Health Care Cost Insights and Capitation for the Patient Centered Medical Home (PCMH)

The Population Health Blog finally caught up with the Oct 22/29 "Price, Cost and Competition" issue of JAMA. 

One of the more interesting articles was a Viewpoint editorial on the Patient Centered Medical Home (PCMH). After tut-tuting fee-for-service payment as antithetical to meaningful payment reform, the author admits what the PHB has been saying all along: a global payment that covers all the medical, coordinating as well as non-physician services of the PCMH is tantamount to old fashioned "capitation." As we learned in the 1990s, capitation's unintended consequences are a) signing up too many patients, b) limiting access to primary care and c) over-referring to specialists.  To counter that, the editorial's author suggests the PCMH movement seeks "accountability." 

We'll see about that.

In the meantime, some other interesting articles:

Are "for-profit" hospitals evil?  Not necessarily.....

237 hospitals that converted from not-for-profit to for-profit anytime between 2003 and 2010 were compared to 631 hospitals that had not converted.  Converting hospitals improved their financial margins (practically all were in the red and subsequently became break-even) vs. the comparison group, and did so without increased utilization, restricting access to care, higher death rates or declines in quality for their Medicare patients. Their path to profitability may have been lined by renegotiated commercial insurance contracts, cutting costs or moving non-performing assets off the balance sheet.

Can physician groups become monopolistic? In a word, yes.

Commercial insurance preferred provider organization (PPO) charges for ten types of physician office visits in ten different specialties across 50 states were correlated with a measure of local market dominance dubbed the "Hirschman-Herfindahl Index" (more on that here).  As the HHI index increased, payments also increased, suggesting that as much as additional $3 to $12 in fees for the same services were the result of monopolistic contracting.

Monopolies aside, if docs are in charge vs. the hospitals, can they reduce health care costs?  Also yes.

This study compared average "per-patient expenditures" of physician-owned versus hospital-owned integrated medical groups and independent practice associations in California from 2009 to 2012. Among the 158 groups, 118 were owned by docs; their expenditures were over a thousand dollars less compared to hospital owned groups.  Larger physician groups had higher expenditures than the smaller ones.  More on that in a future post.

Does price transparency help patients chose to spend less?

Over 500,000 insurance plan enrollees had special on-line access to prices for medical services prior to using them.  There were over 250,000 households and of these, approximately 7500 accessed the information. Compared to households that didn't check the information, the price-shoppers seemed to choose cheaper labs (a few dollars per test) and imaging options (about a hundred dollars per test).  In looking at the data, the DMCB suspects some may have also deferred testing by choosing to use them less frequently or not at all.

The Commonwealth Fund Keeps Score on U.S. Healthcare: Less Here Than Meets the Eye

YOU are in last place!

According to news reports on the Commonwealth Fund's comparison of the United States' healthcare to other developed countries, we are the sick man, on a losing streak and dead last. 

Ugh.

Just when the U.S. prevailed against Ghana in the World Cup, we have to deal with being called a loser.

Naturally, the Population Health Blog decided to investigate.  It discovered that the Commonwealth Fund ranked the U.S. against 10 other countries using a combination of multiple outcome measures. 

Here's the complete report. 

What does it actually say?  Rather than attempt to summarize the report's findings, the PHB provides some telling quotes:

Quality:

"The United Kingdom ranks first and Norway last on quality, based on averages of the scores in these four areas. The U.S. falls in the midrange on this domain of performance."

Preventive Care:

"The U.S. does well in providing preventive care for its population. Respondents in the U.S. were more likely than those in most other countries to receive preventive care reminders and advice from their doctors on diet and exercise."

Effective Care:

"The U.S. is third on effective care overall, performing relatively well on prevention but average in comparison to other industrialized nations on quality of chronic care management."

Safety:

"These findings indicate that the United States has improved on safety indicators.... For example, the U.S. now leads all nations with a relatively low number of sicker patients reporting an infection during a hospital stay or shortly after."

Care Coordination:

"Eighty-three percent of American patients had arrangements for follow-up visits with a doctor or other health care professional made for them when leaving the hospital, second only to the United Kingdom."

Patient Centeredness:

"The U.S. ranks fourth. All countries could improve substantially in this area."

Engagement and patient preferences:

"The United States did well on most indicators."

So, since the United States is doing well on quality, preventive care, effective care, safety, care coordination, patient centeredness as well as engagement and patient preferences, what's the problem? 

Again, some quotes:

Americans .... reported negative insurance surprises and the highest rates of serious problems paying medical bills.... On indicators of efficiency, the U.S. scores last overall with poor performance on the two measures of national health expenditures, as well as on measures of administrative hassles, timely access to records and test results, duplicative tests, and rehospitalization.

Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs.

The U.S. ranks last on mortality amenable to health care, last on infant mortality, and second-to-last on healthy life expectancy at age 60.

Plus this tidbit.....

Disparities in access to services signal the need to expand insurance to cover the uninsured and to ensure that all Americans have an accessible medical home.

The PHB's take?  There is less to this than meets the eye:

1.  The United States performs well on a majority of overall quality measures.

2.  The United States suffers from high overall costs. 

3.  The Commonwealth Fund's ranking system faults the U.S. on two levels:  value (our high quality comes at a very high price) and equity (persons with lower incomes cannot afford to access our high quality system).  Add up the points in this scoring system, and the U.S. is last.

4.  The Commonwealth Fund uses data from prior to the 2014 implementation of Obamacare, which was specifically designed to address the United States' shortfalls by subsidizing commercial insurance and increasing Medicaid enrollment.

5. By the way, despite little evidence in the report that cost, value or access are necessarily increased by the U. S. version of the medical home, the Commonwealth Fund included it anyway.

How well will all those high out-of-pocket "bronze plans," Medicaid, Accountable Care Organizations and the medical home truly reduce cost inflation, enhance value and increase access? 

Stay tuned.  The PHB is looking forward to seeing how they'll rank Obamacare's impact in 2015.

Three Population Health Management Principles for Reconciling Quality-Based Pay for Performance and the Doctor-Patient Relationship

Writing in the New England Journal, Robert Berenson and Deborah Kay of the Urban Institute say a linchpin of Washington DC's pursuit of quality is a "policy overreach [that] could undermine the quest for higher-value health care."

Yikes.  The Disease Management Care Blog turns to population health management to ponder their unhappiness.

The authors' concern is over Medicare's "Physician Quality Reporting System" or "PQRS."  As the DMCB understands it, PQRS rewards (and penalizes) physicians for outcomes that are calculated from a set of quality "modifiers" that are submitted as part of the Medicare billing statement (an example can be found here).  The amount of money at stake is in the range of 1%-2% of the Medicare reimbursements.

Berensen and Kay point out that while the system has been ramping up over 6 years, 70% of Medicare participating physicians do not submit any modifiers.  In their opinion, that's because:

1) the loss of 1% of any payment is practically meaningless,

2) physicians distrust the metrics and

3) there is a fundamental disconnect between the modifiers and the complex world of clinical practice. 

As examples, radiologists are being dinged for total x-ray exposure while surgeons are being held accountable for pre-op antibiotic administration. While these and other quality measures are important, they fall far short of recognizing what keeps docs up at night, like reading the x-ray correctly and getting a patient through surgery and out of the hospital.

"Hear hear!" says the Disease Management Care Blog.  In the course of a normal day, it is job of doctors to do "doctor stuff" involving one patient at a time. 

But, you ask, isn't that contrary to being accountable to the health of populations? 

The DMCB doesn't think so, because state-of-the-art population health management (PHM) agrees that:

A. Physicians need to be immunized from disruptions their "customer facing" (i.e., the patient) activities.  Otherwise known as the doctor-patient relationship, that's the part of the health care system that relies on the seven or more years of undergraduate and graduate training that turns smart people into exquisitely trained physicians.  Let the doctors be doctors, says the DMCB, and let them worry about their patients.

B. High performing systems - as much as possible - need to be configured around those customer-facing activities, further enabling the doc to focus on the patient who is right here and right now. 

From time to time, PHM might have to intrude.  When it does, the DMCB suggests policymakers recognize that they should proceed:

1) only when it's really important

2) only infrequently and

3) whenever possible, when it reduces physician work by outsourcing (an example in primary care can be found here) those things that don't require the personal involvement of a doc.

It would seem that Medicare's PQRS failed to recognize the fundamentals.

Image fromWikipedia

Demanding Medical Excellence: How Do Things Stand?

Disease Management Care Blog colleague Michael Millenson has written a book called Demanding Medical Excellence. Like many other insightful observers, he wrote that only a minority of care interventions are evidence-based and that it can take years for proven therapies to be mainstreamed in clinical practice. Practice variation is rampant, avoidable errors occur too often, patients are passive bystanders in their own care and the U.S. health care system is spending money like trial attorneys at an anti-tort reform political fundraiser.

What few realize is that Millenson was among the first to recognize these issues when he wrote his groundbreaking book over 15 years ago. 

And, you ask, how have things fared since then?

Millenson answers the question in this Health Affairs article with some good as well as some bad news.

The bad news is that the U.S. health care system pays little attention to the prescient insights of smart people like Michael Millenson. The DMCB shares his pain because many of the things it has blogged about have likewise been ignored by the health care system.  The DMCB spouse and most persons working inside the health care system are not surprised.
 
The good news is that, while it may have taken 15 years to address these issues, things, according to Mr. Millensen, are finally beginning to get better.

In his view, the long delay was due to the commercial insurers' unwillingness to give up on their misaligned payment systems that continued to reward preventable complications, prolonged hospitalizations and readmissions. 

This was finally overcome by the twin forces of public insurer activism and patient consumerism. . 

The former imposed no-pay for "never events," required computerized physician order entry (CPOE), promoted accountable care, introduced bundled payments, made physician quality reporting a reality, and reduced payment for hospital acquired conditions. The latter is now represented by internet-enabled consumers who can use their lap tops and handhelds to compare symptoms with other patients, assess treatment options and compare provider outcomes.

The result? According to Millenson, we're finally seeing a long-due "paradigm shift" that is leading to transparent measurement and meaningful rewarding of quality improvement, accountability, safety, quality and value. Providers who are unwilling or unable to participate are seeing their services commoditized.

The DMCB agrees and is reminded that, from time to time, government can be a force for good.
 
That being said, it was the managed care backlash of the 1990s that scuttled the commercial insurers' ability to implement many of their ideas that were eventually adopted by Medicare and Medicaid. 

What's more, federal policy doesn't necessarily automatically translate into win-win, higher quality, lower costs and no unintended consequences for never events (here), CPOE (here), accountable care (here), bundled payments (here) or physician quality reporting (here). 

It may take a few more years before we can know if Millenson can write a follow-on book titled Achieving Medical Excellence.

Image from Wikipedia

The Limits of Airline Safety When It Comes to Healthcare Quality

Readers of the Disease Management Care Blog are probably familiar with its past references to the airline industry's multiple lessons for health care.

The modern jumbo jet has become an inspiring model of human-systems work-flow engineering and information technology that, in turn, has led to unparalleled flying safety. The narrative used by the DMCB - as well as by the New York Times and Agency Healthcare Research and Quality - has been that if providers would embrace cockpit science, the U.S. health care system wouldn't kill the equivalent of four jets' worth of people every week.

The DMCB still agrees with the peer review literature that tells us there is much to be gained by the adoption of aviation safety principles. With further research and experience, it will likely continue to improve patient safety and save lives.

But it also thinks the lessons from the airline industry are not a safety panacea.  There are limits.

As pointed out by economist William Baumol, many parts of health care are still dominated by "personal" or "handicraft" services that remain very labor intensive. Human beings are more complicated than jumbo jets, which means both diagnosis and treatment have to be tailored to each person's unique anatomy, genetics, metabolism, psychology, culture and social supports, one person at a time.

Instead of a jumbo jet, think about a quartet made up of musicians with violins, violas and cellos playing a complicated musical score.:

Unlike the check lists, information inputs and back-up systems of a modern cockpit, each note has to be executed just right in concert with others. The likelihood of one note being off key or out of sequence is considerable. Fortunately, for the musicians and their audience, all an error leads to is an unsatisfactory concert experience.

For a patient with diabetes and heart failure who has been discharged from the hospital who cannot afford his medicines, who is having drug side effects and relying on an overwhelmed family, the likelihood of one note being off-key is very high. Unfortunately for patients and insurers, a single error can lead to a cascading series of interdependent events that will lead back to the hospital.

For the patient with a new diagnosis of cancer who has a chance at cure with the approach of more radical surgery combined with multiple chemotherapy drugs plus radiation therapy who is a healthy 88 year old, the likelihood of one note being off-key and ending up in the ICU is very high.

For the patient with clinical depression who dislikes taking drugs and tells his physician that he will take his medicine and has no intention of doing so, the likelihood of one note being off-key is very high.

For much of health care, one-on-one care involving docs, non-physicians and other professionals with their patients sweating each and every individual detail will still be necessary for the foreseeable future.