Amy Goldstein has an important article in today’s Washington Post detailing the place Don Berwick, the Medicare and Medicaid administrator finds himself in.
It is all but certain he will have to leave his post at year’s end, when his recess appointment expires, because the Senate will not confirm him for a lack of Republican support.
Berwick is one of the most respected health care experts in the country—his career has been dedicated to improving quality first and with that the cost of care. With the new law giving his agency more opportunities to experiment with new approaches and the ability to more quickly implement the things that work, he was the ideal choice.
But with the Democrats ramming the law through without a political consensus to support it, Berwick also became the political whipping boy for opponents to pile on. That he has been willing to point to the things that work in places like Britain only gave the political opportunists plenty of red meat to throw into an already red hot ideological debate.
In my mind, the great frustration in health care is that we really aren’t so far away from being able to make the system far better than it is—in both its quality and its cost. To test and perfect the best ideas we really need to be willing to try new things—many of which won’t work but can form the basis of finding out what does work.
His proposed Accountable Care Organization (ACO) rules were a disaster and he should have known better. But there is also no reason why that failure can’t lead to a better outcome—if finding the right answer is what we are all ultimately interested in.
But, particularly in this red hot political environment made more red hot by one side always more willing to jam their ideas down the other side’s throat—whether that be a new health care law or a debt ceiling solution—people like Berwick get caught up in the bigger political fight.
My sense is that a Republican President, as much as a Democratic one, could have as easily appointed Don Berwick CMS administrator.
People say Don Berwick’s failing is that he is a “political neophyte.” It is the reality that once you get to Washington having the right answer isn’t enough—you have to be able to get it through the system. What does it say about Washington when a first class expert speaking what he sees in good faith as “truth” is seen to be naïve and can be quickly dismissed for “having a record on rationing care?”
But Don Berwick never had a chance in an environment where trying to find the right answers takes a back seat to scoring political points.
With health care costs and the nation’s debt crisis now coming to a place that must finally be changed, we can’t afford this toxic take no prisoners political environment much longer.
In fact, August 2nd might be the day it all comes home to roost.
Robert Laszewski currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog, where this post first appeared.
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Nate–
I wrote, at length, about risk in Bull! A History of Boom and Bust.
Warren Buffet recommended Bull! in Berkshire Hathaway’s annual report.
But I guess Buffett doesn’t understand risk.
And Leon Levy didn’t understand why Long Term Capital Management went down.
“Risk is, by definition, unknown or incalculable.”
LOL sometimes I think you say this stuff trying to be funny and know your not right, I don’t want to imagine any otehr scenerio that you actually beleive what you just said.
The entire insurance industry is predicated on defining and predicting risk. You might not know who will get cancer but you know out of a representiitve population of X you will have 5 cases. You might not know when Matt will pass away but you know the average life expectancy of a 35 year old is 42 years.
A chance of injury or loss doesn’t mean its unknown. They know how many houses will burn down and how many auto accidents there will be. Without this knowledge and control of risk there would be no insurance, they would either be bankrupt or charge premiums so high no one would buy it.
“I’ve written quite a bit about risk in the financial world.”
Writting about it doesn’t mean you understand it, as this comment proves.
“The notion that one can calculate or measure risk with any certainty is what brought Long Term Capital Management Down.”
No Maggie measuring risk had nothing to do with LTCM’s fall, it had everything to do with leverage, tax cheating, and the collapse of Russia.
“To take on risk is to gamble.”
No to gamble is to take risk, one can assume risk with no potential for loss. I have clients that self fund their health insurance becuase there was no chance they wouldn’t save money. They assume the risk becuase they were guaranteed a positive return. I have invested in the stock market with a guaranteed postive outcome.
“Empirical reserach suggests”
To risk multimillion or billion dollar companies on the suggestion of a positive outcome is to gamble. Your ignoring the specific concerns the hospitals had, probably becuase you don’t understand them. Assuming risk on an unidentified population is gambeling. That is the issue they have.
““ACOs pay a penalty to Medicare if costs for their patients increase beyond the levels projected by CMS.” But on the other hand, ACOs would not have sufficient information to determine in advance the population of patients they would have to care for, and the rules do not adjust for changes in the health status of patients or costs beyond control.”
You would need to understand insurance to grasp what they are saying, trust me this is a major problem for someone being asked to bare the liability for this undefined population.
Every population has a predicable cost once you reach a critical size, couple thousand roughly. To predict cost without knowing the populaiton is not possible or the prediction would be of so little value.
“Hospitals would prefer not to be vulnerable to “the unexpected.”
No Maggie, again your speaking for other people, they have no problem assuming liability for patients, I have had the meetings with them. They don’t want to be on the hook at a set price for someone they know nothing about.
“The goal of patient-centered reform is to give hospital CEOs more reason to worry about risks to patients.”
please don’t be so niave, the goal of ACOs is to save Medicare. Without substantial cost reduction the program is going to collapse and take with it the whole new deal/liberal idelogy dogma. Congress doesn’t care about patients they care about patients not costing so damn much.
Nate–
You write: “sounds like they are afraid of unknown risk”
Risk is, by definition, unknown or incalculable. Dictionary defintion: “a chance of injury or loss.” Chance. . .. A legal dictionary defines risk as “uncertainty as to chance of loss.”
As it happens, I’ve written quite a bit about risk in the financial world. The notion that one can calculate or measure risk with any certainty is what brought Long Term Capital Management Down. (See Leon Levy’s brilliant
The Mind of Wall Street” Levy ran Odyssey Partners, a famous hedge fund.”
See Nassim Taleb’s “Fooled by Randomness” and Peter Bernstein’s “Against the Gods”–the two best studies of risk. As Bernstein points out “the unexpected lies in wait for us.”
To take on risk is to gamble. One hopes to reduce risk. And under the ACA
rules, hospitals are expected to do their best to reduce risk. Empirical reserach suggests that if they practice evidence-based medicine, follow safety protocols, and enlist everyone to collaborate, they can reduce waste adn errors. But their are no guarantees that their profits will increase. They could lose money. That is what “risk” is all about.
Hospitals would prefer not to be vulnerable to “the unexpected.” But the truth is that any patient who enters a hospital is “risking” the unexpected. If chance turns against him, he may pay with his life.
The goal of patient-centered reform is to give hospital CEOs more reason to
worry about risks to patients.
http://www.beckershospitalreview.com/hospital-physician-relationships/developing-an-aco-how-to-manage-risks.html
http://www.physicianspractice.com/blog/content/article/1462168/1847448
Erickson. He anticipates between 75 and 125 applications at the onset, with many waiting for best practices to emerge first. ACOs must, however, wait until Jan. 1 of each year to register, although the proposed rule by CMS indicates that there is a “possible” additional July 1 start date to come next year.
So that means, said Erickson, that those jumping in for 2012 — the “sophisticated players” — will likely elect for Track 2, having established their ACOs and partnerships well in advance and willing to take on risk for greater rewards.
http://www.hfma.org/Templates/Print.aspx?id=23532
“Organizations of providers, however, have objected that the potential savings are uncertain, and the rules create too great a risk of loss.”
“It was predictable that hospitals and
some doctors would balk at the idea of taking financial risk.”
These are not the same statements. Balking at the idea of taking risk is not the same as taking on a known loss. If you don’t understand this difference I wonder how you ever reported business.
Insurance carriers take on risk, they will not insure a high risk pool without government subsidy or something to offset the known loss they will take. You did a terrible job reporting what one blogger said, lets look at everything you left out;
“The doctors’ organization said the ACO rules require that “ACOs pay a penalty to Medicare if costs for their patients increase beyond the levels projected by CMS.” But on the other hand, ACOs would not have sufficient information to determine in advance the population of patients they would have to care for, and the rules do not adjust for changes in the health status of patients or costs beyond control. Consequently, ACOs would not be able to “evaluate the nature or magnitude of the down-side risks they would be accepting” or be confident they could recoup the steep “the up-front investments needed to build the appropriate ACO infrastructure.”
Wow that sure doesn’t sound like they are afraid of risk, sounds like they are afraid of unknown risk, as any prudent person would be.
“the American Hospital Association revealed its estimate of the cost of forming an ACO as $11 million to $26 million in the first year, which is 6 to 14 times the government’s $1.8 million estimate of the startup expenses.”
I won’t even go into how much of a joke that 1.8 million figure was, perfect example of an academic having no clue what they are talking about. If your lucky the attorney bill might come in under 1.8 million.
What were you saying about healthcare paying for poor work? Terrible reporting, if you can’t even copy an idea and repeat it….your not creating original thought, you just sharing what others think and you can’t even do that accuratly.
Nate:
“Since publicatoin of the government’s rules for forming ACOs in April, hospitals and doctors have balked, objecting that the provisions are too complex and subject them to substantial risk of financial loss rather than gain.” http://www.markpine.us/?p=3783
http://www.beckershospitalreview.com/hospital-physician-relationships/premier-offers-aco-recommendations-to-cms.html
Premier healthcare alliance has written a letter to CMS with recommendations for ACOs, including the immediate allowance of multiple payment models, according to a Premier news release.
The letter mentions the following recommendations:
• CMS should allow multiple payment models within the ACO model from the start, such as shared savings, bundled payments, capitation or a combination of these.
• Existing legal exceptions regarding one provider entity funding the infrastructure costs of another need to be broadened, particularly for small physician practices.
• CMS should allow ACOs to participate in the medical home demonstration programs.
• The program should be transparent to beneficiaries.
• CMS should develop criteria focused on the outcomes of care rather than processes used to achieve it.
• CMS should structure ACO quality reporting requirements to satisfy the Hospital Inpatient Quality Reporting Program, the Physician Quality Reporting Initiative and meaningful use programs.
Premier serves more than 2,400 hospitals and health systems. The letter was issued as a response to CMS’ request for comments regarding aspects and policies of ACOs.
that pretty much destroys everything you just made up, er I mean said.
Hospitals want more opportunities to take risk
The big take away though is this;
“CMS should develop criteria focused on the outcomes of care rather than processes used to achieve it.”
Typical academic/politician, outcomes don’t matter its the process to try, and they said no it should be about the outcomes.
“Consensus was impossible. Republicans have made it clear that their primary goal is to make sure that Obama is not re-elected. ”
Prior to that Obama made it clear he was going to pass his version of healthcare without any input from Republcians. Nice job starting half way through the story Maggie. Republicans tried to meet with Obama and he wouldn’t allow it. It was his actions on healthcare reform that caused them to so strongly advocate for his defeat.
“Medicine is perhaps the only sector where you are almost always paid even if you do a bad job. In that sense, the provider takes no risk.”
Government and Journalism, how many years did you make a living at it?
“It was predictable that hospitals and
some doctors would balk at the idea of taking financial risk.”
Dishonest hackery, I have never heard a hospital object to taking risk, in fact prior to this and to this day we are working with hospitals to set up vehicles to take risk, even had a discussion with Paul about this. Their objection to ACOs was the reporting was impossible. The amount of work it created was not possible. You need to go do some more 3 hour blocks of internet reserach or gosh forbid maybe call a couple hospitals.
Regarding the notion that Democrats rammed the legislation through without a consensus . . .
Consensus was impossible. Republicans have made it clear that their primary goal is to make sure that Obama is not re-elected. Thus they were committed to opposing any major piece of legislation that he supported–particularly one this big.
The PPACA is t he major achievement of his first term.
As for Berwick and the ACO rules– It was predictable that hospitals and
some doctors would balk at the idea of taking financial risk.
Medicine is perhaps the only sector where you are almost always paid even if you do a bad job. In that sense, the provider takes no risk.
Paul Levy recently wrote about a survey of hosptial CEOs which showed that the majoirty did not llist “patient safety” or “quality” as among their two top pirorities.
Why? Beause hospitals are paid whether or not patients acquire infections, whether or not they do a good job of controlling a dying patient’s pain, whether or not the oncologist refuses to let a palliative care specialilst talk to the patient, whether or not they use checklists during surgery . . . .
The is little financial incentive to make patient safety and quality a hospital’s top priority.
Docctors and hospitals are complaining that it is not at all clear that ACOs will help them make more money. They migiht even lose money!! They would like to be eligible for bonsues without taking financial risk!!
The goal of ACOs (and the goal of reform) is not to enrich hospitals and doctors. Poorly run hospitals will suffer. Wasteful hospitals will suffer.
Hospitals that do not insist that all doctors follow rules designed to keep patients safe will suffer.
As Berwick and others have said, “hospitals need to learn to think of themsleves as cost centers, not revenue centers.” Their goal should not be to increase revenues. Rather, a hospital’s go should be to reduce its costs–and the cost to payors.
Berwick has also said that CMS “anticipated” the objections.
I certainly anticpaetd the objectoins. Anyone could foresee that hospitals
would object to rules that force them to focus on quality, report quality, and
meet quality requirements.
Health Care Providers are going to be held “accountable.” They are not accustomed to being held accountable. Of course they are uncomfortable .
Of course they find the rules “onerous.”
It’s disappointing, but not suprising, that I haven’t seen a single hospital or physicians’ group suggest ways of strenghtening the rules to make them
better for patients. Instead, every group is saying: “This isn’t good for US.”
ACOs are supposed to be patient-centered, not provider-centered.
Do the rules need to be fine-tuned? No doubt.
Will it take longer than intitially hoped to get ACOs up and running?
Almost certainlly.
Are they a “disaster.” No.
” With the new law giving his agency more opportunities to experiment with new approaches and the ability to more quickly implement the things that work, he was the ideal choice.”
Problem is here.
If we were ALL free from JCAHO and CMS and runaway consumerism and litigation, we could all “experiment”.
The central committee canot possibly have all the answers, no matter who is at the top. Just ask Stalin.
What if you parent is over 65 and on Medicare, it doesn’t cover children.
A stand alone child policy is $60 to $100 for very good coverage, To add a dependent to a group policy usually cost hundreds per month.
Your parent could be on Medicare or Medicaid due to disability and the kid would not be eligibile
All adults should be insured but 30 million+ aren’t, isn’t the responsible thing to do to make sure your kid is covered though?
We also see a lot of cases where non birth parents take care of kids but are not custodial so tjhey aren’t eligibile for group policy.
Nate, can you explain why it is necessary, or beneficial, to have a child only insurance market? Since all adults should be insured anyway, isn’t adding a child to adult policies cheaper than buying separate policies? If I was selling insurance, I would offer a discount for family purchase, and I think they do….
“and what does”written by a politician or academic” mean, Nate?”
It means written by someone that doesn’t have any idea what they are doing and thus are prone to write bills with obvious but unintended consiquences.
For example PPACA in an effort to increase insurance coverage for kids actually eliminated the entire market for child only insurance policies. Instead of increasing coverage it greatly decreased it.
Forthcomming is the maximum deductible provisions meant to limit the deductible is going to actually increase more people’s deductibles then it will lower.
people that work in the industry saw these comming as soon as they read the provisions. Academics and politicians with no experience make the same mistakes time after time.
its not anti harvard its anti people that don’t know what they are doing getting in over their head and messing things up worse then it was before. And never taking responsibility for it.
Another great example would be all the tinkering with mortgage rules and how its has dragged out the housing bust.
If I wrote the legislation at least it would accomplish what it said it did. I know success is frowned on in your circles but some people actually prefer it
…which is exactly the point….
Passing legislation is “ramming through”
Legislation itself is critiqued for style (poorly written, too long), and what does”written by a politician or academic” mean, Nate? Is this statement supposed to appeal to anti-Harvard sentiments in the, so called, plain folks population? Did you expect a broker to write the regulations, or maybe the entire legislation?
Had Mr. Berwick had a confirmation hearing, I maintain he would have been approved. The recess appointment doomed him.
all of the above.
Amen!
or as everyone has said when they called them a disaster they were so poorly written and onerous that people took one read and dropped any plans to be an ACO. They were such a bureaucratic mess it looked like they were written by a politician or academic that never actually had to work in the field, sort of like the appeal procedures comming down the pipeline that are going to blow up into a huge disaster.
lofty goals are fine as long as they aren’t so poluted with wishful thinking they are inpraticle or downright impossible. The 1099 rule that was also in PPACA would be anothere example of this. Now that I think about it most of PPACA seems to have turned out like this…..
So when we say that the “(ACO) rules were a disaster and he should have known better”, what exactly do we mean?
Where they a disaster because they encourage creation of corporate medicine (i.e. consolidation + vertical integration), in the form of multiple privately owned, profit-driven NHS-like entities, which anyway you want to look at it, cannot be good for patients (or costs)?
Or were the ACO rules a disaster because they had too many quality measures, including patient opinions, too much patient freedom of choice, and too much corporate risk, ergo too little certainty that profits will be as large as ever (i.e. no costs will be cut)?
Government and politics have always been about power and the ability to control and influence others. Don Berwick has had a great influence on many of us in the health care field due largely to his work and accomplishments. That makes him a threat to others who have a financial and political stake in seeing the dysfunctional status quo maintained so that they can use it as an argument for their party to accumulate even more clout.
That being said, Berwick shot himself in the foot a few times as well, most recently with the ACO regulations. Perhaps CMS is better served with a politically savvy head who is smart enough to get seasoned counsel from Berwick and others, and skilled enough to move the health care system forward despite these obstacles.
How much would you bet the people who champion this partisan bs legislation by the Democrats were the loudest ones howling for Republican scalps when the Iraq War was started? And, even that had some Democrat support!
Hypocrisy should never be tolerated much less approved. That is why as much as I detest the Republican Party as the party of Self, the Democrats are now the party of “do as I say, not as I do.”
I never have respected anyone who claims as a defense of committing a wrong that “well that is what the other guy did”. Hope the cliff has lots of large sharp rocks at the end of your fall, party faithful ilk!!!
“Silly me. I thought they voted on and passed it.”
Silly you. They only spent 13 months getting it passed. They only got 60 votes in the Senate. This now constitutes “ramming through.” Catch up on your memes.
Steve
Winston Churchill said, “If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty you have no brain.” Berwick’s cardinal sin may have been he tried to be both a liberal and conservative at 65, It’s a combination that does not work well in American partisan politics. Hearts and brains don’t always mix, as I point out in my new book The Health Reform Maze, due out in a month or so (Greenbranch Publishing).
Wouldn’t the ACO mess be a perfect example of why he CLEARLY was not the right person for the job? His supports decalre endlessly how ideal he was and when he clearly blows it just ignore it. He would be great for a department inside CMS that advocated quality or efficency, he has zero qualification for running the whole thing.
Appointments like this are another example of the partisian problem you want to address, appointing him was just as political as the healthcare bill and debt ceiling debate.
Anyone remember Tom Daschle? Has he rehabilitated himself, he’d be idea for CMS, assuming he can find a COO who actually knows how to work the levers of a large complex bureaucratic agency.
Administrator of CMS isn’t merely a “policy” position; it’s a huge and complex managerial challenge. For this managerial challenge, Berwick was not qualified. The job also requires good political radar, relationship capital and a working understanding of how the healthcare payment system operates. Don was at once too close (e.g. the bedside) and too far away from the health system for him to function effectively in the job he was given.
This was a choice which reflected on Don’s prestige and deep respect across the health system, not his capacity to run the agency. Sometimes, the “best and brightest” are not the best choices for jobs like this one- an agency budget larger than the Pentagon’s, and comparable in size to the GDP of Mexico.
“But with the Democrats ramming the law through”
Silly me. I thought they voted on and passed it.
“But with the Democrats ramming the law through without a political consensus to support it” – what do you mean? Tea party/republican opposition? Opinion polls? Just curious.