Posts Tagged ACO
Current Procedural Terminology codes (CPT codes) are what makes health care fee-for-service work. The codes function to increase profits for health care providers. Fee-for-service is widely cited as a root cause of high cost in the US health care system. The bottom line is: health care providers work to make money by performing CPT coded services whether the service is needed, whether quality is delivered, and whether a lower cost service would work just as well.
The American Medical Association (AMA) is dominated by surgeons and specialists who do procedures. When the AMA first published a book of CPT codes in 1966 insurance companies were happy to have some basis on which to pay claims. In 1983, for the same reason, Medicare adopted the codes. But, what originally seemed like a good idea, like Dr.Frankenstein’s monster, turned out badly.
The AMA followed simple economic principles and fractionated the health-care market with more and more codes until there are now thousands. Every little thing a health care provider can imagine is now a billable service. Fractionation of a market maximizes profit, and it really worked for doctors but not for patients, insurance companies or the government.
CPT codes in the US have driven fee-for-service to high levels, in fact, that was the purpose. Now, the question for US health care: how to get rid of fee-for-service and CPT codes as the gateway to payment? How to change the incentive system for the benefit of patients and the national budget?
An auto-assembly worker is not paid according to every little procedure — using a wrench (APT code Q70506), installing a radio (APT code F402305) or looking up an exhaust pipe (APT code C403843). No they don’t use Automobile Procedure Terminology, they get paid by the hour with some incentive pay for quantity and quality of the work. There is no reason health care providers should be paid in a different way.
CPT codes or something like them might have a place inside an organization to assess productivity or simply to know what health care providers are doing. The old saying “measure to manage” is indeed true. The mistake is to connect procedure codes directly to payment. Diagnosis, outcome, and patient satisfaction should have input into the payment equation as well.
The way to purchase health care is in the aggregate, like the price of a car, the whole enchilada, or the total amount of care a person might need for a year. The US needs a system of care whereby a patient, a business or a government can purchase health care BY THE YEAR. The incentive is turned around — a profit is present when the cost of care is lower.
Is there opposition to this idea? Of course. Health-care is a huge business. Reorganizing health care takes different forms in different countries. In the US the idea is the Accountable Care Organization (ACO). It’s an organization big enough to actually deliver all the care a person might need in a year and big enough to manage the financial risk. This is not a Mom and Pop operation, this is a huge business almost like an automobile manufacturer. We need this type of care, we need cost containment, we need industrial medicine! The US health care system is like a Dr. Seuss car when we really need a Ford.
A good patient portal is wonderful; a bad patient portal is a waste of time. A recent post by Dr. Yul Ejnes suggested portals may not be patient centered and don’t get much use.
An alternative view is that all patient portals NOT are the same. Some have great features and are supported by the providers offering them. Other portals are not much more than advertising — generally something a patient does not revisit. Sadly, many businesses have the latter type of portal — no wonder people don’t flock to medical portals.
Check out your health care provider’s portal. If it does not really provide a benefit then TELL THE PROVIDER, complain, and say other providers do a better job.
Admittedly, a poorly functioning provider office will likely have a poorly functioning portal. Just because the portal lets you send a message to the nurse or provider is no guarantee the response will be helpful.
Large vertically integrated health systems or ACOs have the best chance of a good patient portal. The portal needs monitoring and rules for providers — rules that require questions to be answered the same day. And, that the portal will display lab results within 48 hours, regardless of whether the provider has or has not seen the results. Responses from nurses need to be monitored for accuracy and timeliness — the lazy but profitable response to just make an appointment is not adequate. Integration of pharmacy functions is essential.
Here is a checklist of possible portal features — how does your provider’s portal stack up?
- Responses to online requests take less than 24 hours
- Ask a medical question
- Ask medication related question
- Make a follow up appointment
- Make a same day urgent care appointment
- Get refills on a chronic medication
- Get a message from your provider about test results
- Report drug side effects or drug allergies
- Send a picture of a skin rash.
- Diabetics can send blood sugar results
- Asthmatics can send peak-flow measurements
- Look at your list of medical diagnoses both active and inactive
- See a list of current medications and the diagnosis for which they are prescribed
- Links to drug information about the drugs on the medication list
- Review the providers notes
- Review any test, x-ray or consultation report
- Your provider can send questions to specialists and forward the response to you
- You can print your lab, pathology and x-ray reports
- See your most recent medical summary including past medical history, social history, family history, medications list allergies — and be able to print the report if needed for consultations or to take on trips.
- Request a summary of billing and payment information — including when bills are sent to insurance and when payment is received.
- Pay your bills on-line
- Links to reliable on-line information sources about tests, treatments, drugs, immunizations and diseases. Include a symptom checker — a computerized diagnosis based on symptoms — something to discuss with your doctor.
- Provider office provides training to use the portal.
A provider might say: “I’m not paid for running a portal or answering questions”. That is very true for many providers in the US health care system. But, in systems without fee-for-service billing then portals are a huge driver of efficiency. If a patient’s questions or problems can be resolved via the portal so much the better for both the provider and the patient. The handwriting is on the wall — fee for service is going to go away — the efficiency of portals will be a strong driving force.
Here is the list:
- Pay doctors more
- Let the government pay subsidies to families not covered by the employee’s health insurance.
- Get rid of fee-for-service payments
- Smooth the transition from Medicaid to subsidized health insurance
- Transparent pricing
There are obviously some problems with this “consensus”. To begin with, who is part of the consensus? And who benefits from the 5 suggestions? On the face the ideas seem OK but where is overall cost reduction — the real crux of our health care problem?
So, to address each point:
- Pay doctors more — if the payment is not tied to reducing health care costs and increasing quality then it is money down the drain.
- Covering families — seems simple enough but why should business be exempt from doing what they have traditionally done? Employer insurance needs to cover the whole family — that’s simple.
- Get rid of fee-for-service. Yes that payment method is a problem but there must be an incentive for health care providers to provide a high volume of work and an incentive to do quality work. The simple solution is to pay a health care system (an accountable care organization) to provide care for a large group of people for a yearly fee. The organization must meet quality and budget constraints as opposed to our current “the sky is the limit” fee model.
- Smooth the the transition away from Medicaid. At this point Medicaid is less expensive than standard indemnity plans — why think about a change? If the person enters the workforce the employer just pays the cost — simple. Changing providers is not easy but if quality is uniformly better there would not be such concern.
- Transparent pricing. This is presented to suggest people could decide on what tests and treatments to buy if only they knew the prices — patients have never had the knowledge to make that decision and never will. The transparency of pricing should be the price for ALL the healthcare a person needs per year. Market forces may be helpful on the macro level (like for a healthcare system) but there is no free market for healthcare on the micro level — imagine a person being asked to choose between various methods of treating diabetes or the best way to remove an appendix (the decision is either random or biased by what the very person asking the question tells them).
The U.S. is experiencing something its citizens have not witnessed before: the transition away from population healthcare decisions being made behind closed doors at insurance companies to those decisions being made in the political arena. Other countries experience this all the time — just look at newspaper headlines in the UK or France over the past 20 years!
Elisabeth Rosenthal reported “Patients’ Costs Skyrocket; Specialists’ Incomes Soar” in the New York Times today 1/19/19. She particularly targets one of the most popular specialties for US trained physicians, dermatology. Good hours, great pay, and compared to other specialties, easy to learn.
A highly trained thoracic surgeon can only do 2 bypass surgeries per day but a dermatologist can to 20 lesion removals per day and make almost as much money. Patients choose to go to a dermatologist when most primary care doctors can just as easily solve the problem at a fraction of the cost (like benign skin lesions, sun related pre-cancers, and acne). And, when infection sets in on the weekend the dermatologist’s answering machine says to go to the emergency room ($300 co-pay).
She describes a situation where a woman had a facial skin cancer removed at a cost of $26,014. The astounding cost was the result of a dermatologist removing a lesion and then being unable or unwilling to close the wound — but still billing for the procedure. And, the patient also received bills from the doctors that actually fixed the problem (perhaps they should have billed the dermatologist). Sadly, a bad system is more profitable than a good system.
It is easy to see why the patient and Ms. Rosenthal believe there is a problem with US healthcare. Because, THERE IS A PROBLEM!
Rather than complain about the problem, what is the solution? It is not rocket science. The dermatologist, surgeon, operating room personnel and anesthesologist all need to be employed by an accountable care organization (ACO)– that way there is just one predetermined fee for taking care of the whole patient for a year. If the system does the work correctly they make some money, if they goof-it-up (as in this case) they lose money. The incentive should be to do good and efficient work. Not to make money by making mistakes.
This solution is extremely easy yet extremely unpopular with hospitals, surgeons, anesthesiologists, pathologists, radiologists, ophthalmologists and dermatologists. The reasons are obvious — they make less money and must follow quality guidelines. Given the low quality and extreme high cost of US healthcare is that really a problem? A few more articles by Ms. Rosenthal and a few thousand letters to congress might help. Sadly, one industry lobbyist equals one journalist in this battle.
By the way, the lesion at the top is a benign seborrheic keratosis — harmless, but gladly removed by dermatologists ($250).
$3,500 is the amount US insurance companies pay for a screening colonoscopy that takes 30 minutes. In some states a $9,000 charge is routine. In the country of Switzerland the cost is $655 using the same techniques and the same scope from Japan. This sad story of price gouging was reported in detail by the New York Times on Sunday June 2, 2013.
Key points about high charges from the Times’ article include:
- Adding charges for an unnecessary anesthesiologist
- Adding facility fees by calling colonoscopy a surgery
- Adding huge fees for biopsies that take only minutes
- Repeating colonoscopy too frequently
If it was just colonoscopy that was the cause of the problems with high cost in the US it would be an easy fix. But, the pattern of prices having no basis in actual cost is a systemic problem of huge proportions.
In other walks of life people would not tolerate the abuse. We would complain bitterly if a garage mechanic charged for someone to hold his light, or added a fee to use the garage space, or tacked on a charge to check tire pressure or wanted to recheck the muffler every 3 months.
Why do people tolerate unreasonably high medical prices? Because people do not understand health care. Because insurance shields them from the need to understand. And, because we think 10 years of training is needed to do many procedures, which is absolutely not true.
Surgeons and gastroenterologists study many things but if colonoscopy was separated out, the total training time for that procedure itself is probably only a few months. A trained physician assistant or nurse practitioner could easily do a screening colonoscopy at much lower cost and with equal safety. The manpower drain from gastroenterology to do screening colonoscopy is astounding and the only reason they do it is the high reimbursement.
Keep in mind, it is not people causing the problem. The fault is with the warped system of care and reimbursement we have devised.
To fix the problem the US system of payment must change to be more like other advanced countries. That means either the prices for procedures are set nationally (the French way) or large conglomerates of doctors and hospitals are paid to provide all necessary care to people on a per capita basis (the ACO way).
Numerous publications are reporting on the problems in our health care system. The New York Times, The Wall Street Journal and Time Magazine have had lead articles on the subject.
The problem of high cost will need government action to make a significant change since no business is large enough to force the issue alone. It is easy to be pessimistic — but, there is a tipping point coming. When consumers realize lower-cost higher-quality health care is possible they will want it.
How do the Brits do it? They made a healthcare system with twice the quality at half the price compared to the US (according to the Commonwealth Fund cost per person per year US $7960 UK $3487, developed country quality rank UK #2 US #7). Simply, they do it by having original ideas and a willingness to adopt good ideas from other countries.
The National Health Service (NHS) of the UK was born in the aftermath of WWII. Taxes pay for the system, which is free to citizens at the point of care. Internally, the system is based on capitation — doctors and hospitals are paid by the size of the population they serve. The system grew to be one of the highest quality and least expensive systems in the world. In the 90’s it was bogged down by waiting lines and old facilities until a modernization push got it back on track around 2000.
The DRG example: In 1983 Medicare adopted a way to pay hospitals with a single payment for each case based on the diagnosis of the patient. This revolutionary idea was called the diagnosis related group or DRG. NHS experts embraced the Medicare cost saving idea and renamed it the HRG (health resource group) and started using it in about 2003. Consequently, by adopting what works, the UK has strikingly transformed the financial workings of the NHS.
The NHS noticed cost variations between providers and solved the problem with “Best Practice Tariffs”. That means if the provider follows a well established guideline they get a full payment, if not, the payment is lower. In the US we call that concept “value based purchasing” (VBP) but the US only has a few pilot projects and only dreams about making VBP happen on a large scale.
The UK decided they wanted better results. The reform was called Payment by Results (PbR) and implemented in 2013. The results they expected were high quality, adequate volume of services, and cost efficiency. The NHS basically tweaked the capitation formula with incentives for the desired results.
The US Affordable Care Act (Obama Care) encourages the aggregation of doctors and hospitals in an economic model called an Accountable Care Organization (ACO). The US thinks it invented the idea behind the “Accountable Care Organization”. Actually, the concept is just a spin-off from the Primary Care Trusts and Hospital Trusts in the UK which have been functioning for over 60 years. Think: “Trust”=”ACO”.
The recent “Perspective” in the New England Journal of Medicine (NEJM 668;16 April 18, 2013, page 1465-1468) describes the recent IOM report requested by Congress. The authors lament the “Geographic Variation in Medicare Services“. The NHS is well known for controlling health care costs. Looking across the pond to the UK, here are some references that might be helpful to them:
- A simple guide to Payment by Results
- A person based formula for allocating commissioning funds to general practices in England: development of a statistical model
- Payment by Results: time for a rethink?
- Regional variation in the productivity of the English National Health Service.
Some understanding about how the NHS works would also be helpful. The following diagram is an overview of how the NHS controls cost associated with hospitals and doctors. They also have a good system for dealing with drugs and devices — a good topic for a future blog.
(figure revised 7/11/13)
Other charts of organization can be found at Nuffield Trust – New Structure of the NHS slideshow, NHS website – new structure, and History of the NHS.
In the UK 90% of health care is controlled by the government and 10% by the private sector. The UK Parliament sets a budget for health care which is administered by the Department of Health. Based on the funds allocated in the budget the Department of Health makes a national price list for services (unlike the US where there is no cap on expenditure) .
The “SUS” approves payments to providers based on the national price list (national tariff) and adds the features of PbR (payment by results). The commissioners are the paymasters and transfer funds to the providers. The providers keep track of actual costs and must provide cost data to the Department of Health (unlike the US where real costs are proprietary information and hospitals use the infamous “chargemaster“).
The US could learn a lot from other countries. The NHS in the UK seems very willing to share what they have learned over the years — and it is in English. The old saying “America and England are two countries separated by a common language” is especially true for health care.
Payment of health care providers by volume of service (fee-for service) rather than quality of service is blamed by many as the cause of high cost and low quality in the US health care system.
A possible solution was proposed in 2006 as the Accountable Care Organization (ACO). The concept is modeled after other advanced countries which have lower cost and higher quality health care than the US. The idea is to pay a large organization (the ACO) to provide all the care needed for a large group of people. In other words, a per capita system, with payments not related to volume of services.
Medicare and the Affordable Care Act are betting on ACOs. The private sector is moving that way as well. The following graph shows the number of ACOs in the United States (CMS data)
The following graph shows the increase in the number of ACOs starting in 2009 and ending the first quarter of 2012.
The insurance industry is so entrenched it is hard to think outside of terms like deductible, out of pocket cost, and premiums. And, current ACOs indeed use those terms. But, under the hood, the ACO is run with a budget based on the cost to take care of a person for a year.
So, perhaps sometime in the near future you will just purchase health care by the year — something based on your age and ranging between $100 and $400 per person per month. Undoubtedly, there will still be some co-payments in order to avoid over use of services by some people.
A well formed ACO has a strong focus on a medical home and should include pharmacy service (not Walmart,Target or Walgreens etc.), hospital service (not every hospital), doctors, nurses, physician assistants, x-ray services, medical equipment, and devices. Not every hospital in the ACO would duplicate services — some would have specialty expertise, like brain surgery or heart surgery.
The materials to run the ACO would be purchased in bulk. The providers would be predominantly on salary and the hospitals under a strict budget with mandatory quality levels for all.
The rise of ACOs is encouraging but the actual number of covered patients is not large and the internal payment for ACO providers is still rooted in volume of services. But, with time and pressure (mostly from the business community) ACOs should begin to lower costs to levels enjoyed by other countries.
Congress could speed the process to be ready for the aging baby-boomers. But, action in Washington seems nearly impossible. It seems hard to argue against lower cost and higher quality, but they will.
An Interim Report from the Institute of Medicine (IOM) about geographic variations in care was just released. This is a very scholarly report with massive statistical analysis. The basic idea was to review what Medicare paid for various types of medical care, devices and drugs across the US to see if some pattern could be identified. The hope was to find some way to alter the payment scheme to improve the value of health care. Alas, they could not find a pattern, only wild variation. An individual doctor might be cost-effective for one disease and a money-waster in another, doctors within a group would range from judicious to wildly profit-motivated and the variations between hospital referral areas show the same scatter.
The holes in the target above are an example of wide variation. The archers did not hit the bulls-eye very often — there is a lot of variation. A particularly interesting graph from the report is redrawn above on the right. This is about how often gastroenterologists in an unnamed state perform a stomach scope (EGD) with the billing diagnosis of heartburn (i.e. gastroesophageal re-flux) .
The vertical axis is the number of EGD procedures per 100 diagnoses of heartburn (the procedure rate). The horizontal axis is the ordered list of 403 gastroenterologists in the state. The list is in order of the lowest to highest rate of performing EGD. The ovals placed on the s-shaped curve represent 17 different doctors all in the same group. The remainder of the 403 gastroenterologists are plotted as dots on the curve. If all the gastroenterologists approached heartburn in a consistent and reliable manner the graph would just be a horizontal line somewhere in the lower part of the graph. Instead we see some gastroenterologists performing a scope on 100% of people they see who have heartburn — to be clear, this is the picture of unnecessary procedures or “padding” the bill.
What does it mean?
Gastroenterologists are poor marksmen. No, no, no. It means they are shooting at different targets. Some aim to maximize revenue, some aim to follow evidence based (lower cost) guidelines and some aim in-between. Keep in mind that a gastroenterologist is paid about $200/hour for clinic visits and about $1000/hour when doing procedures. The doctors on the right side of the graph clearly have targeted the high paying procedures “scope first and ask questions later!”
The IOM claims no insight into the mysterious variation. It is not necessary to study this more! Look at other countries, they don’t have this problem because other countries don’t pay doctors by the number of procedures performed. Simply pay the gastorenterologist the same hourly wage for seeing patients in the clinic as doing a procedure. In the big picture, the variation can be markedly reduced by having doctors employed by an accountable care organization (ACO). The ACO sets the salary, pays the malpractice insurance and provides the office to practice — a doctor in an ACO just has to focus on doing what is right for the patient, not what is most profitable for the gastroenterologist.
What should be done?
Although the graph puts gastroenterologists in the spot light the data show the same scatter across the spectrum of doctors. US health care is sliding more and more into the swamp of poor quality and high cost. The US needs doctors to aim for the right target and to aim for reliability, which means to consistently hit the bulls-eye. Hopefully the IOM will have the strength to recommend strong action to change the whole system of payment for US doctors, hospitals, drug companies and equipment manufacturers. Instead of trying to make a perfect system we need a good system that can be adjusted as needed to achieve both high quality AND low cost care.
Some Americans just don’t have access to health care. That statement is hard to understand for many people. Just get in the car and drive to your doctor’s office. Or, if you don’t have a doctor where you live then move somewhere else! People without money may not have a car and may live with relatives who don’t want to move. It is reminiscent of what Marie Antoinette said about people who did not have bread “Let them eat cake”.
The majority of Americans do have access to health care so why worry about those who do not? There are three reasons for concern; 1) we don’t like our fellow man to suffer 2) the care for people with poor access is terribly expensive once they do get medical attention.3) we have a system of care for the indigent which is very expensive and does not work well. Poor people who live in the Mississippi Delta get health care like a third world country and sometimes not even that good. In fact, a health care system copied from Iran is being used in Mississippi to try to improve access to care.
Just as an experiment, try to make an appointment with a doctor and say you don’t have insurance. Voila, no appointment. What if you have a sinus infection and can’t get an appointment with a health care provider? You go to the emergency room. Even though you have been admitted many times for heart failure you can’t get an appointment with a doctor so you run out of medication — back to the emergency room. You have a growth on your breast but can’t get an appointment. So when it smells bad you go to the emergency room.
One measure of poor quality preventive care and follow up care is the rate of emergency room visits and re-hospitalizations. Some communities do very poorly by this measure.
When looking at the health care system as a whole providing good access to care is a way to save money. But, in America we have lost track of those cost savings. If a hospital, in good faith, tries to prevent readmissions for everyone, poor and rich, they lose income. The community benefits and taxpayers benefit but the organization controlling the situation is penalized.
There is some hope in the idea of an Accountable Care Organization (ACO). That proposed system of care matches a population to an organization of hospitals and providers for care. A certain amount is paid per person per year to the ACO (similar to insurance but without the middleman). The ACO hospitals become overhead expense rather than cash cows and primary care providers that keep patients healthy are golden. At least the incentives are aligned favorably for Americans but whether the idea will work is yet to be tested on a large scale. If poor people are included in the ACO, access to care should be improved and cost may come down. Additionally, an ACO can be held accountable for quality — since health care providers work for the ACO considerable pressure to deliver a quality product can be applied, especially if customers get to choose which ACO to join.