A Promising Medicare Plan, if Only Health Organizations Would Stick Around

Jun 30, 2015 · 40 comments
renolady (reno, nv.)
For the past 18 months, I have received the eye injections for wet macular degeneration from a very respected retinal physician. I had some initial improvement in my vision, but in the last months, the efficacy of having further treatment didn't seem to warrant the cost that Medicare was paying. I told the Dr. I was done and he tried to persuade me to continue with them. Then an interesting thing happened.

I had read several articles in the last months which compared the cost of the several types of injections which are given for this malady. The costs ranged from $60 to over $2000 per injection and yet there seemed to be no difference in the results achieved. When I brought this up with the Dr. and asked him why I was receiving the most expensive injection, his demeanor suddenly changed and he told me I didn't need any further treatment on my eye. Medicare needs to keep an "eye" on these situations and question physicians about this.
Joseph Fleischman (Missoula Montana)
Good for you! Keeping an eye out (pun intended) for providers who cheat the government is an important civic responsibility, as it's myopic (another intended pun) to think that we don't pay these bills.
Joseph in Missoula
jane (ny)
I noticed an issue with my Medicare bill (double billing for the same procedures on the same day) and went onto the Medicare site to try to register this complaint. Had to give up. If Medicare were on the ball they would make it easy for patients to register their concerns, upload scans or pdfs of their bills etc. online while keeping patient confidentiality. One concern was that my doctor would drop me or refuse treatment if I ratted on him.
Frank (Oz)
'follow the money' to find out why decisions are made

if health 'care' organisations see more profit holding out, or avoiding, or doing something else, they'll do it - in the name of their 'shareholders', etc. - risk vs responsibility, etc.

government's role is to decide what is the right thing to do - then make the rules - clear and simple - that organisations must follow

while there is any uncertainty - for-profit organisations will always seek the way that makes them the most profit - that's your 'free enterprise' system
Roger (St. Louis, MO)
ACOs are not the answer, and there are two basic reasons why.

The first is that quality metrics are almost useless. Every time an organization comes up with a new quality "metric", an administrator finds a way to game the system. We are better off determining best practices and holding providers to these standards. For example, enforcing a standard of 90 minutes between patient arrival and opening a clogged artery during a heart attack has improved outcomes. We should use this approach in other areas of medicine as well.

The second problem is that ACOs effectively take a large insurance pool and split it into multiple smaller, ACO based insurance pools. This increases the financial risk, and necessitates higher profit margins to compensate. This counteracts some, if not all, of the savings from the ACO strategy.
John Booke (Longmeadow, Mass.)
We have an oversupply of health care providers. That oversupply is rapidly growing. We still have a fee-for-service payment system. That combination of too many doctors doing too many services (procedures), and a fee-for-service payment system that encourages providers to do procedures even when the procedures are unnecessary spells trouble for any CMS efforts to contain spending.
hag (<br/>)
Health Care ???? and here I thought it was money care....
Paula Burkhart (CA)
You are SO right; private health care in this country is an outrage. Medical care and the peoples' health should have NOTHING to do with profit. Remove the profit; it's the ONLY way we can improve health care nationally.
jane (ny)
Remove the profit and nobody's going to bother to go to medical school. Remove the middleman and the drug profiteers and you start to improve things.
mannyv (portland, or)
Accountable care doesn't work financially, which is why companies are leaving the program.

Kaiser, the large vertical HMO, which should be operating as an ACO, isn't. They make around 5% and they've been doing this forever. Why does anyone think that a newcomer get better results?

ACOs are a fantasy born of hope.

The only way to reduce healthcare spending is to convince older people that further treatment is pointless and that they're going to die sooner rather than later.
Mary (Boston suburb)
As an older person in the "further treatment is pointless" situation, I strongly agree. Treat pain and discomfort but no surgical intervention or invasive tests.
Shaheen 15 (Methuen, MA)
Caregivers aim to give patients the finest care possible. They are not the subjects to be tested. As a population, they are trustworthy, honest and without greed. Time, effort and money spent on outcome studies of patients should be focused on diagnosis and treatment of disease, not time and motion studies related to managing money.

The way to manage money and costs involves capping prices paid to profit making organizations. The method is to Institute price controls. Study the costs and profits of insurance, pharmaceuticals, excesses in hospitals and related facilities, excesses in sophisticated diagnostic equipment that could be shared among institutions according to population requirements and focus on other forms of waste. Study the costs that do not provide direct care to patients. That's where the money is as well as where the money goes. The overriding example of centralizing the distribution of goods, rather than direct services, lies mainly with insurance companies. No one's health is threatened when the only thing an insurance scheme provides is money. Centralize the money with one insurer. Namely, Medicare for all.

It is time to be honest with how we count waste according to what we are spending outside of direct care. That's where the real money is.
Dr. Truthful (Portland, Oregon)
Managed Care alone, will not stop the healthcare cost crisis.

"Managed care" is arguably "better care", but it will not lower costs. Here is the definitive proof.

The ongoing presumption is that if you have a not-for-profit healthcare system where the doctors/providers are salaried and have no incentive to do any tests or treatments other than what is absolutely necessary; and you make sure that administrative costs are reduced to a bare minimum, then this will lower healthcare costs dramatically, and resolve our healthcare cost crisis. The problem is, that has already been done in a massive way, in America, over many decades, with little or no affect on costs.

Kaiser Permanente, the undisputed leader in managed care in America, has existed for ~70 years. It has, and has had collectively, tens of millions of covered lives over that time. Doctors/providers are paid a fair salary without production incentives of any sort. Administration costs for the system are reported consistently at about 5%, which is an industry low.

Now if all, or even part of those assumptions are true, Kaiser should have the lowest premiums by far. But the unfortunate fact is they are not the low price leader in any market in which they offer their plan.

The reason? Kaiser too, must offer the same very expensive new drugs, tests, and proprietary treatments as any other plan, and that is the overwhelming driver of healthcare cost inflation.
Todd (Evergreen, CO)
Kaiser is the lowest cost provider in my market of nearly 3 million people.
hag (<br/>)
And without all of these [money making] tests and drugs, a healthier population...
Remember Bloomberg, smaller sodas, more vegies, .. When will that be part of our health care
jane (ny)
Health care is your own personal responsibility. No processed foods, no antibiotics, no GMOs...fresh fruit and vegetables....that will be part of our own health care if we wise up enough to take care of our own bodies. Eating trash then expecting the doctor to fix it is like never maintaining your car then expecting your mechanic to keep it running.
lhfry (MT)
It's hard for me to understand how "quality" of care can ever be a criterion for judging health care delivery. It's pretty subjective. Plus patients don't always follow their doctor's advice, so how can a physician be judged on patient outcomes?

The biggest problem we've found with Medicare is finding a doctor who will take a new Medicare patient. If you move away from your pre-Medicare physicians, you may be out of luck. We relied on urgent care centers for several years and have finally bought into a "concierge practice." Not sure how well that's worked out yet but there are at least marginal improvements. Old people need continuity in the their health care. They may need a physician to verify their advanced directive. If your doctor doesn't know you, or doesn't follow up because Medicare doesn't pay for such care, your health can suffer.
frank m (raleigh, nc)
OK, so here is a system based on good ole "free market fundamentalism" and good "ole unregulated capitalism." And what do we get?

We get this a quote from the article: "Because the program is voluntary, an organization that can earn more by leaving, or one that anticipates it cannot recoup investments necessary to succeed, will not participate. One reason organizations may have dropped out is that payments decrease quickly as organizations become more efficient."

So where is the marvelous benefit that individual humans beings, the rest of us, the bottom 90%, are supposed to gain from this? Where is the fantastic value our marvelous economic system is supposed to provide? No where of course. Capitalism has no intrinsic value system (just the profit motive as just described), does not consider "people" and what they really need and favors the elite, the oligarchs and the plutocrats.

It is a system which needs to be highly modified, in this case with a single payer system, not the asinine Affordable Care Act, which hangs on to the capitalistic, value-less, negatives. We need a new system of inclusive capitalism, which means a considerably regulated system not run by elites and millionaires. We see what it produces all around us including our dragging, lethargic current economy where the middle class and below are on, and for some time have been on, a downward slope. And the upper 10% have accrued all the financial value of the last four decades.
jane (ny)
In defense of Obama, there was no way he could pass ANY act that would improve our healthcare system without pandering to the GOP and their masters, the insurance companies, Big Pharma and all the others who profit on keeping Americans sick and stupid.
tintin (Midwest)
Those who propose getting rid of the health insurers through some form of single-payer system are often naïve. First, non-profit health insurers, due to the constraints of their non-profit status, reap very little margin from the financing of health care. Furthermore, the amount of money insurers pay for various health care procedures is generally guided by Medicare, so the insurers are often not deviating that drastically from what the government is also doing. Unlike non-profit insurers, physicians groups are often dramatically over-compensated regardless of their quality. We have a system in which surgeons are making $500,000 a year, incentivized to provide more care in order to make more money, with the necessity of many procedures already questioned. That, readers, is a profit motive. If you want to reduce the profit motive in health care, you are going to have to shift away from a fee-for-service model and move into a salaried model like at the VA Hospitals or the NHS in the UK: in those systems, physicians and other health professionals are salaried and do not have an incentive to provide more care and bill more CPT codes. Additionally, if you look at Canada's single-payer system, it's a disaster, particularly with regards to certain areas of care, like mental health, medical rehabilitation, and others. I'm a 3rd generation Democrat, but I'm not naïve when it comes to health care. Do your homework, then re-consider how good a single payer system would be.
fschoem44 (Somers NY)
I would suggest, based on my own experience, France, basically Medicare for all, with private supplemental insurance and price controls on drugs is a better place to look than Canada. Based on an article/opinion I read here a couple(?) of years ago. Switzerland is a country where well regulated private insurance keeps medical costs from the kind of 'exuberance' we see in the US.
Richard Simnett (NJ)
When Corzine was governor of NJ he wanted Horizon Blue Cross to convert from non-profit to for profit. The reason was that the state would get the accumulated 'surplus' of the non-profit. It amounted then, more than 10 years ago, to over $2B. Non-profit is a tax classification, not an actual philosophy. Non-profit managements do quite well if the surplus continues to grow. The same goes for non-profit hospitals, as well as many other non-profits such as public TV and radio.
My parents are treated by the UK NHS. They have reached their late 80s, have received treatment and follow-up care as and when needed, at essentially zero cost to them, without delay in needed hospital, surgical, or diagnostic procedures (including CAT and MRI scans which US legend has it NHS patients must wait months).
I am aware of a US multi-specialty group that participated in an ACO-like trial with a commercial insurer. It was presented as 'save money, improve quality and the insurer will share the savings'. They documented savings of about $14M, and spent about $2M doing so (extra visits, tests, etc all for a fixed fee). The insurer shared $250k. End.
When Obamacare was still in Congress CBS interviewed UK NHS primary care physicians. The NHS wanted fewer complications from some particular ailment among the elderly, and offered incentives if targets were achieved, based on saved hospital costs. The physicians interviewed said they more or less doubled their income.
Administration matters too.
.
donald (honolulu)
Ah those poor suffering Execs from the non-profit insurers
" CEOs from 35 Blues plans collectively brought home about $93 million in bonuses, salary and other compensation in 2011, according to an analysis of state insurance department filings by The AIS Report. Of the total compensation those CEOs received last year, about $40 million came in the form of bonuses."
George N. Wells (Dover, NJ)
While all medical practitioners are in business to make money part of the problem is that there are people with no medical credentials who own and operate a lot of medical care operations from small groups to large hospitals. The Capitalist approach may seem fine but all the Capitalist can see is profit maximization not care for the customer (a.k.a., Patient) or the person paying the customer's bill.

I've been subjected to up-selling in the public sector of the medical business more-and-more. The Doctors and other professionals get really upset when I don't simply accept their up-sell recommendations and get visibly angry when I simply ask "Why?" When they cannot state a rational reason, I pass on the up-sell procedure.

Want to contain costs? Get rid of the Charge Masters and the edicts of the owners to up-sell the customer. Also never be in the position where you, or somebody acting on your behalf, cannot say no to the up-sell.
Roger DeCoverley (NY)
Year over year spending reductions in the MSSP (trend-based model) are difficult, if not impossible. The most inefficient systems had the most to gain - and saved - but struggled to continue those operational efficiencies year over year. Additionally, hospital-based ACOs have struggled even more, because their top line revenue is driven by utilization and admissions, and thye just aren't cutting it long term. It's too hard for them. MSSP is a modified FFS+, and it's just not enough to illicit substantive change. Of course it's a start, but many of these organizations are finding it's just too difficult to facilitate positive behavior change in such a tumultuous environment. Also, it's a disservice to readers that most studies do not include investment costs of an ACO (some estimate 1.5M initially, and 1M every year after) when they are judging their ability to reduce costs. My question is, why ony the providers? Payers have been demonstration their ability in "accountable care" for years. Let them have a go! Oh wait, isn't that Medicare Advantage?
AnnS (MI)
Wrong.

Medicare Advantage is good at

* Increasing the profits of private insurance companies

* Increasing the out-of-pocket amounts paid by patients (in this state, the OOPS will be 5-20 times higher than regular Medicare with a Medigap Plan A that covers copays but not the deductibles)

* Giving Advantage enrollees frou-frou stuff like gum memberships

And the big one --- doing it ONLY because those plans are heavily subsidized by the Feds and actually cost 20-30% MORE per enrollee than regular Medicare.
Dennis Byron (Cape Cod)
Here's the good news. While the Democrats and the goo goos fool around with this bureaucratic nonsense, the cliff (to randomly choose a metaphor) collapsed under their feet. Ryan proposed that the Medicare system move to a Medicare-Advantage-like program back in 2009 (when only about 10% of us were on Part C) and was shown pushing gramma over the cliff for his troubles. Who'd a thunk today's grammas would be choosing Ryan's approach over LBJ's almost2 to 1 just five years later. Today over half the people on Medicare who can make a decision (those not on Medicaid, those not on an FFS group retirement plan, those not over 80 and therefore not locked into their ways) choose public Part C Medicare Advantage and similar Part C health plans.
AnnS (MI)
You are wrong.

Only 20-25% f Medicare enrollees choose Medicare Advantage plans.

And they probably wouldn't pick them if they were not the younger and healthier enrollees who don't need care and who jump at the gym memberships and the $100 to a pair of glasses..

THe copays on Advantage plans are murderous -- easily add up to 5 -20 times that of Regular Medicare + a Medigap Plan A (does not pay deductibles but does cover copays.)
florida len (florida)
ACO's is a good idea, because ever since i started Medicare, I have felt like a human 'ATM Machine'. In other words, since there was little incentive to cut tests and hence reimbursements, the tests were piled on. This was a reaction by doctors to decreased reimbursement, i.e. just add more tests and fees to make up the shortfall. Hopefully, some sort of bonus systems for good and reasonable care can be implemented to help bring down costs, and the time it now takes to complete all the tests of which many are unnecessary.
J (USA)
I've not been able to figure out what ACOs do for the PATIENT. When I discovered I was in one and could not get a satisfactory explanation of how they work and what they would do for ME, I opted out. Anyway, although my primary care physician is a member of the ACO, most of my other doctors are in a different state. They hardly communicate with each other and definitely do not use the same patient portals.
kingdavid (china)
Want to cut costs and keep quality of Medicare? Get rid of the costs that occur in the last 48 hrs (surely 24 hrs) of life. "comfort care only". People in America should come to grips with the eventuality of death.
Richard Head (Mill Valley Ca)
There are many things that can improve care and lower costs.

#1- Communication. Offices have poor ability to trade records. An appointment is often wasted since the previous records are not present. All records need to be accessed at all times.
#2- scheduling of exams. Many are not thought out and added as the patient is seen so the process takes weeks rather then days. Then, the lack of careful history and physical to see if an exam is necessary. many (40%) are not,
#3- Many have drugs they were given months or even years ago and not necessary at this time. They need bi - yearly reviews.
#4- Lack of patients understanding what is going on. This is especially true when two or more doctors involved.
These are a few of simple easy to practice things that would decrease cost and improve care.
tintin (Midwest)
These measures you propose are not going to lower costs if the physicians continue to be incentivized to provide more care and more expensive procedures. In order to decrease the costs of health care, we have to stop rewarding those who look for every opportunity to bill for their services and instead promote optimal care regardless of its financial rewards. If a surgical procedure will pay-out $5,000, and advice-giving will pay out $0, guess which is most likely to be favored by those who stand to make the $5,000? Physician are grossly over-compensated in a fee-for-service scheme and it remains the crux of the problem in our system.
Annette (Margate NJ)
About 8% of health care expenditures in this country goes to physicians. Grossly overcompensated, many some but mot the majority of physicians.
Dennis Byron (Cape Cod)
This article seems to be telling only part of the story on Medicare Accountable Care Organizations (ACOs). It leaves out the almost simultaneously released Medicare Actuary report on Medicare ACOs -- the one that counted. It found no savings without performing a sleight of hand. According to the Medicare actuary's report on ACOs the "savings" numbers are a projection against the "current cost baseline." But Medicare costs have been coming down due to demographics -- or because of the 2003 Part D drug plan law -- for over 10 years. So the baseline is always inflated.

In addition a large amount of the "cooked" savings seem to derive from waiving the "3-night rule" relative to moving Medicare patients from acute to skilled care. This rule could be changed without all this other bureaucracy.

In addition, the actual numbers show that the average per capita costs of people on traditional Medicare not arbitrarily assigned to an ACO were much lower than the average per capita costs of the people on traditional Medicare who were put in an ACO. Only after the actuary applied some convoluted risk adjustment and price standardization formula does he claim the Pioneer ACOs "saved" money. And Pioneer ACOs are only one type; according to the actuary the other type of ACO still cost more on average per capita than non ACO Medicare.

(And do Mayo and Kaiser even participate in the Medicare ACO program?)
A Goldstein (Portland)
I am concerned with programs that measure success by lower cost and higher quality because the former is easily and objectively measured whereas the latter is not. Is quality of care patient satisfaction, reduced mortality and morbidity, improved management of chronic diseases, healthier lifestyle or all of the above? I would like to hear from the front line medical professionals (primary care doctors, nurses, PAs, NPs) whether quality is really improving.
Sara (Oakland CA)
Indeed-- the shallow measures that pass for 'patient satisfaction' are often meaningless. 'Bedside manner' is a foolish term that denigrates the importance of careful caring attention by an MD- essential for a sound history & treatment approach.
Teaching MDs to sound 'nicer' is likely to improve patient satiusfaction scores a bit but does not reflect substantive factors that can improve real quality and reduce errors.
Dennis Byron (Cape Cod)
You're right. I flunked a cardio stress test many years ago and when I asked what he thought, the cardiologist basically said "It's probably because you smoked for 25 years you fool." He would truly flunk the bedside manner rating but I haven't smoke now for 30 years.
5barris (NY)
As a former quality assurance manager in an Ivy League medical center, I have argued that "quality of care" is "reduced mortality and morbidity". This is largely achieved through "improved management of chronic diseases".

See Eggleston KN1, Fuchs VR2. The New Demographic Transition: Most Gains in Life Expectancy Now Realized Late in Life. J Econ Perspect. 2012 Summer;26(3):137-156.

The full text is freely available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4112481/
knockatize (Up North)
They leave because the push against effective oversight is usually stronger than the push for oversight.

Why stay in a system that requires you to play by the rules when your competitor is making bank padding the daylights out of their billings and Medicare won't say 'boo' about it until the money's long gone?

There's one thing worse than making health care a business matter, and that's making it a political matter as well.