Uwe Reinhardt's timely comments on ACOs and P4P

Pay for Performance Extends to Health Care in Experiment in New York

By Anemona Hartocollis
The New York Times, March 30, 2015

(A)ccountable care organizations are appearing around the country for Medicare recipients, with mixed results. New York, which has the country’s largest Medicaid budget, is committing more than $1 billion a year for five years to the experiment.

“If we succeed, patients will be more likely to get the right tests and medicine, doctors will benefit as we simplify the business side of their practices, and businesses will benefit as we hold down health-care cost growth,” Sylvia M. Burwell, secretary of the federal Department of Health and Human Services, said this month in New York City, during a visit to promote accountable care organizations.

In the future, if the experiment works, providers may be paid solely based on outcomes rather than volume of services, with better-performing groups earning more than those whose patients are in worse shape.

Perhaps the most unusual alliance is one that brought together more than 1,000 primarily Hispanic doctors serving Upper Manhattan and the South Bronx and Asian doctors working in the Chinatowns of Manhattan, Brooklyn and Queens; and North Shore-Long Island Jewish Health System, a hospital chain that serves a largely middle-class population. The nonprofit venture they formed, called Advocate Community Providers, counts more than 770,000 patients, by far the most of the 25 groups taking part in the program.

The force behind this group is Dr. Ramon Tallaj, a former health official in the Dominican Republic who moved to the United States in 1991.

But some of the Medicaid panel members questioned the logic of having such a large, diverse group of doctors and patients like Dr. Tallaj’s, without any obvious connections among them.

“What’s the glue that holds them together?” asked Stephen Berger, a panel member and investment banker.

The sheer size of the group could also make it complicated to track patients and determine who deserves credit for any improvements in their health. Patients may continue to see any doctor they wish, even if that doctor is not in the group.

Likewise, Dr. Tallaj acknowledged that if his patients did well, he could reap the benefits even if he had not seen them, though he said that was not his motivation.

Uwe Reinhardt, a health economist at Princeton, thought the idea was not as promising as some had hoped. “People thought there was maybe more waste than there actually really is,” he said.

Dr. Reinhardt was also dismissive of performance bonuses for doctors. “The idea that everyone’s professionalism and everyone’s good will has to be bought with tips is bizarre.”


By Don McCanne, M.D.

Value rather than volume. Quality rather than quantity. Paying for performance. Reducing costs by eliminating wasteful services. Making providers accountable and rewarding them based on the value of their services. These concepts have become memes in the political and policy communities yet with very little in the health policy literature to confirm that these should be the driving principles behind health care financing reform, though there are quite a few studies that confirm that these concepts lead to mediocrity, at best.

It is urgent that we reconsider these concepts since in two weeks the Senate is expected to pass H.R. 2 which is designed to change payment methods from fee-for-service to models of payment that instill these ideas that are more rhetoric than science-based policy. Yet the rhetoric is leading to implementation of the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). These will have a major impact - more negative than positive - on the actual delivery of health care services.

Who is behind this meme-driven revolution in health care? Much of the academic policy community. Legislative and administrative staff members. Politicians. Representatives of vested interests that will benefit from these changes. Well-meaning consumer organizations. Although some are driven by greed, most are on meme-fed autopilot and have gathered in lemming fashion charging forward to a goal in which utopian perceptions will be dashed by the reality of plowing into the shoals of flawed policy.

Although it is quite disconcerting to read the meaningless rote responses of some of the more noted representatives of the policy community, we do have the comfort of of being able to hear from some of that community who bring us reality by questioning these conclusions that are based more on wishes than on objective evidence.

One of those on whom we can rely is Uwe Reinhardt. His brief comments in this article should give the Senate pause as they consider H.R. 2. Current political activity seems to be based on the concept that these flawed policies can eliminate much of the wasteful health care services provided. As he tells us, the problem with that rationale is that there is not nearly as much waste as has been thought. The initial results of experimentation have confirmed that there just is not that much recoverable by attempting to reduce or eliminate care that is not beneficial.

Perhaps Uwe Reinhardt’s most important lesson is in his comments about paying for performance: “The idea that everyone’s professionalism and everyone’s good will has to be bought with tips is bizarre.” What could be more fundamental than the ethical foundations driving the practitioners of the healing arts? The policy people have it all wrong, and they do not seem to understand why.