Posted 2/9/12 on Health Care Reform Update
The Congressional Budget Office’s January issue brief on the failure of almost all of more than thirty Medicare demonstration projects to cut costs generated considerable discussion. Judging from the reactions of some health care policymakers, the CBO’s findings came as a surprise.
They shouldn’t have.
Aside from the fact that the results of virtually all of the demonstrations had previously been published, the failure to reduce Medicare spending is exactly what should have been expected.
Let’s take a look at the three payment models used by CMS for the demonstrations:
- Regular Medicare reimbursement plus a guaranteed no-risk fee or bonus for participating
- Regular Medicare reimbursement plus a fee or bonus dependent on performance
- Bundled payment for demonstration services
Continue reading “Medicare Providers Don’t Want Less Revenue” →
Posted 2/1/12 on the Disease Management Care Blog
Approximately 15 years ago, the Disease Management Care Blog was a speaker at a conference with an audience mostly made up of managed care leaders. It boldly argued the nation’s disease management vendors were going to help put the nation’s health insurers out of business by simultaneously assuming risk and lowering costs.
Hows that for chutzpah. The DMCB was never invited back, but not because it isn’t an outstanding conference speaker who deserves fat fees.
It was because it was utterly wrong.
And so is this online commentary on accountable care organizations (ACOs) courtesy of the The New York Times. In it, Dr. Ezekiel Emanuel boldly predicts that by 2020, ACOs will drive health insurance companies out of business. They’ll do that by assuming full risk, dropping patient barriers to care, coordinating services, fostering communication, promoting health, banning fee-for-service, increasing efficiency, relying on evidence-based care, being locally responsive and competing against other ACOs on cost and quality
Dr Emanuel is being astonishingly overconfident for four reasons.
Continue reading “A Thousand Dollars Says Dr. Ezekiel Emanuel Is Wrong About ACO’s Long Term Prospects” →
Posted 10/31/11 on HealthBlawg
The final Accountable Care Organization regulations are out, the initial flurry of commentary is out (including my own ACO webinar with simultaneous #ACOchat tweetchat –available for download/replay soon; slides here now: “ACOs, Bundled Payments and the Future of Health Care“), and we can now all catch our collective breath and contemplate the draft vs. final ACO regulation comparisons, the meaning of this new, final set of regulations, guidances and statements from CMS, FTC, DOJ, OIG, and IRS on ACOs and Medicare Shared Savings Programs, and all of the attendant antitrust, antikickback, Stark, and other fraud and abuse matters, and of course tax issues.
So, now that these final regulations are out, and the mythical characteristics of the ACO will soon be dispelled (see under: unicorn), I propose a new animal kingdom metaphor for discussion of Accountable Care Organizations:
The Camel’s Nose is in the Tent.
The definition of a camel, as those of you who tuned into my ACO webinar already know, is a horse designed by a committee. And, given the nature of the legislative and rulemaking processes, that’s exactly what we have before us – a camel.
Continue reading “Accountable Care Organization Regulations – The ACO is a Camel, Not a Unicorn” →
To muted applause and some sighs of relief from providers, HHS released the final ACO regulations last week.
The final version superseded the much-criticized draft regs published several weeks earlier. This previous draft was widely regarded as imposing overwhelmingly complex rules for the chance of sharing in any gains. As one commentator noted: “The promise of integrated, coordinated and cost-effective care provided by hospital-physician networks had run into the reality of having to invest millions dollars with a questionable ROI, a complex maze of up and downside risk calculations, reams of burdensome quality measures and overlawyered antitrust regulations.”
So the final less-unwieldy rules have been relatively well-received. On the other hand, fundamental questions about the viability and impact of ACOs remain:
- Will the potential “bonuses” justify the financial investments? Major hospital systems (likely to be the primary ACO sponsors) seem to be willing to play so long as the regulations are not too onerous. And as with other HHS initiatives, those willing to participate are likely to be those who are most confident that they can readily cut costs and gain the savings bonuses. On the other hand, ACOs that aren’t able to do a much better job of coordinating care will be unable to recoup their investments.
- Will there be losers? Physicians and hospitals who don’t participate in ACOs may find HHS squeezing rates to be in line with costs of competing ACOs. And even in successful ACOs, hospital staff and individual physicians may be in danger of losing their jobs as the ACOs try to reduce variable costs in order to achieve the “bonus-eligible” level.
- Why are hospitals so interested in ACOs? It’s a great opportunity to tie physicians more tightly, thereby guaranteeing referrals and admissions and strengthening the hospitals’ rate negotiating positions. At the same time, the hospital risk is small; the ACO component is expected to be tiny relative to the size of the Medicare program, and with beneficiary assignment made prospective in the final rules, the costs and risks for participating providers are even less.
- Will ACOs really enhance cost-effectiveness? In some cases the answer will be yes, with the ACOs achieving the objectives of their government designers. In other cases, however, the pros of better integrated care will be more than outweighed by the cons of quasi-monopolistic hospital systems able to dictate their terms to insurers and other payers.
There is one more fundamental problem with the present ACO design: by randomly assigning Medicare beneficiaries to ACOs, much of the opportunity to impact the highest cost cases may be lost. A more targeted approach might begin to show the savings that the Medicare program desperately needs. On the other hand, HHS’ track record of success with its chronic care demonstrations gives little confidence that the government could indeed achieve these potential savings.
The bottom line seems to be: ACOs will generally demonstrate the virtues of integrated care (something that was known already), while in too many cases encouraging monopolistic hospital systems to become even more entrenched.
Roger Collier used to be CEO of a large health care consulting practice. Now he writes at Health Care Reform Update.
Posted 10/20/11 on Forbes
In a high-stakes political, clinical and economic poker game that goes by the name of Accountable Care Organizations (ACOs), the Centers for
Medicare & Medicaid Services (CMS) has just issued a call for doctors and hospitals to grab some chips and ante up.
The set-up goes like this: one of the biggest potential changes in how health care is actually delivered contained in the Accountable Care Act was ACOs.
They’re voluntary, but they allow doctor- or hospital-led organizations that take responsibility for coordinating the care of at least 5,000 Medicare beneficiaries to get reimbursed at a higher rate for providing better-quality, lower-cost care. It’s supposed to be a win-win-win for providers, patients and taxpayers and part of a more general move towards “value-based purchasing.”
Continue reading “CMS Wants Docs To Ante Up To CMS Poker Game” →
First posted 9/29/11 on e-CareManagement Blog
A just released study from Aon Hewitt and Polakoff Boland — 2011 Employer Driven Accountable Care Organizations Survey Report— examines employer attitudes toward ACOs. The report provides useful insights into an area that hasn’t yet received much attention.
A couple tables in particular caught my attention.
(click on the graphic to view a larger version)
Key findings in this table include:
- Hospitals come out lowest (employers are only 30% very/somewhat confident in hospital driven ACOs)
- Large medical groups come out slightly higher (31% very/somewhat confident)
- Involving a health plan significantly increases employer confidence for both hospitals and large physician group ACOs:
- Confidence in a hospital/health plan ACO increases to 48% very/somewhat confident (up from 30% with hospital alone)
- Confidence in a medical group/health plan ACO increases to 53% very/somewhat confident (up from 31% with medical group alone)
- A large percentage (25–26% answered Do Not Know) to all options
Continue reading “Employers Perceive that Health Plans Add Value to ACOs” →
First posted 9/19/11 on Disease Management Care Blog
Adding to a continuing drumbeat of skepticism about Accountable Care Organizations (ACOs), Gail Wilenksy offers a “sobering” Perspective in the New England Journal about their underlying business model. She draws on the lessons of the Physician Group Practice Demonstration, where – despite “glowing” press releases – the financial savings were decidedly elusive. Summarizing things nicely, Ms. Wilensky points out that only 2 out of the 10 Demo participants were able to achieve savings in the first year of operation and that only half of the group had savings after three years.
Why did this happen? She agrees with many of the criticisms noted by your Disease Management Care Blog: there were some important “design” issues involving the comparator groups (the use of “rural” settings may have set the baseline too low), CMS struggled with providing timely claims data and the risk adjustment methodologies may have fallen short (for example, the Demo participants had high-cost specialty services which may have inflated their cost).
While Ms. Wilensky previously served in a Republican administration, the Disease Management Care Blog has always found her to be a reasonable pundit. That’s why it’s telling that she concludes her paper with a damning observation candy-wrapped in bureaucrat-speak: as currently envisioned, she says, the proposals “seem inconsistent with the hopes that have been pinned to ACOs as a viable alternative to both traditional Medicare and traditional managed care.”
Jaan Sidorov MD writes at Disease Management Care Blog.
First published 6/3/11 on Health Blawg
There has been a significant outcry against the proposed ACO regs: everything’s wrong and nothing’s right about them, or so some would have us believe. (The comment period is still open, and CMS is still soliciting input; much of the outcry is a form of posturing and negotiation … not that there’s anything wrong with that.)
Today’s “nattering nabobs of negativism” focus on: the estimated price tag for complying with the regulatory requirements (IT and other infrastructure incuded), the slim chance of success by ACOs in righting the wrongs of decades of bloat in the health care system, the premature pledging of allegiance to an idea only partly proven through the PGP demo, the likelihood of failure due to the whole endeavor’s being tied to FFS reimbursement, on the one hand, and due to exposure of ACOs to downside risk, on the other, the unreasonable reliance on dozens and dozens of quality measures . . . and the list goes on. For further detail, see, e.g., David Dranove’s recent post decrying unproven theories baked into the ACO program (with a link to info on the PGP demo’s results, and differing interpretations of those results; check out the lively discussion in the comments to Dranove’s post on The Health Care Blog), Jeff Goldsmith’s opposition to ACOs as conceived in the ACA (and alternative proposal discussed in the linked post), and Mark Browne’s search for a few good quality measures. (This has been a recurring theme for me as well; I would love to find six or eight meta-measures that predict all others; Mark links to the AHA’s comments on the ACO rule, which are worth a read).
Continue reading “Don’t Kick a Unicorn When It’s Down” →
First published 5/17/11 on HealthBlawg
In the current all-ACO, all the time, health care policy news cycle, we’ve been inundated with declarations that the ACO is dead, because a handful of big boys say they don’t want to play.http://healthblawg.typepad.com/
First published 5/11/11 on [Not] Running a Hospital
Cheryl Clark and her colleagues at HealthLeaders Media have put together a special report on the industry’s response to CMS’ proposed Accountable Care Organization regulations. This a helpful survey that supplements unsupported comments from people like me. Let’s start with a reminder of the general scope of the regulations:
Groups of ACO professionals with a minimum of 5,000 beneficiaries would be permitted to apply for one of two risk models in order to benefit from shared savings over the three-year program. In the first model, providers would share savings of 50% in all three years, but would be at risk in year three for any losses that exceed 2% of the benchmark established by the Centers for Medicare & Medicaid Services.
Continue reading “Cheryl et al Report on CMS’ ACO Regulations” →
First published 4/19/11 at Gooz News
Michael Millenson, a health care consultant who many moons ago worked as I did at the Chicago Tribune, has offered a scathing critique of the Center for Medicare and Medicaid Services’ proposed rules for setting up accountable care organizations (ACOs), which are health care reform’s primary delivery system reform. Says Millenson on the Health Care Blog:
Continue reading “ACO Rules “Impenetrable”” →
First published 4/19/11 on Kaiser Health News
The ACO fairy tale is drawing perilously close to an unhappy ending.
The government’s long-awaited draft regulations on Accountable Care Organizations have brought a dose of ugly reality to a concept that’s always seemed coated with a patina of pixie dust. Unless those regs are substantially changed before the clock strikes Jan. 1, 2012 — the statutory date for ACO implementation — Cinderella’s going to turn back into a scullery maid and the horse-drawn carriage transporting her to the Health System Transformation Ball will be revealed as nothing more than four mice and a pumpkin.
Continue reading “ACO Fairy Tale Faces a Rumpelstiltskin Moment” →
First published 4/10/11 on Health Policy and Marketplace Review
Last week, I posted that I was disappointed in Paul Ryan’s health care budget proposal because it lacked cost containment ideas other than the usual conservative reliance upon the market and defined contribution health care.
In my last post, Why ACOs Won’t Work, I argued that the latest health care silver bullet solution, Accountable Care Organizations (ACOs), are just a tool in a big tool box of care and cost management tools. But, like all of the other tools over the years like HMOs and IPAs, they won’t be used as they were intended because everybody—providers and insurers—can make more money in the existing so far limitless fee-for-service system.
How do you make the American health care system efficient?
You change the game.
Continue reading “Changing the Game on Health Care Costs” →
First published 4/7/11 on Health Policy and Marketplace Review
First, I think Accountable Care Organizations (ACOs) are a great idea. Just like I thought HMOs were a good idea in 1988 and I thought IPAs were a good idea in 1994.
The whole notion of making providers accountable for balancing cost, medical necessity, appropriateness of care, and quality just has to be the answer.
But here’s the problem with ACOs: They are a tool in a big tool box of care and cost management tools but, like all of the other tools over the years like HMOs and IPAs, they won’t be used as they were intended because everybody—providers and insurers—can make more money in the existing so far limitless fee-for-service system.
Continue reading “Why ACO’s Won’t Work” →