Managing Managed Care

Our inequitable, inefficient, oftentimes uncaring health care "system," revealed. -- Jeffrey G. Kaplan, M.D., M.S.

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The Nexus of Quality and Cost

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The quality improvement movement has changed its focus from improving the health of patients to obtaining the greatest return for the investment.  Why? Because experience has shown, time and again that the former is beyond our abilities, beyond any 'carrot and stick' approach to patient care, and beyond any contrived incentive realignments.  When it comes to lifestyle management, we fail, miserably.  For instance, getting people to stop smoking, the only thing that has worked is raising the price of a pack through the roof so even the diehard have to think twice about buying a pack.  Think of the exponential growth in the obese and overweight.  Of course, we can wait for the 'teachable moment,' for example get their attention right after a heart attack, failed joint, gall bladder attack or when the cardiac, peripheral or cerebral circulation has been compromised.

Before discussing how to save money in health care, let's review price gouging in the good 'ol USA–Ezra Klein in the Washington Post, March 15, 2013 writes: "Why an MRI costs $1,080 in America and $280 in France."  See in particular, the interactive graph, "The High Cost of Medical Procedures in the U.S."

It should be obvious, then, that there needs to be some sort of comparative pricing, a sort of old fashioned relative values scale.  That coupled with appropriateness testing and keeping track of "who" did "what," "where," and "when" should bring the gouging under control but in most other industries, improving the quality of the product saves the most money (e.g., obtaining a better 'bang for the buck,' so to speak).  We, in healthcare are just beginning to understand/measure that--witness new emphasis on preventing readmissions. But, just as we are getting started trying to improve value (see the Value Equation, below), the quality improvement movement has shifted its focus from improving the outcomes of care (specifically, the health of patients) to establishing a business case for quality, i.e., how to obtain the greatest return for the investment.  What a pity!

"The argument was that in most industries improving the quality of the product saved money (fewer recalls, better and less expensive products), so investing in quality of health care should also save money....Although there are some examples in the literature to support the concept that better quality of care is less expensive, few studies have produced information that could be generalized across time and institutional settings. Indeed, it is the rare article that actually includes measurement of cost or expenditures in a study that attempts to improve quality [9]. Of course, health care/insurance organizations speak about working the nexus of cost and quality but "the information derived from such activities is not generally in the public domain."


Robert H. Brook, MD, ScD "The End of the Quality Improvement Movement; Long Live Improving Value."  JAMA. 2010;304(16):1831-1832. doi:10.1001/jama.2010.1555

[9] Ovretveit J. Does Improving Quality Save Money? A Review of Evidence of Which Improvements to Quality Reduce Costs to Health Service Providers. London, UK: The Health Foundation; 2009.


  • The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

Children's Health Insurance Program

  • Quality Payment Program website 
  • Improvement Activities and Alternate Payment Models (APMs) 
  • Comprehensive list of APMs
  • Executive Summary of the Final Rule
    • Medicare Program; Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models 

MIPS has 4 categories that will determine a doctor's score and thereby his or her revenue.  These are: Quality, Cost, Care Coordination and EHR Use.  Each category's weight may change over time. For instance, cost is not weighted in 2017, however CMS will assess that parameter for future performance reference. As cost factors in, quality may correspondingly be weighted less.

See "Infographic:Navigating MIPS, Part One."; accessed  2/27/17.

So, efforts to address healthcare quality, costs, and access are (and have been) underway.  It's deja vue: See "But, My Patients Are Sicker!" referring to the seminal work of "Jack Wennberg, MD," where we, once again, have to question whether the incentives are aligned or counterproductive.  Furthermore, measuring without managing is poorly suited to the aforementioned goal. "Simply measuring spending does not get at the complexity of patient care in the U.S. and may lead to disadvantages for patients needing higher amounts of care, some say. Others worry the measures may not be true reflections of quality.

In fiscal 2015, providers will be evaluated based on 26 measures. They include 12 clinical process-of-care measures (for example, whether surgical patients received venous thromboembolism preventive care); eight patient-experience dimensions (such as doctor and nurse communication); five outcome measures (including 30-day mortality rates for heart failure, pneumonia and heart attack); and one efficiency measure on spending per beneficiary."

Sabriya Rice "Reform Update: Some question the value of value-based purchasing." Modern HealthcarePosted: August 11, 2014 - 4:30 pm ET

Is healthcare a right or a privilege? "The debate goes on. But a lot of physicians think that it is." []

The Affordability of Health Care; Trends

The Health Reform Monitoring Survey's key findings are:

  • Almost three-quarters of adults with problems paying medical bills reported forgoing health care due to cost.
  • However, the share of adults with problems paying medical bills declined from 22% in 2013 to 17.3% in 2015.
  • Financial difficulty decreased in Medicaid expansion states (5.1%) and nonexpansion states (4.2%).
  • 25% of uninsured adults reported problems paying medical bills, compared with 15.1% of insured adults.
  • 30.7% of adults whose health status was fair to poor had medical bill problems vs. 14.9% of other adults.
  • 24.2% of low-income adults (below 138% FPL) had medical bill issues vs. 14.4% of higher income adults.
  • Almost three-quarters of adults with problems paying medical bills reported forgoing health care due to cost.

Source: Health Reform Monitoring Survey, May 21, 2015 as published on MCOL's DailyFactoid [pub. 6/2/15 for members]


Health care costs too much and the investment doesn’t leave us healthier. 

What is so difficult about changing all that by simply measuring and managing health care better?  For starters, we don’t have the right data. In fact, most of health care’s processes and outcomes are known only by a claim ($), orders (a referral, for example; why did you have the test? Why did you go to see the doctor? What was the reason for the E.R. visit? What happened? What didn’t happen?  It’s no wonder that we don’t know what works and what does not.  It’s no wonder that health care is so expensive.  And, it is no wonder that management is ineffective improving quality.

The Medicare Payment Advisory Commission’s (MedPAC’s) Merit-based Incentive Payment System (MIPS) was supposed to help—It didn’t; it was “bound to fail” and here’s how it did.

Why the Incentive Payment System Failed

According to MedPAC’s David Glass, the “most fundamental objection to MIPS is that it’s not possible to measure accurately the ‘merit’ or ‘total performance’…. of individual doctors.” 

There are several reasons for this, including:

  • Inadequate statistics such as from having small sample size
  • The Centers for Medicare & Medicaid Services (CMS) largess, allowing doctors to select their own ‘quality of care’ measures from a broad list that almost “guarantees apples are not being compared to apples.”
  • The attribution problem as in which patients “belong” to which doctor, and …. “whether the doctor was the ‘lead’ doctor or a ‘supportive’ doctor, and whether the condition was acute or long-term
  • CMS ignored these instructions, adopting a “slightly less bizarre method of attribution: Medicare beneficiaries are attributed to doctors based on the plurality of primary-care services provided. This plurality method guarantees that doctors are rewarded and punished for patients they never see or, in the case of patients they do see, for treatment decisions made by other doctors.”
  • MedPAC’s staff, nevertheless felt “MIPS’ grading system is useless, both to physicians and patients, adding “it is extremely unlikely that clinicians will understand their score or to how to improve it.”
  • MIPS is costly to physicians with CMS estimating that “the clinician cost to comply with MIPS in the first year of the program is over $1 billion”
  • Doctors may be inclined to join some form of Accountable Care Organization (ACO) –- virtual, geographic, or existing.

Kip Sullivan, JD. “< blog="" 2017="" 10="" 20="" medpac-sinks-deeper-into-the-macra-tar-pit="" "="">MedPAC Sinks Deeper into the MACRA Tar Pit.” The Health Care Blog; 10/20/17