Tag Archives: Accountable Care Organizations

Again, With the Models?

Today’s post from Don McCanne revives an old issue readers of this blog are familiar with — the introduction of new models or the revising of old models for value-based care such as Accountable Care Organizations (ACOs) and the Medicare Shared Savings Program.

CMS Administrator Seema Verma attempts to defend these models and gives an overview of a new proposal called “Pathways to Success.” Don’t you just love these cute names they give to future failures? Instead of scraping them altogether and going to single payer, they keep re-inventing a broken wheel.

At any rate, I am posting Verma’s article from Health Affairs blog, along with Kip Sullivan’s response, and lastly, Don McCanne’s brief comments on both. Enjoy!


Health Affairs Blog
August 9, 2018
Pathways To Success: A New Start For Medicare’s Accountable Care Organizations
By Seema Verma
For many years we have heard health care policymakers from both political parties opine about the need to move to a health care system that pays for the value of care delivered to patients, rather than the mere volume of services.
From the moment I became Administrator of the Centers for Medicare & Medicaid Services (CMS), I have been committed to using every tool at my disposal to move our health care system towards value-based care.
One set of value-based payment models that CMS has been closely reviewing are initiatives involving Accountable Care Organizations (ACOs).
In this post I will unpack key features of Medicare’s ACO initiatives and provide an overview of CMS’s new proposal for the Medicare Shared Savings Program, called “Pathways to Success.”
Upside-Only Versus Two-Sided ACOs
The majority of Medicare’s ACOs – 460 of the 561 or 82% of Shared Savings Program ACOs in 2018 – are in the upside-only “Track 1” of the Shared Savings Program, meaning that they share in savings but do not share in losses.  Currently, ACOs are allowed to remain in the one-sided track for up to six years.
The results show that ACOs that take on greater levels of risk show better results for cost and quality over time. (See Kip’s comments.)
The current combination of six years of upside-only risk, which involves bonus payments if spending is low but no risk of losses if spending goes up, along with the provision of waivers may be encouraging consolidation.  Such consolidation reduces choices for patients without controlling costs.  This is unacceptable.
The proposed changes included in Pathways to Success would shorten the maximum amount of time permitted in upside-only risk to allow a maximum of two years, or one year for ACOs identified as having previously participated in the Shared Savings Program under upside-only risk.
Streamlining the program, extending the length of agreements, and accelerating the transition to two-sided risk would result in reduced administrative burden and greater savings for patients and taxpayers.
Looking Forward
ACOs can be an important component of the move to a value-based system, but after six years of experience, the program must evolve to deliver value.  The time has come to put real “accountability” in Accountable Care Organizations.
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The Health Care Blog
August 21, 2018
Seema Verma Hyperventilates About Tiny Differences Between ACOs Exposed to One-and Two-Sided Risk
By Kip Sullivan, JD
There is no meaningful difference between the performance of Medicare ACOs that accept only upside risk (the chance to make money) and ACOs that accept both up- and downside risk (the risk of losing money). But CMS’s administrator, Seema Verma, thinks otherwise. According to her, one-sided ACOs are raising Medicare’s costs while two-sided ACOs are saving “significant” amounts of money. She is so sure of this that she is altering the rules of the Medicare Shared Savings Program (MSSP). Currently only 18 percent of MSSP ACOs accept two-sided risk. That will change next year. According to a proposed rule CMS published on August 9, ACOs will have at most two years to participate in the MSSP exposed to upside risk only, and after that they must accept two-sided risk.
That same day, Verma published an essay on the Health Affairs blog in which she revealed, presumably unwittingly, how little evidence she has to support her decision. The data Verma published in that essay revealed that one-sided ACOs are raising Medicare’s costs by six-one-hundredths of a percent while two-sided ACOs are cutting Medicare’s costs by seven-tenths of a percent. Because these figures do not consider the expenses ACOs incur, and because the algorithms CMS uses to assign patients to ACOs and to calculate ACO expenditure targets and actual performance are so complex, this microscopic difference is meaningless.
As pathetic as these figures are, they fail to take into account ACO start-up and operating costs. CMS doesn’t know or care what those costs are. The only relevant information we have are some undocumented statements by the staff of the Medicare Payment Advisory Commission (MedPAC) to the effect that ACO overhead is about 2 percent of their benchmarks (their predicted spending). I suspect 2 percent is low, but let’s take it at face value and do the math. If, as Verna’s data indicates, two-sided ACOs save Medicare seven-tenths of a percent net (that is, considering both CMS’s shared-savings payments to some ACOs and penalties other ACOs that lose money pay to CMS), but these ACOs spend 2 percent doing whatever it is ACOs do, that means the average two-sided ACO is losing one percent.
The good news is that Verma may have hastened the demise of a program that isn’t working. Whether Congress ultimately pulls the plug on the ACO project will depend on whether ACO advocates will concede at some point that the ACO fad was based on faith, not evidence, and has failed to work. I predict they will refuse to admit failure and will instead peddle another equally ineffective solution, for example, overpaying ACOs (as the Medicare Advantage insurers and their predecessors have been for the last half-century). I base my prediction on the behavior of ACO advocates. The history of the ACO movement indicates ACO proponents don’t make decisions based on evidence.
Facing the Evidence
Evidence that the ACO project is failing is piling up. All three of CMS’s two-sided ACO programs – the PGP demo, the Pioneer demo, and the Next Generation program – saved only a few tenths of a percent, while CMS’s mostly two-sided program, the MSSP, raised costs by a smidgeon. All four programs have raised costs if we take into account the ACOs’ start-up and operating costs and CMS’s cost of administering these complex programs. Evidence indicting the other major “value-based payment” fads – medical homes, bundled payments, and pay-for-performance schemes – is also piling up. The simultaneous failure of all these fads to cut costs spells trouble ahead for the Affordable Care Act (because it relies on “value-based payment reforms” for cost containment), MACRA (because it also relies on “value-based payment” theology), and our entire health care system (because the big insurance companies and the major hospital-clinic chains are spending more money on “value-based payment” fads than those fads are saving, and because these 1,000-pound gorillas are using the establishment’s endorsement of ACOs, medical homes etc. as an excuse to become 2,000-pound gorillas).
The root cause of our nation’s chronic inability to adopt effective cost-containment policies is the chronic inability of the American health policy establishment to make decisions based on evidence, not groupthink. Seema Verma’s decision to bet the farm on two-sided-risk ACOs is the latest example of this problem.
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Comment by Don McCanne
We can thank Seema Verma for showing us that all of the talk about value-based payment – paying for value instead of volume through the establishment of accountable care organizations – was never really about value. Her insistence in shoving providers into downside risk reveals that it was always about reducing federal spending on Medicare. But that hasn’t changed her deceptive rhetoric about value and accountability.
Thank goodness we have astute analysts such as Kip Sullivan. The excerpts from his critique of Verma’s views as expressed in her Health Affairs Blog article should tempt you to read his entire critique at The Health Care Blog (link above).
The nonsense about ACOs has to go so we can get down to fixing the real problems with our health care financing system – the inequities, lack of universality, and lack of affordability for far too many individual patients. So let’s turn up the volume on a well designed, single payer, improved Medicare for all.
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Physician practices seek help in transition to value-based care | Healthcare Dive

Follow-up to the last post and yesterday’s regarding CMS’ initiative for quality reporting.

See the link:

The report also found physicians are moving more toward independent and physician-led group practices after a six-year trend of doctors moving to hospitals.

Source: Physician practices seek help in transition to value-based care | Healthcare Dive

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.

SPOTLIGHT Interview on Medical Travel Today.com

The following interview was published this morning on Medical Travel Today.com. They have published several of my articles in the past, as well as a prior interview in 2013.

Medical Travel Today (MTT): It’s been awhile since Medical Travel Today has checked in with you. Remind our readers of your position in the medical travel industry, as well as what you have been involved with since we last chatted in 2013.

Richard Krasner (RK): I am the blogger-in-chief of the Transforming Workers’ Comp blog, as well as the CEO and principal consultant of FutureComp Consulting – an as yet not official company dedicated to bringing the medical travel industry into the workers’ comp industry.

Since 2013, I have continued my blogging, and in November 2014, I spoke at the 5th Mexico Health & Wellness Travel Show in Reynosa, Mexico. I was invited to speak again at the 6th Mexico Health & Wellness Travel Show in December, in Puerto Vallarta.

MTT: Can you give the readers some background on FutureComp Consulting and its goals?

RK: I came up with the name of the company because I truly believed that the future of workers’ compensation in the U.S. has to be more globally focused, especially since the workforce in the U.S. is increasingly Latino and Asian, as has been reported by those who follow the demographic makeup of the U.S. population as a whole.

The goal of FutureComp Consulting is to transform the workers’ compensation industry by freeing employers and injured workers from the high cost of surgery for work-related injuries common to workers’ compensation claims, such as back, hip, knee, shoulder, and carpal tunnel.

MTT: Do you work directly with the patient, employer and/or both?

RK: As FutureComp Consulting is at the very early stage as a startup company, there are no patients or employers that I am working with, however, there is one health plan that has expressed an interest to expand what their members’ employees are already doing in northern Mexico with regard to general healthcare, and not workers’ comp.

My vision for the company would involve employers and insurance companies seeking to lower the cost of surgeries for work-related injuries, with the injured workers agreeing to go out of the country when the option is presented to them. They would not be under any obligation or pressure to go abroad for medical care, and should they decline to do so, they would be free to get treated here in the U.S., as if the option was never offered. I think that with the large and growing Hispanic workforce in the U.S., that if presented correctly, they would choose to go to their home country, or similar country for surgery. This would help them overcome any language or cultural barriers, and assure their friends and relatives in that country that they are getting the best care possible, in the best facility their country has to offer. For non-Latino workers, it would be a chance to see another region of the world, and to learn about other cultures. Naturally, in both cases, spouses and even children, would be allowed to travel with them to make the worker feel more comfortable with going abroad.

MTT: Will FutureComp Consulting help connect medical travel patients to specific locations?

RK: I would like to see injured workers travel to Latin America and the Caribbean, because the travel time from the U.S. mainland would be less than four hours, and less of a strain on their injury and recovery from surgery.

MTT:Medical travel provides patients with the opportunity for high-quality, cost-effective healthcare, so in 2015, why do you think there is still pushback?

RK: For one, I think because of media reports about the negative outcomes and serious injuries that have occurred, even a few deaths, here and there. Second, I think too many Americans are under the impression that medical care in other countries outside of North America and Western Europe is so-called “third-world medicine,” and therefore not as good as medical care at home. Third, the concept of “American exceptionalism,” of which I have written about in the past, is too strong in the mindset of most Americans, especially those who have never traveled abroad or to those regions where medical travel is currently offered. I have written about the issue of “third-world medicine” as well, and one domestic critic of mine insists that I want to send patients to Bangladesh or some other country that does not have first-world medical care, as they would define it. I don’t want to disparage Bangladesh or any other country, but that is the perception, and that is why there is pushback, at least in terms of what I am trying to do.

The workers’ comp industry is too conservative, and too stuck in their ways to look outside the box and outside the border of the U.S. to find solutions to the problems plaguing workers’ comp. In other words, they have not caught on that the world, healthcare and workers’ comp are all globalizing.

MTT: Where do you see the future of healthcare headed, domestic and international?

RK: As far as workers’ comp is concerned, I think that the future of medical care is uncertain, because there are forces both internal and external that are challenging the original intent of the system. International medical travel for workers’ comp is years away in much the same way that sub-orbital, commercial flights between one and four hours travel time is — something that may happen by mid-century.

However, domestic medical travel in workers’ comp is occurring due to differences in medical and surgery costs from state to state.

With regard to general healthcare, the enactment of the Affordable Care Act (ACA) has not yet been felt as either hurting or helping medical travel, because the timeframe is too short at this point. Not enough information about the impact of the law has been developed, although there are some conflicting opinions about aspects of the law, which I have recently written about in regard to Accountable Care Organizations (ACOs).

I am not sure if the ACA is driving some people to look abroad, but those who are now covered, and who were not covered before, are more likely than not to stay home, unless it gets too expensive or they lose it because opposition politicians get their way.

MTT: At this point, is there anything else you would like to share with our readers?

RK: Yes, there is. The end of October 2015 will mark three years since I began writing my blog, and one of the biggest disappointments I have encountered has been the number of individuals and organizations that are not behaving in an ethical or professional manner. This has been brought to my attention by several individuals I have had contact with over the past three years. I believe that it is time for this behavior to stop. We must treat each other ethically and professionally. Standards should be established for how to conduct business with each other, between our partners, and with the patients themselves, as well as for how to practice medicine, and relate to foreign patients in terms of learning to speak their language, and providing meals at the proper time and in accordance with their cultural norms, etc. We must also develop organizations to bring the industry together under common laws and procedures for handling problems.

Lastly, I think there is far too much emphasis on conferences and congresses, and not enough on actually going out into the market and getting the business, instead of bringing providers and facilitators together. Also, the industry must, as I said in Reynosa, go after the workers’ comp market; it will not come to you. You must go beyond cosmetic and plastic/reconstructive surgery, dentistry, spas, wellness programs, etc., and market your services for the masses, and not just the rich and affluent. Healthcare should know no class distinctions.

I have been unable to get traction from both the workers’ comp industry and the medical travel industry, but I am willing to partner with anyone who sees what I am trying to do, and wants to be a part of it. I hope this interview will allow me to do so.

The entire interview can be seen here.

Challenges Remain in Physician Payment Reform

Following up on my post yesterday about shared savings, John O’Shea writes today in the Health Affairs blog, that challenges remain with regard to physician payment reform, now that President Obama has signed the Medicare Access and CHIP Reauthorization Act (MACRA) in April.

MACRA repeals the Sustainable Growth Rate (SGR) mechanism of updating fees to the Physician Fee Schedule (PFS).

The SGR has 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.

The passage of MACRA, O’Shea wrote, raises new questions about where the US health care system is headed in the post-SGR world of payment and delivery reform.

Yet, before MACRA was signed into law, HHS Secretary Burwell announced a major initiative calling for 30 % of Medicare payments to be value-based through the use of alternative payment models (APMs) by 2016, and 50% by 2018.

HHS also set a goal of tying 85% of all traditional Medicare payments to quality or value by 2016, and 90% by 2018.

O’Shea reported there are reasons for caution. These policy changes, following calls to move from the current volume-based, fee-for-service (FFS) system to a value-based system that pays for patient outcomes, rather than for individual services, present major challenges to achieving the goal of value-based health care, the goal of any real health reform initiative.

One of the APMs O’Shea discussed is Value-based purchasing (VBP), which is the concept behind APMs, includes a broad set of performance-based payment strategies that attempt to use financial incentives to influence provider performance, such as the Shared Savings Program mentioned yesterday.

Another APMs is the Merit-Based Incentive Payment System (MIPS) [don’t you just love how the government comes up with these abbreviations?], a modified FFS system, which is basically a Pay-for-Performance (P4P) program.

The overall early results of these initiatives, as well as possible flaws, make the long term viability of these models uncertain.

With regard to P4P programs, a 2014 RAND report looked at 49 studies examining the effect of P4P on process and intermediate outcome measures, and found that the overall results were mixed, and that any identified effects were relatively small.

According to the lead author of the study, Cheryl Damberg, “The evidence from the past decade is that pay for performance had modest effects on closing the quality gap.” A basic flaw in the model is the reality that meaningful patient-centered outcome measures remain elusive.

ACOs, as I wrote about yesterday, are another APM; and O’Shea reported that their ability to generate savings to share with participants is so far not encouraging. He points to early results from the Pioneer ACO program that determined that of the 23 ACOs that participated in 2013, only 11 earned any shared savings, which totaled about $41 million. Six ACOs lost a total of $25 million. The results from a similar study in 2014 showed improvement, but the long-term outlook is still unclear.

What is the impact on the practice of medicine?

What O’Shea found was that physicians currently labor under an increasingly burdensome and often meaningless number of reporting requirements that take time away from patients, and fail to help them improve quality of care.

Accordingly, a commentary O’Shea cited from the New England Journal of Medicine said that, “the quality-measurement enterprise in US health care is troubled.”

A recent CMS report, O’Shea mentioned, said that 40% of Medicare providers will face 1.5% cuts for failing to submit data to the Physician Quality Reporting System.

Because of this, many public and private payers are tying larger amounts of provider payments to a growing number of largely meaningless measures.

O’Shea said that there are two areas of concern, given the plethora of payment and delivery reform initiatives: the administrative burden on physicians, and the push towards greater consolidation.

Nearly half, or 46% of doctors who reported said that they felt burned out in 2014. A main reason cited by the physicians was the increasing administrative burden.

What does the mean?

Well, having slogged through an online Health Care Quality course as part of my MHA degree program, the myriad abbreviations mentioned in Mr. O’Shea’s article does not surprise me. CMS and HHS has for years developed all kinds of initiatives and programs to influence and alter behavior of all stakeholders in our health care system.

As “Uncle” Walter Cronkite once said, “America’s health care system is neither healthy, caring, nor a system.” And that was before the passage of the ACA.

But for the purposes of this blog, and in keeping with the point of the last article where it was said that what happens in health care affects workers’ comp. then I think you can agree that these initiatives and programs, while well-meaning, may make things worse in the future, but not because the idea behind the ACA or the law itself is bad, but because we Americans cannot do anything right until we try everything else, a la Winston Churchill.

If that is the case, then believing that by doing the same things over and over again, that by following everyone else off the cliff of unregulated, employer-based, multi-payer health care, and by not opening the workers’ comp system to real alternatives, especially for surgery, then nothing will ever change.

We will continue to see more new initiatives and programs from CMS, and the results will be dismal, and the impact on workers’ comp will be felt eventually. That is, unless you open up your minds to new ways of thinking.

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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.

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.

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

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.