“The issue of universal coverage is not a matter of economics. Little more than 1 percent of GDP assigned to health could cover it all. It is a matter of soul.”

Uwe E. Reinhardt
September 24, 1937 – November 13, 2017

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By Kip Sullivan, J.D.
The Health Care Blog, November 9, 2017

The managed care movement thrives on misleading words and phrases. Perhaps the worst example is the incessant use of the word “quality” to characterize a problem that has multiple causes, only one of which might be inferior physician or hospital quality. To illustrate with a non-medical analogy, no one would blame auto repair mechanics if 50 percent of their customers failed to bring their cars in for regular oil changes. We would attribute the underuse of mechanics’ services to forces far beyond the mechanic’s control and would not, therefore, refer to the problem as a “quality” problem.

But over the last three decades it has become acceptable among American health policy experts and policy-makers to characterize any measurement of under- or over-use of medical care, or any measurement of a medical outcome, no matter how poorly adjusted to reflect factors outside provider control, as an indication of “quality.” The widespread, inappropriate use of “quality” long ago set off a vicious cycle. It helped spread the folklore that the quality of America’s doctors and hospitals is awful, and that in turn was used to justify taking even more crude measurements of quality, and so on.

In the early 1990s when the measurement craze was limited to a few “quality” report cards, and grades on those report cards were not used to punish or reward doctors and hospitals, the craze posed less risk to providers who treated a disproportionate share of the poor and the sick. But over the last 15 years, inaccurate “quality” grades on report cards have been linked with financial penalties and rewards. Payment schemes that link rewards and punishments to quality scores were dubbed “pay-for-performance” (P4P) circa 2003. Payment schemes that link rewards and punishments to both quality and cost scores, which began to materialize in the late 2000s, were dubbed “value-based purchasing” (VBP) schemes. (“Value” implies both quality and price have been taken into account). These VBP schemes go by various names, the most important being “accountable care organization” and “medical home.” MACRA is one big VBP scheme.

A growing body of research indicates P4P and VBP schemes (I will refer to both from now on as VBP schemes) pose a much greater threat to the health of poorer and sicker Americans than the old report cards did. They do so because they pose a much greater threat to the financial health of the providers who treat poorer and sicker Americans. Because minorities represent a disproportionate share of our nation’s sickest and poorest, and because the responsibility for treating minorities falls disproportionately on a few clinics and hospitals, many of them staffed by minority health care professionals, VBP schemes punish minority providers for no reason other than that they see more minority patients.

In this article I will document what I have just said by focusing on black doctors as well as hospitals and ACOs that serve a large number of black patients. I will argue that those who promote VBP are guilty of racial profiling – punishing black doctors and other providers who treat a high proportion of black patients and, ultimately, black patients. We will see that three intractable conditions guarantee that VBP penalizes black providers and their patients:

(1) Black physicians, and a small number of hospitals, treat a disproportionate share of black patients;

(2) black patients tend to be sicker and poorer than white patients, which means the clinics and hospitals that treat a disproportionate number of them have to spend more on them and yet have fewer resources to do that, and are therefore less likely to score well on cost and quality measures; and

(3) administrators of VBP schemes are incapable of adjusting quality and cost scores accurately to take into account factors outside provider control, including the lower health status, lower incomes, worse insurance, worse access to transportation, and greater exposure to stressors such as crime and food insecurity suffered by black Americans.

Note that I am not criticizing measurement per se. Measurement is essential to quality improvement in every field of human endeavor. I’m criticizing inaccurate measurement and the reckless use of inaccurate measurement.

You can continue reading this article at the following link:

http://thehealthcareblog.com…

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Comment:

By Don McCanne, M.D.

There are many problems in our health care system. There are many problems in our nation. And they inevitably interact.

At PNHP we tend to focus on our health care financing system and the interaction it has with the delivery of health care. Application of solid health policy is important in correcting the deficiencies in these interactions. But today’s message suggests that health policy science may still be in its primitive stages, not so much because of the lack of intellect in the health policy community but rather because of lack of enlightenment that has been suppressed by the memes of the free market approach to our nation’s problems, expressed in the concept that the government’s legitimate role is merely to help the private marketplace work.

Of course the needs unmet by the marketplace could not be ignored and thus public programs such as Medicare for the elderly and Medicaid for the poor were enacted. Yet we are shoving the beneficiaries of these programs into market models such as private Medicare Advantage plans and private Medicaid managed care organizations. We are also inundating the delivery system with nebulous market concepts such as shifting from volume to value – an ill conceived concept with which we are moving rapidly forward with implementation when the policy science studies to date have failed to give much support for such concepts.

In the marketplace resources are allocated based on the prospect for optimal business success; health care is distributed based on ability to pay. In publicly administered health programs resources are distributed based on need. Public funds are already used to pay for 60 to 70 percent of health care in the United States, yet we place control of much of our resources in the private sector.

What does this have to do with practicing medicine while black? It should be obvious. The private sector is not inclined to direct its resources to endeavors that do not provide greater revenue opportunities, whereas publicly administered programs distribute based on need – not only for health care but for correction of all of the other social deficiencies that have resulted in worse outcomes for the poor, a sector disproportionately represented by minorities.

A quick look at the current tax proposals tell us where we are. The greatest economic problem we face today is the transfer of income and wealth from the struggling masses to the plutocrats at the top. Yet the proposals before Congress would increase that upward transfer when the need is for public policies to improve social justice. This need screams out for progressive public financing rather than the regressive policies proposed.

We need to get our public priorities in order. We should be rewarding black physicians who dedicate themselves to caring for black patients and other ill-served populations who are sicker and poorer and thus a greater challenge to care for. Instead we penalize these virtuous physicians through payment reductions based on quality scores designed for business models rather than patient service models. Yes, we punish them. That isn’t right.

Changing to a more equitable financing system – an improved Medicare for all – is crucial, but it is only a first step. Since it is imperative that we also address these other social and economic issues, we’ve got a lot more work to do.

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By Valerie A. Lewis, Ph.D., Elliott S. Fisher, M.D., M.P.H., and Carrie H. Colla, Ph.D.
The New England Journal of Medicine, November 9, 2017

Despite aggressive targets set by Medicare for the spread of value-based payment arrangements and widespread agreement on the importance of delivery-system reform, progress toward lower spending growth and a transformed delivery system has been slow. Accountable care organizations (ACOs) are a prime example: nearly 1000 organizations operate as ACOs, but they have generated limited savings.

Myriad context-specific factors affect the performance of individual ACOs, but few characteristics have been shown to systematically explain ACO performance. We identified four cross-cutting explanations for the failure of ACOs to achieve savings right away (or at all) — two economic and two organizational. Economic explanations emphasize the breadth and depth of financial incentives in ACO programs, whereas organizational explanations emphasize organizational processes and complexity.

Economists worry about weak incentives. In the Medicare Shared Savings Program, nearly all participants opted to receive a bonus if they generate savings but bear no financial responsibility for losses. Transitioning providers to sharing in downside risk may result in greater behavior change and savings, although the literature on this subject is mixed. A second explanation suggests that having more patients covered by ACO-like contracts may strengthen incentives. Providers with few patients covered by ACO-like contracts face a problem colloquially described as “having a foot in two canoes.” Initiatives that generate savings in the care of a provider’s ACO patients will reduce income from its fee-for-service patients — an effect that led some integrated networks to fail during the managed care era. Until providers reach a tipping point in the number of patients covered by risk-based contracts, it will be hard for organizations to generate substantial savings.

We believe that all ACOs would benefit from having more patients covered by ACO-like contracts, something we routinely hear from providers. Lack of downside risk may help explain the performance of integrated delivery systems: complex existing systems might require stronger financial incentives to change their behavior. In contrast, the increasing proportion of physician-group and hospital-coalition ACOs achieving savings over time suggests that sharing in downside risk may not be necessary for these types of ACOs to generate cost savings if they are given enough lead time.

Economic explanations suggest that the key issue is motivation: providers know how to save money, but they need financial motivation to change their behavior. An alternative set of explanations draws on organizational theory and literature and suggests that providers either don’t know how to achieve savings (at least initially) or that they have to focus on other things — such as organizational, start-up, and compliance work — before they can implement the changes necessary to save money.

One organizational explanation for the progress that different kinds of ACOs have made toward generating savings relates to knowledge: when joining an ACO, independent physician practices with little knowledge of new care models may have ideas about how to save money, but they may need time to work out what to do and how to do it. Such groups may need to explore care management models or learn how to improve care transitions. This explanation may be particularly apt for outpatient-physician–practice ACOs and some hospital-coalition ACOs that are new to the game.

Another organizational explanation is that the complexity of ACOs affects their performance. First, most ACOs are not preexisting organizations; they are collections of independent providers, such as a community hospital and local private-practice physicians who decided to pursue an ACO contract together. These new organizations must accomplish a great deal of foundational work, such as forming a board; determining how to share bonuses; and completing tasks that require internal coordination, such as reporting quality measures. Then they must agree on and implement a joint strategy for pursuing cost savings. In these ACOs, we expect that progress toward generating savings may be delayed, because setting up a functional ACO will initially require attention and effort.

Second, organizational complexity probably challenges integrated systems. Although all ACOs must learn how to change ingrained practices among clinicians, the large, complex, and diverse networks of providers in an integrated delivery system present an added challenge for clinical transformation. Overcoming the inertia in these systems may be like trying to turn a large battleship. In contrast, outpatient-physician–practice ACOs are small and have a simple organizational structure, which probably makes them more nimble and able to more quickly implement (or discard) new initiatives — and generate savings. Newly formed coalition ACOs must spend time developing organizational infrastructure, but these groups aren’t encumbered by existing organizational processes.

We believe these explanations support taking a nuanced approach to encouraging, motivating, and rewarding providers. For all providers, moving a greater share of patients to value-based payment arrangements may support efforts to transform care and remove the barrier of conflicting incentives. Larger, integrated systems may benefit from a wider breadth of incentives and from stronger incentives that include sharing in downside risk. Shifting too quickly to risk sharing for newly formed ACOs, however, could backfire: among a subset of ACOs, it may be critical to allow providers enough time to settle into new organizational forms and develop and implement strategies in a deliberate and thoughtful manner. ACOs are as diverse as the U.S. health care system, and saving money in health care is notoriously hard. Developing policy approaches that accommodate this diversity will be important for payment and delivery reform to achieve its potential.

http://www.nejm.org…

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Comment:

By Don McCanne, M.D.

Elliott Fisher developed the concept of “accountable care organization,” proposing that health care providers across a continuum could improve quality and more effectively control costs by sharing accountability for patient care. It sounded like a reasonable approach and it rapidly gained traction as various entities, with public and private support, implemented them even though there was little understanding as to exactly what they were.

There are now a plethora of reports, including this one, that confirm that, whatever they are, they are smoldering along and really not delivering on their promise of higher quality at lower cost. Most of these reports also suggest that the grand experiment should continue because “there must be a pony in there somewhere.” Unfortunately, they are largely ignoring the diversion of effort and resources to these entities while not accounting for the greater economic losses from the administrative excesses nor for the impairment resulting from an increase in physician burnout.

This certainly does not mean that we should discontinue efforts to improve quality and reduce wasteful spending, but there are more effective ways to do this. One of the more important measures would be to enact a well designed single payer national health program. The administrative savings alone is far more than ever could be achieved through any iteration of an accountable care organization. Also, establishing a health care financing system that places the patient first creates a financing infrastructure that automatically drives quality.

Dr. Fisher and his colleagues deserve credit for their ongoing efforts to encourage changes that would improve value in health care through higher quality while reducing wasteful services. But we have enough experimental data now that we should no longer defer enactment of single payer merely because we hope that accountable care organizations will fix our system. They will not. Enough minds have cranked out enough ideas that we know that there is no magical accountable care infrastructure in our future that will produce the dramatic changes we all wish would occur.

Let’s get on with enacting an improved Medicare program that covers everyone. Under such a system we can continue to strive for higher quality and reduce care that is not beneficial, but in a system that brings greater satisfaction to patients and to their health care professionals.

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By Adam Gaffney, M.D.

From the Introduction

Thus, where the human right to healthcare is indeed a recent rhetorical convention and ethical notion, ideas and practices around the right to healthcare – that is, around healthcare universalism – stretch back considerably further. Yet a conceptualization of a “right to healthcare” developed over time in tension with the far more typical practice of providing healthcare as a commodity or consumer good. In some moments and places, healthcare was conceived of and provided by right on the basis of needs; more typically, it has been a service sold on the basis of means, like other commodities.

The first aim of this book then is to trace what might be termed a healthcare “rights-commodity dialectic” through history…

The second aim of the book is to examine how healthcare rights are realized. Where and why rights to healthcare goods were fought for – and achieved – relates little to changing interpretations of rights and more to political struggle and economic change. Though ideas about equality have existed since antiquity, constituencies strong enough to challenge social, economic, and, indeed, healthcare inequalities have usually been too scattered over time and space to challenge the status quo in a meaningful way. Potent proposals for social welfare, including healthcare, most often arose when such constituencies became sufficiently mobilized to at least be perceived as a credible threat: examples in Europe include (among others) the eras of the English Civil War, the French Revolution, the Revolution of 1848, and the years following the Second World War; in the United States, such periods include the New Deal era and the Civil Rights era; and in the developing world, as we will see, revolutionary moments during the post-colonial period were most critical (to generalize broadly). The emergence of such political challenges, in turn, can only be understood in the setting of innovations, disruptions, and profound strains imposed by an economic system that evolved not gradually, but in great fits and starts, whether that be the advent of industrial capitalism in the nineteenth century or of economic crises like the Great Depression in the twentieth.

Similarly, the successes and the failures in the achievement of the human right to healthcare in the twenty-first century – the healthcare right-commodity dialectic today – have to be understood in the context of the latest stage of global economic history, what is often called “neoliberalism.” The mobilization of corporate power in the past few decades has often served to substantially favor the commodification of healthcare services throughout the globe, to constrain the vision of universal healthcare reform in the United States. Still, the story is by no means all negative: during these very same decades, there have been activist movements and even major political achievements that have helped enhance the right to healthcare, in ways small and large, in countries throughout the world.

The fate of the “right to healthcare” – whether it will rise to a universal reality, remain a privilege for some classes or some nations, or shrink to little more than pleasant but irrelevant rhetoric – will, in the final analysis, depend on the outcome of such struggles.

From Chapter 3: Public Health, Social Medicine, and Industrial Capitalism

One day during the cold Scottish spring of the year 1838, three impoverished women – all out of work, all with young children – were seen by the physician William Pulteney Alison. Alison cam from an established family and was a very prominent physician in Edinburgh. Yet throughout his career, Alison had also served as a physician to the poor.

All of the women, he later recounted, were living in a “miserable state of destitution.” There was little relief to be had from the public purse: the nineteenth-century Scottish Poor Law, even in comparison to the English Poor Law, was notable for its draconian frugality and largely voluntary system of funding. And so, when the women were denied admission to the local workhouse, they – and their infants – were essentially left to their own meager resources. After several weeks of “severe suffering,” as Alison noted, all of the children – presumably from some combination of cold and malnutrition – were dead.

Alison told this story in his 1840 “Observations on the Management of the Poor in Scotland, and Its Effects on the Health of Great Towns.” In this book, he does not simply bemoan the inevitable sadness of life, but instead counters the establishment Malthusian notion that attempting to improve the condition of the poor through public aid would not be useful, and indeed would only worsen their moral condition. Alison seemed to find such arguments repulsive. Reflecting back on his encounter with the three women and their children, he thought the neglect of the poor was shameful, and that the resultant loss of life was as preventable as it was reprehensible. “If any one supposes,” he wrote with more than justified acidity, “that the effect of this sacrifice of innocent life was to improve the morals of these women or their associates, I can only say, that he knows nothing of the effect of real destitution on human character and conduct.” What they deserved was neither moralistic rejection nor the unpredictable provision of voluntary charitable relief, but instead the supply of relief by public provision, by way of right. Alison advocated a relatively more expansive system of welfare for Scotland, which would be supported by taxation and include medical staff to treat the sick poor.

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In March 1848, unrest broke out in Berlin, a turn of events that brought (Rudolf) Virchow, eager to be involved, back to his city. Indeed, soon after his return, Berlin was in full revolt, and he did not hesitate to join the barricades. Following the initial success of the Berlin revolution, Virchow then became involved in the Prussian “medical reform” movement, and with a friend, Rudolf Leubuscher, started a journal of that name. In the first issue of his journal, Virchow put forth the egalitarian aims of the movement. “Medical organization is to be reformed not so much for the benefit of physicians as for that of the patients,” he wrote, and later continued with the argument that “physicians surely are the natural advocates of the poor and the social problem largely falls within their scope.” In subsequent issues, his articles dealt with a wide array of social and political issues connected to medicine. He argued against capital punishment, for the gradual end of war, and in favor of a variety of reforms ranging from social welfare and the regulation of working hours to periodic physician recertification. He also touched poignantly on the notion of a right to health and healthcare that government is responsible to ensure, arguing that “the concept of all having equal rights to healthful existence follows form the definition of the state as the moral unity of its members, i.e. of individuals enjoying equal rights and obligated to act in solidarity. The endeavor of the state to implement these rights mainly falls to the Public Health Services.”

https://www.routledge.com…

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Comment:

By Don McCanne, M.D.

There is much discussion today about the right to health care. Adam Gaffney provides us with a thoroughly researched history of the sociological and economic considerations of the concept right up to the present day. He provides us with a springboard not simply for the rhetorical dialectic, but, more importantly, for what use we make of our knowledge of what has transpired and use that to make this a better world, not just for our health and health care, but with the more ambitious goal of achieving social justice for all.

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By Andrew Samwick
National Bureau of Economic Research, November 2017

Abstract

Recent federal legislation has linked the price paid for health insurance benefits to current income. Under the Patient Protection and Affordable Care Act of 2010, individuals and families with income as high as 400 percent of the federal poverty level are eligible for premium tax credits that limit their health insurance premiums to under 10 percent of their income. Under the Medicare Modernization Act of 2003, higher-income beneficiaries face income-related premiums over three times the standard premium for Part B coverage. For workers at or near retirement age, means-testing based on current income provides an incentive for early retirement, dissaving, and income manipulation, raising concerns about the efficiency of such means-testing. Further, current income is subject to short-term fluctuations, making it a noisy predictor of ability to pay. Using the Health and Retirement Study and linked Social Security earnings histories, this paper introduces a measure of lifetime income that compares favorably to current income as a basis for means-testing. It offers less short-term variation in premiums while improving incentives for pre-retirement work and saving.

From the Conclusion

Policy makers must balance equity and efficiency considerations when designing social insurance programs. Both the Medicare Modernization Act of 2003 and the Affordable Care Act of 2010 introduced means-testing of federal health entitlement benefits based on current income. Means-testing based on current income for those near or in retirement has several disadvantages as a basis for entitlements: it provides incentives to lower income by reducing saving and work; it provides incentives to manipulate income or change its composition; and it bases transfers on a noisy measure of ability to pay. Against these disadvantages is the possibility of providing insurance against adverse shocks to current income. This paper provides a first analysis of the extent to which the provisions of these laws have introduced these disadvantages relative to means-testing based on Medicare Average Earnings, a measure of lifetime income based on earnings subject to the Medicare payroll tax.

This study has illuminated the need to measure and evaluate the extent to which means- testing on current income introduces economic inefficiencies and inequities.

To the extent that the use of current income is shifting behavior in unproductive ways, means-testing based on lifetime earnings can be considered as a potential alternative.

http://www.nber.org…

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Comment:

By Don McCanne, M.D.

This paper is important because it demonstrates the counter-intuitive inefficiencies and inequities of means-testing federal health benefits, particularly for Medicare Part B premiums and for premium tax credits under the Affordable Care Act. The author suggests that this unfairness can be mitigated partially by using lifetime earnings instead of current earnings to determine the means-tested premium contribution for these federal programs. But this ignores the most serious flaw in using means-tested premiums and that is that premiums are used at all.

In an equitable health care system the financing of health care and the delivery of health care services should be totally separated. Everyone should have equal access to the health care delivery system based on medical need, with income or wealth playing no role. The financing of the system should be based on ability to pay. The latter is easy since the universal risk pool can be financed through progressive taxes.

A wealthy nation should be able to support, through equitable taxes, a health care system that has adequate capacity and provides appropriate access to primary care and specialized services. Charging premiums decreases equity since the burden is inversely related to income. Means-testing the premium reduces that inequity but it also reduces the political support of higher-income individuals who might resent paying more. Since the wealthy have a much greater political voice, there likely would be a greater effort to further privatize Medicare, fragmenting the Medicare Advantage market into Cadillac plans for the wealthy and an underfunded, spartan public plan for the masses.

One of the improvements for an Improved Medicare for All should be to eliminate any premiums and cost-sharing so that everyone has equal access to health care regardless of means.

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