ACOs: They won’t work for the same reason HMOs didn’t work

Presentation to TCMS By Kip Sullivan

February 17, 2011

Congressional interest in reforming the SGR, and Fisher, brought us the

ACO“Together, the Medicare Payment Advisory

Commission … and [Elliot] Fisher provided the impetus for the current concept and interest in ACOs.”

Kelly Devers and Robert Berenson, “Can Accountable Care Organizations improve the value of health care by solving the cost and quality quandaries?” Urban Institute, October 2009, P 2 http://www.urban.org/publications/411975.html, accessed February 3, 2011.

Deficit Reduction Act of 2005 required Medpac to report on SGR alternative

“The report must discuss disaggregating the current … [Sustainable Growth Rate method of updating the Medicare physician fee schedule] target into multiple pools using five alternatives: Group practice, hospital medical staff, type of service, geographic area, and physician outliers.” Statement of Dana Kelly, transcript of Medpac’s October 5, 2006 meeting, P 3, http://www.medpac.gov/transcripts/10_06_MEDPAC_all.pdf , accessed February 8, 2011.

Fisher presented “extended hospital medical staffs” to Medpac on 11-9-06

“Let me briefly describe the general approach we've taken to assigning patients. If a physician works in an inpatient setting, we assign them to the hospital where they provided care to the greatest number of Medicare beneficiaries [they] saw. If they get no inpatient work, we assigned him to the hospital where the plurality, or actually the majority in most cases, of their patients they billed for were admitted…. It turns out, not surprisingly, that you can assign virtually all physicians billing Medicare to a hospital.”

Testimony of Elliot Fisher to Medpac, November 9, 2006, PP 287-288, http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf, accessed February 5, 2011.

Examples of how Fisher’s attribution of patients to primary care docs worked• Doctor who treats 40 patients in Hospital A,

30 in Hospital B, and 30 in Hospital C is assigned to Hospital A.

• Doctor who does no inpatient work is assigned to the hospital where a plurality of his patients were admitted. Thus, doctor who treats 40 patients admitted to Hospital A, 30 admitted to hospital B, and 30 admitted to Hospital C, is assigned to Hospital A.

Fisher’s rules for attributing patients are as logical as the Bacon game

• Elvis Presley appeared in “Change of Habit” (1969) with Ed Asner;

• Ed Asner appeared in “JFK” (1991) with Kevin Bacon;

• Therefore, Asner has a Kevin Bacon number of 1, and Presley has a Bacon number of 2.

Wikipedia, http://en.wikipedia.org/wiki/Six_Degrees_of_Kevin_Bacon, accessed February 5, 2011.

Medpac’s chairman introduced “accountable” after Fisher’s testimony“Thank you Elliot. As always, a great job. [P 308]….The third

notion that interests me is within such a framework of total cost and geography creating opportunities for what I'll call accountable organizations to get their own performance assessment. So if you have a geographic system the target would still be the target for the geographic region. But as opposed to their payment consequences being based on the whole region's performance, it could be for a smaller subset like an extended hospital medical staff….” [P 309]

Statement of Glenn M. Hackbarth, Medpac meeting, November 9, 2006, http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf, accessed February 5, 2011

A few minutes later, Fisher indicated his approval of Hackbarth’s phrase

“I love your notion of accountable organizations. It's exactly the right thing we want to create. And I agree completely with applying it to all services. It should include the whole gamut of care so we get rid of the silos, because you look at the numbers of care transitions and you just see that these places are churning patients from hospital to acute care to nursing home back to the hospital.”

Medpac meeting, November 9, 2006, http://www.medpac.gov/transcripts/1108_1109_medpac.final.pdf, accessed February 5, 2011, P 311

HMO and ACO have very similar definition, purpose, and history

• Same diagnosis: FFS and “fragmentation” • Same prescription: Reverse fee-for-service incentives,

shift insurance risk to doctors; “protect” patients with report cards; consolidate clinics and hospitals into much larger entities

• Shared poster child: Kaiser Permanente• Same vague definition of HMO/ACO: network of

providers “held accountable” for cost via capitation and quality via report cards

• Each associated with one “father”(Ellwood; Fisher);• Neither was demanded by patients and doctors; each

initiated by Congress and a few state legislatures

ACO proponents define the problem the way HMO proponents did

In the following quotes from papers promoting HMOs (Ellwood et al.) and ACOs (Fisher and McClellan), note these similarities in their diagnosis of the problem:* the fee-for-service payment method is the fundamental cause of health care inflation;* the medical sector is “fragmented.”

Ellwood’s definition of the problem, 1971

“Medical care is presently provided by doctors, hospitals, clinics, visiting nurses, laboratories, and drug stores…. It is the way health services are organized … that needs changing. Health services are delivered by units that are both too small and too specialized.” [ P 292] [Cont.]

(Ellwood’s definition of the problem, 1971, cont.)

“The way that health care is financed today works against the consumer’s interest. Since payment is based upon the number of physician contacts and hospital days used, the greater the number of contacts and days used, the greater the reward to the provider.” [P 292]

Paul M Ellwood, Jr., et al., “Health maintenance strategy,” Medical Care 1971;9:291-298

Fisher et al’s definition of the problem, 2009

“To overcome the current system’s perverse incentives and fragmentation, providers need to become accountable for the overall quality and cost of care for the populations they serve.”

Elliot Fisher et al., “Fostering accountable health care: Moving forward in Medicare,” Health Affairs 2009;28:w219-231, w220 (Published online 27 January 2009)

Fisher et al.’s definition of the problem, 2010

“The current system, based on volume and intensity, does not disincentivize, but rather pays more for, overuse and fragmentation. Providers note that current payment systems undermine efforts to invest money and effort in delivery-system improvements that can sustainably reduce costs.”

Mark McClellan et al., “A national strategy to put accountable care into practice,” Health Affairs 2010;29:982-990, 982.

ACO proponents define their solutions the way HMO proponents did

In the following quotations from Ellwood’s 1971 paper, the Jackson Hole Group’s 1992 paper, and McClellan-Fisher’s 2010 paper, note these similarities in the papers’ description of the solution:* The HMO/ACO is vaguely defined (no particular organizational structure is required);* the entity will be “accountable” for cost via capitation and quality via report cards; and* the entity must provide all necessary medical services to a defined population (aka “enrollees”).

Ellwood’s definition of the HMO“Services would be purchased annually from … Health

Maintenance Contracts (capitation)…. [ P 291][T]he … HMO … agrees to provide comprehensive health maintenance services to its enrollees in exchange for a fixed annual fee…. The economic incentives of both the provider and the consumer are aligned…. [P 295] Federal concern would focus on the performance of the HMO, not on its organizational structure. [P 296]. A performance reporting system … would be … installed….” [P 297]

Paul M Ellwood, Jr., et al., “Health maintenance strategy,” Medical Care 1971;9:291-298

Ellwood-Enthoven-Etheridge definition of “accountable health partnerships”

“The reformed system must be based on organizations that integrate the financial, clinical, managerial and preventive aspects of health care, that are publicly accountable for their cost, health outcomes produced, and patient satisfaction. We refer to them as ‘Accountable Health Partnerships.’ Such organizations would replace the traditional fee-for-service fragmented practice … model.” [P 149] [Cont.]

(Ellwood et al. definition of AHP’s continued)

“The critical, defining characteristics of Accountable Health Partnerships will be their participation in a system of public accountability reporting for the health of enrolled populations and their ability to compete … on the basis of costs. [They will] deliver the full array of Uniform Effective Health Benefits…. [P 153]” [Cont.]

(Ellwood et al. definition of AHPs cont.)

“Registered [AHPs] can be single, vertically integrated organizations consisting of providers who are … capable of delivering health care services that meet the required set of Uniform Effective Health Benefits, and insurers who are … able to meet the underwriting standards for the industry. Registered [AHPs] may also be made up of two affiliated … organizations – a provider … and a carrier….” [P 154]

Paul M. Ellwood et al., “The Jackson Hole initiatives for a Twenty-First Century American health care system,” Health Economics 1992;1:149-168.

Fisher-McClellan definition of ACO

“ACOs consist of providers who are jointly held accountable for achieving measured quality improvements and reductions in the rate of spending growth…. ACOs should have at least limited accountability for achieving these improvements while caring for a defined population of patients.” [P 983] [Cont.]

(Fisher-McClellan definition of ACO, cont.)

“ACOs may involve a variety of provider configurations, ranging from integrated delivery systems and primary care medical groups to hospital-based systems and virtual networks of physicians such as independent practice associations. All accountable care organizations should have a strong base of primary care. Hospitals should be encouraged to participate….” [P. 983]

Mark McClellan et al., “A national strategy to put accountable care into practice,” Health Affairs 2010;29:982-990

Definition of ACO according to Patient Protection and Affordable Care Act

“The basic statutory requirements of the program are that ACOs need to have the capacity to deliver or arrange for the continuum of care for those patents assigned to it, to have a sufficient number of primary care professionals to provide services to at least 5,000 beneficiaries…, and to report data on cost, quality, and overall patient experience for beneficiaries in traditional Medicare.” [P 722] [Cont.]

(PPACA’s definition of ACO cont.)“Although Sections 3022 and 10307 give the [HHS]

Secretary discretion in using additional payment approaches, they specify … a shared savings payment approach whereby groups would be paid their usual Medicare fee-for-service reimbursements, with no penalties … for higher spending, and could share in savings if the group provides care to assigned beneficiaries for less than a Medicare benchmark spending target … while passing … thresholds for … quality of care.” [P 722] [Cont.]

(PPACA’s definition of ACO cont.)“[T]here can be no limitation on patient choice of

provider at the point of service…. It is even possible that the Secretary could assign beneficiaries ‘invisibly’ (without their knowledge) to an ACO on the basis of concurrent fee-for-service claims that indicate where they receive the preponderance of their primary care services, as was done in the Medicare Physician Group Practice … demonstration. [I]t is possible that the ACO wouldn’t know which of its patients qualify it for shared savings payments.” [P 722]

Robert A. Berenson, “Shared savings program for Accountable Care organizations: A bridge to nowhere?” American Journal of Managed Care, 2010; 16:721-726.

Under Section 3022 of PPACA, all sorts of groups can form ACOs

“[T]he following groups of providers of services and suppliers which have established a mechanism for shared governance are eligible to participate as ACOs under the program under this section:(A) ACO professionals in group practice arrangements.(B) Networks of individual practices of ACO professionals.(C) Partnerships or joint venture arrangements between hospitals and ACO professionals.(D) Hospitals employing ACO professionals.(E) Such other groups of providers of services and suppliers as the Secretary determines appropriate.”

Invisible enrollment not possible for 40 percent of non-elderly

“However, recent analysis of VHCURES data for the Health Care Reform Commission in Vermont has identified a major issue when this approach is taken with a younger population. That analysis found that approximately 40 percent of covered individuals do not have any contact with a primary care physician in a one-year period. If this finding is accurate, it raises the question of how to attribute those individuals. Further, if those individuals are not attributed and seek care, who will be financially responsible? How should their claims experience (if any) be used in calculation of premiums?”

William Hsiao et al., Act 128 Health System Reform Design: Achieving Affordable Universal Health Care in Vermont, P 108, http://www.leg.state.vt.us/jfo/healthcare/FINAL%20VT%20Draft%20Hsiao%20Report.pdf, accessed February 5, 2011.

Summary of HMO-ACO proponents’ thought process

• FFS system is the problem, ergo, capitation (shifting insurance risk) is the solution.

• But cannot shift risk to small clinics and hospitals, so it becomes necessary to justify consolidation (which in turn requires criticizing “fragmentation”).

• Cannot shift risk if patients can seek care outside their HMO, so limited choice becomes essential.

• Shifting risk creates incentive to deny care, which justifies report cards.

Other consequences of HMO-ACO premises

• To justify capitation (shifting insurance risk), it helps to claim capitation will induce doctors to do more prevention and disease management.

• To justify all of the above – capitation, consolidation, loss of choice, and report cards – it helps to trash doctors (they refuse to do prevention, they order services patients don’t need, they won’t follow guidelines, they refuse to buy electronic medical records, etc.).

(Other consequences of HMO-ACO premises cont.)

If report cards are necessary, then– guidelines with which to measure quality become

essential, – risk adjustment of “grades” becomes necessary

which in turn justifies routine collection of medical records, which in turn justifies

– universal and interoperable electronic medical records.

(Other consequences of HMO-ACO premises cont.)

• If capitation/premium payments to groups of providers is necessary, then risk adjustment of those payments becomes necessary, which (like report cards) justifies– routine collection of medical records which in

turn justifies– Universal adoption of interoperable electronic

medical records.

Capitation without risk adjustment shifts resources from poor to wealthy

”From 2002 to 2010, about 75% of [the province of Ontario’s] 13 million residents and 10,000 primary care physicians joined medical home models…. The single most notable change … was to switch from predominantly fee-for-service to predominantly capitation practices…. Parties involved in the negotiations could not agree on case-mix or socioeconomic adjustments (… capitation payments were adjusted for age and sex alone).” [P 2186]

(Capitation w/o risk adjustment cont.)

” Without finer case-mix adjustment, practices in the healthier and wealthier areas obtained attractive revenue projections with capitation, and the majority chose this model…. Conversely, physicians treating sicker patients had no incentive to join a capitation model…. Such adverse risk selection and ‘cherry picking’ was accentuated because capitated medical homes were allowed to de-roster patients who sought outside primary care. This provided a strong incentive for some medical homes to drop precisely those patients with higher health needs and complex care [P 2186)…. Major cities with urban poor and recent immigrants were much less likely to be served by primary care physicians working in a capitated medical home.” [P 2187]

Richard H. Glazier and Ronald Redelmeier, “Building the patient-centered medical home in Ontario,” Journal of the American Medical Association 2010;303”21862187

Report cards without risk adjustment also shift resources

“We simulated performance-based payments to Massachusetts practices serving higher and lower shares of patients from these vulnerable communities in Massachusetts.” [P 925] “We did not adjust for most potential confounders….” [P 926] “Typical practices serving higher shares of vulnerable populations would receive less per practice compared to others, by estimated amounts of more than $7,000.” [P 925]

Mark Freidberg et al., “Paying for performance in primary care: Potential

impact on practices and disparities,” Health Affairs 2010;29:925-932, 926.

Most important differences between the HMO and the ACO may be…

• Size (ACOs could be much smaller);• insurance risk (will be shifted to ACO doctors

and hospitals in increments); and• limitation on patient choice of provider (ACO

membership will be “attributed,” “enrollees” will not be notified of their “attribution” to an ACO, and they will not have to stay within the ACO network).

CBO estimated ACOs would cut Medicare spending by 1/10th of a %

“Under this option [37], groups of providers meeting certain qualifications would have the opportunity to participate … in Medicare as bonus-eligible organizations (BEOs). The concept of BEOs is similar to the accountable care organization models proposed by some researchers.”

Congressional Budget Office, Budget Options: Volume 1, Health Care, December 2008, http://www.cbo.gov/doc.cfm?index=9925. The CBO estimated this option would cut Medicare spending by $5.3 billion over the 2010-2019 period. According to the National Health Expenditure Accounts, Medicare will spend $6.8 trillion over this period (National Health Expenditure Projections 2009-2019, CMS, Table 2 http://www.cms.gov/NationalHealthExpendData/downloads/NHEProjections2009to2019.pdf). Under the CBO’s Option 38, primary care doctors would be paid by partial capitation. But CBO’s savings estimate for this option is virtually identical to its estimate for Option 37 -- $5.2 billion over the 2010-2019 period.

Three ways to assess ability of ACOs to cut costs or improve quality

• Examine research on HMOs;• Examine results of 2005-2010 Physician Group

Practice demonstration;• Examine research on tools ACOs are expected

to use, including:– prevention and disease management– “coordination”– report cards and P4P schemes– electronic medical records

HMOs damaged quality

Number of comparisonsHMO care was better than FFS care 4HMO and FFS care were equivalent 19HMO care was worse than FFS care 21Total number of comparisons 44

Source: Kip Sullivan, “Managed care plan performance since 1980: Another look at two literature reviews,” American Journal of Public Health 1999;89:1003-1008.

HMOs increased consolidation“We find that higher levels of local managed-care

penetration are associated with substantial increases in consolidation in hospital and physician markets. In the average market … between 1981 and 1994 … [t]his is equivalent to moving from 10.4 equal-sized hospitals to 6.5…. In the physician market, … [t]his implies a decrease in the percentage of doctors in solo practice from 38 percent in 1986 to 24 percent by 1995.”

David Dranove et al., “Is managed care leading to consolidation in health-care markets?” Health Services Research 2002;37;573-594.

Prospect of ACOs is causing another round of consolidation

“When Congress passed the health care law, it envisioned doctors and hospitals joining forces, coordinating care and holding down costs…. Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups....” [P A1] “’If accountable care organizations end up stifling rather than unleashing competition,’ said Jon Leibowitz, the chairman of the [FTC], ‘we will have let one of the great opportunities for health care reform slip away.’” [P A27]

Robert Pear, “As health law spurs mergers, risks are seen,” New York Times, November 21, 2010, A1.

Experts agree HMO experiment failed

“Events of the past year demonstrate beyond a doubt that managed care has failed – and failed dismally. The greatest single ethical crisis facing American health care as we move into new year is what to do about it.”

Art Caplan, director of the Center for Bioethics at the University of Pennsylvania ("In 2001, managed care our No. 1 health crisis," MSNBC, December 21, 2001 http://www.msnbc.com/news/671464.asp, accessed December 23, 2001).

(Expert opinion on managed care, cont.)

“Managed care is basically over. People hate it, and it's no longer controlling costs. Health-care inflation is now back in the double digits. So if it's not saving money, then why should we have it? But like an unembalmed corpse decomposing, dismantling managed care is going to be very messy and very smelly, and take awhile.”

George Lundberg, former editor of JAMA who as

recently as 1996 had co-authored an article defending managed care (Linda Marsa, “Former JAMA editor laments the state of medical care,” Los Angeles Times, March 26, 2001, http://www.latimes.com/print/health/200103 26/t000026016.html, accessed March 28, 2001).

McClellan and Fisher view the PGP demo as an ACO prototype

“The ACO model builds on similar initiatives that Medicare has implemented in the past several years. Starting in 2005, the Physician Group Practice Demonstration engaged ten provider organizations and physician networks, ranging from freestanding physician group practices to integrated delivery systems, in a ‘shared savings’ reform. The providers in the demonstration continue to receive all of their usual fee-for-service payments.”

Mark McClellan et al., “A national strategy to put accountable care into practice,” Health Affairs 2010;29:982-990, 983-984.

But the PGP demo failed to cut costs

“[T]he model for the ACO program … has been tested in the PGP demonstration project that began in 2005. In the demonstration, 10 group practices … were permitted to receive bonus payments if they passed quality-of-care thresholds and achieved savings…. [T[he year 2 evaluation report documented that the essential reason for the overall savings across the 10 sites of about 1% … was from diagnosis coding changes the PGP sites initiated….”

Robert A. Berenson, “Shared savings program for Accountable Care organizations: A bridge to nowhere?” American Journal of Managed Care, 2010; 16:721-726., 723.

Third test of ACO: Do these methods ACOs might use cut costs?

• Prevention• Disease management• “Coordination” (gate-keeping, utilization

review)• Report cards and P4P• Electronic medical records

If ACO proponents have other mechanisms in mind, what are they?

Prevention doesn’t cut costs

“Although some preventive services do save money, the vast majority reviewed in the health economics literature do not.”

Joshua T. Cohen et al., “Does preventive care save money? Health economics and the presidential candidates,” New England Journal of Medicine 2008;358:661-663.

“It’s a nice thing to think, and it seems like it should be true, but I don’t know of any evidence that preventive care actually saves money.”

Jonathan Gruber, economist at the Massachusetts Institute of Technology, quoted in

David Leonhardt, “Free lunch on health? Think again,” New York Times, August 8, 2007, C 2.

Cardiovascular prevention raises costs

“The cost of caring for CVD, diabetes, and CHD over the coming 30 years will be on the order of $9.5 trillion. If all the recommended prevention activities were applied with 100% success, … total medical costs [would rise] by $7.6 trillion (162%).”

Richard Kahn et al., “The impact of prevention on reducing the burden of cardiovascular disease,” Circulation 2008;118:576-585, 580.

Diabetes disease management raises costs by 25%

“Even for the most optimistic picture – a 30-year horizon and assuming no turnover [patients stay with the same plan for 30 years] – the net effect on diabetes-related costs would be an increase of about 25%.” [P 261] “The [disease management] program used in [this] study may be too expensive for health plans or a national program to implement.” [P 251]

David M. Eddy et al., “Clinical outcomes and cost-effectiveness of strategies for managing people at high risk for diabetes,” Annals of Internal Medicine 2005;143:2512-64.

Disease management doesn’t cut costs

“On the basis of its examination of peer-reviewed studies of disease management programs…, CBO finds that to date there is insufficient evidence to conclude that disease management programs can generally reduce the overall cost of health care services.”

Congressional Budget Office, An Analysis of the Literature on Disease Management Programs, October 13, 2004, http://www.cbo.gov/showdoc.cfm?index=5909&sequence=0,accessed September 25, 2005.

(Disease management cont.)“[T]he results of our review suggest that, to date, support for

population-based disease management is more an article of faith than a reasoned conclusion grounded on well-researched facts. ... Most of the evidence on disease management programs to date is derived from small high-intensity programs focusing on high-risk patients that are typically run as part of a demonstration project by the providers at a single site. This evidence suggests that those programs typically lead to better processes of care, but the evidence for improved long-term health outcomes and cost savings is inconclusive. ... [T]he vendor-run assessments typically do not meet the requirements of peer-reviewed research ....”

Soeren Mattke et al., "Evidence for the effect of disease management: Is

$1 billion a year a good investment?" American Journal of Managed Care 2007;13:670-676.

“Coordination” doesn’t cut costs“To study whether care coordination improves the quality of

care and reduces Medicare expenditures, the Balanced Budget Act of 1997 mandated that the Secretary of Health and Human Services conduct and evaluate care coordination programs…. [p. 604] None of the [15] programs reduced regular Medicare expenditures, even without the fees paid to the care coordination programs. Only two programs had a significant difference in expenditures and, in both of these programs, the treatment group [that is, the group getting ‘coordinated care’] had higher expenditures. “(p. 611)

Deborah Peikes et al., “Effects of care coordination on hospitalization, quality of care, and health care expenditures among Medicare beneficiaries: 15 randomized trials,” Journal of the American Medical Association 2009;201:603-618.

Utilization review doesn’t cut costs“Although utilization review is widely used to control health

care costs, its effect on patterns of health care is uncertain….We compared the health services provided to 3702 enrollees whose requests were subjected to utilization review (the review group) with the services provided to 3743 enrollees whose requests received sham review and were automatically approved for insurance coverage (the non-review group)…. During the study period, the mean age-adjusted insurance payments per person were $7,355 in the review group and $6,858 in the non-review group (P = 0.06).”

Stephen N. Rosenberg et al., “Effect of utilization review in a fee-for-service health insurance plan,” New England Journal of Medicine 1995;333:1326-1330, 1326.

Report cards do not improve quality

“[O]ur results show that report cards [on heart surgeons] led to increased expenditures for both healthy and sick patients, marginal health benefits for healthy patients, and major adverse health consequences for sicker patients. Thus, we conclude that report cards reduced our measure of welfare over the time period of our study” (P 577). “[M]andatory reporting mechanisms inevitably give providers the incentive to decline to treat more difficult and complicated patients” (P 581). “[M]ore severely ill … patients experienced dramatically worsened health outcomes.” (p. 583) “Report cards led to a decline in the illness severity of patients receiving CABG [coronary artery bypass grafts] in New York … relative to patients in states without report cards.” (P 583)

David Dranove et al., “Is more information better? The effects of ‘report cards’ on health care providers,” Journal of Political Economy 2003;111:555-588.

Report cards can harm minority patients

“Rachel M. Werner and David A. Asch (2005)find that the incidence of cardiac surgery forminority patients relative to white patientsdeclined in New York subsequent to theintroduction of report cards.”

David Dranove and Ginger Zhe Jin “Quality disclosure and certification: Theory and practice,” Journal of Economic Literature 2010;48:935-963, 955.

P4P does not improve quality“There has been enough experience to date with pay for performance

and transparency to argue convincingly that neither of these additional mechanisms for compensating physicians will achieve the goal of most patients to receive high-quality, humane, and affordable care…. [citations omitted]. These mechanisms are not silver bullets; they can enhance performance only modestly…. In addition, these mechanisms may have unintended consequences. …. If only a few measures are used in pay-for performance arrangements, clinicians will design particular aspects of their practice to ensure those measures are achieved, even if it means reducing quality of care in other practice areas.”

Robert Brook, “Physician compensation, cost, and quality,” Journal of the American Medical Association 2010, 304;795-796

P4P does not improve quality of hypertension care

“Explicit financial incentives in the pay-for-performance initiative introduced in the United Kingdom in 2004 did not improve the quality of care and clinical outcomes for patients with hypertension in primary care.”

Brian Serumaga et al., “Effect of pay-for-performance on the management and outcomes of hypertension in the United Kingdom: Interrupted time series study,” British Medical Journal 2011;342:d108.

Electronic medical records and clinical decision support don’t improve quality“We analyzed physician survey data on 255,402 ambulatory

patient visits…. [P E1] …. [N]either EHRs [electronic health records] nor CDS [clinical decision support] was associated with ambulatory care quality, which was suboptimal for many indicators. We noted no association between EHR use and care quality for 19 indicators and a positive relationship for only one indicator. We also found CDS use associated with better quality for only one of 20 quality indicators, refuting our hypothesis that CDS would be associated with improved care quality.” [P E4]

Max J. Romano and Randall S. Stafford, “Electronic health records and clinical decision support systems: Impact on national ambulatory care quality,” Archives of Internal Medicine, published online January 24, 2011, doi:10.1001/archinternmed.2010.527.

EMRs don’t cut costs“We linked data from an annual survey of computerization at

approximately 4000 hospitals for the period from 2003 to 2007 with administrative cost data from Medicare Cost Reports and cost and quality data from the 2008 Dartmouth Health Atlas. We calculated an overall computerization score and three subscores based on 24 individual computer applications…. We analyzed whether more computerized hospitals had lower costs of care or administration, or better quality…. As currently implemented, hospital computing might modestly improve process measures of quality but does not reduce administrative or overall costs.”

David U. Himmelstein et al., “Hospital computing and the costs and quality of care: A national study,” American Journal of Medicine 2010;123:40-46, 40.

Why don’t these managed care tools work?

• HMOs didn’t work because administrative costs offset reduced medical costs, and for reasons set forth below.

• Report cards and P4P don’t work because quality can’t be measured accurately, and Skinnerian tactics work only with simple tasks.

• Cost of prevention, DM and EMRs outweighs foregone medical expenditures due to better health.

Most important reason may be too few docs/nurses to meet all guidelines“On the basis of recommendations from

national clinical care guidelines for preventive services and chronic disease management, and including the time needed for acute concerns, sufficiently addressing the needs of a standard patient panel of 2,500 would require 21.7 hours per day.”

Kimberly S Yarnall et al., “Family physicians as team leaders: ‘time’ to share the care,” Preventing Chronic Disease 2009 6(2), http://www.cdc.gov/pcd/issues/2009/apr/08_0023.htm, accessed June 1, 2010.

Examples of questions required by guidelines

“Are you feeling down? Have you recently traveled to another country? Do you have more than one sexual partner? Does your child live in or regularly visit a house built before 1950? How do you deal with anger? Any trouble sleeping? Do you wear a seat belt? Do you drink alcohol? Does your vision make it difficult for you to recognize your pills or read medication labels? Do you have a gun at home?”

Kathleen P Tomaselli, “One more thing,” American Medical News, January 23, 2006, 19.

So if ACOs can’t improve quality or cut costs with …

• prevention,• disease management,• coordination,• report cards and pay-for-performance, and• Electronic medical records…

what mechanism do ACO proponents think ACOs will use?

Some ACO proponents cite “medical homes”

• Not clear why. Some claim “homes” will be building blocks for ACOs. Others imply “homes” have already shown an ability to do that which HMOs and managed care could not, namely, lower costs by improving care.

• But “medical homes” are almost as vaguely defined as ACOs, and have roughly the same track record, namely, none at all.

Example of ACO proponents invoking “medical homes”

“Reforms that support primary care can leverage accountable care, and vice versa. For example, medical homes typically involve additional payments to primary care physicians each month in exchange for physicians’ leading prevention, disease management, and care coordination activities…. Implementing a medical home and accountable care organization at the same time could address budgetary concerns while also providing more incentives for overall care coordination.”

Mark McClellan et al., “A national strategy to put accountable care into practice,” Health Affairs 2010;29:982-990, 985

Adding primary care workers to clinic staff doesn’t require ACOs

• Research on “home”-like entities suggests that integrating more nurses and social workers into primary care clinics improves health, possibly enough to offset the cost of the additional staff.

• But this simple intervention does not require recycling the HMO experiment.

If FFS is the problem, why is underuse far worse than overuse?

“[W]e found greater problems with underuse (46.3 percent of participants did not receive recommended care …) than with overuse (11.3 percent of participants received care that was not recommended and was potentially harmful…).”

Elizabeth A. McGlynn et al., “The quality of health care delivered to adults in the United States,” New England Journal of Medicine 2003;348:2635-2645, 2641.

ACOs won’t work for same reason HMOs didn’t work: wrong premises

• Wrong diagnosis (FFS);• Faith-based solutions that raise costs as much

as or more than they lower costs:– capitation, which in turn requires• consolidation• report cards and• limited choice (or “invisible enrollment”)

One last question: How are ACOs supposed to work outside Medicare?

If insurance companies agree to shift risk to clinics and hospitals, who needs insurance companies?