Fwd: qotd: ACOs provoke pointless war between insurers and hospitals

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-------- Original Message --------
Subject: qotd: ACOs provoke pointless war between insurers and hospitals
Date: Fri, 7 Feb 2014 11:40:12 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Wall Street Journal
February 6, 2014
Insurers face new pressure over limited doctor choice
By Anna Wilde Mathews and Christopher Weaver

Insurers are facing pressure from regulators and lawmakers about plans
that offer limited choices of doctors and hospitals, a tactic the
industry said is vital to keep down coverage prices in the new health
law's marketplaces.

This week, federal regulators proposed a tougher review process for the
doctors and hospitals in plans to be sold next year through
HealthCare.gov, a shift that could force insurers to expand
those networks.

Meantime, regulators in states including Washington and New Hampshire
are ramping up their own scrutiny, and lawmakers in Mississippi and
Pennsylvania, among others, are weighing bills that could force plans to
add more hospitals and doctors.

The moves come amid complaints by some consumers that they don't have
access to a broad enough range of care—such as specialists at top
academic medical centers…

http://online.wsj.com/news/articles/SB10001424052702304450904579365373011903340?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304450904579365373011903340.html

==
The New York Times
February 4, 2014
Health law goals face antitrust hurdles
By Eduardo Porter

[I]n a remote courthouse in Idaho ... less than two weeks ago a district
judge sided with the Federal Trade Commission and ordered the unwinding
of the merger between one of the state's biggest hospital systems and
its biggest independent network of doctors.

The ruling against St. Luke's Health System's 2012 purchase of the
Saltzer Medical Group underlined a potentially important conflict
between the nation's antimonopoly laws and the Affordable Care Act. The
new law has encouraged the creation of big, broad accountable care
organizations, which are paid to keep patients healthy rather than for
individual services.

"We want to be providing a more coordinated product that delivers health
care at a lower overall cost to the community we serve," Christine
Neuhoff, general counsel at St. Luke's, told me. ....

Paradoxically, Judge B. Lynn Winmill seemed to agree. In his decision,
he noted that the merger, had he let it stand, would probably have
improved patient outcomes: "St. Luke's is to be applauded," he wrote,
"for its efforts to improve the delivery of health care in the Treasure
Valley," which stretches west from Boise.

Still, he slapped it down because the merged group, he reasoned, would
be able to demand higher reimbursement rates from health insurers and
raise rates for services like X-rays, pushing up health care costs for
consumers. "There are other ways" to obtain the desired efficiencies
that "do not run such a risk of increased costs," he concluded.

http://www.isidewith.com/news/article/economic-scene-health-law-goals-face-antitrust-hurdles

==

Wall Street Journal
January 24, 2014
FTC wins challenge against Idaho hospital deal
By Brent Kendall

Lawyer David A. Ettinger, who represented a competing Idaho hospital
that opposed the St. Luke's transaction, said the judge's ruling
effectively rebuts "the notion that all these transactions are
appropriate because of the Affordable Care Act."

http://online.wsj.com/news/articles/SB10001424052702304856504579340733626090534

==

Comment by Kip Sullivan JD

The Affordable Care Act has set off another wave of mergers among
hospitals, and it has induced insurance companies to kick doctors out of
their "networks." Both hospitals and insurers are justifying their
behavior by claiming it is exactly what the authors of the Affordable
Care Act wanted them to do. Hospitals claim they are merely trying to
create "accountable care organizations" (a new synonym for HMO endorsed
by the ACA) that will better "coordinate care" and thereby reduce costs.
The insurance industry is claiming they are narrowing their networks in
order to lower costs and winnow out doctors who don't care about "quality."

The emperor here is stark naked. The hospital and insurance industries
are building up market power as fast as they can in order to maintain
countervailing power against each other. By reducing the size of their
networks, insurers create more power over the remaining providers and
use it to negotiate lower reimbursements. By merging with other
hospitals and buying up clinics, hospitals making it harder for insurers
refuse to include them in their networks and to squash their fees.
Neither the insurers nor the hospitals can afford to disarm unilaterally.

Proponents of the ACO provisions within the ACA should have predicted
that their handiwork would set off the equivalent of an arms race. The
least they can do now is admit that's what happened and that the
consequences – smaller networks and bigger hospital-clinic chains – need
to be unraveled. But ACA proponents either ignore the issue or suggest
solutions that make no sense. In the New York Times article quoted
above, Jonathan Skinner, a leading ACO proponent, argues that empire
building by hospitals won't lead to higher prices because insurance
companies are also building up countervailing power by creating narrower
networks. The Times quotes Skinner as follows: "It's certainly true that
the consolidation of physician groups and hospitals can lead to greater
market power and higher charges to insurance companies. But the
insurance companies are creating narrower networks of providers. So
providers who try to charge more risk getting dropped entirely from the
now narrower network." What Skinner is saying is that we needn't worry
about giant hospital chains because giant insurance companies will react
by reducing consumer choice and all will be well. In this battle between
Godzilla and King Kong, patients will lose choice of provider, but
that's not anything we should worry our little minds about. What's
important is that the ACO experiment should play out across the country.

The Times also quotes Obama ally David Cutler saying that if
hospital-clinic monopolies do evolve, that's fine because they are
probably the "only way to obtain good care," and if that turns out to be
the case, then we'll have to "regulate [their] prices or total
spending." Like Skinner, Cutler is assuming that enormous
hospital-clinic chains confer such obvious benefits that society must
give up choice of provider and learn to tolerate enormous
hospital-centered monopolies. The only difference between Cutler's
"solution" and Skinner's is that the government will play Godzilla to
the hospital's King Kong, not the insurance industry.

But the claim that enormous health "systems," dressed up as ACOs or
anything else, can improve care and lower costs remains unproven. Until
it is proven, the FTC, the Justice Department, and state attorneys
general should not stand idly by and watch the empire builders. And
judges should not treat the claims made by ACO proponents as true as the
judge in the St. Luke's case apparently did. When the FTC or Justice
brings the empire builders into court and the empire builders claim they
are merely trying to "integrate care" per the ACA, judges should demand
evidence that ACOs or "integrated systems" work as advertised. That
evidence does not exist today and probably never will exist.

In ruling against St. Luke's, the Idaho judge made a valuable
observation. He said "there are other ways" to achieve the goals ACO
advocates claim they want to achieve. Imagine that. May I suggest one
way: Why don't ACO proponents state concretely and specifically what
they want ACOs to do, and if evidence indicates what they're proposing
is good for patients, then let's pay clinics and hospitals (not ACOs) to
provide those services. When I say ACO proponents should speak
"concretely and specifically," I mean in everyday language, not
"coordinated" this and "integrated" that and other fatuous labels
invented by the illuminati at 80,000 feet.

For example, if ACO proponents were to say that what they really want is
nurses to visit heart failure patients at home after discharge and to
monitor them remotely thereafter, I believe all of us – ACO proponents
and skeptics alike – would agree the evidence indicates that is good for
patients http://www.innovations.ahrq.gov/content.aspx?id=275. In that
event, we could write a code for those services and order public and
private insurers to pay for them. Why funnel un-earmarked "capitation"
payments through the headquarters of enormous hospital-clinic chains and
hope they'll use the money to pay nurses to take better care of heart
failure patients rather, than, say, more advertising or more mergers?

Paying clinics and hospitals directly would remove much of the incentive
to build empires and it would give society a much better record of where
our money went.

Of course, the ultimate antidote to empire-building is a single-payer
system.