Single payer supporters say new payment systems will mean new limits on care

The Centers for Medicare and Medicaid Services and the Federal Trade Commission are just wrapping up today’s hearing on the anti-trust implications of accountable care organizations, hypothetical networks of doctors, hospitals and other providers that would team up to delivers comprehensive care. Go to  #ACO on Twitter for a stream of updates or to the CMS page. 

Here’ s how Medicare defines ACOs :

Groups of providers and suppliers who voluntarily meet certain statutory criteria, including quality measurements, can be recognized as accountable care organizations (ACOs). This designation allows them to share in the cost savings that they achieve for the Medicare program. Beginning January 1, 2012, these ACOs can qualify for bonus payments if they achieve a threshold savings amount.

 The hearings come as the Patrick Administration is taking another run at pushing the concept of global payments, which need ACOs to work.  The Globe explains:

The system, called global payments, would require doctors, hospitals, and other providers to band together into groups called accountable care organizations that would split the payments and better coordinate patient care, thereby improving quality.

These provider groups generally would get a flat per-patient fee, along with incentives for high-quality care, hopefully eliminating the incentive for unnecessary tests and procedures, and encouraging greater focus on preventing serious health problems from developing in the first place.

Now comes a long email from the single-payer supporters at Mass Care, who say the system won’t work. They argue that it is the rising cost of services – not overtreatment or volume of services — that is driving up costs. The group argues that ACOs and global payments represent nothing but a throw-back to capitation – the HMO system of paying per enrollee instead of per service.

And, we all know how well that went over.

Physicians for a National Health Plan, which also supports single payer, has a few comments to offer about ACOs today as well. 

Since it is not posted on line, here is a bit from the Mass Care email:

Brace yourselves, because Massachusetts is poised to follow the path of managed competition, chronic disease management, and a dozen other ideas that didn’t work by implementing a cost control policy that is being called “Accountable Care Organizations,” or sometimes “Global Payment Reform” or “Global Capitation.” Unfortunately, there is no evidence that it will control costs, there is a real risk that it will be dangerous for patients, and it will without question undermine the continuity of care for all of us in a dramatic way.

 The legislature actually passed a bill back in 2008 that it hailed as “comprehensive cost control” legislation. Beyond kicking up a controversy over pharmaceutical gifts to physicians, the law contained almost no actual cost controls and a lot of new spending. But what it did contain was funding for a number of new studies. In a typically dysfunctional , Beacon Hill way, the first two of these studies were commissions tasked with deciding what the state would do to control costs; the last two of these studies were responsible for figuring out what was actually driving up health care costs in the first place.

 So the task force on Payment Reform issued a report declaring (without actually bother to prove) that our fee-for-service payment system, by which we reimburse physicians per visit or per procedure, was driving up costs by giving them an incentive to overtreat patients. This task force recommended we instead move to a system of “global capitation” whereby we pay physicians and hospitals a fixed amount for treating a patient for a whole year, removing this incentive. This report – which is 100% wrong in its assumption that fee-for-service is a significant cause of rising health care costs – is the basis for the expected next round of health reform.


Next came the two very good studies looking at the causes of rising costs in Massachusetts: one by the Division of Health Care Finance and Policy, the other by the Attorney General’s office. They both came to the same conclusion: our costs were not rising because doctors or hospitals were overtreating patients, or because the quantity of care was rising from year to year; our costs were going up because the price of providing the same exact procedure, or the same exact visit, were going up from year to year. In fact, the AG’s report found that providers being paid fee-for-service in the state were no pricier than those being paid under a per-patient arrangement; this finding was accompanied by one of the most politically tactful footnotes you will ever encounter, encouraging those considering payment reform to have their heads examined.


When you go to a doctor, you expect evidence-based medicine, but don’t hold your breath for evidence-based health policy. The rush is now on to implement “Accountable Care Organizations,” which will prevent our health providers from overtreating patients – a problem that all of the state’s own research, in addition to virtually all national research and all international research tells us is not the actual problem. A very balanced 2009 review of the evidence on Accountable Care Organizations by the Brookings Institution concludes that there is little evidence they will have a large impact on costs, but the jury is still out and more experiments will be necessary to know more.


What we do know is that the version of ACOs being pushed in Massachusetts essentially revives two policies of the managed care revolution in the 1990s that were largely abandoned after massive patient and provider push-back: capitation and limited networks.


“Capitation” is the practice of paying providers a fixed amount to care for a patient over the course of the year: that amount will not go up or down, no matter how healthy or sick the patient becomes. What this means is that instead of insurance companies bearing the risk for a patient, providers bear the risk. If a patient is healthier than expected and uses little care, the provider will make money off of that patient; if the patient is sicker than expected or suffers an unexpected accident, the provider will lose money. The obvious problem is that, just as insurance companies have an incentive to avoid the sick when they bear the risk for patients, moving to a capitation system means that providers now have an incentive to avoid the sick. This led to a serious backlash when managed care companies first introduced capitation in the 1990s, and it is now an uncommon practice in Massachusetts.


Limited networks were also a hallmark of early managed care, forcing patients to receive care only from a limited number of hospitals and doctors. While this sounds like a fine way to reduce costs, it is fine only until you change jobs and have to leave the physicians you know and trust because they are out of network. Limited networks are an intentional barrier to access – they do not exist in countries with universal health care (that, is, all of the rest of them in the developed world) – and they undermine continuity of care, which is considered incredibly important for quality of care in the medical world. Limited networks have also become unusual in Massachusetts, but they would be imposed on virtually everyone if the proposal for accountable care organizations were implemented.

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