Transcript Presentation to TCMS, February 17, 2011

ACOs: They won’t work for the
same reason HMOs didn’t work
Presentation to TCMS
By Kip Sullivan
February 17, 2011
Congressional interest in reforming the
SGR, and Fisher, brought us the ACO
“Together, the Medicare Payment Advisory
Commission … and [Elliot] Fisher provided the
impetus for the current concept and interest
in ACOs.”
Kelly Devers and Robert Berenson, “Can Accountable Care Organizations
improve the value of health care by solving the cost and quality quandaries?”
Urban Institute, October 2009, P 2
http://www.urban.org/publications/411975.html, accessed February 3, 2011.
Deficit Reduction Act of 2005 required
Medpac to report on SGR alternative
“The report must discuss disaggregating the current
… [Sustainable Growth Rate method of updating
the Medicare physician fee schedule] target into
multiple pools using five alternatives: Group
practice, hospital medical staff, type of service,
geographic area, and physician outliers.”
Statement of Dana Kelly, transcript of Medpac’s October 5, 2006 meeting, P 3,
http://www.medpac.gov/transcripts/10_06_MEDPAC_all.pdf , accessed February 8,
2011.
Fisher presented “extended hospital
medical staffs” to Medpac on 11-9-06
“Let me briefly describe the general approach we've
taken to assigning patients. If a physician works in an
inpatient setting, we assign them to the hospital where
they provided care to the greatest number of Medicare
beneficiaries [they] saw. If they get no inpatient work,
we assigned him to the hospital where the plurality, or
actually the majority in most cases, of their patients
they billed for were admitted…. It turns out, not
surprisingly, that you can assign virtually all physicians
billing Medicare to a hospital.”
Testimony of Elliot Fisher to Medpac, November 9, 2006, PP 287288, http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf,
accessed February 5, 2011.
Examples of how Fisher’s attribution of
patients to primary care docs worked
• Doctor who treats 40 patients in Hospital A,
30 in Hospital B, and 30 in Hospital C is
assigned to Hospital A.
• Doctor who does no inpatient work is
assigned to the hospital where a plurality of
his patients were admitted. Thus, doctor who
treats 40 patients admitted to Hospital A, 30
admitted to hospital B, and 30 admitted to
Hospital C, is assigned to Hospital A.
Fisher’s rules for attributing patients
are as logical as the Bacon game
• Elvis Presley appeared in “Change of Habit”
(1969) with Ed Asner;
• Ed Asner appeared in “JFK” (1991) with Kevin
Bacon;
• Therefore, Asner has a Kevin Bacon number of
1, and Presley has a Bacon number of 2.
Wikipedia, http://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon,
accessed February 5, 2011.
Medpac’s chairman introduced
“accountable” after Fisher’s testimony
“Thank you Elliot. As always, a great job. [P 308]….The third
notion that interests me is within such a framework of total
cost and geography creating opportunities for what I'll call
accountable organizations to get their own performance
assessment. So if you have a geographic system the target
would still be the target for the geographic region. But as
opposed to their payment consequences being based on
the whole region's performance, it could be for a smaller
subset like an extended hospital medical staff….” [P 309]
Statement of Glenn M. Hackbarth, Medpac meeting, November 9, 2006,
http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf, accessed
February 5, 2011
A few minutes later, Fisher indicated
his approval of Hackbarth’s phrase
“I love your notion of accountable organizations. It's
exactly the right thing we want to create. And I
agree completely with applying it to all services.
It should include the whole gamut of care so we
get rid of the silos, because you look at the
numbers of care transitions and you just see that
these places are churning patients from hospital
to acute care to nursing home back to the
hospital.”
Medpac meeting, November 9, 2006,
http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf, accessed
February 5, 2011, P 311
HMO and ACO have very similar
definition, purpose, and history
• Same diagnosis: FFS and “fragmentation”
• Same prescription: Reverse fee-for-service incentives,
shift insurance risk to doctors; “protect” patients with
report cards; consolidate clinics and hospitals into
much larger entities
• Shared poster child: Kaiser Permanente
• Same vague definition of HMO/ACO: network of
providers “held accountable” for cost via capitation
and quality via report cards
• Each associated with one “father”(Ellwood; Fisher);
• Neither was demanded by patients and doctors; each
initiated by Congress and a few state legislatures
ACO proponents define the problem
the way HMO proponents did
In the following quotes from papers promoting
HMOs (Ellwood et al.) and ACOs (Fisher and
McClellan), note these similarities in their
diagnosis of the problem:
* the fee-for-service payment method is the
fundamental cause of health care inflation;
* the medical sector is “fragmented.”
Ellwood’s definition of the problem,
1971
“Medical care is presently provided by doctors,
hospitals, clinics, visiting nurses, laboratories,
and drug stores…. It is the way health services
are organized … that needs changing. Health
services are delivered by units that are both
too small and too specialized.” [ P 292] [Cont.]
(Ellwood’s definition of the problem,
1971, cont.)
“The way that health care is financed today
works against the consumer’s interest. Since
payment is based upon the number of
physician contacts and hospital days used, the
greater the number of contacts and days used,
the greater the reward to the provider.” [P
292]
Paul M Ellwood, Jr., et al., “Health maintenance strategy,” Medical Care
1971;9:291-298
Fisher et al’s definition of the problem,
2009
“To overcome the current system’s perverse
incentives and fragmentation, providers need
to become accountable for the overall quality
and cost of care for the populations they
serve.”
Elliot Fisher et al., “Fostering accountable health care: Moving forward in
Medicare,” Health Affairs 2009;28:w219-231, w220 (Published online 27 January
2009)
Fisher et al.’s definition of the
problem, 2010
“The current system, based on volume and
intensity, does not disincentivize, but rather
pays more for, overuse and fragmentation.
Providers note that current payment systems
undermine efforts to invest money and effort
in delivery-system improvements that can
sustainably reduce costs.”
Mark McClellan et al., “A national strategy to put accountable care into
practice,” Health Affairs 2010;29:982-990, 982.
ACO proponents define their solutions
the way HMO proponents did
In the following quotations from Ellwood’s 1971
paper, the Jackson Hole Group’s 1992 paper, and
McClellan-Fisher’s 2010 paper, note these
similarities in the papers’ description of the
solution:
* The HMO/ACO is vaguely defined (no particular
organizational structure is required);
* the entity will be “accountable” for cost via
capitation and quality via report cards; and
* the entity must provide all necessary medical
services to a defined population (aka “enrollees”).
Ellwood’s definition of the HMO
“Services would be purchased annually from … Health
Maintenance Contracts (capitation)…. [ P 291][T]he …
HMO … agrees to provide comprehensive health
maintenance services to its enrollees in exchange for a
fixed annual fee…. The economic incentives of both the
provider and the consumer are aligned…. [P 295]
Federal concern would focus on the performance of
the HMO, not on its organizational structure. [P 296]. A
performance reporting system … would be …
installed….” [P 297]
Paul M Ellwood, Jr., et al., “Health maintenance strategy,” Medical Care
1971;9:291-298
Ellwood-Enthoven-Etheridge definition
of “accountable health partnerships”
“The reformed system must be based on
organizations that integrate the financial, clinical,
managerial and preventive aspects of health care,
that are publicly accountable for their cost, health
outcomes produced, and patient satisfaction. We
refer to them as ‘Accountable Health
Partnerships.’ Such organizations would replace
the traditional fee-for-service fragmented
practice … model.” [P 149] [Cont.]
(Ellwood et al. definition of AHP’s
continued)
“The critical, defining characteristics of
Accountable Health Partnerships will be their
participation in a system of public
accountability reporting for the health of
enrolled populations and their ability to
compete … on the basis of costs. [They will]
deliver the full array of Uniform Effective
Health Benefits…. [P 153]” [Cont.]
(Ellwood et al. definition of AHPs
cont.)
“Registered [AHPs] can be single, vertically
integrated organizations consisting of providers
who are … capable of delivering health care
services that meet the required set of Uniform
Effective Health Benefits, and insurers who are …
able to meet the underwriting standards for the
industry. Registered [AHPs] may also be made up
of two affiliated … organizations – a provider …
and a carrier….” [P 154]
Paul M. Ellwood et al., “The Jackson Hole initiatives for a Twenty-First
Century American health care system,” Health Economics 1992;1:149-168.
Fisher-McClellan definition of ACO
“ACOs consist of providers who are jointly held
accountable for achieving measured quality
improvements and reductions in the rate of
spending growth…. ACOs should have at least
limited accountability for achieving these
improvements while caring for a defined
population of patients.” [P 983] [Cont.]
(Fisher-McClellan definition of ACO,
cont.)
“ACOs may involve a variety of provider
configurations, ranging from integrated delivery
systems and primary care medical groups to
hospital-based systems and virtual networks of
physicians such as independent practice
associations. All accountable care organizations
should have a strong base of primary care.
Hospitals should be encouraged to participate….”
[P. 983]
Mark McClellan et al., “A national strategy to put accountable care into
practice,” Health Affairs 2010;29:982-990
Definition of ACO according to Patient
Protection and Affordable Care Act
“The basic statutory requirements of the
program are that ACOs need to have the
capacity to deliver or arrange for the
continuum of care for those patents assigned
to it, to have a sufficient number of primary
care professionals to provide services to at
least 5,000 beneficiaries…, and to report data
on cost, quality, and overall patient experience
for beneficiaries in traditional Medicare.” [P
722] [Cont.]
(PPACA’s definition of ACO cont.)
“Although Sections 3022 and 10307 give the [HHS]
Secretary discretion in using additional payment
approaches, they specify … a shared savings
payment approach whereby groups would be
paid their usual Medicare fee-for-service
reimbursements, with no penalties … for higher
spending, and could share in savings if the group
provides care to assigned beneficiaries for less
than a Medicare benchmark spending target …
while passing … thresholds for … quality of care.”
[P 722] [Cont.]
(PPACA’s definition of ACO cont.)
“[T]here can be no limitation on patient choice of
provider at the point of service…. It is even possible
that the Secretary could assign beneficiaries ‘invisibly’
(without their knowledge) to an ACO on the basis of
concurrent fee-for-service claims that indicate where
they receive the preponderance of their primary care
services, as was done in the Medicare Physician Group
Practice … demonstration. [I]t is possible that the ACO
wouldn’t know which of its patients qualify it for
shared savings payments.” [P 722]
Robert A. Berenson, “Shared savings program for Accountable Care
organizations: A bridge to nowhere?” American Journal of Managed Care, 2010;
16:721-726.
Under Section 3022 of PPACA, all sorts
of groups can form ACOs
“[T]he following groups of providers of services and
suppliers which have established a mechanism for
shared governance are eligible to participate as ACOs
under the program under this section:
(A) ACO professionals in group practice arrangements.
(B) Networks of individual practices of ACO
professionals.
(C) Partnerships or joint venture arrangements
between hospitals and ACO professionals.
(D) Hospitals employing ACO professionals.
(E) Such other groups of providers of services and
suppliers as the Secretary determines appropriate.”
Invisible enrollment not possible for 40
percent of non-elderly
“However, recent analysis of VHCURES data for the Health
Care Reform Commission in Vermont has identified a major
issue when this approach is taken with a younger
population. That analysis found that approximately 40
percent of covered individuals do not have any contact
with a primary care physician in a one-year period. If this
finding is accurate, it raises the question of how to attribute
those individuals. Further, if those individuals are not
attributed and seek care, who will be financially
responsible? How should their claims experience (if any) be
used in calculation of premiums?”
William Hsiao et al., Act 128 Health System Reform Design: Achieving Affordable Universal Health
Care in Vermont, P 108,
http://www.leg.state.vt.us/jfo/healthcare/FINAL%20VT%20Draft%20Hsiao%20Report.pdf, accessed
February 5, 2011.
Summary of HMO-ACO proponents’
thought process
• FFS system is the problem, ergo, capitation
(shifting insurance risk) is the solution.
• But cannot shift risk to small clinics and hospitals,
so it becomes necessary to justify consolidation
(which in turn requires criticizing
“fragmentation”).
• Cannot shift risk if patients can seek care outside
their HMO, so limited choice becomes essential.
• Shifting risk creates incentive to deny care, which
justifies report cards.
Other consequences of HMO-ACO
premises
• To justify capitation (shifting insurance risk), it
helps to claim capitation will induce doctors to do
more prevention and disease management.
• To justify all of the above – capitation,
consolidation, loss of choice, and report cards – it
helps to trash doctors (they refuse to do
prevention, they order services patients don’t
need, they won’t follow guidelines, they refuse to
buy electronic medical records, etc.).
(Other consequences of HMO-ACO
premises cont.)
If report cards are necessary, then
– guidelines with which to measure quality become
essential,
– risk adjustment of “grades” becomes necessary
which in turn justifies routine collection of
medical records, which in turn justifies
– universal and interoperable electronic medical
records.
(Other consequences of HMO-ACO
premises cont.)
• If capitation/premium payments to groups of
providers is necessary, then risk adjustment of
those payments becomes necessary, which
(like report cards) justifies
– routine collection of medical records which in
turn justifies
– Universal adoption of interoperable electronic
medical records.
Capitation without risk adjustment
shifts resources from poor to wealthy
”From 2002 to 2010, about 75% of [the province of
Ontario’s] 13 million residents and 10,000
primary care physicians joined medical home
models…. The single most notable change … was
to switch from predominantly fee-for-service to
predominantly capitation practices…. Parties
involved in the negotiations could not agree on
case-mix or socioeconomic adjustments (…
capitation payments were adjusted for age and
sex alone).” [P 2186]
(Capitation w/o risk adjustment cont.)
” Without finer case-mix adjustment, practices in the healthier and
wealthier areas obtained attractive revenue projections with
capitation, and the majority chose this model…. Conversely,
physicians treating sicker patients had no incentive to join a
capitation model…. Such adverse risk selection and ‘cherry picking’
was accentuated because capitated medical homes were allowed to
de-roster patients who sought outside primary care. This provided a
strong incentive for some medical homes to drop precisely those
patients with higher health needs and complex care [P 2186)….
Major cities with urban poor and recent immigrants were much less
likely to be served by primary care physicians working in a capitated
medical home.” [P 2187]
Richard H. Glazier and Ronald Redelmeier, “Building the patient-centered
medical home in Ontario,” Journal of the American Medical Association
2010;303”21862187
Report cards without risk adjustment
also shift resources
“We simulated performance-based payments to
Massachusetts practices serving higher and lower
shares of patients from these vulnerable
communities in Massachusetts.” [P 925] “We did
not adjust for most potential confounders….” [P
926] “Typical practices serving higher shares of
vulnerable populations would receive less per
practice compared to others, by estimated
amounts of more than $7,000.” [P 925]
Mark Freidberg et al., “Paying for performance in primary care: Potential
impact on practices and disparities,” Health Affairs 2010;29:925-932, 926.
Most important differences between
the HMO and the ACO may be…
• Size (ACOs could be much smaller);
• insurance risk (will be shifted to ACO doctors
and hospitals in increments); and
• limitation on patient choice of provider (ACO
membership will be “attributed,” “enrollees”
will not be notified of their “attribution” to an
ACO, and they will not have to stay within the
ACO network).
CBO estimated ACOs would cut
Medicare spending by 1/10th of a %
“Under this option [37], groups of providers meeting
certain qualifications would have the opportunity to
participate … in Medicare as bonus-eligible
organizations (BEOs). The concept of BEOs is similar to
the accountable care organization models proposed by
some researchers.”
Congressional Budget Office, Budget Options: Volume 1, Health Care, December 2008,
http://www.cbo.gov/doc.cfm?index=9925. The CBO estimated this option would cut
Medicare spending by $5.3 billion over the 2010-2019 period. According to the National
Health Expenditure Accounts, Medicare will spend $6.8 trillion over this period
(National Health Expenditure Projections 2009-2019, CMS, Table 2
http://www.cms.gov/NationalHealthExpendData/downloads/NHEProjections2009to20
19.pdf). Under the CBO’s Option 38, primary care doctors would be paid by partial capitation. But
CBO’s savings estimate for this option is virtually identical to its estimate for Option 37 -- $5.2
billion over the 2010-2019 period.
Three ways to assess ability of ACOs to
cut costs or improve quality
• Examine research on HMOs;
• Examine results of 2005-2010 Physician Group
Practice demonstration;
• Examine research on tools ACOs are expected
to use, including:
– prevention and disease management
– “coordination”
– report cards and P4P schemes
– electronic medical records
HMOs damaged quality
Number of comparisons
HMO care was better than FFS care
4
HMO and FFS care were equivalent
19
HMO care was worse than FFS care
21
Total number of comparisons
44
Source: Kip Sullivan, “Managed care plan performance since 1980:
Another look at two literature reviews,” American Journal of Public Health
1999;89:1003-1008.
HMOs increased consolidation
“We find that higher levels of local managed-care
penetration are associated with substantial
increases in consolidation in hospital and
physician markets. In the average market …
between 1981 and 1994 … [t]his is equivalent to
moving from 10.4 equal-sized hospitals to 6.5….
In the physician market, … [t]his implies a
decrease in the percentage of doctors in solo
practice from 38 percent in 1986 to 24 percent by
1995.”
David Dranove et al., “Is managed care leading to consolidation in
health-care markets?” Health Services Research 2002;37;573-594.
Prospect of ACOs is causing another
round of consolidation
“When Congress passed the health care law, it envisioned
doctors and hospitals joining forces, coordinating care
and holding down costs…. Now, eight months into the
new law there is a growing frenzy of mergers involving
hospitals, clinics and doctor groups....” [P A1] “’If
accountable care organizations end up stifling rather
than unleashing competition,’ said Jon Leibowitz, the
chairman of the [FTC], ‘we will have let one of the
great opportunities for health care reform slip away.’”
[P A27]
Robert Pear, “As health law spurs mergers, risks are seen,” New York Times,
November 21, 2010, A1.
Experts agree HMO experiment failed
“Events of the past year demonstrate beyond a
doubt that managed care has failed – and failed
dismally. The greatest single ethical crisis
facing American health care as we move into
new year is what to do about it.”
Art Caplan, director of the Center for
Bioethics at the University of Pennsylvania ("In
2001, managed care our No. 1 health crisis," MSNBC, December 21, 2001
http://www.msnbc.com/news/671464.asp, accessed December 23, 2001).
(Expert opinion on managed care,
cont.)
“Managed care is basically over. People hate it, and it's
no longer controlling costs. Health-care inflation is
now back in the double digits. So if it's not saving
money, then why should we have it? But like an
unembalmed corpse decomposing, dismantling
managed care is going to be very messy and very
smelly, and take awhile.”
George Lundberg, former editor of JAMA who as recently
as 1996 had co-authored an article defending managed care (Linda Marsa, “Former JAMA editor laments the state of
medical care,” Los Angeles Times, March 26, 2001, http://www.latimes.com/print/health/200103 26/t000026016.html,
accessed March 28, 2001).
McClellan and Fisher view the PGP
demo as an ACO prototype
“The ACO model builds on similar initiatives that
Medicare has implemented in the past several
years. Starting in 2005, the Physician Group
Practice Demonstration engaged ten provider
organizations and physician networks, ranging
from freestanding physician group practices to
integrated delivery systems, in a ‘shared savings’
reform. The providers in the demonstration
continue to receive all of their usual fee-forservice payments.”
Mark McClellan et al., “A national strategy to put accountable care into
practice,” Health Affairs 2010;29:982-990, 983-984.
But the PGP demo failed to cut costs
“[T]he model for the ACO program … has been tested in
the PGP demonstration project that began in 2005. In
the demonstration, 10 group practices … were
permitted to receive bonus payments if they passed
quality-of-care thresholds and achieved savings…. [T[he
year 2 evaluation report documented that the essential
reason for the overall savings across the 10 sites of
about 1% … was from diagnosis coding changes the
PGP sites initiated….”
Robert A. Berenson, “Shared savings program for Accountable Care
organizations: A bridge to nowhere?” American Journal of Managed Care, 2010;
16:721-726., 723.
Third test of ACO: Do these methods
ACOs might use cut costs?
• Prevention
• Disease management
• “Coordination” (gate-keeping, utilization
review)
• Report cards and P4P
• Electronic medical records
If ACO proponents have other mechanisms in
mind, what are they?
Prevention doesn’t cut costs
“Although some preventive services do save
money, the vast majority reviewed in the
health economics literature do not.”
Joshua T. Cohen et al., “Does preventive care save money? Health economics and the
presidential candidates,” New England Journal of Medicine 2008;358:661-663.
“It’s a nice thing to think, and it seems like it
should be true, but I don’t know of any
evidence that preventive care actually saves
money.”
Jonathan Gruber, economist at the Massachusetts Institute of Technology, quoted in David
Leonhardt, “Free lunch on health? Think again,” New York Times, August 8, 2007, C 2.
Cardiovascular prevention raises costs
“The cost of caring for CVD, diabetes, and CHD
over the coming 30 years will be on the order
of $9.5 trillion. If all the recommended
prevention activities were applied with 100%
success, … total medical costs [would rise] by
$7.6 trillion (162%).”
Richard Kahn et al., “The impact of prevention on reducing the burden
of cardiovascular disease,” Circulation 2008;118:576-585, 580.
Diabetes disease management raises costs
by 25%
“Even for the most optimistic picture – a 30-year
horizon and assuming no turnover [patients stay
with the same plan for 30 years] – the net effect
on diabetes-related costs would be an increase of
about 25%.” [P 261] “The [disease management]
program used in [this] study may be too
expensive for health plans or a national program
to implement.” [P 251]
David M. Eddy et al., “Clinical outcomes and cost-effectiveness of
strategies for managing people at high risk for diabetes,” Annals of Internal
Medicine 2005;143:2512-64.
Disease management doesn’t cut costs
“On the basis of its examination of peer-reviewed
studies of disease management programs…, CBO
finds that to date there is insufficient evidence to
conclude that disease management programs can
generally reduce the overall cost of health care
services.”
Congressional Budget Office, An Analysis of the Literature on Disease
Management Programs, October 13, 2004,
http://www.cbo.gov/showdoc.cfm?index=5909&sequence=0,
accessed September 25, 2005.
(Disease management cont.)
“[T]he results of our review suggest that, to date, support for
population-based disease management is more an article of faith
than a reasoned conclusion grounded on well-researched facts. ...
Most of the evidence on disease management programs to date is
derived from small high-intensity programs focusing on high-risk
patients that are typically run as part of a demonstration project by
the providers at a single site. This evidence suggests that those
programs typically lead to better processes of care, but the
evidence for improved long-term health outcomes and cost savings
is inconclusive. ... [T]he vendor-run assessments typically do not
meet the requirements of peer-reviewed research ....”
Soeren Mattke et al., "Evidence for the effect of disease management: Is $1
billion a year a good investment?" American Journal of Managed Care
2007;13:670-676.
“Coordination” doesn’t cut costs
“To study whether care coordination improves the quality of
care and reduces Medicare expenditures, the Balanced
Budget Act of 1997 mandated that the Secretary of Health
and Human Services conduct and evaluate care coordination
programs…. [p. 604] None of the [15] programs reduced
regular Medicare expenditures, even without the fees paid to
the care coordination programs. Only two programs had a
significant difference in expenditures and, in both of these
programs, the treatment group [that is, the group getting
‘coordinated care’] had higher expenditures. “(p. 611)
Deborah Peikes et al., “Effects of care coordination on hospitalization, quality of care, and health
care expenditures among Medicare beneficiaries: 15 randomized trials,” Journal of the American Medical
Association 2009;201:603-618.
Utilization review doesn’t cut costs
“Although utilization review is widely used to control health
care costs, its effect on patterns of health care is
uncertain….We compared the health services provided to
3702 enrollees whose requests were subjected to
utilization review (the review group) with the services
provided to 3743 enrollees whose requests received sham
review and were automatically approved for insurance
coverage (the non-review group)…. During the study
period, the mean age-adjusted insurance payments per
person were $7,355 in the review group and $6,858 in the
non-review group (P = 0.06).”
Stephen N. Rosenberg et al., “Effect of utilization review in a fee-for-service
health insurance plan,” New England Journal of Medicine 1995;333:1326-1330,
1326.
Report cards do not improve quality
“[O]ur results show that report cards [on heart surgeons] led to
increased expenditures for both healthy and sick patients, marginal
health benefits for healthy patients, and major adverse health
consequences for sicker patients. Thus, we conclude that report
cards reduced our measure of welfare over the time period of our
study” (P 577). “[M]andatory reporting mechanisms inevitably give
providers the incentive to decline to treat more difficult and
complicated patients” (P 581). “[M]ore severely ill … patients
experienced dramatically worsened health outcomes.” (p. 583)
“Report cards led to a decline in the illness severity of patients
receiving CABG [coronary artery bypass grafts] in New York …
relative to patients in states without report cards.” (P 583)
David Dranove et al., “Is more information better? The effects of ‘report
cards’ on health care providers,” Journal of Political Economy 2003;111:555-588.
Report cards can harm minority
patients
“Rachel M. Werner and David A. Asch (2005)
find that the incidence of cardiac surgery for
minority patients relative to white patients
declined in New York subsequent to the
introduction of report cards.”
David Dranove and Ginger Zhe Jin “Quality disclosure and certification:
Theory and practice,” Journal of Economic Literature 2010;48:935-963, 955.
P4P does not improve quality
“There has been enough experience to date with pay for performance
and transparency to argue convincingly that neither of these
additional mechanisms for compensating physicians will achieve the
goal of most patients to receive high-quality, humane, and
affordable care…. [citations omitted]. These mechanisms are not
silver bullets; they can enhance performance only modestly…. In
addition, these mechanisms may have unintended consequences.
…. If only a few measures are used in pay-for performance
arrangements, clinicians will design particular aspects of their
practice to ensure those measures are achieved, even if it means
reducing quality of care in other practice areas.”
Robert Brook, “Physician compensation, cost, and quality,” Journal of the
American Medical Association 2010, 304;795-796
P4P does not improve quality of
hypertension care
“Explicit financial incentives in the pay-forperformance initiative introduced in the
United Kingdom in 2004 did not improve the
quality of care and clinical outcomes for
patients with hypertension in primary care.”
Brian Serumaga et al., “Effect of pay-for-performance on the
management and outcomes of hypertension in the United Kingdom:
Interrupted time series study,” British Medical Journal 2011;342:d108.
Electronic medical records and clinical
decision support don’t improve quality
“We analyzed physician survey data on 255,402 ambulatory
patient visits…. [P E1] …. [N]either EHRs [electronic health
records] nor CDS [clinical decision support] was associated
with ambulatory care quality, which was suboptimal for
many indicators. We noted no association between EHR
use and care quality for 19 indicators and a positive
relationship for only one indicator. We also found CDS use
associated with better quality for only one of 20 quality
indicators, refuting our hypothesis that CDS would be
associated with improved care quality.” [P E4]
Max J. Romano and Randall S. Stafford, “Electronic health records
and clinical decision support systems: Impact on national ambulatory care
quality,” Archives of Internal Medicine, published online January 24, 2011,
doi:10.1001/archinternmed.2010.527.
EMRs don’t cut costs
“We linked data from an annual survey of computerization at
approximately 4000 hospitals for the period from 2003 to
2007 with administrative cost data from Medicare Cost
Reports and cost and quality data from the 2008 Dartmouth
Health Atlas. We calculated an overall computerization score
and three subscores based on 24 individual computer
applications…. We analyzed whether more computerized
hospitals had lower costs of care or administration, or better
quality…. As currently implemented, hospital computing
might modestly improve process measures of quality but does
not reduce administrative or overall costs.”
David U. Himmelstein et al., “Hospital computing and the costs and quality
of care: A national study,” American Journal of Medicine 2010;123:40-46, 40.
Why don’t these managed care tools
work?
• HMOs didn’t work because administrative
costs offset reduced medical costs, and for
reasons set forth below.
• Report cards and P4P don’t work because
quality can’t be measured accurately, and
Skinnerian tactics work only with simple tasks.
• Cost of prevention, DM and EMRs outweighs
foregone medical expenditures due to better
health.
Most important reason may be too
few docs/nurses to meet all guidelines
“On the basis of recommendations from
national clinical care guidelines for preventive
services and chronic disease management,
and including the time needed for acute
concerns, sufficiently addressing the needs of
a standard patient panel of 2,500 would
require 21.7 hours per day.”
Kimberly S Yarnall et al., “Family physicians as team leaders: ‘time’ to
share the care,” Preventing Chronic Disease 2009 6(2),
http://www.cdc.gov/pcd/issues/2009/apr/08_0023.htm, accessed June 1,
2010.
Examples of questions required by
guidelines
“Are you feeling down? Have you recently traveled
to another country? Do you have more than one
sexual partner? Does your child live in or
regularly visit a house built before 1950? How do
you deal with anger? Any trouble sleeping? Do
you wear a seat belt? Do you drink alcohol? Does
your vision make it difficult for you to recognize
your pills or read medication labels? Do you have
a gun at home?”
Kathleen P Tomaselli, “One more thing,” American Medical News, January
23, 2006, 19.
So if ACOs can’t improve quality or cut
costs with …
•
•
•
•
•
prevention,
disease management,
coordination,
report cards and pay-for-performance, and
Electronic medical records…
what mechanism do ACO proponents think
ACOs will use?
Some ACO proponents cite “medical
homes”
• Not clear why. Some claim “homes” will be
building blocks for ACOs. Others imply
“homes” have already shown an ability to do
that which HMOs and managed care could
not, namely, lower costs by improving care.
• But “medical homes” are almost as vaguely
defined as ACOs, and have roughly the same
track record, namely, none at all.
Example of ACO proponents invoking
“medical homes”
“Reforms that support primary care can leverage
accountable care, and vice versa. For example, medical
homes typically involve additional payments to primary
care physicians each month in exchange for physicians’
leading prevention, disease management, and care
coordination activities…. Implementing a medical
home and accountable care organization at the same
time could address budgetary concerns while also
providing more incentives for overall care
coordination.”
Mark McClellan et al., “A national strategy to put accountable care into
practice,” Health Affairs 2010;29:982-990, 985
Adding primary care workers to clinic
staff doesn’t require ACOs
• Research on “home”-like entities suggests that
integrating more nurses and social workers
into primary care clinics improves health,
possibly enough to offset the cost of the
additional staff.
• But this simple intervention does not require
recycling the HMO experiment.
If FFS is the problem, why is underuse far
worse than overuse?
“[W]e found greater problems with underuse
(46.3 percent of participants did not receive
recommended care …) than with overuse
(11.3 percent of participants received care
that was not recommended and was
potentially harmful…).”
Elizabeth A. McGlynn et al., “The quality of health care delivered to
adults in the United States,” New England Journal of Medicine
2003;348:2635-2645, 2641.
ACOs won’t work for same reason
HMOs didn’t work: wrong premises
• Wrong diagnosis (FFS);
• Faith-based solutions that raise costs as much
as or more than they lower costs:
– capitation, which in turn requires
• consolidation
• report cards and
• limited choice (or “invisible enrollment”)
One last question: How are ACOs
supposed to work outside Medicare?
If insurance companies agree to shift risk to
clinics and hospitals, who needs insurance
companies?