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Barriers To Accountable Care Organizations (ACOs) Success

October 27, 2010

inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

In response to my last blog about the complexity of Accountable Care Organizations, a reader wrote, “Complexity breeds fraud, waste, abuse and inefficiency. By nature, huge Government programs are complex and breed all four of the problems mentioned.”

Many of President Obama’s well intended government control programs have experienced terrible outcomes because he followed theories of “experts” instead of using common sense.

President Obama’s theoretical Accountable Care Organizations will be a failure. The pity is ACOs will waste money and destroy medical resources. President Obama’s healthcare reform law is not going to solve the healthcare system’s basic problems.

There are three possible reasons:

1. President Obama does not know what he is doing. He doesn’t understand physicians mentality, the process of medical care or previous physicians’ experiences with government control.

2. President Obama refuses to learn from past history.

Government dictated planning and attempts at execution of social, economic and cultural change usually fails. The government should make the rules to level the playing field for all stakeholders and then get out of the way.

Government planning and controls are expensive to execute for all stakeholders. The planning usually restricts freedom of choice by imposing mandates.

3. President Obama knows exactly what he is doing. He wants the healthcare reform plan to fail.

Failure would lead the way for the government to impose a government controlled single party payer system.

There is no question America needs healthcare reform. Rules to create a more efficient system are essential.

Patients own their disease. They should be put in the power position. Patients should be responsible for their care. The government should set up the rules and protections for patients to be responsible for their care.

The secretary of health and human services is required to establish a program within Medicare in which savings from efficient, high-value care are shared using Accountable Care Organizations (ACOs).

The ACO program of payment is to be launched in January 2012. At this time, only two of the 10 demonstration projects have been partially successful in saving money. The demonstration projects were done in ten clinics that were supposed to theoretically succeed in saving money..

At the moment, there are no real world ACOs exist. The rules and regulations regarding qualification as an ACO have not yet been published. We are approaching 2012.

The barriers for the success of ACOs are overwhelming.

“In principle, ACOs will efficiently deliver the measurably high-quality care offered by integrated health maintenance organizations (HMOs) without the “lock-in” that many Medicare beneficiaries abhor.”

The author assumes that HMOs delivered high-quality medical care. ACOs payment will be the same as HMOs without the lock in patients abhor.

ACOs are really HMOs on steroids. Once patients and physicians understand this they will be hesitant to join.

“ ACOs begin not with insurance but with a collection of providers (physicians and facilities) who come together and accept internal payment arrangements that facilitate the provision of efficient, high-quality care. If the ACO does well, the savings it achieves can be shared among the providers or pumped back into the provision of high-value care.”

ACOs are a fixed payment system. The financial risk is shifted from the government to physicians. Why should physicians pick up the risk for irresponsible patients?

Patients are attributed to the ACO on the basis of their patterns of service use. That is, if a patient typically sees a primary care physician who belongs to an ACO, all of that patient’s care is attributed to that ACO. If the costs incurred by the ACO’s “attributees” are sufficiently below Medicare’s spending projections for that population, the ACO shares in the savings realized by Medicare; if the costs are too high, the ACO loses nothing.

Patients will not have a choice of physicians. The experts predict physicians’ incentives are changed from “over testing” to “under testing” patients. However, physicians will be forced to continue to over test for defensive medicine purposes and the threat of malpractice. I think over testing for defensive medicine will not be solved until effective malpractice reform is passed. President Obama has no interest in malpractice reform.

George Thomas, a New York physician, has posted a blog describing to non-doctors and non-sued doctors what is wrong with the malpractice system and its economic effect on healthcare cost. It is written from the point of view of a physician who has been sued five times and won each suit.

“First, being sued does not make a doctor a better doctor. We improve through experience and studying, and not making the same mistake twice.”

I hope President Obama will read this article. Everyone should read this article. The ACO payment system is destined to fail.

Elliot Fisher M.D. of the Dartmouth group is one of the masterminds of the ACOs.

Dr. Fischer has little real world experience. He has described an attribution rule whereby Medicare beneficiaries are assigned to their primary care provider and then to unique physician–hospital networks. Please note the lack of patient choice.

1.“ ACOs must be able to collect information on the quality of care, create new incentives, and accept and distribute bonus payments. Building these capabilities will entail substantial up-front costs for new legal entities, information systems, and other infrastructure. Large multispecialty groups are well positioned to take on these responsibilities”

Most primary care physicians are not in that position and are unwilling to hand their intellectual property over to a hospital system.

All primary care practitioners will not likely to be invited into or want to participate in an ACO.

The ACO concept will generate severe shortages of primary care physicians. There are important legal antitrust concerns about the corporate ownership of physicians in some areas of the country. The Medical Home concept designed to enable primary care to survive will quicken the specialty’s demise.

3.” The ACO concept calls for each primary care practitioner to be part of only one ACO.”

The practice of medicine will be under the dictates of the federal government.

A excellent panel discussion was presented by the online New England Journal of Medicine. Thomas H. Lee, M.D., Lawrence P. Casalino, M.D., Ph.D., Elliott S. Fisher, M.D., M.P.H., and Gail R. Wilensky, Ph.D. presented the virtues and defects in ACOs. Gail Wilensky and Lawrence Casalino point out the impractical ideals of ACOs.

In spite of this, President Obama has declared the ACO payment system a done deal.

He is misguided.

The opinions expressed in the blog “Repairing The Healthcare System”
are, mine and mine alone.

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Simple Fixes

March 1, 2015

inMedicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

Republicans are trying to figure out what to change in Obamacare to make it work. I believe Republicans should change all the perverse biases built into Obamacare. The result would be a small but important dent in Repairing the Healthcare System.

It is best to start all over again with a bill that puts consumers in charge of their healthcare dollars. Consumers must be responsible and own their healthcare decisions and healthcare dollars. Consumers must drive the healthcare system in order to have reduced costs, increased efficiency of care and competition among stakeholders.

Obamacare is a political strategy by progressives to get more power. It is not about improving delivery of healthcare.

“It is about "redistribution of wealth"… or, by its more common name, "SOCIALISM.”

Republicans do not understand this. They don’t have the courage to call out President Obama or the Democrats.

Democrats cannot or do not want to understand the power of market based consumer driven healthcare because their ideology of central government control of healthcare does not allow it.

Consumers, taxpayer and voters must drive the change to a better, more cost efficient and less dysfunctional healthcare system.

Obamacare’s basic theme is built on hospital ownership of physicians’ practices. If hospitals or hospital systems own all the physicians’ practices in a community, the government has to only negotiate prices with the hospital system. The central government can then control a community and decide on access to care and the rationing of care of the community’s citizens.

The hospital receives a bundled reimbursement for a disease encounter. The hospital divides the reimbursement between the doctor and the hospital.

Once physicians are in the employ of hospitals, the government and hospital systems think that the non-compete clause will hold up in court and physicians will be afraid to leave the hospital systems.

Hospitals think they can lower the salary of physicians during negotiations for renewal of physician employment contracts since physicians will be afraid to leave the hospitals’ employ.

I’ll bet if a group of physicians decided to leave at the same time, the hospitals would be in the trap hospitals set to apply to physicians. Physicians should wake up. Some physicians have.

These are some of the perverse biases Obamacare has created against physician practices and patients.

The biases created against groups of private practitioners and to the advantage of hospital systems costs government and healthcare insurers more than it would if there was a level playing field for practicing physicians. It would create market place competition. Consumers and taxpayers absorb these government overpayments.

A common belief is that the payment system must be changed from a fee for service system to a bundled payment system.

HMOs failed in the 1980’s and early 1990’s because of the pressure of patient and physician dissatisfaction with the quality of care that was provided with a bundled payment system.

Accountable Care Organizations (ACOs) run by hospital systems are the organizations that will take risk and accept a bundled fee. It is similar to the HMO’s that failed previously.

ACOs will fail because it is difficult to predict medical risk. The increases in premiums are the result of the insurance industry’s miscalculation of risk.

Physicians are not willing to take on the risk of patients’ compliance and adherence. Physicians are not mechanics that put a new part in patients and then patients are fixed.

The popular notion is payment reform requires coordinated delivery of medical care in an Accountable Care Organization in which a single institution owns the physicians.

Everyone knows the physicians are at risk. Much of that risk depends on the patients’ responsibility to understand their illness and their behavior toward caring for that illness.

Obamacare is biased against less centralized engagements where independent doctors enter into contractual relationships with their patients. The government has imposed less reimbursement and more paperwork for these independent practices to discourage them from remaining in private practice.

Private practitioners cannot afford to participate in reformed payment plans. Private physicians need complex IT infrastructure in order to comply with the rules and regulations needed to participate in the complex payment reform structure that shifts risk to physicians.

“It makes participation absurdly expensive for anyone but a hospital that already has its own server hub.”

The problem is hospital systems cannot control physician’s medical judgments. Medical judgments are complex and cannot be boiled down to cookbook decision solutions.

Obamacare also provides favorable anti-kickback provisions to hospital systems only when hospital and physicians qualify as Accountable Care Organization. ACO qualification is dependent on requirements that create the same need for physical infrastructure and bureaucratic overhead that is hard to replicate outside the hospital setting.

In the end physicians shouldn’t care to be in an ACO because their freedom to practice medicine according to their medical judgment could be impaired.

However, many physicians still feel compelled to join hospital systems so they are not left out of the “new age.”

Those physicians who do not participate are joining the surge of interest in the fast growing concierge medicine phenomenon. Consumers want someone to relate to them and not to be a commodity in a failing healthcare system.

I know of only one group of physicians in a small city in Texas who have supposedly taken control of the hospital and enjoy government provided benefits for developing an ACO.

The hospital is dependent on the organized physician group rather than the hospital taking over the physician’s group and dictating how these physicians should practice medicine.

In order for real reform to occur Congress must level the playing field between hospitals and independent private practice physicians. Only then will there be a competitive system where both hospitals and physicians will compete for patient pools.

Congress has to put consumers in the drivers seat, not hospital systems.

The government could set up a new class of “independent risk managers” to help groups and individual physicians analyze and manage risk.

Managing risk depends on patients assuming responsibility in the participation in managing their diseases.

Hospital systems do not evaluate risk very well. Neither does the healthcare insurance industry or the government.

Government should be the facilitator of improving care, not the manager of the healthcare system.

“Obamacare deliberately crowds out this sort of market innovation in favor of hospitals and their existing networks.”

Another simple solution to increasing costs would be to provide physician owned private groups and individual physicians with the same reimbursement provided to hospitals and hospital owned physicians.

“ Medicare is paying much more for many procedures when performed in a hospital outpatient clinic rather than an independently owned medical office.

Things as common as heart scans ($749 versus $503), colonoscopies ($876 versus $402) and even a 15-minute doctor visit ($124 versus $70) all pay more when done by a hospital-based doctor than a privately owned medical office.”

This is true in all coding categories. The difference produces a sizable profit incentive to the hospital at a great cost to government.

Hospital systems are driven to buy physicians’ practices to take advantage of the difference since money-making long inpatients hospital stays are becoming a thing of the past with new advances in medical and surgical care.

The profit margin from owning brick and mortar is shrinking and the profit from owning intellectual property and surgical skills is increasing. Hospitals want to take advantage of this phenomenon.

Why is the Obama administration doing this?

Once the hospital own the physicians in the community the government can then squeeze the reimbursement to the hospital system. Hospital systems will have no option but to accept the reduced reimbursement.

It is called “got you in checkmate.”

It has happened before. This strategy has never worked.

When will the government ever learn?

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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Organized Medicine Is Out Of Touch With Practicing Physicians.

May 16, 2011

inMedicine: Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

There is a widespread discrepancy between the opinions of organized medical group leaders in the American Medical Association (AMA), the American Academy of Family Physicians (AAFP), the American College of Physicians (ACP), and practicing physicians. AMA, AAFP, and ACP are part of organized medicine.

These organizations supported the healthcare reform law in 2010 and continue to support the legislation. I believe they have taken this position because they want a seat at the table as implementation of the legislation moves forward. President Obama has not paid attention them so far and there is little evidence that he will in the future.

In March of 2010, Speaker of the House Nancy Pelosi famously said, "We have to pass the [health care] bill so that you can find out what is in it."

Most physicians are starting to realize the implications of President Obama’s Healthcare Reform Act (ACA) (Obamacare). They are terrified about the implications for the practice of medicine.

Organized medicine is still not disenchanted with President Obama’s Healthcare Reform Act. Charles Cutler, MD, chair of the ACP Board of Governors said recently, "The medical community recognizes that so much of the ACA is good."

Dr. Cutler is out of touch with the thinking of the practicing community. It is important for the public to know what practicing physicians are thinking.

In a January 2011 poll of practicing physicians conducted by Thomson/Reuters and HCPlexus. “Seventy-eight percent of physicians said the ACA (Obamacare) would negatively affect their profession, 74% predicted that the law would make physician reimbursement less fair, and 58% believed it would hurt patients care.”

President Obama’s healthcare team does not want to recognize that the shortage of primary care physicians become worse as a result of Obamacare. The Healthcare Reform Act makes no attempt to decrease the present shortage. Sixteen million new enrollees in Medicaid will not be able to find a physician.

A recent membership survey by the Texas Medical Association (TMA) of Texas physicians reports that “59% of Texas physicians have an unfavorable opinion of Obamacare. Texas physicians described their feelings as disappointed (78%), anxious (74%), and confused and angry (62%).

A nationwide survey conducted by The Physicians Foundation last fall produced the same negative results.

Physician disapproval of President Obama’s Healthcare Reform Act is consistent among all medical and surgical specialties. Practicing physicians know it cannot work.

The Thomson/Reuters and HCPlexus survey showed that only 11% of primary care physicians thought Obamacare would have a positive impact on their profession. Only 14% of pediatricians and psychiatrists were optimistic. The optimism for success among cardiologists and surgeons was at 3% and 4%, respectively.

Organized medicine should at least try to hear what practicing physicians thinking.

Forty-eight percent of the general public disapproves of President Obama’s healthcare plan. I believe it will equal the disapproval ratings of physicians once the public experiences the full impact of this terrible law.

President Obama has tried to maintain public support by increasing benefits in the first two years of implementation of Obamacare before the 2012 elections. After 2012 the impact will be felt. It will be too late by then. The infrastructure will be built and money will be wasted. In 2013 and 2014 there will be increased taxes, decreased access to healthcare and decreased choice of care as a result of the Healthcare Reform Act.

President Obama promised a bonus to primary care physicians. The reality is the bonus is insignificant. I suspect with a 29.5% decrease in reimbursement scheduled to go into effect on January 1,2012. It will not only offset the bonus but decrease reimbursement significantly.

President Obama promised organized medicine a “Doc Fix.” Most believe the promise is bogus in light of the budget pressures.

No one is talking about the upcoming debate to make participation in Medicare a condition for renewal of medical licensure. President Obama is going to create a larger physician shortage than already exists with this move.

Accountable Care Organizations(ACOs) introduces another avenue of uncertainty. The process for providers to qualify for ACO status is costly. ACOs are going to increase the cost of healthcare rather than decrease the costs. ACOs will put physicians at risk for patient outcomes. Physicians will be penalized if outcomes are poor. Physicians know that clinical and financial outcomes not only depend on their care of patients but also the patients care of themselves. Few physicians are interested in assuming the patients’ responsibility for this risk. ACOs will fail.

The burden of mandated insurance is a clear attack on the states’ sovereignty and budgets. It is also a clear attack on individuals’ freedom to choose. I believe it is unconstitutional. It will be a few years before the Supreme Court rules on the issue. Mandated insurance only increases the uncertainty and ability to maintaining a medical practice.

Just as the federal government is supposed to be a government by the people for the people and not ignore the will of the people, organized medicine should not ignore the will of its constituents.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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How To Win A War; Don’t Show Up

May 4, 2011

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Stanley Feld M.D.,FACP,MACE

A reader responded to my last blog, Why ACOs Will Fail, with the following comment.

"Stan

Let's keep our objections as simple as possible, so we can explain them better. The ACO's are a form of capitation. Why should doctors be at any financial risk for performing a service that the government and the public feel is absolutely necessary?

Sincerely

R.M. M.D."

The point I made was that the only way to repair the healthcare system is if patients are responsible for their healthcare dollars and for the maintenance of their health. Patients with the appropriate education with will force the healthcare system to be competitive (Consumer Driven Healthcare).

It is naïve to assume that physicians and hospital systems are interested in taking risks for patients’ behavior.

HHS head,Kathleen Sibelius, does not think I am correct according to her news release;

“Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us,”

Under the ACO initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy.”

Dr. Donald Berwick CMS chief wrote in a Wall Street Journal op-ed;

“We announced another effort that will reduce costs by improving care: a proposed set of rules for doctors, hospitals and other providers who want to work together as Accountable Care Organizations, or ACOs. ACOs will coordinate better care for patients, improving communication and reducing duplicative tests and procedures that hassle patients and do them no good at all.

The ACOs will be held to a strict set of quality standards to ensure that they aren't lowering costs by cutting necessary care.”

The initial results from Medicare’s one year pilot studies of 10 Medicare Physician Group Practice sites and five Dartmouth/Brookings sites demonstrate the majority of the savings occurred from outpatient services and not inpatient services.

The sites in the pilot have not achieved the level of saving to share with Medicare.

CMS hopes 75 to 150 groups will apply and qualify as an ACO. The startup investment and first-year operating expense for a participant in the Shared Savings Program is estimated by CMS to be about $1.75 million per ACO. Many say this estimate is low.

CEO of the large hospital systems and group practices are starting to understand the financial trap ACO’s represent.

“I think there’s a very high bar that’s set in these regulations,” says Thomas Graf, MD, chairman of Community Practice Service Line for Geisinger Health System in Danville, PA.

“They’re very detailed, and somewhat prescriptive, although there’s a mention that if there’s an alternate idea, and you can show how your proposed alternative meets these goals, they would consider it.”

The Geisinger Health System, one of the 10 Physician Group

Practice demonstration sites plans to stay with the PGP model for another two years, especially since the new rules for the second portion of that program were just released.

Dr. Graf also notes that some organizations will have to endure a

25% withhold, which means that in order to make sure new ACOs

are able to manage any losses, they’ll retain one-quarter of shared

savings. “To the extent you’re a startup ACO, you have to put in

costs now, presumably something to improve the care that you’re

delivering on both the quality and cost side. You incur costs on

Day 1”.

Dr. Graf explains: “Let’s say that in the first year, you qualify for

shared savings of $2 million. [CMS says] we’ll pay you $1.5 million

and we’ll retain half a million in case in the second year you have

$300,000 of losses, which will come out of the $500,000.”

CEOs are realizing that an effective plan must include smaller organizations. Local markets must be represented because all medical care is local. The hospital system CEOs also are beginning to recognize that patients must be central to determining their own healthcare needs. Consumers must be responsible for their own care for a healthcare system to be effective.

Craig Samitt, MD, president and CEO of Dean Health System in Madison, WI. says,

“There are many complexities and process-based requirement in ACO s.”

Large investments will be needed for most organizations to be high-performing ACOs”

Some don’t think ACOs equitable or practical. ACOs will not

know which Medicare beneficiaries they will be judged on until at

least a year after the program is under way.

Many have expressed concern that there just isn’t enough time between now and Jan. 1 for the final regulations to come out. There is not enough time for them to apply and be approved. It will be impossible for them to have all the pieces in place for a highly functioning ACO.

Chris Van Gorder president and CEO of Scripps Health expressed that concern, among others. “The government is trying to put a politically correct managed care

system of healthcare together requiring the hospitals or the ACO to assume both financial and quality responsibility for patients without even letting them know who those patients are prospectively.”

Chris Van Gorder says “he’ll hold his system back from applying for

Medicare ACO status unless the regulations undergo significant

change.” “Frankly, I was surprised. I thought there would be more

carrots, not so much stick.”

He emphasized that rather than this flawed ACO model, CMS would get better results by expanding bundled payment incentives to include hospital care. “That will get faster and maybe better results than by trying to push the ACO too fast.”

He also says that “he was quite surprised the regulations

impose a penalty for lack of performance on cost controls “right

at the beginning of this grand experiment. That was expected

over time, but [not] for a startup program that is extremely

complicated and far-reaching. One would have thought the

feds would have done all they could to attract and incentivize

healthcare providers and suppliers to take this risk.”

That sentiment was echoed by Richard A. Hachten II, president

and chief executive officer of Alegent Health in Omaha, NE.

“It’s appropriate that we’re going to be managing people’s

health differently going forward; it’s the financial risk part of it

and not being able to do that as effectively as one could if you

knew which patients you were working with, and could do a more

effective job in coaching the use of healthcare resources,” he says.

“So we think there’s a significant amount of unmanageable risk

built into the way it’s set up currently.”

Jay Cohen, MD, executive chairman of Monarch Healthcare in Orange County, CA says;

The negatives on the flip side outweigh the positives in the proposed regulations, and may prevent his organization from opting to be an ACO. “The way the proposed regulations are written will not work.”

George Halvorson, chairman and chief executive officer of

Kaiser Foundation Health Plan and Kaiser Foundation Hospitals,

which has 8.8 million members nationally, says his system does

not plan to apply and will stay with prepaid Medicare Advantage.

Kaiser, he says, already has a much more advanced team approach to care that goes beyond the four walls of the system. “We’re already there and we’re giving great care. We’re cutting the number of heart attacks in half; we’re cutting the number of broken bones in half.”

There you have it. “The Art Of War”. The healthcare organizations Dr. Donald Berwick was depending on are not going to show up to his ACO party.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Here We Go Again.

March 16, 2011

inMedicine: Healthcare System, Politicians,Healthcare and Vested Interests, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

Last year’s “Doctor Fix” was passed the last week congress was in session in 2010. This was after the medical profession was held in suspense for 9 months.

The “Doctor Fix” was supposedly the result of President Obama making a deal with the AMA for the AMA’s support. He was going to pass a real “Doctor Fix” in 2011 by repairing the defective sustainable growth rate formula (SGR). Nothing has been done about this by President Obama in 2011. The cumulative physician reimbursement reduction of 25% was suspended until January 2012.

Physicians face a 29.5% Medicare Pay Cut in January 2012. Four and one half percent was added to last year’s cumulative physicians reimbursement reduction. The reduction was calculated into the CBO’s cost score for President Obama’s Healthcare Reform Act.

Last week an official with the Centers for Medicare and Medicaid Services unveiled the 29.5% rate reduction for 2012 in a recent letter to the Medicare Payment Advisory Commission. This will become another distraction for physicians and the media as President Obama stalls for time.

“Leaders of the American Medical Association and other medical societies have warned that such a huge pay cut would force physicians to turn away not only seniors but also military families whose TRICARE coverage is based on Medicare rates.”

President Obama is stalling for the development and implementation of Accountable Care Organizations. His goal is to deal with big hospital systems, clinics, and not 600,000 individual physicians.

President Obama is ignoring the fact that Accountable Care Organizations (ACOs) are difficult to organize and impossible to execute efficiently and effectively. ACOs will fail for the reasons I have outlined previously.

It will end up costing the federal government more rather than less than the present system does. Hospital systems are excited because they think they will own the physicians and make a killing on Accountable Care Organizations. They think they will own physicians intellectual property. They cannot be more mistaken. They can expect a lot of fighting and grief.

At the same time, President Obama is dispiriting the physician workforce with his duplicity. He is increasing physician mistrust for government control over medicine.

President Obama’s proposed budget for fiscal 2012 calls for delaying the next cut from January 1, 2012, until January 1, 2014, freezing rates in the meantime.

Why doesn’t he fix the SGR? It is a screwy way to do business.

The healthcare system needs to be repaired. President Obama is going about it the wrong way.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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The Mainstream Media Refuses to Understand the Meaning of President Trump’s Healthcare Insurance Associations

November 5, 2018

inDisinformation and the healthcare system, Medicine: Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

The Mainstream media refuses to acknowledge the advantage of the Presidential order to allow Associations to participate in available health insurance plans.

Democrats do not want the public to understand the advantages President Trump’s healthcare insurance associations will provide to consumers. It is an important step in Repairing the Healthcare System. Obamacare was advertised only to fix the individual insurance market.

Pre- Obamacare there were 14 million people who had individual healthcare insurance plans. Most were unaffordable. Now, there are only 12 million in the individual market on Obamacare. Most are unaffordable.

Medicaid has expanded from 2 million to 10 million under Obamacare. The total on healthcare insurance provide by Obamacare is 22 million. Medicaid is a failed healthcare insurance plan. It is a socialized medical insurance plan the has failed.

The mainstream media has forgotten that Obamacare was originally sold by President Obama to cover the individual insurance market. The individual healthcare insurance market was unaffordable. Obamacare was supposed to make it affordable. It turns out that 85% of Obamacare recipients are subsidized by the federal government. President Obama has expanded socialized medicine and a single party payer (the government) with Obamacare. Even with government subsidies the insurance is unaffordable because of the high deductibles.

It is difficult for me to understand how President Obama says he always tells the truth. He said he was going to make the healthcare individual market more affordable. He has not.

I remember he also said; “If you like your doctor you can keep your doctor” and “if you like your healthcare plan you can keep your healthcare plan.” Nothing could be further from the truth.

When Obamacare was passed there were requirements in the bill that outlined coverage the healthcare insurance industry must provide for everyone who has any kind of healthcare insurance. These requirements included levels of coverage that many people did not need. This excess coverage raised the cost of healthcare insurance in both the individual healthcare insurance market and the group healthcare insurance market. Both types of insurance became unaffordable.

This, combined with the inefficiency of a bureaucratic government raised prices of healthcare insurance even further. Remember the government outsources all of the administrative services to the healthcare insurance industry.

Now, the Democrats want the government to run the entire healthcare delivery system with “Medicare for All.” The unsustainability of “Medicare for All” is estimated at 32 TRILLION dollars over the next ten years!

Associations will not solve all the problems in the healthcare system. However, they will start solving a good many of them. The Democrats are scared to death that the public will start to understand the advantages of associations. Consumers will have a choice of healthcare insurance plans. Consumers will be in a position to start controlling their healthcare dollars.

The pundits in the mainstream media seem to have no interest in understanding this dynamic. Their only interest is to despise President Trump and regurgitate the Democrats’ easy to understand talking points.

Trump’s associations will:

allow the healthcare industry to sell healthcare plans without the rigid requirements imposed on them by Obamacare.

make individual healthcare plans tax deductible. The large corporations’ group healthcare insurance plans are tax deductible. The individual healthcare insurance plans presently are not tax deductible.

allow members to buy healthcare insurance across state lines. This will create price competition that will lower premiums.

let small companies and the self-employed band together and buy health insurance outside of Obamacare’s strict rules.

offer a way for people to take advantage of the group insurance market, even if they are self-employed or work for a business too small to provide insurance.

“will “level the playing field” by giving small businesses bargaining power.” This statement was made by Labor Secretary Alexander Acosta.

Mr. Acosta said “As the cost of insurance for small businesses has been increasing, the percentage of small business offering health coverage has been dropping substantially,”. “This expansion will offer millions of Americans more affordable health care options.”

The U.S. Chamber of Commerce said the change, “will give employers the relief and flexibility they need to cover more employees at a lower cost with more choices for quality care.”

The Congressional Budget Office estimates that 4 million people, including 400,000 who otherwise would go without insurance, are expected to join association health care plans by 2023.

The introduction of associations is going to disrupt the Democrats plans to take total control of the delivery of healthcare. It is going to start to put healthcare delivery back in the hands of the consumer!

Mr. Trump said at the National Federation of Independent Business’ 75th anniversary celebration in his usual hyperbolic style;

“You’re going to save a fortune,”

I believe he is closer to being right than he is being wrong.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.  

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Hospital Mergers Don’t Work

September 11, 2018

inMedicine: Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

This article appeared in Kevin M.D. several weeks ago. The article has some valid points. However, it misses the vital reasons hospital mergers are not working.

“In 2010, there were 66 hospital mergers in this country. Since the Affordable Care Act went into effect, the rate of hospital consolidation has increased by 70 percent.

By creating incentives for physicians and health providers to coordinate under accountable care organizations (ACOs), the ACA hindered the ability of regulators to block hospital mergers while incentivizing hospital consolidation.”

The government published reason for encouraging hospital mergers was to increase hospital efficiency and decrease healthcare costs.

I have said over and over again that the real goal of Obamacare was to have total control over the healthcare system. This control could be accomplished by controlling all the providers.

Hospitals realized that physicians controlled the utilization of hospital facilities. As knowledge and technology improved more and more diagnosis and treatment could be performed on an outpatient basis.

All the hospitals had to offer was a brick and mortar facility. Hospitals tried to stop physicians, before Obamacare, from developing their own outpatient facilities. The hospitals lobbied the government to require certificate of need for advanced outpatient technology (MRI, CAT scans, Outpatient Surgical facilities, and laboratories).

It did not work.

Obamacare provided incentives for hospitals to merge and consolidate into hospital systems.

Obamacare also provided incentives for hospital systems to create Accountable Care Organizations (ACOs). I have written about ACOs destiny to fail ad nauseum.

The government’s pretext was that hospital consolidation into hospital systems would increase efficiency with resultant decreases in hospital care costs.

The real reason was to get hospitals to hire physicians. At that point they would lower reimbursement on both. Hospitals and physicians would be totally dependent on the government.

“There is a growing body of evidence that hospital mergers lead to higher prices for consumers, employers, insurance and the government.”

The result is opposite the stated goal and was totally predictable.

“It is imperative to educate patients and lawmakers as to how the consolidation of hospitals and medical practices raise costs, decrease access, eliminate jobs and, ultimately, reduce care quality as a result.”

The development of hospital systems led to the expansion of administrative personnel which in turn led to increased administrative salaries and costs. Administrative costs are not government controlled. They are part of the overinflated hospital overhead.

In some cases, the government increased hospital systems’ subsidies because of increased administrative costs.

It did not lead to greater compensation to physicians they hired. Yet the hospital system was totally dependent on staff physicians for revenue production.

Physicians tended to work hard when they owned their own practice. Now that their salary was guaranteed they tended not to work 12-hour days.

Initially, hospital systems paid physicians on the basis of physicians’ previous productivity in their private practice. Additionally, physicians were given a payout for their practice. The payout was never the real value of their practice.

Hospital systems calculated the physicians’ productivity because the hospital system hired all the full-time employees. The hospital systems’ computer systems were also used in the calculation of productivity and overhead.

Hospital systems controlled the overhead and the books. A lot of the time the calculation was inaccurate. This was the result of two fees collected from the government and the insurance companies. One was a technical fee that belonged to the hospital system. The other was a professional fee for the physician.

At times, the professional fees were not collected and the physician groups could not figure out the discrepancy.

There had been a long-standing mistrust by physicians toward hospitals prior to Obamacare. The errors in calculations resulted in greater mistrust by physicians toward hospitals.

If a physician was not producing according to the hospital system’s calculation the physician, at the end of a usual two-year contract, was let go. This created more mistrust and suspicion among physicians toward hospital systems.

It has also caused physicians who anticipated this stranglehold by hospital systems to become concierge physicians or open outpatient clinics of their own.

This has caused hospital systems to provide concierge physicians of their own as well as hospital outpatient ambulatory surgical care clinics. The problem is that the free-standing physician owned ambulatory surgical care clinics (ASC) are more efficient and cheaper than the inpatient hospital care and the hospital’s own outpatient ambulatory surgical care clinics (HOPD). Some privately own ASC are cheaper than the increasing deductibles patients with private insurance have to pay using their insurance.

Below are some examples of Ambulatory Care Surgical Center fees as opposed to Hospital Owned Outpatient Surgical fees.

“ASC – $1250 ($500 out of pocket)

HOPD: $4250 ($1000 out of pocket)

Echocardiogram:

ASC $500 ($200 out of pocket)

HOPD: $4250 ($1250 out of pocket)

Arthroscopy of Knee:

ASC – $3600 ($1070 out of pocket)

HOPD: $13,000 ($3900 out of pocket)

Hernia Repair:

ASC – $2500 ($750 out of pocket)

HOPD: $19,000 ($5700 out of pocket)”

There has been a dramatic increase in hospitals gobbling up independent providers and becoming powerful regional monopolies. These monopolies raise prices not decrease prices.

“According to a 2012 study by the Robert Wood Johnson Foundation, “the magnitude of price increases when hospitals merge in concentrated markets is typically quite large, most exceeding 20 percent.”

Forbes’ Avvik Roy of Forbes said, a presentation in 2012.

“You have to get at the errors in public policies which drive the hospitals to merge.” He concluded that government must do more to fight consolidation among hospitals.”

The underlying theme is that President Obama wanted Obamacare to fail so it can be replaced by a single party payer system that has been pushed by progressives since 1935. Obamacare is moribund despite claims by Democrats. They refuse to face the fact that socialism does not work even thought it is a feel-good concept.

“A recent paper authored by Northwestern’s Leemore Dafny, Columbia’s Kate Ho, and Harvard’s Robin Lee provides some definitive proof that when hospitals consolidate, prices increase substantially. The effect is made worse directly in proportion to proximity of the merging hospitals. “If you are doing it because you think in the long run it will serve your community well, you should think twice,” Dafny said.”

Hospital systems are consolidating because they think it is in their vested interests to consolidate. They are falling right into President Obama’s trap. Hospital systems do not control productivity. Physicians control productivity.

A study published by the National Bureau of Economic Research, conducted by Zack Cooper of Yale University, Stuart Craig of the University of Pennsylvania, Martin Gaynor of Carnegie Mellon and John Van Reenen of the London School of Economics, sheds light on the real cost of reduced competition among hospitals: hospital prices are 15.3 % higher when a hospital had no competition compared in markets with four or more hospitals, amounting to a cost difference of up to $2000 per admission. Hospital prices are 6.4% higher in markets with two hospitals and those with three are 4.8 % more expensive when compared to markets with four hospitals.”

The American Hospital Association has been aggressive in criticizing those reports. It has funded a couple of critical reports defending mergers and consolidations. The American Hospital Association doesn’t understand the progressives’ trap either.

It is backfiring already as hospital systems are saying they are losing money. The government is cutting reimbursement, the insurance companies are raising insurance rates and increased deductibles are unaffordable. Consumers are experiencing a decreased access to care.

None of the policy makers are focused on the right problems because they want a single party payer system in order to gain total control over the healthcare system. Progressive have no interests in the cost of care, the need to raise taxes or the delivery of efficient care.

America is going to experience an economic disaster as it has been experienced in Canada, England and many other countries in the world.

Consumers are continuing to take it on the chin in other countries because 80% are not sick at any one time. Consumers in other countries feel secure with the guaranteed coverage even if it increases their taxes and decreases access to care.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.  

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Deals With The Devil, How To Destroy The Healthcare System

July 1, 2016

inDisinformation and the healthcare system, Medicine: Healthcare System

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Stanley Feld M.D., FACP, MACE

President Obama’s goal is to destroy the healthcare system. His deals and regulations lead the healthcare system on the path of destruction.

The strategy is creating so much pain to all the stakeholders that the healthcare system will implode.

At that time public opinion will demand the government take over the healthcare system.

What makes the government a better manager than the free market? The key is to have a system that aligns all the stakeholders’ incentives.

The government is not doing a good job keeping Medicare and Medicaid solvent and providing access to care. It is providing horrible healthcare services to our veterans in the VA system.

The government has conditioned progressive Democrats to continuously declare; “ I don’t mind paying a little more to make the system better.”

The destruction of the healthcare system is a slow process. The Obama administration is proceeding step by step in a very organized fashion.

When it is replaced by a single party payer system controlled by non-elected bureaucrats, consumers will have no control over their free choices.

Hopefully, the U.S. and its citizens are too diverse and too accustomed to freedom of choice and freedom of expression to let this happen.

Hopefully, consumers realize that central government control and socialized medicine doesn’t work. The concept of central control and socialism has failed too many times to count.

Our founding fathers certainly understood this concept.

Hopefully, consumer will realize that Adam Smith was right. The free market is self-correcting. It is only self-correcting with everyone plays by the rules and the government enforces the rules.

A government run by the political establishment that is controlled by vested interests does not work. It will eventually generate mistrust among all parties.

The mistrust of government is building to a tipping point.

Two recent examples of approaching the tipping point are the new ACO rules and the deception involved in the Obamacare reinsurance scandal.

Most of the 242 ACOs out of 3000 potential ACOs have three-year contracts. Many ACOs are not about to reach their Shared Savings goals for the reason I have mentioned.

I don’t know if these ACOs realized in their quest to become more efficient they would eventually lose money. Next year’s sharing goal will be this year’s modified to be the new profit sharing benchmark.

It might be impossible to deliver care more efficiently by the new benchmark.

When the ACO automatically progress to track 2 and fall short of the most recent efficient cost sharing savings benchmark these ACOs will have to repay the government for the losses.

The second important point that is propelling the healthcare system to the tipping point is that the new ACO rules do not take into consideration the healthcare systems that signed up to become ACOs initially.

Any savings the new rules offer in order to attract more healthcare systems to sign up for the ACO program have not been offered to the original signees until 2019. The original 242 have to wait until 2019 to be eligible for the extra bonuses given to new signees.

This might get the original hospital systems to quit their ACO participation completely. If the old ACOs quit the program, it would create more dysfunction in the healthcare system.

It would be just the thing the Obama administration wants to happen. The more dysfunction, the closer America is to a single party payer system.

An equally frustrating example was the money promised to the healthcare insurance industry to guarantee it a profit if it participates in the federal and state health insurance exchange program.

I have described President Obama’s reinsurance program in detail previously.

I was opposed to the reinsurance program. The Obama administration is totally dependent on the healthcare insurance industry to perform healthcare administrative services.

I am not sure either house of congress was aware of or appreciated the implications of the reinsurance program until it because obvious three years after Obamacare was passed.

“The healthcare insurance industry knowing full well that they couldn’t make legitimate profits selling coverage through Obamacare’s exchanges, relied on Democrat guarantees that their losses would be covered by the taxpayers.

But a funny thing happened on the way to easy profits. Congress refused to appropriate the funds.”

When congress realized what was going on it capped the funds appropriated to the reinsurance program. President Obama is still trying to find the fund to pay the healthcare insurance industry.

President Obama paid only 12.6% of the 2.87 billion dollars the industry claimed the government owed it.

Now the healthcare insurance companies that have not been paid are starting to sue the Obama administration.

The companies included are Health Republic Insurance Company. It has filed a class action lawsuit against the government for $5 billion, Highmark Health has sued for $223 million, Moda Healthfiled filed a $180 million suit. Blue Cross & Blue Shield of North Carolina has sued for $129 million. Land of Lincoln Health has filed a $70 million suit.

“It isn’t clear that these lawsuits aren’t going anywhere. “

“The defendant in the class action suit, for example, is “The United States of America” and the plaintiffs ask the court to strike down provisions of two congressional budget resolutions that require the risk corridor program to be budget neutral.”

Congress is the only branch of government that has the power of the purse. It is not the administration or the court.

“As U.S. District Judge Rosemary Collyer put it in a ruling against the Obama administration in a similar case involving unauthorized HHS spending, “Congress is the only source for such an appropriation … See U.S. Constitution, Art. I, § 9, cl. 7”

“(‘No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.…’).” And a budget resolution becomes law once it has been signed by the President. That’s why the 2015 spending bill is titled, “Public Law 113–235.” Yet the Health Republic class action suit holds that losses somehow render the law invalid:”

Qualified Health Plans have incurred even greater compensable losses in 2015 that CMS and HHS cannot pay as a result of the 2016 Spending Bill.

“Neither the Obama administration nor the congressional Democrats with whom they made their cynical deal can save them. In the end, the Devil will have his due.”

Another way to look at the entire debacle of Obamacare is this is exactly the way President Obama and his administration wanted it to turn out. It will lead the way to a single party payer system. The single party payer system will be another disaster.

Was Obamacare designed and implemented with such incredible ineptitude that Co-Ops like Health Republic and Lincoln Health were doomed from the onset?

Were Texas and the thirty other states that did not join smart enough to know the Co-Ops and state exchanges were destined to fail and go bankrupt?

Was it done purposefully by the Obama administration in order to create chaos in the healthcare system?

Why would anyone believe that a central government that runs and controls the healthcare system be any different than the VA system and the insolvent Medicare and Medicaid System?

Who is responsible for the debacle? The traditional mainstream media such as the New York Times and the Washington Post will blame it on a Republican congress that is refusing to change the law to pay President Obama’s illegal debts.

Who do you think will pay for the upcoming debacle?

You guessed it.

The taxpayers will pay for President Obama and his administration’s obvious fiscal irresponsibility.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Thought You Could Win?

February 16, 2016

inMedicine: Healthcare System, Stakeholder Abuse of the Healthcare System, Stakeholder Mistrust

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Stanley Feld M.D.,FACP,MACE

There are lots of healthcare systems that think they can win by supporting Obamacare.

It has always been clear to me that hospital systems cannot win by participating in the present rules of the Affordable Care Act.

Major hospital systems are finding that fact out slowly but surely.

“HealthSpan is the insurance arm of Catholic hospital system (Mercy Health).”

The Catholic Healthcare System is one of the top ten rapidly growing hospital systems with a network of 387 acute care hospitals.

The governance of the Catholic Healthcare System thought it could profit from Obamacare, its federal Health Insurance Exchanges and the formation of an Accountable Care Organization.

Mercy Health believed it could profit by setting up an insurance arm for its network and selling insurance in the Obamacare Health Insurance Exchanges.

In order to form an ACO it bought an existing integrated physicians group.

Mercy Health, a 23-hospital system, formerly known as Catholic Health Partners, bought Kaiser’s Ohio business in 2013.

Mercy Health tried hard to make the strategy work for its financially.

I have stated previously that it is very difficult to set up ACOs. The business model is destined to fail because of faulty premises and inadequate cultural and financial incentives.

Patients should be responsible for their healthcare dollars. Healthcare insurance companies should be responsible for financial risk and financial reward by providing the insurance coverage.

“HealthSpan, the insurance arm of Catholic Healthcare System Mercy Health, is getting rid of its medical group (Kaiser) and halting sales of Affordable Care Act policies just two years after acquiring Kaiser Permanente’s Ohio subsidiary.”

The move represents a failure of one health system trying to replicate the much-heralded Kaiser model of healthcare which integrates the payment and delivery sides.

HealthSpan has been a failure financially. Mercy Health’s managers realized that the two new programs became a financial disaster for the entire healthcare system.

The reality is in contrast to the optimistic statement made by CEO Michael Connelly two years ago. His announcement was not dissimilar for the many other statements by hospital systems that are on the road to failure. It almost sounds like they had the same consultant.

In announcing its agreement with Kaiser Permanente, Catholic Health Partners president and CEO Michael D. Connelly said in the joint release, “This opportunity interests us because it preserves a values-based, patient-centered care model that we can expand throughout the region. Additionally, it enables us to focus on enhancing quality, improving access to health care, and effectively managing costs.”

No one ever asks practicing physicians what system will work to Repairing the Healthcare System.

No one every talks about the patients’ responsibility in preventing chronic diseases or once a chronic disease occurs, what is their responsibility in managing the disease.

Until a healthcare system is built around patients’ responsibility along with ways to prevent insurance company, hospital system and physician abuse, a healthcare system will not be built that is cost efficient with increased quality of care.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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