Of Interest

How healthcare providers make, spend, borrow and invest money.

Not ready for takeoff?


Space Shuttle Endeavour launched Monday.

Health policy experts met in Washington last Friday and most politely took apart the proposed plans to launch accountable care under Medicare. On hand to gamely hear the critique was Dr. Richard Gilfillan, acting director of the CMS' Center for Medicare & Medicaid Innovation, who may have lamented his opening invitation to the crowd. “Don't pull any punches,” he said.

Dr. William Jessee, outgoing president and CEO of the Medical Group Management Association, bluntly said the ambitious proposal “seems to me to be a bit of a stretch” after the less-rigorous demonstration project of accountable care payment among 10 physician groups achieved “only marginal success.” Jessee noted not all physician groups secured financial bonuses during the test.

Jessee was among speakers at an Alliance for Health Reform briefing on accountable care.

Under accountable care, providers may earn bonuses based on quality and their ability to control medical spending.

During the first four years of the five-year demonstration, no more than half the physician groups received financial bonuses in any given year.

“I might add that yesterday, the 10 groups that participated in the demonstration project sent a letter to Dr. (Donald) Berwick notifying them that unless subtantiative changes were made in the rule that all 10 of them had decided that they would not participate in the new program,” Jessee said.

“I think that is sort of a telling analysis of where the provider community is,” he added.

Susan DeVore, president and CEO the Premier healthcare alliance, swiftly listed financial obstacles she said could “threaten the viability” of accountable care organizations.

Providers must invest in technology, labor and new ventures to prepare for the payment model. Doctors and hospital see no bonus without savings and must clear a minimal savings threshold before they can earn a payout. Financial incentives total 50% to 60% of eligible savings, she said. CMS will also withhold 25% of any bonus, which CMS said was needed to offset future losses. And providers face the “significant” risk of financial penalties, DeVore said.

“And so if you take a provider perspective and you say we've got to invest all this money on the front end, and we've got all these hurdles of financial risk, it seems like something that might actually threaten the viability of some of these systems,” she said.

“I know CMS wanted not the faint of heart to be a part of this and not anybody that wanted to maintain the status quo, but it feels just too challenging from a financial perspective,” she added.

Gilfillan seemed ready for the poor marks the proposal received and even addressed them in his opening remarks.

“Folks have said we set the bar a little too high,” he said. “We feel that's OK.” Federal officials' goal was to draft the best proposal they could and then seek comment from the industry to identify the best approach. He also challenged the crowd with questions. Is the bar too high for the first year? Is it too high no matter what?

“Are we asking too much?” he continued. “Or are we asking things that make sense if you think about us moving from a siloed, fragmented, unsustainable, financially out of control healthcare system to a safe, seamless, coordinated care system that's patient-, people- family-centered? … Are we on the right road with what we've established?”

Dr. Mark McClellan, director of the Engelberg Center for Health Care Reform at the Brookings Institution and a former CMS administrator, was the least critical. He noted that financial investments required for accountable care could be supported by incentives for other health policy priorities, such as medical homes and health information technology.

One final note:

Perhaps to honor the final launch of the space shuttle Endeavour on May 16, Stuart Guterman, executive director of the Commonwealth Fund's commission on a high-performance health system, compared the dedication needed to overhaul U.S. healthcare finance to the force required to break the Earth's atmosphere.

The CMS, private payers and healthcare organizations must “build up enough thrust to escape the gravity of business as usual,” he said. “There is a strong pull toward continuing business as usual” for payers and providers.

(According to NASA (PDF), when the shuttle's three main engines and two solid-fuel boosters fire at launch, each main engine has enough thrust to power 2.5 Boeing 747s and the combined thrust of the rock boosters is equal to 44 million horsepower.)

“The government is entrusted with protecting the fiscal and policy integrity of the program,” said Guterman, who is also the Commonwealth Fund's vice president for payment and system reform.” Private payers are entrusted with protecting their own financial integrity and achieving their own goals. And providers need to make a margin and they need to be ensured of their own financial survival,” he said.

“But everybody needs to work at understanding that operating in the business-as-usual mode is not going to get us where we want to go and in the future that's going to create big problems for all of us.”

You can follow Of Interest on Twitter @MHmevans.


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