Minor League Champs

Last September, the Bowling Green Hot Rods, a minor league affiliate of the Tampa Bay Rays, beat the Peoria Chiefs 7-2 to win their first ever Midwest League Championship.

I bring you this critical, though seven-month old, item because one of the themes we are tracking this year is the migration to value-based reimbursement.  Yes, a segue is coming. 

Today, we have a little news from the minor leagues of value-based care.  See the connection?

We’re checking back in on the Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). Remember when these ACOs, working in the MSSP model, were going to save us boatloads of money and fix healthcare?  Now, it seems like Single A ball.

If you’ve been reading here long, you know that the ACO/MSSP idea is a favorite punching bag for us.  For all the smoke and heat and light and energy and spending that has been put into this, CMS would have saved more money by simply asking their staff use the other side of the Sticky Notes before reaching for another.  ‘Rounding error’ is a fitting summary for the program’s ‘savings’ to date.

But we look a little deeper today.  It turns out that physician group ACOs record a net positive savings to Medicare, while hospital-integrated ACOs don’t save enough to even cover their bonuses.

Neither saves a ton, but the evidence is clear for physician ACOs.  Those that entered the program in 2012, the first year, saved $474 per Medicare beneficiary in 2015, the last year for which the data is available.  Their hospital counterparts from the same year saved only $169, less than the bonuses they received.

Bowling Green beats Peoria.

Looking at the ACOs that have been in the program longer is the right idea because they’ve had time to bake-in their strategies.  And sure enough, both hospital and physician ACOs get better over time.  But, the doc-driven ACOs start with a better savings and get better faster in subsequent years.

In 2015, the physician group ACOs saved CMS, after bonuses, $256 million dollars.  The hospital-based ACOs were net negative to the cost of the program.

It was a bit humorous to read one analysis, explaining that doc-owned ACOs outperform because they more aggressively cut spending from other providers outside their practice, but the hospital ACOs should be excused because they own all of those downstream providers and can’t be expected to reduce services to their own business units.

So, it is not real savings unless you reduce spending in your own part of the value chain, but if you own all parts of the value chain, you can’t be expected to reduce spending??

You see why we think this model is flawed?

Save the Salt Shakers

It is function of where I am in life that way too many conversations with friends of late include a discussion about aging parents.  We used to talk about potty training tricks, youth sports programs, and when to give your kid a phone, but now it is more about assisted living options, various forms of dementia, and estate planning.  We are cheerful lot, aren’t we?

One of the questions is often about Mom and Dad’s stuff, stuff they have collected and cherished and dusted for decades.  The simple, if harsh, reality is the stuff is not worth the cost of the cardboard boxes you’d have to buy to put it in, much less the hassle of moving it to your basement, only for it become your kid’s problem in 20 years. 

Sentimentality gets in the way of clear thinking.  ‘Mom just loved her salt and pepper shaker collection and had to buy a set on every family vacation.’  Yep, and at $50 a month for the self-storage unit, we’ll just keep buying those smiling Yellowstone bears with three holes in their head over and over again.

I get it…emotional attachments can make it hard to move on.

Like the Medicare Shared Savings Program.    

A bi-partisan group of nine members of Congress sent a letter (and by the way, there is a typo in the 2nd paragraph where $314 million becomes $314 billion…maybe it is not a typo, but Washington math magic) last week to Seema Verma, Administrator of CMS, asking her to reconsider the administration’s plan to change the MSSP rules for ACOs.  CMS wants to make two big changes: new ACOs must move to accepting downside financial risk in two years instead of the current six; and they would share in only 25% of the savings instead of the current 50%. 

CMS says the government is just not getting enough benefit from the program and needs more.  The signers of the letter (you can almost see the hands of the American Hospital Association moving the puppet) say these changes will dissuade new ACOs from stepping into the MSSP game, which must be saved.

Let’s step back and ask, ‘Do we really want to hold on to these knickknacks?’

The authors tout the great success of the MSSP model in producing a net savings for Medicare of $145 million in 2015.  Wow. 

Note that the annual Medicare budget is about $650 billion. We’re talking a 0.02% impact.  Has ever so much time, effort, money and press release ink been spilled to realize so little?

Look, we have a real problem with our spending and if we don’t fix it fast we are not going to like our options.  Messing around on the edges is not getting it done.  Send the salt shakers to Goodwill and let’s get after the bigger solutions.