Entries in Cost & Utilization (72)


A Stitch In Time…Will Cost A Lot of Money

By Kim Bellard, December 5, 2013

It almost seems like piling on to pick on hospital pricing anymore, following such incisive articles already this year such as Steven Brill’s Time article “Bitter Pill” or Elizabeth Rosenthal’s “The $2.7 Trillion Medical Bill” in the New York Times, but there just continue to be more examples of how irrational health care charges are in the U.S. health care system. 

Jillian and Joseph Bernstein just published a study in JAMA Internal Medicine, focusing on the difficulty in getting hospitals’ prices for electrocardiograms (ECGs) – and comparing that with the ease of obtaining those same hospitals’ prices for parking.  This followed a study published earlier this year that looked at the difficulty of getting hospitals to quote prices for hip replacement.  The Bernsteins were testing the hypothesis that perhaps hip replacements included too many variables, thus making quoting prices difficult, and so chose the more standardized ECGs. 

The results will probably not surprise anyone.  They contacted twenty Philadelphia area hospitals to ask for the two kinds of prices.  Nineteen of the hospitals were easily able to provide the cost for parking, but only three could come up with a price for the ECG (and don’t you want to know what hospital couldn’t even quote its own prices for parking?).  It’s also interesting to note that the three ECG prices they got ranged from $137 to $1200, almost a tenfold difference.

The authors conclude that “hospitals seem able to provide prices when they want to; yet for even basic medical services, prices remain opaque.”

Meanwhile, Ms. Rosenthal of The Times was at it again, this time in “As Hospital Prices Soar, a Stitch Tops $500.  The article points out not only simple stitches that cost $500 in ERs but also IV bags that cost under $1 but for which hospitals charge $137, or $20 neck braces for which that hospitals want $154.  And these are not the most egregious examples cited. 

Few people pay full charges, of course – except for the people without insurance, who are probably least able to pay them – but the hospitals build their charge structures due to what one physician told The Times was the Saudi sheikh problem: “you don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges.”  That’s what passes for pricing strategy in U.S. hospitals?

The Times attributes the seemingly unfettered hospital pricing to increasing market dominance, using Sutter Health in California as a prime example.  Indeed, a recent study in JAMA found that price increases – not increased demand or aging of the population – accounted for 91% of the increases in overall health care costs since 2000, with market consolidation blamed as one of the key drivers of these price increases. 

We’ve been waiting for patients to care about prices for some time, especially with the advent of high deductible plans, and there is some evidence perhaps that is starting.  A survey by TransUnion Healthcare found that 55% of insured consumers have started to pay more attention to their medical bills in the past year, and that 67% claim they want to know not just how much services cost them directly but also how much their insurance is paying on their behalf. 

The TransUnion survey also found that, when it comes to choosing providers, consumers rated “makes it easy to see the cost of services” right below “world class specialists and technology,” and – amazingly -- above high quality scores or proximity to home.  Even more interesting was that the survey found some correlation between consumers’ perception of quality of care with their satisfaction with the billing experience, a fact to which one hopes providers are paying close attention. 

Ironically, health plans now are expressing some concern over exactly what type of transparency they support.  AHIP, their trade association, indicated that calls for an all-payer claims database, which would facilitate comparisons between providers and across payors, could backfire, raising the spectre of lower paid providers demanding higher reimbursements once they started seeing what other providers were being paid.  Having once led transparency efforts for a large health plan, I can affirm that this concern is very much on the minds of provider contracting staff.

At the same time, many physician specialty organizations, including the AMA, continue to balk at many forms of transparency.  Lately they have questioned the wisdom of a proposal to make public the Medicare payments to physicians, something the Wall Street Journal, among other organizations, has long been pushing for.  They worry that the data could be confusing or misleading to consumers, although it’s hard to see what could be more confusing or misleading to what we’re doing now.

Still, not everyone is a fan of transparency, at least not as it has been attempted so far.  The ever-quotable, always insightful Uwe Reinhardt, writing recently in JAMA, throws cold water on many previous efforts.  In his words, “[T]he idea that American patients should 'shop around for cost-effective health care' so far has been about as sensible as blindfolding shoppers entering a department store in the hope that inside they can and will shop smartly for the merchandise they seek,  In practice, this idea has been as silly as it has been cruel." 

Reinhardt does think that health IT can change the game by more easily making pricing available to consumers, citing such innovators as Healthcare Blue Book and Castlight Health.  He likes the reference pricing approach (which I discussed recently), which involves setting a uniform payment limit and making providers compete for anything they want to try to charge above those limits. 

Of course, simply disclosing costs is only a necessary, but not sufficient, change to bring about true competitive pressures for pricing.  We’re moving to ICD-10 codes, and a cottage industry has emerged to find the funniest examples.  For example, there are separate codes for being struck by a turtle, orca, or duck, not to mention for walking into a lamppost.  You know that in back offices of provider organizations and health plans, diligent bean counters are coming up with prices for each of these. 

If we merely made visible the existing pricing structures, which are built for billing and diagnostic accuracy rather than for consumer understanding, it’d be liking going to Dr. Reinhardt’s metaphorical department store and finding that each item showed the cost of every party involved in the manufacture, marketing, and distribution of the item, plus costs for a variety of additional variables based on the consumer’s needs.  No exactly an Amazon one-click kind of experience.

Despite the big challenges ahead for it, I do believe that, whether it is AHIP, AMA, AHA, or any other providers making a living in the current arcane system, there is a danger that if they don’t get on the transparency bus, they may get run over by it.  The Saudi sheikh strategy can’t last.


“Health Care Productivity” is an Oxymoron

By Kim Bellard, September 26, 2013

It has long baffled me when politicians and others trumpet job growth in the health care sector, while at the same time bemoaning rising health costs, as if there was no connection. Some Rust Belt cities like Pittsburgh and Cleveland have bet a large portion of their economic future on their growing health care industries, and some economists attribute much of the nation’s recent economic revival on the growth in the health care sector. But job growth in itself is not always a good sign. An insightful piece by Robert Kocher suggests that the situation is even worse than I already suspected.

Kocher concluded that productivity is actually dropping in health care, with hiring outstripping output. He figures that the health care workforce has increased 75% since 1990, with almost all of the growth coming from non-doctor workers. There are 16 non-doctor workers for every doctor, and only 6 of those have a clinical role. As Kocher says, “[T]he problem with all of the non-doctor labor is that most of it is not primarily associated with delivering better patient outcomes or lowering costs.” So what the heck are they doing?

Health care professionals would be quick to note that there are ever-more administrative demands, driven by the multiplicity of payors, health care plan designs, and the number of hoops through which they are expected to jump in order to justify payment. Fair enough; it is hard to think of many other industries in which there is so little standardization. Payors want more standardization from providers in how the deliver care, providers want more uniformity from payors in coverage and requirements, and patients are stuck in the middle with neither side listening to them very well.

The latter, at least, may be starting to change. Hospitals are now facing big Medicare penalties for poor scores on HCAHPS, and physicians have to be looking forward to that future. There are some signs that hospitals are paying more attention, such as reported for California hospitals. One of the initiatives mentioned was simply to ensure patient rooms are cleaner. It’s sad that in 2013 it takes the threat of penalties to make this a focus.

Providers may be going overboard on trying to improve patient satisfaction by focusing on amenities. The New York Times’ recent article “Is this a Hospital or a Hotel?” discussed this issue, and included a series of photos that dare the reader to determine which is which. I know I had a hard time distinguishing them. Is this really where our health care spending should be going, and is this improving productivity – or patient care?

Perhaps this kind of focus on amenities partially explains both our high costs and the productivity issues. Ironically, it’s not at all clear that patient satisfaction is directly tied to quality. A recent study found statistically significant correlations between the two, but with only a weak association. Another study from Johns Hopkins similarly found that patient satisfaction does not necessarily reflect the quality of surgical care patients receive.

Moral of the story: patient satisfaction is important, but we shouldn’t let it be a substitute for better empirical measures of quality and outcomes.

A crucial component of improved standardization – and, with it, increased productivity -- is with the data. HITECH is most commonly known for being the stimulus for EHR adoption, but it also spurred the development of health information exchanges (HIEs), which are critical for the sharing of all that desired electronic information. Progress certainly has been made, with HIEs now funded in every state, but a recent report by HIMSS Analytics reminds us that the war is not yet won. Although 73% of surveyed hospital IT executives indicated they participated in an HIE, only 20% indicated that it had improved patient safety, and only 12% believed it saved time for clinicians. The biggest challenge, voiced by 49%, was that other organizations were not sharing data robustly; 64% admit to still relying on faxing to get around this problem.

It is typical health care: spend lots of money – billions in this case – but do not use it to drive ruthlessly towards improving care or cutting costs. To make things worse, providers aren’t able to eliminate the old, paper-based processes, which means work flows can’t become more uniform, and all those new costs become additive.

I have a hard time believing Walmart, Apple, or GE have this much trouble transmitting and using data across their supply chains.

Indeed, David Cutler – former health aide to President Obama – argues that health care will be much more like Walmart once the effects of the information technology “revolution” is more fully realized. He likens health care to the retail industry of the early 1980’s, full of solo practitioners and lacking useful information technology. As companies like Walmart and Amazon have demonstrated, he sees the future as being made up of larger, more integrated institutions, and able to drastically cut administrative expenses through more effective information technology.

Cutler also believes the patient has to become more central -- connected to the most appropriate health resources and providers via technology and finally becoming a more equal contributor in his or her own care.

The lack of a patient-centered system is one of the key barriers Michael Porter names in a recent blog (and article). As he and co-author Thomas Lee say, “[P]roviders are organized and reimbursed around what they do, rather than what patients need.” This is not exactly news to anyone, but it is nonetheless a profound insight. The seemingly haphazard, provider-centric structure of our health care system goes a long way towards explaining both our high costs and the difficulty in improving productivity.

Porter’s solution is that health care must focus on value; again, hardly a unique proposal, but one that is hard to argue with. Porter outlines the barriers he believes is preventing our system from improving value. In addition to the previously mentioned provider-centric structure, he also cites the following barriers:

  • Free-agent physicians operate independently, rather than as part of an integrated team.
  • Patient volume is fragmented, making every patient a special case.
  • Massive cross-subsidies in reimbursement for individual services have distorted care and stalled care integration.
  • No participant in the system has good information about patient outcomes and the cost of care.
  • Information technology has often made care integration and value improvement harder, rather than enabling it.

Today’s health care “system” simply has too many entities pursing too many distinct goals, and limited ability to measure what is happening. None of these entities is particularly happy with the current situation, and most would agree that there’s too much waste in the system. Porter believes we can get to a value-based system, but it will take some radical changes in delivery systems, payment, and measurement. His article even includes a nifty infographic to illustrate. I hope I live long enough to see that future realized.

Cutler compared health care to 1980’s retail, and I would extend this to say that the productivity gap in health care is akin to what happened when personal computers became more widespread in offices in the 1980’s and 1990’s. Economists kept wondering where the productivity gains were. It wasn’t enough to simply add computers to existing business practices; business had to truly re-engineer their processes to take advantage of the new capabilities in order for productivity to soar, as it started to do in the late 1990s. Health care is not there yet.

Maybe the problem with productivity in health care – or even measuring its productivity – is that we’re too vague about exactly what we want to have happen. Process measures and patient satisfaction measures are all well and good, but what matters is what actually happens with the patient. When we can track that more effectively, maybe we can finally start identifying and attacking productivity more effectively.


Gorillas in Our Midst

By Kim Bellard, August 13, 2013

There’s a well-known psychology experiment in which participants were asked to keep track of how many times a basketball was being passed in front of them, only to have a (fake) gorilla stroll in front of them.  Surprisingly, about half of the participants were so focused on their task that they were totally oblivious to the gorilla’s presence.  Researchers call this “inattentional blindness,” and we now have some evidence that it happens even to trained health care professionals as well.

Researcher Trafton Drew recently published results of a study in which he and his colleagues placed an image of a gorilla – I swear, I am not making this up! -- in one of a series of slides radiologists were reviewing for cancer nodules.  Amazingly, 83% of the radiologists failed to detect the image, even though it was 48 times larger than the typical nodule they were looking for and eye tracking indicated the radiologists had looked directly at the image.  They weren’t looking for gorillas and, as a result, did not see them. 

“Inattentional blindness” seems to me an apt description of how those of us in the health care field tend to look at health care.  It’s the old “if the only tool you have is a hammer, then everything looks like a nail” syndrome and it may help account for why our health system is so dysfunctional.  Health care has a lot of hammers and we sure do like to use them.

Take health insurance.  Health insurers are notoriously low rated when it comes to consumer trust, and it’s no wonder: consumers don’t understand their product.  Recent research by George Lowenstein of CMU indicate that only 14% of consumers understand four basic terms – deductible, copay, coinsurance, and out-of-pocket maximum – and only 11% could estimate their cost for a hospital stay given all the applicable data. 

I worked a long time in the health insurance industry and like to think I’d do well on Dr. Lowenstein’s tests, but when it comes down to reading all the fine print from different companies I suspect I’d not know how to evaluate them either.  We’ve simply made coverage too complicated, and if anyone thinks the new health insurance marketplaces will solve this problem, then I suggest they think again. 

It’s all well and good that ACA dictates which preventive services are covered at 100%, what “essential benefits” are, and how much different levels of plans must pay out, but none of that is making health insurance understandable to the average consumer.  We’re so busy debating things like high deductible plans versus first dollar plans, single payor versus competing private plans that we ignore the real problem: not only don’t consumers understand the product but, even worse, the product fails to help them be healthy.

Or take hospitals.  Let’s say you were very sick but had no idea what a hospital was.  Your friend tells you they are where sick people go to get better.  As a result, they’re full of sick people; in fact, it’s more likely than not that you’ll have to share a room with some sick stranger.  All those sick people means lots of germs; the official statistic is that one in 20 patients will pick up an infection during their stay (which is almost certainly understated) and that about 100,000 will die from those each year (which hopefully is overstated).  Part of the problem is that hospitals can’t even do a good job of getting their employees to do simple hygiene tasks like washing their hands. 

When you arrive, you’ll have to fill out lots of forms, giving them information that you no doubt have already given to other health care professionals.  The hospital will expect you to wear a flimsy gown that affords no dignity, and stick a wristband on you like you are a piece of merchandise, which is supposed to lessen the chance that they’ll, say, remove one of your limbs or a kidney by mistake.  An array of different hospital personnel will keep interrupting you for a variety of tests, procedures, and other tasks, virtually none of which you’ll have much advance warning of when to expect and which will make sleeping or resting very difficult.  You’ll spend most of your time in the hospital waiting around, but don’t expect much in the way of good distractions: the food is bland at best and terrible at worst, and the entertainment options on the television might have been state-of-the-art for 1970’s cable. 

Don’t bother trying to find out what anything is going to cost; no one can tell you until long after the fact, and then you’ll be shocked at how expensive everything is – at prices that would make even the most hardened Pentagon procurement officer blanch.  Oh, and there’s a one in five chance that you’ll have to be readmitted within 30 days, either because you didn’t really get better during your stay or because something else bad happened to you when you were there. 

If you learned all this for the first time, you might think twice about being admitted.

Hospitals have been around in some form for centuries, but they didn’t really start turning into these impersonal behemoths until federal money started pouring in after World War II, first with Hill-Burton funds and then with the introduction of Medicare and Medicaid.  The trend has accelerated in recent years.  Hospital buildings have often grown very complex due to repeated expansion and renovation, to the point that visitors need color coded maps just to try to get around.  The equipment in the hospitals, down to the beds themselves, has grown equally complex – and expensive.   Hospitals can certainly help patients in ways that would have been unimaginable even twenty or thirty years ago, but I doubt there are many people who could assert that the hospital experience has improved.

It’s not that smart people aren’t thinking about this.  Take, for example, Patient Room 2020, led by design firm NXT Health in conjunction with Clemson’s Healthcare + Architecture Program, and funded by the Department of Defense.  They’re reimagining what patient rooms should look like and work, and have come up with some cool design changes (see, for example, more pictures in Wired’s article).  As Wired said, it’s like the Apple Store meets Tron (although I think I’d have chosen a better sci-fi movie – or at least one that had a medical facility in it). 

The trouble is, they’re not seeing the metaphorical gorilla.  It’s the concept of the hospital that we’re not seeing properly.  It’s sort of like Windows 8 – some impressive engineering that provides expanded capabilities, but at the end of the day still a kludge trying to maintain an approach that is quickly becoming bypassed by newer ones. 

To carry the analogy further, hospitals and health insurers would surely be the mainframes of the health system, with outpatient clinics and surgical centers perhaps the desktops.  Physician offices and perhaps physical therapy offices might be considered the laptops.  In this analogy – where are the equivalents of tablets and smartphones, and where are the “apps” that make using the system easier?  Again, I mean these as an analogy, not literally, to illustrate that we’re just not doing a good job of rethinking the system.

Just look at all the artificial distinctions that have ossified in our health system: allopathic versus osteopathic (or chiropractic); “Western” versus alternative medicine; primary care versus specialty versus subspecialty; dental versus vision versus medical; workers compensation health coverage versus “commercial” health insurance; state by state licensing of health care professionals and insurance.  I could go on and on, but it’s clear that there are a lot of gorillas that we’re missing with our inattentional blindness. 

For example, a recent study found that one in ten Americans now take an antidepressant.  The problem is, nearly two-thirds of them don’t meet the criteria for depression and probably shouldn’t be taking the prescription.  Both the patients and the prescribing physicians are guilty of going for the medication fix because that’s what they’ve been conditioned to look for.

We need to go back to first principles.  What are the structures we need to encourage and incent consumers to focus more on good health?  What are the types of professionals and support systems that can assist them in that ongoing journey?  How do we better identify when health issues turn into medical problems, and apply the “least necessary” resources to them?  How do we keep the patient in the center even as care becomes more complex?  How much should consumers be expected to pay towards their own health, and how do we want to finance those costs?  Answering these questions from first principles would be monumentally hard, but right now there are not many people even trying.

We’re so busy seeing tests/procedures/pills/payment that we’re missing, not the gorilla, but the patient.


It Was Those Other Guys

Kim Bellard, July 26, 2013

A fascinating study in JAMA on physician’s attitudes towards controlling costs helps illustrate the bipolar attitudes our health system tends to generate.  The study found that physicians generally believe other players in the health system have the major responsibility for controlling costs – led by the popular culprits: trial lawyers (60%), insurance companies (59%), and pharmaceutical/device manufacturers (56%).  Patients were cited by 52%.

Only 36% of the physicians cited physicians as bearing a major responsibility for controlling costs.

When I saw the latter result, I initially assumed the respondents would simply plead ignorance about costs, or at least take the 5th, but nope: 76% agreed that they were aware of the costs of services they recommend.  Even more surprising, 73% disagree that doctors are too busy to worry about costs of tests and procedures, and 75% agree that trying to contain costs was every physician’s responsibility.  There’s a certain cognitive dissonance here that is hard to understand.

As for cost containment strategies the physicians were enthusiastic about, mom-and-apple-pie approaches dominated: promoting continuity of care (75%), the ever-popular “rooting out fraud and abuse” (70%), and chronic disease care coordination (69%).  Only 7% were in favor of eliminating fee-for-service and only 6% liked the approach of bundled payments.  I guess they haven’t gotten the memo that FFS is supposedly dying.

I was particularly disappointed that the physicians were not more enthusiastic about more empirical approaches to controlling costs, with only 51% in support of expanding access to quality and safety data and only 50% supporting head-to-head trials of competing treatments. 

Support for head-to-head trials should be much higher, based on some findings recently released by the Mayo Clinic.  The researchers reviewed ten years of articles in a “high impact” medical journal, looking both at articles studying new medical practices and ones evaluating existing treatments.  The results are disturbing: 40% of the existing treatments reviewed were no better or worse than the prior standards of care; i.e., the results recommended reversing an existing practice that was considered the current standard of care.  Only 38% reaffirmed existing practices, with the rest inconclusive.  This is medicine by ready-shoot-aim.

New treatments fared better, with only 17% failing to improve upon existing practices.  I suppose I should be comforted by that result, but it just makes me wonder if the discredited practices ended up being used anyway (especially if they resulted in higher revenue).  

Another recent survey of physicians – this one by Wolters Kluwer Health – didn’t paint a better picture than the JAMA study.  For one thing, 34% reported that it was somewhat or very likely that they’d leave their practice in the near future.  The respondents found it challenging to manage shifting reimbursement models with payors (91%) as well as their practice’s financial management (90%); as a result, 88% reported it challenging to spend enough time with patients.  Improving patient care was seen as further down their list of challenges (78%, but with the lowest result for being seen as very challenging -- only 20%). 

These physicians do think that HIT is making progress in having an impact on ensuring patient safety and in improving quality of care (both 55%), but are more skeptical that it is making progress in improving ease of use (56% disagree) or managing costs (63%). 

In terms of areas of focus for the next 3-5 years, 48% listed improving practice efficiency, 34% planned to explore different business models, while only 14% were focused on public reporting of quality metrics and only 11% wanted to concentrate on patient safety.  To be fair, 31% did hope to adopt technology to improve clinical decision-making/evidence-based medicine. 

One likes to think that it truly isn’t all about the money, but it’s also easy to be cynical about this.  The Washington Post recently wrote about how an AMA committee is driving Medicare reimbursement decisions, using some questionable assumptions.  The Post asserts that some of the committee’s assumptions grossly exaggerate the time involved in procedures, such as for colonoscopies.   The assumptions can be as 100% higher than actual time and effort. 

The Post also notes that the committee is seven times more likely to raise time estimates than to lower them, in apparent contradiction to presumed technology and productivity advances.  Despite the billions of dollars at stake, CMS only uses “six to eight” people to review the recommendations, and none of them are devoted full-time, in contrast to the “hundreds” of people the AMA and specialty societies use to develop their recommendations.

Former Medicare chief Tom Scully is quoted as saying, “The concept of having the AMA run the process of fixing prices for Medicare was crazy from the beginning.  It was a fundamental mistake.”  The Harvard researcher who originally developed the RBRVS point system, William Hsiao, says, “The AMA fought very hard to take over this updating process.  I said this had to be done by an impartial group of people.  This is highly political.”

The AMA committee’s recommendations do not directly result in higher payments, nor is it likely that most individual physicians are aware of the assumptions embedded in their payment rates, but the process is another illustration at how no one is minding the store.

I would be remiss if I failed to mention the IOM’s new report “Variation in Health Care Spending: Target Decision Making, Not Geography.”  They were asked to investigate since Congress has been considering shifting money from high-cost areas of the country to lower cost ones.  Somewhat surprisingly, IOM did not support that tactic.  They reaffirmed that geographic spending differences do exist, for both Medicare and private insurance, and that there is essentially no correlation between quality and spending.  However, they did not support geography-based reimbursement models, finding that the geography is not the issue.

For Medicare, they found that higher spending differences were most associated with post-acute care, and to acute care only to a lesser extent; indeed, post-acute care differences accounted for 73% of Medicare’s geographic spending differences.  For private insurance, spending differences were due to price markups rather than utilization differences.

The IOM’s main conclusion is in the subhead of their report’s title: “Target Decision Making, Not Geography.”  Now if only we could figure out who is making the decisions.   The physicians don’t think it’s them; the government is delegating theirs to special interests and lobbyists; the payors can’t negotiate tough enough with the provider systems (especially now that those systems continue to consolidate); the provider systems – well, they’re terrified that the physicians will stop generating all that revenue for them. 

We can continue to pin the tail on new culprits, but we need to get past blame.  I’m naïve enough to think that there aren’t many villains here (although there are, allegedly, some), but it boils down to too many involved parties not being willing to be accountable for their actions.

When it comes to increasing value – not just controlling health care costs but also improving quality – in our health care system, I think of words of the always wise Benjamin Franklin: we must all hang together, or assuredly we shall all hang separately.


CMS Pronouncements on Pioneer ACO Results and 2014 HIX Premiums

By Clive Riddle, July 18, 2013

This week CMS announced results from the first performance year of the Pioneer Accountable Care Organization (ACO) Model, along with a new report that finds premiums in the Health Insurance Marketplace will be nearly 20 percent lower in 2014 than previously expected.

Here are the Pioneer ACO results that CMS is touting:

  • Costs for the more than 669,000 beneficiaries aligned to Pioneer ACOs grew by only 0.3 percent in 2012 where as costs for similar beneficiaries grew by 0.8 percent in the same period.
  • 13 out of 32 pioneer ACOs produced shared savings with CMS, generating a gross savings of $87.6 million in 2012 and saving nearly $33 million for Medicare
  •  Pioneer ACOs earned over $76 million in compensation.
  • Only 2 Pioneer ACOs had shared losses totaling approximately $4.0 million.
  • All 32 Pioneer ACOs successfully reported quality measures and achieved the maximum reporting rate for the first performance year, with all earning incentive payments. 
  • Overall, Pioneer ACOs performed better than published rates in fee-for-service Medicare for all 15 clinical quality measures for which comparable data are available.
  • 25 of 32 Pioneer ACOs generated lower risk-adjusted readmission rates for their aligned beneficiaries than the benchmark rate for all Medicare fee-for-service beneficiaries.
  • The median rate among Pioneer ACOs on blood pressure control among beneficiaries with diabetes was 68 percent compared to the comparison value of 55 percent as measured in adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001. 
  •  Pioneer ACOs performed better on clinical quality measures that assess low density lipoprotein (LDL) control for patients with diabetes. The median rate among Pioneer ACOs for LDO control among beneficiaries with diabetes was 57 percent compared to 48 percent in an adult diabetic population in 10 managed care plans across 7 states from 2000 to 2001.
  • Pioneer ACOs were rated higher by ACO beneficiaries on all four patient experience measures relative to the 2011 Medicare fee-for-service results.

CMS did disclose that seven Pioneer ACOs that did not produce savings intend to switch to the Medicare Shared Savings Program, and two Pioneer ACOs have indicated their intent to leave the program. 

The Wall Street Journal  didn’t interpret these results as rosily as did CMS. Here is the WSJ take, from their July 16th article Mixed Results in Health Pilot Plan: “All of the 32 health systems in the so-called Pioneer Accountable Care Organization program improved patient care on quality measures such as cancer screenings and controlling blood pressure, according to data to be released Tuesday by the Centers for Medicare and Medicaid Services. But only 18 of the 32 managed to lower costs for the Medicare patients they treated—a major goal of the effort. Two hospitals lost money on the program in the first year. Seven have notified CMS that they intend to move to another program where they will face less financial risk. Two others have indicated they intend to leave the program,”

On the Health Insurance Marketplace front, CMS touted findings from a just released twelve-page ASPE Issue Brief: Market Competition Works: Proposed Silver Premiums in the 2014 Individual and Small

Group Markets Are Nearly 20% Lower than Expected. CMS notes the report found that:

  • In the 11 states (including the District of Columbia) that have made information available for the individual market, proposed premiums for 2014 are on average 18 percent lower than HHS’ estimate of 2014 individual market premiums derived from CBO publications.
  • In the six states that have made information available in the small group market, proposed premiums are estimated to be on average 18 percent lower than the premium a small employer would pay for similar coverage without the Affordable Care Act.
  • Preliminary premiums appear to be affordable even for young men. For example, in Los Angeles - the county with the largest number of uninsured Americans in the nation - the lowest cost silver plan in 2014 for a 25-year-old individual costs $174 per month without a tax credit, $34 per month for an individual whose income is $17,235, and a catastrophic plan can be purchased for $117 per month for an individual.

Here a chart provided in the ASPE report, comparing the ASPE premium estimate for Individual Silver premiums compared to actual premiums for applicable states:

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