Posted in Accountable Care, ACO, Affordable Care Act

Those Failing CO-OPs: Implications for the ACA and its ACO Workhorse

by Gregg A. Masters, MPH

As the battle for the hearts and minds of Americans relative to the Affordable Care Act (ACA) continues, and the tracking sentiment index waxes and wanes between ‘favorable’ and ‘unfavorable’ one front in particular seems to have a fair degree of utility with the narrative profferred by the ‘repeal and replace‘ crowd.

Consumer Operated and Oriented Plan (CO–OP) Program

Nested in Section 1322 of the Affordable Care Act (ACA), the ACA created the Consumer Operated and Oriented Plan Program (the CO–OP program):

‘to foster the creation of new consumer-governed, private, nonprofit health insurance issuers, known as ‘‘CO–OPs.’’ In addition to improving consumer choice and plan accountability, the CO–OP program also seeks to promote integrated models of care and enhance competition in the Affordable Insurance Exchanges established under sections 1311 and 1321 of the Affordable Care Act. The statute provides loans to capitalize eligible prospective CO–OPs with a goal of having at least one CO– OP in each State. The statute permits the funding of multiple CO–OPs in any State, provided that there is sufficient funding to capitalize at least one CO–OP in each State. Congress provided budget authority of $3.8 billion for the program’

For program details and background see the Notice of Proposed Rule Making (NPRM) hereACOwatch_COOPGraphs_netIncome

As fodder for the anti-ACA crowd, much of the recent headlines have rightfully focused on the problematic ‘failure‘ rate of many of these community based AND governed start-up health plans.

Just witness some of the associated reports recently in the news:

Lets underscore the fact that CO-OPs are de-facto start-up health plans – a problematic undertaking under ideal launch conditions. As any entrepreneur or VCs fueling their vision knows, there is a tender proof of business model period during which an entities’ expenses typically exceed their revenues as they build market share and compete for members or lives in the market where they operate.

The ‘break-even’ (B/E) formula is rather simple:

revenues – expenses + subsidies = profit (or for non-profit entities: surplus revenues over expenses)

While not a golden rule, the B/E crossover point is rarely (if ever) within the first 24 or even 36 months of a stand alone (vs. subsidiary) operations and wholly determined by local market conditions and competitive landscape. Whether capitalization is via private investment or as in the case of CO-OPs via Federal loans this start-up fragility can not be overstated.

The other consideration unique to the CO-OP Program is the locally brewed, governed and accountable nature imbued in the operating culture and mission of these entities.

When you layer in the well established actuarial dynamics of profit and loss cycles predictably inherent in health insurance industry including ALL managed care derivatives, the critical variable of timing of market entry may introduce a volatility factor over-expressed under the current market conditions the ACA has fostered.

In other words, start-up health plans take time to create the infrastructure (people, processes and culture) to market, retain, price and operate successfully under ideal let alone typical market conditions. When you add the disruptive conditions the ACA has created (see: ‘Risk Adjustment Gone Wrong‘) in the small group and individual markets via Federally Facilitated or State run health insurance exchanges that complexity, associated market share gain challenges and ‘volatility ratio‘ can only be expected to play an increasingly important role in the success or failure of the enterprise.

The HMO Act of 1973

There is precedent to perhaps gauge and contextually consider the relative success or failure of the CO-OP Program spawned by the ACA. When the managed care revolution was birthed by then Republican President Richard Nixon via the HMO Act of 1973 as a market driven solution to remedy the run away costs of healthcare, HMO’s were typically seeded as non-profit, community based AND governed risk bearing health plans with a principal mission to maintain the health ACOwatch_HMO_Actand well being of its members.

HMO’s like the CO-OP program today received Federal support via start-up loans to manage through the typical B/E point associated with the start-up of a community based health plan vs. the typical indemnity based, fee for services insurance companies that dominated the market. The two exceptions to this rule where the non-profits licensed and operating under the Blue Cross and Blue Shield label and at least in California the Kasier Permanente Health Plan.

During the launch trajectory as then designated ‘alternative delivery systems‘ (ADS) HMO’s slowly gained share (both mind-share and members) and made their way out of California, though constrained by their non-profit nature and operating culture including the limited marketing upside of ‘staff’ or group model HMOs portrayed as second class medicine. In the 80s HMO’s went mainstream via the introduction of Independent Practice Associations (IPAs) and later ‘network models’ which attracted the independent private practice cohort into managed care if for no other reason than to defend against an emerging trend that could threaten their livelihood as more and more health benefit plans started to traffic patients to a contracted network of ‘participating providers’.

Shortly thereafter fueled by Wall Street the major health insurance companies went on a acquisition binge of these sleepy, capital constrained community based health plans. This consolidation orgy created a legal bonanza via a new industry of for-profit conversions of community based health plans, the behemoths of which included many of the Blue Cross/Blue Shield licensees. During the ‘urge to merge‘ imperative the seminal transaction was likely the for profit conversion of Blue Cross of California under the stewardship of health wonk Leonard Schaeffer (former Administrator of HCFA – the predecessor agency to CMS). Blue Cross of California was then to serve as the founding member of the for-profit WellPoint empire now re-branded and operating as Anthem, Inc. 

As simple and narrow as HMO (alternative delivery system model) charge was then, it pales in comparison to the charge and expectations placed on the nascent and fragile CO-OP industry. Not only are CO-OPs to stand up entities that provides non-profit, community based alternatives in a competitively vetted, comparably priced tiered benefits package for exchange facilitated marketplaces, they are to do this while the hospital, physician and a health plan communities are rapidly consolidating to gain scale and thus pricing leverage.

Bottom Line

The health insurance industry is a complex and some would argue ‘protected‘ industry (see: McCarran–Ferguson Act) that challenges even best-of-breed leadership (Mark Bertolini, Bruce Broussard et al) to sustainably operate their business as profitable enterprises during the volume to value shift. Witness the ‘urge to merge‘ amidst the majors, i.e., Aetna’s proposed acquisition of Humana, and Anthem’s proposed acquisition of Cigna, both recently challenged by the Department of Justice, and both rationalized by the need for scale to achieve the operating results expected by their investors.

As to ACO implications, clearly there are some. It’s hard to predict the rate of legal and clinical integration and the seamless care coordination and commitment to quality envisioned by 2nd or 3rd generation ACOs (typically risk bearing) or any of their derivative plays as exchanges become the de-facto market place for small group and individual offerings, but the handwriting is clearly on the wall.

So as some of us point to the CO-OP failure rate as another example of ACA over-reach via fundamentally flawed legislation and thus cause for repeal or re-entrenchment from the law, it may be helpful to historically gauge the nature of their challenge AND the market conditions in which they operate. A little humility can go long way here.

 

 

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Posted in Accountable Care, ACO, Affordable Care Act

POTUS: The De Facto Health Wonk-in-Chief of the US?

by Gregg A. Masters, MPH

United States Health Care Reform

 

Love him or hate him President Barack Obama continues to demonstrate depth, insight, tenacity and a firm grip on the state of the U.S. Healthcare ecosystem dysfunction (and remedies) well beyond his formal training as a Constitutional scholar. Now as arguably one of the most legislatively accomplished President’s in U.S. history, particularly in light of the catastrophic train wreck he inherited from his predecessor and fueled by the nonstop ‘hell no‘ chorus of his disingenuous (often health policy clueless) political opposition he weighs in to set the record straight and for legacy purposes.

On July 11, 2016, JAMA released ‘United States Health Care Reform: Progress to Date and Next Steps‘ a rather scholarly construed unbundling of the state of healthcare then and now (pre and post ACA implementation). As a rather complex piece of legislation with many moving parts, and staggered implementation timelines (some as a result of political accommodation, some merely in tune with operational and prevailing healthcare delivery and financing legacy inertia) he steps up and in classic barrister narrative fashion lays out his case, and simultaneously calls out the next steps to remedy the U.S. healthcare conundrum.

POTUS aka ‘Health Wonk-in-Chief‘ Barack Obama concludes:

Policy makers should build on progress made by the Affordable Care Act by continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition, and taking actions to reduce prescription drug costs. Although partisanship and special interest opposition remain, experience with the Affordable Care Act demonstrates that positive change is achievable on some of the nation’s most complex challenges.

I strongly encourage you to click on and read the entire piece. It is well worth your time and wholly consistent with the ‘accountable care’ narrative (the subject of this blog) driving Medicare ACOs, their commercial derivatives and large portions of the moving parts of the ACA including the entire spectrum of ‘value based’ healthcare initiatives.

For this piece, I want to focus on four areas of the ‘next steps‘ called out by POTUS, namely: the ‘Health Insurance Marketplaces’, associated ‘delivery system reform’, AND the introduction of ‘a public plan option in areas lacking individual market competition, and finally ‘taking actions to reduce prescription drug costs’.

Health insurance marketplaces

So much of the ACA oppositional cheerleading liked to stress the ‘buying across state lines‘, and ‘malpractice reform‘ as ‘freedom and choice‘ enabled solutions to the health insurance quagmire. Never mind the rampant marketing, churn, double digit premium increases, retrospective rescissions or opportunistic denial rates, coverage limits and lifetime caps so endemic in the space. Not to mention ‘mini-meds‘ or ‘junk insurance’ so prevalent in the market before some baseline notions of what constitutes ‘insurance‘ in the face of typical health, illness or accident challenges one may experience in life. Here again, coverage baselines and the need for consistency to shop, compare and ultimately purchase real health insurance seemed like too much regulatory over-reach in a market where choice absent basic ground rules somehow seemed like a more attractive solution – at least to the often clueless opposition. The entire over-reach narrative was wrapped up, sold and bought as a ‘Government controlled healthcare takeover‘ per the vacuous talking points proffered by ACA oppositional research.

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Yet, the value proposition of an ‘insurance market place‘ whether Federally run, ‘facilitated’ or state delegated exchange option makes total sense if a transparent consumer market is to emerge from the chaos that is principally the individual market (non employer sponsored health insurance), though the group, or self funded ASO market ain’t much to cheer about either. Yet such a model was/is a proven way (witness the explosive growth of private exchanges) to introduce orderly competition in an otherwise opaque industry.

If you’ve ever run a health plan, built a managed care organization or contracted for hospital, physician, ancillary and pharmaceutical services (I presided over several employer sponsored health plan initiatives, MSOs, PHOs and IPAs tackling both capitated and discounted fee for service plan launch and operational issues in for-profit, voluntary and academic health systems) you will know that prudent (empowered, informed, etc.) purchasing of health insurance options requires clear apples-to-apples covered services comparisons, exclusions and non-covered item disclosures coupled with understandable pricing transparency and the cost sharing burden associated with your election. Absent this comprehensive clarity, listing guidance and/or requirements that an exchange imposes to ‘qualify’ eligible participants as candidates to choose from is virtually impossible. Standing up the infrastructure (people,  process, culture, etc.) to enable informed choice requires such an exchange environment whether public, private or some combination thereof to transparently market their services to the consuming public.

Delivery system reform

This is clearly the ACA’s ‘achilles heel‘ as there ain’t much there, there other than aggregate ‘on the come‘ efforts to tip toe into the waters of ‘clinical integration‘, measured risk assumption and a range of payment reforms collectively recognizing fee-for-service (i.e., do more to earn more) medicine as a burning platform. The most tangible form of this commitment is represented by Secretary Burwell’s call to migrate increasing shares of Medicare beneficiaries (including me, as I turn 65 in August and have elected Kaiser Permanente Senior Plan in San Diego) into Medicare Advantage, ACOs and a broadly cast series of ‘value based‘ healthcare arrangements by certain dates.

Standing Up the ACOFor the most part, ACA focused on insurance market place reforms. While delivery system reform was principally invested in ‘nascent’ ACOs (which are mutating as we speak amidst some 5 and 1/2 years of operating experience under the Medicare Shared Savings Program (one I like to call ‘HMO-lite’ which incidentally and inevitably is morphing into its more traditional gatekeeper HMO predecessor vs. the retrospective attribution methodology that undermines successful ACO risk assumption performance).

Additional delivery system reform was to come from pilots, demonstrations and other ‘innovations’ the Center for Medicare and Medicaid Services (CMS) funded via the Center for Medicare and Medicaid Innovation (CMMI) – who’s budget the Republican controlled Congress is determined to cut.  Here, I might add at the ACO Summit circa 2012 one of the most seasoned and successful risk savvy players I had the opportunity to work for and with in Dallas, Texas Richard Merkin, MD, the founder and owner of Heritage Medical Systems and Heritage Provider Network described as the ‘hidden jewel’ in the ACA.

As much as we’ve progressed into ‘managed care‘ whether discounted, bundled, case rates, per diems or global or partial per member per month (PMPM) capitation or percent of premium the majority (estimated at 80-90%) of healthcare payments are still of the fee for services variety. Back in the 80s when American Medical International (AMI) retained me to develop and preside over their managed care strategy for the California Region’s 19 hospitals I elected ‘Director of Health System Development‘ vs. Regional Director of Managed Care as a title, since I saw the strategic imperative of building and operating a hospital system as a partnership with payors, health plans and employer groups, in order to create value. Since ‘payors’ (as a group) were our customers to grow market share we needed ‘dots on the map‘ to effectively service their employees, members or insureds. That vision and strategy collapsed before taking root since quarterly earnings per share incentives of the hospital CEOs precluded the longer term strategy of acquisitions and divestitures consistent with a dots on the map game-plan could take hold.

Today, many years later health systems are ‘getting [payor/provider partnership] religion’ at least rhetorically, yet the prevailing provider/payor mindset remains ‘your revenues are my expenses‘ – not much progress! So don’t hold your breath on material delivery system reform other than the equivalent of re-arranging furniture on the deck of the Titanic while the ship sinks. Mergers, acquisitions, the ‘death of independent‘ medicine and rise of mega institutionally led health systems more or less ‘clinically integrated‘ notwithstanding.

A public plan option in areas lacking individual market competition

While POTUS stresses the individual market as the target ‘book of business‘ most at risk and dysfunctional absent effective reform the need for a ‘public option‘ across the board (group, self funded/ASO, fully insured, etc) is rather compelling, in my view. The recent failures of the ACA enabled ‘CO-OPs‘ notwithstanding (i.e., startup insurance companies or health plans rarely if ever achieve profitability in such a short timeline given the threshold need for ‘the law of large numbers‘ for actuarial credibility and the inherent volatility of the underwriting profit/loss cycle) do nothing to undermine the argument and need for a public option writ large.

I’ll go one step further and say ultimately our worshipping of ‘pluralism‘ in healthcare delivery and finance will ultimately give way to a ‘Medicare E‘ version as in Medicare for everyone. If public/private partnerships and business models could successfully manage clinical risk and meet the health and healthcare needs of their constituents we would have solved the problem in the 80s and 90s. Who remembers the ‘Harry and Louise‘ narrative battles (‘if the Government choses, we lose‘) on the Clinton Health Security Act aka ‘HillaryCare‘? So perhaps we’ll get there once we exhaust every other option to avoid ‘single payor‘?

Actions to reduce prescription drug costs

This seems to me the segment the easiest to resolve. Here I’d empower Medicare to negotiate direct and on behalf of it’s entire pool of beneficiaries, rather than dilute the market power via a tapestry of variably (under) performing ‘PDPs’. The political compromise that birthed Medicare Part D (the Prescription Drug Plan) materially undermines the market power of the ‘law of large numbers’ to extract best price from vendors, suppliers or providers of services. This make NO sense, and we’re paying the price! Here, politicos assured Medicare could NOT intervene with such market clout instead they routed the business upside to a pool private participants.

Add to this macro market efficiency undermining the challenges of orphan or rare disease market segments and the egregious and unaccountable pricing practices most recently popularized by ‘bad boy’ Martin Shkreli of Turning Pharma and more recently Valeant‘s abusive pricing admissions.

Yes, specialty pharma is at risk and a major source of heartburn for AHIP and it’s employer allies, yet PHRMA has a point. The drug discovery and commercialization process/pathways to market are unpredictable and fraught will high failure rates. Coupled with the long development runways and high costs, but absent a ‘ceiling’ or ‘pricing accountability framework’ pharma’s management credo will remain ‘whatever the market can bear‘ strategy lest ProPublica‘s (et al) investigational journalism (see their guide to investigating non-profit health systems) marshals sufficient public attention and shame forces reconsideration or retraction of Pharma’s lazy over-reliance on raising ‘P’ (Price) vs. the more complex market challenge of driving ‘U’ (units via share gains) becomes their duty and ultimate measure and basis of ‘success’.

So thanks BO! Despite all odds, you (and Max Baucus et al) pulled it off. And yes, it’s only a beginning and there’s lots of work to do. In the words of then Acting CMS Administrator, Don Berwick, who was wrongly blocked (by you know who) for permanent appointment [I paraphrase below]:

This will require no less than an all hands of deck, full court press to make happen [i.e., the triple aim].

 

Posted in Accountable Care, ACO, Affordable Care Act

Must listen JP Morgan Healthcare Conference Webcasts: @Centene

by Gregg A. Masters, MPH

NOTE: This is second in a series of ‘Must listen’ webcasts produced at JP Morgan’s 34th Annual Healthcare Conference. The first focused on telehealth sector market leader Teladoc. For background and details on this august gathering, see ‘If It’s January, It’s JP Morgan Healthcare Conference. Remaining companies to detail as they represent important ‘bell weather’ insights relative to their respective sectors, include: Aetna, AthenaHealth, Centene, Genomic Health, Molina Health,Universal American, Tenet Health, as well as several from the ‘non-profit’ (tax exempt) sector including Baylor Scott and White

Centene’s operations and strategy positioning insights are material on a number of levels including the ‘urge to merge’ in the HMO or managed care space, and the implications such continuing consolidation holds for movement towards clinical and financial integration in the provider space. Additionally as many predict the future viability of the Medicare Trust Fund may rely largely on the efficacy of how Part C stakeholders articulate a sustainable vision of Medicare Advantage program to extend and enhance the life cycle of the Medicare program itself.

For direct link to the JP Morgan Healthcare Conference, click here. For the associated Centene profile, click here, the deck here and webcast, here.

For two related pieces on navigating the ‘white waters’ of the market’s transformation from volume-to-value as well as the recent ‘collateral damage’ (aka data breach) of healthIT as central spine enabling the transformation, check out ‘Centene–Health Net Entity Could Be Medicaid Leader and ‘Centene loses hard drives with health info on 950,000 beneficiaries, launches search‘, respectively.

Meanwhile, here are some slides which paint the picture both company and industry:

Centene overview

Centene growth 2015

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Centene

Centene specialty growth

Centene growth strategy

Centene market vy product

Centene pipeline

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Centene:

http://jpmorgan.metameetings.com/confbook/healthcare16/company.php?company=CENTENE+Corporation&p=19768&special_list_title=

http://marketrealist.com/2015/07/centene-health-net-entity-medicaid-leader/

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

CMS Quality Measure Development Plan: A DRAFT

by Gregg A. Masters, MPH

An inspirational leader and ‘disruptive‘ politician taken down well ahead of his time once opined:

“Ask not what your country can do for you, ask what you can do for your country…” John Fitzgerald Kennedy

Fast forward some 55+ years and season such an invitation with the relentless drone of 24/7/365 faux patriotism, hate mongering, intolerance, and emotive ‘hell no‘ sound-bytes proferred by those who self righteously claim title to the ‘take back our country’ narrative and you may ask yourself how did we get from there (the Peace Corps) to here (carpet bomb em)?

Yet, in our unique strain of American democracy even through studies empirically demonstrate a consistent disconnect between what Americans want and what their representatives codify via policy with a capital ‘P’, the bottom line is look in the mirror ‘we are the government’.

CMS_quality_development_planWhether it’s the creation and passage of what merged into the ‘Affordable Care Act‘ (ACA) or how the ‘public’ participates in both the legislative process and its implementation via the rule making process initiated aka the ‘notice of proposed rule making’ (NPRM), we are presented with both the opportunity and as it turns out obligation to engage in and thus granularly shape (via a dialectical bottoms up vs. top down exchange) the ground rules which in turn govern our economy and the conduct of its constituent industry stakeholders.

In the quest to advance the efficacy of quality initiatives (garbage in garbage out) one recent effort is the DRAFT release of the ‘CMS Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models‘.  

As an industry we are process oriented sometimes to a fault. Moreover the ‘check the box’ or drop down nature of many of these measures lends itself to the argument that the state of the industry to actually measure, document and report healthcare quality is at best a crude representation of what is actually going on. Clearly there is more work to be done if this industry is to matter.

To help readers of this blog, the introduction of the executive summary is pasted below:

I. Executive Summary

Background

A transformation of the U.S. healthcare delivery system gained momentum in 2010 with the passage of the Patient Protection and Affordable Care Act (Affordable Care Act).1

The law established the Health Insurance Marketplace to extend consumer access to affordable care through private payers and provided strong incentives in publicly financed healthcare programs to connect provider payment to quality of care and efficiency. 

Building on the principles and foundation of the Affordable Care Act, the Administration announced a clear timeline for targeting 30 percent of Medicare payments tied to quality or value through alternative payment models by the end of 2016 and 50 percent by the end of 2018.
These are measurable goals to move the Medicare program and our healthcare system at large toward paying providers based on quality, rather than quantity, of care.2

The passage of the Medicare Access and Children’s Health Insurance Program (CHIP)
Reauthorization Act of 2015 (MACRA)3 supports the ongoing transformation of healthcare delivery by furthering the development of new Medicare payment and delivery models for physicians and other clinicians. Section 102 of MACRA4,i requires that the Secretary of Health and Human Services develop and post on the CMS.gov website “a draft plan for the development of quality measures” by January 1, 2016, for application under certain applicable provisions related to the new Medicare Merit-based Incentive Payment System (MIPS) and to certain Medicare alternative payment models (APMs).

The law provides both a mandate and an opportunity for the Centers for Medicare & Medicaid Services (CMS) to leverage quality measure development as a key driver to further the aims of the CMS Quality Strategy:

• Better Care,
• Smarter Spending, and
• Healthier People. 5

Measure Development Plan Purpose
The purpose of the CMS Quality Measure Development Plan (MDP) is to meet the requirements of the statute and serve as a strategic framework for the future of clinician quality measure development to support MIPS and APMs. CMS welcomes comments on this draft plan from the public, including healthcare providers, payers, consumers, and other stakeholders, through March 1, 2016.ii The final MDP, taking into account public comments on this draft plan, will be posted on the CMS.gov website by May 1, 2016, followed by updates annually or as otherwise appropriate.i

So here it is… have at it. Perhaps your input will in fact shape the substance and steward the glide-path of how the transformation from volume to value can be realized. Certainly it’s worth your consideration. Afterall, another attributed Kennedy quote with biblical DNA may apply here:

“We are not here to curse the darkness, but to light a candle that can guide us through the darkness to a safe and sure future. For the world is changing. The old era is ending. The old ways will not do.

The problems are not all solved and the battles are not all won and we stand today on the edge of a New Frontier – a frontier of unknown opportunities and perils, a frontier of unfulfilled hopes and threats.

It has been a long road to this crowded convention city. Now begins another long journey, taking me into your cities and towns and homes all over America.

Give me your help. Give me your hand, your voice and your vote.”

John Fitzgerald Kennedy

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

Health Insurance Industry Consolidation: Any ‘Qui Tam’ Exposure?

by Gregg A. Masters, MPH

If you’re a health policy junkie like me, then the best show in town (or anywhere for that matter) was in the Dirksen Senate Office Building in Washington, D.C., where HMO industry veteran and Chairman, President and CEO of Aetna Mark T. Bertolini and Anthem President and CEO Joseph R. Swedish among other industry stakeholders testified before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on health insurance industry consolidation, for video replay click here or watch below:senate hearing health insurance industry

As most of you reading this blog know, subject to the Department of Justice review Aetna will acquire Humana, and Anthem will acquire CIGNA. Thus, the submitted testimonies and ad hoc answers to sitting Senators on the Subcommittee were potentially a high stakes exchange.

Moreover, the hearing today was nothing short of a tutorial into the dynamics of the managed competition marketplace (both theory and practice since absent complete transparency assuming the salutary benefits of such competition may be more ‘wishful thinking‘ than reality as noted by Senator Blumenthal – CT, the home of the insurance industry) and whether this unique American strain of public/private collaboration can deliver on the oft repeated promises of such integration, i.e., that scale via consolidation drives operating efficiencies, improves quality and lowers costs to end users. We shall see…

As I heard the pitches from the various representatives assembled to offer perspective to the sitting Senators (see list here), I began to wonder if any of their testimony would be subject to the ‘false claims Act‘ if post consolidation the promised benefits do not accrue to the intended benefactors.

For those of you not familiar with the ‘False Claims Act‘ or otherwise known as Qui Tam filings, here a summary including its recent expanded scope via the Affordable Care Act:

The False Claims Act, expanded by the Fraud Enforcement and Recovery Act of 2009, P.L. 111-21 (S. 386), 123 Stat. 1617 (2009), now proscribes: (1) presenting a false claim; (2) making or using a false record or statement material to a false claim; (3) possessing property or money of the U.S. and delivering less than all of it; (4) delivering a certified receipt with intent to defraud the U.S.; (5) buying public property from a federal officer or employee, who may not lawfully sell it; (6) using a false record or statement material to an obligation to pay or transmit money or property to the U.S., or concealing or improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S.; (7) conspiring to commit any such offense. Additional liability may also flow from any retaliatory action taken against whistleblowers under the False Claims Act. Offenders may be sued for triple damages, costs, expenses, and attorneys fees in a civil action brought either by the United States or by a relator (whistleblower or other private party) in the name of the United States.
If the government initiates the suit, others may not join. If the government has not brought suit, a relator may do so, but must give the government notice and afford it 60 days to decide whether to take over the litigation. If the government declines to intervene, a prevailing relator’s share of any recovery is capped at 30%; if the government intervenes, the caps are lower and depend upon the circumstances. Relators in patent and Indian protection qui tam cases are entitled to half of the recovery.

Not sure if qui tam consideration can or even remotely applies to the upside representations proffered in favor of the acquisitions, since as noted by one or more witnesses today much of the empirical (public) record is incomplete and inconsistent with respect to supporting or discounting the arguments that will or have been made to DOJ as they conduct their anti-trust investigation into the proposed acquisitions or mergers.

[Editor’s Note: Two examples of previous health insurance industry consolidations were noted, including Aetna’s 1999 acquisition of PruCare, and United Health Group’s acquisition of Sierra Health Services. I will post the submitted witness testimony once it becomes available online, including any current discussion ‘tea leaves’ of what and where the DOJ investigation may be headed in both transactions. If you have anything, please feel free to add in comments section.]

This Subcommittee hearing is rich with both fundamentals and nuance considerations of the Affordable Care Act and whether it’s many moving parts can indeed align to meet the legislative intent of its authors.

Stay tuned!

Posted in Accountable Care, ACO, Precision Medicine

Precision Medicine v. Accountable Care: A Faux Choice?

By Gregg A. Masters, MPH

Whether you call it personalized medicine or as Eric Topol MD prefer’s ‘individualized medicine’ or even via the possible conflation of the two c/o the President @BarackObama ‘Precision Medicine’s’ initiative (see fact sheet here), it strikes me that we may need an emerging business model glossary to make sure we’re comparing, contrasting and discerning health reform and clinical practice innovation correctly.

Precision Medicine Fact Sheet

Further considering the difficulty in separating healthcare innovation or clinical practice transformation/re-engineering from political spinmeisters and their ideological agenda’s, it’s vitally important to gain a grasp of the range of conversations now in play under a ‘big tent’ of widely variable practice in health[care] innovation circles.

It’s tempting to dumb down the debate by assigning those ventures in the ACO or accountable care derivative play space to ‘tweaks at the margin’ of business as usual medicine, while reserving the more promising frontier represented by precision medicine as a life sciences and biotechnology fueled new breed of medicine enabling us to walk away from the business as usual burning platforms required by the current financing and delivery of care paradigm.

A few articles will help with the discernment and formation of a common taxonomy of accountable care and precision medicine practices – which I will use to include both personalized and individualized medicine.

In Specialist Doctors Head for Exit as U.S. Shifts Payments we revisit the perennial dispute between cognitive vs. procedural medicine specialists and the relative embrace or resistance of ‘bundled payment’ as a transitional practice to value (vs. volume) based medicine. Disorganized medicine has a history of ‘circling the wagons’ and shooting in to solve differences. Unfortunately, the current developing divide between primary care specialists and their sub-specialty peers will likely continue this tradition of internecine warfare.

InPrecision medicine takes genetic mapping to the next level Florence Comite, MD (@comiteMD) an endocrinologist turned precision medicine evangelist unbundles the biotech and genomic medicine fueled promise of this emerging field.

And at Will patients pay for Personalized Medicine? Rob Wright (@RfwrightLSL) dips into the ‘follow the money’ question given the continued practice (now somewhat codified by the ACA via a metals designation of plan type) of cost shifting from health plans to patients/members the increasing burden of health benefits coverage.

Finally perhaps tangential though relevant to the conversation is the recent ruling in the Massachusetts Attorney General v. Partners Healthcare litigation where the delivery system merger is being challenged as anti-competitive. Fueled by accountable care strategy roll-outs (formerly ‘managed care’), market trends and the ACA, consolidation is one of the key themes likely to influence both the alchemy and market conditions under which both of these models will continue to evolve before before their inevitable convergence into a sustainable health[care] ecosystem.

Yes, we do live in ‘interesting times’.

 

 

Posted in Accountable Care, ACO, Affordable Care Act

Accountable Care Round Up

by Gregg A. Masters, MPH

One of the ongoing challenges in ‘new media’ is to effectively discern the content ‘signal to noise’ ratio given the ease of publishing these days. Everyone is a potential publisher and not all curation is of equal value nor newsworthy per se.

As heard at a Health 2.0 meeting some time ago, ‘there’s no such thing as information overload, only filter failure’. I’m not sure if I entirely agree, but I’m in there trying.

Meanwhile if this blog can contribute to the accountable care or more broadly cast quest triple aim conversation via a recap of  ‘must read’ articles, videos or podcasts posted elsewhere then so be it. What follows is week one of a round-up series that you might appreciate:

Managed Care Contract Negotiations Morph Under PPACA

In ‘Managed Care Contract Negotiations Morph Under PPACA‘  HealthLeaders author Greg Freeman points out that:

Negotiating a managed care contract is not the same as it was even a few years ago. Now all of the power providers have in managed care negotiations is in their ability to prove that they can manage quality and cost more effectively than the next guy, says one expert.

In it’s purest form the entire managed care industry experience comes down to an opaque mosh-pit of filing cabinets stuffed with ‘proprietary contracts rates and terms’ as well as the underlying ‘secret sauce’ business models to enable the contractual obligations assumed. One could make an equally plausible argument that the entire accountable care et al sequelae industry will reduce itself to a similar albeit virtual version of this opaque storage of a complex tapestry of provider/payor relationships – not much of a contribution towards transparency here.

One big difference in the mix today thanks mostly to the emergence of enabling health information technology but also ‘new and improved’ sets of performance indices is the more effective (at least in the view of some) measurement of the actual quality of healthcare delivered.

Just remember, ACOs are not gatekeeper entities that traffic patients (members) to their preferred contract network of providers. They must attract and have attributed to their ‘risk pools’ (or share savings budgets) their membership. In this ‘vote with your feet’ environment, a more friendly consumer facing image and experience of care AND better documented quality outcomes (improved population health) will no doubt be a material competitive advantage.

There’s more to the story but one I suggest you read in its entirety.

A risky future? Two-thirds of ACOs want rules to change

Over at The Advisory Board (always an excellent independent source of market intelligence) Chas Roades, Chief Research Officer vets the signal from the ACO community to CMS overlords with – you guessed it – more risk pushback: A risky future? Two-thirds of ACOs want rules to change Citing a recent survey from the National Association of ACOs (NAACOs):

  • About 67% of program participants say they are unlikely to adopt a two-sided risk model in the next round of contracts;
  • 46% of its members are “very unlikely” to accept two-sided risk in the next round; and
  • 21% are “somewhat unlikely” to take on greater risk.

So the dance between the regulators and the regulated continues. Whether this NPRM public/private mechanism to source, develop and issue industry ground rules can succeed in crafting a new paradigm of healthcare delivery and finance – short of single payer – that doesn’t bankrupt the country remains to be seen.

Court Rejects ProMedica Merger Opposed by FTC 

Court Rejects ProMedica Merger Opposed by FTCOne of the ‘counseled’ potential market risks via the ‘Notice of Proposed Rule Making’ process (NPRM) associated with the implementation of the Affordable Care Act and the provisions specific to enabling the formation of Accountable Care Organizations (ACOs) is provider asset concentration in markets to consolidate power, grow share and leverage price. Ergo, the recent unanimous decision via a three-judge panel in the U.S. 6th Circuit Court of Appeals in Cincinnati to deny ProMedica’s petition to overturn a 2011 FTC ruling that ProMedica’s bid to merge with Toledo-area St. Luke’s was anticompetitive is worth a read. Whether the judges can adjudicate pro-market equilibrium also remains to be seen.

DaVita lowers earnings forecast as medical group unit underperforms

Consider this next story as more narrative in the vetting of business models that might work in an ‘ACA implementation quiver’ portfolio of sorts. DaVita lowers earnings forecast as medical group unit underperforms

In today’s murky and mostly transitional but assuredly disruptive operating environment, layered with conflicting financial incentives and nominal to no effective alignment between health systems and their physician ‘partners’ the pursuit of ‘successor’ managed competition models is no sure thing. Sourcing and grafting clinically integrated (both virtual and otherwise) models into local footprints that can legitimately enable the sometimes mutually exclusive (or seemingly so) objectives of the triple aim (better experience of care, better outcomes at lower per capita costs), the acquisition by renal care center operator DaVita of Healthcare Partners and thus entry into the integrated medical group operational theater is one to watch and dissect for clues.

The investor call is well worth the listen, including the entire Q & A from the usual institutional suspects following the industry.

(NOTE: though obviously very smart and knowledgeable you might want to caveat analyst engagement of DaVita/Healthcare Partners leadership with the history of due diligence applied during the vetting of the PPMC industry – a Ponzi scheme that sold many into serfdom while broker/dealers and underwriters pocketed millions).

The rather clever but telling ‘formula’ articulated by Kent Thiry (beginning at the 00:18:50 mark), DaVita’s talented and straight talking CEO is revealing. He nets it out as follows, then articulates the company’s performance on across it’s two principal verticals:

effective rate (OI) – expense x volume x execution risk = performance 

The net for aggregate medical group operations of Healthcare Partners:

down/more down than up/unit growth very promising/legacy solid, new ventures poor

Again, the investor call is well worth a listen if you want a deeper dive into the nexus between strategy and the challenging real world of implementation.

FTC Examining Health Care Competition Workshop: Panel 3: Advancements in Healthcare Technology

 Examining Health Care Competition Workshop - Part 3 The FTC’s ambitious and timely exploration of ‘consumer facing issues’ albeit not in sound byte fashion is a rather compelling and insightful journey into the status of health information technology as enablers [or obstacles] of the integration vision (care management, coordination, de-siloing the silos of American sick care) albeit from a central or more accurately distributed ‘IT’ spine perspective.

The ‘Panel 3: Advancements in Health Information Technology (HealthIT)‘ session focused on the competitive considerations that FTC should incorporate into their process as they catch up with market changes.

This is a MUST watch series for all but especially e-patients and healthIT professionals. The eloquent exploration of industry issues and observations proffered by both former ONC Director Farzad Mostashari, MD and AthenaHealth VP for Government & Regulatory Affairs, Dan Haley are worth the effort of watching the entire clip. As an alternative you can scroll through the transcript of the session pasted here.

There’s more to share, but we’ll roll them into the next Round-Up.

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