Here's a point of view guaranteed to upset those who religiously believe (nothwithstanding structural flaws) that the move to accountable care organizations with an accompanying shift of risk to providers is the way to transform the U.S. healthcare system.
Today, the federal government essentially admitted that the move is a failure.
Let's look at the underlying principle: If we give ACOs a financial incentive to beat an annual patient care budget, they will dramatically shift the way they deliver care to garner the surplus and avoid the penalties. By pairing risk and reward, we will influence clinical decision-making.
But what if we only offer rewards and take away the risks? What does that say about the principle?
That's exactly what is now planned. From Jordan Rau at Kaiser Health News:
Health care systems experimenting with a new way of being paid by Medicare would have three extra years before they could be punished for poor performance, the federal government proposed Monday.
The proposal is one of dozens of changes that the Centers for Medicare & Medicaid Services wants to make to rules governing accountable care organizations. ACOs are affiliations of doctors, hospitals and other providers that jointly care for Medicare patients with the goal of pocketing a portion of what they save the government. Those that spend above Medicare estimates stand to lose money.
In the first year of the program, 118 ACOs saved Medicare $705 million with about half earning bonuses, government records show. Another 102 ACOs spent more than Medicare's benchmark, but only one had to repay Medicare because most ACOs have a three-year grace period when they can earn bonuses but are excused from penalties.
The new rule would give ACOs, both new and existing ones, an extra three years before they faced penalties, for a total of six years. Sean Cavanaugh, Medicare's director, said the change was one of many prompted by concerns raised by ACOs. "The notion that 36 months later you're going to be at downside financial risk is pretty intimidating," he said in an interview.
The rule comes because many organizations have withdrawn from the ACO scheme or threaten to do so. They have concluded that the risks just aren't worth the potential gain. So now, CMS tries to solve that problem by essentially removing the risks.
This kind of reversal represents a kind of muddied thinking that is an indication of ideological public policy formulation.
There are so many other things CMS could do to lower health care costs and remove incentives for overuse of unproven or inappropriate technologies. I wish it would get to work on those rather than persistently trying to hammer a square block through a round hole.
Paul Levy is the former President and CEO of Beth Israel Deaconess Medical Center in Boston and a patient-driven care advocate. He blogs at Not Running a Hospital.