Ten Contrarian Predictions for Healthcare in 2019

The Disease Management Care Blog resurfaces momentarily to repost a "Ten Healthcare Predictions for 2019" post from LinkedIn.  The busy DMCB is CEO of The Care Centered Collaborative at the Pennsylvania Medical Society and the thoughts below do not express the views of The Collaborative or of The Society. 

They do reflect a belief in physician leadership.

1. 2019 Will Be the Year of the Doctor

After a spending years in the health reform wilderness as commoditized “providers,” doctors will reassert their hard-earned professional designation.  Large health systems will see an uptick in physician-administrator tensions, physician-owned entities that honor the profession will have less trouble poaching talent and the ratio of employed to independent physicians will stabilize.  Contrary to expectations, independent physician entities will cater to millennial doctors’ underappreciated skepticism about corporate healthcare.

2. Physician-led CINs – Health Information Technology Reaches Critical Mass

As their fee-for-service (“volume”) income wanes and payments are shifted to reward quality (”value”) the independent physicians take advantage of advances in information technology to organize into clinically integrated networks (CINs).  Declining costs and increasing sophistication of these information systems is lowering the barriers to market entry. This will enable the best of both worlds: local independence and regional interdependence.  These entrepreneurial doctors will be the surprise alternative to  health system consolidation, hospital market  dominance and one-size-fits all approaches to care. Financial savings from other group purchasing arrangements will be icing on this cake.

3. From Revenue Centers to Cost Centers – The Emperor Begins to Lose His Clothes

As hospitals scramble to get even bigger by buying one another, constructing new wings and launching slick branding campaigns, these glass and steel behemoths will begin to contrast with unflattering local stories about inability of patients to get a timely appointment and a convenient care plan. These noisy patients will use more social media to point out something that elected officials, regulators and academics are missing: that these complex mega-health care organizations cost more than they give. Unfortunately, this alone won’t be enough to lead to change, but.....

4.  Unholy Alliances – It’s What Lies Under the Emperors’ Clothing

The Wall Street Journal confirmed what many physicians suspected about hospital-insurer collusion. 2019 will show how prevalent this is: enterprising local reporters will find that their health system has been using its local market dominance to dictate terms to health insurers.  No longer just a matter of fat fee schedules and lavish quality bonuses, terms of these contracts will leak and inform local markets, showing anti-steering clauses, secretive pricing arrangements, extra fees and the exclusion of lower-cost alternatives.  As news of these arrangements spreads, embarrassed health insurers will pull back from these agreements and look for network alternatives.  Combined with #2 above, patients will be willing switch to these alternatives and large health systems will begin to see declines in the rate of increase in their outpatient revenue. 

5. Risk Transfer Transfers Gain Pace

Health insurers are ultimately in the business of “risk transfer,” in which the potential cost of a future healthcare event is accepted in exchange for money.  This monetized risk increasingly being sliced, sorted, allocated and re-transferred. While this innovative area of insurance has been dominated by large systems, increasing actuarial sophistication and growing risk appetite of smaller networks – including physician CINs -  will lead to limited and profitable risk transfer arrangements.

6.  Social determinants of health – Accountability is incomplete without fixing them.

As risk transfers to providers grow, awareness of underlying socioeconomic threats to patient claims expenses will evolve in a Stages of Change arc from “precontemplation” in 2018 to “action” in 2019. An impatient mandate to “do something!” to manage social determinants will prompt frontline healthcare workers will begin to use some of the upfront premium revenue from their risk arrangements to mitigate the impact of determinants, such as poor social supports, low education, and insufficient income. Unencumbered by an insurer mindset, there will be investments in community-based supports, patient education and non-medical services.

7. More Venture Capital

The allure of artificial intelligence, connected health, the human genome, block chain, consumerism, making the inefficient more efficient and more will drive another run at finding “The Innovation” thatwill finally transform healthcare.  Alas, this is less a function of the potential of market change than the lack of investment opportunities elsewhere.  Good luck!

8. All Eyes on Medicaid 

An accommodating posture in CMMS will enable the leadership of state Medicaid programs – and their managed care insurance partners – to innovate.  One area ripe for change are quality metrics, which have been dominated by entities such as the NCQA, NQF and AHRQ. Criticized for being disconnected from what patients really value, state Medicaid Directors will show a willingness to adopt new measures and reward health systems that can move these new needles.  Physician-led CINs will lead the way and they’ll start by arguing that a number one priority should be measures of social determinants of health.  By the way, venture capitalists (see 7 above) will miss this bus.

9 The JPMorgan- Amazon-Berkshire Thingy Will Go Nowhere.

Didn’t these companies’ ERISA plans already exploit the low hanging fruit?  Between Warren Buffet’s hardnosed actuaries, blockchain’s unreadiness for prime time, the limits of Alexa-style healthcare consumerism, and Atul Gawande being the Peter Principle personified, this three-way alliance will remain stuck in countless video conference rooms in Seattle, New York City and Omaha.

10. Medicare for All Takes Off

The Donald will demonstrate once again that he has no ideological moorings, no respect for fiscal responsibility and no embarrassment from co-opting his opponents’ ideas. Once the fight over The Wall has been squeezed for every possible advantage, the President will shamelessly signal he’s open to a version of “Medicare for All.”  Why not?  Insurers will see opportunity in the expansion of government-paid managed care business, employers will welcome a way out of paying for commercial health insurance, voting Boomers’ may be grateful for being fast-tracked to Medicare eligibility and the House Democrats’ momentum will become ten times more complicated. To the chagrin of his detractors everywhere, Mr. Trump will give the impression he really has a chance at a second term. MFA might even pass.

Pricing, Product and Audience: Theranos and DTC Blood Testing

Is the Population Health Blog due for a meal of humble pie?

In this prior post, the PHB was "long" on Theranos' prospects.  Since that was written, Medicare has alleged that a company lab was a "jeopardy to patient health and safety," a peer-reviewed study showed troubling test inaccuracies, the Securities and Exchange Commission (SEC) has opened an investigation, higher ups have left the company, years of test results have been "voided"  and founder Elizabeth Holmes faces the prospect of a ban from doing business with Medicare and Medicaid. And to add injury to insult, Walgreens has bailed out.

Talk about CEO humble pie.

In this well-written Viewpoint published in JAMA, Stanford's John Ionnidis composes a Theranos requiem that ultimately questions the virtues of the company's low-cost and direct-to-consumer blood testing. He argues that while the solution of self-diagnosis and early treatment only sounds revolutionary. That pales in comparison to the far larger problem of misdiagnosis that leads to the reality of overtreatment.

Good point.  But, while Theranos' prospects are clouded, the PHB is still long on the underlying three point business model.  Theranos got one right, and the other two are within reach.

To wit,

1) The pricing is uncoupled from opaque insurer-based fee schedules and based on rational consumer-driven price points.

2) The product is health insights, not blood testing data.

3) The audience of buyers/regulators need to understand the value-based outcomes  

 

The PHB explains:

1) Theranos stumbles over internal quality control and regulatory compliance issues will play out, and, after a sufficient number of heads roll, will be addressed.  Once that's settled, consumer interest in being able to circumvent insurance and "buy" transparently-priced and OTC blood tests should remain considerable. Medicare's fee schedules are ultimately "cost-plus" which includes the costs of a highly inefficient care system. Think about that $500 stitch and it's little wonder why consumers are so willing to forego the sticker-shock and co-pay hassles to beat a retail path to Theranos' door.

2) Consumer insights about screening blood tests come from combining the test results with pre-test odds, sensitivity and specificity.  While a smart physician can certainly help patients navigate an abnormal liver function test or a high cholesterol, distance technology combined with consumer-friendly machine intelligence (here's a simple example) can also. It's simply a matter of industrializing and democratizing what we've known for decades. And once consumers can understand tests' imperfections, things will rationally equilibrate between under and overtreatment

3) For many reasons, healthcare is a different business. Among the many reasons for that is that "success" is particularly dependent on the need to understand the short and long term outcomes and costs (i.e. value) of any new care model. That means committing considerable resources to study, document, internalize and publicly report what was achieved at what price. An audience of scientists, regulators, providers, insurers, buyers, politicians, physicians and bloggers want to know: does open-range testing for Hepatitis C paired with education on true and false positive test results reduce the incidence and costs of cirrhosis or liver cancer?  Does consumer self-ordering blood glucose levels combined with post-test odds reporting increase awareness of otherwise undiagnosed diabetes and increase claims expense? Does DTC pregnancy testing.... oh, wait, we know that one. You get the picture.

 

If not Theranos, then some other company will profit from putting patients in at the center of lab testing.  The genie is out of the bottle.

Since first posted on May 25, there have been update modifications.

Medicare's Comprehensive Primary Care Initiative - A Two Year Report

After all the buzz (for example) around the coming launch of CMS' Comprehensive Primary Care "Plus" program,  the New England Journal of Medicine (or NEJM) just published a "special article" on the original Comprehensive Primary Care (CPC) initiative.

This is important if you think CMS' approach to supporting primary care is the fix for what ails the U.S. health care system.

Population Health Blog readers may recall that two years ago, CMS launched CPC. This is a still ongoing four-year multi-payer study to determine whether primary care that is "turbocharged" with medical home-style capabilities (see here, here and here - see page 8) would increase quality and lower health care costs. 

The term "multi-payer" is important, because CMS recognized that clinics struggled with providing medical home care to some, but not all, patients on the basis of their insurance.  Better to have one standard of care to all patients.

The NEJM article is an analysis of CPC's results after two years. 

To summarize how CPC was set up, 502 clinics (from 978 applicants) across 8 states participated along with a total of 39 other insurers.  In addition to the usual fee schedules, the Medicare and the other insurers paid a per patient severity-based "care management fee" that, on average, ranged from $8 to $40 per beneficiary per month (PBPM). Practices were also promised an additional bonus if, after two years, they reduced health care costs (i.e., shared savings) and improved various quality measures and performed well in surveys about the patients' experience of care.

These CPC practices' outcomes were compared to a propensity matched group of non-participating practices with a similar electronic health record (EHR) infrastructure that cared for a set of patients with similar levels of disease and baseline costs. 30% of these practices had applied but were not accepted in the initiative. The total number of comparison practices was 908.

Results?  Not good.

Aft the end of two years, there was no statistically (p > .05) significant difference in the growth of health care costs between the CPC and control sites.  This was true whether just claims costs were examined (a negligible difference of $11 per patient per month favoring the CPC sites), or whether claims costs plus the additional fees were examined (a difference of $7 favoring the comparison sites).

When patient costs were examined by the burden of disease, there was no indication that more costly patients achieved any savings. 

CPC sites had a statistically significant reduction in outpatient office visits, but not in hospitalizations.

While the difference in claims expense failed to be statistically significant, the total additional fees collected by the participating sites amounted to a financially significant $389,000. This represented a 15% increase in their income. 

Was quality of care improved?

Patients with diabetes and a high burden of illness were more 3% more (p<.05) likely to receive the recommended follow-up measures to manage their disease. Otherwise, "the initiative did not have significant effects on the processes used as measures of the quality of care for the full sample."

Patient experience of care?

While surveys showed small increases in patient support, "there were no significant effects on other composite measures: ability of patients to obtain timely appointments, care, and information; how well providers communicate with patients; provider’s knowledge of care patient received from other providers; and overall rating of providers by patients."

Yikes. Ouch. Egads.

The authors correctly point out that CPC is a four year program and that it still may be too early to see the impact of the medical home turbocharging.  That was pointed out in the negative one year evaluation.  Maybe something will turn up at three or four years.

In addition, CMS has a lot of other value-based initiatives underway, which may have biased the results.  There may be a "ceiling effect" among the participating sites as well as the control sites, which were already working to reduce (for example) rehospitalizations or pursue the fee schedule modifiers.

It's also important to note that the impact on the other insurers' costs and patient quality was not reported.  It's possible that they saw a benefit.

The PHB's take?

1.  Many care management programs achieve claims reduction with savings (for example) within one to two years.  If CPC hasn't succeeded by now, it probably won't.  And if the just-announced CPC Plus is modelled after this, it's hard to see how that program will turn out any differently.

2. It is possible that, within all the statistical noise, there were some primary care sites with particularly robust approaches to care that did bend the cost curve.  CMS should seek these sites out and find out more about their secret sauce.  More on that in a future post.

2.  If CPC's approach to care is ultimately shown to not bend the curve, what's the problem? 

The PHB continues to believe that one size doesn't fit all and not all patients benefit from care management. Many patients, even those with chronic conditions are quite stable and need minimum attention; some patients are so sick that no intervention will keep them out of emergency rooms and hospitals. As pointed out here, as more and more patients are enrolled in care management, the return on investment can paradoxically go down. Better to focus on patients who are not only at risk, but have "impactable" condition profiles.

In addition, CPC is based on a 5 year-old model of care. Things have changed since then: modern population health brings many more resources to the table.  That not only includes in-depth analytics support (for example, to define those patients who are at greatest risk) but mHealth. For example, there is one innovative company (the PHB's Shameless Commerce Dept. over on the right side of your screen) that provides recently discharged patients with an app-enabled handheld configured to provide close follow-up.  And so on.

3. It may be that care management works best in a managed care setting.  CPC is a study of classic fee-fore-service Medicare beneficiaries with access to any participating Medicare provider. In Medicare managed care, the insurers and their providers have an even larger incentive to maximize quality and lower cost.  If that's the case, CMS - despite their commitment to innovation - may want to get out of the care management business, because they just don't know how to do it.

The Personalized Healthcare Ecosystem of the Future: Welcome to the Year 2030

Against your better judgment, you've just checked your contact lens-enabled news feed. You're annoyed, because President Meghan McCain has just used the Trump Doctrine to "fire" Medicare's lead administrator over the botched roll-out of the Agency's block-chain claims payment system.  The mild spike in sweat stress chemicals detected by your clothing sensors prompts a boost in the transcutaneous dosing of the blood pressure pharmaceuticals from the networked skin patch on your thigh. 

 

It's the year 2030, and personalized "eDxTx" (ecosystems of Diagnosis and Treatment) has arrived for a lucky few who are able to afford it. That has created political headaches for the President and her campaign promise to bring Medicare out of the 20th century. Your decision to opt out of "Medicare for All" (a.k.a "TrumpCare") has been expensive, but worth it because your Geico insurance plan includes eHealth as a covered benefit.  Geico's ability to automate all underwriting and claims handling means high service standards and keeping costs down. Plus, those video ads are still cool.

Thanks to ubiquitous wireless connectivity, cloud-based machine intelligence and mass-personalized medicine, you and your private doctor's team were able to configure a suite of customizable off-the-shelf apps that meet your goals for living well as well as long.  The first step was your $2 psychometric, biomic and genetic testing (the expense of a mitochondrial analysis was offset with an agreement with the laboratory, Theranos, to pool your data with other customers) that spotlighted the optimum mix of nutrition and pharmaceuticals to blunt your risk of Type 15 Hypertension and GAB15a-linked gastrointestinal cancer. 

As you sit down and use the heads up display in your lens to ponder the short-list of candidates to replace the fired administrator (a well-placed leak suggests it reportedly includes Elizabeth Holmes), the patch modulates your drug dosing to account for the change in body position.

You're hungry and looking forward to your specially tailored evening meal that is being drone-delivered to your patio in.... your contact lens again... 28 minutes. 

This is one of the five days out of the week that you adhere to a configured meal of calories, carbs, proteins, fats, nutraceuticals, probiotics and prebiotics that's adjusted to meet your taste preferences. It will also achieve an optimal body fat percentage, and reduce your risk of cancer and a host of other chronic conditions. The other two days use competitive gamification that is linked to your online preferences to reward you with a real burger for meeting your nutrition goals.  Not for everyone, but your behavioral reward profile suggested that that would help motivate you to stick to the diet. Who knew?

You ponder getting a burger tonight, but fight the temptation by triggering a mindfulness app through your lens.  The lights in your living space also dim and a riff made up of an pleasing artificial jazz-indie chord progression offers a well-placed distraction.

Diet and risk reduction are not the only an ingredients you use to achieve your goal of living 105 years, but also participating in next month's Goggle Spartan Race.  Come to think of it, time to tailor a set of 3D printed sneakers. You look forward to you and your personal life-drone (your spouse suggests it's more evidence of your narcissism; you've named it "Donald" to confirm her suspicions and annoy her) competing in a mix of virtual and real obstacles in a course of that includes real rope climbing and a virtual 3-D avatar obstacle course. The drone and wearables will network, monitor and heads-up display your neuro and cardiovascular dashboard for optimal performance. It will also use the same technology that they used in hospitals to anticipate any medical emergencies that could happen to you.

Naturally, your drone will use artificial intelligence to image, edit and securely post the race video for friends and family to view.

That's what you did last year, when the video also showed you twisting your ankle.  You had to go to a treatment center and be evaluated the old fashioned way, where a doctor treated you.  Some things never change, but avoiding those opaque bills and paying your deductible using virtual currency was so convenient.

As your pour yourself your recommended 1.2 ounces of bourbon (personalized by the distillery with a proprietary combination of esters and lactones to create your preferred finish), you reflect on how healthcare has changed since the days of in-home monitoring and physician teleconferencing. It worked well while it lasted, but was soon eclipsed by the cloud-based technology that combined physician intelligence ("physint") with Watson (artificial intelligence) that "scaled" in an era of fully automated care. 

Sort of like the driverless car that will take you to next month's race.

Speaking of old fashioned cars, that eDxTx medical alert last year reminded you of that old fashioned "check engine" light.  It seems a biochemical marker profile was consistent with the presence of an early stage tumor.  Based on your past medical data, the calculated Bayesian risk that the tumor was real approached 1%.  Watchful waiting using Medicare's IPAB guideline recommendations was raised as an option by your doctor, but you decided to undergo the additional testing to rule it out.  Naturally, your insurance covered most of that cost.

You finish your bourbon after you get an alert that the pizza has arrived.  You silently wish President McCain good luck. Some things never change.

Image from Wikipedia

An Update on the Evidence of the Impact of the Patient Centered Medical Home on Cost and Quality: Of Soup and Weather Vanes

In its work with a variety of payer and provider customers, the Population Health Blog has advised that primary care medical home planning is more "soup" than "soufflé," and that outcomes are more a matter of direction than preciseness.  Naturally, the MBA-types that populate and advise the C-suites and Boards of our health institutions never liked hearing that, preferring instead to impose their notions of cookbook orderliness on what they disdain as inefficient.

Bunk.

Anyone who has had an underinsured patient in crisis in their clinic at 4 in the afternoon knows what the PHB is talking about.

Which is why the trained professionals who actually take care of primary care patients will find a lot to agree with in the Patient-Centered Primary Care Collaborative's report on the Patient Centered Medical Home's Impact on Cost and Quality. 

This is a summary of the 30 recent peer-reviewed, state, industry or federal publications examining medical homes' impact on cost, utilization or quality.  There are pages of tables that conveniently describe the initiatives, the payment methodology, their impact on cost/utilization (mostly good), and the impact on other outcomes (mostly good).  To the PCPCC's credit, the review is free of the trade association-style framing that can obscure neutral assessments of the data; it even includes an entire section dedicated to study limitations.  Good for them.

Two PHB Insights

   

Soup: While often portrayed as a caveat, one of the major insights of the report is that the PCMH is best thought of as a "model" of care defined by a set of "attributes" that include patient-centeredness, comprehensiveness, coordination of care, accessibility and quality/safety.  Do right by adapting those principles into a clinic and, to paraphrase Justice Stewart, you'll know it when you see it.  Turning to the "soup" analogy, if it's liquid, there's stock, the ingredients are softened and the flavors have been extracted into a broth, you've got something that will satisfy. 

Let a thousand medical home clinics bloom.

Direction: Another major point of the review is that outcomes vary considerably, and not just in terms of dollar impacts, but on various measures of utilization and outcomes.  The insight here is that the "directionality" of this model of care is "pointing" toward lower overall costs with better clinical outcomes.  Unfortunately for administrators and insurers everywhere, the answer to "how much" is that "it depends." 

Fortunately for patients, the wind is blowing in the right direction

There are some other interesting take-aways. 

As "alternative payment models" (reminding the PHB to also use acronym "APMs" whenever possible) expand, the funding for PCMHs is likely to grow. The Medicare Access and CHIP Reauthorization Act (another acronym "MACRA") has fans in the PCMH community. 

$4.90 per patient per month is an average payment for medical home services, with dollar add-ons possible from various measures of performance, shared savings, care coordination, pre-payment and risk adjustment (see above on how "it depends"). 

Multi-payer collaboration convening commercial and government payers is more likely to have an impact on PCMH outcomes than single payer programs. Based on experience, this reminds the PHB of a similarity between the PHB spouse and Medicare: compromise is always possible so long as you do it her way.

Next Steps

The PHB couldn't have said it better.  Advocates for the PCMH need to continue to share their design and outcomes in the public square so that everyone can better understand its strengths as well as weaknesses and to make this soup even better.  As the report concludes

"Investment (ROI) or “total cost of care” research is needed that assesses the costs associated with PCMH transformation (or “upstream” spending) that results in “downstream” savings, through reduced ER visits or hospitalizations. This would demonstrate the extent to which spending on primary care results in long term ROI to the overall health system."

"As in past years, there was a dearth of studies that evaluated cost or utilization measures together with patient experience or provider satisfaction and health outcomes, essential elements of the Triple Aim. As we evaluate cost outcomes associated with the model, we must increasingly evaluate the model as a whole to ensure that cost savings and better patient care go hand in hand."

Soup and vane images are from Wikipedia

Of Rising Risk and ACO Success in the Medicare Shared Savings Program: Community Health Network and Pharos Innovations

To each according to their need, from each according to their ability.

While that famous (and paraphrased) adage was originally used to attack capitalism, it's also not a bad way to think about effective care management programs.  Ill persons have varying needs, and care providers have varying resources.  In a resource-constrained environment, the health system that matches the right needs with the right resources will win.

A case in point may be one of the few Medicare Shared Savings Program (MSSP) ACOs that met CMS' savings threshold.

"Community Health Network" is a joint venture between HealthEast Care System and Entira Family Clinics that serves Medicare beneficiaries in Minnesota's Twin Cities.  According to this Pharos Innovations case study (which can be found here), the organization analyzed their population's past utilization and future risk and realized that a relatively small group of beneficiaries were high need.

High need was defined as those individuals with "rising risk" or what the Population Health Blog has termed the "sweet middle." These are individuals who are not only burdened by chronic medical conditions (such as heart failure), but have a constellation of issues (such as a recent discharge from a hospital) that also can be mitigated or impacted.

Once these patients were identified, Pharos Innovations provided the "transition coaches" and "engagement specialists" for the high need/rising risk/sweet middle patients who were most likely to have an admission and/or readmission.

By pinpointing state-of-the-art heart failure treatment protocols, care management, self-care coaching and discharge-care interventions, avoidable admissions and avoidable readmissions - compared to a control group of patients - dropped in significant manner. That was enough to skew the ACO's overall admission and readmission costs downward and reach CMS' savings threshold.

Population Health Blog lessons:

1) If a healthcare organization is willing to take on the financial consequences of health insurance risk, it will have to array its covered population's risks from high to low, and deploy interventions that can address the needs of patients at high - yet modifiable - risk.

In other words, within any high risk subpopulation are sub-populations with specific health care needs that can be addressed with smart population-based care management interventions. 

2) The PHB looks forward to these data appearing in the peer-reviewed literature.  In the meantime, kudos to Pharos Innovations for achieving credible outcomes based on a comparison to a valid control group.

3) Patients who don't have to go into a hospital are better off for it.  Despite Karl Marx's antipathy, aligned economic incentives can be win-win for everyone.  Community Health Network deserves to be financially rewarded by CMS.

4) There is a good reason to believe that Community Health was destined to do well versus the other MSSP participants. As pointed out here, physician leadership may be one ingredient to the MSSP ACO secret sauce. According to the case study linked above, Community Health Network expended considerable resources to convince their physicians that this approach was a good idea.  What's more, their board is majority physician controlled.  In addition, Pharos Innovations was started by a doc and they have additional physician representation on their board.

The Majority of Medicare ACO Participants Appear to Have Lost Money in 2014

There's no other way to put it.

Like many wonks, the Population Health Blog glommed onto this recent CMS report report on the 2014 performance of the Pioneer and Medicare Shared Savings Accountable Care Organizations (ACOs). 

While there's some quality reporting data, the PHB decided to focus on the economics.

It ain't pretty.

Briefly, as the PHB understands it:

The 20 Pioneer and 333 Medicare Shared Savings Accountable Care Organizations generated a total of $411 million in savings.

Among the Pioneer participants:

15 out of 20 generated savings.  Only 11 of the 15 earned enough savings to trigger a payment from CMS that totaled $82 million.  The PHB calculates that's an average payment of approximately $7.5 million for each ACO. 

Three of the Pioneer ACOs had to provide clawbacks to CMS of $9 million, or an average $3 million each.

Of the 333 Medicare Shared Savings participants:

92 out of 333 saved $806 million in health care costs.  They received checks totaling $341 million.  The PHB calculates that's a payment of $3.7 million per ACO. 

Another 89 of the Medicare Shared Savings reduced costs, but not enough to trigger a payment from CMS.  That also means that the rest of these ACOs didn't even reduce costs.

The PHB's conclusions:

ACOs in the Pioneer program have about a 50% chance of getting some money back.  Assuming that there are from $2 million to $7 million per year in program support costs - in addition to the all of the foregone billable services - it's not clear to the PHB that the business model is sustainable (for example) for many of the Pioneer participants.  To add downside-risk insult to injury, there's a 15% chance a Pioneer ACO would have to pay Medicare.

ACOs in the Shared Savings program have a 75% chance that they won't be able to generate enough savings to cover the lost of income from fewer billable service or their program costs.

That's a majority of the participating ACOs.

Admittedly, there are several advantages to ACOs.  They 1) are an answer to the threat of rising health care costs, 2) are a laboratory for bundled payments, 3) promote care coordination and 4) are linked to medical homes.

But that's all for naught if the majority of the program participants are losing money in a massive exercise in risk transfer involving hundreds of millions of Medicare dollars.

This is health reform?

++++++++++++++++++++++

Coda: The PHB can't help noting that the title of the CMS report is "Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014."   That may be technically true, but that title is more about spin than about the science. The findings haven't been submitted to the scrutiny of peer-review, and until it is, the PHB won't really know what to believe.

Health Care Cost Inflation Returns

True, that....

Call it the return to the old normal.

With the slow recovery of the U.S. economy, the advent of some blockbuster drugs and the entry of more than 8 million newly-insured persons, healthcare cost inflation is ticking back up. Writing in Health Affairs, CMS' actuaries are projecting a 5.8% year-over-year rate of inflation that reminds them of the years prior to the Great Recession. This rate is projected to grow faster than the Gross Domestic Product (GDP), which means that by 2024, the U.S. will be devoting 19.6% of its economy to healthcare.

Some eye-catching observations:

1) If it weren't for consumer cost-sharing, the inflation rate would be even higher;

2) Drug treatment for a single disease - Hepatitis C -  is driving prescription drug costs "sharply higher" and adding to the overall 5.8% rate;

3) No mention of the impact of the administration's innovations, like accountable care organizations;

4) Substantial uncertainty.

The Population Health Blog's take:

In a highly competitive global economy, even single point increases in healthcare costs underlying the manufacture of items that make up the GDP, automobiles or washing machines, is bad news.  If the projections are true, business leaders could reconsider the merits of overseas outsourcing or start dropping employer-based health insurance.

Costs in 2015 and 2016 will be lower than the 5.8% rate, which means it won't hurt enough to make healthcare a big factor in the 2016 elections.  While the Affordable Care Act remains a rhetorically rich target environment, the PHB expects politicians on both sides of the partisan divide to find better red meat elsewhere, like building thousand-mile walls or buying hundreds of millions of solar panels.  So, if you're an investor in healthcare stocks, continue to go long.

Any good news in other sectors of the economy could paradoxically make healthcare costs look comparatively worse. As energy and housing costs creep along at a lower rate, consumers are going to see a greater percent of their income going toward healthcare - either in the form of health insurance premiums or out-of-pocket cost-sharing.  If (and that's a big if) the U.S. economy can return to its efficient cost-cutting ways, expect the healthcare debate to heat up and for calls for a government-sponsored option to increase. 

The mean increase of 5.8% is an average.  Some segments of the insured population will see higher costs and others will see lower costs "around" the mathematical mean.  Which voter block "loses" by paying more than the 5.8% could drive the coming debate as it shifts from insurance coverage to affordability and access.  Case in point: the PHB's spouse is registered to vote and she's not happy with the guesswork behind our pricey monthly insurance premium.

While Americans have reasons to be reluctant to travel overseas for cheaper surgery, they'll be far less so for access to a course of just-as-good medications that are under foreign price control.  Call it medication tourism.

And finally.... uncertain abounds.  No one saw that Hepatitis C would have such a near-term impact.  Who knows what else is out there?  A new epidemic?  Another cure?

Stay tuned!

Reform of Medicare's Sustainable Growth Rate: Be Careful What You Wish For

Be careful what you wish for.  The law of unintended consequences.  I'm from the government and I'm here to help. 

These were the nostrums that the Population Health Blog considered when the Senate passed House Bill 2 and killed the walking budgetary undead known as the Sustainable Growth Rate or SGR. 

As PHB readers know, the Balanced Budget Act of 1997 law attempted to use the SGR to substitute medical inflation with general inflation adjustments to the Medicare physician fee schedule.  Since the costs of CAT scans have risen faster than cat food, Congress periodically had to pass catch-up "fixes."

As the PHB understands it, the just-passed "Medicare Access and CHIP Reauthorization Act of 2015" undoes the SGR by substituting 0.5% increases for the next five years.  Medicare payment cuts that were scheduled to kick in immediately have been averted - just in time.

The PHB will review what the bill does.  Then it will look at some downsides.

What does the bill do?

During the five year period, Medicare will transition to two new payment models.

In 2019 the Physician Quality Reporting System (PQRS), Value-Based Modifier and electronic record Meaningful Use (MU) will be consolidated into single program dubbed the Merit-Based Incentive Payment System (MIPS).

Physicians who choose to participate in MIPS will be assessed on a consolidated measure of quality, cost/utilization and electronic record MU.  They will also have to report on participation in quality improvement activities. CMS will offer technical assistance for QI. Medical organizations will be able to provide input into quality. The quality data will be collected and housed in certified registries. More research will be applied to emerging science of risk adjustment for cost/utilization.

The MIPS composite performance score will range from 0 to 100 (it's on page 40 of the Bill). MIPS incentive payments will be adjusted based on change from baseline using the mean as a performance threshold. Physicians who fail to report or participate will automatically be assigned a score of zero.  Physicians participating in a medical home (as defined by Medicare) will automatically be assigned the highest score.

Physicians falling below the mean will experience percentage-based payment cuts.  Payment incentives for the winners will be budget based. Physician-specific data will be made publicly available.

MedPAC will be charged with monitoring MIPS impact on Medicare beneficiary access to care.

There are also incentives for physicians to leave MIPS behind and participate in alternative payment models (APMs). The incentives will be greater than the MIPS program, giving physicians another reason to join an ACO.  If successful, fee-for-service will eventually go away.

The PHB's take on the legislation? 

Something is better than nothing, but the PHB readers need to be aware of the potential downsides:

0.5% increases may not keep up with physician costs.  While the SGR was repugnant, the patches were tied to medical cost inflation. 

As Congress continues to "reform" health care, uncertainty will continue to abound.  Never mind the continued vulnerability of a fifth of our economy to partisan rancor, this particular bipartisan exercise in legislation still went to the wire.  That's success?

Congress - which admittedly knows little about health care - is still outsourcing considerable administrative judgment to the Secretary of HHS. This is a political appointee who presides over a vast and largely unaccountable bureaucracy.  That is, unless, you have pull like this.

While it's called "APS," it doubles down on ACOs, which still have an uncertain impact on cost and quality. We still do not know how to reconcile the theoretical efficiencies of large provider systems with the real world need for antitrust enforcement.

If - emphasis on the word if - MIPS and APS don't work out, more physicians will flee the Medicare program.  They'll cater to credit-card wielding patients, further reducing access to socioeconomically vulnerable persons who have no other options.  While the legislation charges MedPAC with monitoring access to care, they may not spot problems in time.

As for MIPS:

The economic upside incentives are based on an assumption that the money will be there and that Congress will fund it.

PQRS and MU programs, which are still based on dubious evidence (here and here), are alive and well.

Because there's a mean or median on a 0 to 100 scale, 50% of participating docs are guaranteed to be economic losers.  That information will be in the public domain.  And that's only part of the problem.

Gaming may still be possible. Examples include avoiding high risk patients, questionable links between reporting vs. outcomes and moving the goalposts by changing reporting thresholds. 

Reporting MIPS data may turn out to be odious; similar tone-deaf hassles and their associated costs led to the rebellion against specialty society maintenance of certification.

Medicare will provide technical assistance? Really?

CMS Succumbs to Disease Management Style Spin?

If, thanks to the medical home or disease management, you've witnessed the improvements in patients' care, you've also probably been frustrated by those silly skeptics' insistence on validation. But for traditional research designs, statistical significance, valid comparators and publication in obscure scientific journals, the face validity of nurse-led care management for high risk patients could have ushered in a new era in primary care.

Darn those academic-actuary-statistician-weenies! And double darn CMS for falling for them and not funding the medical home and disease management!

Which is why Population Health Blog readers may enjoy this bit of peer-review schadenfreude. It appears a recent CMS pronouncement that its own "Partnership for Patients Program" prevented early elective deliveries and reduced readmissions is highly suspect, thanks to "a weak design, a lack of valid metrics, and a lack of external peer review for its evaluation." 

Yikes.

It appears the amateurs at CMS used a pre-post design, selected start and stop evaluation points to gin up the outcomes, relied on imperfect administrative data and never bothered with having its outcomes validated by independent review. As a result, we really don't know if the billion of dollars that went into PPP did any good at all.

The PHB appreciates the point. Scientific discipline and peer review go a long way making sure that consumers are getting their money's worth. Now that CMS has gone from an agnostic payer to the centerpiece of health reform, there's a huge risk that its bureaucrats will succumb to shortcuts and spin.

Taxpayers deserve better.  And so do patients.

Image from Wikipedia

The Majority of Medicare Spending Variation Is Unexplained

From time to time, the Population Health Blog spouse finds that her husband is insufficiently attentive.  During a recent conversation about that very topic, things stopped when the PHB pointed out the window and exclaimed "Look! A squirrel!"

Naturally, the spouse is curious about the PHB's erratic attentiveness.  Is it how its brain is hardwired?  Too much sugar? Substandard parenting?  And of all those possibilities, how much do each contribute?

That introduction should help the PHB and its readers check out this just-published Health Affairs paper on Medicare's erratic spending habits.

As PHB readers know, Medicare's patient costs patient vary from one locale to another by thousands of dollars, with no discernible impact on survivorship or quality. One narrative is that the health system is being consciously or unconsciously manipulated by doctors and hospitals at a regional level.  Another is that poverty is causing patients in some areas of the country to have have more than their fair share of health problems.

Enter Laurence Baker et al, who wanted to know if patients' preferences are playing a role.

The answer is that it does. But, compared to hospitals and patient income, not that much.

The authors obtained Medicare claims data from 2005 and sorted it by Medicare Hospital Referral Region (or "HRRs," which can span several counties). They wanted to know if HRR costs correlated with 1) county and zip code-level median income, 2) self-reported health status, 3) the availability of doctors and hospital beds and 4) a six question survey that ascertained respondents' preferences for care based on scenarios like chest pain or cough.

The results?

The HRRs were grouped and sorted into low to high spending quintiles.  As the quintiles increased, so did the number of hospital beds per thousand (2.2 low to 2.5 high), which suggested that the supply of services increases health care utilization. Doctors were negatively correlated (the more docs, the lower the spending, 214 per 100K low vs. 193 per 100K high). 

Income was not correlated.

Patient preferences were correlated but only by a small amount (just over $100 across the quintiles).

It's one thing, however to have a correlation, it's another to know the strength of the correlation.  Using regression analytics, the authors found that the availability of hospital beds and doctors could independently account for 23% of the low to high variation across the quintiles. Health status and income seemed to drive another 12%. Patient preferences explained another 5%.

While that explains approximately 40% of the low to high variation across the quintiles, that means 60% remains a mystery. 

In other words, if hospital services, patient economic disparities and patient preferences were completely neutralized by very enlightened central planning, wholly just income redistribution and perfect patient education, only 40% of the cost variation across the United States would go away.  Boston would still cost more than Boise.
 
The PHB's take:

1) Squirrels abound: there is still a lot that we don't understand about the national swings in Medicare's costs.  Some areas are cheap, others aren't and the majority of that has little to do with the availability of hospital services, poverty or beneficiary preferences.

2) Any wonk, policymaker, politician, academic or blogger who offers "a solution" to Medicare's variation is kidding themselves.  The majority remains outside the reach of laws, regulations or payment reforms.

3) Compared to Medicare, PHB's variable attention span is a comparatively modest problem.  The spouse should take some comfort in that.

Image from Wikipedia

The Two-Sided Iron Triangle of Cost and Access and What It Means for Health Reform in 2015

From time to time, the Population Health Blog likes to refer to this article on the "iron triangle" of health care reform. Using classic project management theory, it suggests health care planning is:

a) bound by 1) cost, 2) quality and 3) access, and

b) if there are limited resources, health system planners can only optimize two out of three.

Want to decrease costs?  Either quality will go down or access to care will decline. 

Want to increase access?  Docs and operating rooms will spend less time with patients (quality will suffer) or costs will go up, because you have to hire more docs or build more operating rooms.

Suppose you want to increase quality?  Because most interventions that increase quality are not free, it'll cost you.  Alternatively, fixed budgets and resources will have to be tasked to additional needs, so access will suffer.

It's admittedly simplistic, but this framework can be used even by the amateurs in the White House to better define the Veteran Affairs scandal. As the PHB understands it, VA administrators wanted to increase quality (more primary care, better mental health services), but they didn't have the budget to match it. Access declined and, voila, waiting lists developed.

Which brings the PHB to the insurers' dilemma.  The generous narrative is that commercial and government insurers can leverage "quality" and somehow increase access for more persons with insurance and/or "bend the curve" of cost inflation.  The "iron triangle" says that's not true and the PHB agrees.

That's because:

1) while it's possible to statistically assess outcomes in primary care settings, there is a shortage of primary care providers.

2) it's far more difficult to statistically assess outcomes in specialty settings, where there are limited numbers of patients, fewer commonly accepted outcomes and a greater impact of patient variation.

In other words, quality is neutralized. That means health care is a two sided triangle.

Assuming quality is now constant, the PHB now has another reason to predict that insurers will have only two options in 2015:

1) increase access to care for more persons, but that means increasing, not decreasing costs. That means higher out-of-pocket costs for patients, or lower reimbursement for providers.

2) lower costs, but that means decreased access to care. Providers will refuse to contract or more restricted provider networks be created.

Image from Wikipedia

Additive, Not Substitutive, Health Care Innovation

Sirens calling the unsuspecting
to their doom

If, like many of our policy and political elite, you have also been seduced by the siren call of health care "innovation" as a cost-saving panacea for the United States, you may want to check out this JAMA Viewpoint.

"Transcatheter aortic valve replacement" (TAVR) was supposed to be a less invasive and presumably safer and cheaper alternative to open heart surgery or "surgical aortic valve replacement."  Prospective clinical research trials demonstrated that TAVR was an option for small numbers of persons who may be too frail to tolerate open heart surgery.  Academics and regulators anticipated that TAVR use would be limited to carefully selected patients cared for at high-end "center of excellence" hospitals. 

That's not what happened in the Philadelphia region. Large and small hospitals that were only blocks apart followed the money and quickly established TAVR programs.

New York City turned out to be different.  Since health systems in Manhattan seem to have a higher degree of "integration," the authors wonder if TAVR was functionally rationed.  In addition, New York apparently has an aggressive "certificate of need" program for new technology.

True to their academic pedigree, the authors advocate for 1) further research trials to better define the risks and benefits, 2) the creation of TAVR registry databases that are populated by long-term outcomes, 3) the participation of "expert panels" that can opine on the best use of this technology, 4) "safe harbor" regulations that promote centers of excellence and 5) helping physicians do a better job of educating patients about the risks vs. the benefits.

Based on its limited knowledge, the Population Health Blog has a different take:

1) New technology is a genie that cannot be bottled. If it offers patients a new treatment option in an unfettered market, it will be rapidly adopted.  The impact is not substitutive, but additive.  It's Say's Law, turbocharged with Medicare financing and paid for by the U.S. taxpayer.

2) The PHB isn't sure "integration" played much of a role in New York City's slow uptake, since the Philadelphia region is likewise dominated by regional "integrated systems."  More likely was the top-down regulation imposed by certificate of need.  Other top-down approaches include utilization management.

3) Research, registries, panels, safe harbors and physician education are about as likely to stem the demand for TAVR as much as nicely asking 24's Jack Bauer to stop being so mean.

Discovering What We Don't' Know About Risk-Adjustment for Hospital Readmission Rates in Medicare

Something like this?

When the Population Health Blog agreed with the spouse that it was time to replace the living-room gas fireplace insert with something more sleek and modern, it then turned its attention to changing the surrounding mantle. The PHB favored something heraldic, featuring partially-garbed warrior babes, sporting shields and sandals. Cherubs too.  Preferably oak.

After some counseling from the PHB spouse, it came to realize that its wayward tastes in interior design may be a function of going sans helmet during its childhood bicycle riding, its deepening appreciation of bourbon's mysteries and pausing too frequently on Fox News' The Kelly Files. 

Naturally, the PHB wants to know the relative influence of each. Increasing exposure will help it propose some ideas for the unfinished basement.

Hospital administrators are dealing with a similar problem when it comes to readmissions.

Approximately 20% of discharged Medicare beneficiaries come back within 30 days. In response, CMS financially penalizes hospitals with high readmission rates for heart attack, heart failure and pneumonia. To reduce that penalty, hospitals have asked about the quality of their care, discharge planning and follow-up outpatient care. 

But, what is the relative impact of each? Where should administrators focus their corrective actions? 

Or, like the PHB and interior design, are readmissions ominously outside of anyone's control?

According to some interesting research, it turns out that more than half of the variation in readmissions may be outside of hospitals' control.  What's worse, CMS doesn't account for that in its calculation of the penalty that uses patient factors, such as age, gender and illness burden.

That's the conclusion of this recent article appearing in HSR Health Services Research.

Herrin and colleagues correlated CMS's Hospital Compare readmission data with each hospital county's socioeconomic data (rural vs. urban, persons living alone, employment status and educational level), access to care (the per capita density of primary care and specialist physicians as well as hospital beds) and nursing home number and quality (the number beds and the number of high-risk, long-term patients with bed sores).

Based on risk-adjusted rates from 4,079 hospitals in 2,254 counties, the authors found that more half of the variation in hospital readmissions was statistically explained by the counties' data.  That included persons living alone, low educational attainment, urban setting, a higher number of Medicare beneficiaries, fewer primary care physicians, fewer nursing home beds, higher numbers of nursing home patients with bed sores.  More beds and more specialist physicians were also independently associated with higher readmission rates.

The Population Health Blog's take?

As it noted previously, much of the vituperation around the unexplained variation in health care has been less a function of an inefficient health care system and more a function of our inability to identify the underlying drivers of utilization.

And now we're getting better. The HSR article shows that when it comes to readmissions, much of that variation is a reflection of the poverty in our neighbors' homes as well as the strength of the primary care network and the ability of nursing homes to act as a cushion.

Hopefully the mandarins at CMS will take these findings into account as they continue to financially sanction hospitals for readmissions. A more sophisticated approach to risk adjustment could help lessen the budgetary impact of county-level factors that are outside the hospital administrators' control. 

And since hospitals' bottom lines typically reflect the populations they serve, better risk adjustment could also lessen the disparate impact on the nation's poorest hospitals.

Image from Wikipedia

I'm From CMS and I'm Here to Help

Writing in JAMA "online first," CMS Administrator Tavenner and colleagues offer a payment reform "framework" that includes "multipayer collaboration."  The article is wonky, so the Population Health Blog dons its universal adminispeak translator so us normal humans can better understand what CMS is up to.

According to the writers, CMS has a history of innovatively implementing reforms that were later adapted by other insurers. The most famous example is the hospital "DRG" system that, starting in 1983, paid for a diagnosis in lieu of a daily room rate.  Suddenly, hospitals had an incentive to shorten hospital stays, which is precisely what happened in the years that followed.

Buoyed by this success, the authors describe the merits of championing Medicare's transition from "category 1" fee-for-service without any link to quality to "category 4" population-based payments that are linked to quality. And, as CMS embarks on this excellent payment journey toward accountable care, they'll get other commercial insurers to mirror their efforts by:

"Being conveners" as in "working with" other insurers in a region or a state to implement large payment reforms.  Working with may include grants;

"Incentivizing," as in requiring the participation of other payers prior to funding any large pilot programs.

"Working with states" to implement additional reforms, when the state has sufficient influence over the health insurance or delivery system.

The Population Health Blog's take:

"Category 4 population-based payments" are a form of capitation that are ultimately designed to transfer insurance risk from CMS to providers. The PHB hopes the bureaucrats at CMS are aware of the risk re-introducing some 1990s-style managed care abuses. 
 
What also goes unmentioned by the JAMA article are examples of CMS payment reform unintentionally gone awry, including RVUs, regional payment variation and the SGR with lingering fraud. While CMS has had its successes, it's also had more than its share of problems.  Time will tell which track record will apply to population-based payments.

Convening was an art developed by Medicaid programs.

Ms. Tavenner implies that population-based payments (a form of capitation) are intrinsically linked to quality.  Nothing could be further from the truth, since it's possible to reward quality while also relying on a FFS methodology. 

Accountable population-based care remains a large experiment.  Ms. Tavenner implies that there is an aura of inevitability.  The PHB learned long ago that the sign of a good plan is an exit strategy in case things go south.  The PHB didn't read that here.