The IDS - Physicians for a National Health Program

The IDS: Health policy’s Higgs
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).
(Summary cont.)
• 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
No clear definition of IDS
“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
Wenke Hwang et al., “Effects of integrated delivery system on cost and quality,” American Journal of Managed
Care, 2013;19(5):e175-e184,, accessed September 18, 2013.
HMO = ACO = IDS: Context indicates
IDS is another label for HMO and ACO
“Kaiser Permanente Northwest … [is] a midsized health maintenance organization
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,
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,
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.
IDS = HMO: Lewin Group’s description
of SB 921 (CA’s “single-payer” bill)
“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 can’t be defined
“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, accessed
February 3, 2011.
IDS/ACO definitions are circular,
aspirational, or focused on regulation
• 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.
Example of circular and regulationfocused definition
• 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
Example of aspirational definition
“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
Medpac, Improving Incentives in the Medicare Program June 2009, p. 39
IDS proponents cannot produce
evidence supporting claims
• 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
Quality improvement does not save
“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)
Quality improvement does not save
“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
HMOs offer inferior care
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
Kip Sullivan, “Managed care plan performance since 1980: Another look at two literature reviews,”
American Journal of Public Health 1999;89:1003-1008.
ACOs don’t cut costs: PGP (ACO) demo
“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
Advocates are vague about the tools
IDSs will use
“[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.
Evidence does not support costcontainment claims for:
“Coordination” and disease management
Report cards and P4P
Utilization review
Electronic medical records
• Mixed evidence on quality; no evidence that
QI requires “integration” (consolidation)
Prevention does not save money
“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.
“Coordination” does not save money
“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.
Coordination/disease management
does not save money
“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,, accessed October 10, 2012.
Disease management does not save
“[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.
Disease management does not save
“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.
Report cards/P4P damage quality via
“[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.
Report cards/P4P induce teaching to
the test (i.e., resource shifting)
“One hundred most common medical and
surgical conditions … represent nearly 90
percent of all care provided to Medicare
Jha et al., “Low quality, high cost hospitals ….” Health Affairs 2011;30:1904-1911, 1905.
Report cards/P4P damage quality
through resource shifting
“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
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.”
mechanisms may have unintended consequences. ….
Robert Brook, “Physician compensation, cost, and quality,” Journal of the American Medical
Association 2010, 304;795-796
Report cards/P4P damage quality
through resource shifting
“[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.
Report cards/P4P induce shifting of
“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
Report cards/P4P induce shifting of
“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.
Utilization review does not save
“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.
EMRs do not save money; evidence on
quality is limited and mixed
“[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;
IDS fad has side effects
• 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.
ACO craze provoked mergers
“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
Robert Pear, “As health law spurs mergers, risks are seen,” New York Times, November 21, 2010,
A1, A1.
ACOs require large size
“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
IDSs use cost-shifting tactics which
give them more resources
• Cherry-picking, lemon-dropping,
• rationing,
• using oligopsony power to extract fee
• 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.
HMOs cost shift: Discounts offered by
Twin Cities hospitals to HMOs
All other payers
Katherine Hiduchenko, “Do Health Maintenance Organizations control costs or shift costs?” New
England Journal of Medicine, letter, 1993;328:971.
HMOs shift costs: Enormous discount
granted to Boston HMO
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.
MA plans shift resources to healthier
"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
Jason Brown et al., “The consequences of risk adjustment in the Medicare Advantage program,”
National Bureau of Economic Research, April 2011,,
accessed October 13, 2013
Example of ignoring IDS’s illicit
resource advantage
“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.
HR 676 HMO loophole
• 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

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