Category Archives: savings

Moderate Democrats Health Care Plans Fall Short

Listening to the Democratic debates since they began last year, I have been dumbfounded and angered that so many of the candidates running for President this year believe that some halfway measure to achieve universal coverage for health care is possible, if only voters would vote for them.

With the exception of Bernie Sanders and Elizabeth Warren, the rest of the candidates, those still running, and those who dropped out, advocate a public option or fixing the ACA. (see “Medicare for All and the Democratic Debates”) Their proposals fly in the face of study after study, article after article that firmly states that the only way to provide universal coverage at lower cost, and that will save money is Medicare for All.

They are trying to scare the American people with words like “Socialism” and suggesting that their taxes will go up, or that they will lose their employer-based or private health insurance.

As I have written in the past, there is a concerted effort on the part of the health care industry to defeat Medicare for All/Single Payer, and they have been targeting the Democrats to do so.

An article last Monday in The Hill by Diane Archer, senior adviser at Social Security Works states that twenty-two studies agree that Medicare for All saves money.

According to Ms. Archer, researchers at three University of California campuses examined 22 studies on the projected cost impact for single-payer health insurance in the United States and reported their findings in a recent paper in PLOS Medicine.

Every single study, they found, predicted that it would yield net savings over several years. In fact, it’s the only way to rein in health care spending significantly in the U.S.

In addition, all of the studies, regardless of ideological orientation, showed that long-term cost savings were likely. As reported last year, even the Mercatus Center, a right-wing think tank belonging to the libertarian Koch Brothers, recently found about $2 trillion in net savings over 10 years from a single-payer Medicare for All system. Most importantly, everyone in America would have high-quality health care coverage

The key takeaway from the studies is that Medicare for All is far less costly than our current system largely because it reduces administrative costs.

This is because Administrative savings from Medicare for All would be about $600 billion a year. Savings on prescription drugs would be between $200 billion and $300 billion a year, if we paid about the same price as other wealthy countries pay for their drugs. A Medicare for All system would save still more with implementation of global health care spending budgets.

None of the other Democratic candidates can make that assertion because their plans leave many uninsured and and keep in place the insurance companies and pharmaceutical companies to make huge profits from the health of the American people.

While I am no fan of Bernie Sanders as a candidate, and his recent dispute with the Nevada Culinary Union not withstanding, his goal is to cover every American with universal health care. Elizabeth Warren’s plan differs somewhat from Sanders’, but has a more reasonable time frame for implementation.

The inconvenient truth, folks is that Medicare for All will save money, will cover everyone, and will finally bring down the cost of health care so that no one has to go broke paying for it, or decide not to get medical care when needed because they can’t afford it.’

Those of you who are not physicians or in the insurance industry, or the pharmaceutical industry who pontificate on social media that Medicare for All is bad, are only delaying the inevitable. You consultants, analysts, researchers and other auxiliary industries to health care must see the truth staring you in the face. You are on the wrong side of the debate, and on the wrong side of history.

ACOs Do Not Improve Spending or Quality

Thank to Dr. McCanne, I am re-posting the following article from the Annals of Internal Medicine that was published Tuesday. I have written before about MSSPs, so I thought it would be a respite from talking about single payer.

Here is the article in its entirety:

Annals of Internal Medicine
June 18, 2019
Performance in the Medicare Shared Savings Program After Accounting for Nonrandom Exit: An Instrumental Variable Analysis
By Adam A. Markovitz, BS; John M. Hollingsworth, MD, MS; John Z. Ayanian, MD, MPP; Edward C. Norton, PhD; Phyllis L. Yan, MS; Andrew M. Ryan, PhD


Accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) are associated with modest savings. However, prior research may overstate this effect if high-cost clinicians exit ACOs.

To evaluate the effect of the MSSP on spending and quality while accounting for clinicians’ nonrandom exit.

Similar to prior MSSP analyses, this study compared MSSP ACO participants versus control beneficiaries using adjusted longitudinal models that accounted for secular trends, market factors, and beneficiary characteristics. To further account for selection effects, the share of nearby clinicians in the MSSP was used as an instrumental variable. Hip fracture served as a falsification outcome. The authors also tested for compositional changes among MSSP participants.

Fee-for-service Medicare, 2008 through 2014.

A 20% sample (97 204 192 beneficiary-quarters).

Total spending, 4 quality indicators, and hospitalization for hip fracture.

In adjusted longitudinal models, the MSSP was associated with spending reductions (change, −$118 [95% CI, −$151 to −$85] per beneficiary-quarter) and improvements in all 4 quality indicators. In instrumental variable models, the MSSP was not associated with spending (change, $5 [CI, −$51 to $62] per beneficiary-quarter) or quality. In falsification tests, the MSSP was associated with hip fracture in the adjusted model (−0.24 hospitalizations for hip fracture [CI, −0.32 to −0.16 hospitalizations] per 1000 beneficiary-quarters) but not in the instrumental variable model (0.05 hospitalizations [CI, −0.10 to 0.20 hospitalizations] per 1000 beneficiary-quarters). Compositional changes were driven by high-cost clinicians exiting ACOs: High-cost clinicians (99th percentile) had a 30.4% chance of exiting the MSSP, compared with a 13.8% chance among median-cost clinicians (50th percentile).

The study used an observational design and administrative data.

After adjustment for clinicians’ nonrandom exit, the MSSP was not associated with improvements in spending or quality. Selection effects — including exit of high-cost clinicians — may drive estimates of savings in the MSSP.

Primary Funding Source:
Horowitz Foundation for Social Policy, Agency for Healthcare Research and Quality, and National Institute on Aging.

In addition, here is an article from The Incidental Economist of June 17th on the same subject:

The Incidental Economist
June 17, 2019
Spending Reductions in the Medicare Shared Savings Program: Selection or Savings?
By J. Michael McWilliams, MD, PhD, Alan M. Zaslavsky, PhD, Bruce E. Landon, MD, MBA, and Michael E. Chernew, PhD.

Prior studies suggest that accountable care organizations (ACOs) in the MSSP have achieved modest, growing savings. In a recent study in Annals of Internal Medicine, Markovitz et al. conclude that savings from the MSSP are illusory, an artifact of risk selection behaviors by ACOs such as “pruning” primary care physicians (PCPs) with high-cost patients. Their conclusions appear to contradict previous findings that characteristics of ACO patients changed minimally over time relative to local control groups.


Monitoring ACOs will be essential, particularly as incentives for selection are strengthened as regional spending rates become increasingly important in determining benchmarks. Although there has likely been some gaming, the evidence to date — including the study by Markovitz et al. — provides no clear evidence of a costly problem and suggests that ACOs have achieved very small, but real, savings. Causal inference is hard but necessary to inform policy. When conclusions differ, opportunities arise to understand methodological differences and to clarify their implications for policy.

And finally, Don McCanne’s comment:

This important study in the highly reputable Annals of Internal Medicine concludes that accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) did not show any improvement in spending or quality when adjustments were made for selection effects, especially the non-random exit of high-cost clinicians (“I’m worth the extra money, and if you’re gonna cut my fees, I’m outta here.”)

The conclusions were immediately challenged by others in the policy community who have previously published studies indicating that “ACOs have achieved very small, but real, savings,” albeit admitting that “there has likely been some gaming.” And the savings were, indeed, very small. Others have suggested that the very small savings did not take into consideration the significant increase in provider administrative costs for technological equipment and personnel to run the ACOs, and certainly did not consider other unintended consequences such as the tragic increase in physician burnout.

Another problem with the infatuation for ACOs is that politicians and the policy community are insisting that we continue with this experiment in spite of the disappointing results to date. That simply postpones the adoption of truly effective policies, such as those in a single payer Medicare for All program, that would actually improve quality while greatly reducing administrative waste. The tragedy is that this also perpetuates uninsurance, underinsurance, and personal financial hardship from medical bills.

People are suffering and dying while the policy community continues to diddle with ACOs and other injudicious policy inventions. Enough! It’s long past time to reduce suffering and save lives! Single Payer Medicare for All!

(Yes, I’m angry, but even more I’m terribly anguished over the health care injustices that we continue to tolerate through our collective inaction.)

See, we can’t get away from Medicare for All after all.


Federal Spending Increased Due to Medicare ACO’s

Once again, a topic previously discussed here has raised its head.

This time, it is the Medicare Shared Savings Program (MSSP), Medicare’s largest alternative payment model (APM).

Readers of this blog will recall previous posts about this topic. The first, from September 2015, Shared Savings ACO Program Reaps the Most for Primary-care Physicians reported that primary-care physicians were benefiting the most from the shared savings.

The next post, Challenges Remain in Physician Payment Reform, which followed on the heels of the first, discussed the challenges that remained in reforming physician payment, after then President Barack Obama (the good ole’ days) signed the Medicare Access and CHIP Reauthorization Act (MACRA) back in April.

MACRA repealed the Sustainable Growth Rate (SGR) mechanism of updating fees to the Physician Fee Schedule (PFS), and had been blamed for causing instability and uncertainty among physicians for over a decade, and that led to 17 overrides of scheduled fee cuts, at a cost of over $ 150 billion.

In Models, Models, Have We Got Models!, I suggested, rather strongly that all these models were not living up to their promise and was only creating more complexity, confusion, and dysfunction in an already dysfunctional health care system.

A post from January 2017, Illogical!, reported on yet another asinine model introduction by CMS at the Health Care Payment Learning and Action Network (LAN) Fall Summit by Adminstrator Seema Verna.

So when I received an email today from Dr. Don McCanne, former president of the Physicians for a National Health Plan (PNHP) that mentioned a press release from Avalere Health indicating that Medicare ACO’s have increased federal spending despite projections that said they would produce net savings.

According to the press release, the Medicare Shared Savings Program (MSSP) has performed considerably below the financial estimates from the CBO that was made in 2010 when the MSSP was enacted as part of the ACA.

Avalere’s press release said that this has raised questions about the long-term success of Medicare’s largest alternative payment model (APM).

The MSSP has grown from 27 ACO’s in 2012 to 561 in 2016, and most of them continue to select the upside-only Track 1, the release continued, which does not require participants to repay CMS for spending above their target.

As seen in the figure below, Avalere’s research found that the actual ACO net savings have fallen short of initial CBO projectios by more than $2 billion.

However, in 2010, the CBO projected that the MSSP would produce $1.7 billion in net savings from 2013 to 2016. Yet, it actually increased federal spending by $384 million over that same period, a difference of more than $2 billion.

Josh Seidman, senior vice president at Avalere said, “The Medicare ACO program has not achieved the savings that CBO predicted because most ACO’s have chosen the bonus-only model.”

Avalere also found that while the MSSP was overall a net cost to VMS in 2016, there is evidence that individual ACO performance improves as they gain years of experience. Avalere found that MSSP ACO’s in their fourth year produce net savings to the federal budget totaling $152 million, as shown in the next figure.

Avalere’s analysis also showed that the downside-risk models in the MSSP experienced more positive financial results overall. This indicates that there is potential for greater savings over time to CMS as the number of downside-risk ACO’s increase.

The upside-only model increased federal spending by $444 million compared to the downside-risk ACO’s $60 million over 5 years.

“While data do suggest that more experienced ACO’s and those accepting two-sided risk may help the program to turn the corner in the future, the long-term sustainability of savings in the MSSP is unclear. ACO’s continue to be measured against their past performance, which makes it harder for successful ACO’s to continue to achieve savings over time,” said Avalere’s director, John Feore.

The weird part is that despite the MSSP increasing federal spending, ACO’s are still reducing spending compared to projected benchmarks.

If you are increasing spending, then how can you at the same time be reducing spending? Isn’t this a health care oxymoron?

Which brings me back to my previous posts. CMS is a clusterfudge of programs, models, rules, regulations, and schemes that have done nothing to improve the health care system in the US. In point of fact, it has only added to the confusion, complexity, dysfunction, and wastefulness of a system no other nation has.

When are we going to wake up from this nightmare and deep six the market-driven disaster that is the American health care system? There are saner alternatives, but we are so mentally ill and obsessed with profiting from people’s illnesses that nothing changes.

Einstein was right. The definition of crazy is doing the same thing over and over again and expecting different results. We are crazy to continue with this mess.