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Opportunity for Real Reform

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We are now having an unprecedented opportunity for change, but Robert H. Brook, MD, ScD [The RAND Corporation] warns that simultaneously improving health care coverage, the affordability of health care and its quality is challenging. 

His JAMA article, "The Science of Health Care Reform" [subscription required] helps us understand how we got to where we are.  He references the RAND Health Insurance Experiment (HIE) [1] where families across the country were randomized to receive fee-for-service (FFS) coverage with varying levels of cost sharing, or free care in a health maintenance organization (HMO). The researchers concluded:  A) The more the cost sharing, the less health care was used [1]  B) When care was free (compared to cost-sharing), on average, 1/3 more care was consumed. Nevertheless, after 5 years, these consumers were "no healthier." [2]

He also cites the Dartmouth Atlas, [3] the seminal research of Dr. Jack Wennberg of Dartmouth on Unwarranted Geographic Variation in the health care industry: "Individuals living in regions of the country that use twice as much health care as other regions are not healthier." [4]
Lest one conclude that policies that "reduce service use" and have patients pay more for what they require, would be effected with impunity, know that "the reason more care did not improve health is that providing more care did not improve the quality of care individuals received." Also, it seems that paying out of pocket reduces one's use of "effective services in equal proportion to use of ineffective services."[1]  {Emphasis added}

OTOH, Harold Luft observed the other side of this in or before 1978. To paraphrase him (a star in my opinion), HMOs achieve their savings not only in discretionary care, but in non-discretionary care, as well. 

    Luft H. "How Do HMOs Achieve Their Savings? Rhetoric and Evidence. N Eng J Med. 1978; 298(24):1336-1343
Brook's piece "The Science of Health Care Reform"), adds "perhaps one-third of common medical and surgical procedures are either equivocal (benefit and risk to the patient are about equal) or inappropriate (the procedure will produce more harm than benefit to that patient). Although this finding is disturbing, the relationship of appropriateness assessed at the individual patient level to health care services use in a given area is far more disquieting."
    Brook, RH. "The Science of Health Care Reform." JAMA. 2009;301(23):2486-2487 [with 14 references of which 4, are used here:]
1. Newhouse JP, Archibald RW, Bailit HL; et al. Free for All? Lessons From the RAND Health Insurance Experiment. Cambridge, MA: Harvard University Press; 1993.
2. Brook RH, Ware JE Jr, Rogers WH; et al. Does free care improve adults' health? Results from a randomized controlled trial. N Engl J Med. 1983;309(23):1426-1434.
3. Wennberg JE. Tracking the Care of Patients With Severe Chronic Illness: The Dartmouth Atlas of Health Care 2008. Lebanon, NH: Trustees of Dartmouth College; 2008.
4. Skinner J, Chandra A, Goodman D, Fisher ES. The elusive connection between health care spending and quality. Health Aff . 2009;28(1):w119-w123.
Politician, if you plan on constraining my care by putting up financial barriers or applying supply side economics, patients may suffer. Want to wait for 'comparative effectiveness' research? As stated by Alexander and Stafford, "what good is comparative effectiveness research if it cannot be used to discern anything about value to clinicians, insurers, patients, and society?" 
    Alexander GC, Stafford RS. "Does Comparative Effectiveness Have a Comparative Edge? JAMA. 2009;301923):2488-2490
The answer to health care reform lies in its
  1. interoperability (i.e., what it takes to share information). and the availability of reminders (feedback) at the point of contact (POC) with the patient, such as alerts/guidelines in "Doctor, you made a referral/test / there was an admission, readmission, ER visit / you ordered but never received/acknowledged ______________ on such as such a date.  Managed Care is and will be the best hope for reducing costs without compromising quality; its modus operandi is measurement and management; management and measurement.  
  2. Aligned incentives
  3. Having a longitudinal record that accurately documents accessibility and most, if not all relevant processes and outcomes of care.
  4. Caring 
I believe these four ingredients will come sooner than previously thought possible, now that the National Commission in Physician Payment Reform is calling for a phasing out of fee-for-service pay within a few years. The Commission also notes that other fixed payment models, bundling, and what I call cost-sharing and cost-shifting are no panacea, either.  Indeed, their recommendations go beyond just "recalibrating fee-for-service payment to fix payment inequities and reward care that improves patients' health."  Among these recommendations they recommend are:
  1. providing equity in access for evaluation of management (E&M) services in an attempt to address the nation's primary care shortage;
  2. they want to "Pay equal rates for the same physician services regardless of specialty or setting,
  3. Abolish Medicare's Sustainable Growth Rate (SRG),
  4. Improve the Relative Value Scale Update Committee (RUC).  
  5. "Health care providers should be paid for the quality of the care they deliver, not just the quantity.  
The work of this commission helps move us toward that goal," said Risa Lavizzo-Mourey, MD., President and CEO of the Robert Wood Johnson Foundation.  I certainly agree.
 NCPPR Report

watch: how big data and automation are disrupting healthcare

"Technology and automation are facilitating healthcare reform under the rubrick of value-based care.  We see in that payers and providers beginning to leverage big data, which is also empowering healthcare consumers. Verscend’s President and CEO, Dr. Emad Rizk discussed this 'metamorphosis' at the 2017 Health Care Forecast Conference held at the Paul Merage School of Business at the University of California, Irvine." [This excellent interiew is published, online by, March 10, 2017]

ACOs, HMOs, PPOs, Medical Homes, Shmos?

"Accountable care organizations are a 'fad' and 'not very different from the HMO model… [with] a few bells and whistles, but otherwise it's the same old incentive to do as little as possible and find the healthiest patients you can,' says a director of the Association of American Physicians and Surgeons."

Greg Freeman, "Are ACOs Really Different from HMOs?" November 27, 2013 [Originally published in Managed Care Contracting and Reimbursement Advisor December, 2013]


Accountable care organizations (ACO) aim to completely revamp how healthcare is delivered in the United States; Not surprisingly, they are promising to improve quality and lower costs. However, physicians who have heard these promises before are wondering if ACOs are just the new iteration of HMOs, the same lofty notion dressed up in new digs.

From: Harvey S. Frey, MD, PhD, Esq.  Sent: Nov. 27, 2013 7:42 PM

From the very beginning, I've been saying ACOs are just HMOs with lipstick. And, most of the contributors to this article appear to agree.

One of the pro-ACO people says that the difference is that it is Doctors who are setting the rules, not insurance companies or HMO executives.  But, anyone who has noted the behavior of Medical Groups associated with HMOs realizes that MDs can be every bit as aggressive in quality lowering / cost cutting as MBAs.  AAMAOF, when MDs become administrators, they're like the pigs in Orwell's Animal Farm - they become indistinguishable from the old administrators.

I think this article answers its title question with a clear-cut 'No!'  Even under ACA, just as with HMOs, consumers should avoid insurance systems where the doctors lose money when they treat you.

From: T. C-S, MD  Sent: Nov. 27, 2013 9:12 PM

How are we going to reduce cost while improving quality?  Presently, there is absolutely no incentive to reduce cost in a fee for service model. Doctors earn more money doing  "stuff", especially if they own their own surgicenter, MRI, CT scanner. Patient feel that they are getting great care if they get "stuff" done quickly, no matter what the cost, as long as they are not directly paying for it. Eliminate insurance, then fee for service model will work well to reduce cost, and probably improve quality. You can cherry pick the article for the opinions that you agree with, but overall the article is a big "We'll see" on whether the ACO will be as onerous as the old HMO. I do not share your animal farm reference; the old HMO was never run by doctors, just minions doing the insurance companies bidding.  Having the ACO run by doctors and concentrating on quality may help reduce cost in the end.

From: JGK  Sent: Nov. 27, 2013 8:42 PM

Dr. Chang-Stroman is partially correct with his criticism about the Orwellian reference (at least in my experience - over 30 years at it): "the old HMO was never run by doctors, just minions doing the insurance companies bidding."  Nevertheless, I am very skeptical that "Having the ACO run by doctors and concentrating on quality may help reduce cost in the end."  The 'cost | quality | access' 3-legged stool is only stable so long as each leg gets it's full length or attention.  I'd let the doctors take care of the patient; they have little time to bureaucratize the care process (inevitable when trying to control "stuff"), manage the care (or lack of appropriate care) of populations, or reduce unwarranted variation (the key according to Wennberg), and they certainly are not measuring quality or outcomes systematically.  And I'm not even mentioning the fear of being accused of malpractice, the cost of communication and collaboration by us hyper-individualistic physicians, or having to deal with insurance companies' (or doctors') rules, guidelines or bureaucratic hurdles.

From: Bob Goff   Sent: Nov. 28, 2013 11:40 AM

The article author is right, and wrong.

Under a Medicare ACO model there is no cherry picking possible (enrolling the healthy patients) as it is based on attribution, rather than enrollment.  This means that the physicians in the ACO are responsible based on patients’ use of their services.  The rule is: where the patient receives most of their care largely dictates their inclusion in the reimbursement model.  This is one of the objections to the ACO model in that to be successful you have to front-load significant management / coordination/ diversion services for a population that you will not know, until after the fact for whom you are responsible.  This can be very costly—providing services for 100% of the patients seen, hoping they will comprise the majority of the patients attributed to you.  Not realistic in a metropolitan community.

There remains the issue of what is the right balance of incentives in any system. Fee-for-service pays to services, needed or unnecessary, poor quality, duplicative, obsolete, CYA care, etc., as well as the clinically appropriate stuff when it arrives in the proper time and place and with G_d knows what justification (explanation).  A pure capitated system has built-in incentives to restrain the provision of both discretionary and non-discretionary services, including those that are both appropriate and medically necessary.  So, then what is the "balance"?  The ACO models have quality measures (not real quality, but the performance of certain services that serve as proxies for quality) and these must be met before there can be gains from inefficiencies (read: cost reductions) in care delivery.  

I find most interesting in this philosophical tour-de-force is the expectation that physicians can move from a patient-centered care concept to a population health model—what the reimbursement system dictates is allowable or approvable (which is not the same as guaranteed covered, by the way) and the process quality measures which may or may not have anything to do with outcomes, by the way.  The physician has to move from ‘I can only be accountable for what I do’ to being accountable for what they do, plus what those involved in the care of their patient do, as well as the degree (or lack thereof) that the patients are compliant with or otherwise participate in their own care.  And, they are expected to do this without the data to understand the quality and efficiency of the other providers’ care, as well as without the tools to outreach to engage or follow-up patients (the vicissitudes of life, notwithstanding).


Let’s see what happens as the patient moves from being a patient to being a consumer, with ‘skin in the game’ (e.g., substantive out-of-pocket costs) and the ability to albeit, superficially check out physicians and other providers online for their cost efficiency and quality.  All of the exchange products have meaningful cost sharing and 60% of commercial polices have deductibles of more than $1000—incentives or as some would say “barriers” that is already being credited or blamed for reductions in some places of physician visits by 7-11%

There's hope.  From  Krugman, Paul. "Obamacare's Secret Auccess." NY TimesPub.: Nov. 28, 2013

"Follow the bending cost curve and you will find that the slowdown in health costs has been dramatic.

So, how’s it going? The health exchanges are off to a famously rocky start, but many, though by no means all, of the cost-control measures have already kicked in. Has the curve been bent?

The answer, amazingly, is yes. In fact, the slowdown in health costs has been dramatic.

O.K., the obligatory caveats. First of all, we don’t know how long the good news will last. Health costs in the United States slowed dramatically in the 1990s (although not this dramatically), probably thanks to the rise of health maintenance organizations, but cost growth picked up again after 2000. Second, we don’t know for sure how much of the good news is because of the Affordable Care Act....

And the biggest savings may be yet to come. The Independent Payment Advisory Board, a panel with the power to impose cost-saving measures (subject to Congressional overrides) if Medicare spending grows above target, hasn’t yet been established, in part because of the near-certainty that any appointments to the board would be filibustered by Republicans yelling about “death panels.” Now that the filibuster has been reformed, the board can come into being.

The news on health costs is, in short, remarkably good. You won’t hear much about this good news until and unless the Obamacare website gets fixed. But under the surface, health reform is starting to look like a bigger success than even its most ardent advocates expected."

See also Lieberman DAllen J."New Approaches to Controlling Health Care Costs: Bending the Cost Curve for Colonoscopy." JAMA Intern Med. Published online September 08, 2015. doi:10.1001/jamainternmed.2015.4594.   Excerpt:

"We are encouraged by the increasing evidence that new approaches to payment, such as bundling and reference pricing, can bend the cost curve for procedures such as colonoscopy, while maintaining access and quality. But there are many unknowns, and continued study and monitoring is essential as these approaches become more widely used. We should continue to seek improved payment models that ensure that patients have incentives, not disincentives, to obtain important and high-quality preventive care."

Obamacare cheat sheet for [] is, basically, the Feds' place to simplify a person submitting an application for coverage, be it subsidized or not, on an online Marketplace ; it is running much better today than it did on Oct. 1,  2013 and that's just in time for the first deadline for consumers who need insurance. As the site improves, we note traffic is increasing, and folks are slowly becoming more comfortable.  Even so, we feel compelled to suggest this is a step in the right direction towards Single Payer (which is not the same as socialized medicine).  Let's wait and see!

See also: "Accountable Care Organizations: Like H.M.O.s, but Different." NY Times, Jan. 19, 2015; see, especially its linking to a very relevant [] target="_blank">abstract.]

And, the following insider's lament about our health care "system": 

"The Affordable Care Act, which seems so complicated to so many, was almost entirely about getting more people in the United States health insurance. That was just a first step, arguably an easy one, and we’re still fighting about it. Reforming the ways in which we actually deliver care and try to improve outcomes? That’s so much more important, and we barely talk about that at all. But that’s what matters to the people who use the system, and it’s why so many of them are frustrated.

Because of my job, I probably know more about the health care system and how it works than most people in the United States. Yet if this is how much trouble I have navigating a simple refilling of my medication, I don’t know how the rest of America does it, especially those with much more complicated issues than mine."

Carroll AE, THE NEW HEALTH CARE "Trapped in the System: A Sick Doctor’s Story." NY Times9/21/2015