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The Massachusetts Experiment Analyzed: Provider Payments Based On Their Negotiating Strength, Not Quality Of Care

Massachusetts Attorney General Martha Coakley released her office’s second annual report, An Examination of Health Care Cost Trends and Drivers (PDF; see also press release), which contains a wealth of critical data analysis — and also highlights how little we know about certain things — providing some important context for the discussion of the proposed Part III of Massachusetts health reform, a bill filed by Governor Patrick which would create all-payor ACOs and a system of global payments.

At this late date, few would argue against a move a way from fee-for-service reimbursement for health care, or adding quality metrics to the mix, and tying financial rewards to providers to their performance measured against these metrics.  (Consider the Massachusetts Blue Cross Blue Shield ACQ (alternative quality contract) experience.)  The AG’s report, however, highlights the wide disparities in payments to providers based on negotiating strength, rather than quality or cost of care (as noted in last year’s AG report; check out the 2009 special commission report, too). Read more »

*This blog post was originally published at HealthBlawg :: David Harlow's Health Care Law Blog*

Accountable Care Organizations: An Experiment With A Few Good Ideas?

400px-WLA_metmuseum_1495_Unicorn_captivityThere has been a significant outcry against the proposed ACO regs: everything’s wrong and nothing’s right about them, or so some would have us believe.  (The comment period is still open, and CMS is still soliciting input; much of the outcry is a form of posturing and negotiation … not that there’s anything wrong with that.)

Today’s “nattering nabobs of negativism” focus on: the estimated price tag for complying with the regulatory requirements (IT and other infrastructure incuded), the slim chance of success by ACOs in righting the wrongs of decades of bloat in the health care system, the premature pledging of allegiance to an idea only partly proven through the PGP demo, the likelihood of failure due to the whole endeavor’s being tied to FFS reimbursement, on the one hand, and due to exposure of ACOs to downside risk, on the other, the unreasonable reliance on dozens and dozens of quality measures . . . and the list goes on.  For further detail, see, e.g., David Dranove’s recent post decrying unproven theories baked into the ACO program (with a link to info on the PGP demo’s results, and differing interpretations of those results; check out the lively discussion in the comments to Dranove’s post on The Health Care Blog), Jeff Goldsmith’s opposition to ACOs as conceived in the ACA (and alternative proposal discussed in the linked post), and Mark Browne’s search for a few good quality measures. (This has been a recurring theme for me as well; I would love to find six or eight meta-measures that predict all others; Mark links to the AHA’s comments on the ACO rule, which are worth a read). Read more »

*This blog post was originally published at HealthBlawg :: David Harlow's Health Care Law Blog*

Accountable Care Organizations: Global Payments To Replace Fee For Service?

Federal health reform and Massachusetts health reform may find a point of convergence in the development of ACOs (accountable care organizations) and the payment mechanisms that will make them tick (or hum, or do whatever it is that we want them to do).  The Federales will be holding a listening session next week on the issues raised by ACOs across the HHS and FTC landscapes.  Meanwhile, back in Boston, the inner circle of health care regulators and the regulated community are busy hashing out an approach to global payments that could be ready for prime time by January 1.

The need for payment reform in Massachusetts has been well-documented — see the health care market report from the AG’s office, as well as an earlier report on the imperative to keep insurance risk on insurers and place performance, or quality, risk on providers.  Now, this may be easier said than done, but we’ve got some of the best and brightest working away at the issue.

Unfortunately, the Massachusetts legislature blinked, and has not mandated the approach across the board — at least not yet.  Initially, the global, or bundled, payment for episodes of health care approach is being tentatively applied to just a couple of types of episodes of care. (See Section 64 of Chapter 288 of the Acts of 2010 – the small group market reform legislation enacted this summer.) Read more »

*This blog post was originally published at HealthBlawg :: David Harlow's Health Care Law Blog*

Where Obama Is Right On Health Care Reform

Cost is the enemy here. via the WSJ blog

“If we do not control these costs, we will not be able to control our deficit. If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket.

…if somebody told you that there is a plan out there that is guaranteed to double your health care costs over the next 10 years, that’s guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that.

Well, that’s status quo. That’s what we have right now.”

Proponents and supporters can argue forever about whether this is the fault of the free market or the fault of too much or too little government. I happen to believe that what we have today is nothing more than an expected result of the government regulations put in place. No matter how you try and structure regulation, capitalism will exploit it.
Every insurance I am involved with has a beginning and an end. If your house burns down, you get a defined compensation. If your spouse dies, their life insurance pays a defined compensation. If drive your car into a garbage can and dent the hood, your insurance pays a a beginning and an end.
With health care insurance, we haven’t defined an end point. With fee for service, the costs are unlimited, and therefore our health care inflation is unlimited.
With bundled care, the costs are limited, and there fore our health care inflation is limited as well. Some folks believe that you can’t estimate how much it will cost to take care of a patient with diabetes with complications, coronary disease and six other chronic medical diseases. I think we can. And I think we can do it much cheaper than we are doing it today.
The current model is not sustainable. In any third party model, whether it is the government through taxes, or private insurance through premiums, no one is accountable to cost. FREE=MORE makes providers do more. FREE=MORE makes patients do more. I have come to the conclusion you can’t have both fee for service and third party insurance AND not double our expenses in the next 10 years. I personally do not want to spend $25,000 on myself and Mrs Happy’s health insurance in ten years.
Obama is right. This is exactly where we are heading. Remember that $25,000 in health care insurance is $25,000 less in take home pay being withheld by your employer. As long as someone else is paying the bills, FREE=MORE will prevail and we are all screwed.
Either abandon health insurance all together, or abandon fee for service. We can’t have both and survive.

*This blog post was originally published at A Happy Hospitalist*

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