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Amazon’s health care experiment shows exactly why we need Medicare for All

Amazon’s health care experiment shows exactly why we need Medicare for All

We have to remove profit from the health care equation, just like Amazon, Berkshire Hathaway and JPMorgan Chase intend to do.

By Richard Master
USA Today, Feb. 7, 2018

Amazon, Berkshire Hathaway and JPMorgan Chase announced last week that they would be forming a new company aimed at reducing employee health care costs. This decision was a response to what small, mid-sized and large business owners and CEOs have known for a long time: The private insurance system is strangling the U.S. economy.

As the founder and CEO of a mid-sized company that employs 180 people in the United States, I know this well. In 2018, we will pay $2.8 million to insure our workers and their families. Year after year, we have wrestled with the costs of our health care plans. And despite trying every trick in the book, our per-employee costs have tripled over the past 14 years.

A family plan in 2018 will cost us $27,000, which is higher than the annual salary of one-third of all working Americans. To put it another way, we are paying $13.50 per hour per employee just to cover the health care benefit. It’s a model that’s completely unsustainable, and needs to change.

According to their statement, this new health care company will pursue technology solutions to provide health care and lower costs. The real game-changer is that the company will be “free from profit-making incentives and constraints.”

They’re inches away from a major revelation: The way to fix health care for all people — not just those who are employed by monolithic corporations — is to de-commercialize the health insurance system.

In announcing the new partnership, Berkshire Hathaway Chairman Warren Buffett called the costs of healthcare “a hungry tapeworm on the American economy.” He’s right. But, combined, these three companies employ about 1.1 million people. Even accounting for dependents, this new company will, at best, serve 1% of the population. I’m looking for a solution that would help the other 99%: Medicare for All.

In the United States, we rely on private, for-profit insurance companies to finance our health care system. Over 157 million Americans are getting their coverage from employer based plans. Another 21.9 million have purchased insurance individually.

In theory, an insurance company exists to help negotiate with providers, and minimize the amount that patients and families are paying for healthcare. However, health insurance executives have the same motivation as the leader of any other company: profit.

That motivation is holding patients, workers and every other sector of our economy hostage to high premiums, and large out of pocket expenses. It is no coincidence that while health insurance companies are using hundreds of billions annually for their own sales and marketing, administrative overhead and profits, we are suffering under the most complex and expensive system in the world.

This is an existential threat to our businesses and our economy.

The high costs of health care, fueled by the profit motivation in the private insurance system, can be directly linked to the decreased take-home pay for workers; businesses not having capital to expand to new markets, create new jobs, or invest in new technologies; and medical bills as the number one cause of bankruptcy in the United States.

While some companies have the resources to do what Berkshire Hathaway, Amazon and JPMorgan Chase are doing, most don’t.

I certainly couldn’t do it for my employees, even though I wish I could. That’s why, if we are going to achieve an improved system for all of our citizens, what we really need is Medicare for all. Whether they know it or not, the leadership of these three companies made a strong case for removing profit from our health care system, and I hope our politicians are listening.

Richard Master is founder and CEO of MCS Industries, executive producer of multiple documentaries on the U.S. health care system, and founder of the Business Initiative for Health Policy.

https://www.usatoday.com…

Single payer at play in Germany’s talks to build a coalition government

Parties enter final round of talks to build new German coalition government

Deutsche Welle, February 4, 2018

More than four months after holding general elections, Germany remains in political limbo without a new government.

Negotiations between the CDU/CSU (Christian Democrats and Christian Social Union) and the SPD (Social Democratic Party) have entered what many hope could be the final round, with a number of issues still unsettled between the parties.

The parties managed to reach agreement on energy and agriculture issues as well as on the divisive issue of refugee family reunifications, but there’s still no consensus, especially over healthcare reforms. The conservative CDU/CSU bloc have squarely rejected SPD calls for introducing sweeping changes to Germany health insurance system which would see the country’s universal multi-payer health care system replaced by a national single-payer model.

“We’ll have to negotiate very, very intensively on these issues today and I think agreements are possible but they still haven’t been reached,” (SPD leader Martin) Schulz told reporters.

http://www.dw.com…

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Germany’s divided SPD: the ultimate grand coalition decider

Deutsche Welle, February 4, 2018

After German reunification in 1990, the Social Democratic Party (SPD) boasted nearly a million members. These days, that figure is just over 440,000. But the members that remain are set to play a crucial role in the future of the center-left party.

The Christian Democrats (CDU), the Christian Social Union (CSU) and the SPD have set a Sunday deadline for concluding coalition talks, though party leaders have agreed to a two-day grace period in the event they have yet to overcome key differences.

But without the consent of SPD party members, Germany will not be governed by a so-called grand coalition. Once talks have concluded, a copy of the coalition treaty will be sent to each of them for review. When going over the document, the key issue will be: Does the proposed government agenda bear the stamp of the Social Democrats in a clearly perceptible manner, or were the SPD’s negotiators shortchanged by their conservative counterparts?

As was the case four years ago, it’s the SPD that has the last word when it comes to signing a coalition treaty with Chancellor Angela Merkel’s CDU and their Bavarian sister party, the CSU.

In contrast to negotiations to form Germany’s previous government in 2013, which 76 percent of the SPD’s members approved, dissenting voices in the party have the opportunity to derail the current grand coalition at an early stage. Many Social Democrats already feel that some of their key demands are being overlooked.

http://www.dw.com…

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Germany’s grand coalition talks enter second period of extra-time

Deutsche Welle, February 6, 2018

German officials remained positive on Tuesday morning that Chancellor Angela Merkel’s conservative bloc and the Social Democrats (SPD) would strike a deal to forge a new coalition government by the evening.

As she headed into the final round of talks, Merkel called on all sides to make the necessary concessions and strike a deal that would end months of political limbo.
“Each of us will still have to make painful compromises,” the chancellor said. “I am prepared to do that if we can be sure in the end that the advantages outweigh the disadvantages,” she added.

SPD leader Martin Schulz also said today’s decisive stalks were “about nothing less than building stable, lasting government in one of the largest industrialized countries in the world.”

However, the sides still remain divided on several issues, most notably labor and healthcare policy.

The CDU and its Bavarian sister party, the Christian Social Union (CSU), continue to reject any sweeping changes to Germany’s health insurance system. The SPD, meanwhile, wants to see Germany’s two-tier health system reformed with a new system that closes the care gap between citizens with private and statutory insurance.

The CDU’s Klöckner said her party wanted to see welcome changes to Germany’s healthcare model but warned that a “one-size-fits-all” system would be too expensive.

http://www.dw.com…

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Comment:

By Don McCanne, M.D.

Germany has a multi-payer system for health care composed of competing, not-for-profit, nongovernmental health insurance funds (“sickness funds”) in the compulsory statutory health insurance (SHI) system, and those with higher incomes can choose private health insurance (PHI). PHI is especially attractive for young people with good incomes, as insurers may offer them contracts with more extensive ranges of services and lower premiums. Thus Germany has a two-tiered system with a “care gap between citizens with private and statutory insurance.”

Four months after their election, talks may finally conclude today on formation of a coalition government. One of the major issues still to be decided is whether or not the parties will agree to close the gap in their two-tiered system by replacing it with a national single payer model. Although the conservative opposition has not yet yielded, the success in forming a coalition government may be at stake. We may know the results later today.

The issue for us is that more egalitarian European systems, such as that in Germany, may still be inequitable if people are allowed to buy up out of the compulsory system. The fact that single payer has become a major negotiating issue in Germany shows that their citizens understand that as well. Although the divide is between center-left and conservative politicians, just as in the United States, is that where the people are? Or would they prefer that the politicians move past the polarization and adopt a fully egalitarian system?

(As of Feb. 6, 9:00 PM, Central European Time, there are no further media reports on the progress of the negotiations.)

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Readers And Tweeters Add Two Cents On Amazon Venture To Repackage Health Care

By Carol Paris, M.D.
Kaiser Health News, Feb. 6, 2018

We were disappointed KHN’s “Expert Advice” did not include input from advocates for a single-payer system. So, here is an open letter to the CEOs of Amazon, JPMorgan Chase and Berkshire Hathaway.

Dear Messrs. Jeff Bezos, Warren Buffett and Jamie Dimon:

We agree with you that health care is among the greatest issues facing society today. Your tremendous resources provide a unique opportunity to advocate for a health program to benefit all Americans: a universal, single-payer system.

Mr. Buffett describes our profit-based health system as a “tapeworm,” a parasite whose survival depends on its ability to drain nutrients from the host. How did our health care system reach that sorry state?

Our nation faces a catastrophic failure on two levels. First, the market has failed to deliver affordable health care to those who need it most. More importantly, our elected officials have failed to enact the reforms that could remedy health care’s woes because they are unwilling to offend big donors from the insurance and pharmaceutical industries. Instead, they’ve nibbled around the edges with incremental reforms like the Affordable Care Act. The ACA not only failed to kill the tapeworm of profit-based health care, it fattened it up with government subsidies, fueling the twin drivers of health costs — profits and administrative bloat.

Adding one more well-intentioned layer to our labyrinthine health care financing arrangements cannot fix them. We must move to one simple, nonprofit financing system, known as single-payer or “Medicare for all.” Mr. Buffett recently said that as a nation “we can afford to do it.” Medicare for all would bring desperately needed financial stability to the lives of everyday Americans, to every unit of government, and to businesses large and small.

We urge you to meet with policy experts who have studied this problem for decades, as well as the health care professionals operating at the front lines. Physicians for a National Health Program is a 22,000-member nonprofit research and education organization that advocates for single-payer health care. Our “Physicians’ Proposal for Single-Payer Health Care Reform” is a research-based plan for expanding health coverage to all Americans while eliminating the waste and profiteering of private insurance, and the inefficiencies they inflict on doctors and hospitals.

Dr. Carol Paris is president of Physicians for a National Health Program.

https://khn.org…

Who will be next year’s high health care spenders?

Consistently High Turnover in the Group of Top Health Care Spenders

By William C. Johnson, Ph.D.; Niall Brennan, M.P.P.; Sally Rodriguez, M.P.H. & John Hargraves, M.P.P.; Health Care Cost Institute
NEJM Catalyst, February 1, 2018

The concentration of most U.S. health care spending in a small proportion of individuals is well documented. The notion that high health care spending only affects a small portion of people in a given year is particularly relevant to the ongoing policy debate about how to make health insurance affordable for all, while accommodating people with complex health care needs and accompanying higher costs.

To better understand the patterns of spending for higher-risk enrollees, the Health Care Cost Institute studied the distribution of health care spending among commercially insured individuals and how their spending changed over time. Specifically, we analyzed the annual health care spending of more than 9 million individuals under the age of 65 in each pair of years from 2008 to 2015. Because people may change insurers over time, within each pair of years we limited our sample to people with continuous enrollment and prescription drug coverage for the full 2 years. We found that top spenders (the top 5%) account for a growing share of health care spending, and there is consistent and substantial turnover among these top spenders.

Taken together, we interpret these findings as evidence that as costs continue to rise, health insurance will play an increasingly important role in easing the financial burden of increased health care spending. For this reason, less comprehensive plans may be risky, even for consumers with low health care spending in previous years. These findings provide a timely reminder of the inherent uncertainty in health care spending in light of proposals to create significant changes in individual and group insurance markets, such as altering consumer protections created by the Affordable Care Act.

Large Degree of Turnover from Year to Year among Top Spenders

Simply put, three out of five top spenders in any given year were not top spenders in the prior year. In 2015, only 39% of the top 5% of spenders were in the top 5% of spenders in 2014. Moreover, this trend was consistent in each year from 2009 to 2015. These new top spenders came from all portions of the spending distribution. For example, in each year studied, almost 15% of top spenders were in the bottom 50% of spenders or had no spending in the previous year.

People who are new to the top 5% of spenders endure dramatic changes in their health care spending within a short period of time. The median newly top spender saw their total health care spending rise almost 800% from $4,528 in 2014 to $35,523 in 2015. While insurance plans insulated them from most of this spending increase, median out-of-pocket spending for this group also rose nearly 400% from $1,048 in 2014 to $4,067. These year-to-year changes in out-of-pocket spending are particularly jarring considering the Federal Reserve Board’s 2016 Survey of Household Economics and Decision, which reported that 44% of respondents could not afford a $400 emergency expense.

https://catalyst.nejm.org…

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Comment:

By Don McCanne, M.D.

This report quantifies a well-known, important fact about health care spending. Consistently, year after year, three-fifths of the top 5 percent of health care spenders are new arrivals, with a median health care spending rise of 800 percent from the previous year. The population with high health care costs is unstable, year after year.

Those opposed to universal, comprehensive health care tell us that we should buy only the insurance that we need. Yet 3 percent of those under 65 without high health care costs will have health care spending the following year in the top 5 percent. It is almost impossible to know who most of those individuals are.

The authors state, “These findings provide a timely reminder of the inherent uncertainty in health care spending in light of proposals to create significant changes in individual and group insurance markets, such as altering consumer protections created by the Affordable Care Act.” Further, “These year-to-year changes in out-of-pocket spending are particularly jarring considering the Federal Reserve Board’s 2016 Survey of Household Economics and Decision, which reported that 44% of respondents could not afford a $400 emergency expense.”

The obvious conclusion is that everyone needs comprehensive insurance, including the young and healthy, because of the unpredictability of high health care costs. Even more important than financial security, a well designed single payer national health program would ensure that everyone would have health security as well.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Single-payer health care betters costs, outcomes

By Mario L. Maiese, M.D.
Press of Atlantic City (N.J.), Letters, February 3, 2018

Regarding the Jan. 16 column by Betsy McCaughey, “Single-payer a danger for cancer patients”:

Most of the facts in McCaughey’s column regarding single-payer health care are correct, but she omits significant points.

The primary purpose of single-payer is to cover more people at decreased cost, so that everyone would be able to receive the advanced treatment she describes. Without insurance, people don’t have access to caregivers for the diagnosis and management of cancer and the other diagnostic and preventive services.

She fails to mention that the U.S. health-care system is last in overall outcomes performance among high-income countries, according to the Commonwealth Fund, even though we have the best cancer survival rates. We spend far more than these single-payer countries, where everyone has coverage. Our excessive uninsured population results in a far higher death rate from conditions that can be managed and treated effectively.

Additionally, a single-payer health-care system is the best way to manage and decrease cost. It decreases inefficiencies in management and can negotiate pharmaceutical prices and set prices for care. Most of the exact same medications are cheaper in these other countries and procedures cost less (current example: it costs four times as much for coronary bypass surgery here compared to the United Kingdom).

I believe that with our innovation and the proper management of a single-payer health-care system we can go from last to first.

https://www.pressofatlanticcity.com…

MedPAC: Repeal MIPS and replace it with VVP, whatever that is

MedPAC’s Repeal And Replace MIPs Campaign Will Not End Well

By Kip Sullivan
The Health Care Blog, January 28, 2018

“This is tough. I don’t know how to proceed…. Lord help the staff who must bring all this together.”

That was how Dr. Francis Crosson, chairman of the Medicare Payment Advisory Commission (MedPAC), reacted to the commission’s baffling discussion at its January 11 meeting moments before it voted 14-2 to replace the Merit-based Incentive Payment System (MIPS) with something called the “voluntary value program” (VVP). MedPAC’s staff must now summarize the January 11 discussion and prepare a report for inclusion in MedPAC’s March 2018 report to Congress.

MIPS is a pay-for-performance (P4P) scheme imposed on the traditional fee-for-service Medicare program by an act of Congress known as MACRA. MIPS requires that CMS measure performance on cost and quality at the level of the individual doctor, something MedPAC recently acknowledged can’t be done after spending 13 years claiming it could be done.

The portion of the commission’s January 11 discussion that focused on the repeal of MIPS was not hard to understand. The commissioners agreed that MIPS cannot work for multiple reasons, the most important being that the pools of patients treated by individual doctors are too small to permit accurate measurement of cost and quality. “MIPS will not succeed in helping beneficiaries choose clinicians, helping clinicians … improve value, or helping the Medicare program to reward clinicians based on value,” explained MedPAC staffer Kate Bloniarz.

It was the commissioners’ discussion about what to replace MIPS with that will be very difficult to summarize. That’s because the discussion consisted largely of expressions of doubt about the VVP, which is essentially a proposal that all doctors who treat Medicare patients either join a “group” (aka ACO) or lose 2 percent of their Medicare payments. The discussion, which followed a vague opening presentation by two MedPAC staff members, consisted of numerous questions posed to the staff that neither the staff nor Dr. Crosson could answer. Because so many issues remained unresolved, ten of the 16 commissioners (one was absent) expressed reservations about voting for the VVP. How does the staff or anyone else summarize a discussion like that? How does the staff explain why the commission voted to recommend the VVP to Congress when a majority of commissioners have multiple concerns about it?

The two questions that got the most discussion were: Will functioning ACOs (as opposed to Potemkin village ACOs that have no internal cohesion) be available for all doctors to join, and; won’t CMS’s crude method of measuring “performance” punish doctors who treat poorer and sicker patients? These and other issues were raised not only at the January 11, 2018 meeting, but at five previous meetings in 2017. That these questions were still unanswered after six meetings is compelling evidence Dr. Crosson and the staff cannot answer them and never will.

Chronology of MedPAC’s latest lead balloon

MACRA (Medicare Access and CHIP Reauthorization Act), which authorized MIPS, was signed by President Obama in April 2015. Although the fatal defects in MIPS were obvious the day Obama signed MACRA, MedPAC waited nearly two years to begin a discussion about whether MIPS could work. Instead of sounding the alarm immediately, MedPAC wasted the rest of 2015 discussing some vague principles that should guide CMS in developing the “alternative payment model” (APM) portion of MACRA.

I have no idea how to explain the delay between April 2015, when Obama signed MACRA, and January 2017 when MedPAC finally started talking about repealing MIPS. I do know what caused the failure to act between January 2017 and January 2018: That was Dr. Crosson’s and the staff’s insistence that MedPAC should propose a replacement for MIPS at the same time they recommended its repeal. This insistence manifested the staff’s near-religious devotion to P4P despite a large body of evidence indicating P4P does not work at any level – at the individual physician level, the clinic or hospital level, or even at the level of large pools of providers.

Because of this devotion, staff and Dr. Crosson could not bear the thought of repealing MIPS and thereby leaving 80 percent of the doctors and nurses who treat Medicare patients unmolested by P4P. (Eighty percent appears to be the commission’s latest estimate of the percent of Medicare “clinicians” who will not be in ACOs or other entities that qualify as “advanced alternative payment models” [APMs] under MACRA by 2019, the first year MIPS penalties and rewards kick in.) It was this blind insistence on forcing some form of P4P upon that 80 percent that caused the staff to link repeal with replacement right from the start of the repeal discussion in January 2017.

The staff presented its replacement proposal – what they would eventually call the “voluntary value program” (VVP) – at the January 2017 and March 2017 meetings. At both meetings, and at four subsequent meetings (October, November, and December 2017 and January 2018), commissioners peppered the staff with questions about the VVP – to no avail. Dr. Crosson and the staff resolutely refused to add any details to the vague VVP proposal first presented in January 2017. For example, all the staff would say about the “groups” that doctors would have to join in order not to lose 2 percent of their payments is that they must be “sufficiently large to have statistically detectable performance on population-based measures” such as use of “low-value” services and “healthy days at home.” That was their story, and they stuck to it. The skeleton-like proposal the commission voted on at the January 11, 2018 meeting was identical to the skeleton-like proposal they first heard in January 2017.

(The excerpts are truncated here. If you are interested in reading the process which resulted in the decision to replace MIPS with the nebulous VVP then click the link for the rest of the article. – DMc)

Lessons from another “repeal and replace” campaign

All sentient readers will recall the sad ending of another “repeal and replace” campaign. It had a sad ending because it was driven by ideology, not evidence. MedPAC appears hellbent on repeating the same mistake Republicans made in declaring their intention to “repeal and replace” the Affordable Care Act. MedPAC linked repeal of MIPS with its replacement before they had time to research the replacement. MedPAC might as well have said, “We will replace MIPS with something terrific!”

http://thehealthcareblog.com…

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Principles for a Framework for Alternative Payment Models

By Sam Nussbaum, M.D.; Mark McClellan, M.D., Ph.D.; Grischa Metlay, Ph.D.
JAMA, January 29, 2018

The way physicians, hospitals, and other health care professionals are paid influences patient care because payment methods affect business models that clinicians and health care facilities use to prioritize investments, establish infrastructure, and design care processes. Fee-for-service medicine and its volume-based financial incentives can lead to overuse of low-value services and suboptimal care. A consensus is emerging among patients, health care professionals, payers, and purchasers that transitioning to alternative payment models (APMs) that better incentivize value for patients is essential for improving the quality and affordability of health care.

In 2014, the CMS published a system for classifying APMs.1 In the interim, the Health Care Payment Learning and Action Network (LAN), a public-private partnership driving multistakeholder consensus and coordinated action to accelerate the transition to APMs, built on, expanded, and refined the original system.

This Viewpoint reviews major themes in the framework principles as revised by LAN, illustrating how they are applied in the LAN classification scheme, and the LAN national goals for payment reform.

The Updated APM Framework

Category 1: Fee for service; no link to quality and value

Category 2: Fee for service; link to quality and value

1. Foundational payments for infrastructure and operations (eg, care coordination fees and payments for health care information technology investments)

2. Pay for reporting (eg, bonuses for reporting data or penalties for not reporting data)

3. Pay for performance (eg, bonuses for quality performance)

Category 3: APMs built on fee-for-service architecture

1. APMs with shared savings (eg, shared savings with up-side risk only)

2. APMs with shared savings and down-side risk (eg, episode-based payments for procedures and comprehensive payments with up-side and down-side risks)

Category 4: Population-based payment

1. Condition-specific population-based payment (eg, per-member per-month payments, payments for specialty services such as oncology or mental health)

2. Comprehensive population-based payment (eg, global budgets or full/percentage of premium payments)

3. Integrated finance and delivery system (eg, global budgets or full/percentage of premium payments in integrated systems)

The updated APM Framework rests on 8 principles, which can be summarized as follows:

1. Changing clinicians’ and health care facilities’ financial incentives is not sufficient to achieve person-centered care, so it will be essential to empower patients to be partners in health care transformation.b

2. Reformed payment mechanisms will only be as successful as the delivery system capabilities and innovations they support.b

3. The goal for payment reform is to transition health care payments from fee for service to APMs. While category 2C APMs can be the payment model for some clinicians and health care facilities, most national spending should continue moving into categories 3 and 4.b

4. Value-based incentives should ideally reach care teams who deliver care.

5. Payment models that do not take quality into account are not considered APMs in the APM Framework and do not count as progress toward payment reform.

6. Value-based incentives should be intense enough to motivate clinicians and health care facilities to invest in and adopt new approaches to care delivery without subjecting them to financial and clinical risk they cannot manage.b

7. Alternative payment models will be classified according to the dominant form of payment when using more than 1 type of payment.

8. Centers of excellence, accountable care organizations, and patient-centered medical homes are examples rather than categories in the APM Framework because they are delivery systems that can be applied to and supported by a variety of payment models.

Patient Protections

Payment reform is not an end; it is a means to supporting better, more coordinated care for patients. Accordingly, APMs must help make patients better health care consumers and mitigate perverse incentives that reward low-quality patient care.

Protections for Health Care Professionals

Reformed payment mechanisms that hold health care professionals increasingly accountable for cost and quality performance and that allow more flexibility in care delivery are central to any efforts to transform care delivery.

Value-Based Goals for Payment Reform

The value of an APM should be assessed not only by its design elements but also by how well it promotes person-centered care.

APM Framework and Progress Tracking

As the nation approaches 30% of payments in value-based arrangements, the LAN APM Framework could provide a useful platform for helping to accelerate progress on payment reform by outlining principles for APM design, differentiating APMs based on potential value, and offering a tool to consistently measure progress toward national goals.

https://jamanetwork.com…

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Comment:

By Don McCanne, M.D.

Much of the history of health policy in the United States involves the application of policy concepts based on ideology rather than solid policy science. Policies are dreamed up and then executed broadly on a wish about what would happen rather than reliable predictions of what really will happen. The SGR, MACRA, MIPS, APM, and now VVP is a saga of such dreams in the policy community forced to meet reality.

SGR (sustainable growth rate) was a tool to slow the growth in health care spending. When implemented it was perceived to be too austere and thus annual adjustments were postponed until the cumulative deficit proved to be so great that SGR had to be abandoned. It was replaced by MACRA (Medicare Access and CHIP Reauthorization Act) which established MIPS (Merit-based Incentive Payment System) and APM (Alternative Payment Model).

MIPS has proven to be a dud, and thus MedPAC (Medicare Payment Advisory Commission) has recommended that it be abandoned and replaced with VVP (Voluntary Value Program). Kip Sullivan, who had previously warned us about MIPS (as did I), now explains why we should be concerned about VVP (and I emphatically concur). His full article available at The Health Care Blog website should be read to understand what a farce this is.

Recognizing the deficiencies in MIPS, many in the policy community have recommended that incentives be established to move everyone past MIPS into the Alternative Payment Models (APMs). But what are they? JAMA has just published the updated framework for APMs as established by LAN (Health Care Payment Learning and Action Network). Read the framework itself and the eight principles on which it rests. Then sit back and think about how this framework would define the future of our entire health care delivery system, putting the eight principles to work. In their dreams based on ideology, our policy community has come up with Comprehensive Revision of American Physician Payment Principles (CRAPPP).

Come on. We have solid policy evidence that a well designed single payer system would achieve their goals (and ours) of a high performance health care system that takes care of all of us and is affordable for each of us. Let’s cut out the CRAPPP and do it right.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Single-payer health care cuts costs

Insurance administrators are not evil. They are, rather, a product of our uniquely dysfunctional health care system.

By Samuel Metz, M.D.
Portland (Ore.) Tribune, Feb. 1, 2018

Measure 101 barely saved Oregon’s Medicaid funding for two years, but our health care (like that in the 49 other states) is still the world’s most expensive.

For what Oregonians pay in health care taxes, insurance premiums, deductibles and co-pays, citizens in other countries receive 100 percent coverage for all treatable diseases. We Oregonians consider ourselves lucky if we dodge bankruptcy when our family needs care.

Why is health care in Oregon so expensive?

It’s not the usual suspects: Waste, fraud and abuse. It’s the unusual suspects: people who handle our insurance money.

Insurance administrators are not evil. They are, rather, a product of our uniquely dysfunctional health care system. Every billable health care event requires an insurance officer to determine:

• Was the patient insured?

• Did benefits cover the condition? Did benefits cover treatment?

• Did physicians follow preauthorization procedures?

• Was the physician in network?

• Did diagnosis and procedure codes match?

That’s a lot of time. Then they repeat 30 percent of this work because three of 10 first insurance claims are denied.

This process diverts 20 percent of insurance premiums away from health care and into administration. This loss does not include physician time lost to complete the claim in the first place. It does not include deductibles, co-pays or out-of-network expenses. It’s simply the cost of billing. Our billing costs are two to 10 times that of other countries.

Enter Bernie Sanders.

U.S. Sen. Sanders did not invent single-payer health care. He was not the first to introduce a single-payer bill. In fact, single-payer health care was invented before he was born, here in the Pacific Northwest.

An American industrialist, Henry J. Kaiser, guessed that keeping his employees and their families healthy without intervening private insurance companies would be good for his business (actually, the idea came from his company physician Dr. Sidney Garfield). Both were right.

The Sanders’ 2017 “Medicare for All” single-payer bill reflects Kaiser’s 1930s plan: include everyone, treat treatable conditions and pay physicians with administrative simplicity. These concepts are emulated by most large American businesses (using “self-funded” health care — private single-payer plans) and every other developed nation. The United States missed this message.

Most proposals save money by excluding sick people, withholding benefits, or underpaying providers. Single payer, in contrast, converts administrative overhead into health care.

Single-payer efficiency is validated daily by corporate single-payer plans in the United States and national single-payer plans in Australia, Taiwan, Denmark, Israel and a few dozen other countries.

All these single-payer plans provide better care to more people for less money.

Sen. Sanders may be the most dramatic American advocate, but he’s not alone. Four members of Oregon’s congressional delegation already endorse the single-payer system: Sen. Jeff Merkley and Reps. Earl Blumenauer, Suzanne Bonamici and Peter DeFazio.

The holdouts — Sen. Ron Wyden and Reps. Kurt Schrader and Greg Walden — need to hear from us. Oregonians want better care for more people for less money. Our congressional delegation should make it happen.

Oregon hasn’t solved its health care crisis by rounding up the usual suspects, nor by passing Measure 101. America’s biggest corporations and our international neighbors teach us the answer: single-payer health care. Call Sen. Wyden, Rep. Walden, and Rep. Schrader and give them the message. Oregon families will be grateful.

Dr. Samuel Metz is a private practice anesthesiologist who lives and works in Portland.

https://portlandtribune.com…

NYT Letter: Astute advice for Buffett, Bezos and Dimon

Letter: The 3 Giants’ Health Plan

By Elizabeth R. Rosenthal, M.D.
The New York Times, January 31, 2018

To the Editor:

Re: “3 Giants Form Health Alliance, Rocking Insurers” (front page, Jan. 31):

Before spending lots of time, effort and money developing a new health care “product,” Warren E. Buffett of Berkshire Hathaway, Jeff Bezos of Amazon and Jamie Dimon of JPMorgan Chase should realize that using a market approach to health care has failed miserably in this country.

They should go with Mr. Buffett’s earlier assessment. He suggested that despite “limited knowledge,” he thought that single payer is probably the best system, adding: “We are such a rich country. In a sense, we can afford to do it.”

Instead of reinventing the wheel, they should consult a group of experts who understand the needs of patients and populations and who have for many years studied the public policies that can best fulfill these needs. Physicians for a National Health Program, on whose board I sit, would be glad to oblige.

Dr. Elizabeth Rosenthal is a dermatologist. She resides in Larchmont, N.Y.

https://www.nytimes.com…

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Comment:

By Don McCanne, M.D.

It is great news that these icons of the business world – Buffett, Bezos and Dimon – recognize that there are serious problems with our health care system and that they want to do something about it. But looking for technological advances to build on and tweak our current system will leave in place most of the flawed policies that result in very high costs with only mediocre performance.

There is no doubt that they could make some improvements within a customized system designed to serve their own employees, even if also extended to employees of other larger corporations. But most individuals outside of their companies would still be exposed to our highly dysfunctional system, so the net social good would be very limited.

On the other hand, if they advocated for a well designed single payer system, it would bring to their own businesses the efficiencies which would achieve their goal of cost containment while at the same time improving the allocation of our resources within the entire health care delivery system – serving well not only their companies but all of us. Further, it is likely that it would be much less expensive for them to advocate for a single payer system than to spend large sums in trying to leverage their own internal systems with expensive technological innovations – innovations that frequently fall far short of their idealistic goals.

These gentlemen have a chance to make a difference. Before they pull all stops, they should take a very careful look at a better system that would serve all of us quite well. Elizabeth Rosenthal’s astute, concise advice should be considered and pursued.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

An open letter to the CEOs of Amazon, Berkshire Hathaway, and JPMorgan Chase

February 1, 2018

Dear Mr. Bezos, Mr. Buffett, and Mr. Dimon:

As a physicians and health justice advocates, we agree with you that health care is among the greatest issues facing society today. Your tremendous resources provide a unique opportunity to advocate for a health program to benefit all Americans: a universal, single-payer system.

Mr. Buffett describes our profit-based health system as a “tapeworm,” a parasite whose survival depends on its ability to drain nutrients from the host. How did our health care system reach that sorry state?

Our nation faces a catastrophic failure on two levels. First, the market has failed to deliver affordable health care to those who need it most. More importantly, our elected officials have failed to enact the reforms that could remedy health care’s woes because they are unwilling to offend big donors from the insurance and pharmaceutical industries. Instead, they’ve nibbled around the edges with incremental reforms like the Affordable Care Act. The ACA not only failed to kill the tapeworm of profit-based health care, it fattened it up with government subsidies, fueling the twin drivers of health costs—profits and administrative bloat.

Adding one more well-intentioned layer to our labyrinthine health care financing arrangements cannot fix them. Instead, we must to move to one simple nonprofit financing system, known as single payer or Medicare for all. In fact, Mr. Buffett recently supported single payer and said that as a nation “we can afford to do it.” Medicare for all would bring desperately needed financial stability to the lives of everyday Americans, to every unit of government, and to businesses large and small.

As you turn your focus towards health care, we urge you to meet with policy experts who have studied this problem for decades, as well as the health care professionals operating at the front lines of this crisis. Physicians for a National Health Program is a 22,000-member nonprofit research and education organization that advocates for single-payer health care. Our “Physicians’ Proposal for Single-Payer Health Care Reform” is a research-based plan for expanding health coverage to all Americans while eliminating the waste and profiteering of private insurance, and the inefficiencies they inflict on doctors and hospitals.

We would be happy to meet with you to discuss how single payer could benefit your workers, your bottom line, and the American economy as a whole.

Sincerely,

Carol Paris, M.D.
President, Physicians for a National Health Program

Health Insurance Reform in the United States – What, How, and Why?

By Adam Gaffney, M.D.
Journal of Policy Analysis and Management, Point/Counterpoint, Winter 2018

Last summer, Republican efforts to repeal the Affordable Care Act (ACA)—seven-years in the making—dramatically collapsed. Yet, if the failed Senate vote in July marked a pause in conservative reform efforts, it only further animated the health care reform debate on the left side of the political spectrum. In this article, I argue that one of the reform models under discussion—single-payer national health insurance (NHI)—is the most potent and realistic policy solution.

First, I make the case that universal coverage is economically feasible. Second, I examine why achieving universal coverage remains paramount. Third, I describe how universal coverage can be quickly and effectively achieved via NHI enrollment. Fourth, I discuss benefit design, emphasizing the importance of comprehensive benefits, and first-dollar coverage. And finally, I explore the role of the public and private sectors, arguing that health care coverage must remain entirely within the public sphere if the goal of universal health care is to be, at long last, attained.

CAN WE AFFORD UNIVERSAL COVERAGE?

First: Can the United States afford universal coverage? Multiple lines of evidence demonstrate that we most certainly can. Table 1 provides estimates of population coverage, together with health care spending, for 11 OECD nations in 2015. While the United States is at the bottom of the list in terms of coverage, it is at the top of the list in terms of health care spending. A host of high-income nations have been able to achieve near 100 percent coverage despite their much lower levels of health care spending, and some of these nations—like Canada and the United Kingdom—have done this while eliminating cost sharing for most services.

Table 1

Table 1. Health care spending and coverage in 11 OECD Nations, 2015

The experience of Taiwan—which implemented a NHI system in 1995—further bolsters the case for the affordability of universal health care. There, the costs of a rapid single-payer universal coverage expansion, and the resultant increase in health care utilization, were offset by other savings, such that the “total increase in national health spending between 1995 and 2000 was not more than the amount that Taiwan would have spent, based on historical trends” (Lu & Hsiao, 2003). Taiwan was thus able to implement a universal single-payer program with comprehensive benefits without an acceleration in national health spending growth, despite the fact that the nation began with a much higher baseline proportion of uninsured than the United States has currently (i.e., 43 percent vs. 9 percent 1) (Lu & Hsiao, 2003).

A back-of-the-envelope estimate further confirms the economic feasibility of universal coverage under NIH in the United States. A study of the cost of care for the uninsured found that for 2013, the uninsured used about half as much health care resources ($2,443) as the insured ($4,876) a year (Coughlin et al., 2014). These investigators used such figures to estimate that $121 billion was spent on the uninsured in 2013, suggesting that the uninsured might have been covered in that year for a similar (additional) sum. If we reduce that figure to account for the decline in the number of uninsured since 2013 and then inflate it for rising medical spending, we have a rough, back-of-the-envelope figure of $92 billion annually to cover all of the uninsured, including undocumented immigrants. 2

Though it may seem like a large sum, that figure represents only a small fraction of the savings that could be generated via the greater efficiencies of a single-payer system, discussed below. Together with evidence from other high-income nations abroad, it thus provides strong support for the affordability of universal coverage through NIH in the United States.

WHAT WOULD BE THE BENEFITS OF UNIVERSAL COVERAGE?

Even if we can afford universal coverage, is it worth the price? Though there has been some debate on whether coverage saves lives, a recently published review has strengthened the case that it indeed has such a protective effect (Woolhandler & Himmelstein, 2017a). For instance, the investigators note that three quasi-experimental difference-in-differences studies and most longitudinal observational studies support an association between coverage and reduced mortality, with an odds ratio of dying among the insured vs. the uninsured ranging from 0.71 to 0.97. And while the Oregon Medicaid experiment—the only randomized trial to examine the question (Finkelstein et al., 2012)—did not have a statistically significant protective effect on mortality, Woolhander and Himmelstein note that the direction of the effect was consistent with benefit, and in any event that the study was underpowered for this outcome.

Lowering mortality, of course, is not the only goal of universal coverage. Another review found that coverage had a beneficial impact on patient finances, health care access and use, the management of some chronic conditions, self-rated health, as well as on mortality (Sommers, Gawande, & Baicker, 2017).

It is worth noting that these sorts of benefits—especially on mortality—figured heavily in the debate over the repeal of the ACA. Yet, it is notable that every argument wielded against the repeal of the ACA on the grounds of lives lost also serves as a powerful argument for proceeding to universal coverage. For instance, it was estimated that under the Senate ACA repeal bill, 49 million would be uninsured by 2026 (Congressional Budget Office, 2017). However, 28 million are predicted to remain uninsured without the repeal. It seems hard to argue that having 49 million uninsured produces an unacceptable amount of unnecessary death and suffering, while leaving 28 million uninsured does not.

HOW DO WE GET EVERYONE ENROLLED?

While the goal of “universal coverage” today garners support from a diversity of voices, the devil is in the policy details. Against the single-payer approach advocated in this article, for instance, some argue for an incremental path to universal coverage by building on the ACA.

Perhaps the most prominent incremental reform is a “public option” plan added to the ACA marketplaces. However, it seems unlikely that such a reform would bring us towards universal coverage. While a public option might have lower premiums (Congressional Budget Office, 2013), it could potentially serve as something of a high-risk pool, enrolling sicker and most costly individuals, thereby raising premiums in the public plan while effectively subsidizing the profits of private insurers. Yet even assuming this could be avoided, there is no clear evidence that a public option would take us to universal coverage: The CBO’s 2013 scoring of a public option, after all, predicted that it would produce no significant reduction in the number of the uninsured (Congressional Budget Office, 2013).

A second proposed incremental approach to universal coverage would be to strengthen the ACA’s individual mandate. Some point to international examples—in particular, the Netherlands and Switzerland—to make this case. For instance, Herzlinger et al. assert that more “firm penalties” and a more “forceful approach” towards the individual mandate could achieve universal coverage in the United States (Herzlinger, Richman, & Boxer, 2017). They and others cite the example of Switzerland (which essentially has universal coverage), where penalties for being uninsured are more severe as compared to those of the ACA, and where those who misrepresent their insurance status can even be subject to imprisonment (Ginneken & Rice, 2015). Should we follow the Dutch and Swiss roads to universal coverage, for instance, by imposing a stiffer individual mandate penalty, instead of taking the single-payer path?

Absolutely not. After all, as Timothy Jost has written, not only are the Dutch and Swiss models often misrepresented, it is by no means clear that they are the best reform models to follow. The insurance plans sold in these nations are considered social services, not commodities (for this reason, the Dutch plans are not subject to European Union rules on competition, while in Switzerland, for-profit companies are barred from even selling basic plans) (Jost, 2009). But perhaps most critically, as Jost notes, the “managed competition” mandate-model reforms in both countries was not deployed to effect universal coverage, which had already been mostly achieved prior to the implementation of these reforms. And, critically, neither reform seems to have controlled costs, with Switzerland remaining the second most expensive health care system after the United States (Jost, 2009).

There are other reasons not to embrace these models. For instance, a 2015 study examining mandates in Germany, the Netherlands, and Switzerland found that even with these strict mandates, some remain uninsured, underinsured, or in default on their premiums (Ginneken & Rice, 2015). Premium defaulters and those who remain uninsured, moreover, are similar to the uninsured in the United States: they are more likely to be migrants, have low incomes, or be young, the study notes. These experiences cast doubt on using the ACA’s mandates to achieve universal coverage.

It is also worth noting that achieving universal coverage within a private-insurance framework may be prohibitively expensive. As will be later discussed, single-payer systems are capable of achieving much lower levels of administrative spending, savings needed to cover the cost of universal coverage.

Instead of a complicated patchwork approach, the most effective way to cover everybody would be instead to simply cover everybody through an NHI program. Some have suggested that enrolling everybody via a sweeping, quickly implemented “Medicare-for-all” system would entail a great deal of disruption. However, it is worth looking at the 1966 implementation of Medicare to see that this need not be the case. Medicare was signed into law by President Lyndon B. Johnson on July 30, 1965, and its benefits began on July 1, 1966, giving the Social Security administration less than a single year to enroll all of the nation’s seniors (Marmor, 2000, 87). And remarkably, it succeeded: by July 1, 1966, an overwhelming majority (18.9 million) of the nation’s 19.1 million seniors were enrolled in Medicare Part A, and more than 90 percent were enrolled in the voluntary “Part B” program (History of SSA During the Johnson Administration, 1963–1968; Marmor, 2000, 87). While it might be argued that times have changed—for instance, that Medicare’s administrators were dealing with a tabula rasa—this is not true. For instance, slightly more than half of seniors were enrolled in insurance plans prior to Medicare’s implementation (Davis, Schoen, & Bandeali, 2015, 9).

Finally, the example of Taiwan parallels that of Medicare. That nation also rapidly covered almost the entirety of the eligible population: Only 57 percent were covered before NHI’s implementation in 1995, vs. 96 percent by the end of the following year (Lu & Hsiao, 2003).

Such experiences provide firm evidence that when there is a will to universal coverage, there is a way.

WHAT WOULD BENEFIT DESIGN LOOK LIKE?

Single-payer proposals (Gaffney et al., 2016) and bills (H.R. 676, now sponsored by a majority of House Democrats) propose that comprehensive benefits—such as inpatient and outpatient care, dental care, long-term care, mental health care, and pharmaceuticals—be covered under NHI. This is essential for a number of reasons. First, these basic categories of benefits are required by all or nearly all at some point in the life course: There is no reason to relegate certain categories of medically-necessary services to the private insurance market. For instance, widespread lack of dental coverage—especially among the elderly and those of low income—produces unnecessary suffering, disability, and sometimes death, likely exacerbating social inequality in the United States (Otto, 2017).

Second, excluding important medical benefits from coverage may not only deprive individuals of important health care services, but in some instances may serve to increase rather than decrease health care spending. For example, though the single-payer Canadian Medicare system provides universal access to physicians’ services and hospital care, it does not provide universal access to prescription drugs. Yet this lack of public drug plan does not produce savings, but rather imposes costs, insofar as it leaves Canada with less leverage in drug price negotiations. According to one estimate, a universal public pharmaceutical plan might bring down total drug spending by 32 percent in Canada (Morgan et al., 2015).

Another benefit design issue relates to cost-sharing. At least since the RAND Health Insurance Experiment (HIE)—which found that imposing cost-sharing reduced health care utilization and spending without obvious harm to the health of the study population as a whole (Brook et al., 1983)—some have taken it as given that cost-sharing is a necessary and safe tool for cost containment. Yet evidence suggests that cost-sharing is not only unnecessary for cost control, but hazardous to health.

For instance, the RAND HIE itself found that cost-sharing might harm disadvantaged individuals, as it seemed to lead to higher blood pressure and hence potentially higher mortality (Brook et al., 1983). Moreover, cost-sharing has again and again been shown to reduce the use of both appropriate and inappropriate forms of health care (Brot-Goldberg et al., 2015), not surprising given that distinguishing the two reliably is generally thought to require a medical degree. Reducing the use of appropriate health care, in turn, can have adverse health consequences. For some children, for instance, cost-sharing reduces the use of asthma inhalers, and increases hospitalizations (Karaca-Mandic et al., 2012). And among adults with diabetes, high-deductibles reduce visits to specialists, and also increase visits to emergency rooms for diabetes-related complications (Wharam et al., 2017).

Cost-sharing is also unnecessary to control costs. For instance, for at least some specific types of health care (like medications after a myocardial infarction), the absence of cost-sharing may have a positive impact on health, and thus ultimately be at least cost-neutral (i.e., by reducing other forms of health spending) (Choudhry et al., 2011). But, additionally, as previously mentioned, some nations—like Canada and the United Kingdom—have abolished cost sharing while controlling health spending.

WHAT IS THE ROLE OF THE PRIVATE MARKET?

Under NHI, health providers can be a mix of public and (not-for-profit) private. However, health insurance should be entirely public, for a critical reason: The greater administrative simplicity produced by a single-payer is one of the key sources of savings to pay for universal coverage (Gaffney et al., 2016).

A body of literature supports the argument that public single-payers are more administratively efficient. For instance, whereas the administrative overhead of traditional Medicare is only 2 percent, that of private Medicare advantage plans is 11 percent, and that of total private insurance plans 13 percent (Davis, Schoen, & Bandeali, 2015, 23). The Taiwanese NHI, meanwhile, has startlingly (perhaps excessively) low administrative overhead, at little more than 1 percent of operating expenses (Cheng, 2015). And when looking beyond insurer overhead to total health system administrative costs (which include providers’ billing-related costs), it is notable that at least in 1999, 16.7 percent of Canadian health care dollars went to administrative activities, as compared to 31.0 percent in the United States (Woolhandler, Campbell, & Himmelstein, 2003).

As a result of such differences in administrative efficiency, the transition to a single-payer system might yield savings in excess of $500 billion a year, funds that could be then used to pay for the proposed system of comprehensive, first-dollar, equitable coverage for all (Woolhandler & Himmelstein, 2017b).

CONCLUSION

Some concede that single-payer NIH is the best policy option, yet point to the problem of political feasibility, noting that the prospects for sweeping reform at the national level, in the current climate, are slim. Yet, later or (one hopes) sooner, the political climate will change, opening the door for more progressive policy solutions, including those—like single-payer reform—that now seem farfetched.

It is also worth noting the political hurdles that would be encountered with more incremental reforms. For instance, a meaner individual mandate penalty is unlikely to serve politicians well as a rousing rallying cry. The mandate is perhaps the ACA’s most unpopular provision, supported by a mere 35 percent of Americans (Kirzinger, Sugarman, & Brodie, 2016). In contrast, majorities of poll respondents say they support “Medicare-for-all” (57 percent) and “single-payer” (53 percent) (Hamel, Wu, & Brodie, 2017).

Enrolling everybody in the nation into a single NHI program therefore remains the most efficient, effective, and perhaps most likely road to creating a right to health care in America.

ACKNOWLEDGMENTS

The author wishes to thank Professors David Himmelstein and Steffie Woolhandler for their years of mentorship, as well as for reading this manuscript.

The author is active in the not-profit organization, Physicians for a National Health Program, which advocates for single-payer reform. He has no financial conflict of interest with any relevant commercial entities.

1. Figures of the number of the uninsured in the United States throughout this article are from: National Health Interview Survey (Cohen, Zammitti, & Martinez, 2017).

2. The number of the uninsured is 36.2 percent lower now as a result of the ACA’s coverage expansion, or 28.6 million uninsured in 2016 vs. 44.8 million in 2013 (I assume a figure for 2017 that is unchanged from 2016). CMS’s National Health Expenditure tables show that per capita health spending rose from $9,110 in 2013 to a projected $10,833 in 2017, or an 18.9 percent increase. Thus, I reduced the $121 billion figure by 36.2 percent to account for the fall in the number of the uninsured, and then inflated it by 18.9 percent to account for rising medical spending. Of note, this approach to calculating the cost of covering the uninsured is somewhat similar (and relies on the same study of the cost of uncompensated care), but not identical, to that employed by a recent economic study on the cost of a single-payer bill for California, commissioned by supporters (Pollin et al., 2017).

BIOGRAPHY

Adam Gaffney is an Instructor in Medicine at Harvard Medical School, The Cambridge Hospital (e-mail: agaffney@challiance.org).

http://onlinelibrary.wiley.com…

P4P should incite the policy community

Pay for performance: a dangerous health policy fad that won’t die

By Kip Sullivan and Stephen Soumerai
STAT, January 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

  • Do not improve the health of patients
  • Harm sicker and poorer patients
  • Encourage doctors and hospitals to avoid or “fire” sicker patients who drag down quality scores due to factors outside physicians’ control
  • Cause some doctors to stop using lifesaving treatments if they don’t result in bonuses
  • Create interruptions in needed medical care
  • Reduce job satisfaction and undermine altruism and professionalism among doctors
  • Cause doctors to game quality measures. For example, a Medicare program that punished hospitals for hospital-acquired infections actually induced some hospitals to characterize infections acquired after admission as “present upon admission” or to simply not report the infection rather than reduce actual infection rates.

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.

https://www.statnews.com…

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Performance-based financing in low-income and middle-income countries: isn’t it time for a rethink?

By Elisabeth Paul, Valéry Ridde, et al
BMJ Global Health, January 13, 2018

Abstract

This paper questions the view that performance-based financing (PBF) in the health sector is an effective, efficient and equitable approach to improving the performance of health systems in low-income and middle-income countries (LMICs). PBF was conceived as an open approach adapted to specific country needs, having the potential to foster system-wide reforms. However, as with many strategies and tools, there is a gap between what was planned and what is actually implemented. This paper argues that PBF as it is currently implemented in many contexts does not satisfy the promises. First, since the start of PBF implementation in LMICs, concerns have been raised on the basis of empirical evidence from different settings and disciplines that indicated the risks, cost and perverse effects. However, PBF implementation was rushed despite insufficient evidence of its effectiveness. Second, there is a lack of domestic ownership of PBF. Considering the amounts of time and money it now absorbs, and the lack of evidence of effectiveness and efficiency, PBF can be characterised as a donor fad. Third, by presenting itself as a comprehensive approach that makes it possible to address all aspects of the health system in any context, PBF monopolises attention and focuses policy dialogue on the short-term results of PBF programmes while diverting attention and resources from broader processes of change and necessary reforms. Too little care is given to system-wide and long-term effects, so that PBF can actually damage health services and systems.

http://gh.bmj.com…

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Comment:

By Don McCanne, M.D.

We are living through the generation of health policy research. By applying health policy science we should be able to improve the quality of health care while controlling costs. But what we are seeing instead is the widespread implementation of schemes without adequate evidence of their effectiveness. P4P – pay for performance – is one such scheme.

We now have overwhelming evidence that P4P does not work as intended. It does not improve performance, supposedly by giving rewards for (largely flawed) measures of performance, but, in fact, it can create perverse incentives that impair outcomes, as Kip Sullivan and Stephen Soumerai explain.

Furthermore, Elisabeth Paul, Valéry Ridde and their colleagues show us that the widespread acceptance and implementation of this concept throughout the world “can actually damage health services and systems.”

Right now we are swamped with policy concepts that are being adopted on a wholesale basis without adequate evidence of either effectiveness or safety – an approach that is antithetical to the health sciences. Just a couple of examples of these schemes include ACOs, MIPS, APMs, and now VVP (to be covered soon in another Quote of the Day).

How have we been doing with this applied health policy that lacks scientific support? Costs continue to be outrageous while we have compromised access through the financial barriers of underinsurance; we have reduced choice through limited provider networks, and we have left tens of millions uninsured.

In sharp contrast are the proven policies inherent in a well designed single payer system. Our immediate attention should be redirected to enacting and implementing those policies instead. Once we have an efficient financing infrastructure in place we will have a much better foundation on which to use the tools of health policy science to improve efficiency and outcomes.

Instead of wasting our time with a parked cart on a fallow field, we should be nurturing the horse and sowing the field. In health policy, P4P and the other schemes have shown us that we are wasting our time with a horseless cart. Our pathetic results should be no surprise.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

Pay for performance: a dangerous health policy fad that won’t die

The latest research shows that this carrot-and-stick approach to improving health care doesn't work.

By Kip Sullivan and Stephen Soumerai
STAT News, Jan. 30, 2018

Pay for performance, the catchall term for policies that purport to pay doctors and hospitals based on quality and cost measures, has been taking a bashing.

Last November, University of Pittsburgh and Harvard researchers published a major study in Annals of Internal Medicine showing that a Medicare pay-for-performance program did not improve quality or reduce cost and, to make matters worse, it actually penalized doctors for caring for the poorest and sickest patients because their “quality scores” suffered. In December, Ankur Gupta and colleagues reported that a Medicare program that rewards and punishes hospitals based on arbitrary limits on the number of hospital admissions of heart failure patients may have increased death rates. On New Year’s Day, the New York Times reported that penalties for “inappropriate care” concocted by Veterans Affairs induced an Oregon hospital to deny acute medical care to its sickest patients, including an 81-year-old “malnourished and dehydrated” vet with skin ulcers and broken ribs.

And just three weeks ago, the Medicare Payment Advisory Commission recommended that Congress repeal a Medicare pay-for-performance program, imposed by Congress in 2015, because the program is costly and ineffective.

This bad news comes on top of a decade of less-publicized research indicting policies intended to reward and penalize doctors based on measures — most of them inaccurate — of their cost and quality. That research demonstrates that penalties against doctors:

Subjecting doctors and hospitals to carrots and sticks hasn’t worked for several reasons. The most fundamental one: Clinician skill is not the only factor that determines the quality of care. Consider one widely used performance measure: the percent of patients diagnosed with high blood pressure whose blood pressure is brought under control. Doctors who treat older, sicker, and poorer patients with high blood pressure will inevitably score worse on this so-called quality measure than doctors who treat healthier and higher-income patients.

This divergence between actual and measured skill will happen — regardless of economic incentives — because of factors outside physicians’ control. These include patients’ health, genes, income, ability and willingness to exercise, access to health insurance, and stressors at home and work. In other words, this “performance” measure is not a measure of quality but a mishmash of many factors, only one of which might be physician skill.

The use of such crude performance measures creates several destructive side effects, most notably harm to patients. This harm is inflicted in two ways. First, doctors who treat a disproportionate share of sicker and poorer patients are the most likely to be hit with penalties and therefore end up with reduced resources with which to treat their patients. Second, the certainty that sicker and poorer patients drag down doctors’ scores causes some doctors to avoid treating these patients, causing serious preventable illness and additional medical costs.

With all the bad news about pay-for-performance programs and their destructive effects, it would be easy to assume that the concept will soon die a well-deserved death. In an editorial accompanying the Annals of Internal Medicine study, Harvard’s Ashish Jha and Boston University’s Austin Frakt, both of whom had previously expressed sympathy for paying bonuses, argued that it was time to abandon pay-for-performance programs. The Annals study “should be the final nail in the coffin of the current generation of P4P [pay-for-performance],” they wrote.

Yet we aren’t celebrating the death of this policy because evidence has never mattered to its proponents. Bonus-and-penalty policies became wildly popular among policymakers and the insurance industry, even though there was no evidence supporting the fad when it took off in the early 2000s. Although research indicting pay for performance has piled up since then, policymakers and academic cheerleaders have either ignored it or argued that pay for performance only needs tweaking.

But their suggested tweaks, such as increasing payments to doctors, don’t work. A nationwide incentive and penalty program in the United Kingdom paid an extra $40,000 per year on average to family doctors and still failed to improve care.

In the early 2000s, pay for performance was endorsed by influential groups and individuals, including the Medicare Payment Advisory Commission and Donald Berwick, who was later to become President Obama’s administrator of the Centers for Medicare and Medicaid Services. These endorsements cited no research. As one review paper put it in 2006, pay-for-performance programs “are being implemented in a near-scientific vacuum.”

Despite the lack of evidence, proponents hyped the costly policy with great confidence. “There’s no question that pay for performance will work,” said Thomas Scully, CMS administrator under President George W. Bush, in 2003. Berwick, who had declared in 1995 that pay-for-performance policies are “toxic,” “naïve,” and “absolutely wrong,” asserted in 2003 that payment for performance should become “a top national priority.” Berwick’s 180-degree reversal illustrates how powerful pay-for-performance folklore had become by the early 2000s, even without a shred of good evidence.

Thanks to the groundless cheerleading by health-policy heavyweights, bonus-and-penalty programs spread like crabgrass through the American health care system. By the late 2000s, objective research on pay for performance began to trickle in. By the early 2010s, there was more than enough evidence to conclude that it does not work and even harms patients. Jha and Frakt concluded that practices that care for lower income or sicker patients received greater penalties, “essentially creating a reverse Robin Hood effect” that may have “exacerbated existing disparities in care.”

The Medicare Payment Advisory Commission and other critics of Medicare’s current pay-for-performance program have adopted a baffling response to this research. They argue that Medicare should terminate its program but that other organizations should continue to use the same crude pay-for-performance schemes that Medicare uses. Jha and Frakt, for example, justify the abandonment of pay for performance on the ground that “alternative payment models,” most notably accountable care organizations, “have exhibited more promising performance than standard P4P programs.”

We disagree. Accountable care organizations have failed just as badly as pay for performance, in large part because they, just like Medicare, dish out rewards and penalties using the same crude “performance” measures.

Performance-based pay may improve the sales of products like dishwashers and computer products. But it is irrelevant to the complexities and professionalism of good doctoring and other human services like education. The research on pay for performance in health care is now conclusive: It’s time to terminate these harmful bonus-and-penalty schemes.

Kip Sullivan, J.D., is a member of the Health Care for All Minnesota Policy Advisory Committee and the legislative strategy committee of the Minnesota Chapter of Physicians for a National Health Program. Stephen Soumerai, Sc.D., is professor of population medicine and founding and former director of the Division of Health Policy and Insurance Research at Harvard Medical School, where he teaches research methods.

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