The Concentration of Naiveté

The Population Health Blog's car garage is not the size of a football field. 

So, when the PHB spouse parks our car inside, she tends to err on the side of safety.  She pulls far forward so that the rear bumper doesn't get "dinged" by automatic closure of the garage door.  That obliges the Population Health Blog to inconveniently squeeze past and climb over the front bumper when it wants to use the PHBmobile.

The win-win fix to our travails arrived last Christmas when the perspicacious PHB gave the spouse a positionally adjustable ceiling-mounted laser. It blinks a ruby red light through the windshield onto the dashboard when the car is in optimum position.  Pull too far forward, and the beam will be directed on the floor or a front seat. 

Since it's been installed, the PHB spouse has ignored it.  The laser beam is effectively pointing at the back seat.

The good news is that the PHB's naiveté was limited to parking habits, one house's garage and a spend of $19. 

Not so for Ezekiel Emanuel's work in health reform in the White House and a spend of far more money. 

According to this article in this weekend's Wall Street Journal, the well-meaning Dr. Emmanuel couldn't change the habits of Medicare's vast bureaucracy or of Mr. Obama's formidable political advisors.  As a result, bundled payments remained the stuff of demonstration projects, while the closure of tax exclusions for employer sponsored health insurance was limited to "Cadillac" plans.

What's more, professional liability reform died in the crib thanks to the White House chief of staff Rahm Emanuel's unwillingness to stir the political pot:

He immediately cut me off: "Shut the f— up! We are not doing malpractice. Period. Every time the AMA comes in here, they don't talk about malpractice." Their first, second and third priority, he said, was the formula used by Medicare to determine doctors' pay. "We don't need to do malpractice for the doctors, and I am not alienating the president's base for nothing," he barked. "Stop it."

Rahm's reaction told me everything that I needed to know about the politics of the issue. Democrats would accept malpractice reform under two circumstances: if they needed it to keep the AMA's support for the bill, or if they needed it to attract Republican support. Neither was true. In backroom negotiations, the AMA was solely focused on securing higher physician payments—not on malpractice. And not a single Republican in Congress would even negotiate.

The president had already aggravated liberals by forgoing a "public option." He'd offended unions by limiting the tax exclusion. He wasn't going to antagonize trial lawyers, another core Democratic constituency, for no gain.(from the WSJ, March 7 "Inside the Making of Obamacare.")

In its own small way, the PHB called attention to the AMA's narrow-minded focus on the SGR five years ago.  But the AMA's blunder and PHB's prescience are not the point.  Or, rather, points:

1. The health reform that eventually passed was a curious mix of White House naiveté and Washington inside-the-beltway politics. The result was the Affordable Care Act which continues to spawn quick-fix delays and throw sand in the gears of government.  We deserved better.

2. By concentrating risky decision making in Washington DC, the upside gains in big government may be undercut by the downside of unintended consequences and half-baked decision-making in all 50 states.  It's scary to think that the likes of Dr. Emanuel had such power.

Lessons learned.

Health Reform and Capitation 2.0

New recipe for capitation?

Readers of Kaiser Health News, Politico and The Hill (here, here and here, respectively) were treated to the faux news of another expert report on the tedious topic of physician payment reform.  While the Disease Management Care Blog is a big fan of the brainy Society of General Internal Medicine (SGIM), this physician compensation communique is another rehash of "misaligned incentives" leading to "quantity over quality."

Yawn.

The good news is that there may be insights that were missed by KHS, Politico and The Hill.  In this instance, the DMCB has been listening closely and found one thing the experts aren't saying.

What was said?

Like the many other decrees that have preceded it, the Report of the National Commission on Physician Payment Reform recommends the recalibration and then phasing-out of stand-alone fee-for service (FFS) while transitioning to other payment models that blend FFS with global payment, salaries or "capitation."  It also advocates increasing payment for "congnitive" over procedural services, removing any hospital overhead costs from the fees that are paid for any service that can also be performed at a free-standing facility, rewarding measurable quality, paying for telemedicine, increasing the use of risk adjustment, repealing the sustainable growth rate (SGR) and reforming the RUC.  And like everyone else, it assures the reader that paying for the savings from all these reforms will more than pay for themselves.

And yes, the word "capitation" was in the report.

What isn't being said is that there is a growing consensus that scuttling of traditional fee-for-service will usher in a new era of capitation.  The DMCB thinks of it as Capitation 2.0.

"Capitation" doesn't necessarily have a good name, but that doesn't mean this new rose doesn't smell as sweet or have fewer thorns. Originally spawned by the go-go managed care era of the 1990s, it was blamed for putting profits before patients by giving physicians an incentive to withhold needed medical services.  While a much younger Donald Berwick reported that the medical literature "did not make capitation out to be the villain that some believe it is," the complex risk taking, a lack of individual physician support and unseemly group practice behaviors undoubtedly fueled the physician backlash and the end of managed care in the 1990s.

 So why is capitation coming back?  The DMCB suspects one reason is that there are only passing references to it and that it's been rebranded with more benign sounding names like "gain-sharing" and "global payments."  Another is Medicare FFS fatigue, caused not only by the SGR but by CMS' unending hassles, the uncertainty surrounding PQRS and the dread of having to go through one of those repugnant "RAC audits."  Unwilling (so far) to simply drop out of Medicare altogether, docs are backing into acquiescing to the recommendations of groups like the SGIM.

And why does the DMCB call it Capitation 2.0? Writing in SGIM's Journal of General Internal Medicine more than a decade ago, Thomas Bodenheimer predicted the survival of managed care thanks to the allocation of full capitation to institutions, not individuals. It's then up to those institutions to leverage both FFS and capitation at the individual physician level.  The DMCB would add that a third ingredient is tying any payments under capitation to specific quality goals, like control of chronic illness or maintaining access to care.

The DMCB's conclusions?

What they didn't say: The track record of original capitation or advent of Capitation 2.0 doesn't mean physicians are embracing what their organizations and political allies are saying what's best for them.  They simply don't see an alternative. The 1990s could happen again.

What they got right, sort of: Outside of large organizations that take capitation, we have much to learn about the best combination of FFS and fixed payments when it comes to physician incentives and protecting patients.  Like other reports before it, the National Commission suggests we need 5 years to assess new payment models.  Given the decades of experience with managed care's capitation and Medicare's institutional inertia, that may be overly optimistic.

The Coming Demise of the Medicare Sustainable Growth Rate and the Undoing of Fee For Service: How and Why Congress Really Means It This Time

Here they come....

Like manna from heaven, the Congressional Budget Office (CBO) has given the nation's physicians and their medical organizations an opening against Medicare's reviled sustainable growth rate (SGR).

Regular Disease Management Care Blog readers already know that the SGR is part of a 1997 law that was designed to battle rising health care costs. It relies on the blunt force of a "conversion factor" that unilaterally adjusts physicians' Medicare fee schedules to match the growth in the U.S. gross domestic product. Despite the good intentions, physicians costs have blown past the GDP faster than high income earners fleeing California. Not wanting to disappoint a grumpy constituency, Congress has repeatedly approved temporary patches to undo the conversion factor.

Unfortunately, the original 1997 law was never repealed and the Feds' bookkeepers have kept track of the growing gap between the GDP and the physician fees.  Without another patch, Medicare will deploy the conversion factor and reduce payments by approximately 25% beginning in 2015. 

As the DMCB understands it, the problem with the SGR is the projected costs of cancelling it. According to a recent article in AMA News, the price tag of repealing the SGR would increase the projected 10 year cost to $244 billion.  That calculated deficit has complicated Washington DC's efforts to balance the federal budget, find common ground on the sequester and fix the debt ceiling.

Enter the CBO's updated and just-released Budget and Economic Outlook for 2015 to 2023 . This telling sentence is buried on page 31:

"... holding payment rates through 2023 at the levels they are now would raise outlays for Medicare (net of premiums paid by beneficiaries) by $14 billion in 2015 and about $138 billion (or about 2 percent) between 2015 and 2023."

Whether you believe the projected slowdown in physician costs from $244 to $138 billion is the result of a moribund economy (the Republicans) or the enlightened interventions of Obamacare (the Democrats), the implications for the U.S. budget deficit are enormous.  Knowing a fiscal opening when they see it, politicians have responded faster than the DMCB's misanthropy to a crowded Amtrak train. 

The U.S. House Republicans have released their outline of an SGR reform proposal, while Pennsylvania Rep Allyson Schwartz (D-PA) (see below) has introduced a House bill dubbed the "Medicare Physician Payment Innovation Act of 2015."

Both are remarkable for their two similarities than differences:

1) Strangling the SGR by repealing the looming 25 percent across-the-board rate cut in 2015 along with any future rate cuts. Congress will establish a temporary five-year period of "predictable payment rates."

2) Finishing off fee-for-service (FFS) by soliciting organized medical society and "other relevant stakeholder" input to create multiple scientifically based payment models that use a variety of quality and efficiency metrics that will be periodically updated by Medicare.

These models will include registries, risk adjustment approaches, physician rankings, performance feedback, shared decision-making tools and pay-for-performance. Should a doc disagree that the registry-based risk adjusted ranking of how the shared decision making improved performance, he or she will be given opportunity to make an "appeal."

Ms. Schwartz's bill has more detail. She would lock-in the current payment rates until the end of 2015 and transition in the reforms described above over 5 years. During this time, she would also annually increase primary care physician payment rates by 2.5%. An interim report on the pace and success of the reforms would need to be submitted by the General Accounting Office to Congress in 2017. For docs that are struggling with the demise of fee-for-service, there'd be a payment track that retains FFS "for providers who are incapable of transitioning."

The DMCB's take:

1. Given the degree of Democratic and Republican agreement and the relatively low cost of "only" $138 billion, the likelihood of repeal of the SGR is better than it has been for years. Maybe it will really happen this year.

2. There is a remarkable bipartisan consensus that Medicare's FFS system needs to go away, despite an astonishing lack of evidence that we can really achieve an payment approach that is truly a better payment mousetrap.  The DMCB remembers the perils of exquisitely engineered global payment systems that were designed to reimburse for value and not volume.  It was called "capitation" and it failed miserably.

Maybe a 2019 target date is warranted. It'll take that long to not repeat history.

3. Also buried in the CBO report is this caveat:

.....spending per enrollee for Medicare and Medicaid—which generally has grown faster than GDP—is very difficult to predict. If per capita costs in those programs rose 1 percentage point faster or slower per year than CBO has projected for the next decade, total outlays for Medicare (net of receipts from premiums) and Medicaid would be about $650 billion higher or lower for that period."

While the DMCB understands the fiscal and political logic behind the timing of the SGR appeal, let's be honest: this is a budget decision built on assumptions based on guesses that are ultimately propped up by wishful political decision-making.

4. As a member of several professional medical organizations, the DMCB appreciates the proposed role of these entities in this next phase of health reform.  If you are a doctor and you are not paying dues to one organization or not participating in meetings and emailing its leadership, you stand to lose. 

Docs: Join. A. Professional. Society. Or. Association. Now. 

That's especially true if, as an employed physician, you think your Health System CEO has your interests at heart.  This might be a good start.