Payment Reform

COST: A Bit More Explaining about Accountable Care....

Joanne Kenen — Tue, 21 Jul 2009 17:54:00 -0400

We posted this morning a guest post by an attorney about Accountable Care Organizations and physician-hospital integration. Many of our readers are quite familiar with ACOs but for those of you who want to learn a bit more, here are some useful links:

From CQ Healthbeat in April, via the Commonwealth Fund:

April 13, 2009 -- Washington just can't get enough of accountable care organizations (ACOs). Members of Congress are talking about them as a way to save money and increase quality in the U.S. health care system, and the Medicare Payment Advisory Commission (MedPAC) again probed the concept as it relates to Medicare at its April 9 meeting.

An explanation from the folks at the Dartmouth Atlas and Brookings in January (related to a Health Affairs article):

Washington, DC -- Medicare could save money and improve health care quality by providing financial incentives to providers for coordinating patient care through a shared savings program... Research by Elliott Fisher, Mark McClellan, and colleagues demonstrates that such a program, implemented with the establishment of Accountable Care Organizations (ACOs), would benefit patients, payers, and providers. The ACO shared savings concept would eliminate waste, reduce overuse and misuse of care, and support the development of health systems that can deliver high quality, affordable care.

A look at ACOs may fit into the next phase of Massachusetts' health reform, courtesy of the Liz Kowalczyk of The Boston Globe:

The plan would require significant restructuring of the healthcare system, and some of its components would need legislative approval. Primary-care doctors, specialists, hospitals, and home healthcare agencies would have to form so-called accountable care organizations. Patients would choose a primary care doctor to coordinate their care, mostly within the organization. Insurers would pay the accountable care organization a flat yearly per-patient fee to be divided among the providers.

Dr. Lawrence Casalino has done some similar work on what he calls Accountable Care Systems. (He uses the word "system" to convey the fact that such organizations could be composed of multiple organizations working within an ACS -- we blogged about that here) and he and some other experts did a presentation and published papers as part of a New America project on Medicare. In the context of Medicare, Casalino writes:

[B]ecause an ACS would be a relatively large organization, and because it would be responsible or the full range of costs and quality for its patients, it would be possible for Medicare to use a broader and deeper set of measures, including outcome measures, to reward high quality, cost-effective are than is possible for individual physicians, medical groups, or hospitals.

Finally, Kaiser Health News also did a "quick primer," putting the idea within the context of the whole system:

In the existing fee-for-service payment system used by Medicare and most private insurers, doctors get paid more by giving more services, and hospitals make more by increasing admissions. With ACOs, doctors and hospitals would get paid based on their ability to hold down overall costs and meet quality-of-care indicators. In effect, their pay would be based on improving care, not driving more of it.

QUALITY: Stopping the Mistakes

Meredith Hughes — Tue, 21 Jul 2009 16:58:00 -0400

All health systems, even good ones, make mistakes. Some have horror stories. Surgical sponges left inside of patients, deadly infections that come from within the hospital rather than the outside world, operations on the wrong body part. Within the past few years, Virginia, Maryland, and DC have enacted laws requiring hospitals to disclose such patient injuries to regulators, The Washington Post reports. The goal is to make the system safer.

Regulators are hoping to reduce preventable deaths and injuries, sometimes called "never events" because they should "never" happen. According to the Post, one hospital in Northern Virginia reported about two dangerous blood infections for every 1,000 IVs inserted in patients. Currently, insurance companies generally reimburse hospitals for medical errors. If, for example, a patient were to come into the hospital for a low cost procedure, and get an infection from an IV because their doctor did not wash his hands, the hospital would bill the insurance company for the much higher cost of treating the hospital acquired infection. As the Post puts it, "if a lawn service mowed down your rosebush while cutting the grass, you wouldn't pay the company to replace it."

Some regulators and insurance providers are starting to come up with strategies to fight against these "never events" by realigning payment incentives. Medicare already implemented this system -- there are specific "never events" that Medicare won't pay hospitals for, including ventilator-associated pneumonia and hospital acquired staph infections. Some hospitals in Maryland are voluntarily cooperating with insurers who want to follow Medicare's example; agreeing to forgo reimbursement for mistakes such as transfusing people with the wrong blood type, or performing surgery on the wrong side of the body, reports the Post. Anthem Blue Cross and Blue Shield of Virginia also stopped paying for a small number of serious, preventable mistakes, such as operating on the wrong patient, or leaving foreign objects inside the patient after surgery.

Clinicians and hospital workers are only human, and people do make mistakes. But the potentially cataclysmic consequences of mistakes in patient care mean that hospitals and clinicians -- and the systems they work in -- need to strive toward perfection in care delivery. Doctors don't intend to make mistakes, and patients and their families don't like feeling victimized. (In fact, many have found that a sincere "I'm sorry" from doctors does a lot to alleviate the burden of medical malpractice lawsuits, reports the Associated Press.) Other simple strategies, such as Dr. Peter Pronovost's hygiene checklist, have helped hospitals lower rates of hospital acquired infections when implemented, but no method is foolproof. Health care providers are also worried about understaffing -- how strict is too strict for nursing staffs that are already chronically understaffed? Ultimately, the goal of changing payment incentives is to improve the health care system, to reduce medical errors, increase quality, lower cost, and improve patient safety.

HEALTH REFORM: Overheard on the Metro

Joanne Kenen — Tue, 26 May 2009 14:53:00 -0400

En route to work today, we could not help but overhear a conversation between two men sitting behind us. One was about 35 or 40, and married to an oncologist. The other was maybe 55. His sister is an oncologist, and he has another physician-business consultant in the family in Massachusetts. The conversation went something like this:

Older man: How are things at the hospital?

Younger man: The hospital is hurting because of the economy but the oncologists are doing fine. Cancer treatment isn't elective. Besides the payment system is great for oncologists. They get paid by procedures. And they do lots of procedures. It's not like the pediatricians in the office practice. They're getting killed, insurers don't pay much.

Older man: Yes that's what I hear. My sister is at Kaiser Permanante, so she doesn't make as much as some of the oncologists in private practices, but still she likes it.

Younger man (sounding apologetic): My wife is in academic medicine so she isn't making as much as other oncologists either. But really, if you do procedures, you get paid a lot. It's all about procedures.

Older man: I read somewhere that only about 15 percent of medical students want to go into primary care. You can't blame them. They don't do procedures.

Younger man: Yeah, I read some article somewhere that the more specialists you have, the more procedures get done, and it costs more. And the places with more primary care—it costs less and the patients do as well. The system though, it's all about procedures

Older man: Do you think they are going to pass this health reform bill? They really have to. The system is broken. It's going to just fall apart "

Maybe lawmakers should spend a little more time on the Metro...

HEALTH REFORM: How Industry Pledges Came About -- And Amplifying the Message

Joanne Kenen — Thu, 14 May 2009 20:35:00 -0400

Wondering how those industry groups ended up at the White House this week with their offer of $2 trillion in health care savings? According to the Washington Post's Ceci Connolly, it centers around President Obama's Health Care czar (czarina?) Nancy-Ann DeParle.

Eager to be at the bargaining table for this year's health-care reform debate, Karen Ignagni, president of America's Health Insurance Plans, told DeParle that the health industry was willing to wring about $2 trillion in savings out of health spending over the next decade.

"I was skeptical," DeParle recalled in an interview this week. She thought, "They probably don't even know what these numbers mean."

A few weeks later, in mid-April, Ignagni, who opposed President Bill Clinton's reform effort in the early 1990s, enlisted a hospital group and a labor union. DeParle still wasn't satisfied. "I need to see that it's more than just the three of you," she said she told them.

Over the next month, as DeParle kept a wary distance, a coalition was built and the proposal refined. Finally DeParle was sold, and on Monday she brought the group to the White House, where industry titans better known for killing health-care reform 15 years ago found themselves basking in presidential praise.

Of course, this doesn't solve the health care problem—economically or politically. But the White House has made clear that it helps. It's hard for critics to wave off savings as a mirage when the industry pledges to make them real. Hard for conservative to recite Frank Luntz's talking points about how reform will destroy the patient-doctor relationship when the doctors (or at least the AMA) is on board.

But the White House and the congressional Democrats know that they need to do more, to counter a conservative message onslaught and to link the Democratic health plans to the popular president. Obama had three upbeat health care events this week. At one, he said "the stars are aligned" for a health care overhaul as House Democrats outlined their ambitious summer legislative timetable. Today's newspapers are filled with stories about how the administration and the Democrats are refining their health care message about security, choice, affordability, and quality.

Whatever plans emerge, both from the House and the Senate, I do believe that they've got to uphold three basic principles," Obama said. "First, that the rising cost of healthcare has to be brought down; second, that Americans have to be able to choose their own doctor and their own plan; and third, all Americans have to have quality, affordable healthcare."

"We believe the public shares our views. But we don't want to be overwhelmed by either resources, messaging or boots on the ground," New York Democratic Chuck Schumer, who has been pivotal in trying to work out a compromise on the public health insurance plan option, told the New York Times after a meeting between Senate Democrats and White House officials.

"We won't make the mistake of 1993-94," Schumer said, when critics pulled apart and ultimately defeated President Bill Clinton's plan for universal health coverage.

REFORM: The Challenge of Health Care and Entitlements

Julie Barnes — Mon, 15 Sep 2008 22:20:00 -0400

We came to the National Press Club today ready for a debate on health care and entitlement reform. What we got was a lot of consensus on the serious challenge of health care cost growth and the need to do everything in our power to bend the cost curve. That, and an interesting bowl of gazpacho with chunks of watermelon in it….

Our cold soup confusion aside, we were pleased to participate in the panel of experts put together by our colleague Maya MacGuineas, Director of New America’s Fiscal Policy Program and President, Committee for a Responsible Federal Budget.

Our co-panelists addressed the need to make hard choices in health care and the budget and the potential of Medicare to drive changes in the system. With such a broad range of expertise in fiscal and health policy, there was naturally some disagreement on priorities and political viability of different options. But every panelist shared the goal of getting health care costs under control. The purpose of our presentation was to show that there are real, tangible ways of holding down costs that can provide the basis of meaningful reform.

You can find the whole discussion webcast here. Below are a few of our key themes:

Transforming inefficiency into savings: Roughly one third of current health care spending adds little or no clinical value. If we were able to reduce unnecessary care by just 10 percent a year for the next 10 years we could save $900 billion —enough to cover the uninsured while addressing the needs of Medicare, Medicaid, and other budgetary priorities.
Payment reform is key: To tap into the tremendous potential savings in our health care system we need to change the way we pay for health care. Fee-for-service medicine encourages volume over quality. As we and others have noted in the past, payment reforms such as bundling, medical homes, and shared savings models have the potential to reduce costs while improving the quality of care. The state of North Carolina has generated more than $240 million a year in Medicaid savings from its medical home model, simply by paying doctors a small fee per patient to manage and coordinate their care.
Building an infrastructure for reform: Changing the way we pay for medical services will require real data on what works and doesn’t in health care. During Q&A, former Senator John Breaux raised the concept of comparative effectiveness being discussed by the Senate Finance Committee. He asked whether such research of comparing health care treatments should take into account costs. We agreed with our co-panelist, a senior fellow at Brookings and former director of the CBO, Alice Rivlin, who said that as an economist, costs always matter. As we noted during our presentation, the CBO recently concluded that such comparative effectiveness when coupled with changes in the financial incentives of patients and providers has the potential to reduce health care spending over the long term.

None of this is easy. But all of it is necessary. Fortunately, both presidential candidates have recognized the challenge of health care costs in their platforms and campaign proposals. Furthermore, both houses of Congress have introduced bipartisan comprehensive health care reform bills that have much more than token support. Finally, the major stakeholders in health care reform—insurers, physician groups, consumers advocates, unions, employers—all agree that major change is necessary. We can afford to pass on the gazpacho, but we can’t afford to wait any longer for sustainable comprehensive health reform.

HEALTH REFORM: The Business of Bundling

Guy Clifton M.D. — Tue, 12 Aug 2008 15:38:00 -0400

I've been doing a lot of traveling, attending meetings about health care quality and payment reform, and I wanted to share a bit of what I learned at the recent Healthcare Payment Reform Summit in Pittsburgh. The topic was "bundling"—paying for an episode of well-coordinated care. In the current system, we pay for quantity of procedures, not quality or outcome. Everybody at the Pittsburgh summit understood that this procedure-focused system leads to overutilization of care.

Moving from the status quo to bundling will take some careful planning and transitioning, but Francois de Brantes gave a presentation that underscored how worthwhile it can be. He presented data showing that improved management of diabetes and heart disease leads to better quality—as well as a 50 percent drop in costs.

The host of the summit was the Network for Regional Healthcare Improvement, which brought together six leading regional collaboratives: Pacific Business Group on Health, Massachusetts Health Quality Partners, Pittsburgh Regional Health Institute for Clinical Systems Improvement, Minnesota Community Measurement and the Wisconsin Collaborative for Healthcare Quality. These groups are collaboratives of insurers, providers, and employers—stakeholders that are often at odds—all trying to increase the value of health care.

The groups came together around a set of general principles that can help us get to bundling:

New organizational structures among physicians and hospitals are needed to make bundled payments work

Intermediate payment changes should precede creation of such organizations

Bundled payments should be set at a level that rewards efficient providers and punishes inefficient ones

While the types of organizations accepting bundled payments across regions may differ, the incentives and quality measures used nationally should be similar

At this meeting, like most I've attended around the country for the last six months, attendees were representatives of insurers, collaborative organizations focused on value, and health care companies with a business stake in the reorganization of medical care. Some of these coalitions represent the big U.S. employers who pay for more than half the healthcare in the U.S., but I often wish representatives of major corporations would attend themselves, or perhaps send their top benefit managers. Their direct participation, I think, would help.

Any health reform is a complex political undertaking, and there will be winners and losers. MedPAC has recommended that Medicare move toward bundling, and I hope that happens. We also need reforms at the national level. But I often think that much of the implementation will end up being local. Insurers and employers will have to come together to compel changes in the delivery of health care. It's happening in some communities, but not enough.