Accountable Care Organizations were supposed to reduce healthcare costs and maintain profits for health care organizations. Why did Dartmouth College end its ACO program?

obamacare-logo_fullAccountable Care Organizations were supposed to reduce healthcare costs and maintain profits for health care organizations. Why did Dartmouth College end its ACO program?

Accountable Care Organizations (ACO’s) were one of the big ideas designed to reduce healthcare costs under the Affordable Care Act, also known as Obamacare.   While Obamacare has succeeded with increasing enrollment in Medicaid for the poor through the exchanges, and ultimately reduce the amount of uninsured patients, it also set up guidelines for what would be covered and what would not for those who participated.

ACO’s and Medical Homes  were in theory going to reduce costs by helping doctors communicate better and reduce duplication of services, while improving the coordination of care.   While it did set financial rewards for those practices that participated, it also penalized them for those goals that were not met, often negating any benefits to the organization that participated.

Most of the ACO’s, especially in New Jersey are Medicaid based, and Dartmouth had been a larger server of the Medicaid population,  so they are already cost efficient. Most Medicaid practices are reimbursed low amounts for the work they do, when compared to Medicare and other insurers.  The promise of improved systems ultimately did not help Dartmouth earn more for saving more, because while they met many of the incentives for a bonus for cost savings, they were also penalized for measures they could not meet.

According to Dartmouth, part of the problem is that “Rather than trying to measure the performance of individual doctors, they said, Medicare should assess the hospital and the doctors together and hold them jointly accountable for the cost and quality of care provided to a defined group of Medicare patients.”

A larger problem nobody is talking about is the highly fragmented nature of how we practice care in the USA, which increases costs, reduces the quality of care and increases the likelihood of a medical error which is costly to the system. Imagine taking a flight from New York to California and having to change planes several times; which kind of explains the problem of why our current fragmented system of healthcare requires a rethinking of how we deliver care, not just communication.   Unless this changes, our bloated system can never adapt to a more cost effective model.

What happened and where are the cost savings?

doctor prescriptionYears ago, primary care providers would spend sometimes a half hour or more with a patient and may have even done basic procedures in their offices, while being paid for the service.  During the 1960’s, the AMA began to develop specialty programs producing specialists who looked at specific organs or systems and treated only part of the body, rather than treating the body as a number of interactive systems which it is.   As a result, primary care was deemphasized and with the HMO boom, defunded to such an extent, most primary doctors had less time to spend with patients, and ordered more tests and referred to more specialists who were reimbursed at a higher level, while primary doctors continued to see their role marginalized.

Since primary care doctors were supposed to be the managers of the system, or the gateway, we ordered more tests which came back negative and more people were shuttled from doctor to doctor.   This highly inefficient model has morphed into what we have now; a bloated, fragmented system that rewards more procedures, and more medications, while not necessarily improving care, and ultimately, the hospital systems and their large corporations which own many doctors practices are making money along with the drug companies and the insurers who make more under the Affordable Care Act each time they raise your premium due to the 80/20 rule.

Is it no wonder the ACO model is all about trimming the fat from the system, but not fixing the problem of fragmentation? In order to grow, these systems require more people, higher fees and more patients, which is what they got with the Affordable Care Act, however, under the ACO program, it shows the problem of not having true reform and guidelines that reinforce our fragmented system; nobody really saves much and those who are penalized by not reaching seemingly impossible goals under our current model will quit.

We are seeing this as some of the larger carriers trim their offerings on the exchanges and practices drop their ACO status. To put it bluntly, being inefficient even inefficiency lite is not effective, and as systems grow, they need more money, bigger buildings which we pay for and unfortunately, many hospitals use 25% of what they take in just on administration alone, as many of them also forge larger hospital systems and negotiate larger fees to cover this excess.

This is no way to run a healthcare system, as so many middle men profit from it, with many of the doctors being the low men on the financial totem poll, while the salesmen, the drug companies, the hospital administrators and the insurers stand to make more as we allow this charade to continue.

Most doctors are now putting in longer hours, while trying to keep up with their Electronic Health Records, which by some measures can outweigh the time spent with patients.   Wow.

Where to start fixing the problem

doctor dollarLets empower primary care, by reimbursing them better and allowing them to better figure out what is going on their patients.  Doctors will go where the money is and if primary care paid much better than many specialties, many specialists may consider primary care.

Lets look at the concierge model.  The doctor sees a smaller number of patients, and has the time to spend.   While the current model is not necessarily the best or most cost effective, it may be a great model of reimbursement for primary care that adequately funds doctors, keeps costs within a defined limit and will ultimately reduce referrals and tests.

Teach medical providers more about the musculoskeletal system, and move more toward a wellness vs. an interventional model.   Most medical providers work in an antiquated model of the body being a system of disjointed organs that can dysfunction.  Wouldn’t it be refreshing if your orthopedic looked at you rather than just the painful part, which will lead to better diagnosis and fewer surgeries down the line.  Gastroenterologists often run negative tests because many stomach problems involve the fascial system.  Many people with lung and breathing issues have mechanical issues with the pelvis, diaphragm and rib cage, and exercising these areas without improving function first while giving medications is highly inefficient and often is not effective, resulting in chronic lung and breathing issues.

Medical providers should use other providers who understand the musculoskeletal system better than they do.  Chiropractors are chronically underutilized by medical providers who can help their patients and reduce the cost of care, while improving satisfaction.

Move to a Medicare for all model, which can reduce costs administratively, and simplify the drug formularies, and rules that doctors work under, while ensuring that doctors are paid and require fewer people to collect money.  Medicare would also have lower copayments which make sense since people who wait tend to come in with chronic and more expensive problems, something that is not being talked about in todays media. Perhaps Medicaid needs to go away so those on the lower income scale have more choices of where they can go for care. Medicare for all would eliminate the billions wasted on exchanges, and the infrastructure needed to make sure everyone complies and buys insurance which today is very expensive, even with a government subsidy.

Medicare must be able to negotiate drug prices based on known development costs and reasonable profit levels.  Years ago Medicare developed a system called RBRVS which helped them develop sensible fee schedules for providers.   A similar program should be developed for drugs, and a rational model for reimbursement should reduce the middle men who raise the prices for all of us, while many drugs across the border sell for much less.

These are just a few ideas.  Policy wonks, are you listening?