The Obama administration finally deserves some credit on Obamacare. On the heels of pulling the plug on the unworkable long-term care program known as the CLASS Act, the Department of Health and Human Services (HHS) actually listened to those who know best when it comes to delivering health care: doctors, hospitals and nurses.
On October 20, HHS Secretary Kathleen Sebelius announced the final government regulations to the Medicare Shared Savings Program, widely known as Accountable Care Organizations (ACO). Supporters of Obamacare touted this demonstration project as an innovative model to improve the delivery of medical care.
The concept behind the Shared Savings Program is absolutely right. It seeks to financially incentivize doctors, hospitals, nurses and other care providers to coordinate the care that they collectively deliver for Medicare patients. They would share any cost-savings with the government.
This attacks a serious problem in health care, as coordination is virtually non-existent in today’s system. Take for example the 23 percent of Medicare beneficiaries who have four or more chronic conditions. They account for nearly 70 percent of total Medicare costs. According to a former HHS official citing internal data, every year these seniors average 37 office visits, see 14 separate doctors and fill 50 prescriptions for roughly nine different medications. This lack of coordination is costly, inefficient and deadly — such as when doctors blindly prescribe medicines not knowing what other medicines the patient is on.
Obamacare put a noble and innovative concept into the meat-grinder of government. What came out wasn’t noble or innovative at all. It was bureaucratic, inflexible and anything but transformational.
There were many lowlights to choose from. The Department of Justice and the Federal Trade Commission required hospitals and doctors to petition the government for approval to participate in the program. If they were accepted, they had to collect, report and pass 65 detailed benchmarks. They would not even know which of their patients were participating until the end of the program.
The proposed regulations were so unworkable that world-class health systems like Intermountain Healthcare, Mayo Clinic and Gundersen Lutheran balked — and they were tailor-made for this project, as they’ve been doing care coordination for years.
Dr. Delos “Toby” Cosgrove, president and CEO of the Cleveland Clinic, wrote, “Rather than providing a broad framework that focuses on results as the key criteria of success, the Proposed Rule is replete with 1) prescriptive requirements that have little to do with outcomes; and, 2) many detailed governance and reporting requirements that create significant administrative burdens.”
Hearing a mountain of similar complaints, HHS listened to the industry. The final regulations nixed many of the more burdensome requirements to make it more attractive for care providers to participate. The quality benchmarks were cut in half. The start dates were pushed back. Groups would not have to have marketing material pre-approved by HHS.
While these changes were needed and HHS deserves credit for pulling back, did they go far enough to entice providers into the program? Definitely not, according to several leading health systems I asked.
That’s because of one fundamental issue: government is incapable of innovating. The Shared Savings Program is even being driven by the newly created Center for Medicare and Medicaid Innovation.
But innovation does not look like this: P.L. 111-148, section 1899(d)(1)(B)(ii).
You cannot legislate innovation. You cannot prescribe it through regulation. Innovation requires creativity, flexibility and risk. Just read any of the recent articles on Steve Jobs. Just look at how places like Microsoft innovate. They give their R&D teams free reign to experiment, test, fail and then succeed — not stringent rules to comply with or prescriptive benchmarks to hit.
The kind of innovation we need in health comes from organizations like CareFirst. They, too, are tackling the problem of care coordination, but they are doing so in a leaner, more open and more straightforward way. They are incentivizing their network doctors to voluntarily form primary care medical homes, where doctors work closely with each other as well as with their patients to delivery better quality, coordinated care.
Proactive care plans are created; preventive services are prioritized; patients are engaged; flexible information technology is used; and outcomes — not processes — are measured. (The quality benchmarks are explained and can be calculated in a simple 10-page document.) If their patients are healthier and costs are reduced, doctors can earn up to 80 percent more in “outcome incentive awards.”
Physicians are excited about the program and have signed up in droves. More than half of CareFirst’s 5,000 network physicians have volunteered to participate.
Healthier patients, enthusiastic physicians, modern technology and lower costs. That’s innovation.
Compare that to the Shared Savings Program. It started out as 11 pages in Obamacare and ended up as more than 1,000 pages of regulation. The Obama administration’s recent announcement to scale back burdensome regulations is certainly welcomed. But until administration officials realize that government itself is a fundamental barrier to innovation, things are not likely to change.
David Merritt is the former Chief Executive Officer at the Center for Health Transformation and the Gingrich Group.