Category Archives: Bundling

Those Damn Models Again – Health Care As An Experiment in Bait & Switch

Another shout out to Dr. McCanne, who posted today about a study sponsored by the AMA and conducted by RAND that basically said that alternative payment models (APM) are affecting physicians, their practices and hospitals.

Here is the RAND Summary with key findings:

RAND
October 24, 2018
Effects of Health Care Payment Models on Physician Practice in the United States
By Mark W. Friedberg, et al
This report, sponsored by the American Medical Association (AMA), describes how alternative payment models (APMs) affect physicians, physicians’ practices, and hospital systems in the United States and also provides updated data to the original 2014 study. Payment models discussed are core payment (fee for service, capitation, episode-based and bundled), supplementary payment (shared savings, pay for performance, retainer-based), and combined payment (medical homes and accountable care organizations). The effects of changes since 2014 in the Affordable Care Act (ACA) and of new alternative payment models (APMs), such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Quality Payment Program (QPP), are also examined.
Key Findings
Payment models are changing at an accelerating pace
Physician practices, health systems, and consultants find it difficult to keep up with the proliferation of new models, with some calling for a “time out” to allow them to better adapt to current APMs.
Payment models are increasing in complexity
Alternative payment models have become increasingly complex since 2014. Practices that have invested in understanding complex APMs have found opportunities to earn financial awards for their preexisting quality — without materially changing patient care.
Risk aversion is more prominent among physician practices
Risk aversion among physician practices was more prominent. Risk-averse practices sought to avoid downside risk or to off-load downside risk to partners (e.g., hospitals and device manufacturers) when possible.
RAND press release

https://www.rand.org/news/press/2018/10/24.html

Here is the comment by Don McCanne:

There is much more here than a casual glance might imply. The search for value-based payment in health care, as opposed to paying for volume, has led to various payment models such as shared savings, accountable care organizations, bundled payments, pay for performance (P4P), medical homes, and other alternative payment models. How well is that working?
To date, most studies have been quite disappointing. Claims of cost savings are belied when considering the additional provider costs of information technology and human manpower devoted to these models, not to mention the high emotional cost of burnout. This RAND study shows that these models are increasing in complexity, making it difficult for the health delivery system to keep up. Even worse, they are inducing risk aversion. The health care providers are trying to avoid those who most need health care – the opposite of what our health care system should be delivering.
Much of the experimentation in delivery models has been centered around reward or punishment. But, as Alfie Kohn writes, “intrinsic motivation (wanting to do something for its own sake)… is the best predictor of high-quality achievement,” whereas “extrinsic motivation (for example, doing something in order to snag a goody)” can actually undermine intrinsic motivation. It has been observed by others that the personal satisfaction of achievement of patient health care goals is tremendously rewarding, whereas the token rewards based on meager quality measurements are often insulting because of the implication that somehow token payments are a greater motivator than fulfilling Hippocratic traditions. Even more insulting are the token penalties for falling on the wrong side of the bell curve simply as a result of making efforts to care for patients with greater medical or sociological difficulties.
Quoting Alfie Kohn again, “carrots or sticks… can never create a lasting commitment to an action or a value, and often they have exactly the opposite effect … contrary to hypothesis.” The RAND report suggests slowing down and working with these models some more while increasing investment in data management and analysis with the goal of increasing success with alternative payment models. No. These models are making things worse. It’s time to abandon them and get back with taking care of our patients. The payment model we need is an improved version of Medicare that takes care of everyone. Throw out the sticks and carrots.

 

But however we see it, from the point of view of carrots and sticks as not able to change behavior, or by introducing ever newer models of alternative payments, the end result is the same.

Health care suffers because of the wasteful, bureaucratic, and arbitrary imposition of models that only serve to make life for physicians and hospitals harder, and makes health care more expensive and complex.

As Dr. McCanne says above, throw out the carrots and the sticks. Get rid of the models that don’t work and go to a single payer system that is streamlined and less bureaucratic and arbitrary.

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Models: Here We Go Again

My readers will remember that I have been critical of CMS’ multitude of models for health care payments and such from my articles, Models, Models, Have We Got Models!, Illogical!, or Regulation Strangulation.

So it comes as no surprise that CMS is unveiling another model for a voluntary bundled payment program.

The unveiling was reported today in FierceHealthcare. com. Called the Bundled Payments for Care Improvement (BCPI) Advanced model, it is the first model launched by CMS under the current political regime now occupying the White House.

As I have always maintained, the more models, the more complex, confusing and dysfunctional the health care system gets in the US. But it seems CMS never learns, and until the American people stand up to the medical-industrial complex and demand single-payer, damned the torpedoes to their profits and bottom-lines, the better our health care system will get.

Today, someone posted an article about single-payer on LinkedIn and most of the folks who responded did so with negative views about single-payer that indicated that they had drunk the kool-aid fed to them by the medical-industrial complex and their political allies.

They made the claim that countries that have single-payer have seen a decline in care, and that people hate it. So I asked the question, if it is so bad, why aren’t they adopting our system? It is because theirs works.

They don’t have too many models and regulations, and they get great quality of care. Yes, there are problems and they are not perfect systems, but nothing ever is. The truth is we are still the only Western country without single-payer, and CMS’ models are one reason why.

Here is the link to the article.

Illogical!

Picking up where I left off last week with my post, Regulation Strangulation, regarding too much regulation, a series of articles from earlier this week, published in various health care journals and magazines, discussed a new scheme the good folks at CMS have cooked up to make our health care “system” better. (Or worse, depending on whether you have drunk the kool-aid yet)

You may recall my post from late last year, Models, Models, Have We Got Models!, that reported that CMS was launching three new policies to continue the push toward value-based care, rewarding hospitals that work with physicians and other providers to avoid complications, prevent readmissions and speed recovery.

In that article, I mentioned the various models CMS was implementing. My view then, as it remains today, is that these models have not worked, and have only made matters worse, not better.

So when CMS unveiled their latest scheme recently when Administrator Seema Verma spoke at the Health Care Payment Learning and Action Network (LAN) Fall Summit, this is what she said:

The LAN offers a unique and important opportunity for payors, providers, and other stakeholders to work with CMS , in partnership, to develop innovative approaches to improving our health care system. Since 2015, the LAN has focused on working to shift away from a fee-for-service system that rewards volume instead of quality…We all agree that quality measures are a critical component of paying for value. But we also understand that there is a financial cost as well as an opportunity cost to reporting measures…That’s why we’re revising current quality measures across all programs to ensure that measure sets are streamlined, outcomes-based, and meaningful to doctors and patients…And, we’re announcing today our new comprehensive initiative, “Meaningful Measures.”

Let’s dissect her comments so we can understand just how complicated this so-called system has become.

  1. Develop innovative approaches? How’s that working for you?
  2. Improving our health care system? Really? What planet are you living on?
  3. Financial cost? Yeah, for those who can afford it.
  4. Revising current quality measures? Haven’t you done that already after all these years?
  5. “Meaningful Measures”. Now there’s a catchy phrase if I ever heard one. You mean they weren’t meaningful before?

You have to wonder what they are doing in Washington if this is the level of insanity and inanity coming out of the bureaucracy on top of our health care system.

In an article in Health Data Management, Jeff Smith, vice president of public policy for the American Medical Informatics Association stated the following regarding the new CMS initiative.

According to Smith, “the goals are laudable, but the talking points have been with us for several years’ now…measurement depends on agreed-upon definitions of quality, and in an electronic environment, it requires access to and use of computable data. If CMS is going to turn these talking points into reality, it will need to put forth far more resources and commit additional experts to a complete overhaul of electronic quality measures for value-based payments.”

Mr. Smith’s comments are at least an indication that not everyone goes along with CMS every time they unveil some new initiative, model, or program, but again we see the words associated with the consuming of health care being used in discussing the current state of affairs. Terms like “value-based payments”, and “quality measures”, and “financial/opportunity cost”, etc., only obscure the real problem with our health care system. It is a profit-driven system and not a patient-driven system.

Let’s push on.

A report mentioned Monday in Markets Insider showed that 29% of total US health care payments were tied to alternative payment models (APMs) in 2016, compared to 23% in 2015, an increase of six percentage points. These APMs were discussed previously in Models, Models, Have We Got Models!,

The report was issued by the LAN, and is the second year of the LAN APM Measurement Effort (try saying that three times fast). They captured actual health care spending in 2016 from four data sources, the LAN, America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and CMS across all segments, and categorized them to four categories of the original LAN APM Framework. (Boy, you must be tired trying to remember all these acronyms and titles!)

Here are their results:

  • 43% of health care dollars in Category 1 (traditional FFS or other legacy payments)
  • 28 % of health care dollars in Category 2 (pay-for-performance or care coordination fees)
  • 29% of health care dollars in a composite of Categories 3 and 4 (shared savings, shared risk, bundled payments, or population-based)

Speaking of shared savings, an article in Modern Healthcare reported that CMS’ Medicare shared savings program paid out more in bonuses to ACO’s than the savings those participants generated.

As per the report, about 56% of the 432 Medicare ACOs generated a total of $652 million in savings in 2016. CMS paid $691 million in bonuses to ACOs, resulting in a loss of $39 million from the program.

Chief Research Officer at Leavitt Partners, David Muhlestein said, “Medicare isn’t saving money.”

This is attributed to the fact that 95% of the Medicare ACOs (410) participated in Track 1 of the Medicare Shared Savings Program. Only 22% participated in tracks 2 and 3.

Two more articles go on to discuss a Medicare bundled-pay initiative and the Medicare Merit-based Payment System (MIPS) .

What does this all mean?

It has been long apparent to this observer that the American health care system is a failure through and through. Sure, there are great strides being made daily in new technology and therapies. A member of my family just benefited from one such innovation in cardiac care. But luckily, they have insurance from Medicare and a secondary payor.

But many do not, and not many can afford the second level of insurance. From my studies and my writing, I have seen a system that is totally out of whack due to the commercialization and commodification of health care services.

And knowing a little of other Western nations’ health care systems, I find it hard to believe that they are like this as well. We must change this and change this now.

If Medicare is losing money now, with the limited pool of beneficiaries, perhaps a larger pool, with little or no over-regulation and so many initiatives, models, and programs, can do a better job. Because what has been tried before isn’t working, and is getting worse.

The logical thing to do is to make a clean break with the past. Medicare for All, or something like it.

 

 

Large Variations in Payments for Hospital Outpatient Care to Injured Workers

Back in April of this year, I wrote about a study by the Workers’ Compensation Research Institute (WCRI) in which it was found that fee schedules may increase the number of workers’ comp claims.

Today, the WCRI released a new study that said that “hospital outpatient payments per surgical episode varied significantly across states, ranging from 69 percent below the study-state median in New York to 142 percent above the study-state median in Alabama in 2014,” according to Dr. Olesya Fomenko, co-author of the study and economist at WCRI, and who also is mentioned in my previous post.

The report also stated that “variation in the difference between average workers’ compensation payments and Medicare rates for a common group of procedures across states was even greater—reaching as low as 27 percent (or $631) below Medicare in New York and as much as 430 percent (or $8,244) above Medicare in Louisiana.”

Here are the major findings:

  • States with no workers’ compensation fee schedules for hospital outpatient reimbursement had higher hospital outpatient payments per episode compared with states with fixed-amount fee schedules—63 to 150 percent higher than the median of the study states with fixed-amount fee schedules. Also, in non-fee schedule states, workers’ compensation paid between $4,262 (or 166 percent) and $8,107 (or 378 percent) more than Medicare for similar hospital outpatient services.
  • States with percent-of-charge-based fee regulations had substantially higher hospital outpatient payments per surgical episode than states with fixed-amount fee schedules—32 to 211 percent higher than the median of the study states with fixed-amount fee schedules. Similar to non-fee schedule states, workers’ compensation payments in states with percent-of-change based fee regulations for common surgical procedures were at least $3,792 (or 190 percent) and as much as $8,244 (or 430 percent) higher than Medicare hospital outpatient rates.
  • Most states with fixed-amount fee schedules and states with cost-to-charge ratio fee regulations had relatively lower payments per episode among the study states. In particular, for states with fixed-amount fee schedules, the difference between workers’ compensation payments and Medicare rates ranged between negative 27 percent (or -$631) and 144 percent (or $2,916).

Still think that workers’ comp is doing okay? Still think that keeping the status quo is the best option for injured workers? Still think that thinking outside the box, and considering alternatives to the ever increasing cost of medical care for workers’ comp is stupid, ridiculous and a non-starter?

Or do you believe, as Joe Paduda wrote about today in his blog, that workers’ comp is no longer needed for 90% of America’s employees, as the workplace has become safer than the non-occ environment.

The idea brought forth, and as Joe said, it is an intriguing, but wrong one, is that the medical care can be provided under health insurance, and the disability coverage can be added to long-term or short-term disability insurance.

Whichever way you look at the issue, workers’ comp is not going away, but it is getting more expensive to pay for medical care. The problem here is, too many Americans are slavishly wedded to outmoded ways of thinking, outmoded economic policies and models, as well as an outmoded economic ideology, to think rationally and seriously about alternatives.

Lastly, there are too many cooks (or should that be crooks) with their hands in the pot who have a vested interest in keeping things the way they are. If that is so, then the WCRI is only telling us what we should already know…injured workers are screwed and so are the carriers and employers. As long as outside interests have a hand in the system, and those who profit from higher costs block real change, this situation will only get worse.

I am sure glad it is not my money being wasted like this.

As always, to purchase the study click this link:

http://www.wcrinet.org/studies/public/books/hci_5_book.html

 

A Little Disruption is a Good Thing

Staying on the topic of single payer, this time discussing its impact on workers’ comp, David De Paolo wrote an article today that describes Colorado’s Amendment 69 as a disruption of the status quo, and he points out that the tech industry has disrupted business models and industries for several decades and that the work comp industry needs to be disrupted as well.

He goes on to say that ColoradoCare (Amendment 69) is a debate and idea that is long overdue. The arguments against the idea, De Paolo writes, of a single payer system strikes him as simply entrenched interests seeking to protect their turf and business models.

Earlier this week, Workers’ Comp Insider published an article, “It’s A Colorado Rocky Mountain Low” that opposed the approval by Colorado voters this November of the amendment, using the reasons David cites in his piece, and some of the usual misleading distortions that only confuse voters on substantive issues such as this.

Readers will recall my previous two posts, the first, “Colorado Gets Real on Workers’ Comp and Health Care” which introduced the Amendment and the push to bring the two silos of workers’ comp and health care together, and the second, “Colorado “Single Payer” in Health Care Industry’s Sights” which described the health care industry’s attempts to derail the amendment’s approval.

The issue of combining the two silos was brought up by yours truly in an earlier post, “Betting the Farm“, and as I wrote then, not an original idea of mine. Yet, by reading David’s post, and the one by LynchRyan, you get the feeling that the only reason not to combined the two is greed and protection of vested interests.

Yet, in the business world, mergers happen all the time. And while it is true that some are not approved by the Justice Department or other government agencies, most mergers do take place.

The argument about issues like return to work being the purview of insurance companies under work comp is specious at best, because if we consider two patients, both of whom injure the same body part and require the same surgery to repair that injury, one must be put in a return to work program because he is covered for his injury under work comp; the other does not because his injury is not work-related, but did cause him to miss time from work. Does that make sense? Doesn’t the second patient also need to get back to work?

It is not logical to divide injured individuals by who picks up the check. It is more logical to treat all injuries the same, and to treat all medical issues the same, no matter if they are work-related or not. Getting cancer from occupational exposure to carcinogenic chemicals is no different than getting cancer from smoking, or being genetically predisposed as in breast cancer, or other types of cancer. They both are going to be seen by an oncologist, maybe even the same one if they live in the same area.

So keeping workers’ comp and health care separate and unequal, like education and social accommodations once did to African-Americans, is not only stupid, it is wrong. ColoradoCare is one way this can be accomplished, and as David points out, “Nobody really knows how all of this will play out.”

Maybe it is time we find out.


I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

I am also looking for a partner who shares my vision of global health care for injured workers.

I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Will accept invitations to speak or attend conferences.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com.

Transforming Workers’ Comp Blog is now viewed all over the world in over 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.

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Colorado Gets Real on Workers’ Comp and Health Care

A shout out today to David DePaolo of Workers’ Comp Central for publishing an article today about a subject I discussed about a year ago, the combining of the silos of workers’ comp and general health care.

Voters in Colorado, the first state to legalize pot (talk about a real ‘Rocky Mountain High’) will decide in November on a ballot initiative that would create ColoradoCare,  a state-run program that will would pay for medical treatment provided to all residents of the state, including those who are hurt on the job.

According to the initiative, “ColoradoCare shall assume responsibility for payment of all reasonable and necessary medical expenses incurred by workers who suffer injuries or illnesses arising out of and in the course of their employment after the date ColoradoCare assumes responsibility for health care payments,”

The law, David writes, will levy (must be Jewish?)  a 3.33% payroll tax on workers and a 6.67% payroll tax on employers, as well as a 10% health care premium tax on non-payroll income to raise $25 billion to pay for medical care.

A 21-person board of trustees would be created to oversee the program. And, employers would still have to carry workers’ comp insurance to cover indemnity benefits (lost wages).

This would be something left up to legislators to figure out, says DePaolo, because the law is only intended to consolidate health care and eliminate the myriad of silos that create delay, confusion and ultimately heath care consumer angst.

It is David’s opinion that the measure will pass, but that is up to the voters of Colorado to decide (are you listening, Maria?).

So what this will mean is this: should the measure pass in November, it is possible that injuries sustained on the job that requires surgery could be achieved through medical travel, since what is possible now under health care would also be possible in workers’ comp (see my post, “Medical Tourism and Workers’ Comp: What’s Good for the Goose is Good for the Gander“).

When it passes, the following warning should be issued to all potheads in Colorado:

Before going abroad for surgery under the provisions of ColoradoCare, should they allow you to do so, please leave all of your “medicine”, in whatever form you take it in, and the paraphernalia that goes with it home, or else you will end up like Billy Hayes in a Turkishmaninacanstan prison.

But the hospitals in Turkishmaninacanstan are much better, and that is one reason why you are going there in the first place. For world-class health care at a lower cost.

Final Rule for Bundled Hip and Knee Replacements Published

Four months ago today, I wrote a piece called, “CMS to Require Bundling of Reimbursements for Hip and Knee Surgery”, that said the Centers for Medicare & Medicaid Services (CMS) will require the bundling of reimbursements for hip and knee surgeries.

Today, Health Affairs blog published an article reporting that CMS has recently published the final rule for the Comprehensive Care for Joint Replacement (CJR) model, which is a mandatory bundled payment model for lower extremity joint replacement (LEJR) services in certain geographic areas.

The article, by Patrick H. Conway, Rahul Rajkuma, Amy Bassano, Matthew Press, Claire Schreiber and Gabriel Scott, said that hip and knee replacements are the most common inpatient surgery procedures for Medicare beneficiaries, and can require long recovery and rehab periods.

The authors said that in 2014, more than 400,000 beneficiaries received hip or knee replacement, which cost more than $7 billion just for hospitalization.

They also reported that the quality and cost of care for these surgeries varied significantly by region and by hospital, and was true for both the care received in the hospital and for post-acute care outside.

The variation, they said, is due to the way Medicare pays for this care today, spread among multiple providers, with no single entity accountable for the total patient experience.

Care can be fragmented, they wrote, which leads to adverse outcomes.

Here are the key takeaways from the final rule:

  • the CJR model seeks to incentivize Medicare providers and suppliers to work together to improve the quality and reduce the costs of care for patients undergoing lower extremity joint replacement
  • the acute hospital where the procedure occurs will be accountable for aggregate Medicare expenditures and the overall quality of related care
  • the model will include participant hospitals located in 67 Metropolitan Statistical Areas (MSAs) throughout the country
  • acute hospitals paid under the Inpatient Prospective Payment System (IPPS) and located in the selected MSAs will be included in the model, with the exception of hospitals currently participating in Model 1 or Models 2 or 4 of the Bundled Payments for Care Improvement (BPCI) initiative
  • depending on the hospital’s quality and aggregate spending performance, the hospital may receive an additional payment from Medicare, or need to repay Medicare in the second year if spending exceeds targets
  • hospitals will need to work with physicians and post-acute care providers, such as home health agencies and skilled nursing facilities, to ensure patients get the care they need

This is in contrast to what I reported on in July, when I said that a former CMS official was cited in the Freeman article as saying that mandatory bundled payments for hip and knee surgeries would shutter one in four skilled nursing facilities and trigger “demand destruction in areas such as diagnostic testing, hospital stays, and avoidable readmissions.”

Whether or not this final rule will do what the authors of the Health Affairs article says it will do remains to be seen, but judging by past CMS programs to affect quality and costs, this may be wishful thinking on the part of the authors.

The insistence that one more new initiative, or more incentives, or one more new model or new rule will change the way health care is being provided in the US, just goes to show that until we adopt a single-payer, “Medicare for All” system with less rules and less incentives, some people will continue to game the system, then we will see a radical change in the American health care system.

And if workers’ compensation follows changes in health care under Medicare, especially how it determines reimbursements for hip and knee surgeries, which are also common to workers’ comp, we can expect to see issues in workers’ comp.

Alternatives must be considered to an ever expensive and poor quality of health care for workers’ comp. That alternative is medical travel.