Shared Savings Equals Cost Cutting By Design

Medicare needs to cut costs. It has chosen methods to cut costs that will damage the basic health care services needed by most Medicare patients. And instead of calling this cost cutting, it uses terms such as "shared savings." Even worse, the “shared savings” will result in even less health spending in United States locations that already have lowest health spending. Innovative designs are not the problem. The problem is that Medicare designers need to understand the basic health needs of most Medicare patients left behind by design.

Medicare and Medicaid face significant challenges.

Spending will continue to rise with more patients covered such as the doubling of the elderly from 2010 to 2030. The United States has continued to add more drugs, treatments, drug coverage, reasons for hospitalization, and technologies that are most costly. Politicians shout Death Squad rhetoric for any attempt to limit services. Meanwhile those needing basic services such as primary care are left behind. Medicare, Medicaid, and other patients are also left behind in 30,000 zip codes with lower or lowest health workforce.

Not surprisingly the Centers for Medicare & Medicaid Services (CMS) wants to cut costs just as in the 1990s and just as in the 1980s. In fact, the real designs since the 1980s have all been cost cutting in focus.

CMS Design Distortions

Surprisingly few realize that the CMS design is not focused on health or health care delivery for improved health. More and more studies are indicating the failure of a design that allows more and more spent on fewer Americans with little or less result. The real Medicare design favors those nearest death rather than better health and better health care. This is the design that works best for those receiving the most spending. They also influence designs and designers the most.

Designs Fail for Most Americans Forgotten By Designers

About 30,000 zip codes with 200 million Americans are dependent upon Medicare and Medicaid for substantial amounts of health spending. Another top down cost cutting (shared savings) design will result in even less spent in 30,000 zip codes. This will result in fewer primary care personnel and professionals in 30,000 zip codes. Medicare makes this worse by failing to increase primary care revenue as each year bring double digit increases in the cost of delivering primary care. Accelerating Cycles of Primary Care Decline are accelerated.

The CMS changes will make it even harder for Medicare patients (and those not on Medicare) to access primary care in 30,000 zip codes. Already practices are making changes such as limiting Medicare patient access. In states that have experienced Medicaid cuts substantial problems result for many practices dependent on Medicare and Medicaid for half of revenue. Practices that can avoid lowest revenue Medicare and Medicaid patients as well as those on little or no insurance will do so. Closures of practices, fewer personnel to deliver the care, and less volume per primary care professional will result in increasing access problems for most Americans.

What Medicare Was Before 1980 and After Redesign

Medicare has only acted to improve primary care only from 1965 to 1980 when it led the nation to a doubling of the primary care graduate design. This was the only time the primary care workforce production design was increased. Since 1980 only non-primary care has doubled and it has done so each 15 years. The Medicare design fails to reign in non-primary care with massive overspending. The Medicare design fails to pay for basic services even 2010 to 2030 when the elderly are doubling and they need local zip code care or adjacent zip code care as the elderly become more limited in mobility and transportability and need 2 to 3 times more primary care.

Cost cutting designs may be difficult to avoid, but they will not help most of the elderly or most people in the United States – by design.

How Can Primary Care Infrastructure Be Restored with Even Less Spending?

The goals of "promoting accountability for the care of Medicare Fee-For-Service (FFS) beneficiaries; requiring coordinated care for all services provided under Medicare FFS; and encouraging investment in infrastructure and redesigned care processes” are impossible goals with a cost cutting design.

The United States has not demonstrated the ability to prioritize horizontal health access needs under designs that reward vertical tertiary and quaternary services. Also the horizontal health access providers have remained true to health access service on the front lines. Those dominating US health care are the most organized subspecialty and academic interests. Accountable Care does not offer opportunities to separate out primary care in ways that allow it to survive, much less become the foundation of a viable health care system.

The Motivations for Infrastructure Investments Are Poor.

Cost cutting designs such as shared savings will make it even more difficult for necessary infrastructure reinvestments in primary care delivery. Too little spending on primary care has already resulted in over a decade of larger multi-specialty and academic practices less likely to bail out underfunded primary care.

A better choice is to fund primary care separately and directly. A separate primary care design is also an important check and balance upon appropriate care. Primary care too connected to subspecialty and hospital care can be subjected to compromise. A population based or cost based design would be best for primary care. Cost cutting is appropriate for hospital and non-primary care services that have resulted in runaway US health care costs for decades.

Benefits for the Bigger and Badder

Another concern is that only those most organized and sophisticated with top number-crunching ability would benefit. They can select the partners that they want and the populations that they want. They can even bundle services in ways that cherry pick services. Accountable Care is already a bundling of services and the failure to recognize this is also another concern with regard to the designers.

New reforms plus failure in accountability are problematic.

The Obama administration has allowed states the flexibility to have plans with a wide range of services. Also states that have not met deadlines or basic needs have not been disciplined. When the federal government sets up a program to allow financial incentives for those that make investments such as electronic records and then fails to force states to meet federal deadlines, the result is distrust of providers in federal and state designs. States have had such bad plans that lawsuits are required – and more flexibility is being given?

Even optimal states such as Oregon that are far ahead in developing state plans, those in charge cannot tell how much spending will be invested and there is a vague mention of three different types of plans. As a physician delivering care, I can tell you that a major problem is variation in health care plans. Even if people can access care, there is great uncertainty with regard to getting basic medications, referrals, or hospitalization.

At some point people who promise more for less should be held accountable. Innovations and reorganizations are spectacularly unsuccessful, especially in areas such as basic health access where the United States has failed to invest in many dimensions.

Integration Dysfunction

For decades the US has never figured out how to integrate various private, public, and grant providers. It has actually created more designs that make coordination even more difficult. Coordinated care could result from the new reforms. Unfortunately the cost cutting portion is the deal killer.

Instead of starting "population based" for a more integrated and equitable design, a shared savings payment model is required first. There are other increasing costs not considered in a cost cutting design or any design. These include rapid increases in routine costs, increases in the cost of finding and keeping trained personnel in areas such as primary care, and new costs such as electronics and software.

Without an integrated and simplified design such as single payer with universal access and standardized record keeping, the real benefits of integration and coordination are minimal. The same fragmentations result in too much cost required just to get paid such as screening patients, multiple fee scales in multiple locations for multiple services with multiple types of billing and multiple types of record keeping, etc.

Grassroots Up Versus Top Down

Accountable Care follows the same failed designs of past decades and for the same basic reason – the designers. Cost saving has been documented in models that have focused on basic personal, cultural, social, and family needs. Southcentral Foundation is such a model. Southcentral also had quality improvements and greater retention of health personnel, essential for better quality and better patient satisfaction and better health care in Alaska on complex patients.

Time and talent and treasure are three different approaches. The US design has resulted in a focus on treasure and highly specialized talent. What is also required is time spent with people and talent in people skills areas.

What If Our Nation Had a Different Design for Entry to Medical School?

Medical students before and during school are not known for substantial time availability, but what they have can be spent working with patients part time in their homes to save substantial costs. it is interesting to see energy invested in a grassroots human being effort rather a focus on research. Medical students at the School of Osteopathic Medicine Arizona have one of the most intense first years of training, yet several have found the time to devote to a home care prevention of readmission. This is a partnership between the students, the hospital, and dieticians. The results in the first two years have been outstanding. Also this was accomplished with little treasure or specialized talent. The model reinforces being there in a caring way helping patients to maximize their health - rather than more and more health care services required.

Imaging 50,000 applicants pursuing medical school based on grassroots service efforts rather than devoting hundreds of hours for research (or 250,000 applying for health professional school positions). Imagine tens of thousands working with patients, families, and neighborhoods on better health outcomes in more than just readmission.

Robert C. Bowman, M.D.        Basic Health Access Web    Basic Health Access Blog

SMART Basic Health Access     World of Rural Medical Education

Basic Health Access Blogspot 2011 - Summaries and Links for 2011

Dr. Bowman is the North American Co-Editor of Rural and Remote Health and a Professor in Family Medicine at A T Still University School of Osteopathic Medicine. He was the founding chair of the Rural Medical Educators Group of the National Rural Health Association, he was the long term chair of the STFM Group on Rural Health, he is the founding director of Priority Infrastructure at http://www.infrastructureamerica.org/ and he is the author of the World of Rural Medical Education, and Physician Workforce Studies