By MATTHEW HOLT

Last week Jeff Goldsmith wrote a great article in part explaining why health care costs in the US went up so much between 1965 and 2010. He also pointed out that health care has been the same portion of GDP for more than a decade (although we haven’t had a major recession in that time other than the Covid 2020 blip when it went up to 19%). However, it’s worth remembering that we are spending 17.3% of GDP while the other main OECD countries are spending 11-12%. Now it’s true that the US has lots of social problems that show up in heath spending and also that those other countries probably spend more on social services, but it’s also clear that we don’t actually deliver a lot more in services. In fact probably the most famous health economics paper of the last 50 years was Anderson & Rienhardt’s “It’s the Prices, Stupid”, which shows we just pay more for the same things. Anyone who’s looked at the price of Ozempic in the US versus in Denmark knows that’s true.

But suspend disbelief and say we actually wanted to do something about health care costs, what would we do?

There are 4 ways to cut health care costs

1. Cut prices
2. Cut overall use of services
3. Reduce only unnecessary services
4. Replace higher priced services with lower priced ones

Number 3 or reducing only unnecessary services is the health policy wonks dream.

The Dartmouth school, originating with Jack Wennberg, has done a pretty good job convincing the health policy establishment that there is massive practice variation across the nation (and even within cities and individual hospitals), and that while this leads to higher costs, it doesn’t result in better outcomes. In fact outcomes where there are more services and spending tend to be worse. Dartmouth does have its critics like Buzz Cooper, and maybe all the explanation of variables in health care spending is caused by well meaning doctors ministering to the inner city poor, but it’s not hard to find overuse bordering on fraud. There have been a ton of well meaning attempts to both educate patients to choose wisely and to get doctors to behave better (or at least report their data), but there’s a new report out showing that Dartmouth had it roughly right every day. (This recent NYTimes one is about cutting babies’ tongues to make them breastfeed more easily).

Overall there have been some reductions in some measures, like hospital admissions but many of those have been replaced with other services, and in general practice variation has not gone away. Could it happen? Maybe, but 50 years of evidence makes it look unlikely. Don’t forget that the Obamacare authors were faithful disciples of Dartmouth but not much of that philosophy ended up in CMS policy.

Number 4 or replacing higher priced services with lower priced ones is the Silicon Valley health tech dream cross-bred with the Dartmouth school’s love of primary care. I will admit to being a fan of this movement. If we can replace higher priced people (doctors) with lower priced people or non-people (AI) we should be able to deliver the same things we are doing today at a lower cost. For example, in the field of psychotherapy there’s currently a great shortage of therapists. One thing that’s being done is replacing therapists with lower qualified coaches. But the end game is to use AI-powered chatbots and avatars to do the same thing. 

A related attempt is to deliver preventative services using technology. This is now paid for by Medicare – it’s called remote physiological monitoring (RPM). While its introduction has been a tad bumpy, it intuitively makes sense. If you can start tracking the care of relatively sick people while they are at home and relatively healthy, surely you can pick up issues before they get worse, intervene with medication changes and other services in their homes, and therefore prevent hospital admissions and improve outcomes. In fact, given how cheap tracking technology is, and the advances in AI, can’t you monitor everyone (based on their level of acuity) and give them a personal AI health coach? I call this the “continuous clinic” and it’s a great idea if I say so myself. The problem is that it’s not going to happen easily in a medical world that manages its process in terms of office visits and hospital admissions and gets paid on those metrics. We simply don’t have the right type of new organizations to put this together. And if you believe John Glaser and Sara Vaezy’s recent piece in the HBR called Why the Tech Industry Won’t Disrupt Health Care, we’re unlikely to get them. (I think John & Sara hope that the incumbents will reform themselves, but they would say that, wouldn’t they!)

Which leaves us with 1, cutting prices, and 2, reducing overall use of services. 1 & 2 are what the rest of the OECD does. 

Virtually every country in the OECD has some form of central price controls. Even if they have multiple paying entities, like Germany, there’s one agreed price schedule. Or, as in the UK and Scandinavia, there’s a regional or national budget. The US also has such a national price control, but only for some people over 65, given that Medicare Advantage now covers half of that population, and only for some services. Notably it doesn’t cover drugs, although that will slightly change in the near future given CMS’ new ability to negotiate the prices of some drugs. 

To this point in the US, any attempt to squeeze down on Medicare prices produces two effects. One is violent disagreement on behalf of provider organizations, which spend more money lobbying than basically any other industry in America. Almost always this means that Congress balks at imposing any real cuts. The other is that providers find ways to transfer those costs onto patients unable to negotiate. You’d think that the patients’ representatives (insurers and employers) would resist that but RAND has shown that they are basically price takers, paying more than double what Medicare pays for the same thing. Again this could change, and there’s some recent legislative activity that has a few people very excited, and has spurred some lawsuits about fiduciary responsibility – ironically one from an employee of a drug company. But we remain a long long way from a German/Japanese/French style price schedule.

Which leave us with 2, reducing overall use of services. The name for this in US health political  (if not policy) circles begins with another R, rationing. The stories of Canadians flooding across the border to access American health care were always basically bullshit, but like today’s stories of critical race theory, transgender drag queens corrupting our youth, and millions of migrants invading the southern border, it doesn’t take much to wind up the Fox News crowd as the Democrats found out. In 2009 the very wonky issue of when women should get mammograms became death panels very quickly. (BTW if you want to read a lot more about Canada, here’s a classic THCB piece I wrote in 2003. Not that much has changed)

This all means that obviously and transparently reducing services, presumably by creating a UK style cost-benefit analysis commission, is unlikely to happen. We have tried outsourcing that to the private sector, particularly in Medicare Advantage. But the combination of naked greed and stupidity from the MA plans and the use of scary AI, will probably put paid to that soon enough now the trial attorneys have got hold of it.

So to summarize, we pay about double what most other countries pay in $$ terms and about 50% more as a share of our (much bigger) GDP. And of course we lead the league (still) in the number of uninsured people and those who are practically uninsured, or facing bankruptcy from medical bills. There are four ways we could fix it, but none of them seem that promising.

And I don’t see a way this changes any time soon.

Matthew Holt is the publisher of The Health Care Blog

BY DAVID INTROCASO

In May the Centers for Medicare and Medicaid Services (CMS) simultaneously published two proposed Medicaid rules (here and here) intended to improve moreover access and quality.  Both discussed at length the agency’s commitment to “addressing health equity.”  The first sentence in both identified health equity as a Medicaid program priority.  The proposed “ensuring access” rule stated CMS “takes a comprehensive approach to . . . better addressing health equity issues in the Medicaid program.”  CMS went on to state “we are working to advance health equity by designing, implementing, and operationalizing policies and programs” by “eliminating avoidable differences in health and quality of life outcomes experienced by people who are disadvantaged or underserved.”

Nevertheless, CMS’ interest in health equity is entirely performative.  It is impossible to believe the agency is legitimately interested in “eliminating avoidable differences” because leadership is well aware the greatest health equity threat to Medicaid – and Medicare – beneficiaries is the climate crisis.  This is because the most climate vulnerable Americans are Medicaid and Medicare populations.  Yet, the climate crisis is never addressed much less mentioned in either proposed Medicaid rule.  The word “climate” never appears in 291 Federal Register pages. 

This is explained by the fact that despite the Biden administration’s “government-wide approach” approach to “tackle” the climate crisis, HHS has refused to address the threat the climate crisis poses by regulating the healthcare industry’s massive carbon footprint.

Children, 36 percent of whom are Medicaid beneficiaries, are uniquely vulnerable.  Fine respirable particles resulting from fossil fuel combustion are particularly harmful because children breathe more air than adults relative to their body weight.  Research published last year concluded the health effects to the fetus, infant and child include preterm and low-weight birth, infant death, hypertension, kidney and lung disease, immune-system dysregulation, structural and functional changes to the brain and a constellation of behavioral health diagnoses.   

Medicare beneficiaries, already compromised due to higher incidence rates of co-morbidities, are at even greater risk related to arthropod-borne, food-borne and water-borne diseases because the climate crisis can increase the severity of over half of known human pathogenic diseases.  Extreme heat episodes are particularly deadly.  Over the past 20 years heat-related mortality among seniors has increased 54%. 

US healthcare, the largest industry in the largest economy in the world, emits approximately 500 million tons of greenhouse gas (GHG) emissions, the equivalent of burning 553 billion pounds of coal annually.  Healthcare’s GHG pollution equals approximately 9% of total US annual and 25% of total global healthcare GHG emissions.  If US healthcare was its own country, it would rank 11^th or 12^th worldwide in GHG pollution.  To truly appreciate how massive healthcare industry emissions are, if every nation emitted US healthcare’s per capita rate of greenhouse gases, the total would approximate the entire global carbon budget to limit warming to 1.5⁰ C by 2030.  Healthcare’s emissions alone have been estimated to be commensurate with upwards of 98,000 US deaths and roughly three times this number globally.  This helps to explain why fossil fuel use constitutes the largest environmental cause of human mortality.  Fossil fuel-related air pollution constitutes 58% of excess annual US deaths and approximately ten million globally.  Associated US healthcare costs have been estimated to exceed $820 billion annually.  Despite all this, the healthcare industry remains solidly uncommitted to decarbonizing.  For example, less than 4% of US hospitals are EPA Energy Star certified. 

CMS’ failure here is consistent with wider agency policy.  The agency’s “Framework for Health Equity, 2022-2032” does not recognize the fact healthcare’s own GHG emissions disproportionately inflict innumerable and unrelenting health harms on HHS beneficiaries.  CMS’ “Strategic Plan” ignores the issue, specifically the plan’s “2023 Strategic Framework.”  So too does CMS’ related 2022 “Diversity, Equity, and Inclusion Strategic Plan.”  Medicaid’s “strategic vision” outlined in 2021also makes no mention of the climate crisis. 

CMS’ Centers for Medicare and Medicaid Innovation (CMMI) has also done nothing to either mitigate industry emissions or work to improve climate-related health care delivery.  During a recent National Academy of Medicine virtual meeting all CMMI Director Liz Fowler could offer was to note the Innovation Center’s recent Medicare Advantage demonstration affords participating plans the option of offering undefined “climate change supports in the future.”   It is worth nothing as well neither is the climate crisis nor health equity an Office of the Surgeon General priority.

There is a great deal that is disturbing about CMS’ continuing fecklessness. 

Among other things, what makes the climate crisis a unique health threat is that it is not just another problem.  As a meta problem it exacerbates all other health conditions. Research published in 2019 concluded fine particulate matter resulting from burning fossil fuels can damage every cell in the human body.  Efforts to improve health equity along with care quality and patient safety absent mitigating GHG emissions are therefore compromised.  Possibly futile when you realize HHS dedicated to “sound, sustained advances in the sciences underlying medicine, public health and social services,” substantially contributes to biological annihilation since the climate crisis is an increasing contributor to the planet’s ongoing and accelerating human-caused sixth mass extinction.

Healthcare professionals take a moral oath to do no harm.  However, instead of fostering a business model rooted in beneficence, HHS instead advances one that operates as a maleficent harm-treat-harm doom loop where health harm is treated in a way that further compounds health harm.  Because health harms resulting from healthcare’s GHG emissions are largely foreseeable, CMS’ regulatory malfeasance can be described as reckless, negligent, the worst sort of moral hazard and moral treason.  The Hippocratic Oath has become an absurdity. 

One would think the world’s most powerful healthcare regulatory body would be particularly concerned that the biosphere is rapidly destabilizing.  Among numerous other realities, ocean heat content is at alarming record levels, the Northern Hemisphere’s summer disaster season is off to an early start made evident by heat waves worldwide, that explains for the first time this past month surface air temperatures worldwide exceeded 1.5°C, and a Canadian wildfire season that already is the worst ever recorded.  Three recent publications in Nature drew three frightening conclusions: 9% of the world’s population already lives outside the “human climate niche;” climate tipping points are being triggered substantially more rapidly than previously understood; and, seven of eight life support earth system boundaries have already been crossed.  In June, UN Secretary General Antonio Gutters was once again forced to raise alarm.  During a press conference in New York City he argued, “The collective response remains pitiful.  We are hurtling toward disaster, eyes wide open.”  “There is too much at risk for us to sit on the side-lines.  Now must be the time for ambition and action.” 

CMS refuses to address the fact that healthcare is a climate destroying industry that leaves HHS guilty of fossil fuel racism.  All this is quintessentially Orwellian.  Orwell’s characterizing Party members in “1984” aptly applies to HHS leadership.  They “could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening.”

Dedicated THCB readers may recall among 25 articles I wrote between 2016 and 2018, three concerned the climate crisis.

David Introcaso is a healthcare research and policy consultant based in Washington, D.C

BY GEORGE HALVORSON

We know from the current annual report from the Medicare trustees that Medicare Advantage is saving Medicare, and that Medicare will be a much stronger program as Medicare Advantage continues to grow.

When we look at actual numbers from that report, we see that Medicare Advantage cost Medicare $403.3bn last year.

The report shows that Medicare is growing 6.7% each year in total revenue. We see that Medicare Parts A and B have expense growth that slightly exceeds 8%, and that Medicare Advantage is projected to have expense growth of 4.2% for the year.

That means we’re losing money from the fee-for-service part of the Medicaid program — and that is eating into the Medicare trust fund. We also can see that Medicare Advantage is making a surplus for Medicare, and is increasing the size of the fund.

We know that Medicare Advantage bids against the average cost of Medicare in every county to create the capitation levels for each year. Those bids are typically discounted by 15% (or more) from the average Medicare cost.

Those discounted bids cost Medicare less in actual dollars each month. The Medicare Advantage critics speculate about coding levels for the plans, but the Medicare trust fund doesn’t care about codes.

They only care about actual dollars. When you look at actual dollars, we see that Medicare spent $403.3bn to pay for the coverage with Medicare Advantage plans.

Medicare Advantage costs less than Medicare because the plans deliver much better care in many key areas. Fee-for-service Medicare for low-income people has some of the highest blindness rates in the world.

Medicare Advantage plans have quality goals and processes that are anchored on the medical reality that you can reduce the blindness rate by 60% when blood sugar is controlled for diabetic patients. So the plans all have blood sugar management goals and their performance in those areas improved under Covid.

Low-income Medicare patients for fee-for-service Medicare have some of the highest amputation rates in the world. Medicare spends billions on amputations. The Medicare Advantage plans all know that 90% of the amputations are caused by foot ulcers.

They know that we can reduce foot ulcers by more than 40% with dry feet and clean socks. They have much lower costs for amputations, because over 90% of the Medicare Advantage special-needs plan patients have clean socks.

The Medicare Advantage capitation levels and benchmarks are based on using the average cost of fee-for-service Medicare in every county as the starting point for the process. The plans have much better care in a number of areas, so the plans bid at discounts that exceed 15% from those Medicare average cost levels.

The plans still make a profit from those lower bids, because care is so much better. The program was designed as part of the Affordable Care Act to take the possible profits for the plans and turn them into higher benefits for the members.

That worked extremely well.

The plans offer dental, vision, and hearing benefits along with other community support benefits from the profits they make with better care. Fee-for-service Medicare is an extremely poor and expensive care purchasing and delivery process. The average cost of care that sets up the bidding benchmarks in every county for the plans creates a cashflow that is a much better and more competent use of the Medicare dollar than traditional Medicare.

Some of the plans use their profits from those bids to buy Medicare Part D drug coverage for their members. Medicare Part D is an extremely good and solid program for getting prescription drugs to Medicare members. The plans both work with that program to provide the right drugs, and they sometimes even pay the Part D premiums for their members from the profits.

That payment of that premium does not increase the overall cost of Medicare. The profits that were needed to buy that Part D coverage were actually included in the $403.3bn total cost of Medicare Advantage that we saw in the trustee report. 

Medicare broke even overall this year on the reserve levels. We know from the fact that Medicare Advantage capitation costs will increase by 4% this year, in the face of the overall program receiving 6.7% in additional revenue, that every member of Medicare Advantage will financially strengthen Medicare.

The highest-need and the lowest-income Medicare members have dual eligibility for both Medicaid and Medicare. Some of those members have been badly damaged by social determinants of health issues and inequities. And some of them actually received team care for the first time in their life when they enrolled in Medicare Advantage Special Needs Plans.

The costs are also lower for Medicare when that happens. The 2023 Medicare trustee report said that Medicare Part A had a decrease in their expenses when some of the most expensive patients enrolled in Medicare Advantage Special Needs Plans. That’s far better care for those members.

The Medicare Advantage Payment Increase for 2024 is now Projected to be 3.32%

What we know for an absolute fact from that trustee report, is that the $403.3bn expense that we saw for 2022 for Medicare Advantage will not grow beyond the 6.7% income increase level that we’ll see for the Medicare program overall. CMS is currently projecting a 3.32% increase in the payment for 2024.

We know that we’re absolutely safe and financially secure with the long-term financial future for those Medicare Advantage members, because there’s no possible combination of circumstances or processes or transactions that can achieve what the Health Affairs pieces have been projecting explicitly and directly about the future bankruptcy of Medicare, based on Medicare Advantage upcoding processes.

Those warnings never made sense to anyone who looked at the obvious and highly visible fact that the plans were already discounting their prices 15% from the average cost of Medicare. And there was nothing to be gained by having higher codes in any of those areas as a source of revenue for the plans. 

That was a fake news process, but it has had followers. We need everyone to now look at the actual Medicare trustees 2023 annual report and then look at the 2023 Medicare Advantage and Part D Rate Announcement from CMS, and have that information from those credible sources give us a chance to relax, enjoy, understand, and appreciate the financial future that the current payment model now creates for us all — and how well that payment approach is doing right now for Medicare.

CMS eliminated any possibility of upcoding in 2020. CMS replaced the actual coding system in 2020 with individual encounter reports, which include the diagnosis information for each patient. 

That data is now current and close to perfect. 

You can see from the CMS payment directions, and from the actual 2023 rate announcement narrative, that encounter-based data-gathering approach is what we use now for every plan. They report actual encounters as opposed to coding anything in a way that creates those negative outcomes that critics claim are happening. 

You can see from the CMS reports, and from the current trustee report, the correct data is resulting in a 4.2% increase in plan revenue for next year. That low increase in plan cost is actually saving Medicare in a very gentle, useful, and effective way.

Anyone challenging that conclusion will see it validated entirely in a year from now. The 2024 Medicare trustees report will show how much Medicare Advantage will cost in 2025, how strong the trust fund is now, and how strong it will continue to be.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14.

I just got to interview Glen Tullman, CEO Transcarent (and formerly CEO of Livongo & Allscripts) & Aneesh Chopra, CEO Carejourney (and formerly CTO of the US). The trigger for the interview is a new partnership between the two companies, but the conversation was really about what’s happening with health care in the US, including how the customer experience needs to change, what level of data and information is available about providers and how that is changing, how AI is going to change data analytics, and what is actually happening with Medicare Advantage. This is a fascinating discussion with two real leaders in health and health tech — Matthew Holt

BY GEORGE HALVORSON

2022 Medicare Advantage data gathering process change made last year just made upcoding for plans irrelevant and impossible, but the critics do not accept that it happened. 

CMS just ended that upcoding debate for 2022 by completely killing the coding system for the plans, effective immediately. The plans can’t code risk levels up because the coding system was eliminated entirely for 2022.

RAPS is dead.

The payment approach for Medicare Advantage now has no upcoding components and the government just used their new and more accurate numbers to create the 2023 payment level for the plans.

The numbers went up a bit with the real risk levels because the plans actually seemed to have been undercoding in spite of their best efforts to have higher numbers in their RAPS data flow.

We should now be able to put that issue to bed and look at what has been accomplished overall by the Affordable Care Act.

The Medicare Payment component of the Affordable Care Act just evolved to a new level — and the entire Obamacare package should now be recognized for what it is now and what it has become. 

When the Affordable Care Act was designed, there were people helping with that process who understood that the only way of getting care in America to continuously improve is to buy care as a package, and not by the piece, and to reward the organizations who re-engineered care for achieving those goals in ways that encouraged using the best tools for care delivery in our markets.

The Medicare Advantage plans all know that clean socks and dry feet reduce foot ulcers that create 90 percent of amputations by 40 percent. The plans also know that congestive heart failure is extremely expensive and painful, and they identify the high-risk patients and help them reduce their risk by doing helpful things in people’s homes to make that happen. Some plans even have scales that send an alert to the care plan nurses when people have unexpected weight gains from fluid retention that indicated a CHF crisis is impending.

Interventions at that moment in time work — and the JAMA study cited above shows that the plans have 40 percent fewer hospital admissions for both congestive heart failure and asthma.

Managing blood sugar for diabetic patients cuts blindness by 60 percent for the patients who achieve that goal — and one of the most important goals in the Medicare Advantage five-star plan has always had blood sugar as a major priority. The plans even improved performance in that area under Covid.

The tools used by the plans are very flexible and are aimed at continuous improvement in many settings. The overlap with other patients in those settings is significant because it’s too hard for caregivers to deliver multiple patterns of care for their patients.  

The Affordable Care Act also aspired to improve care for everyone — and it’s good for the country that most major employers are self-insured for their care, and it’s good that the vast majority of those employers hire administrators to manage their self-insurance.

The organizations who do that administrative work for the employers tend to be the same major carriers who also own the vast majority of Medicare Advantage plans and the vast majority of Medicaid administrators and they have an overlap with the care goals set by the significant majority of union trust fund administrators as well. Over 5 million union members are in their own Medicare Advantage plans, and those union plans tend to have some of the highest Medicare Advantage five-star quality scores in the country.

So when the people designing the Affordable Care Act were doing that design work for care improvement, they aspired to have the care improvement spill over to the rest of American health care.

This is the right time for that spillover of best processes to happen.

We should be on the cusp of a golden age for care delivery in America.

We should be able to use artificial intelligence and FIHR like data connection systems to do things like the cancer moon shot now being set up for the best cancer sites in America to make care both cheaper and better for everyone. The very best care team will be able to predict multiple types of cancer a year or more in advance with simple blood tests and other monitoring devices, and that could significantly reduce the cost of care for us as a country, because a stage 1 cancer costs a lot less to treat than a stage 4 cancer.

Fee-for-service Medicare will not support any of those enhancements or improvements in care because they have never supported that level of care improvement and flexibility. The Medicare Advantage plans will now have some plans that support everything that happens to enhance care, and that enhanced care from those programs will create a competitive advantage for those plans that other plans will need to follow by also improving care.

That’s obviously good for everyone. It’s how markets should work and it’s very different from how market forces have been working in fee-for-service American health care.

So, as we look at the Affordable Care Act, the key pieces are clearly supporting some things we need to happen to make care affordable for the country — and we should understand that process and build on those successes in every area that they’re happening, and we should have it anchor continuously improving care for us all.

When the Affordable Care Act was passed, the health care economists fairly consistently projected that America was on a slippery slope to spend more than 20 percent of our GDP on care — and the new markets that use better tools for many patients, and that create better purchasing mechanisms in both Medicaid and private insurance, seem to have had a major positive impact on that agenda.

We are now at 18 percent of our GDP being spent on care — and that is high, but significantly better than the path to 20 percent that we were on before the law was enacted. The timing of those trajectories tells us that is isn’t coincidental.

The problem we face today is that there are some serious enemies to the process of using Medicare Capitation and Medicare Advantage to improve care.

We need to keep the people who clearly and openly still want to kill all of the plans, because they think some version of election fraud happened in some settings, from doing the damage that those opponents seem committed to be doing in order to make Medicare Advantage disappear and die.

That warning about those critics at this point in time should not be necessary, but those people who want to kill those programs and processes do exist and that death is their open goal — and we just need to recognize what they’re doing and keep them from sneaking in back doors and using distorted data flows of various kinds to somehow make those changes happen in damaging ways for our care as a country.

Let’s celebrate Obamacare on each level that it exists.

The Medicaid program is a huge win.

The employment direct access and open enrollment insurance programs and the functional insurance exchanges in every state are major wins.

The Capitated Medicare program is creating better care and doing it for about 10 percent less money than fee-for-service Medicare spends on those same patients in all of those counties.

The people who lost their political careers because they got that Affordable Care Act law passed should be heroes to us now because the wins are so clear today for what they put in motion, and Americans have better lives because those programs exist.

Thank you.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14.

BY GEORGE HALVORSON

When the Affordable Care Act was passed, the politics were so intense and the debates were so filled with rhetoric in all directions that most people actually didn’t understand that there were three major component parts to the strategy and program that function very directly as a package, and should be looked at now in the context of several years of implementation to see how each part of that law is currently doing.

Medicaid was our first priority.

The first component part — and the one that had the highest need for passage when the law was passed because we were doing such a horrible job as a country in providing coverage to our children and to our low-income people — was Medicaid expansion.

We were the only country in the industrialized world that did not have health care available to our low-income children, and that deficiency damaged so many people and was so terrible as a reality that we needed to correct it as soon as we could.

That program is on the right track.

Most states have now used the full Medicaid package and we now have a total of 90 million people enrolled in Medicaid. About 41 million of the members are in the CHIPS program, and a majority of the births in a majority of the states are now Medicaid births.

The states have all used a number of modern care improvement tools to provide and deliver significantly better care than the old Medicaid programs that are far too often delivered to their beneficiaries.

A small number of states have not done the full Medicaid expansion for their own political reasons, but it’s increasingly clear that the voters in most of those states want it to happen and it’s only a matter of time before we see more states going down that path. It makes so much sense for our low-income people and it stabilizes both hospital and community care in many settings, and that’s good for everyone in those settings.

Our second major agenda for the Affordable Care Act was expanded insurance coverage for working adults. 

We eliminated pre-existing condition exclusion policies and we removed some underwriting restrictions from the insurance world, and then we functionally set up relatively affordable insurance exchanges in every state to enroll our working people in coverage.

We had 46 million uninsured and uncovered Americans in those categories in 2010, and we are down to about 27 million uninsured adult Americans now. That is far better and it’s a trajectory we will continue to improve. It isn’t a perfect response, but it has done extremely good things for millions of people and we should consider that to be a successful program.

The third major leg of the Affordable Care Act was to become a much better purchaser of Medicare benefits — moving people from the care failures and the far too extensive care delivery deficiencies of fee-for-service Medicare to a capitated Medicare purchasing program that both improves the quality of care and reduces the cost for both the government and the patients.

The law cut the payments to the prior Medicare Advantage plans significantly and it has put in place a very intentional and well-targeted quality and expanded benefits agenda that has now shown the ability to both improve care and to make care more affordable, widely, for growing numbers of Medicare patients. Almost exactly half of our Medicare enrollees have chosen Medicare Advantage plans for their coverage this year.

The most recent JAMA study that looked at both Medicare approaches showed that Medicare Advantage had higher quality than fee-for-service Medicare in all eight quality measures and has much lower costs — with 40 percent fewer people going into the hospital for asthma and congestive heart failures because the care teams and the care approaches are so much better for Medicare Advantage patients.

The purchase and capitation payment model was carefully chosen to give the country a mechanism that significantly improves care and then rewards the care sites when that happens.

The very clear and intentional point of paying capitation rather than just paying fees for care is that the plans can use the capitation money to improve care.

Fee-for-service Medicare buys care badly and ends up with some major care deficiencies for too many of our lowest income people. Fee-for-service Medicare has some of the highest amputation rates in the world for low-income people, and those amputations cost billions of dollars for Medicare today.

The capitated Medicare Advantage plans look at the relevant care processes and they all know the unchallenged basic science that 90 percent of the amputations are caused by foot ulcers — and the plans all know that you can reduce foot ulcers by more than 40 percent with dry feet and clean socks.

Those amputations cost more than $100,000 each — so the capitated plans have people in homes helping people with dry socks, and fee-for -service Medicare doesn’t do that work and has people losing limbs at the highest rate in the world, but billing $100,000 for every cut.

The only major care category in American hospitals that jumped up under Covid in the first months and year of Covid care was a major increase in amputations for fee-for-service Medicare patients.

That’s just wrong.

But it is what it is, and that pattern of care will continue to happen for those patients until we get more people enrolled in Medicare Advantage Special Needs plans for our lowest income and highest health-need patients — and have much better results for those patients.  

The Medicare Advantage critics, who shamelessly and repeatedly say explicitly and clearly that the business model of the plans is to distort the diagnosis codes of members to increase revenue for the plans, always forget to mention or talk about the 5 million people who have dual eligibility for Medicare and Medicaid, and who have the highest care needs in Medicare and who are enrolled today with Medicare Advantage special needs plans. The government studied the care for those dual eligible Medicare Advantage plans carefully for a year and concluded that the plans have the lowest death rates and the best care results in government programs today for those high-risk and low-income patients.

The Medicare Advantage critics who say that the business model of plans is enhanced coding approaches very intentionally and inaccurately create a climate of distrust and suspicion about Medicare Advantage with both patients and policy people that keep enrollment lower than it should be in the Medicare Advantage special needs plans. 

The upcoding attacks are actually bad and inaccurate distortions of what is really happening with those numbers, because  the functional reality is that fee-for-service Medicare is so bad and so expensive that the average cost of care for fee-for-service Medicare in every county already generates far more money than the plans can use today, and there’s no upside to upcoding given the current payment model because the plans already have more money than they can use based on the high average cost of Medicare in every county.

When the plans discount and reduce their capitation levels by 10 to 20 percent in their annual bids in every county in the country today from the high cost of bad care in fee-for-service Medicare today, then the functional and mathematical reality is that there’s absolutely nothing to be gained by the plans from upcoding any numbers even if they choose to do it, and had the tools to achieve that goal, because the capitation opportunities already exceed the payment levels that the plans can use without creating excessive profits under the law.

However — that isn’t what many people believe. The Medicare Advantage critics believe and continue to say with conviction that risk skimming happens and upcoding exists, and they say consistently that the upcoding impact currently costs about 9 percent in the cash flow of Medicare. They say the country can’t count on or celebrate what appear to be major savings from the Medicare Advantage prices, bids, better benefits, and county-by-county surpluses because everything is so distorted by the cloud created by that 9 percent that we can’t trust any numbers about Medicare Advantage.

The fake news and the intentional and deceptive voodoo economics created by those numbers are actually believed by too many people — and the upcoding attackers and attacks change people’s behaviors in some damaging ways. That accusation has a number of strong followers — and that accusation makes the 40 percent difference in the death rates seem somehow irrelevant to too many people, because people think that the plans might be paid wrongly and they believe that payment flaw somehow offsets more than 40 percent fewer deaths.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14.

By MICHAEL MILLENSON

Imagine a government program where private contractors boost their bottom line by secretly mining participants’ personal information, such as credit reports, shopping habits and even website logins.

It’s called Medicare.

This is open enrollment season, when 64 million elderly and disabled Americans choose between traditional fee-for-service Medicare and private Medicare Advantage (MA) health plans. MA membership is soaring; within a few years it’s expected to encompass the majority of beneficiaries. That popularity is due in no small part to the extra benefits plans can provide to promote good health, ranging from gym membership and eyeglasses to meal delivery and transportation assistance.

There is, however, an unspoken price for these enhancements that’s being paid not in dollars but in privacy. To better target outreach, some plans are routinely accessing sophisticated analytics that draw upon what’s euphemistically labeled “consumer data.” One vendor boasts of having up to 5,000 “certified variables for every adult in America,” including “clinical, social, economic, behavioral and environmental data.” 

Yet while companies like Facebook and Google have faced intense scrutiny, health care firms have remained largely under the radar. The ethical issue is obvious. Since none of this sensitive personal information is covered by the privacy and disclosure rules protecting actual medical data, it is being deliberately used without disclosure to, or explicit consent by, consumers. That’s simply wrong.

But a more fundamental concern involves the analyses themselves.

The claims of predictive accuracy have never been subjected to public third-party scrutiny examining possible bias or even basic effectiveness. Since more than half of all Black and Hispanic Medicare beneficiaries already choose MA plans, that’s a flashing warning sign.

The human and financial stakes – the government pays MA plans some $350 billion annually – are high. The failures of transparency urgently need to be addressed. 

A recent Federal Trade Commission (FTC) forum explored what’s been termed “surveillance capitalism.” FTC chair Lina Khan notes that Americans often “have limited insight into what information is being collected about them and how it’s being used, sold or stored.”

That’s particularly true here. Giant data brokers, privately-funded startups and others are using artificial intelligence (AI) techniques to uncover both patient risk factors and the best way to influence behavior.  For instance, an affiliate of billionaire Richard Branson’s Virgin Group said its analytics showed that Philadelphia Eagles fans would be likelier to join a disease management program if they were contacted by text rather than email.

The for-profit mining of consumer data for health purposes is a somewhat paradoxical outgrowth of public health research, which has long stressed the need to address so-called “social determinants of health” (SDOH). SDOH refers to the environment in which people are born, live, learn, work and play. Many health care organizations now use questionnaires to try to discover who has SDOH issues that might make them more vulnerable to later developing expensive medical problems.

But questionnaires are often completed partially, inaccurately or not at all. The data mining mavens believe they’ve found a better and more scalable solution. Because MA plans are paid a flat rate per member, effective SDOH interventions can yield both better health and a healthy return on investment. Moreover, the health systems and physician groups that actually provide care are increasingly signing contracts that incent wellness, both for Medicare patients and others. When you add in the renewed national attention to health equity, the result is an SDOH industry worth $18.5 billion as of July, 2021, according to one estimate.

While it’s difficult to identify which organizations use the data and how, specifics sometimes slip out. 

At a 2019 Department of Health and Human Services seminar, a physician executive at a New York City health system, explained how his group applies AI to information gathered from the electronic health record mixed with commercial data.

“For instance, if people don’t live near a bus stop or subway station and haven’t purchased an oil change or wiper blades, we can reach out to ask questions [about mobility],” said the system’s head of population health. That conversation required discretion, Fields added, since revealing why someone was contacted “would be creepy.” 

A Humana slide from that same seminar showed that its Grandkids-on-Demand program, which provides companionship and assistance to lonely seniors, was in part enabled by “consumer information from an external vendor.”

Meanwhile, United Healthcare’s Optum group has said it uses consumer data to “close gaps in care and reduce medical costs.” Separately, an Optum algorithm was identified in 2018 as being unintentionally biased against Black patients.

Humana and United enroll nearly half of all MA members, and in many U.S. counties control at least three-quarters of MA enrollees, according to the Kaiser Family Foundation. 

An overwhelming 81 percent of Americans believe they have little or no control over the data companies collect on them, according to a Pew Research Center poll. So what should be done about this secret health care surveillance? 

Government regulators could move to mandate transparency, but there’s a simpler path. United’s market-leading MA share has been powered by its long affiliation with AARP. As a senior advocacy group, AARP should immediately demand that United, and all MA plans, disclose their consumer data use. Perhaps that would prod insurers and providers to treat those in their care as genuine partners, not objects.

The Center for Medicare & Medicaid Services should similarly publicly ask MA plans to disclose. That call for “voluntarism” could be echoed by the members of Congress who introduced bipartisan legislation to strengthen data privacy and security. 

 But beyond disclosure, the government should demand that researchers be allowed to examine the assertion that the data miners are providing predictive accuracy without bias. This is crucial, and it can be done while protecting intellectual property rights. As one researcher put it, “We have to make sure this pays off both for the health care system and the patient.”

That’s exactly the right standard. I believe “big data” could provide a genuine leap forward in finding and helping individuals whose health is at risk. But good intentions are not good enough to protect consumers.  Health care decisions relying upon secret information secretly used is a risk vulnerable Americans should not have to take.

Michael Millenson is a consultant specializing in quality of care, patient empowerment and web-based health. He is President of Health Quality Advisors, and an adjunct associate professor of medicine at Northwestern University’s Feinberg School of Medicine

By MICHAEL MILLENSON

Super Bowl Week ended with the San Francisco 49ers and 161 U.S. hospitals having something in common.

Both were publicly penalized, both lost money as a result and both passionately believed the process was unfair. Unfortunately, it’s not easy to decide whether their objections were sensible or sour grapes and, in the case of hospitals, the real-life consequences are not a game.

The penalty that pained the 49ers occurred shortly before halftime of Super Bowl LIV, when offensive pass interference was called on tight end George Kittle. The call negated a big gain that might have enabled the 49ers to take the lead.

Replays showed that the referees – nicknamed “zebras” for their black-and-white striped shirts – were technically correct in their decision. Nonetheless, controversy erupted over whether given other possible penalties called or overlooked, this one deserved a yellow flag.

Hospitals call that kind of context “risk adjustment.” A few days before the Super Bowl, the Medicare program blew the whistle on a group of hospitals having high rates of infection and other patient injuries. The hospitals who are outliers in what are blandly labeled “hospital-acquired conditions” (HACs) suffer a cut of one percent in their Medicare payments over next fiscal year.

Like that interference penalty, cries were immediately heard that the “refs” – otherwise known as the Centers for Medicare & Medicaid Services (CMS) – were “arbitrary and unfair,” as a Kaiser Health News story summarized the objections. 

The obvious solution to quieting the kibitzers would be better “zebras.” In football, that might mean more training and even more instant replay cameras. Still, while Super Slo-Mo can show what happened, humans must still judge its significance.

Judgment calls might seem less important in parsing electronic data from hospitals. After all, the actual care plays out in private. You won’t see a former-surgeon-turned-color-commentator regaling a TV audience about the deftness of a diseased organ’s removal only to bemoan the sloppiness of leaving a few sponges inside the patient.

Yet judgment calls inevitably shape CMS’s choices of measures and how to apply them in practice. Medicine is even more complicated than the football rulebook, so it’s difficult sometimes to assess whether a penalty is truly a bad call or whether the hospital is loudly protesting as part of a strategy athletes call “playing the ref.”  

While there are arguments for and against a “no-call” on both Kittle and some of the hospitals penalized by CMS, there is one area where hospital objections deserve special attention. In a written statement to Kaiser Health News, San Francisco’s UCSF Medical Center blamed its high rate of HACs on its thoroughness in identifying infections in order to then eliminate the causes. 

“This commitment will naturally make our rates appear to be higher,” the hospital said.

Better risk adjustment can’t account for risks that aren’t reported. How do you address the problem of hospitals whose approach to HACs is “Don’t ask, don’t tell”? Instead of thinking about more ways to catch wrongdoers, maybe we need to think more deeply about culture.

This brings us to a sport that is the diametric opposite of the full-contact, noisy, adrenaline-charged, win-at-all-costs world of pro football: golf.

There are judges in golf tournaments, even if they don’t wear zebra-striped shirts. However, from the time golfers begin playing as amateurs, a code of honor is instilled that requires them to mark their cards with a penalty if they commit a rules violation. Routinely, even for violations no one else sees and even when the stakes are high, they do exactly that.

“High school golfer calls penalty on herself, loses state title,” read one 2018 headline. Professionals do the same. In a major 2018 tournament, Phil Mickelson, one of the highest-ranking golfers in the world, assessed himself a two-stroke penalty for violating a rule. And this past November, a 30-year old PGA Tour player went from making the cut, and maybe getting a big check, to going home empty-handed after calling himself on a penalty.

The system isn’t infallible, of course. Judgment calls remain, and people are people. Nonetheless, the example of golf should remind us that the hospital executives and clinicians who today are calling penalties on themselves deserve a level playing field.

A disturbing 40 percent of respondents to a nationwide survey on hospital safety culture by the Agency for Healthcare Research and Quality agreed with the statement that “hospital management seems interested in patient safety only after an adverse event happens.” Meanwhile, as I wrote in a recent article in the Health Affairs Blog, it’s the consensus of veteran patient safety experts that while many hospitals are trying to improve safety, fewer than 10 percent are seriously committed to zero preventable harm.

The rules and the penalties need to be made as fair as possible, but better “zebras” alone won’t put patients out of danger. We must build a culture that reminds hospital executives and clinicians why they went into this field. That means creating an ethical environment where everyone at the hospital pursues perfection in patient safety as avidly as golfers seek a perfect game, and an environment where no one is afraid to admit when they have, for the moment, failed.

 Unlike the Super Bowl, that’s an approach where all sides can be winners.

Michael L. Millenson is president of Health Quality Advisors LLC and adjunct associate professor of medicine at Northwestern University Feinberg School of Medicine.

By ANDY MYCHKOVSKY

I feel like the healthcare world just skipped over the $17.3 billion mega-merger between Centene and Wellcare, which just received final regulatory approval last Wednesday. With their powers combined, this new company will create the Thanos of government-focused health plans, hopefully without any of the deranged plans to take over the world. I do get it, 181 million lives are covered by employer-sponsored insurance, between full-risk and self-insured plans. These employer populations have the most disposable income and their HR departments are willing to provide supplemental benefits. However, in my opinion, the future growth of health insurance will be governmental programs like Medicare Advantage (MA), Medicaid managed care, and ACA exchanges. But instead of me telling you this, here is exactly what Centene and WellCare said in a press release to defend the merger:

“The combined company would be the leader in government-sponsored healthcare with increased scale and diversification both geographically and in its managed care service offerings, and enhance access to high-quality services for members. It will offer affordable and high-quality products to its more than 12 million Medicaid and approximately 5 million Medicare members (including Medicare Prescription Drug Plan), as well as individuals served in the Health Insurance Marketplace and the TRICARE program. The combined company will operate 31 NCQA accredited health plans across the country and will have increased exposure to government-sponsored healthcare solutions through WellCare’s Medicare Advantage and Medicare Prescription Drug Plans. It will also benefit from leveraging Centene’s growing position in the Health Insurance Marketplace to new markets. The transaction creates a company with the size and scale to better serve members through enhanced healthcare programs, expanded capabilities and increased investment in technology.”

Simply put, here’s some of quick stats provided at the JP Morgan Healthcare Conference presentation on January 13, 2020:

• National footprint now serving 1 in 15 Americans
• Clear market leader in Medicaid managed care and ACA exchange marketplace
• Dominance serving most complex populations, #1 leader in LTSS and #2 in dual eligible
• Competitiveness in the Medicare Advantage (MA) enrollment wars
• $500 million in proposed savings due to annual cost synergies

Announced back in March 2019, some investor analysts questioned the merger given the significant overlap between each plan’s enrollment and focus on governmental programs. Turns out, in some states, the combined entity would have monopolistic tendencies. Therefore, in order to satisfy anti-competitive market dominance, WellCare must divest its Medicaid and Medicare Advantage plans in Missouri, Medicaid plan in Nebraska, while Centene must divest its Medicaid and Medicare Advantage plans in Illinois. So long as they comply with these specific requests, you have yourselves a ballgame folks.

I’m actually a bit shocked these few divestitures is all that is required given their combined business. For example, Florida is the 4^thlargest Medicaid state in the country. This is also where WellCare is headquartered and holds the largest Medicaid managed care enrollment in the state. The combined market share between Centene and WellCare nears 46% as of December 2019 enrollment reports for the traditional Managed Medical Assistance (MMA) population (e.g., TANF, SSI, ABD) with over 2.7 million lives. Now Florida did just finish their open enrollment period in January, so there is potential that the two plan’s enrollment could’ve changed by now. However, I find it difficult to believe their enrollment would change too significantly given the relatively low open enrollment churn rates in Medicaid.

Why does this all matter? Because Medicare covers 61.2 million Americans and Medicaid covers 75.8 million Americans. That represents 137 million total lives between the two major lines of business that Centene and WellCare focus on. Add in the 8.3 million from the 2020 ACA exchanges and that is just icing on top of the cake for next decade’s growth opportunity. We have a baby boomer population (ages 52 to 70) that numbers 74 million and beginning to age into Medicare. These are the highest cost population segment, excluding some of the smaller specialty populations (e.g. PACE), that must be managed by either Medicare fee-for-service (FFS) or Medicare Advantage plans.

Let’s start with MA. I wrote an entire blog last week on the MA market, particularly from the perspective of the startup health plan. To recap, the battle for MA is hard. The sales and marketing expenses for subscale plans is high due to broker fees for initial enrollments and renewals. The plan must be old enough with good quality to receive a high Medicare STAR quality rating, which in turn requires the federal government to provide bonus payments to the MA plan that can be used to offer patient’s supplemental benefits. Given the high medical cost of MA patients, $800-1,000 per member per month (PMPM), small plans are subject to actuarial risk and higher outlier expenditures that can sink your plan’s medical loss ratio (MLR).

Let’s take Duval County, Florida, home of the Jacksonville Jaguars and 180,000 Medicare eligible beneficiaries and 70,000 MA lives (39% MA penetration rate). In this particular MA market, Centene and WellCare account for 17% of the total MA lives (~12,000 lives), trailing only UnitedHealthcare (32%) and Humana (19%). This merger nearly triples Centene’s existing MA enrollment and places them in a much better position to compete against the major for-profit incumbent and startup plans. They will still only account for 3.6% of the total MA market, but appear focused on targeting this older customer base and will benefit from the broader trends from FFS to private plans. All-in-all, Centene and WellCare have a combined 875,000 lives across 455 MA plan options as of January 2020.

Now let’s switch to Medicaid. The worst kept secret in healthcare is that Medicaid (not Medicare) is the primary payer of long-term services and support (LTSS) like nursing homes in America. If we’re projecting forward, where do you think the 74 million baby boomers are likely to reside as they age? With a shortage of qualified home health aides (not to mention how expensive out-of-pocket it can be), limited societal buy-in for multi-generational housing (compared to Asian countries), and younger generations receding to expensive, urban areas, Houston we have a problem. Not to make matters worse, but the only way for your loved one to receive Medicaid benefits to cover nursing home care, is if they’ve already used up most their savings and assets. Once they’ve hit that financial point of no return, it is unlikely your loved one will be able to afford anything else beyond the nursing home that accepts their Medicaid coverage.

In terms of growth opportunities, I mentioned in a previous Heathcare Pizza blog that majority of states have already transitioned into Medicaid managed care. Most states contract with payers like Centene or WellCare to administer the program for a portion of patients in return for a set per PMPM fee. This fee is set by third-party actuarial firms and includes the desired medical loss ratio (MLR), administrative loss ratio (ALR), and profit margin built in. The way you win a coveted contract award is by applying during a competitive request for proposal (RFP) period that typically happens every few years. Centene already has a strong 5-year Medicaid RFP win rate of 80%, and adding WellCare will only bolster their chances. With North Carolina scheduled to move into managed care in 2020, of which both Centene and WellCare were awarded separate contracts, the game is less about net new states but instead focused on transitioning all populations into managed care.

For example, the state of Arkansas is currently undergoing a process to transition their Medicaid populations into managed care via the Provider-led Arkansas Shared Savings Entities (PASSE) program. The state chose to start with the most complicated and expensive population, the ~45,000 intellectually and developmentally disabled (I/DD) patients. They started here because these patients alone cost Arkansas Medicaid over $1 billion annually. However, there are 926,000 Medicaid lives in the state as of December 2019. If you don’t think health plans like Centene see the potential opportunity to convert the remaining members into their managed care enrollment, you’re being naïve.

Up to 24 million lives will be covered by this newly merged entity, forming a formidable opponent to the dominant for-profit health plans like UnitedHealth Group and CVS / Aetna. If their go-to-market roadmap is successful, I see good things for employees and investors related to the company in the near future. That is not financial advice, just one man’s opinion. I will tell you one thing though, the market seems to have come full circle because since October 2019, the stock has been on a steady rise in preparation for the merger approval.

Andy Mychkovsky is the creator of Healthcare Pizza, where this post originally appeared. Follow him on Twitter (@AMychkovsky) and LinkedIn for future thoughts and updates.

By ROBERT M. HERZOG

The Cure for healthcare isn’t Medicare for All, it’s establishing organizations with complete responsibility for the total care, costs, quality and outcomes for a person.

Discussions of Medicare for All substitute structure for substance. They engender a debate about the trappings of care delivery, administration, and cost, but don’t address the fundamental issue, which is how to provide genuinely better care for people of all ages and economic circumstances.

The premise of Medicare for All is that a single payer will provide better and more cost effective care. But what is really needed is single entity accountability. Whether there are one or many, whether they are public or private, is not as important as that one organization and its people become responsible for the total health and care of an individual and the costs associated with that care. With incentives for doing it well, and penalties for doing it poorly. And an ease of transition for people to move from an entity that doesn’t serve them well to one that does, to maintain the benefits of competition and varied approaches based on differing conditions.

Focusing on Medicare for All promulgate a systemic flaw baked into our health insurance and provider systems. High costs and lower quality can’t just be fixed by a single payer negotiating lower drug prices, nor would providing fewer services mean better care at lower costs. The core problem is exemplified by the invidious arbitrary split in public health insurance between Medicaid and Medicare, with each providing different services spread out among many providers, none of whom have sole responsibility for the complete health of the person.

BetterCare for All need not be a win-lose proposition, of Medicare for All or nothing. The feasibility near term of a one payer system is low, whereas the feasibility of building on existing systems and frameworks to create single system accountability is much higher.

Single accountability addresses the structural flaws in the US health system, which have positioned the US to have the highest costs for healthcare in the world while ranking 11th (last place among developed nations) in the quality of care, with all the negative quality of life implications that implies.

Whether it’s Medicare, a form of Medicaid, or private insurance, unless a single entity oversees the care of a person across the so-called care continuum — home, office, hospital, facility — and the levels of reimbursement and pay are adjusted by the quality of care and outcomes of that person, the systemic problem of high costs with poor outcomes, and lack of access, will remain in place.

Health care provision is often well described as being in silos, or buckets. For example, when an enrollee in a Medicaid program has to go to a hospital, the Medicaid plan’s responsibility, oversight, even patient information, stops. Similarly, while many Medicare recipients could benefit from services in the home, Medicare doesn’t cover most of them. The same individual is arbitrarily — one should say absurdly — carved up into different components for care services. The results from this lack of coordination are severe. Estimates of excess costs stemming from lack of coordination range from $45 billion annually on up.

Our fractured system embeds structural conflicts among the major parties, to the detriment of the patient. Insurers are called payers, which sums up their primary function and the limit of their mandate, which has little to do with actual care quality. Under fee-for-service models, their incentive is to limit services provided and the costs of those services. Recently a branch of UnitedHealth Group, a huge payer, that administers treatment and addiction services for insurance plans was found to have violated its fiduciary duty under federal law by using overly restrictive guidelines and adopting financial incentives intended to restrict access to care, reflecting the perverse incentives of what should be a system promoting care, not limiting it.

Fee-for-service providers, on the other hand, want to maximize services to generate revenues, and make up in volume for the discounts they have to offer to obtain payer clients. Hence the frequent accusations of in effect churning tests and procedures, inflating costs well beyond what are necessary.

Under so-called alternative payment models, such as value-based payments, the payer shifts the burden of total cost to a provider, giving them a single, capitated rate for the set of services they provide. That of course encourages minimizing services and their related costs, with adverse impact on patients. Hospitals and large plans in turn attempt to slough off their obligations under value payment models by shifting the burden of performance to practitioners or agencies.

That structure causes a lack of alignment between who could institute improvements, such as the introduction of new technologies, and who might benefit from their use. A home care agency might be best suited to provide better technology to gain and use information about the patient in the home, but they do not benefit financially from better outcomes and so have no incentive to bear the costs of the technology.

In a recent briefing on meeting cost reduction goals for NY State’s Value-Based Payment program by its Dept. of Health, healthcare plans were specifically told to only address Medicaid payments, and not Medicare. Why? Because states pay for Medicaid, but the feds pay for Medicare. i.e., when it comes to Medicare management, the state doesn’t care! Yet the high costs and quality imperfections of our system reside as much in Medicare as Medicaid.

Medicare for All also posits an increasingly central role for hospitals in the care infrastructure. But hospitals are not well-suited to be the organizations that provide comprehensive care management. Hospital cultures, skills, staffs, training, are all built around taking care of people in the hospital. And while hospital executives might howl in protest, the simple fact is that hospitals are ill-equipped to deal with people outside their four walls, to be purveyors, or even monitors, of home and community based services. They have historically evinced little interest in doing so, and even now, with various incentive and penalties in place to try to force them to look to care in the community, they don’t do it at all or very well.

Integrated health systems, such as Kaiser, are better situated to do so. Within those systems hospitals focus on being better hospitals, nested within an administrative superstructure that manages care — and equally importantly costs — across all stages of a person’s care life. Establishing such networks or comparable managed care organizations would do more and more quickly than trying to shoehorn hospitals into a central care management role they can’t fulfill.

A recent study from the University of Colorado Anschutz Medical Campus found that

60% of home health workers say they lack adequate patient information from hospitals to inform care, often leaving patients unprepared for treatment. Another study found that 94% of patients had at least one medication discrepancy when comparing referring provider and home health care medication lists. These problems persist, and won’t be solved by trying to change hospitals’ “personalities.”

The nation funded tens of billions of dollars to underwrite electronic health records in the abstract belief that improving the storage and access to care information would in turn have a salutary effect on care quality. Only the disparate EHRs installed in hospitals and provider systems don’t talk to each other, nor do they include effective gathering and use of information about patients where they spend most of their time, in the home or other non-clinical settings beyond the scope of EHR data collection.

Attempts to fix these issues are perforce piecemeal, since they simply mirror dealing with the different spokes of care one at a time rather than building a central hub of care management and responsibility. Various programs that try to connect some of the dots between Medicaid and Medicare still leave large gaps in between, as have those which seek to reduce avoidable hospital readmissions that cost an estimated over $30 billion a year, year after year.

Enormous strides and cost savings while improving quality can be obtained by more inclusion of information from and services in the home, where people spend the bulk of their time and where many health problems originate. Discerning these problems in a timely fashion can prevent deterioration, provide lower cost treatment options, and enable people to remain where they most want to be.

But the orientation of hospitals and providers has been to ignore the home in favor of the more costly and burdensome options of hospital, emergency room, office, and nursing home. Study after study indicates the enormous costs from poor coordination among many providers; a single entity tasked with managing the entire care of the individual, including their home, is the best solution to getting universal coverage at an affordable price.

In my former position as Director of New York City’s Energy Office, we instituted energy conservation programs with measures from swapping lightbulbs to upgrading insulation and HVAC systems which paid for themselves in 1–2 years. But there is no concept of payback in healthcare. What organizations hear is, “we have to pay for something now,” without doing the math as to the benefits over time such investment can yield, operating within an infrastructure that doesn’t incentivize them to make such calculations.

Our health care system suffers from the artificial separations of services to people — Medicare and Medicaid, between payers and providers, the isolation of home and community services from institutional ones. The cure lies in connecting these elements with strong bonds under the management of a single entity charged and familiar with the total life of the person we call a patient, but who is far more than that.

Robert M. Herzog has been an entrepreneur and consultant in technology, media, finance, and healthcare, most recently as founder and CEO of eCaring, Inc. This post originally appeared on Medium here.