Consumer Power Report #243

Published October 13, 2010

What I am hearing is that Congress will bite the bullet and enforce the physician fee cuts this year, mostly because of deficit concerns. What they are likely to do is reduce this year’s cuts from 26 percent to 15 percent, and then enforce the cuts going forward.

Meanwhile, the AMA is pushing an idea to accept a 10 percent cut in exchange for allowing balance billing. Congress is likely to thank them for the concession of a 10 percent cut, raise it to 15 percent, and not allow balance billing. That will be thought of as a compromise. No one is afraid of the AMA anymore. It proved to be a push-over last year and nothing has changed.

Meanwhile, the AMA doubled its spending on lobbyists from $4 million in the 2nd quarter of 2009 to $8.6 million in the 2nd quarter of 2010, according to Health Plan Week (HPW). This is far and away the highest spending of any health care interest group, and for what? All of this spending was after Obamacare was enacted and signed into law.

HPW quotes Bob Laszewski as saying, “Right after the bill passed, (the AMA) got a retroactive fix only until November and now face a 26 percent automatic cut by January 1, 2011. They sure didn’t get their money’s worth in 2009 – particularly when it comes to legislative strategy – and now they have doubled it.”

— Greg Scandlen



Organized medicine’s main threat when talking about the SGR cuts is that such cuts will force physicians out of private practice and reduce the number that are willing to take Medicare patients. The administration doesn’t see that as a threat at all. It is exactly what they are hoping for.

Reducing the number of doctors seeing Medicare patients will lower Medicare costs, and driving them out of private practice will help the transition to “Accountable Care Organizations,” and finally end the days of mom & pop retail medicine. These are both cherished goals of the health planners. Never mind that patients will suffer. People who are focused on “population health” are indifferent to the needs of individual patients.

Surprised? Don’t be. While you were sleeping an entire new industry has cropped up to take advantage of the ObamaCare push to base the health care system on Accountable Care Organizations (ACOs). Now, of course the law doesn’t define what an ACO is, other than that it is GOOD while the rest of the health care system is BAD.

Since everyone wants their hospital, health plan, group practice, or information service to be thought of as GOOD by the Dear Leader and his minions, and there is oodles of money in the form of demonstration projects available, everyone is trying to shoe-horn their existing organizations into whatever definition of ACO is finally agreed upon.


So there is a booming business for conference organizers, consultants, publishers, attorneys, and accountants who claim to know exactly what you must do to become an ACO and reap the largess from Uncle Sam. They will reveal the secrets to you — for a reasonable price, of course.

But, in fact, no one knows what they’re talking about. There are no definitions, no regulations. There will be eventually, but not yet. The Feds have held a few conference calls and meetings trying to sort it out. There was a two-hour call on June 24th hosted by CMS, the purpose of which was to “solicit input from physicians, physician associations, hospitals, and other stakeholders who are potentially interested in participating in the shared savings program.” It dealt with the following topics:

  • Joint accountability among providers in the formation and use of ACOs
  • Cost and quality metrics to assess performance of ACOs in the program
  • Attribution of Medicare beneficiaries to ACOs
  • Benchmarks for purposes of defining shared savings
  • Coordination with other value-bases purchasing initiatives
  • Risk adjustment
  • Medicare beneficiary protections

Man, that’s a lot to cover in a two-hour phone call.

There was another workshop on October 5, sponsored by CMS, the Federal Trade Commission and the Office of the Inspector General focused on how to get around current antitrust law, restrictions on physician self-referral, prohibitions on kick-backs, and civil monetary penalties. Essentially, the regulators were advising the industry on how to break the law. When Dear Leader has blessed something, the laws that apply to the rest of us are out the window.

Then there are a host of private conferences aimed at helping you roll in federal dough by declaring yourself an ACO.

On October 7, the Health Change Bulletin sponsored a web summit featuring:

  • Brief summary of the requirements and issues to become an ACO
  • Examination of two case studies of successful ACO development and implementation
  • Review of ACO initial investment, ROI and as technology requirements for providers
  • Discussion on sustainability of commercial employers directly contracting with ACO

HealthExecWire is also sponsoring a web summit on November 9 that will feature:

  • Five Key Accountable Care Organization Enablers
  • How to put these enablers in place in a range of health care settings
  • Acquire an understanding of new ACO legislation
  • Gain new insight on how to move to an integrated care model
  • Considerations for ongoing performance measurement
  • Understand the value of clinical information across the health ecosystem

And the Corporate Research Group is sponsoring an in-person conference in New York to look at ACOs and “Medical Homes.” It says the reasons to attend are:

  • Find out how the Medical Home Model Transform Health Care Delivery
  • Medical Case Study Success Stories from: BCBSRI, Group Health and Many More
  • Strategies to Gain Physician Buy-In
  • Learn how the Medical Home Model has enhanced chronic disease management

Strategies to build multi payer medical home initiatives

And I just got a notice from the Center for Business Intelligence that it will be holding a meeting in Florida on December 8-9 that will feature:

  • Beacon Grants-Striving to Deliver Value with a Community Approach to Patient-Centered Medical Homes and Accountable Care Organizations
  • Patient-Centered Medical Homes and Accountable Care Organizations-Patients Ask “What?” and “Why”
  • Keys to Managing Medically Chronic, Complex and Costly Populations in AICUs and Accountable Care Organizations


Now you may have noticed that a lot of this sounds like gobbledy-gook jargon. Right you are. In fact, that is what characterizes ACOs from most other health ideas – they string together as many undefined adjectives as possible. The more adjectives, the more impressive sounding your organization will be.

For example, Dr. Jeffrey Brenner explains in “Prescriptions for Excellence in Health Care,” (published by the Jefferson School of Public Health), that he is already involved in “Building an Accountable Care Organization in Camden, NJ.” He says they are trying to transform primary care “into high-performing, modern, patient-centered medical homes, with features such as multi-disciplinary care teams, electronic health records, open-access scheduling, and patient registries.” Whew! Throw in “interoperable” and a good cup of coffee, and he might have a winner!

He goes on to explain that in Camden, a handful of patients were consuming the vast majority of the care delivered. One patient cost $3.5 million and the top 1 percent (1,035 patients) “visited the ER and hospital between 24 and 324 times (from 2002 and 2007.”) He says “The (inter-hospital) database provided critical information that eventually galvanized support from local stakeholders to target high-cost/high-needs patients.” He adds that these patients are often homeless, substance abusers, with chronic conditions, disabilities, and mental health issues.

SOURCE: I don’t believe this is available on-line, but it is from Prescriptions for Excellence in Health Care, Summer, 2010.

I guess it makes sense to “target” the most expensive cases if you want to lower costs. But on the other side of the continent, the AHA met in San Diego and came to the opposite conclusion. Joe Carlson reports in an article for Modern Healthcare that, “ACOs, as defined in the 900-page Power Point presentation otherwise known as the reform law, will pay healthcare providers to keep patients healthy before they even become hospital patients by arranging for providers to receive set pre-payments for care.” So, according to this, ACOs will spend their money on the healthy people so that they never need health care services.

He adds, “At base, hospitals being paid by ACOs need to start thinking about not just the health of the people who come through their doors, but about all the people who could potentially come through their doors. In other words, under ACOs, keeping people out of the hospital would be more profitable than filling up beds.”

Okay, but then what happens to that 1 percent of very sick people in Camden, NJ? Will there be any money available for them? The answer may come from Stephan Rosenthal, “president and CEO of the Care Management Co., which manages pre-payments (read: capitated payments) for Montefiore Medical Center (in New York.)” The article says, “Rosenthal said the population-based approach to healthcare fundamentally alters how you think about healthcare finance.”

Hmmm. So, when we start thinking about “population health” instead of those pesky little sick patients, I guess we won’t have to worry about 1,035 patients in Camden, New Jersey, since they represent just a tiny fraction of “the population.”

But that doesn’t help us to understand ACOs very well, does it? Do we focus on those high-cost cases, or do we ignore them in favor of keeping yuppies well? The Modern Healthcare article likens ACOs to unicorns and quotes Martha Marsh, president and CEO of Stanford Hospitals and Clinics, as saying, “I defy anyone to define it.”

Alrighty, then! We can’t define it but we are basing the future of health care on it!

SOURCE: Modern Healthcare


Now, it isn’t just you and me who is having trouble with all this. The publisher of the Martindale-Hubbell directory of law firms published a brief essay by William Darling in which he asks, “What is an Accountable Care Organization?”

He writes, “PPACA provides ACO requirements that must be satisfied in order to participate in the program. ACOs must be willing to be accountable for the quality, cost and overall care of the Medicare beneficiaries assigned to the ACO by the Secretary. ACOs must also have sufficient numbers of primary care physicians to meet the needs of the assigned beneficiaries. A minimum number of 5,000 beneficiaries will be assigned to each ACO.”

Then he adds, “The providers in an ACO receive the normal fee-for-service payment that they would ordinarily receive for these Medicare services. The ACO program rewards savings to those ACOs that are able to beat the estimated average per capita Medicare expenditures for Medicare fee-for-service beneficiaries for Parts A and B services, adjusted for beneficiary characteristics, by a percent to be specified by the Secretary.”

Sounds a lot like an HMO to me. But he concludes, “There will not be a clear vision of the statutory ACO process until regulations are adopted. The regulations are currently scheduled for publication in the fall of 2010. ACOs are expected to be operational by 2012 according to PPACA. Given the organizational and logistical challenges of creating an ACO, physicians and other participants will be hard pressed to timely create, or even understand, the ACO system.”

So who knows?

SOURCE: Martindale


Okay, look, I don’t want to belabor this any further. Here we go again on yet another dumb idea that is guaranteed to fail. Not only fail, but waste billions of dollars, years of time, and make people’s lives miserable while we go through this little exercise.

It is brought to you by the same idiots that have done the exact same thing time after time over the past 40 years. Consider:

  • Wage and price controls in the early 1970s.
  • Massive mandatory health planning in the 1970s
  • Hospital rate setting that was adopted by 30 states in the early 1980s and repealed by all but one.
  • State universal health programs in the late 1980s, adopted by about 10 states and repealed by every one.
  • Medicare Catastrophic and Section 89 in the 1980s, both repealed before they could do much harm.
  • Small group “reforms” in the early 1990s that destroyed the market for individual and small group coverage.
  • Managed Care in the 1990s.

All were trying to control health care with top-down, command and control, centralized decision-making. It has never worked and will never work. Health care is too complex, too important, and too costly to put bureaucrats in charge.

The whole concept of “population health” should offend anyone who has ever been or might ever become a patient. It should also offend anyone who has ever cared for a patient. But the people who should be standing up for patients have capitulated to politics. The AMA, most notably, no longer comments on the effects a proposal might have on patients. Instead it calculates the political stakes in opposing or supporting an idea. And it does even that poorly.

The chances of turning this latest idiocy around are not high. All of the intellectual elite has signed on. So the American people will be put through yet another misadventure and the elitists will spend our money, waste our time, and endanger our health on something that all the evidence says will not work. In five or ten years the failure will be obvious to all and the idea will be buried. But no one will pay a price for advocating lunacy.