The Uninsured

Many Specialists Won’t See Kids With Medicaid Bisgaier J, Rhodes KV. N Engl J Med 2011;364:

Financial Suffering Among the INSURED

High Deductible Insurance: Except for the Healthy and Wealthy, It’s Unwise

Rising Economic Inequality

Persistent Racial Inequalities

Racial Disparity in Access to Kidney Transplants

Rationing Amidst a Surplus of Care

Unnecessary Procedures

Fewer CABGs, But More Hospitals are Competing to Perform this Lucrative Surgery Lucas F L et al. Health Aff 2011;30:

Variation in Medicare Spending: Some Regions Already Spend at Canadian Level

Half of Americans Live Where Population Is Too Low for Competition Source: NEJM 1993;328:148 A town’s only hospital will not compete with itself

ACOs: A Rerun of the HMO Experience?

Why the ACO/HMO Concept Resonates Lots of redundant high tech facilities and useless, even harmful interventions Neglect of primary care, public health, prevention, mental health Lack of teamwork Quality problems that need system solutions Inadequate public accountability

HMO-ACO Logic FFS is the problem; capitation (shifting insurance risk) the solution. But... small clinics and hospitals can’t bear risk, so consolidation is necessary. Shifting risk creates incentive to deny care, so report cards and risk adjustment are necessary.

Profit-Driven ACO’s: Medicare HMOs Provide a Cautionary Tale

Despite Medicare’s Lower Overhead, Enrollment of Medicare Patients in Private Plans Has Grown

Private Medicare Plans Have Prospered by Cherry Picking

Up-coding: the Achilles Heel of Risk Adjustment, and hence ACO’s (and P4P) By maximizing the number of coded diagnoses and comorbidities, hospitals, doctors and HMOs/ACOs can make their outcomes look better, and (when payment is risk adjusted) make more $$

Upcoding: The Science of Making Patients Look Sicker on Paper No Extra Severity/Payment Acute kidney insufficiency Mg. = 1.6 Delirium Anemia 2 0 GI bleed Malnourished COPD exacerbation Polysubstance abuse Equivalent but Extra Credit Acute renal failure Hypo-magnesemia Encephalopathy Anemia 2 0 acute blood loss Moderately malnourished Acute respiratory decompensation Continuing polysubstance abuse

Medicare’s Attempt to Improve Risk- Adjustment of HMO Payment Pre HMOs were “cherry- picking” when payment adjusted only for age, sex, location, employment status, disability, institutionalization, Medicaid eligibility 2004 – Risk adjustment formula added 70 diagnoses

Risk Adjustment Increased Medicare HMO Over-Payments $30 billion Wasted Annually “We show that... risk-adjustment.... can actually increase differential payments relative to pre-risk- adjustment levels and thus... raise the total cost to the government.... The differential payments... totaled $30 billion in 2006, or nearly 8 percent of total Medicare spending.... recalibration [of the risk adjustment formula] will likely exacerbate mispricing.” Source: NBER #16977

Failure of Medicare HMO Risk Adjustment: Implications for ACOs More risk adjustment leads to MORE, not less cherry picking – ie. Selecting healthier patients within each risk stratum Intensive coding makes patients appear sicker on paper, ups risk-adjusted capitation fee and factitiously raises quality scores ACOs that fail to cherry pick or intensify coding will get low payments, and factitiously poor quality scores Implications: No net savings, probable increased costs Resources transferred from sick to healthy Biggest cheaters are biggest winners, undermines ethical behavior ACOs that embrace problem patients driven from the market

Profit-Driven Upcoding Makes Accurate Risk Adjustment Impossible: H igh Cost Providers Inflate Both Reimbursement and Quality Scores by Making Patients Look Sicker on Paper

Predicting the Impact of ACOs Track record of HMOs Results of Medicare’s Physician Group Practice Demonstration, Evidence on tools ACOs likely to use:  prevention and disease management  “care coordination”  report cards and P4P schemes  electronic medical records

Prospect of ACOs is Already Causing 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....If ACOs 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.’” New York Times, November 21, 2010, A1.

Medicare’s PGP/ACO Demo. Project : Gaming, But No Savings “T he model for the ACO program... has been tested in the PGP Demonstration Project... diagnosis coding changes the PGP sites initiated... produced apparent savings that resulted in shared savings payments to some of the demonstration sites, but not actually fewer dollars spent” Berenson RA. Am J. Managed Care, 2010; 16:

ACO Cost Cutting Armamentarium Prevention Disease management “Care Coordination” (consolidation, gate- keeping, utilization review) Electronic medical records Report cards and P-4-P

Prevention Saves Lives, But Not Money “Although some preventive services do save money, the vast majority reviewed in the health economics literature do not.” Cohen JT et al., New England Journal of Medicine 2008;358: “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.” Gruber J,quoted in “Free lunch on health? Think again,” NY Times, August 8, 2007: C 2.

Medical Homes and Enhanced Primary Care Don’t Require ACOs “Medical Homes” that integrate more nurses, social workers etc. into primary care and cut physicians’ panel size may improve care and reduce ED and inpatient utilization, possibly enough to offset the additional personnel costs But this intervention does not require recycling the HMO experiment.

Assumptions Implicit in P-4-P 1.Performance can be accurately ascertained 2.Individual variation is caused by variation in motivation 3.Financial incentives will add to intrinsic motivation 4.Current payment system is too simple 5.Hospitals/MDs delivering poor quality care should get fewer resources

Assumptions Implicit in P-4-P 1.Performance can be accurately ascertained - i.e. that the variance attributable to an individual doctor can be clearly identified (as opposed to her patients and the circumstances surrounding the work), and will cannot be gamed.

Assumptions Implicit in P-4-P 2.Individual variation is caused by variation in motivation - i.e. that poor performance is a matter of intention, and that change in motivation is therefore likely to improve performance. If poor performance is not “willed” then incentives can’t change it.

Assumptions Implicit in P-4-P 3.Financial incentives will add to intrinsic motivation. If financial incentives undermine intrinsic motivation they may actually worsen performance.

Pay for Performance “I do not think its true that the way to get better doctoring and better nursing is to put money on the table in front of doctors and nurses. I think that's a fundamental misunderstanding of human motivation. I think people respond to joy and work and love and achievement and learning and appreciation and gratitude - and a sense of a job well done. I think that it feels good to be a doctor and better to be a better doctor. When we begin to attach dollar amounts to throughputs and to individual pay we are playing with fire. The first and most important effect of that may be to begin to dissociate people from their work.” Don Berwick, M.D, Source: Health Affairs 1/12/2005

P-4-P Didn’t Improve Quality Scores 5 Year Results of the CMS/Premier Hospitals Project Source: Werner R M et al. Health Aff 2011;30: Baseline

P4P Among UK Primary Care Doctors Multiple quality parameters were documented using a computerized medical record and summed in a point system Virtually all practices achieved most of the quality points within a year of implementation Generated a much welcomed 25% increase in GP incomes

P4P – Scores on Whatever You Pay for Improves, But... “The [British P4P] scheme accelerated improvements in quality for 2 of 3 chronic conditions in the short term. However, once targets were reached, the improvement... slowed, and the quality of care declined for 2 conditions that had not been linked to incentives.” Source: NEJM 7/23/2009:368

High P-4-P Scores, But No Improvement in Hypertension Outcomes in UK Source: Serumaga. BMJ 2011;342:d108

“We found no evidence that financial incentives can improve patient outcomes.” Flodgren et al. “An overview of reviews evaluating the effectiveness of financial incentives in changing healthcare professional behaviors and patient outcomes. Cochrane Collaboration, July 6, 2011

A $75 Million RCT of P-4-P in New York City Schools 200 high-needs New York City schools employing more than 20,000 teachers. Incentives of up to $3,000 per teacher Based on students’ test scores, graduation and attendance rates, and learning environment surveys. Source: Fryer RG. Teacher incentives and student achievement: evidence from New York City public schools. NBER Working Paper No Cambridge, MA: National Bureau of Economic Research, March, 2011.

An RCT of P-4-P for Math Teachers in Nashville Schools 296 middle school math teachers randomized to bonuses/no bonuses. Study ran for 3 years. Incentives of up to $15,000 per teacher per year Based on students’ test scores “Overall we find no effect of teacher incentives on student achievement.” Source: Springer et al. Teacher Pay for Performance: Experimental Evidence from the Project on Incentives in Teaching. Rand Corp. 9/21/2010

ACOs and HMOs: Faith-Based Solutions Capitation as magic bullet Consolidation among providers cuts costs Prevention, care management & EMR/ computers save money P-4-P encourages global quality Risk adjustment can overcome gaming (upcoding of diagnoses)

Investor-Owned Care: Inflated Costs, Inferior Quality

For-Profit Hospitals’ Death Rates are 2% Higher Source: CMAJ 2002;166:1399

For-Profit Hospitals Cost 19% More Source: CMAJ 2004;170:1817

For-Profit Dialysis Clinics’ Death Rates are 9% Higher Source: JAMA 2002;288:2449

Profit Undermines Science: The Case of Myriad Genetics and BRCA Myriad’s patents on BRCA genes (and original test) expire in 2018 Myriad BRCA test = $3,340 Other, cheaper testing methods now possible – could undercut Myriad in 2018 In response, Myriad stopped sharing data on cancer risk of specific mutations Source: New York Times 8/25/11:B1

Drug Companies’ Cost Structure

“In April [2010], AstraZeneca became the fourth major drug company in three years to settle a government investigation with a hefty payment -- in its case, $520 million for what federal officials described as an array of illegal promotions of antipsychotics for children, the elderly, veterans and prisoners. Still, the payment amounted to just 2.4 percent of the $21.6 billion AstraZeneca made on Seroquel sales from 1997 to 2009.” New York Times – 10/3/10 Drug Firms’ Fraud: Pay the Ticket and Keep on Speeding

Mandate Model Reform: Keeping Private Insurers In Charge

“Mandate” Model for Reform Proposed by Richard Nixon in 1971 to block Edward Kennedy’s NHI proposal

“Mandate” Model for Reform Government uses its coercive power to make people buy private insurance.

“Mandate” Model for Reform 1.Expanded Medicaid-like program  Free for poor  Subsidies for low income  Buy-in without subsidy for others 2.Individual and Employer Mandates 3.Managed Care / Care Management

“Mandate” Model - Problems Absent cost controls, expanded coverage unaffordable ACOs/care management, computers, prevention not shown to cut costs Adds administrative complexity and cost; retains, even strengthens private insurers Impeccable political logic, economic nonsense

Massachusetts’ Model Reform: Massive Federal Subsidies, Skimpy Coverage, Persistent Access Problems

Massachusetts Health Reform New Coverage < 150% Poverty - Medicaid HMO < 150% Poverty - Medicaid HMO 150% - 300% poverty - Partial subsidy 150% - 300% poverty - Partial subsidy > 300% poverty – Buy Your Own > 300% poverty – Buy Your Own

Massachusetts: Required Coverage (Income > 300% of Poverty) Premium: $5,600 Annually (56 year old, individual coverage) Premium: $5,600 Annually (56 year old, individual coverage) $2000 deductible $2000 deductible 20% co-insurance AFTER deductible is reached 20% co-insurance AFTER deductible is reached

Crimes and Punishments in Massachusetts The Crime The Fine Violation of Child Labor Laws $50 Employers Failing to Partially Subsidize a Poor Health Plan for Workers $295 Illegal Sale of Firearms, First Offense $500 max. Driving Under the Influence, First Offense $500 min. Domestic Assault $1000 max. Cruelty to or Malicious Killing of Animals $1000 max. Communication of a Terrorist Threat $1000 min. Being Uninsured In Massachusetts $1212 $1212

Public Money, Private Control

U.S. Health Costs Rising More Steeply,

The U.S. Trails Other Nations

Canada’s National Health Insurance Program

Quality of Care Slightly Better in Canada Than U.S. A Meta-Analysis of Patients Treated for Same Illnesses (U.S. Studies Included Mostly Insured Patients) Source: Guyatt et al, Open Medicine, April 19, 2007

A National Health Program for the U.S.

Phony vs. Real Reform Phony Choice of HMO/insurer Coverage = Copays, exclusions etc. Security = Lose it if you can’t work or can’t pay Savings = Less care Real Choice of doctor and hospital Coverage = First $, Comprehensive Security = For everyone, forever Savings >$400 bil on bureaucracy

Public Opinion Favors Single Payer National Health Insurance