Presentation to PNHP Annual
Meeting, Boston, November 2, 2013

• Vagueness of the IDS label guarantees IDS loopholes in single-payer bills will create a multiple-payer, not a single-payer, system.
• The evidence indicates IDSs do not lower costs. The evidence on quality is mixed, and favorable evidence is probably due to the application of more resources gained by antisocial methods (eg., Medicare overpayments, rationing, and oligopsony power).

• IDS proponents ignore or downplay serious side effects, including mergers and degradation of the national conversation about how to solve the health care crisis.
• Medicare Advantage program demonstrates it is not advisable to experiment with an IDS sector alongside a FFS sector.
• If single-payer legislation must include an IDS loophole, HR 676’s “HMO” should be used

“Much of the recent innovation in US health policy has been based upon a fundamental belief that a higher level of integration will yield a more efficient healthcare delivery system. An IDS presumably provides higher quality and more patient-centric care at lower costs. However, there is no clear definition of what constitutes an
IDS.”
Wenke Hwang et al., “Effects of integrated delivery system on cost and quality,” American Journal of Managed
Care, 2013;19(5):e175-e184, http://www.ajmc.com/publications/issue/2013/2013-1-vol19-n5/Effects-of-Integrated-
Delivery-System-on-Cost-and-Quality, accessed September 18, 2013.

“Kaiser Permanente Northwest … [is] a midsized health maintenance organization
(HMO)….”
Center for Health Research, Kaiser Permanente Northwest (B. Hazelhorst et al., “Automating care quality measurement with health information technology,” Am J Managed Care, 2012; 18:313-19 http://www.ncbi.nlm.nih.gov/pubmed/22774999, accessed September 27, 2013)
“Unlike most American health care organizations, Kaiser Permanente is not just a health insurer, not just a hospital system, not just a physician group. It is all three of these things – a non-profit, prepaid , integrated delivery system .”
KP Model: A Prepaid Integrated Delivery System, http://xnet.kp.org/kpinternational/docs/The%20KP%20Model.pdfm accessed September 27, 2013.
“ ACOs may involve a variety of provider configurations, ranging from integrated delivery systems and primary care medical groups to hospital-based systems and virtual networks of physicians …. All accountable care organizations should have a strong base of primary care. Hospitals should be encouraged to participate, because improving hospital care is likely to be essential to success. ….”
Mark McClellan et al., “A national strategy to put accountable care into practice,” Health Affairs 2010;29:982-990, 983.

“People would have the choice of selecting their own primary provider or being covered through an HMO or other integrated delivery system that would be paid a risk adjusted amount to cover all costs for enrollees.”
The Lewin Group, Health Care for All Californians Act: Cost and Economic Impacts Analysis, 2005, page 2

“ACOs have been compared to the unicorn:
Everyone seems to know what it looks like, but nobody's actually seen one. Exactly how
ACOs would work in practice remains to be seen, though that hasn't stopped the health care industry from embarking on a frenzied quest to create them as quickly as possible….”
Jenny Gold, “Accountable care organizations explained,” National Public Radio, January 18, 2011 http://www.npr.org/2011/01/18/132937232/accountable-care-organizations-explained , accessed
February 3, 2011.

• Circular: IDSs “integrate” care/providers.
• Aspirational: IDSs “take responsibility” for the cost and quality of care.
• Definition according to how regulated: IDSs shall be paid by capitation or budget, shall submit to report cards, etc.
• End result: We still don’t know what an IDS is.

• SB 810: As used in this division, the following terms have the following meanings:….
• (i) "Integrated health care delivery system" means a provider organization that meets all of the following criteria: (1) Is fully integrated operationally and clinically to provide a broad range of health care services.… (2) Is compensated using capitation or facility budgets…. (3)
Provides health care services primarily through direct care providers who are either employees or partners of the organization, or through arrangements with direct care providers or one or more groups of physicians….
• Another provision requires one-year enrollment

“The defining characteristic of ACOs is that a set of physicians and hospitals accept joint responsibility for the quality of care and the cost of care received by the ACO’s panel of patients.”
Medpac, Improving Incentives in the Medicare Program June 2009, p. 39 http://www.medpac.gov/documents/jun09_entirereport.pdf

• Evidence purporting to be about IDSs doesn’t support claims made for IDSs.
– Evidence on association between quality and cost
– Literature reviews of HMOs
– Physician Group Practice Demo
– First year results of CMS’s ACO program
• Evidence about tools IDSs allegedly use doesn’t support claims

“Right from the start, it has been one of the great illusions … that quality and cost go in opposite directions. There remains very little evidence of that.”
Donald Berwick, President and CEO,
Institute for Healthcare Improvement
(“‘A deficiency of will and ambition’: A conversation with Donald Berwick,” Health Affairs, Web
Exclusive, January-June 2005, W5-1-W5-9, 7)

“Evidence of the direction of association between health care cost and quality is inconsistent. Most studies have found that the association between cost and quality is small to moderate, regardless of whether the direction is positive or negative.”
Peter S. Hussey et al., “The association between health care quality and cost,” Annals of Internal
Medicine 2013;158:27-34

Number of comparisons
HMO care was better than FFS care
HMO and FFS care were equivalent
HMO care was worse than FFS care
Total number of comparisons
4
19
21
44
Kip Sullivan, “Managed care plan performance since 1980: Another look at two literature reviews,”
American Journal of Public Health 1999;89:1003-1008.

“It is questionable whether the PGP demonstration has saved money. While 4 of 10 PGP sites had low enough growth in risk-adjusted cost to qualify for bonuses, the finding of lower growth in cost depended on the accuracy of the risk adjuster. [Citation omitted.] After 2 years, 5 of the 10 PGP sites had unadjusted cost growth that was materially higher than their comparison groups, 4 had roughly equal cost growth, and only 1 had lower cost growth (RTI 2008). At 9 of the 10 PGP sites, patient risk scores grew faster than at the comparison sites, accounting for the difference between the unadjusted and riskadjusted cost growth.”
Medpac, Improving Incentives in the Medicare Program, June 2009, p 49 http://www.medpac.gov/documents/jun09_entirereport.pdf

“[ACOs] provide a foundation for implementing electronic health records and electronic visits … to improve care management processes and encourage patients to be involved in their own care. The organizations also use performance measures that provide external accountability to payers and the public, and internal metrics to facilitate improved care….”
Stephen M. Shortell et al., “How the Center [sic] for Medicare and Medicaid Innovation should test Accountable
Care Organizations,” Health Affairs 2010;29:1293-1298, 1294.

• Prevention
• “Coordination” and disease management
• Report cards and P4P
• Utilization review
• Electronic medical records
• Mixed evidence on quality; no evidence that
QI requires “integration” (consolidation)

“Although some preventive services do save money, the vast majority reviewed in the health economics literature do not.”
Joshua T. Cohen et al., “Does preventive care save money? Health economics and the presidential candidates,” New England Journal of Medicine 2008;358:661-663.

“To study whether care coordination improves the quality of care and reduces Medicare expenditures, the Balanced Budget Act of 1997 mandated that the Secretary of Health and Human Services conduct and evaluate care coordination programs…. [p. 604] None of the [15] programs reduced regular Medicare expenditures, even without the fees paid to the care coordination programs. Only two programs had a significant difference in expenditures and, in both of these programs, the treatment group [that is, the group getting
“coordinated care”] had higher expenditures.” [p. 611]
Deborah Peikes et al., “Effects of care coordination on hospitalization, quality of care, and health care expenditures among Medicare beneficiaries: 15 randomized trials,” Journal of the American Medical
Association 2009;201:603-618.

“This paper summarizes the results of Medicare demonstrations of disease management and care coordination programs. … In six major demonstrations over the past decade, Medicare’s administrators have paid
34 programs to provide disease management or care coordination services to beneficiaries in Medicare’s fee-for-service sector. All of the programs in those demonstrations sought to reduce hospital admissions by maintaining or improving beneficiaries’ health…. On average, the 34 programs had no effect on hospital admissions or regular Medicare expenditures (that is, expenditures before accounting for the programs’ fees). …. After accounting for the fees that Medicare paid to the programs, however, Medicare spending was either unchanged or increased in nearly all of the programs .”
Lyle Nelson, “Lessons from Medicare’s demonstration projects on disease management and care coordination,” CBO Working Paper 2012-01, January 2012, Congressional Budget Office, http://www.cbo.gov/publication/42924, accessed October 10, 2012.

“[T]he results of our review suggest that, to date, support for population-based disease management is more an article of faith than a reasoned conclusion grounded on wellresearched facts. ... [T]he vendor-run assessments typically do not meet the requirements of peer-reviewed research ....”
Soeren Mattke et al., "Evidence for the effect of disease management: Is $1 billion a year a good investment?" American Journal of Managed Care 2007;13:670-676.

“In each of the four chronic disease populations [coronary artery disease, heart failure, diabetes, and asthma], trends in quality indicators were favorable, but costs did not decrease; instead, they substantially increased.
We conclude that DM is a promising approach to quality improvement but that quality improvements did not reduce costs.”
Bruce Fireman et al., “Can disease management reduce health care costs by improving quality?”
Health Affairs 2004;23(4):63-75, 71.

“[W]e conclude that report cards reduced our measure of welfare over the time period of our study” (p. 577). “[M]andatory reporting mechanisms inevitably give providers the incentive to decline to treat more difficult and complicated patients” (p. 581). “[M]ore severely ill … patients experienced dramatically worsened health outcomes.” (p. 583
David Dranove et al., “Is more information better? The effects of ‘report cards’ on health care providers,” Journal of Political Economy 2003;111:555-588.

“One hundred most common medical and surgical conditions … represent nearly 90 percent of all care provided to Medicare beneficiaries.”
Jha et al., “Low quality, high cost hospitals ….” Health Affairs 2011;30:1904-1911, 1905.

“There has been enough experience to date with pay for performance and transparency to argue convincingly that neither of these additional mechanisms for compensating physicians will achieve the goal of most patients to receive high-quality, humane, and affordable care…. [citations omitted]. These mechanisms … can enhance performance only modestly…. In addition, these mechanisms may have unintended consequences. ….
If only a few measures are used in pay-for performance arrangements, clinicians will design particular aspects of their practice to ensure those measures are achieved, even if it means reducing quality of care in other practice areas.”
Robert Brook, “Physician compensation, cost, and quality,” Journal of the American Medical
Association 2010, 304;795-796

“[I]f providers face a number of tasks and resources are limited, then effort will be allocated toward those tasks that are explicitly rewarded, taking resources away from other activities.
Inevitably, ... the dimensions of care that will receive the most attention will be those that are most easily measured and not necessarily those that are most valued.”
Meredith B. Rosenthal et al.
,
“Paying for quality: Providers’ incentives for quality improvement,” Health Affairs 2004;23(2):127-141,139.

“If payers decide to reward X at the expense of Y and Z, it does not take advanced study in economics to know that there will be some reallocation of time and other resources to X, even though patients might put as high a value on Y and Z.”
Victor R. Fuchs and Ezekiel J. Emanuel ,“Health care reform: Why? What? When?” Health Affairs
2005;24:1399-1414, 1404

“From the present study [which found HMOs were less likely to detect colorectal cancer early] and the earlier breast cancer study … [which found HMOs were more likely to detect breast cancer early] one can infer that the incentives of health plans are to allocate resources to those activities upon which they are measured…. This suggests that preventive screening for conditions such as colorectal cancer that are not required to be in a report card (such as HEDIS) are more likely to be neglected.”
Anna Lee-Feldstein et al, “Health care factors related to stage at diagnosis and survival among
Medicare patients with colorectal cancer,” Med Care 2002;40:362-374, 374.

“Although utilization review is widely used to control health care costs, its effect on patterns of health care is uncertain….We compared the health services provided to
3,702 enrollees whose requests were subjected to utilization review (the review group) with the services provided to 3,743 enrollees whose requests received sham review and were automatically approved for insurance coverage (the non-review group)…. During the study period, the mean age-adjusted insurance payments per person were $7,355 in the review group and $6,858 in the non-review group (P = 0.06).”
Stephen N. Rosenberg et al., “Effect of utilization review in a fee-for-service health insurance plan,”
New England Journal of Medicine 1995;333:1326-1330, 1326.

“[T]he true costs, benefits, and potential harms [of health information technology] are not well described. Almost no evidence exists on the impact of commercially available proprietary systems that are likely to be adopted by most typical
US office practices. Important outcomes (such as quality or quantity of life) are not demonstrably better for patients when they are cared for at sites with advanced health
IT. …. Furthermore, there have been large-scale randomized controlled trials undertaken, and the results seemingly ignored. In one large such trial conducted in the
United Kingdom, where entire practices were allocated to computerized decision support…, the intervention led to no single improvements in more than forty measures of quality when compared to usual care.….
Little rigorous evidence supports the Obama administration’s assumptions that the nationwide rollout of health IT wills save lives and overall health care costs….”
Sumit R. Majumdar and Stephen B. Soumerai, “The unhealthy state of health policy research,” Health Affairs 2009; 5:w900-w908, w904-905 (published online August 11 2009;
10.1377/hlthaff.28.5.w900)

• Merger madness
• Degradation of national debate
– Cause: Distracting public attention from real cause of crisis – waste generated by multiple payers.
– Solution: Attributing IDS results to IDS tactics (e.g.,
“coordination,” EMRs) when results were actually due to application of more resources (e.g., more nurses and social workers), often achieved by anti-social means (e.g., gigantism, Medicare overpayments); adding IDS loopholes to single-payer bills.

“When Congress passed the health care law [the ACA] it envisioned doctors and hospitals joining forces, coordinating care and holding down costs
….
Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups....”
A1, A1.
Robert Pear, “As health law spurs mergers, risks are seen,” New York Times, November 21, 2010,

“The groups in the PGP [Physician Group
Practice] demonstration are large, averaging
500 doctors ….”
Medpac, Improving Incentives in the Medicare Program, June 2009, p 49 http://www.medpac.gov/documents/jun09_entirereport.pdf

• Cherry-picking, lemon-dropping,
• rationing,
• using oligopsony power to extract fee concessions,
• taking overpayments from Medicare,
• not paying for out-of-network care,
• not reimbursing VA, workers comp, juvenile court system,
• not contributing their share of charity, GME and research costs.

Payer Discount
Medicaid
HMOs
Medicare
All other payers
54.1%
37.6%
36.3%
3.2%
Katherine Hiduchenko, “Do Health Maintenance Organizations control costs or shift costs?” New
England Journal of Medicine, letter, 1993;328:971.

Berwick: “What would you say were the primary levers on costs for HMOs?”
Pyle: “….In the Harvard [Community Health] plan, a major lever was a very advantageous deal with
Brigham and Women’s Hospital, under which they became our principal hospital …. We gave the Brigham almost all of our business, in return for which we got a 42 percent discount ….”
Donald Berwick with Madge Kaplan, “’What’s the ethics of that?’ A conversation with Thomas O.
Pyle,” Health Affairs 2008;27:143-150, 146.

"This pattern suggests that MA plans invest more resources in their relatively healthy enrollees, perhaps to differentially retain them. Thus the authors conclude that the Medicare Advantage program both increased total Medicare spending and transferred Medicare resources from the relatively sick to the relatively healthy, and that riskadjustment was not able to address either of these problems."
Jason Brown et al., “The consequences of risk adjustment in the Medicare Advantage program,”
National Bureau of Economic Research, April 2011, http://www.nber.org/digest/sep11/w16977.html, accessed October 13, 2013 http://www.nber.org/digest/sep11/w16977.html

“Finally, we were unable to assess whether increased payments to Medicare HMOs since the Medicare Modernization Act contributed to their better performance on clinical quality measures relative to traditional Medicare. “
John Z. Ayanian et al.,
“Medicare beneficiaries more likely to receive appropriate ambulatory services in HMOs than in traditional
Medicare,”
Health Affairs 2013;32:1228-1235, 1235.

• HMOs must be non-profit
• Must deliver care in their own facilities
• Doctors on salary in HMOs
• Capitation for HMO is for physician care only, does not cover other costs of hospital care (hospitals and other institutions are globally budgeted)
• HMOs may not give physicians financial incentives to deny care
• Separate capital and operating budgets for hospitals
• Patients may disenroll with notice