Posted in Accountable Care, ACO, Affordable Care Act, TrumpCare

Webinar: Next Generation ACO Model – Overview and LOI Information

By Gregg A. Masters, MPH

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Today marks the end to the eight year reign of President Barack Obama and the birth of the Trump Administration tenure.  Yet, so much in the health policy and reform domain remains unclear and on the come.

Since the passage of the Affordable Care Act (ACA) in March of 2010 the implementation of the delivery system side of the reform to restrain if not reduce healthcare spending has been vested primarily in a range of variably sophisticated ACOs and other participants in a tapestry of value based healthcare arrangements from bundled payments to patient centered medical homes and even the more risk savvy cohort of Medicare Advantage operators.

What is clear is change is on the horizon; yet just what the nature of that change will look like will probably reveal itself over the next several months and perhaps even years. For our discussion of what appears to be the emerging indicia of a ‘TrumpCare‘ chassis, Health Innovation Media principals share insights via: ‘On @PopHealthWeek: #Trumpcare What We Know @fsgoldstein @efuturist @2healthguru‘ and ‘A #TrumpCare Roundtable with @efuturist, @fsgoldstein and @2healthguru‘.

screen-shot-2017-01-20-at-1-52-24-pmClearly the era of ‘accountable care‘ and the provider organizations designed to explore and implement their local market vision of an entity that delivers accountability is not likely to come to an end as President Trump occupies the White House. In fact, though I have been deeply skeptical of the rather hollow ‘repeal and replace‘ mantra absent a material Republican replacement option, I am somewhat encouraged by the tempered optimism proffered by Ezekiel Emanuel, M.D., Ph.D., Former Chief Health Policy Advisor to the Obama Administration, to an informed audience at the Commonwealth Club of San Francisco earlier this month.

Meanwhile, I doubt the Trump Administration and his HHS and CMS appointees (Rep Tom Price and Seema Verma, respectively) once confirmed will advocate for an era of ‘unaccountable care‘ with a return to unbridled to fee-for-services medicine. Thus, I bank on the continued evolution and deployment of ACOs as progressive risk bearing entities and continuing clinical integration plays. However, we shall see!

We do indeed live in interesting times!

 

 

 

Posted in Accountable Care, ACO, Affordable Care Act, health reform

The Quality Payment Program

by Gregg A. Masters, MPH

In our healthcare innovation economy from the private sector to material modifications of public programs including Medicare and Medicaid there is a massive effort to identify and enable sustainable delivery and financing schema to stem the treasury bleeding and inch however incrementally towards ‘universal coverage’.CMS QPP 2

Ideological talking points opposing ‘Obamacare‘ aka the Affordable Care Act (ACA) notwithstanding, there are tangible efforts to move the needle in play while the uncertainty of a successor to the ACA remains largely ‘on the come’.

Continuing on this post ACA momentum, the Centers for Medicare and Medicaid recently weighed in on the ‘Quality Payment Program‘. Acting Administrator Andy Slavitt provides introductory remarks and is followed by his CMS colleagues who provide deeper dives into the QPPs two track choices: the Merit Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APM).

To listen to the complete call we’re rebroadcasting it on ‘This Week in Health Innovation.‘ It is archived for on demand replay.

The associated deck is here, and the session transcript is here.

Original link to CMS QPP is here.

 

 

Posted in Accountable Care, ACO, Affordable Care Act

The NextGen ACO: Another Round Opens

by Gregg A. Masters, MPH

The Centers for Medicare and Medicaid Innovation has announced the results of its ‘continuous learning‘ commitment model wherein ‘field reports‘ including provider comments and open door inputs are materially incorporated into tweaks of the Medicare Shared Savings Program (MSSP) as risk is progressively adopted by participating ACOs. This ‘new round’ iteration no doubt includes ‘lessons learned‘ from the Pioneer ACO Program including the many ‘exits’ and risk downgrades opted to date.

In summary, this round is:

‘..one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.’

screen-shot-2016-12-15-at-9-48-25-am
screen-shot-2016-12-15-at-9-48-47-am

screen-shot-2016-12-15-at-9-49-21-am

For complete information, see: ‘Next Generation ACO Model | Center for Medicare & Medicaid Innovation‘.

 

 

Posted in Accountable Care, ACO, Affordable Care Act, TrumpCare

TrumpCare: As the Puzzle Emerges…

by Gregg A. Masters, MPH

As the Trump administration takes form via the nomination of Rep. Tom Price to ‘steward’ (or decimate) the massive bureaucracy of the Department of Health and Human Services (HHS) with Seema Verma nominated as Administrator of the Centers for Medicare and Medicaid Administration (CMS) the structural touch-points to manifest the ‘repeal and replace‘ agenda of the Affordable Care Act (ACA) may be materializing before our eyes.

medscape_physician_survey2016Dr. Tom Price a Board Certified Orthopedic Surgeon (Editor’s note: the highest paid specialty per Medpage 2016 physician compensation survey and according the the Georgia Combined Board of Medical Examiners a ‘non participant’ in Georgia’s Medicaid program, with zero reported hospital appointments, publications or settled professional liability claims) and a vocal opponent of the ACA with several bills sponsored to enable ACA’s repeal and replacement is no friend of Medicare, Medicaid nor the broader ecosystem enabling the fulfillment obligations of the U.S. healthcare ‘[non]system‘.

Much of this likely health policy directional pivot can be reasonably visioned though the lens of what’s emerging as indicia of ‘TrumpCare‘ – the probable repeal and replacement option for ‘ObamaCare‘ aka the ACA.

In order to drill into what we can expect from President-elect Trump and the leadership team he’s proposed to assemble in order to drive his presumptive health reform vision we need focus on Rep. Tom Price’s historical positions and statements as potential replacement options.

The umbrella policy framework for for what may emerge as ‘Trumpcare’ begins at ‘Great Again‘ the .gov website dedicated to the President-elect’s agenda, and informed viaA Better Way (aka RyanCare) the Republican version to substitute ‘Government controlled‘ healthcare with so-called ‘free market‘ alternatives.

[Editor’s Note: At the bottom of this post we list a series of recent links associated with relevant health reform conversations].

Perhaps the most useful insights as to what is likely to survive the political consideration process is sourced from the collection of Republican authored repeal and replace proposals sourced from the historical work of Representative Tom Price.

At a June symposium organized by the American Enterprise Institute (AEI), Rep. Price, who serves as Chair of the House Budget Committee previewed his vision of healthcare reform with the following summary statements:

‘the ACA violates all of the principles that all of us hold dear…. accessible, affordable, a system of the highest quality and a system that provides choices for the American people – for patients.’

‘What we have put together is a patient centered plan that respects those principles. That allows everybody to have access to the coverage that they want not what the government forces them to buy.’

‘To solve the insurance challenges of portability and pre-existing and to save hundreds of billions of dollars.’

‘A few specific examples I’d like to share with you…

‘the individual and small group market – those of you who recognize or are in that area [Editor’s Note: code-speak for special interest groups including brokers, agents, MGAs and underwriters] you appreciate that its been ‘destroyed’ [Editor’s Note via essential health benefits, no preexisting conditions, mandatory MLR ceilings, removal of lifetime caps and the individual mandate] and so we want to re-constitute that market and make it responsive to patients and allow them to purchase the kind of coverage that they want [Editor’s Note: via a return to ‘junk insurance’ and ‘mini-med’ policies] not what the government forces them to buy [Editor’s Note: on the exchanges or via ACA sanctioned group health policies].’

‘Second we waste hundreds of billions of dollars [Editor’s note: estimated at a $55.6 Billion Price Tag Large, But Not a Key Driver of Total Health Care Spending] …due to lawsuit abuse in this country, the practice of defensive medicine and instead of just putting a band-aid on it, we propose a bold and robust solution that would allow physicians through practice guidelines [Editor’s note: Evidence Based Medicine, or so-called “cookbook medicine” by the AMA] to basically have a “safe harbor” [Editor’s note legal CYA] if your doctor does the right thing for a given diagnosis or given set of symptoms then they ought to be able to use that as an affirmative defense in a court of law – that’s the kind of proposal that we put forward.’

‘And third in addition the healthcare system that works for patients is one the must respect the physician patient relationship [Editor’s note: typically third party disintermediated practice, i.e. direct practice, concierge medicine, retainer or membership models] and so what we do is incentivize the highest quality of care without bureaucratic intervention. This better way, this plan right here that puts forward positive commonsense solutions for Medicare, Medicaid and for the larger healthcare arena so that we respect the principles of accessibility, of affordability of quality and of choices…’

There is so much fluff here we decided to do a deep dive on ‘PopHealth Week‘ with healthcare thought leaders and former health system and JV enterprise operators Fred Goldstein, Douglas Goldstein and Gregg Masters. We weighed in on some of the provisions of Representative Price’s tantalizing offers to the American people to deliver a viable alternative to the ACA that:

‘allows everybody to have access to the coverage that they want not what the government forces them to buy;

solves the insurance challenges of portability and pre-existing; and

saves hundreds of billions of dollars.’

You be the judge! Or as some may be recently awakening to: ‘Republicans suddenly discover that Obamacare repeal might not be so awesome, after all‘ or ‘Senate GOP Tips Its Hand: An Obamacare Replacement Could Be A Long Way Off‘.

If like me you are interested in how this unfolds I encourage you to follow the conversation on twitter via #PriceWatch and #TrumpCare hashtags.

More will no doubt be revealed! Some earlier context here and here.

Let’s drain the swamp, after all we now what works!

==##==

Trumpcare Resources c/o Fred Goldstein:

https://www.donaldjtrump.com/positions/healthcare-reform

http://www.cbsnews.com/news/what-will-trump-do-about-obamacare/

http://www.politico.com/story/2016/11/obamacare-defenders-vow-total-war-231164

https://www.govtrack.us/congress/bills/114/hr3762/summary

http://healthaffairs.org/blog/2016/11/09/day-one-and-beyond-what-trumps-election-means-for-the-aca/

http://www.commonwealthfund.org/publications/blog/2016/nov/challenges-for-president-elect-trump-and-congress?omnicid=EALERT1125198&mid=fgoldstein@accountablehealthllc.com

https://www.greatagain.gov/policy/healthcare.html

http://www.dailykos.com/story/2016/10/23/1584745/-Paul-Ryan-has-three-great-ideas-to-improve-Obamacare

http://www.theatlantic.com/health/archive/2016/11/our-bodies-our-trump/507131/

https://www.greatagain.gov/policy/healthcare.html

http://www.commonwealthfund.org/publications/blog/2016/nov/challenges-for-president-elect-trump-and-congress?omnicid=EALERT1125198&mid=fgoldstein@accountablehealthllc.com

http://www.dailykos.com/story/2016/10/23/1584745/-Paul-Ryan-has-three-great-ideas-to-improve-Obamacare

https://www.washingtonpost.com/news/wonk/wp/2016/11/12/donald-trump-is-beginning-to-face-a-rude-awakening-over-obamacare/

http://www.nationalreview.com/article/442120/obamacare-repeal-republicans-should-ensure-health-care-reform-bipartisan

http://blogs.wsj.com/briefly/2016/11/10/5-questions-about-affordable-care-act-coverage-after-donald-trumps-election/

http://www.johnsoncitypress.com/News/2016/11/13/What-would-health-care-look-like-under-Trump.html?ci=stream&lp=1&p=1

http://www.wsj.com/articles/donald-trump-willing-to-keep-parts-of-health-law-1478895339

http://www.healthcaredive.com/news/speculations-swirl-around-trump-hhs-leadership-pick/430301/

https://www.sciencebasedmedicine.org/medical-science-policy-in-the-u-s-under-donald-trump/

http://thehealthcareblog.com/blog/2016/11/13/dear-mr-president-elect-about-that-ryan-plan-thing/

http://www.modernhealthcare.com/article/20161111/NEWS/161119989?utm_source=modernhealthcare&utm_medium=email&utm_content=20161111-NEWS-161119989&utm_campaign=mh-alert

http://www.hhnmag.com/articles/7843-health-reform-and-the-trump-white-house-implications-for-key-stakeholders?utm_campaign=111516&utm_medium=email&utm_source=hhndaily&eid=254508792&bid=1588113#.WCsKPQk6jpM.twitter

http://www.politico.com/tipsheets/politico-pulse/2016/11/obama-dares-gop-on-obamacare-do-it-better-than-me-217419

http://www.vox.com/2016/11/17/13626438/obamacare-replacement-plans-comparison

http://www.wnd.com/2016/11/7-keys-to-effective-health-care-overhaul/

http://www.nationalreview.com/article/442529/obamacare-donald-trump-repeal-replace-tax-cuts

 

Posted in Accountable Care, ACO, Affordable Care Act, Triple Aim

FLAACOs 3rd Annual Fall Conference: A Retrospective

by Gregg A. Masters, MPH

This is the second year I’ve ventured to Orlando to cover the Florida Associations of ACOs (@FLAACOs) Annual gathering.

According to the website, the FLAACOs mission is:

…to provide members a vehicle to collaborate, ensuring that each healthcare organization grows and thrives. The Florida-based association aligns goals to shift physician incentives and improve health-care outcomes across the state.

FLAACOs provides a voice for the accountable care marketplace and its participating providers, payers, and individual physicians.

The goal of FLAACOs is to provide advocacy and support to all Florida accountable care organizations so that together they can become the health-care models of the future.

To many most of the managed care ‘smarts’ and thus ‘risk savvy sophistication’ typically resides in and ‘metastasizes‘ from California to other parts of the U.S. One example being the re-branding and re-positioning for growth ofCAPG formerly known as the California Association of Physician Groups who represents, advocates for and up-levels clinical risk management assumption core competencies for medical groups and ACOs nationwide. Yet, Florida is a Medicare Shared Savings Program (MSSP) hotbed market and judging from the results returned by Florida ACOs there’s a fair amount of savvy infrastructure in the ‘Sunshine state’ particularly as represented by the member ACOs participating in FLAACOs.

For more information on the conference you might review the agenda, faculty and sponsors.

For those who missed this informative conference, some of the highlights include:

flaacos_fields_keynoteA keynote presentation by Robert W. Fields, MD, Medical Director, Mission Health Partners ACO, titled ‘Key Drivers For Population Health: Redefining the Art of Medicine ‘. Our interview with Dr. Fields courtesy of Fred Goldstein is available here.

flaacos_lerer_keynoteFor the second year in a row René Lerer, MD,  President, GuideWell the parent company of a number of subsidiary companies’ including Florida Blue provided a comprehensive update detailing the dynamics of a changing ‘Payer Landscape’ given the instability of many if not all of the provisions of the ACA ‘at risk‘ under the impending Trump Administration. Prior equally informative interviews with Dr. Lerer are available here and here.

A timely panel presentation on ‘How Reimbursement Will Be Tied to Value (MACRA, MIPS, AAPM)‘ was facilitated by Kelly Conroy, Senior Advisor, Aledade, with panelists Dan Duncanson, CEO, Southeastern Integrated Medical, and Ethan Chernin, COO, BayCare Physician Partners.

Finally an extremely informative and insightful interview was offered by Mike Barrett, Sr. VP, Southeast Universal American/Collaborative Health Systems here.

An overview of FLAACOs the organization and its goals including a recap of the conference was offered by Nicole Bradberry, CEO via Fred Goldstein here.

The complete schedule and available presentation decks are here.

Posted in Accountable Care, ACO, Affordable Care Act

ACO Winners and Losers: A Quick Take

by Ashish K. Jha

Last week, CMS sent out press releases touting over $1 billion in savings from Accountable Care Organizations.

Here’s the tweet from Andy Slavitt, the acting Administrator of CMS:

NEW ACO RESULTS: physicians are changing care, w better results for patients & are saving money. Over $1B. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-08-25.html 

The link in the tweet is to a press release.  The link in the press release citing more details is to another press release.  There’s little in the way of analysis or data about how ACOs did in 2015.  So I decided to do a quick examination of how ACOs are doing and share the results below.

Basic Background on ACOs:

Simply put, an ACO is a group of providers that is responsible for the costs of caring for a population while hitting some basic quality metrics.  This model is meant to save money by better coordinating care. As I’ve written before, I’m a pretty big fan of the idea – I think it sets up the right incentives and if an organization does a good job, they should be able to save money for Medicare and get some of those savings back themselves.

ACOs come in two main flavors:  Pioneers and Medicare Shared Savings Program (MSSP).  Pioneers were a small group of relatively large organizations that embarked on the ACO pathway early (as the name implies).  The Pioneer program started with 32 organizations and only 12 remained in 2015.  It remains a relatively small part of the ACO effort and for the purposes of this discussion, I won’t focus on it further.  The other flavor is MSSP.  As of 2016, the program has more than 400 organizations participating and as opposed to Pioneers, has been growing by leaps and bounds.  It’s the dominant ACO program – and it too comes in many sub-flavors, some of which I will touch on briefly below.

A couple more quick facts:  MSSP essentially started in 2012 so for those ACOs that have been there from the beginning, we now have 4 years of results.  Each year, the program has added more organizations (while losing a small number).  In 2015, for instance, they added an additional 89 organizations.

So last week, when CMS announced having saved more than $1B from MSSPs, it appeared to be a big deal.  After struggling to find the underlying data, Aneesh Chopra (former Chief Technology Officer for the US government) tweeted the link to me:

@ashishkjha CMS always releases these results. They are on the website!

You can download the excel file and analyze the data on your own.  I did some very simple stuff.  It’s largely consistent with the CMS press release, but as you might imagine, the press release cherry picked the findings – not a big surprise given that it’s CMS’s goal to paint the best possible picture of how ACOs are doing.

While there are dozens of interesting questions about the latest ACO results, here are 5 quick questions that I thought were worth answering:

  1. How many organizations saved money and how many organizations spent more than expected?
  2. How much money did the winners (those that saved money) actually save and how much money did the losers (those that lost money) actually lose?
  3. How much of the difference between winners and losers was due to differences in actual spending versus differences in benchmarks (the targets that CMS has set for the organization)?
  4. Given that we have to give out bonus payments to those that saved money, how did CMS (and by extension, American taxpayers) do? All in, did we come out ahead by having the ACO program in 2015 – and if yes, by how much?
  5. Are ACOs that have been in the program longer doing better? This is particularly important if you believe (as Andy Slavitt has tweeted) that it takes a while to make the changes necessary to lower spending.

There are a ton of other interesting questions about ACOs that I will explore in a future blog, including looking at issues around quality of care.  Right now, as a quick look, I just focused on those 5 questions.

Data and Approach:

I downloaded the dataset from the following CMS website: https://data.cms.gov/widgets/x8va-z7cu and ran some pretty basic frequencies.

Here are data for the 392 ACOs for whom CMS reported results:

Question 1:  How many ACOs came in under (or over) target?

Question 2:  How much did the winners save – and how much did the losers lose?

Table 1.

Number (%)

Number of Beneficiaries

Total Savings (Losses)

Winners

203 (51.8%)

3,572,193

$1,568,222,249

Losers

189 (48.2%)

3,698,040

-$1,138,967,553

Total

392 (100%)

7,270,233

$429,254,696

I define winners as those organizations that spent less than their benchmark.  Losers were organizations that spent more than their benchmarks.

Take away – about half the organizations lost money and about half the organizations made money.  If you are a pessimist, you’d say, this is what we’d expect; by random chance alone, if the ACOs did nothing, you’d expect half to make money and half to lose money.  However, if you are an optimist, you might argue that 51.8% is more than 48.2% and it looks like the tilt is towards more organizations saving money and the winners saved more money than the losers lost.

Next, we go to benchmarks (or targets) versus actual performance.  Reminder that benchmarks were set based on historical spending patterns – though CMS will now include regional spending as part of their formula in the future.

Question 3:  Did the winners spend less than the losers – or did they just have higher benchmarks to compare themselves against?

Table 2.

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings (Losses)

Winners (n=203)

$10,580

$10,140

$439

Losers (n=189)

$9,601

$9,909

-$308

Total (n=392)

$10,082

$10,023

$59

A few thoughts on table 2.  First, the winners actually spent more money, per capita, then the losers.  They also had much higher benchmarks – maybe because they had sicker patients – or maybe because they’ve historically been high spenders.  Either way, it appears that the benchmark matters a lot when it comes to saving money or losing money.

Next, we tackle the question from the perspective of the U.S. taxpayer.  Did CMS come out ahead or behind?  Well – that should be an easy question – the program seemed to net savings.  However, remember that CMS had to share some of those savings back with the provider organizations.  And because almost every organization is in a 1-sided risk sharing program (i.e. they don’t share losses, just the gains), CMS pays out when organizations save money – but doesn’t get money back when organizations lose money.  So to be fair, from the taxpayer perspective, we have to look at the cost of the program including the checks CMS wrote to ACOs to figure out what happened.  Here’s that table:

Table 3 (these numbers are rounded).

 

Total Benchmarks

Total Actual Spending

Savings to CMS

Paid out in Shared Savings to ACOs

Net impact to CMS

Total (n=392)

$73,298 m

$72,868 m

$429 m

$645 m

-$116 m

According to this calculation, CMS actually lost $116 million in 2015.  This, of course, doesn’t take into account the cost of running the program.  Because most of the MSSP participants are in a one-sided track, CMS has to pay back some of the savings – but never shares in the losses it suffers when ACOs over-spend.  This is a bad deal for CMS – and as long as programs stay 1-sided, barring dramatic improvements in how much ACOs save — CMS will continue to lose money.

Finally, we look at whether savings have varied by year of enrollment.

Question #5:  Are ACOs that have been in the program longer doing better?

Table 4.

Enrollment Year

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings

Net Per Capita Savings (Including bonus payments)

2012

$10,394

$10,197

$197

$46

2013

$10,034

$10,009

$25

–$60

2014

$10,057

$10,086

-$29

-$83

2015

$9,772

$9,752

$19

-$33

These results are straightforward – almost all the savings are coming from the 2012 cohort.    A few things worth pointing out.  First, the actual spending of the 2012 cohort is also the highest – they just had the highest benchmarks.  The 2013-2015 cohorts look about the same.  So if you are pessimistic about ACOs – you’d say that the 2012 cohort was a self-selected group of high-spending providers who got in early and because of their high benchmarks, are enjoying the savings.  Their results are not generalizable.  However, if you are optimistic about ACOs, you’d see these results differently – you might argue that it takes about 3 to 4 years to really retool healthcare services – which is why only the 2012 ACOs have done well.  Give the later cohorts more time and we will see real gains.

Final Thoughts:

This is decidedly mixed news for the ACO program.  I’ve been hopeful that ACOs had the right set of incentives and enough flexibility to really begin to move the needle on costs.  It is now four years into the program and the results have not been a home run.  For those of us who are fans of ACOs, there are three things that should sustain our hope.  First, overall, the ACOs seem to be coming in under target, albeit just slightly (about 0.6% below target in 2015) and generating savings (as long as you don’t count what CMS pays back to ACOs).  Second, the longer standing ACOs are doing better and maybe that portends good things for the future – or maybe it’s just a self-selected group that with experience that isn’t generalizable.  And finally, and this is the most important issue of all — we have to continue to move towards getting all these organizations into a two-sided model where CMS can recoup some of the losses.  Right now, we have a classic “heads – ACO wins, tails – CMS loses” situation and it simply isn’t financially sustainable.  Senior policymakers need to continue to push ACOs into a two-sided model, where they can share in savings but also have to pay back losses.  Barring that, there is little reason to think that ACOs will bend the cost curve in a meaningful way.

==##==

Post originally appeared at An Ounce of Evidence | Health Policy: The blog of Ashish Jha — physician, health policy researcher, and advocate for the notion that an ounce of data is worth a thousand pounds of opinion.

Posted in Accountable Care, ACO, Affordable Care Act

The Long and Winding Road to Healthcare Price Transarency

by Gregg A. Masters, MPH

Bitter Pill: Steve BrillWhen Steven Brill published ‘Bitter Pill: Why Medical Bills Are Killing Us‘ in 2013 he brought national attention via a series of personal stories that served to reveal the complex dysfunction inherent in our healthcare delivery and financing system. A veritable ‘conundrum‘ created over the decades of layering managed care complexity (pre-certification, prior authorization, referral management, contract payment adjudication, etc.) on top of the arguably burning ‘fee-for-services’ platform that incentivizes the prevailing ‘do more [units] to earn more [income]’ mentality of hospitals, physicians and allied healthcare practitioners who do not operate in a pre-paid or per member per month capitated environment.

Central to Brill’s narrative was the hospital ‘charge master‘, typically a made up fictional schedule of retail (sticker shock) values with ZERO relationship to the actual cost of services provided nor what would ultimately be paid by the patient or third party on his or her behalf.

Brill admonishes readers to:

Pay no attention to the chargemaster – No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost — that any hospital executive I spoke with was able to explain. “They were set in cement a long time ago and just keep going up almost automatically,” says one hospital chief financial officer with a shrug.

Most of us are fortunate enough to have 3rd party coverage via our employer or Government funded programs like Medicare, Medicaid, etc., and benefit from deeply discounted intermediary ‘wholesale rates‘ often beginning at 50% of the published charge master rates.

Ironically, those who of us absent this ‘buffer’ and who could least bear the sticker shock burden associated with arbitrary (no relationship to cost) charge master pricing, i.e., the un and under insured, paid the steepest price, see: ‘Medical Bills Are the Biggest Cause of US Bankruptcies: Study‘.

Consumer Directed Health Plans and the ‘Empowered Patient’ Mandate

Since the launch of the Health 2.0 movement and arguably the ‘digital health‘ innovation industry writ large by co-founders Matthew Holt and Indu Subaiya, MD, some of the start-ups launched addressed the problem of price transparency ‘workarounds’ via back end building of ‘virtual’ contract rate books through platform user submissions of EOBs detailing the charge basis and ultimate contract repricing per the health plan negotiated rate of the services rendered and paid. Some of the companies operating in the space, though not necessarily back-ending virtual rate books, include: Medlio, Change Healthcare, Healthcare Bluebook and Castlight Health, see: ‘8 companies working on healthcare price transparency‘.

Clearly the ‘holy grail‘ here is contract rate-book transparency, but don’t hold your breath. These rates are deemed proprietary and thus closely guarded ‘trade secrets’.

So fast forward to today. It’s 2016 (some 43 years post HMO Act) and healthcare inflation which has shown remarkable restraint principally due to the lingering impact of the great recession of 2008, coupled with the health insurance industry’s new found love affair fueled by the ACA with so called ‘consumer directed health plans‘ (aka code for the ‘cost shifting’ charade). Think of it this way, massive health plans, pooling millions of lives, extracting maximum pricing leverage from providers and exercising varying degrees of medical management oversight have explicitly admitted that as an industry they can NOT manage clinical risk, thus have chosen make provider pricing restraint ‘our’ problem. Afterall, they reasoned the required (mythical absence of?) ‘skin in the game‘ of high deductibles, non-covered services, copayments and co-insurance drives granular price sensitivity since the once 3rd party buffer (if it ever existed) is no longer present to immunize our exposure to the cost of utilizing healthcare services.

Last month The Health Care Incentives Improvement Institute (HCI3 ) and Catalyst for Payment Reform (CPR) issued the fourth installment of the ‘Report Card on State Price Transparency Laws‘. The picture below tells the less than pretty story:

Price Transparency Report Care

 

They open the report noting:

Despite the full integration of price information into almost every other retail experience, it’s typical in American health care for consumers to go into an appointment or procedure knowing nothing about what it will cost until long afterward

And conclude as follows:

Our 2016 Report Card on State Price Transparency Laws shows that price transparency—an obvious expectation integrated into every other consumer experience—is on the minds of state legislators and other health care leaders throughout the U.S. It also highlights why this information is so critical to every health care consumer in every state; prices for routine and very common procedures can vary by more than 50 percent, even in the same geographical area, placing a potentially significant financial burden on individual consumers, a burden that can be avoided with robust health care price transparency. Thus, design and implementation of the legislation matter.

In fact, the potential for transparency to empower consumers, shift costs down, and raise quality rests entirely on the strength and comprehensiveness of each state law’s implementation. This is a perspective that is often lost in some of the research on the effectiveness of price transparency, even though no one should be surprised that weak resources yield poor results. Importantly, a very strong and thorough body of research demonstrates that consumers will seek lower-priced, high-quality providers when given the right information in the right format.

Many states may see low grades for themselves. However, in this report card, they also have a roadmap for improvement. It’s up to states to apply that roadmap to benefit from the desired and proven positive effects of price and quality transparency. 

I am not as optimistic as the authors that price transparency solutions coupled with a growing army of ‘empowered patients‘ are sufficient to tame the rapacious appetite of a predominantly volume incentivized delivery system. Clearly this is a slog unlike any other industry re-tooling, re-invention or re-engineering challenge we’ve EVER faced in the United States. More will be revealed as we move from niche solutions (concierge medicine, direct practice, non-risk bearing ACOs or IDNs, or HMO-lite solutions, etc.) tweaking at the margins of the ecosystem dysfunction but delivering little by way of sustainable contribution.

As I was recently reminded by Dan Munro of a quote often mis-attributed to Winston Churchill:

The question is whether there is any reason to believe that such a new era [think value based healthcare driven by ’empowered patients’] may yet come to pass. If I am sanguine on this point, it is because of a conviction that men and nations do behave wisely once they have exhausted all other alternatives. Surely the other alternatives of war and belligerency [avoiding the inevitable path of risk assumption/integration] have now been exhausted.  Abba Eban,  June 1967 

Bottom-line?

I see HMO’s 2.0 (global risk) in our future. There just isn’t anyway around it, though we’re trying our best to avoid the inevitable.

Your thoughts?