In a critique of Accountable Care Organizations last October I wrote
: “Now comes news that three more of the original groups will jump ship, leaving only 19 of the original 32 still on board. A nearly 50 percent attrition rate should be seen as a death knell for the concept, as these were likely the best of the best, and the inducements most generous.
"Reasonable people would head back to the drawing board. But we are dealing with government bureaucrats, health policy wonks, and administrators. They will damn the torpedoes and push on at flank speed.”
Sure enough, Secretary of HHS Sylvia Mathews Burwell recently announced plans to move 50 percent of Medicare spending into Accountable Care Organizations and other forms of so-called “payment for value.” This initiative is being pushed through by special interests that expect to benefit. Patients and practicing physicians, the people most affected, are simply not represented.
Reporting from The Wall St. Journal suggests who will benefit from this approach: “The secretary on Monday was flanked by top insurance industry, health system, medical association, and consumer-group executives as she announced a goal that she described as historic.”
Ms. Burwell is not content with destroying only Medicare. According to Medscape, “Burwell also announced the creation of a Health Care Payment and Learning and Action Network that would work with private health insurers, providers, employers, and state Medicaid programs to hasten the spread of alternative payment models outside Medicare.”
Medscape quotes Douglas Henley, CEO of the Academy of Family Physicians: "We're on board, and we're committed to changing how we pay for and deliver care to achieve better health."
And Robert Wah, President of the American Medical Association: The HHS plan "aligns with the [AMA's] commitment to work toward innovative care delivery reform that will promote high-quality and efficient care for our nation's seniors who count on Medicare, while reducing the administrative and regulatory burdens physicians face today."
And so the leaders of “organized medicine” are on board with policies that will lead to the destruction of private medical practice, which depends completely on the much-maligned fee-for-service payment mechanism. Perhaps they don’t fully comprehend the implications of what they are endorsing.
The fee-for-service private medical system has been the bedrock of American medical care. Far from driving up costs, it is the one part of the system holding down costs. The third-party payment system, by removing the price signal at the point of service, is what drives up costs. And the never-ending regulations and hurdles from third-party payers, both private and governmental, impose costs on medical transactions.
A direct pay (non-third party) medical practice is a model of efficiency. A patient visits the doctor, and pays directly for the visit at the point of service. No bill to an insurance company is generated (though the patient may choose to submit a claim). Personnel dedicated to billing, obtaining various prior authorizations, and following up on denied claims, are eliminated.
Any incentive to churn the system to increase profits is opposed by the patient’s ability to pay, and reluctance to submit to possibly unnecessary or excessive treatments. And the physician is honor bound by a code of ethics not to harm the patient with over treatment.
The fee-for-service system aligns payment with actually providing a service for a patient. Arguably, this is exactly what patients want, especially when they are facing serious disease. Patients expect timely care from a doctor who is representing their best interests. The ACO, like its predecessor, the HMO, provides the opposite.
HMOs, ACOs, and “bundling” share a common trait: A fixed sum is available to provide medical care to a patient. Spend less, and keep the difference as profit; spend more, and incur a loss. If you were diagnosed with kidney disease, or cancer, or heart failure, which system would you prefer?
ACOs must fail because they 1) are based on false assumptions; 2) are top-down and administratively top-heavy; 3) create “savings” that become profit (no real savings); 4) rely on problematic electronic health records; 5) will use so-called quality benchmarks that will end up harming individual patients.
The push for ACOs continues the assault on private practice, which is the last refuge of high-quality, individualized care. Physicians and patients must stand up in opposition.
Since 1990, Dr. Amerling has been on staff at the Beth Israel Medical Center (now Mount Sinai Beth Israel) in New York. He served as director of Outpatient Dialysis from 1995-2012. Amerling is board certified by the American Board of Internal Medicine for Internal Medicine and Nephrology. He also is president of the Association of American Physicians and Surgeons. He has been published in many journals. For more of his reports, Go Here Now.
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