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Making Accountable Care Organizations Great Again

The Healthcare Blog - Sat, 10/22/2016 - 14:43

Test your Accountable Care Organization knowledge:

  1. Select all of the options that are True
  • If you belong to an ACO you qualify for the alternative payment model track in MACRA
  • Most ACO’s are enrolled in to a two sided risk model – (They share profits and losses with Medicare)
  • In 2015, ACO’s saved Medicare more than a billion dollars
  • None of the above

I have been mystified by Accountable Care Organizations ever since I first heard of them almost a decade ago.  ACO’s have had a hallowed place in the world of health care policy for some time now.  Everyone knew they were coming, and everyone knew they would be the answer.  Traditional fee for service medicare that paid based on volume was thought to be the driver of rising health care costs.  Regional variation in medicare expenses even when controlling for underlying population risk suggested that lower costs were possible without sacrificing quality.  Imposing a capitated model of reimbursement tied to quality metrics seemed to be the answer and ACO’s were the vehicle to make this happen.

I was on board, though I freely admitted to everyone who asked, that I had no idea how they would work.  To be fair, I was far more stressed about learning coronary anatomy in the cath lab, than I was about health care policy.  By the time ACO’s finally started in 2012, I had been in practice for a few years, and I was paying slightly more attention.  The passage of time now allows for the assessment of the value delivered by ACO’s and is a health care policy researchers dream.  Clinicians, however, continue to be blissfully unaware of the construct. ACO’s exist in some alternate universe that is interesting and worthy of name dropping to establish your policy-cred, but even the coarse details are shrouded in mystery for most clinicians and patients.  What follows is a brief primer and analysis of some recent data that doesn’t require an understanding of linear regression modeling.

Basic Background

ACOs are organizations that consist of groups of providers made responsible (accountable) for the cost of patients, and the quality of care provided.  There are two ACO programs: Pioneer and the Medicare Shared Savings Program (MSSP).  The Pioneer program is an initiative that springs from the Innovation center at CMS (CMMI) – it was created by the Affordable Care Act (passed in 2010) to test new models of health care delivery and payment.  And test they have.  32 high performing organizations were carefully selected to participate in this model in 2012.  By 2015, only 12 remain and consequently the only news I see about Pioneer ACO’s is about the latest dropout from the program.  The lessons of the failure of the Pioneer program, however, are quite instructive.

The Pioneer Program

The Pioneer programs were set up to test how to break the the-more-you-do-the-more-you-make fee for service, volume based approach that has been the hallmark of Medicare since its inception.  To do this, ACO’s were assigned a capitated amount per attributed patient – a so called benchmark.  This benchmark was calculated based on CMS expenditures for patients in the 3 years prior as well as expenditures for the national Medicare population.  At the end of the year, actual medicare expenditures for each ACO would be compared against their benchmark.  The Pioneer model was testing two sided risk – spend less money than the benchmark and you received a share of the savings, spend more money than the benchmark and you may owe money to CMS.  In order to tie value to the cost side of the equation, Pioneer ACOs were also graded via ~30 performance metrics.  The results on the financial front were troubling from the start.

In 2012, 19/32 (60%) of the carefully selected high performing organizations ended up spending more money than their expected benchmarks.  Because of rules I do not fully understand only one of the ACO’s that ‘overspent’ relative to their benchmark had to share the losses and pay CMS.  In 2013, 23 ACOs remained, 17/23 spent more than their expected benchmark, and 6 had to pay medicare $ values ranging from $1 million to $2.8 million (Figure 1).  Faced with the possibility of these types of losses, health care systems did what you would do if you were playing a game where you had the potential to lose a few million dollars at the end of the year – they stopped playing the game.  By 2015, only 12 ACO’s remain, and even in this best of the best group 1 ACO spent $14 million more than their benchmark said they should.

Figure 1. 2013 Pioneer Data (Source: CMS)

This is not what healthcare systems signed up for.  The health systems were probably under the impression that providing high quality care as measured by metrics would result in financial rewards.  They were gravely mistaken.  Lowering costs has little to do with hiring a performance improvement team to make sure that ACO metrics were being completed (ACO metric #18 – screening for clinical depression).   Not surprisingly, health systems complained as they were exiting the pioneer  program about how benchmarks were calculated – a relevant complaint that I’ll discuss shortly.

Medicare Shared Savings Program (MSSP)

Unlike the shrinking Pioneer program, the other major ACO program – the Medicare Shared Savings Program (MSSP) has been adding participants by leaps and bounds.  It should be easy to guess why.  MSSP programs introduced two tracks initially.  Track 1 involves a one-sided risk model. I call this the heads-I-win-tails-you-lose-track.  ACO’s in this track may share in what they save relative to their benchmarks, but have no penalty if they overspend.  This is like going to a casino where you can only win money – losses are on the house.  What a delicious world that would be!

Track 2 was the non fantasy world of the Pioneer ACOs – a 2 sided risk model where the shared savings were slightly higher than track 1, but spending too much meant paying millions of dollars back to Medicare.  Track 1 was always meant as an on-ramp to track 2. The idea was that organizations could test and refine their care models without significant downside risk initially before maturing eventually to take on the greater downside risk in track 2.  Of the 393 ACO’s data is reported on in 2015, only 3 chose track 2.

The same model that applied in the Pioneer model applied here: ACO’s were compared to benchmarks to decide on savings, and quality metrics were required to be reported.  The Pioneer experience should have predicted the outcome here.  If mature organizations cherry picked by Medicare largely failed, what chance would the MSSP programs have?  The 2015 MSSP performance on the currently participating 392 ACO’s is available here for perusal.  Ashish Jha, a prominent public policy researcher also provides an excellent summary of the data on his blog here.

MSSP 2015 Results

There were 203 ACOs that spent less than their medicare benchmark and thus ‘saved’ money (winners).  189 ACOs spent more than their medicare benchmark and lost money (losers).  There were more winners than losers in 2015, and, on the face of it, ACO’s in a one sided risk model appear to have saved the taxpayer $429 million (Table 1)

Savings (Losses) ($) Winners (203) 1,568,222,249 Losers (189) -1,138,967,553 Total 429,254,696

Table 1. MSSP 2015 ACO Savings/Losses

Recall, however, that Medicare was to share their savings with the health care systems.  This meant that about half of the $1.5 billion saved was returned to the winners in the form of an end of the year bonus.  Medicare paid out $645 million dollars to ACOs in shared savings in 2015.  Account for these payments and the taxpayer is in arrears to the tune of $216 million dollars in 2015 because of ACO’s (Table 2).

Savings (Losses) Winners 1,568,222,249 Losers -1138967553 Shared savings payments to ACO’s -645543866 Net Medicare savings (loss) -216,289,170

Table 2. MSSP 2015 Savings/Losses inclusive of Medicare shared savings payments

Numbers should bring certitude, but in this case that certitude would be misplaced. The savings are somewhat of an illusion.  Winners and losers are declared based on a made up number – the benchmark.  This benchmark is Medicare’s best guess of what the assigned/attributed patients should have cost.  No one can truly attest to the veracity of the benchmark.  A health system could invest in all the right infrastructure, hit all the quality metrics asked of it, but still come out a loser if the benchmark gods give them a bad  number.  It is of interest to note that your chances of being declared a winner are much higher if your benchmark is high.  In other words, the traditionally more expensive per capita regions were the most likely to demonstrate savings.  Conversely, low cost regions were much more likely to lose money. (Figure 2).

My advice to health care systems in regions where medicare benchmark expenditures are < $10,000 / capita? Stay in a one sided risk model (MSSP track 1) as long as you can!

Figure 2. Winners and Losers by per capita benchmark

The Delaware Valley ACO

There is no better example of the capriciousness of the selection of winners and losers than the former Fresh Prince of Bel-Air’s home turf – Philadelphia.  This now happens to be my neighborhood, and the home of 9 ACO’s.  The results for 2015 for the group were fairly poor.  Only three of the ACO’s saved money – two by razor thin margins – and no one qualified for a bonus.  The largest ACO – the Delaware Valley ACO (DVACO) – with ~70,000 patients attributed – spent more than $15 million over their benchmark in 2015.  This, ignobly, put them in the top 20 losers nationally.  This was in stark contrast to the news in 2014, when the DVACO received a bonus from Medicare for coming in below their benchmark.

What happened? The statement from the DVACO blamed the losses on doubling the number of beneficiaries from one year to the next, and working with different populations of physicians and providers.  Interestingly, the DVACO actually spent less per beneficary in 2014 than they do in 2015.  In a health care cost climate of ever rising healthcare costs, this should be cause for celebration.  The problem, of course, was that the calculated benchmark was almost $800 lower per capita from one year to the next.  So even though the DVACO spent less per capita than the prior year, they overspent $211 per attributed patient.  Certainly, this could be because the expanded patient population of the DVACO in 2015 had a lower acuity level than the prior year.  Or it could be because the expanded patient population don’t have their acuity documented as well.  Who really knows?

Regardless, this is where the size of the ACO works against it.  The same size that should theoretically allow for economies of scale in the form of better care coordination and more control over expenditures now ratchets up the level of risk astronomically.  A ~$211 per capita loss with 70,000 patients means a total loss of $14 million.

Benchmark/capita ($) Expenditure/capita ($) Savings/loss ($) Total savings (loss) DVACO 2014 11,852 11450 402 $13,402,585 DVACO 2015 11046 11257 -211 -$14,894,475

Figure 3. Comparison of Delaware Valley ACO expenditures (2014-2015)

Thank goodness the person in charge of selecting the MSSP track chose the right box. Recall that almost every ACO chose Track 1 for this very reason – to insulate themselves from the risk of having to write a check to medicare if they overspent relative to their benchmark.  Clearly calculating the benchmark correctly is vital. A discussion of how exactly the benchmark is calculated is beyond the scope of this post and likely beyond the scope of my frontal lobe, but with the number of variables in play in predicting future per capita health costs, the odds of landing on the right number remind me of my unsuccessful attempts at the roulette table.

While track 1 is good for ACO’s, it is not good for Medicare.  Medicare pays shared savings bonuses without recouping any money from ACO’s that spend more than their benchmark.  It is thus little surprise that Track 1 of the MSSP is not considered an Alternative Payment Model (APM) by the new proposed payment raj that begins in 2017. Track 1 was always supposed to be an introduction to ACOs that would ultimately give way to a 2 sided risk model.  This is a real problem for health care systems that in total lost $1.1 billion dollars in 2015, and would face massive liabilities under a two sided risk model if nothing changes.

But those concerned with the poor performance of ACOs will be rescued from their doldrums by Dr. Michael McWilliams, a Harvard policy guy who in a recent paper takes aim at benchmarks to defend the maligned performance of ACOs. He gives 3 explanations

  1. Provider responses to ACO contracts affect care of patients served by ACO’s but not attributed to these organizations
  2. ACO spending reductions reduce ACO benchmarks because the lower the spending growth rate used to update benchmarks each year
  3. Spending reductions by ACOs lower Medicare Advantage spending because payments to medicare advantage plans are tied to local fee for service spending. Declines in fee for service spending means lower payments per capita to medicare advantage plan

To summarize his argument : ACO’s are actually saving lots of money – its just that we can’t tell methodologically because the benchmarks aren’t right.  If you think that this sounds like grasping at straws, that was my first impression as well.  The policy folks have  a problem – their world rests on a conceptual framework that at its core places the ills of health care on the fee for service (FFS) model Medicare was born into.  Unfortunately for them, growth in spending in the traditional all you can eat buffet of Medicare FFS has had a sustained surprising slowdown.

Figure 4. Medicare spending per beneficiary trends

This was a completely unexpected phenomenon.  Inexplicably, providers that get paid per encounter, procedure, and test are simply doing less.  I am one of those providers, and I can unequivocally say that we do less today than we did ten years ago.  We place fewer stents, do fewer stress tests, and admit fewer people to the hospital. (Figure 5)

Figure 5. Changes in volume of health care delivered over time (Source – Congressional Budget Office)

Is this happening in my locale because of the Delaware Valley ACO that started a few years ago, or because of a larger cultural shift driven by conversations on cost that began years prior?  It’s definitely not the ACO, but I don’t know the right answer, and really no one can because of how broadly alternative payment schemes were implemented.  My very strong belief is that the simple act of paying attention and discussing cost has resulted in changes in provider (hospital/physician) practice patterns.  Perhaps the beauty of the ACO is not getting anything right, but simply threatening to get it right.  The Hawthorne effect – when individuals modify or improve an aspect of their behavior in response to their awareness of being observed – is certainly a well described phenomenon.

Academics, of course, in a feat of circular reasoning, are now trying to prove that the slowdown in traditional medicare is because of alternative payment schemes.  This is the crux of an argument you will hear over and over again for all the alternative payment schemes constructed – if ACOs are reducing traditional medicare costs, it isn’t fair to judge the success of ACOs relative to traditional medicare.  This certainly may be true, but how do you go about proving this?  You can’t.  But you can publish from the high castles of academia in peer reviewed journals, demonstrate correlations, imply causation, and then point to evidence when it comes time to ask the taxpayer to fund said programs.  Understand that by these yardsticks, I could probably ‘prove’ to you that we are spending less because I wear black pants to work on most days.

I get the sense that Dr. McWilliams already knows alternative payment schemes are responsible for moderating health care costs – he just has to prove it.  His solution is a better benchmark.  I remain unconvinced.  Despite the ‘savings’ that are said to have accrued with alternate payment schemes that relate to the ACA, health care cost moderation clearly precedes the passage of this bill, and 2014 data shows health care costs on the rise again due largely to the expansion of coverage the ACA triggered.  It has to be said, if not for the larger overall moderation in health care costs – the actual rise in health care costs would have been significantly higher.

The recent growing ‘evidence base’ emerging to allow alternative payment schemes to take credit for cost moderation will  make a lot of people feel good.  Physicians who bear much of the regulatory, administrative and cost burden of these schemes shouldn’t be fooled.  Open your eyes.  Zoom in.  And feel free to roll your eyes when you run into the next acolyte of our new world talking breathlessly of Accountable Care Organizations.

Anish Koka is a Cardiologist in private practice in Philadelphia.  He has developed an allergy to alternative payment models recently.  Answer to multiple choice question: None of the above.


Categories: OIG Advisory Opinions

MACRA Needs to Use Evidence-Based Interventions

The Healthcare Blog - Fri, 10/21/2016 - 12:00

Whether applied to policymaking for individuals, large populations, or administration of health services nationwide, it is imperative regulatory decisions be anchored to empirical evidence. The official MACRA rule has now been released.  It is 2,000 pages based on the opinion of many non-practicing physicians, Dartmouth economists, and government administrators with input from a few doctors on the front line. In my opinion, what began as a certain death sentence has commuted us to life in prison; MACRA will regulate physicians without representation. 

Let me acknowledge my opinion is limited by my own “small” practice bias. 380 thousand “small” practices (having 15 providers or less) will be exempted if they have less than 100 Medicare patients.  Your definition of small and mine are strikingly different.  Every single independent practice in my hometown of that “quasi-small” size, has sold to the local hospital already.  The “small” practices remaining in my community have 1 or 2 physicians, so I will refer to those as micro-practices for clarity.  My micro-practice serves more than 400 Medicaid patients, with a waitlist of more than 50.  MACRA rules do not seem to have an answer for when there are not enough micro-practices remaining with which to form a “virtual” group. 

I humbly suggest you expand the options in your “flexible” plan, to include a control group composed primarily of 1-2 physician practices.  Please, do not overlook the importance of tailoring interventions to the unique needs of small communities in order to ensure the existence of micro-practices in the long-term. The fates of millions of Medicare (and presumably Medicaid) beneficiaries is at stake.  It is absolutely essential that new payment plans are evaluated in comparison to a control group prior to arbitrarily being applied across the nation. 

A recent article in the NEJM evaluated early performance of ACO’s by using a control group, which is vitally important to the evaluation process.  Researchers concluded the first year was associated with early reductions in Medicare spending among 2012 entrants (1.4%, P=0.02) but not among 2013 entrants. Performance on quality measures was improved in some areas and unchanged in others.  And surprise, surprise, savings were consistently greater in independent primary care groups than in hospital-integrated groups among entrants in 2012 and 2013 (P=0.005 for interaction).  How on earth can CMS ignore yet another study showing independent primary care groups save money before someone important realizes MACRA (as it stands now) is on the bridge to nowhere?

Policymaking must use scientific research to guide decisions at each stage of the process in every branch of government. According to the Washington State Institute for Public Policy, there are three designations to grade the rigor of research methods and the amount of evidence available to guide sweeping program interventions: Evidence-based, research-based, and promising. 

Evidence-based programs have been rigorously studied; using randomized controlled trials, and found to be effective. Research-based programs have been tested using rigorous methods (studies using strong comparison groups, as I am proposing) but do not meet the evidence-based standard.  Promising programs have been tested using less arduous research designs and typically use well-constructed logic or theories to support ideas. 

Postulating and theorizing by Dartmouth economists has left us all on treacherous ground. These experts assembled data, “interpreted” it creatively, and then drew unsubstantiated conclusions upon which to base recommendations for creation of PCMH’s and ACO’s.  The fruits of their “promising, yet non evidence-based” labor have generated unimpressive outcomes, yet their poor quality decisions will not affect their income.  Culpability must be incorporated in the process this time.  Government agencies, their managers, and those economists now advising them must be held accountable for their outcomes this time before holding physicians responsible for ours.

Confidence in these experts is fading because Patient Centered Medical Homes (PCMH) and Accountable Care Organizations (ACO) are not holding up their end of the bargain, demonstrating miniscule savings at best, while making the life of a physician far more cumbersome.  A thorough critique by Kip Sullivan summarizes the research on three PCMH’s and three ACO’s showing little to any cost savings, further exposing the weak platform on which CMS has built their Quality Payment Program. 

In that same vein, CMS is estimating how much value-based payments will bring down medical costs while guiding patients toward better health.  The word “estimate” appears far too often in the Executive Summary of the MACRA Rule for me to be comfortable with this plan.  CMS intends to impose “promising, albeit not evidence-based” options on all physicians treating Medicare patients in less than 3 months.  Where is the conclusive data demonstrating cost containment and improved quality?  It does not appear to exist. What if your estimates are incorrect?  The consequences will be catastrophic for independent solo practices if your “estimates” are wrong.  Should I be forced to make this blind leap of faith without being certain?

Andy, good science will be good for your conscience. CMS policymaking must be based on rigorous research that is supported by empirical evidence, even if the results are equivocal.  Presuming, opining, and educated guessing are not adequate methods for imposing non evidence-based programs upon large populations.  Before CMS officially implements sweeping payment modifications on January 1st; please consider allowing a control group option, composed of small practices with 1-2 physicians.  I, for one, would like to be at the top of the list.  Do not throw the “fee-for-service” baby out with the bathwater before being absolutely certain your non-evidence-based payment models actually contain costs and are better for patient care quality than what is already in place. 

Categories: OIG Advisory Opinions

MACRA: We Can’t Expect the Feds To Be The Key Lever of Change

The Healthcare Blog - Thu, 10/20/2016 - 12:24

The final MACRA rules are out. There is plenty of room for debate about them, but one thing is clear: They are a fine example of why we cannot expect the federal government to be the key and most powerful driver of change in healthcare.

This is not a political statement, not an anit-government slogan, not a libertarian assertion. This is a systemic observation.

This is not because the law or the CMS rule-makers are not well-intentioned. To the contrary, MACRA seems like a noble enterprise. Congress is to be congratulated for at least temporarily getting itself unstuck long enough to pass it. CMS is trying their mightiest to push healthcare in the direction of actually offering value for all the money we keep shoveling into it.

But just look at it: Over 2,000 pages, full of complexities, exceptions, subsidiary re-payment clauses, labels and circles and arrow that will keep healthcare lawyers and consultants in fine shape for quite some time to come. As THCB’s Kip Sullivan has pointed out, MACRA is supposed to be rewarding good “volume to value” behavior and punishing its opposite, but it is so complex that few physicians will be able to honestly tell whether they will get rewarded, how much, or for exactly what.

Operant Conditioning

Or when. Have you ever tried to train a dog? If you want them to stop some behavior, like digging in the garden or jumping up on you, you have to catch them in the act and give them a negative response right then. If you want to reward them for something, you have to give them the treat (or the clicker click that signals a reward) the moment they do it, so that they know what the heck you are talking about and how compelling the reward or punishment is. (My lab used to be all, “If it’s not cheese, don’t even bother.”)

People are not that different, especially people trying to run the increasingly complex business of a medical practice out of one hand while trying to actually practice medicine with the other. If you want them to do something that is both different and difficult, give them an impressive reward the instant they do it, a reward that is significant in comparison to all the other influences on their bottom line, and that happens in this billing cycle.

So if physicians (and physician practice managers) can figure out exactly what they are going to do to get the MACRA bonuses, and then manages to spend the right time and effort and money to do that right behavior, how does MACRA reward them? 

A 4% bonus. In two years. CMS will pay them in 2019 for changes they make and reports they give in 2017. That’s not going to move any needle you care to stare at.

Don’t blame CMS

Is this their fault? No. Here’s why: They are by law trying to move the entire industry for which they are the largest paymaster. That would seem to give them huge, compelling leverage. But it doesn’t. Since they have to pay the whole industry, they can’t act like a real customer. They can’t pick and choose who they pay. They can’t walk away from deals. And being that this is the U.S. system with U.S. politics, they can’t simply issue draconian rules and expect everyone to follow them. They have to work with the industry to find the sweet spot where they can coax at least some of the industry in the right direction. They cannot be truly compelling with either carrot or stick.

Contrast that with private employers and self-funded pension plans and the like, whose true bottom-line incentives are closely aligned with those of their employees and beneficiaries: They want the best healthcare for the lowest price. And crucially they can act as real customers. They can shop. They can demand transparency, bundled prices, and audits. They can make deals or walk away from them. They can reward their employees and beneficiaries for going to the low-cost high-quality providers. They can, in effect, say, “I’m sorry, but you charge too much. We will take our business elsewhere.”

Compelling? Yes. Absolutely. It brings the healthcare providers’ behavior change, and the business model change, and the workflow change down to this year, even this quarter. “Do good business with us, and you will do well.” And there is no question or confusion about what constitutes the behavior that will get the reward, such as a bundled price for a particular operation, with warranties and quality controls.

We have, and will likely continue to have, a mixed system, with about half of medical expenses being paid through public programs like Medicare, Medicaid, CHIP, the Indian Health Service, the military medical program, and the Veterans’ Administration. Those supporting a “single payer” model clearly imagine not only that would bring healthcare to everyone (which it would) but that it would give the government the whip handle over costs. MACRA is another clear demonstration of why that is not true, why a strong, well –operating economic system needs customers and entities that can act like true customers, and why in our system that means private, independent payers paying with their own money.

Categories: OIG Advisory Opinions

The Final Rule

The Healthcare Blog - Wed, 10/19/2016 - 10:22

When I read the original MACRA rule that CMS published last April, I was appalled at its complexity, at CMS’s total disinterest in measuring “performance” accurately, and CMS’s willingness to hype the performance of ACOs and “medical homes” (the main prototypes for the “alternative payment models” [APMs] authorized by MACRA). I entertained the faint hope that CMS would come to its senses after hearing the reaction to its original rule and propose something less complex, or maybe even urge Congress to suspend enforcement of the law until it could be rewritten. Foolish me.

I have read a substantial portion of CMS’s final rule, published last Friday. It is clear to me CMS intends to implement its original rule with only minor changes. I predict the implementation process will be a nightmare.

The most fundamental problem with the rule is its insane complexity. The complexity is a function of both the complexity of medicine and the impossibility of what Congress has asked CMS to do – to measure the cost and quality of physician services at both the individual and group level and to punish and reward doctors based on inaccurate scores, and to oversee the creation of vaguely defined and unproven entities like ACOs and “medical homes” which will also dish out penalties and rewards based on inaccurate data. 

Implementing such a monstrously complex law, or even portions of it, would be very difficult even for an agency run by clear thinkers. But CMS is not run by clear thinkers. It is run by people who think like employees of advertising agencies. They think their job is to persuade their listeners that their product is wonderful. They think they are supposed to exaggerate what MACRA will do, and to deny or obfuscate MACRA’s obvious defects.

CMS committed both types of errors – exaggeration and denial – in its first rule, and it committed identical errors in the final rule. At this point I think it’s reasonable to predict that CMS won’t admit either type of error until long after implementation has begun and reality has repeatedly smashed its staff over the head. Of course, by then much time and money will have been wasted, and many patients may have been harmed as well.

I’ll devote the rest of this essay to examining the worst examples of both types of errors – hyping that which should not be hyped, and overlooking that which should not be overlooked. I will close with a comment on how similar MACRA and the Affordable Care Act are. Both laws are already in trouble because they rely on the same bankrupt theory of cost-containment. Their troubles have only just begun.

“Evangelism is no vice, agnosticism is no virtue”

The most compelling evidence that CMS thinks of itself as an advertiser, as the PR agent for Congress, is its willingness to articulate their most basic premises as beliefs as opposed to conclusions backed by evidence. Consider the following quotations from the final rule (“final with comment period,” is the official label for this rule):

  • We believe participation in any APM offers eligible clinicians and beneficiaries significant benefits. [p. 1396]
  • [W]e believe that all APMs offer meaningful opportunities and benefits to clinicians…. [p. 1427]
  • We believe that both the inclusion of payment based on performance on quality measures in the Advanced APMs and the ongoing monitoring and evaluations conducted on all APMs are mechanisms for identifying whether appropriate care is withheld to save costs. [p. 1454]
  • The costs for implementation and complying with the advancing care information performance category requirements could potentially lead to higher operational expenses for MIPS eligible clinicians. However, we believe that the combination of MIPS payment adjustments and long-term overall gains in efficiency will likely offset the initial expenditures….. [p. 1818] [emphasis added]

Not one of those statements is documented. They are all based on faith. And yet all of those statements have to be true if MACRA is going to improve quality and lower costs. It has to be true, for example, that “any APM offers eligible clinicians and beneficiaries significant benefits” – or at least that the great majority of APMs do so. It has to be true, to take another example, that CMS can detect and punish any denial of necessary care caused by risk-shifting to APMs and the physicians who work for them.

And yet CMS didn’t document these statements and numerous other claims that began with “we believe.” They didn’t for a good reason: They couldn’t. The evidence either doesn’t exist or the evidence indicates the assumptions are wrong.

Take for example the crucial claim that “all APMs … offer benefits to clinicians.” This boast must, at minimum, mean doctors will not lose money if they join APMs. But we have no evidence for that assumption. Ashish Jha recently reported on THCB that CMS’s ACOs are, on average, not saving money, and when CMS’s bonus payments are counted, ACOs are raising Medicare costs. Similarly, all the evaluations of CMS’s “home” pilots indicate they are saving no money for Medicare, and those evaluations plus other studies demonstrate that physicians working in the “homes” are not being paid enough to cover the extra costs they incur to buy the goods and services “homes” are supposed to buy (see my discussion of the evidence here.

“Denial is no vice”

CMS’s sins of exaggeration are aggravated by sins of denial. The worst and most important examples of denial are CMS’s refusal to state that performance must be measured accurately if paying for performance is going to work. You will not find in either the original or the final rule a statement that says anything like, “We believe performance measurement must be accurate.” Is that not an obvious and essential statement? How hard would it be to say that? But you won’t catch CMS saying that.

Here are the two most important “we believe” statements I would have added to the rule:

  1. “We believe pay-for-performance can work only if performance is measured accurately.”
  1. “We believe accurate measurement of performance requires at minimum (a) adequate sample size, (b) accurate attribution of patients to doctors, and (c) accurate adjustment of quality and cost scores to reflect differences in patient health and other factors beyond physician control.”

These statements appear nowhere in the rule despite the fact that numerous commenters raised questions about the accuracy of patient attribution and risk adjustment. CMS just blew those people off. Here is an example:

One commenter was concerned with inaccurate data being reported on Physician Compare…. Another commenter expressed some concern with the accuracy of the information and its usefulness for consumers. One commenter recommended a principal focus be on providing reliable and useful data rather than expediency. Response: We appreciate your comments and remain dedicated to publicly reporting data that generally meet public reporting standards. [pp. 1393-94]

Translation: “We’re CMS. We’ll pretend to seek your input, but on the all-important question of whether we are measuring performance accurately, we intend to ignore you. We absolutely do not want to have an honest conversation about whether it’s financially or technically possible to measure physician performance accurately at any level relevant to even a few types of patients or diseases, much less all of them.”

Republicans and Democrats share the blame for the MACRA mess

In this post I have aimed my criticism at CMS for approaching MACRA with the mindset of a PR agent. CMS deserves harsh criticism because they are not being forthright, and in some cases they have been downright dishonest. [1] CMS’s unwillingness to tell the truth about MACRA does not bode well for its implementation and the ensuing public debate.

But the ultimate blame for MACRA’s nightmarish complexity falls on Congress. Democrats and Republicans voted overwhelmingly for MACRA. How quickly we resolve the mess created by MACRA will depend ultimately on how quickly leaders of both parties understand MACRA’s defects. If both parties engage in some honest introspection, they will at some point realize both parties have subscribed to the same bankrupt theory of cost containment. This should be interesting to watch. On the issue of health care cost containment, there is no daylight between the parties.

The Affordable Care Act, a law Republicans detest, is based on the same bankrupt cost-containment theory that MACRA is based on, namely the managed care diagnosis (overuse) and the managed care solution (shift insurance risk to doctors and micromanage them). Not one Republican voted for the ACA, a law which will succeed only if the claims made for “accountable care organizations” and “medical homes” and other alleged “value-based” reforms are true. And yet Republicans voted overwhelmingly for MACRA, a law which will succeed only if the claims made for ACOs, “homes” and other alleged “value-based” reforms are true.

Republicans need to get their message straight. They can continue telling the public the ACA has no effective cost containment in it (which would be accurate) and is therefore not affordable, but in that case they must level the same criticism at MACRA – it will not cut Medicare costs. Or they can continue to promote the false message that MACRA will cut Medicare costs, but in that event they must stop carping about the ACA and join Democrats in claiming the ACA really will “bend the cost curve” (which is sheer fantasy).

Because neither MACRA nor the ACA promote cost containment, and because both have destructive side effects (including higher administrative costs, more consolidation of the entire health care system, and accelerated physician burnout), both are going to fail. The only issue is how they will fail. Will they collapse overnight? No, I wouldn’t bet on it. I predict, rather, that they will create, each in their own way, so much antagonism that Congress will, after much dithering, be forced to amend them beyond recognition. My only hope is that when Congress amends the ACA it won’t result in a higher uninsured rate and worse coverage, but I fear that’s where we’re headed, at least in the short term.

I predict as well that the amendments that will transform the ACA and MACRA will be contained in multiple bills enacted over a period of years rather than a single bill enacted in one session. These amendments will be stimulated by widespread anger – anger that starts out relatively subdued and spreads as reality sinks in and Congress dithers. The ACA will create (and already has created) anger among taxpayers and patients, while MACRA will create (and already has created) anger among doctors and some patients, including yours truly. Congress will eventually have to recognize this anger and do something about it. My hope for both MACRA and the ACA is total repeal and replacement with a law that focuses on the price of US health care and the administrative waste that drives price up as opposed to the volume, i.e. the overuse, of medical services sold. It is the obsession with overuse that brought us the MACRA mess.

[1] In both the original and final MACRA rule, CMS repeated a false statement it first made in an August 25, 2015 press release, namely, CMS’s ACO pilots are saving money (see p. 1821 of the final rule). Kaiser Health News was the first to demonstrate  this was not true. John O’Shea recently called attention to a report by the HHS Inspector General which criticized CMS for inflating the savings achieved by Pioneer ACOs. As O’Shea put it, “[A]fter the close of the Pioneer ACO Program’s Performance Year (PY) 1, CMS allowed five ACOs that would have had shared losses exceeding $6.8 million to retroactively transfer from a two-sided risk model to a one-sided model with no risk of shared losses. While CMS published information about the results of Pioneer Model PY1’s total shared savings and shared losses, it did not include the information about the five ACOs that had been permitted retroactively to select a one-sided payment arrangement. The $6.8 million in losses that they would have incurred were not included in the results.”

Categories: OIG Advisory Opinions

The Privacy Dilemma

The Healthcare Blog - Tue, 10/18/2016 - 16:35

I recently had the opportunity to join Boston news media veteran, Dan Rea, on his AM radio program, Nightside with Dan Rea. It was a one-hour call in program, and an eye opening experience for me. Dan and I chatted about connected health and how it can truly disrupt care delivery and put the individual at the center of their own health. Then Dan opened the lines to the fine citizens of New England for questions, and the phones started ringing off the hook.

The overwhelming concern – actual fear — among callers was maintaining their privacy in an increasingly connected world, especially their personal health data. This is a topic I touched upon in my recent book, The Internet of Healthy Things, and one which I will explore further in my upcoming talk at our Connected Health Symposium in a few weeks. But I was so struck by the extent of concern, I thought I’d present a few theories I’ve been contemplating on the subject.

When it comes to privacy issues, the cyber world is typically characterized as a sinister place, where consumers are duped and exploited, their data leaked or stolen. What we unfortunately don’t talk about is what consumers have to gain by sharing their data. For instance, the same information that can be used to create highly personalized programs to help people stay healthier and happier, can also be a key factor in improving efficiencies and reducing healthcare costs.  Further, it’s been shown that sharing data with providers, friends or social media groups can actually help people stay on track with their health and wellness goals.

Yes, there is always some risk sharing personal data – whether online banking or communicating with your healthcare provider. But there are also rewards. In my view, it’s a trade-off, and one that I personally am willing to make with my own health data.

As I see it, there are two main problems when it comes to privacy. First, many companies have not been forthright regarding their privacy policies, leaving consumers unaware of when and how their data is being used, sometimes in ways they may not approve of. Second, we are all too aware of some alarming data breaches that make consumers wary of posting or sharing their personal data.

We can combat much of consumers’ fear by making privacy policies transparent; putting a halt to spying on people without their consent and creating systems to keep data confidential. Bottom line, the rights of individuals must be protected, and organizations – healthcare providers included – need to do a better job explaining privacy issues and safeguards.

As my friend and colleague Rob Havasy pointed out to me, HIPAA doesn’t directly apply to most connected health interventions, and certainly not to those things that don’t directly connect to a hospital. Therefore, the consumer’s protections are covered by the privacy policy of the company that provides the equipment or service.

In my mind, privacy is not a complicated issue. In fact, it’s pretty straightforward.

So how do we increase consumers’ comfort levels and create more transparency around the red-hot issue of privacy? Here are two simple ideas:

For anyone who is in the healthcare space, whether you’re a payer, provider, business or entrepreneur developing connected health devices or programs for consumers, you should be very forthcoming about your data collection and privacy policies. And, by all means, provide this information in simple, easy to understand language and skip the legal jargon.

And, consumers need to understand that there’s no such thing as a free app. If it’s a free service, more than likely the business model will sell advertising – or data – including subscriber lists, to marketers. In most cases, without this revenue stream, there would be a fee attached to the service. This is a concept most consumers will understand. Some will opt for the free service with the understanding that they give up some privacy. Others will want a fee-based service that will preserve their privacy. Either way, it should be the consumer’s choice.

Is the privacy fear such a turn-off that consumers will never agree to share their health data? Or can we help individuals understand the trade-off?

Joseph Kvedar, MD is a vice president at the Center for Connected Health.


Categories: OIG Advisory Opinions

The Trust Gap in Healthcare: Findings from the 2016 Healthcare Trust Index

The Healthcare Blog - Tue, 10/18/2016 - 12:03

In Campaign 2016, a recurring theme to date has been the trustworthiness of the leading candidates. As they debate for the third and final time this week, each will attempt to allay voter concern about their trust-gap and widen apprehension about the other’s.

In politics and business, trust is the most valuable asset candidates and companies own. Lacking trust between a candidate and voters or an organization and its customers and trading partners means elections aren’t won and a company’s, long-term sustainability is compromised.

Healthcare is an industry wherein trust is foundational. We trust our physicians to recommend treatments based solely on their effectiveness and appropriateness to our diagnosis. We trust our drugs and technologies are used solely because they work best. We trust our hospitals are safe and our insurance will help pay the bills. When we learn otherwise, we rationalize they’re the exceptions until recurring doubt leads to distrust. Stories about fraud, price gauging, denials of coverage and excessive profit cast doubt on our system and compromise trust in our healthcare system. The frequency of stories about these and social media lend to the growing distrust in healthcare.

Trust is like quality of care: it’s hard to build and invaluable, and when lost, hard to repair. Merriam-Webster defines it as a “firm belief in the reliability, truth, ability, or strength of someone or something.”

Trustworthiness is aspirational for every organization–for profit and not for profit, local and national, large and small. The most successful organizations jealously guard their reputations and address breeches of trust with energetically. Surveillance of social media, exit interviews with departing employees, verification of credentials and customer surveys about perceived performance are standard fare for organizations that value trust and are protective of their reputation.

Understanding trust between trading partners is table stakes. When trust between trading partners is weak, operational performance is suboptimal, value creation is less-than otherwise achievable and customers are harmed.

Arguably, trust between health providers, physicians and hospitals, and health insurers is among the most trading partner dynamics in our health system. Recently, Revive Health, a national healthcare marketing communications firm, released its 2016 Trust Index Survey–an analysis of the level of trust between these trading partners. Their survey compared views along three dimensions of trust: “this organization makes every effort to honor its commitments”, “this organization is accurate and honest in representing itself and its intentions” and “this organization balances its interest with ours and doesn’t routinely take advantage of us”.

The findings are enlightening: they underscore the distrust that’s pervasive in relationships between providers and payers. Highlights:

  • The major trading partners in healthcare do not hold strong feelings of trust toward others.
  • Insurers tend to trust providers more than providers trust insurers.
  • Hospital leaders have wide ranging views about insurers, especially in negotiation around rates and contracts. By contrast, physicians’ views that are more widely held: their range of opinion is much narrower than views held by hospital leaders.
  • In general, organizations that are investor-owned are less trusted than those that operate as not for profits.
    ReviveHealth Trust Index Survey

Source: “Revive Health-Catalyst Healthcare Research Trust Index Survey” The 10th Annual ReviveHealth Trust IndexTM  2016.

What’s the key takeaway from this survey? Distrust in providers and payers is a systemic challenge in our system. The data show some organizations perform better than others but pervasive distrust is a problem for all organizations.

Can it be remedied? Theoretically, yes. It requires parties on all sides to be transparent in business dealings and understand perspectives other than their own. It means negotiations that result in win-win are sought and desire to understand before being understood shared among key leaders. It means objective data is the basis for decision-making, and strongly held opinions lacking facts dismissed.

The trust gap between insurers and providers is wide and long-standing. It did not happen overnight nor will it be solved quickly. In the new world order of healthcare, shared risk arrangements between the parties is now the norm. Unless and until distrust is addressed, these efforts will disappoint and results will be negative.

This week, the major party candidates will attempt to chip away at their own trust gap. We will see the results of their effort in 22 days. In healthcare, the trust gap equally problematic. Like the election, those who stand to lose most if not remedied are our voters—the individuals we serve as patients in our system of health.

Trust Index Survey-

Methodology: The trust measures included in the survey were informed by academic literature on the subject and used a five-point agreement scale – from “strongly disagree” to “strongly agree” applied to three statements: this organization makes every effort to honor its commitments (behavioral reliability); this organization is accurate and honest in representing itself and its intentions (honesty); this organization balances its interests with ours and doesn’t routinely take advantage of us (fairness). For each question, a Trust Index Score value was calculated on a scale from 0 for “Strongly disagree” to 100 for “Strongly agree” wherein “Neither” was valued at 50 and “Don’t know” responses were excluded from the analysis.

Samples: Health Plan: 56 complete responses were collected through an online survey of health insurance executives between May 12 and July 9, 2016: Hospital: 143 responses were collected from hospital and health system leaders via online survey between April 25 and May 27, 2016; Physicians: 602 complete responses were collected through an online survey of Primary Care Physicians and Physician Specialists between July 8 and July 19, 2016.

Source: “Revive Health-Catalyst Healthcare Research Trust Index Survey” The 10th Annual ReviveHealth Trust IndexTM  2016.

Categories: OIG Advisory Opinions

The Blockchained Health Record

The Healthcare Blog - Mon, 10/17/2016 - 12:05

A couple of weeks ago I was discussing the opportunities for using block chain technology for medical record interoperability with a group of friends who unsurprisingly see their real experience as evidence that we haven’t made it easy to exchange medical records yet. While chatting, one of my friends asked the question – “Isn’t there some sort of security problem with Health Information Exchanges (HIEs), because block chain technology could solve security issues, especially if that is what is holding things back?” I thought about it and my immediate answer was “not really.” The sharing problem is about trust and finding a model that works for sharing records rather than just some underlying security conundrum.

The HIE architecture we have today has been designed to be secure. The records are encrypted in transit with clear authorization protocols. The systems that store them use The Federal Information Security Management Act (FISMA) standards to have high security controls over data at rest. Therefore, records are shared between groups only by sharing the system rights and permissions established between health care providers or following patient consent. HIEs are running a large portion of identifiable data back and forth between institutions regularly and I don’t know of an HIE hack to date. As I thought a bit longer about this, I began to think about the different challenges associated with HIEs and Personal Health Records (PHRs) where the unresolved patient and physician behavior along with trust issues reside. These issues might be resolved by using block chain or by offering a more flexible and logical way for patients to experience record sharing.

Both HIEs and PHRs are secure systems (encrypted in transit, use role based authorization, and manage security controls at rest). The security and privacy model is based on rules about how patient records are shared between individuals and organizations. Blocks of records are shared and stored in a number of different ways. The system rules that define the authorization to share a record are slightly different in an HIE vs. in a PHR.  In an HIE, providers who are trusted by the patient have the ability to establish rules in networks that define the circumstances by which it is okay for a physician at one health system to view a medical record for a patient from another health system. The government has the ability to mandate that all health systems must participate in HIEs and allow for sharing data in the majority of circumstances. By establishing the rules of the HIE for exchanging data and not having the patient serve as an intermediary, a provider can potentially exchange patient information smoothly between two providers of separate healthcare organizations with the patients initial consent. However, this would take the decision-making power away from the patient, and the rules for the HIE would impact the outcome of the sharing agreements.  By comparison, in a PHR model, the patient record is delivered to the provider if the patient requests and designates access to their health record to that provider. Both systems use the same underlying protocols integrating the Healthcare Enterprise (IHE) and medical record document formats (CCA) to transmit the documents.

The difference between the PHR and the HIE is in how the contract is structured by the network and the way the patient record flows to the provider from an outside entity. In an HIE patient data flows because a network of health systems have all agreed to trust each other. They have set-up a governance model with policies, established secure system interfaces, and can share patient records in that specific network using that set of policies. In the PHR, the patient’s own specific direct request authorizes use of their record. The patient can thus broker on their own between institutions that have no formal relationship with each other regarding a closed network for patient data sharing.

One challenge in a PHR model is that if we look to the patient to make the decisions about how their health records are shared then every time a physician needs access to the patient’s external medical records, the patient needs to go into an application to give permission. While it is ideal and appealing for privacy and security to have the patient do this, it is complex and a bottleneck that adds labor to the patient who has many other concerns and may not understand what they are doing. The process of filling out additional forms from different providers to share records creates sufficient complexity (such as remembering passwords) that it will fail to get completed in many cases. This transaction burden in a PHR model may be one reason why we have never seen large scale patient controlled health records deployed as a dominant method for interoperability despite the benefits of having the patient as the core of the decision process. The patient, if I look at myself as an example, in most cases just wants sharing within the healthcare community to work in their interests in the background of each system.

Alternatively, on the provider side HIEs enable ‘background sharing’ by having health care providers in an HIE exchange network determine a set of rules for which a provider shares patient data with other providers. The government has the ability to mandate that all health systems must participate in HIEs and allow for sharing data in the majority of circumstances. While this can allow for seamless exchange in each network, any given HIE network is by necessity constructed with a limited set of participating providers. So providers or types of providers who may be important may not be participating in the right HIE network for any given patient thus making data sharing potentially hit or miss. Furthermore, the patient role in controlling their data privacy can be lost by taking a view that the system takes care of it.

So, I got to thinking about block chain and what benefits we might find other than security if health records could be chained together into one large scale network with a common history. The block chain model uses smart contracts attached to assets and subcomponents of assets with rules to handle the exchange of transactions among participants. If we were using block chain for health system interoperability the patient record exchanges could be governed with smart contracts that determine how the patient record should be exchanged. The logic could have more options rather than the current rigid sharing models in place for the HIE and PHR model.

I recently read “Nudge” by Richard H. Thaler & Cass R. Sunstein, on the idea of a choice architecture. The book focuses on the notion that we can benefit from a concept of Libertarian Paternalism, the idea that it is legitimate for private and public institutions to nudge people in directions that will improve their lives while also respecting freedom of choice. Choice architecture is a useful construct for this situation with the general idea that people should have the choice to have either a candy bar or an apple, but because default selections are important, if the goal is to help keep people healthy then apples are the better thing to present as the convenient choice at the check-out aisle in a cafeteria. The ‘smart contract’ within the block chain technology model can establish the right balance of rules between the PHR and HIE models with the patient in the driver’s seat regarding how to tune the contract to meet their level of comfort.

What this boils down to is the idea that the right framework for an HIE/PHR patient data interoperability system might be neither an HIE system controlled by physicians nor a PHR system controlled by patients. It could instead be an integrated system with a built-in choice architecture.  We could set the default contract for sharing data to the most beneficial setting for the patient. The patient could be provided with a default smart contract that follows some basic logic (e.g., “If I see two physicians who are both licensed, then regardless of whether they trust each other or not they should be able to access my record on demand based on a shared patient identification mechanism that links the records to me.”).

This idea may not be revolutionary to some, but for me, it was a bit of a surprising new insight because I have often explained that we have a choice of how interoperability should work. I had thought that interoperability should either go down the path of ‘patient-controlled health records’ or the path of ‘a global provider-controlled health information exchange’. I have historically prophesized on the side of the patient controlled health record knowing that patients have a lot of complexity to deal with in order to get there. With a well-designed smart contract system and some future-state data sharing systems this need not become a choice. A single integrated interoperability framework that gives the patient control of overriding a choice architecture which ultimately sets sharing for providers as the default could be transformative. For more optional services like ‘send my genetic data to a particular retailer so they can sell me more relevant items’ the default sharing would by default be more restricted and require the patient to actively share.

Block chain in this system is an infrastructure shift that would include new tools through the distributed ledger as an alternative to the HIE and PHR models. So block chain is a potential game changer in medical records. But it may be more important to construct new ‘nudge’ based tools governing patient data exchange whether we transition to block chain as underlying technology or not for forming trust through smart contracts. Once we can do that we can titrate to a middle ground between the PHR and HIE approaches to find a patient data sharing model that offers a personalized experience with all of the patient’s interests in mind for any patient including good defaults for convenience, comfort, privacy, safety, quality of care, and service.

Categories: OIG Advisory Opinions

Re-Decentralization of Medicine: The HIE of One

The Healthcare Blog - Mon, 10/17/2016 - 11:06

This week, a non-commercial, open source proof of concept called HIE of One becomes the first standards-based patient-centered health record demonstration. It uses the emerging FHIR standard along with established standards for identity and security management to show how a physician-patient relationship can be independent of any particular institution and therefore as de-centralized as your smartphone messages or your Bitcoin payments.

The history of patient-centered health records begins in 1994 with the Guardian Angel Project at MIT and has inspired many of us. Implementations have come and gone over the past 22 years and today’s massively centralized and institutionally controlled EHRs seem to be headed further and further away from a patient-centered vision. Hacking and information blocking are a concern for patients and legislators. EHRs and government meddling are a source of frustration for physicians. Technology, however, is finally catching up with Guardian Angel’s promise.

Technology does not have to be controlled by institutions. Apple’s iPhones have shown us how personal technology can be beyond the control of both institutions and government. Bitcoin and blockchain has shown how technology for currency and even investment can be beyond the control of both institutions and government. Technology now enables health records that serve the needs of patients and physicians directly without institutional control or interference.

The demonstration at is designed to highlight the user experience for both patients and physicians and to influence global standards and US EHR policy. To make it easier to adopt a patient-centred perspective, the demo mimics the patient and physician experience with typical state health information exchanges (HIE) even though no institutional HIE is involved. From the patient perspective, attaching a practice to their patient-centered health record is not much different than “opt-in” to a state HIE. From the physician perspective, the patient-centered health record is just another EHR connected to the state HIE. From a standards and policy perspective, whether a patient is connected via a state HIE, a private HIE like CommonWell, or a decentralized HIE like HIE of One should be irrelevant to the clinician.

Beyond influencing standards and policy to allow for patient-centered health records, the HIE of One project will evolve into a clinically usable open source health record option that physicians can recommend to some or all their patients. In the coming weeks, new blockchain technology will offer a trusted identity management option that does not require Google ID or any other identity federation. Blockchain technology will also be added to provide auditable and legally accountable records of prescriptions and other regulated activity in the context of a patient-controlled health record. Over months, a secure directory will be used to verify physician attributes such as medical license, insurance, and institutional relationships. Independent decision support interfaces, such as the one already in place with GoodRx, will be expanded and documented.

A sustainable patient-centered health record puts the physician-patient relationship first and treats institutional affiliations as optional. An open source approach allows full transparency, peer review, and community innovation. We hope you will try the demo at for yourself, comment here on THCB to keep the conversation going, and consider contributing to our GitHub communities and the HEART workgroup.

Categories: OIG Advisory Opinions

The Fine Print of MACRA’s Final Rule: Good for Patients?

The Healthcare Blog - Sun, 10/16/2016 - 11:21

The Centers for Medicare & Medicaid Services (CMS) just released the final regulations for the most ambitious attempt in U.S. history to transform how medical care is delivered and paid for. But is it good for patients?

The impact of the Medicare Access and CHIP Reauthorization Act (MACRA) Quality Payment Program created a colossal chorus of kibitzers after the draft rule came out last spring: CMS received over 4,000 written comments. The gargantuan, 2,204-page final rule both sets out regulations and responds to commenters’ suggestions.

The rule is meant “to create a more modern patient-centered Medicare program by promoting quality patient care while controlling escalating costs,” says Andy Slavitt, CMS acting administrator, in a letter to clinicians posted online. The rule itself proclaims “high-quality, patient-centered care” as “the bedrock of the Quality Payment Program.”

Similarly, “improving outcomes by engaging patients through patient-centered payment policies” is listed as one of the “strategic objectives.” The program promises to support and reward clinicians “as they find new ways to engage patients, families and caregivers.”

OK, bestow an “A” for buzzwords. How about the substance?

Here, some context helps. Detailed quality measures in the rule are part of the Merit-based Incentive Payment Program (MIPS). Clinicians who treat enough Medicare patients to be subject to MACRA can choose from a menu of MIPS measures. Or, to avoid MIPS, they can practice as part of an Advanced Alternative Payment Model (APM) that has comparable quality requirements. Because there are menus, certain requirements may be optional, albeit sometimes “weighted” to encourage their selection.

Some critics believe that individual requirements don’t matter much because MACRA is so complex it will self-destruct. MACRA, they argue, is pay-for-performance run amok. They may be right, but for now we’ll assume that when money talks – the Department of Health and Human Services spends more than $1 trillion every year on health care – clinicians will try very hard to listen.

Having said that, I’d like to distinguish between what the program is trying to have clinicians do for patients and what it wants them to do with patients. In simplest terms, the kind of regulations that, say, require hospitals to have fire doors and use licensed doctors and nurses are “patient-centered” in that they help patients avoid being treated by incompetents working in a firetrap. However, those types of rules don’t address the issue of engaging with patients as individuals.

MIPS includes measures both “for” and “with” patients. For instance, one measure pushes integration of care plans for behavioral health and medical treatment. That’s something doctors should do for patients with chronic ills, such as diabetes, that are often accompanied by mental-health issues such as depression. Meanwhile, the MIPS requirement for use of a patient-reported score on a depression screening tool is something clinicians must do with patients.

Similarly, the total knee replacement measure says doctors should evaluate patients before surgery for their risk of a heart attack, stroke or deep vein thrombosis. A companion measure sets out a shared decision-making (SDM) process for first trying non-surgical options such as weight loss or anti-inflammatory drugs. Hepatitis C treatment is singled out with a requirement for better screening that is coupled with a measure that calls for reviewing “treatment choices appropriate to genotype, risks and benefits, evidence of effectiveness and patient preferences towards treatment.”

Some commenters wanted to eliminate patient satisfaction scores, but CMS rejected their erroneous contention that the surveys “may even conflict with clinically indicated treatments.” Instead, the Consumer Assessment of Healthcare Providers and System (CAHPS) survey for MIPS will include items related to “shared decision-making, access to specialist care and health promotion and education.”

On the other hand, CMS also declined to increase the number of patient-reported outcomes (PROs), but told commenters that the agency will “expand their portfolio” in the future.

Speaking of shared decisions, the American College of Surgeons (ACS) is named “steward” of a measure that requires surgeons to give patients “their personalized risks of postoperative complications assessed by their surgical team prior to surgery using a clinical data-based, patient-specific risk calculator and who received personal discussion of those risks with the surgeon.”

In other words, the professional society of surgeons, a membership organization, is in charge of a measure that uses shared decision-making to reduce unnecessary surgery. Performance on that measure, in turn, is linked to Medicare payment and potentially will have medical liability effects

When I spotted this potentially glaring conflict of interest in the draft MACRA rule, I called the college for comment. They told me they were too busy responding to MACRA themselves to talk. A couple of patient groups I spoke to didn’t know much. On page 2,172 of the final MACRA rule it says, “CMS did not receive specific comments regarding this measure.” Does that mean consumer groups didn’t notice, don’t care or didn’t know what to say?

The involvement of physician professional societies as stewards of many MIPS measures sends a larger message. MACRA passed with bipartisan support in large part because it represented a deal between the profession and the politicians: Get rid of the Medicare Sustainable Growth Rate (SGR) adjustment that sends doctors into a yearly panic over mandated automatic pay cuts that only Congress can override. In return, we’ll work with you on developing a new value-based reimbursement system.

But changing the rules so Medicare “pays for what works,” as Slavitt’s letter put it, only works itself with the active collaboration of the medical community. So, for instance, shortly before the final rule’s release, the American Medical Association unveiled a set of MACRA tools for physicians. CMS is acutely aware that pushing too far too fast could set back practice transformation a generation.

That’s why the fine print sometimes finesses the professed “commitment to patient engagement.” In an April 2016 blog post on the draft rule, I criticized the requirements on coordination of care through patient engagement via certified electronic health record technology (CEHRT). They “are startling in their laxity,” I wrote, requiring patient-generated data from just one unique patient a year to be incorporated into the electronic record or just one unique patient a year to actively engage with the EHR.

I submitted more detailed comments and a suggested fix to CMS. Nothing changed, most likely because more numerous complaints in the opposite direction were pouring in from those who were worried clinicians would “struggle” with the objectives and were being held “responsible for the actions of patients.” Some commenters called for the Patient-Specific Education and Provide Patient Access measures to be “retired,” arguing the results were already about as good as they could get. CMS disagreed, calling those measures “a critical step to improving health, increasing transparency and engaging patients in their care.”

Moreover, buried deep in the final rule is an Improvement Activities Inventory where clinicians can choose measures such as “access to an enhanced patient portal [that allows]… patients to enter health information and/or enables bidirectional communication.” Or a measure “that promotes use of patient engagement tools. Or “using evidence-based decision aids to support shared decision-making.”

The fine print giveth, and the fine print taketh away. If the Quality Payment Program works as hoped for, it will save patient lives, prevent avoidable complications of illness and even save money. Patients will also be on the path to becoming routine partners in chronic and acute care.

Yes, the path could have been widened and the progress along it hastened. But Medicare faces formidable political and practical constraints. Fortunately, many employers and private insurers are pushing providers along that same path, as are many professional organizations (even, sometimes, the American College of Surgeons!).

MACRA’s payments to clinicians are supposed to encourage “quality patient care,” including some specific patient-centered activities. The potential is extraordinary; the effect when the new rules are actually implemented remains to be seen.

Categories: OIG Advisory Opinions

Don’t Surrender

The Healthcare Blog - Sun, 10/16/2016 - 11:03

Independent physicians are at the beginning of a challenging movement as we fight to stay relevant and solvent during the transition of health care from independence to “regulation without representation”.   In 1773, British Parliament passed the Tea Act with the objective to help the struggling British East India Company survive. Opposition to the Act resulted in the return of delivered tea back to Britain.  Boston left the ships carrying tea in port and on December 16, 1773, colonists in disguise swarmed aboard three tea-laden ships and dumped their cargo into the harbor.  The seeds were planted for the Revolutionary War. 

Physicians in private practice are facing a war of our own, and make no mistake; we are battling for our freedom and our livelihoods.  Insurance companies and government control of health care has become “regulation without representation.”  Lofty guidelines are being imposed, while administrators, insurance executives, and policy consultants are wedged firmly between doctors and patients.  Ironically, when it comes to taking responsibility for a life, the physician is standing there all alone.  How dare we ask a fee-for-the-service we have rendered?  That would be ‘fiscally wasteful’ according to health policy pundits who know nothing of service-oriented occupations.  This is my call to action. 

Where is all the money going?  CEO’s of healthcare insurance companies are making millions. High level CMS employees undoubtedly have higher incomes than primary care physicians.  I do not hear cries of ‘fiscal waste’ when it comes to paying these non-essential members of the health care team.  They are middleman sucking the life out of patients and physicians. The CEO in this story is on the Forbes top 10 list for compensation.  In one year he made $102 million, which amounts to approximately $280,000 a day. Where is the outcry from the media and public?  They jumped all over Mylan when they started charging $600 for an Epi-pen two-pack.  How many Epi-Pens could this guy buy per day with $280,000? 

The majority of physicians are beholden to third party payers, who decide what our work is worth, like modern day indentured servitude.  Instead of having conversations with patients, our time is spent buried in absurd paperwork, endless forms, and questionnaires to accommodate federal requirements instituted by elected officials while industry insiders are controlling the puppet strings.  Physician lobbying groups, such as the American College of Physicians, keep telling us to “roll over and play dead” because they are profiting regardless. 

While they may not be drinking tea, the business of healthcare is certainly having a party at the expense of physicians, patients, and taxpayers.  It is time the party comes to an end.  Physicians are being held accountable for outcomes yet have no influence on how we care for our patients in our own offices.  Medicare beneficiaries are forbidden from entering private contracts with their long-term physicians (DPC); the only way out is physicians must say no to Medicare and some private insurances. 

Last year, a large insurance company and I did not quite see eye to eye.  Family X already had two children for whom I provided medical care.  Their newborn was assigned to an adult nephrologist two counties away by mistake (I hope), so it seemed reasonable to provide necessary primary care for their third child.  This infant had a respiratory arrest at her two week appointment.  I resuscitated the baby and paramedics transported the infant to the children’s hospital for PICU care.  Imagine my surprise 2 months later when a “take-back” was initiated on the payment for this patient encounter after initially being compensated.  Dr. W in the appeal resolutions department told me to “lose his phone number”; he thought a few hundred dollars was too costly for just saving a human life.  Believe it or not, Dr. W was a pediatrician in private practice before “if you can’t beat them, join them” took hold. 

Ultimately, I had no choice but to bill the family for provided services (at a considerable discount) as cash pay and they obliged.  A threatening letter arrived a few days later from Mr. CEO that balance billing was illegal and there would be serious consequences if I insisted on any monetary payment for my work.  This by definition is worse than indentured servitude.  Balance billing is charging a patient the difference between what health insurance reimburses and the provider charged.   The fact I was not paid by his company nullifies his entire accusation. 

I fired off a response humbly suggesting he focus more on placating his stockholders, while leaving the work of saving lives to me.  Our practice cut ties with this company, notified patients it was no longer accepted in our practice, and most families changed their insurance plans.  You would think my David and Goliath-esque tale ends here; however our local federally subsidized Community Health Center is the only place accepting this exchange plan (for reasons that should be obvious at this point.)  There is no pediatrician available.  The tables turned toward negotiation. 

Local insurance representatives inquired why patients were being turned away.  Never having signed a contract, I made it abundantly clear they had no control over anything.  If I did not receive back pay, there would be no further deliberations. Suddenly, ‘take-backs’ were being halted and back payments were being reversed from over a year before.  When a high level executive called to ask if I would reconsider accepting their patients, it dawned on me that physicians may hold more cards than we realize. 

Health policy experts and insurance executives are NOT physicians and they require our expertise; they have not foreseen the complications that will arise when supply does not meet demand.  Physicians are fed up with data collection requirements, cumbersome electronic record systems, and outcome measures that mean next to nothing.  The time has come to throw proverbial tea chests into the Harbor and refuse to comply with the regulations being enforced up on us.  “No Regulation without Representation” should be our battle cry.  My practice is terminating another insurance contract this week.  If we make smart business decisions, refuse to follow the rules while managing to survive long enough, we can win this war.  Patients deserve better.  Physicians deserve better. 

Acquiescent physicians have already been driven out of independence.  Those of us who remain are smart, resilient, capable, and now we must be resolute in our refusal to comply. We know how to provide extraordinary care, which is why our doors are still open.   My office is overwhelmed by patients clamoring for a living, breathing physician who listens, makes eye contact, and is not attached to a computer.  We must never give up, we must continue to argue, irritate, and aggravate healthcare bureaucrats at every turn, like those brave individuals who boldly tossed tea into the Boston Harbor many years ago.  Defiance will inspire progress. Do not surrender at any cost.   

Categories: OIG Advisory Opinions

Is the ACA Merely a Step Towards Single-Payer “Medicare-for-All?”

The Healthcare Blog - Sat, 10/15/2016 - 06:52

A recent commentary in the Wall Street Journal announced, “Obamacare’s meltdown has arrived.” Over the years I’ve heard conspiracy theories that the Affordable Care Act was designed to fail, as a means to nudge a reluctant nation one step closer to a single-payer, Medicare-for-All health care system.

Bernie Sanders famously advocated for single-payer during his campaign.  In 2011, the Vermont legislature passed a bill to create a single-payer initiative. Green Mountain Care was abandoned in 2014 by Vermont’s governor — a Democrat — as being too costly. Despite an 11.5 percent payroll and a sliding-scale income tax of up to 9.5 percent, Green Mountain Care was projected to run deficits by 2020.   

A similar single-payer initiative is now taking place in Colorado. Amendment 69, known as ColoradoCare, would create a taxpayer-funded health insurer. ColoradoCare would be available to nearly all Colorado residents, including Medicaid enrollees. Federal programs, such as Medicare, TRICARE and the VA would remain in place, however.

ColoradoCare would be funded by a 10 percent payroll tax and a 10 percent tax on nonwage income. The payroll tax could not rise without voter approval and the income subject to the tax would be capped at $350,000 for individuals and $450,000 for couples.

Proponents tout potential savings as a result of lower overhead, no need for profits, little need for marketing and fewer high-salaried for-profit executives. Unfortunately, that is wishful thinking. An analysis by the Colorado Health Institute (CHI) found the program would operate in the red from day 1 and the deficits would grow each year.  The CHI analysis also found covering the uninsured and higher utilization of care that is nearly free at the point of service would about equal the savings from lower 0verhead and lower administrative costs.

According to CHI, the program would almost break even in 2019, its first year of operation. In 2019, ColoradoCare would cost about $36 billion, losing only $253 million. By 2028, ColoradoCare would run an $8 billion deficit — more than $100 per member per month.  The program would only lower hospital spending by about 7 percent in 2019; a savings of only $800 million. This is a pittance (2.2 percent) of the projected $36 billion in total medical spending.

Why so little savings? Single-payer systems implemented at the state level do not really represent single-payer systems with true monopsony power, like Canadian Medicare or the British National Health Service (NHS). By definition, a single-payer is a monopsony — the only purchaser of a good or service.  In theory, if you are the only purchaser in the state, you have significant leverage to dictate the prices you are willing to pay.  The negotiation of hospital and physician fees are basically a “take it or leave it” proposition. 

The Vermont experiment expected hospitals and doctors to accept fees that were about the same as what Medicare pays. Medicare pays hospitals about 70 percent of what private insurers pay and reimburses doctors about 80 percent of rates paid by private insurers.  ColoradoCare would pay fees more generous than Medicare, but presumably less than private insurers. If you remember back in Economics 101, market clearing prices are determined by the intersection of the supply and demand curves, where the quantity supplied equals the quantity demanded. Economic theory suggests a monopsony should set prices where most providers participate, but enough exit to create a slight shortage. In other words, to significantly reduce medical expenditures under a single-payer system, hospital fees would have to be lower than what Medicare pays today. Doctors, medical device makers and drug companies would face a similar squeeze on fees and prices. 

All health care systems — including single-payers — have to use rationing techniques. In most markets, prices are the standard form of rationing. In health care markets that don’t use prices, individuals have to be discouraged from getting expensive care in other ways. In Canadian Medicare this is done by controlling access to high-tech equipment. Other forms of non-price rationing include rationing by waiting and exercising monopsony power. Single-payer systems can save money primarily because they can strong-arm providers into accepting lower fees and discourage unnecessary utilization.

Most single-payers also refuse to pay providers piecemeal or fee-for-service. Rather, hospitals are generally allocated a fixed, annual budget. From this budget, hospitals are expected to care for all patients who need care in the area. To avoid paying for volume rather than value, a single-payer system in the United States would also have to allocate a similar (at-risk) global budget based on hospitals’ licensed beds and occupancy.  Years ago British and Canadian hospitals were accused of keeping seniors in the hospital to recuperate long after they could have been discharged to a nursing home. Warehousing convalescing seniors was cheaper than admitting new patients, who were sicker.  These convalescing patients were called “bed blockers” because they allowed hospitals to treat fewer new admissions.   Hospitals would probably need some form of token payments for treating actual patients, since hospital districts would not want to compensate area hospitals for doing nothing.

A single-payer is not some magical entity that rains down savings from Heaven by being unconcerned about profit. Rather, an efficient single-payer operates more like a predatory HMO with no competition. It is currently in vogue for hipsters to matter-of-factly announce the simple solution to health reform is single-payer. Be careful what you wish for; you may end up with Medicaid-for-All.

Devon M. Herrick, Ph.D. is a health economist and senior fellow at the National Center for Policy Analysis.

Categories: OIG Advisory Opinions

A Letter from CMS to Clinicians in the Quality Payment Program: We Heard You and Will Continue Listening

The Healthcare Blog - Fri, 10/14/2016 - 10:40

Today, we are finalizing policies to implement the new Medicare Quality Payment Program. Part of the bipartisan Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Quality Payment Program aims to create a more modern, patient-centered Medicare program by promoting quality patient care while controlling escalating costs through the Merit-Based Incentive Payment System (MIPS) and incentive payments for Advanced Alternative Payment Models (Advanced APMs).

After issuing our proposal for how to implement the new program earlier this spring, we held a listening tour across the country to hear your thoughts and concerns first-hand about the Quality Payment Program. Whether you formally submitted one of the over 4,000 comments we received, or were one of the nearly 100,000 attendees at our outreach sessions, there have been record levels of clinician engagement. The interactions reflect the importance you place on serving the more than 55 million individuals that have Medicare coverage.

We found an eagerness to help the Medicare program improve and an interest in being engaged in how we address the challenges and opportunities ahead. We also heard concerns, which is not surprising, given the challenge of changing something as large and important as the Medicare program. But, we found that there is near-universal support for moving towards a future focused on patient care that pays for what works, reduces clinician burden, and better supports and engages the medical community.

The policy released today is the first step in a multi-year journey in which we are particularly focused on allowing clinicians to transition at their own pace, continuing to get feedback from the field, providing meaningful support, and improving the program over time. As we read your comments, engaged directly with many of you, sought guidance from Congress, and considered all the options, we identified these priorities for the design of the program.

Focus on the patient

Patients tell us they want and expect us to pay for what works and for higher-quality outcomes. Clinicians tell us that they want to focus on delivering the care that is best for their patients, not on reporting or paperwork. For example, one physician group in Texas urged us to concentrate on quality metrics “that are most meaningful to our practices and our patients.” For this reason, we have reduced the number of required measures and provided practices more flexibility to select the measures that they believe best represent their patients’ needs. And, to free up more time for clinicians to spend on patient care, we announced yesterday an initiative to reduce burden and improve physician engagement with CMS, including a regulatory review to begin reducing unnecessary documentation.

Start out gradually

Other than a 0.5 percent fee schedule update in 2017 and 2018, there are very few changes when the program first begins in 2017. If you already participate in an Advanced APM, your participation stays the same. If you aren’t in an Advanced APM, but are interested, more options are becoming available. If you participate in the standard Medicare quality reporting and Electronic Health Records (EHR) incentive programs, you will find MIPS simpler. And, if you see Medicare patients, but have never participated in a Medicare quality program, there are paths to choose from to get started. The first couple of years are aimed at getting physicians gradually more experienced with the program and vendors more capable of supporting physicians. We have finalized this policy with a comment period so that we can continue to improve the program based on your feedback.

More pathways to participate in Advanced Alternative Payment Models (APMs)

In listening to many of you and working with the Congress, we have heard strong interest in providing more opportunities for physicians to participate in Advanced APMs. Our goal over the next few years is to have more options that fit the diversity of practices and care across the nation, while maintaining robust models that actively encourage high-value care – the best care at the best price – for our Medicare beneficiaries.

In today’s rule, for both Medicare primary care clinicians and specialists, we are announcing our intent to explore testing a new Advanced APM in 2018 – ACO Track 1+ — which has lower levels of risk than other Accountable Care Organizations (ACO). Specifically for specialists, in addition to oncology and nephrology, we recently proposed allowing participants in new cardiac and orthopedic bundled payment models the possibility to qualify as Advanced APMs beginning in 2018. We are also reviewing the other models established through the CMS Innovation Center and are in the process of updating and possibly re-opening them to allow for more participation. And physicians can soon submit proposals for new models to the new Physician Focused Payment Model Technical Advisory Committee, which can now be designed with a lower level of risk than we had originally proposed, which may make more Advanced APMs available to small practices.

With these new Advanced APMs, we estimate that about 25 percent of eligible Medicare clinicians could be in an Advanced APM by the second year of the program.

Adapt for small and rural practices

We know that small practices deliver the same high-quality care as larger ones. Yet at every practice we visited or event we held, we heard from physicians in small and rural practices concerned about the impact of new requirements.

We heard these concerns and are taking additional steps to aid small practices, including: reducing the time and cost to participate, excluding more small practices (the new policy will exclude an estimated 380,000 clinicians), increasing the availability of Advanced APMs to small practices, allowing practices to begin participation at their own pace, changing one of the qualifications for participation in Advanced APMs to be practice-based as an alternative to total cost-based, and conducting significant technical support and outreach to small practices using $20 million a year over the next five years, as well as through the Transforming Clinical Practice Initiative. Due to these changes, we estimate that small physicians will have the same level of participation as that of other practice sizes.

Simplified reporting and scorekeeping in MIPS

Many of you asked us for simplified scoring, better feedback, and clear rules. The policies finalized today begin that alignment and simplification process, which we intend to continue as the program matures.

First, we are simplifying requirements for the two quality components of the program – the quality measures and practice-specific improvement activities. Second, we are moving to align the measurement of certified EHR technology with the improvement activities. This will begin 2017 with a portion of the Advancing Care Information measures; we intend to align more of these measures with quality in later years, to further ensure that certified EHRs are being used to support high-quality care. We also narrowed the focus to those measures that support hospitals and physicians safely and securely exchanging information, and we expect both registries and certified EHRs to move to make reporting more “push button,” making such reporting easier for clinicians. Finally, we are rolling out the new Quality Payment Program website, which will explain the new program and help clinicians easily identify the measures and activities most meaningful to their practice or specialty.

Overall, we are deeply appreciative to everyone, from the Congress to practicing physicians, patient advocates, people with Medicare and their families, and technology companies, who provided input into the launch of the program. We listened and made changes based on your input.

There are a number of ways to learn more about the details and how you can get help in the Quality Payment Program: here. We want everyone to participate over time and will provide intensive support to clinicians through our new Quality Payment Program website, as well as directly through in-person and virtual educational sessions and webinars.

Through this process and the input you have given us, CMS is becoming even more open, transparent, and responsive. We are committed to paying close attention to the impact of our policies on care delivery and adjusting along the way. By working together, we can all make real progress in improving the delivery of care in our country.

Categories: OIG Advisory Opinions