My Evaluation of Joe Biden’s Healthcare Platform, Part 1

Official portrait of Vice President Joe Biden in his West Wing Office at the White House, Jan. 10, 2013. (Official White House Photo by David Lienemann)

Let’s take a look at Joe Biden’s healthcare plan! This is important because, if the democrats win the senate and hold the house, there’s a reasonable chance his healthcare reform plans will, in some shape, become law. But remember the expected caveat: Even though he can have a big influence on setting the priorities and agenda for his party and congress, and even though there is latitude in how he implements laws, it’s still congress that makes the laws.

As usual, I am relying only on the official campaign website for information. Joe Biden has a number of different pages talking about different healthcare issues, such as coronavirus-related issues, gun violence, and the opioid epidemic. But the main one that reviews his plans for the healthcare system as a whole is here.

And what is his plan? Here are what I believe to be all the relevant quotes, copied directly from his website:

  • Instead of starting from scratch and getting rid of private insurance, he has a plan to build on the Affordable Care Act by giving Americans more choice, reducing health care costs, and making our health care system less complex to navigate.
  • He’ll also build on the Affordable Care Act with a plan to insure more than an estimated 97% of Americans.
  • [Give] Americans a new choice, a public health insurance option like Medicare.
  • Whether you’re covered through your employer, buying your insurance on your own, or going without coverage altogether, the Biden Plan will give you the choice to purchase a public health insurance option like Medicare.
  • [Increase] the value of tax credits to lower premiums and extend coverage to more working Americans.
  • Help middle class families by eliminating the 400% income cap on tax credit eligibility and lowering the limit on the cost of coverage from 9.86% of income to 8.5%.
  • Increase the size of tax credits by calculating them based on the cost of a more generous gold plan, rather than a silver plan. This will give more families the ability to afford more generous coverage, with lower deductibles and out-of-pocket costs.
  • [Offer] premium-free access to the public option for those 4.9 million individuals who would be eligible for Medicaid but for their state’s inaction, and making sure their public option covers the full scope of Medicaid benefits.
  • States that have already expanded Medicaid will have the choice of moving the expansion population to the premium-free public option as long as the states continue to pay their current share of the cost of covering those individuals.
  • Biden will ensure people making below 138% of the federal poverty level get covered. He’ll do this by automatically enrolling these individuals when they interact with certain institutions (such as public schools) or other programs for low-income populations (such as SNAP).
  • The public option, like Medicare, will negotiate prices with providers, providing a more affordable option for many Americans who today find their health insurance too expensive.
  • Because the premium tax credits will now be calculated based on the price of a more generous gold plan, families will be able to purchase a plan with a lower deductible and lower out-of-pocket spending.
  • The Biden Plan will bar health care providers from charging patients out-of-network rates when the patient doesn’t have control over which provider the patient sees (for example, during a hospitalization).
  • The concentration of market power in the hands of a few corporations is occurring throughout our health care system, and this lack of competition is driving up prices for consumers. The Biden Administration will aggressively use its existing antitrust authority to address this problem.
  • Lower costs and improve health outcomes by partnering with the health care workforce. The Biden Administration will partner with health care workers and accelerate the testing and deployment of innovative solutions that improve quality of care and increase wages for low-wage health care workers, like home care workers.
  • The Biden Plan will repeal the existing law explicitly barring Medicare from negotiating lower prices with drug corporations.
  • For these cases where new specialty drugs without competition are being launched, under the Biden Plan the Secretary of Health and Human Services will establish an independent review board to assess their value. The board will recommend a reasonable price, based on the average price in other countries (a process called external reference pricing) or, if the drug is entering the U.S. market first, based on an evaluation by the independent board members. This reasonable price will be the rate Medicare and the public option will pay. In addition, the Biden Plan will allow private plans participating in the individual marketplace to access a similar rate.
  • As a condition of participation in the Medicare program and public option, all brand, biotech, and abusively priced generic drugs will be prohibited from increasing their prices more than the general inflation rate. The Biden Plan will also impose a tax penalty on drug manufacturers that increase the costs of their brand, biotech, or abusively priced generic over the general inflation rate.
  • [Allow] consumers to buy prescription drugs from other countries.
  • Biden will end [the] tax deduction for all prescription drug ads, as proposed by Senator Jeanne Shaheen.
  • The Biden Plan supports numerous proposals to accelerate the development of safe generics, such as Senator Patrick Leahy’s proposal to make sure generic manufacturers have access to a sample.
  • Vice President Biden supports repealing the Hyde Amendment because health care is a right that should not be dependent on one’s zip code or income. And, the public option will cover contraception and a woman’s constitutional right to choose.
  • Stop the rash of state laws that so blatantly violate the constitutional right to an abortion, such as so-called TRAP laws, parental notification requirements, mandatory waiting periods, and ultrasound requirements.
  • Biden will reissue guidance specifying that states cannot refuse Medicaid funding for Planned Parenthood and other providers that refer for abortions or provide related information and reverse the Trump Administration’s rule preventing Planned Parenthood and certain other family planning programs from obtaining Title X funds.
  • California came up with a strategy that halved the state’s maternal death rate. As president, Biden will take this strategy nationwide.
  • [Double] America’s investment in community health centers.
  • As Vice President, Biden was a champion for efforts to implement the federal mental health parity lawimprove access to mental health care, and eliminate the stigma around mental health. As President, he will redouble these efforts to ensure enforcement of mental health parity laws and expand funding for mental health services.

Well, I think those quotes already make this week’s post plenty long. Let’s have a week to digest all that, and next Tuesday I’ll provide some commentary on how those proposals do or don’t address the core causes of the issues in our healthcare system.

An Example of How Evidence Can Be Misleading (Bundled Payments Version)

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Bundled payments are a proven strategy in non-healthcare industries, only we call them by different names. We say we’re paying for a “hotel room” when really we’re paying for the use of the room, the cleaning of the room, the “free” wifi, the “free” continental breakfast, access to the concierge, etc. We say we’re paying for a “cruise” when really we’re paying for the cabin, the unlimited food, the port fees, the access to the shows, use of the onboard pools, etc. These terms (“hotel room” and “cruise” are just two examples) are shorthand terms that refer to the bundle of goods and services you get when you pay that single price. That’s how it works in every industry.

Except healthcare. When we get a bill for a knee replacement, it only contains the surgeon’s cost (okay okay, including the hardware). But there’s also a bill for the anesthesiologist. And for the operating room. And for the hospitalization if you need to stay.

Why would all those things be listed individually if you know you will need a surgeon, an anesthesiologist, and an operating room every single time you get a knee replacement?

Enter bundled payments. They finally turn healthcare a little bit more into a normal industry by allowing patients to pay a single price for the bundle of services that should always be included in that one upfront price.

Sidenote: yes, healthcare is and should always be different from other industries in many important ways. For more details on that, read Arrow’s seminal article on the topic. None of this is incompatible with those insights.

But apparently bundled payments are not very helpful according to this Health Affairs review of the evidence. What gives?

When I see a paper like that, I appreciate the effort to summarize the evidence, but I cringe thinking about all the headlines and misinterpretations and misconceptions that it will perpetuate. People are going to start saying that our large-scale efforts to implement bundled payments are a waste of money . . . and they have evidence to back them up!

But that’s totally the wrong conclusion. This is how I interpret this study: I first think about the overall purpose of bundled payments. When you put their role into the context of the Healthcare Incentives Framework, their purpose is to allow patients to know up front the full price for accomplishing the job they have (get their knee functional again). This enables the patient to compare the price of different options. If they also have quality information of those options, now patients have the ability to shop for the best value (Value = Quality / Price). And when patients start choosing which provider to do their knee replacement based on value, market share starts to shift to the higher-value providers, thus forcing the lower-value providers to change in ways that either raise their quality, lower their price, or (hopefully) both! This is the potential benefit of bundled payments–it is an essential component in stimulating a newfound evolution toward higher quality and lower prices in the market for that specific service.

Compare that to how these studies evaluated the utility of bundled payments: They implemented them for a single procedure and usually with just one of many insurers a provider contracts with. Thus, in most cases the providers were still reimbursed the old fashioned way by all their other insurers. And I would guess that very few competitors in any given region were participating in the same bundled payment program. Therefore, there was no way providers were going to completely shift how they deliver the service because of the narrow scope, a lack of uniform incentives, and a lack of any strong financial imperative to do so (their biggest risk was only of losing a percentage of revenue on small portion of their patients–enough to motivate them to try to do some things a little differently but not to completely redesign how they deliver care–and the risk of losing market share to their competitors due to low value was almost nil). In short, these studies did not get even close to creating the environment for an evolution toward higher value.

With this as context, it’s a surprise to me that any of these bundled payment studies found any benefit at all!

Now, if I could perform my dream study (the design details here and here), that would make a splash. It would get us much closer to the true estimation of how impactful bundled payments could be in healthcare. And until a study like that is done, remember the importance of context, and take any evidence on the impacts of bundled payments with a large grain of salt.

Next week I’ll start looking at Joe Biden’s healthcare plans, so look forward to that!

Evaluating the ACP’s Vision for Our Healthcare System, Part 3 of 3: Coverage and Cost of Care

The last in my series evaluating ACP’s “vision for a better U.S. health care system.” Check out the intro to the series, Part 1, context for Part 2, and Part 2.

This is the paper that generated the most media attention, much of which incorrectly asserted that the ACP endorsed “Medicare for All.” So let me, at the outset, clear this up: The ACP doesn’t endorse Medicare for All in this paper. It endorses a couple different options to achieve universal coverage, one of which is a single-payer system. There are many ways to achieve a single-payer system, and Medicare for All is just one way to do that. Maybe this sounds like semantics, but I think it’s important to be accurate here because the term “Medicare for All” carries with it a lot of specific ideas about how a single-payer system should be implemented, and it also carries with it specific political affiliations. The ACP was not committing to any of those specific ideas or political affiliations; the writers were only endorsing the general single-payer system approach as one of two options for how to increase insurance coverage.

Now, on to assessing the details of the paper.

Part 1 of this paper reviews the state of insurance coverage and healthcare spending, which sets the stage for Parts 2 and 3 to talk about ways to expand coverage and lower care costs.

Part 2 is mostly what I want to talk about. First, it asserts unabashedly that the ACP feels that universal health insurance coverage is essential. And since having insurance coverage is pointless if its spending requirements are not affordable or if providers are unavailable, it adds those access details in as also being essential.

Then it lists two options that it sees as being able to achieve that goal: a “single-payer financing approach” and a “publicly financed coverage option.” Let’s look at each one.

Single-payer financing approach. This means a single government-run insurance company provides insurance for everyone in the country. It doesn’t necessarily prevent people from purchasing private supplemental insurance, but it would cover everything considered to be essential. The paper then discusses some of the well-known benefits and concerns that come along with having a single-payer system. The interesting part to me, which makes sense coming from a physician organization, is their particular concern about how this would affect physicians. It could decrease administrative burden and uncompensated care, but it could also decrease autonomy. And the big concern is that if it relies on “Medicare’s flawed payment system,” it would perpetuate a few undesirable things, including bad incentives (such as an over-reliance on fee for service), the overvaluing of certain services (procedures), and unsustainably low reimbursements (that would make some providers go bankrupt). Any prior “Medicare for All” proposal I’ve seen relies on Medicare’s payment system, so this is a good example of why the ACP is not endorsing Medicare for All specifically.

Publicly financed coverage option. Another name for this is a “public option.” Basically it’s a government-run insurance plan that will be offered alongside private insurance plans. It would be available for employees to opt into rather than use their employer-sponsored insurance as well. An essential part of this insurance plan is that it would have premium and cost-sharing subsidies (so that, again, lower-income people don’t end up with useless coverage). Later on in this paper, they say that no matter which option is chosen, it needs to have included with it a mandatory or automatic enrollment component. I’m not sure how premiums would be paid for by people auto-enrolled into the public option plan–possibly through filing their taxes–but isn’t this looking more and more like the Affordable Care Act? Require people to have insurance coverage and subsidize lower-income people to be able to buy it? Yes, that’s the ACA. The one difference is that one of the insurance plans people can select from will be run by the government (which, incidentally, was originally part of the ACA plan).

So those are the two options the ACP supports. They also mention another approach: convert all insurers to non-profits and require everyone to have health insurance (another variation of the ACA, but this time there’s no public option and instead all the insurers are non-profits). But they say there is not enough information on how such a system could be applied to the U.S., so they don’t endorse it. And all the other options for reform that are out there (such as “market-based approaches”) would not achieve universal coverage, so they were eliminated from consideration.

Even though the ACP is politically neutral, you can see that their foundational beliefs and priorities line up much more closely with modern liberal thinking rather than conservative thinking/beliefs/priorities. This is what I expected, and I discussed it in my intro to this series.

Part 3 discusses strategies they support to lower healthcare costs. There are 5 of them: invest more in primary and comprehensive care, reduce excessive pricing and improve efficiency, reduce low-value care, rely more on global budgets and all-payer rate setting, and use more reference pricing.

Rather than get into the merits and drawbacks of these different policies here, lets finish this series with a brief discussion about whether the two options they endorse to attain universal coverage will get in the way of the ideas we talked about in Part 2.

If you will recall, the second ACP paper we discussed gave 6 different recommendations, the two main ones being to (1) give patients price and quality information to help them choose higher-value providers and (2) getting providers to shift to value-based purchasing arrangements (especially different forms of capitation) with insurers.

With a single-payer system, usually the implementation involves setting a uniform nationwide price for each service (adjusted by region for cost of living). This would completely ruin their idea of getting patients to choose providers based on value because the price would be the same for all providers. I will not get into detail on how, but setting a price floor like that completely distorts providers’ innovation incentives. It would kill pretty much any cost-lowering innovation that results in slightly reduced quality, even if the innovation could result in drastically lower cost.

But, on the upside, since there’s only one insurer to deal with, a single-payer system would allow for perfectly uniform incentives for any provider that chooses to enter a VBP arrangement!

With a public option like they have described, there is the exact same problem with distorted/ruined incentives due to uniform pricing, but at least the extent of the problem is limited to the number of patients who are on the public option plan. And, as for providers’ efforts to enter into VBP arrangements, it would probably make it slightly easier to get uniform incentives because I assume VBP arrangements would be harmonized between Medicare and this public option. But any provider who wants to design their own VBP arrangement is going to have to have an even harder time attaining uniform incentives because I suspect they would have to convince the plan administrators of Medicare and the public option independently, which means they’re trying to win over yet another public payer to be able to move forward with their idea.

Am I saying that the ACP’s efforts to accomplish universal coverage will interfere with their efforts to improve the care delivery system? Yes. The two options they endorse don’t necessarily need to be implemented in a way that does that, but I see nothing in what they’ve written that specifies that they should be implemented in a way that mitigates those problems. (For details on how this could be done, see what an optimal single-payer system would look like here and what an optimal ACA-type system would look like here.)

I think different groups of people were working on each paper, and even though they were reporting their findings and recommendations to the same group of ACP leaders for approval, it’s quite a difficult task as one of those ACP leaders to be presented with complex recommendations from two different groups and figure out exactly how they might conflict with each other.

Well, there we have it. The ACP endorsed some things that would be very beneficial, but they fell into the same trap of not thinking about these things from a complete system perspective, so their efforts to get more people into the system will interfere with the changes the system needs to deliver better value over time. This is why any healthcare reformer first needs to have a firm understanding of the core causes of low value and how those can be resolved before deciding on the details of how to enact universal coverage.

But I am happy the ACP jumped directly into this arena. It shows that powerful physician groups are also interested in figuring out how to fix the healthcare system. Maybe the biggest benefit from their efforts of researching and releasing these papers (and then having them critiqued) is that it will make the ACP and other provider groups more likely to recognize and support policies that will truly move us closer to fixing our healthcare system.

My Ideas Versus Congress’ Ideas to Transition to Alternative Payment Models

Next week I’ll finish looking at the ACP’s papers on fixing healthcare. But this week, I wanted to say one more thing about alternative payment models (APMs)–how to transition to them.

First, let’s think about this task without using the Healthcare Incentives Framework. How would a policy maker go about trying to get our healthcare system to shift from FFS to APMs (ignoring the fact that this is the wrong way to look at it)?

They would probably start by saying, “We need to find a way to give incentives to providers and payers to try out these different APMs.” This would be fairly easy to do through Medicare, so they would create some Medicare APM programs and structure them in a way that makes the benefits of joining large enough that lots of providers will want to participate.

They would also encourage private insurer-provider diads to start using APMs. How could they do that? They would probably just have to offer them money to do so.

These two approaches are what we’ve seen policy makers do. Medicare has the Medicare Shared Savings Program to get providers to enter into ACO contracts with Medicare, and the Bundled Payments for Care Improvement initiative to get providers to enter into bundled payment contracts with Medicare.

And to encourage private insurer-provider diads to start using APMs as well, I am only aware of two initiatives:

  1. Medicare joined up with a bunch of private payers to institute a patient-centered medical home program called Comprehensive Primary Care Plus.
  2. In 2015, congress passed the Medicare Access and CHIP Reauthorization Act (MACRA). A major part of this law is something called the Merit-based Incentive Payment System (MIPS). MIPS applies to all providers receiving reimbursements from Medicare, and it says they will now get a bonus or penalty based on a few criteria (quality, cost, EHR use, and quality improvement efforts) UNLESS they are actively participating in enough APMs (including qualifying programs with private payers!), in which case they are exempted from MIPS bonuses/penalties and instead they get an automatic 5% bonus.

I don’t think congress has passed any direct-to-private-insurer incentives to create APM programs (unless you count the Comprehensive Primary Care Plus program), but congress is influencing private insurers indirectly through providers because providers who want to get the 5% bonus and be exempted from MIPS will be pressuring private insurers to sign APM contracts with them.

So there we see the evidence of how policy makers not using the Healthcare Incentives Framework are approaching this effort to shift to APMs.

What would I do, knowing the principles illustrated in the Healthcare Incentives Framework?

First, I would discard the assumption that, for APM usage to increase, artificial incentives need to be created. The Healthcare Incentives Framework makes it clear that if an APM could truly offer increased value to patients, it would naturally arise in the market IF there are no barriers to it doing so. Next, I would go about looking for barriers and eliminate them. And only after doing that, if I want to accelerate the uptake of APMs, I could also offer artificial incentives.

APMs are a contract between an insurer and a provider, so let’s look at both parties.

Providers: Their incentive is to provide care of all kinds–this is how they make money. And any investment that enables them to raise their value relative to their competitors and that is not too risky will be desirable to them AS LONG AS they can be reasonably assured that patients will be able to identify their value as being higher than competitors’ and also have an incentive to choose the highest-value option. So, from a provider perspective, as long as any APM contract being offered by an insurer meets those requirements, they will be happy to participate.

Insurers: Their incentive is to minimize the total cost of care because they are getting a fixed amount of money in premiums, so any expenditure that is prevented is money that stays in their pocket (assuming those frustrating medical loss ratio rules instituted by the Affordable Care Act don’t come into play). The problem is, insurers don’t have much control over the total cost of care. Sure, they can try to negotiate the lowest prices possible, but providers are the ones that largely determine the total cost of care because they are the ones with the ability to prevent care episodes and to determine how much care is needed for care episodes that cannot be prevented. What I am saying is that insurers have the incentive to reduce the total cost of care, but providers are the ones able to make that happen. Therefore, insurers need to pass along their incentives to providers with these APM contracts. And insurers are happy to give money to providers to institute and run these programs if they can reasonably expect to save a lot more money than what they are giving.

With all that as context, what would I do to transition our healthcare system to APMs?

First, I would make sure providers are willing to join APM contracts by reasonably assuring them that if their investments into the program successfully increase their value, they will win more market share (and, therefore, profit).* How can I do that? By enabling patients to identify the highest-value provider up front and also ensuring that they actually have an incentive to choose the highest-value provider. I won’t go into details here on how to accomplish those things because I’ve written extensively about them before. But the result of those changes is that it would make providers see APMs as a potential for being very beneficial not only to their patients but also their profitability, which would probably result in them taking the lead in designing many of the APMs since they’re the ones who know best what changes could make a difference.

Next, I would make sure insurers are also willing to sign on to these APM contracts. Since insurers don’t like investing a lot of money into a program and then being required to give away all the financial benefits of that investment, I would eliminate the Affordable Care Act’s medical loss ratio requirements.

Next, lest you worry that insurers will forever keep all the savings generated by these APM contracts, I would enhance the ability for patients to compare the cost and quality of different insurance plans. That way, insurers will want to lower premiums because they will be assured that patients shopping for insurance will see that they are offering higher value (particularly in the form of lower premiums), so more patients will choose them, thus raising their profit as a result of increased market share.

Next, I would probably continue the programs Medicare is already doing, but I would also allow Medicare to sign on to other APM contracts happening between private insurers and providers. This would enable providers to get all insurers to reimburse them using the same contract, which would give them uniform incentives and make a huge difference in how much they are able to optimize toward that program.

Finally, if I do all that and am still unsatisfied with how fast this shift to APMs is happening, I would offer bonuses paid through Medicare to providers who are working hard to implement APMs (like the 5% bonus Medicare already implemented, described above). And if all that fails at getting this shift to happen as fast as I want, I would consider also offering grants to providers and insurers to try out APMs so that they don’t have to risk their own money designing and implementing them.

This approach is very different than the one currently being used by policy makers, and it would require changes that might be more difficult to make, but it would also not be limited by our current understanding of the “best” APMs. Instead, it would create the right environment for our healthcare system to continually shift toward better and better payment models as they are invented and refined.

* I know that an increase in market share does not automatically increase profitability, but this is my shorthand way of saying that it will increase their market power, which leads to increase profit either through a low-margin high-volume pricing strategy or through a high-margin low-volume pricing strategy. And my prediction is that, given where prices in healthcare are these days, the vast majority of providers would find that the profit-maximizing pricing strategy would be a lower-margin higher-volume option inasmuch as provider capacity allows.

Fee for Service Versus Alternative Payment Models? That’s the Wrong Way to Look at It

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I was reading an interesting article on The Health Care Blog this week, How to Pandemic-Proof Our Health Care Payment System, by Aisha Pittman and Seth Edwards, and it got me thinking about how fee for service has become a scapegoat. And since I’m on an alternative payment model (APM) kick the last few weeks (here and here), I’ll keep it going and save my evaluation of the ACP’s solutions to healthcare for the near future.

First, I need to debunk a myth. Here’s the myth: all fee-for-service (FFS) reimbursement is bad. The corollary to this is that all APMs are better. We need to stop seeing healthcare payments as dichotomous (FFS vs APMs) and start seeing them as sitting on a spectrum. This spectrum is the breadth-of-services-purchased-in-a-bundle spectrum. FFS is closer to the “narrow” end, and APMs are somewhere toward the “broad” end. But no end of the spectrum is inherently good or bad.

If FFS isn’t automatically bad and APMs aren’t automatically good, what determines whether any individual payment to a healthcare provider is good or bad? The answer: How closely it lines up with the principle of having a single payment for a single healthcare need. One payment for one job!

The patient needs a second opinion on a challenging diagnosis? One payment (that would include the doctor’s time). The patient cuts open their finger chopping vegetables? One payment (that would include nurse intake time, the doctor’s time, the lidocaine, the sutures, suture removal, etc.). The patient needs a bad knee replaced? One payment (that would include pre-op, op, and recovery care). The patient wants to have a baby? One payment (that would include all obstetric care from pre-pregnancy planning through delivery). The patient needs a year’s worth of diabetes management? One payment (that would include doctor consultations, podiatry care, lab work, etc.).

Try labeling those examples with the normal lexicon. You’ll see FFS, bundled billing, and capitation. Yet, they’re all “good” because they all require one payment for the job the patient wants the healthcare system to do for them.

How we get to that is a topic for another day, but think what could happen if we always paid one payment for one job (and if the services included in those payments were standardized from provider to provider): There could be prices advertised up front, there could be standardized quality metrics, patients could shop around for the highest value (assuming insurance plan designs don’t get in the way of the shopping incentive), higher-value providers would get more patients and make more money, competition over value would be stimulated, and our healthcare system would start naturally improving the value it is delivering year after year.

So let’s stop making FFS the scapegoat–which obscures the underlying principles–and start focusing on giving patients a single fee for a single job.

Evaluating the ACP’s Vision for Our Healthcare System, Part 2 of 3: Healthcare Delivery and Payment Systems

Read the intro to the series here and Part 1 here.

These posts should start to be more reliably out on Tuesday mornings again soon, but for now I’m excited to get this one out at all.

And in other news, this week marks the blog’s 10th anniversary! It started over at and then I changed the URL to a couple years ago (not something I recommend–it killed my traffic!). My first post was one paragraph long, and I hope I haven’t strayed too far from that original goal to be understandable to the masses as my knowledge has increased. I do know I make more and more assumptions of my readers’ knowledge, which is necessary so I’m not re-explaining everything a million times, but to compensate I try to refer back to the posts that explain those things. I’m interested to see where this blog is and where my knowledge is in another 10 years!

Ok, on to the next ACP paper! I hope you read last week’s post. It’s prerequisite material for everything in this post. Another prerequisite post (linked to in last week’s post as well) explains the spectrum that has fee for service at one end and full capitation at the other end. With the information from those two posts fresh in your mind, everything below will make much more sense.

The overall approach the ACP is taking here is to say that value-based purchasing (VBP) efforts can be great, but the ones we’ve tried to date have not been very effective because they have been fragmented (we’ve been trying lots of different and overlapping ones, all with their own flaws) and because they have been built on a FFS foundation that is often “at odds with goals to reward quality and efficiency.”

So what do they propose instead? They outline 6 “policy positions and recommendations.” I will not talk about each one because, frankly, I don’t know what I would say about some of them. For example, take the first one: “The American College of Physicians recommends that value must always be defined with patients and families at the center, fully empowered to be active partners in all aspects of their care.” That sounds like a great idea that is just ambiguous enough that no one could argue with it! But, to their credit, they do list some ideas in the following paragraphs of how to make that happen.

Their second recommendation is so good that I’m going to put it in the special quotation format:

The American College of Physicians recommends that all patients, families, and caregivers and their clinical care teams be provided with transparent, understandable, actionable, and evidence-based quality, cost, and price information to meaningfully compare medical services, facilities, and products.

Envisioning a Better U.S. Health Care System for All: Health Care Delivery and Payment System Reforms

Yes. This is super important. I love that they included it because the only effective way to financially reward higher-value providers and insurers is to get more patients to choose them. I think I do this almost every week, but I’ll link again to my Healthcare Incentives Framework series that explains this in detail.

Their third recommendation is all about what they would propose to replace the VBP efforts our healthcare system has made to date, and it’s the meat of what I am interested in. They envision teams of caregivers (led by physicians) treating patients, and they want those teams to determine for themselves which VBP strategy to employ from a menu of VBP options. The teams get to choose the VBP option that best fits their specialty and patients’ needs.

The three items on their recommended VBP menu are capitation, patient-centered medical homes, and direct primary care.

They specifically call out accountable care organizations (ACOs) as being less desirable because getting the shared savings bonuses is a moving target from year to year, so already-successful providers have a hard time improving sufficiently to continue getting them. They must take issue with Medicare’s specific implementation of ACOs, because then immediately after saying all that they describe the first menu item–capitation–as a shared-savings approach that should also have quality bonuses (ahem, that’s what an ACO is).

I’ve written less about direct primary care, but it’s simply a narrower form of capitation. The “capitated fee” (fixed monthly fee) patients pay covers all their primary care needs and nothing else. This eliminates all issues with insurer billing! Patients just go to or call the doctor when an issue comes up, and the doctor deals with it in whatever way makes the most sense without having to worry about charging for an office visit or phone call or anything.

So here we have three options on the ACP’s menu that they feel will be the new shiny way of doing VBP that gets rid of fee for service. One is actually still primarily relying on fee for service but pays providers bonuses for reorganizing in ways that decrease spending (patient-centered medical homes), and the other two are actually going away from fee for service and instead relying on some degree of capitation. I’ve talked about how important it is to make sure patients are buying the right breadth of services for each situation, and I don’t think the writers were aware of that principle, but they’re on the right track anyway.

Let’s frame the evaluation of these second and third recommendations by remembering that total healthcare expenditures is determined by (1) the number of care episodes and (2) the cost per care episode.

The ACP has done an admirable job addressing the number of care episodes (primarily by recommending shifting risk to providers, which is an appropriate way for an insurer to pass along the incentive to reduce care costs) AND the cost per care episode (by recommending increased transparency to help patients choose higher-value providers). These two recommendations are not perfect. For example, the ACP still seems to overvalue the benefits of quality bonuses. And they say nothing of many other significant details such as the insurance plan design changes that would also be necessary to get patients to choose higher-value providers. But I am still impressed. If you look back at my Healthcare Incentives Framework, you will see that they have essentially followed the main points of it.

The other recommendations talk about increasing pay for complex cognitive care relative to procedures, decreasing administrative burden (such as billing complexity, which is a huge problem that I have written about recently here and here and here), improving quality metrics (which they unfortunately seem to focus on using for quality bonuses rather than for helping patients determine the highest-value options), and health IT improvements (to facilitate all the other changes recommended in the paper). All these recommendations are interesting and I generally agree with them, but they are peripheral to the issues discussed in the second and third recommendations, so I won’t go into them.

There you have it. The ACP did a good job. Hats off to them. In Part 3, we’ll see if their recommendations to improve coverage and cost of care would interfere with what we talked about here.

Context for what “Value-based Purchasing” (VBP) Really Is About

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As I was reading through the ACP’s “Health Care Delivery and Payment System Reforms” paper this week, I was thinking more about the principles underlying this whole “value-based purchasing” (VBP) thing. So, before we delve into the ACP’s opinions on the topic, I thought it would be helpful to give a little context about what VBP really is.

I’ve written about these topics before here and here, and those posts describe somewhat different aspects of VBP and fee for service than what I’m talking about today.

The stated goals of VBP boil down to two things: (1) reward (and thereby improve) value and (2) decrease healthcare spending. If you’re familiar with my Healthcare Incentives Framework, you know I think trying to give providers bonuses for delivering better quality is not a transformational nor a sustainable effort. But what of the goal to decrease spending? Let’s talk about that for just a minute.

Question: Who stands to gain (or, save) the most if healthcare spending goes down? Answer: The person on the hook for paying for it. Paying for healthcare is a shared responsibility between the patient and the insurer, but really the risk for having to cover large healthcare expenditures resides with the insurer. (Yeah, that’s the point of insurance.)

So, if insurers are the ones that stand to benefit the most if healthcare costs go down*, what can they do to make that happen? They don’t directly control what providers do, but can they financially incentivize those providers somehow to find ways to decrease healthcare spending for them?

Yes. That’s what VPB is. And that primarily takes two forms:

First, they can simply pay them extra to reorganize in certain ways that would decrease spending. The insurer hopes the additional investment will result in a lot more savings than they invested. So, an example of this would be when insurers give clinics extra money when they offer expanded services such as after-hours access to doctors, social workers, and care coordinators. Think: patient-centered medical home.

Second, they can shift some of the risk to providers, so providers will make more money if they successfully decrease spending but will also make less money if spending increases. Think: Any “shared savings” plan, such as an ACO.

Now when we talk more about VBP, you will see these two tactics at work. Really, these are the only two tactics insurers can use, so every VBP model is some variation of one or both of them.

*There are some complicating factors in that statement. One is that with the ACA’s medical loss ratio restrictions, they actually don’t stand to gain much if they find a way to decrease medical spending, because they’re required to turn around and send a lof of that extra money they saved back to their enrollees in the form of rebates. It messes with insurers’ incentives to lower the cost of care, and this is one of the many reasons I despise those regulations. Another complicating factor is that insurers make a large amount of their profits (if anyone knows a specific number, I’m all ears) off the stock market by investing the premium money until they need to pull that money back out of those investments and pay for care. So, the more they get paid in premiums, the more they have available to invest in the interim. If all insurers could collude and find a way to keep healthcare super expensive, they would be tempted to do that, especially if they could keep premiums high AND decrease spending at the same time (and keep 100% of the difference). However, that is not a Nash equilibrium–there’s an incentive for someone to cheat the others and make more money than their competitors by lowering premiums and winning all the market share–so I don’t expect it to be a lasting thing even if it is happening informally in certain markets at certain times.

Evaluating the ACP’s Vision for Our Healthcare System, Part 1 of 3: Barriers to Care and Social Determinants

I am back from my blogging hiatus, and I’m excited to write about the three papers the ACP released earlier this year about how they think healthcare should be fixed!

I gave an intro to this series here, which basically gives the caveats about whose opinions these papers–written by the second largest physician organization in the U.S.–do and do not represent. Now, let’s get into it.

This is the paper where the ACP lays out their recommended solutions to issues related to non-financial barriers to care and social determinants of health. And in case you didn’t already know, I say “non-financial barriers to care” because even people with good insurance coverage that has affordable out-of-pocket requirements can still have many barriers to care. That’s what we call “coverage without access.”

This paper first reviews some of the evidence on a number of public health issues (nutrition, tobacco use, substance use, maternal mortality, firearm injuries and deaths, environmental health and climate change), and then it reviews the main non-financial barriers to care (race and ethnicity, LGBTQIA identity, gender, physical and intellectual disability, location, age, language and citizenship status, incarceration status, religion and beliefs, health literacy, intersectional barriers).

Next, it gives policy position statements and each one is followed by some policy recommendations, so let’s look at each one in turn:

  1. This one says that all people should have equitable access to high-quality care and that none of those non-financial barriers to care should impact that. Then they recommend that policies be put in place to focus on minimizing those non-financial barriers to care. They don’t actually give a set of specific policy recommendations on which ones to prioritize or how to do it, but they do reference a few other ACP papers that give more specifics in certain areas. So, this first one is a nice safe policy statement without any real substance on how to make a difference.
  2. This one says that we need to do a better job ensuring there are enough physicians and hospitals overall and in underserved areas. And it actually gives a few specifics. Notably, the ACP thinks there should be more internists! They want residency spots increased, and they want more programs that support medical trainees to choose primary care and to serve in underserved areas. They also make a general statement about wanting there to be more effort put into ensuring rural and critical access hospitals are available. And they again reference a number of different existing ACP papers that go into detail in a number of those areas.
  3. This one says that they want more public health research and more policy interventions that address social determinants of health. Then, again they simply reference other ACP papers for specifics.
  4. This one says that we need to devote more resources to environmental health and climate change. And, again, without any specifics here, they reference other ACP papers.
  5. This one lists the most “critical” public health objectives that the ACP thinks we should focus our time and money on the most, which are tobacco use, substance use, maternal mortality, firearm-related injuries and deaths, and access to high-quality food. It references APC papers on the subjects that already have papers, and it recommends more research in the other areas.

Well, I admit I am underwhelmed at the substance here. And yet, even though I expected this paper to offer more specifics that I could evaluate, it does do a good job of organizing the issues and putting the other existing ACP papers into context. My only comment, then, will be that all of these policies fit into the “equitable access” category of my Healthcare Incentives Framework. (Sure, some will take issue with my “equitable access” terminology not being broad enough, and I will let them.) Policy responses to these issues should be pursued in each country to the extent that each society deems appropriate, and when the designers of the policies understand the rest of the Healthcare Incentives Framework, they will be empowered to implement those policies in ways that do not interfere with the long-term value improvement of their healthcare system.

We will see what the other two papers (Part 2 here, Part 3 here) have to offer in the coming weeks.

Brief Hiatus

No blog post last week, no post this week. I haven’t forgotten. The weekly Tuesday posts will resume either next week or the week after, and at that time we will get into evaluating the ACP’s papers on how to fix healthcare. Looking forward to it!

Now the American College of Physicians Wants to Fix Healthcare, Too

This is the intro to a series. See Part 1 here, the context to Part 2 here, Part 2 here, and Part 3 here.

Every medical specialty has its own organization (or sometimes a few competing organizations), and the main organization for internal medicine physicians is called the American College of Physicians (ACP). I think it has such a general name because it wants to be representative of internists AND also all the people who did internal medicine on their way to sub-specializing (e.g., cardiology, infectious disease, rheumatology, gastroenterology, pulmonology, . . .). Yes I know most of them consider themselves internists as well, as they should!

After the AMA (which seeks to include all physicians of every specialty), the ACP is the second-largest physician group in the U.S., which makes sense because internal medicine is the most common residency program for medical school graduates to do. I just checked the data on residency positions, and there were 8,697 internal medicine positions for 2020. The second most common one was family medicine, with 4,662 positions.

Random fact: What’s the smallest specialty in terms of residency spots? Apparently it’s preventive medicine. It had one spot available in 2020. I didn’t even know you could do a preventive medicine residency.

As a large medical specialty organization, the ACP has some significant power to wield, and that’s important because one of its main purposes for existing is to promote the interests of internal medicine physicians in the political arena. I’ve seen this in action twice in D.C., when I joined ACP members from all 50 states to meet with quite a few members of congress to advocate for specific issues.

And now the ACP has entered the realm of my primary interest by releasing a new set of policy proposals specifically talking about how to fix our healthcare system.

I haven’t read all their proposals yet–I’ll be doing that over the coming weeks–but I can guess the general approach they will take because I’ve met with enough physicians who are active in the ACP to know the general type of person who gets involved in this flavor of organized medicine and would be the ones influencing these proposals. At the risk of being accused of overgeneralizing, I will describe them as passionate and caring individuals whose morals drive them to push for social justice and to advocate for system changes especially to improve care for the underserved. Of course there are many involved in the ACP who have totally different priorities, but I would venture to say that that description applies to the most prevalent motivation to be involved.

Another reason I can guess how these proposals turned out is because I’ve heard ACP’s Senior VP over Government Affairs and Public Policy, Bob Doherty, speak a number of times, so I have a sense for what he is all about. Bob is not a physician–he’s a policy guy–and he’s articulate and impressively comprehensible when speaking on health policy issues, which tells me he knows his stuff super thoroughly. He’s been with the ACP for a long time, and I am willing to bet that, intentional or not, he had a significant influence on the shape these proposals took, if even only indirectly by being the primary person teaching ACP leadership about the issues.

My point in talking about Bob Doherty and about what kind of person gets involved in ACP leadership is to say that these proposals are going to reflect the minds of those individuals, and that they would probably have ended up looking very different if I and a randomly sampled group of regular ACP members came up with them.

It’s just interesting that now we have the second-largest physician organization essentially saying, “This is what physicians believe about how to fix healthcare.” And the rest of the country will not have any reason to question that.

So, I guess it’s time to learn what I, an internal medicine physician, believe about how to fix healthcare! There are three main papers that lay out the ACP’s proposals, so over the next few weeks I’ll take each one in turn and see what they have to offer.