Will the government and the health care industry get it right this time?

In an ideal world, frail and sick Medicare patients would find care under one sheltering umbrella organization that would help them prepare nutritious meals; send someone to their houses to get them out for walks; remind them to get flu shots; direct them to the best hospital for any surgery; send them home with instructions that they understand; and schedule an occasional nurse visit to be sure they are taking their medicines so that they don’t back bounce back to the hospital.

The latest attempt aiming to make this idea a reality is the Accountable Care Organization (ACO) model, which is a key part of the Affordable Care Act. The goal of the model is to provide coordinated health care.

Providers, researchers and industry stakeholders expressed simultaneous hopefulness and skepticism about whether ACOs will achieve their goal of improving quality while lowering costs, on Wednesday, March 20 at the National Press Club during the free-wheeling discussion held by The Medicare NewsGroup.

ACOs and Medicare “are in the same category; common sense tells you they must grow,” said Michael McCallister, chairman of the board of Humana and the company’s former CEO. The ACOs’ goal is to keep people out of hospitals and nursing homes, and that can be a challenge,” he said. “Are you eating, can you bathe? It is just as important to be sure someone is eating as to get them to the hospital.”

“We don’t know how it will work,” he admitted. “Implementation of the health care bill will be challenging and noisy.” 

Membership in ACOs is voluntary for patients, a fact that has been lamented by the organizations themselves, because then patients have no “skin in the game.” That means a beneficiary could be considered a member of an ACO’s hospital, medical practice or other organization that are at risk for the results of his or her care, but the consumer is free to go elsewhere for care, compromising the delicate coordinated care process at the heart of the ACO movement.

 “Better than a sharp stick in the eye” was the unimpressed assessment of ACOs by Thomas A. Scully, a former administrator of the Centers for Medicare & Medicaid Services (CMS). Scully, now senior counsel at Alson & Bird, a Washington, D.C., law firm dealing with health policy, and a partner with a firm active in health and hospital investments, dismissed Accountable Care Organizations as “Medicare Advantage lite.”

About one-quarter of Medicare beneficiaries are members of Medicare Advantage plans, also known as Part C, which offer care through networks of doctors and hospitals. In return for staying within the network, members get extras not covered by Traditional Medicare, such as prescription drugs, eye care and dental care. That means that three-quarters of Medicare enrollees, on the other hand, have unfettered access to any doctor or hospital enrolled in the Medicare system.

The health insurance industry is now lobbying hard to block payment cuts to Medicare Advantage plans that were scheduled to begin on Jan. 14. The plans have been receiving payments nearly 14 percent greater than the cost of the covering a person in Traditional Medicare, and this margin will be cut back again next year.

“Under the Affordable Care Act the excess payments to private plans will be reduced to 2 percent, saving $132 billion over 10 years, according to the Congressional Budget Office,” The Commonwealth Fund states in a report.

A bipartisan group of 95 members of the House of Representatives has appealed to the Obama administration to stop the cuts from taking place. "This reduction in funding will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current [Part C] coverage," the lawmakers wrote in a letter to the CMS, according to a story on The Hill newspaper website.

“Insurers say the Medicare Advantage cuts in the health care law and the 2.2 percent cut proposed last month would add up to a total reduction of roughly 7 to 8 percent,” the Hill reported. “Medicare Advantage plans would have to make up the difference with $50 to $90 worth of benefit cuts or premium hikes, according to industry estimates.”

When Congress last cut payments to private plans in Medicare, membership in Part C plans dropped by a million beneficiaries as Humana and other providers withdrew from various markets. McCallister declined to speculate on how much premiums might increase or whether his company would leave some markets again.

He expressed confidence that advanced technology will improve care for the Medicare population. Medicare Advantage “has grown to a huge scale in the last few years,” he said. “Companies like ours invested heavily in data capability to integrate these delivery systems.”

If the Part C is not funded sufficiently, doctors won’t be able to deliver big productivity improvements, McCallister explained. Technology can help change the current model where doctors see one patient at a time, especially people with chronic conditions. Monitoring of the glucose levels in diabetic patients, for example, could become a real-time process, with patients uploading their glucose readings from home monitors. The information would then go to a medical center’s diabetes monitoring system, where data could come in from 35,000 diabetic patients in various locations.

The system would analyze the data immediately and identify patients at the highest risk, meaning that they need immediate treatment. The message, said McCallister, will be "these are the 50 you take care of today, don't worry about the rest." And those 50 patients and their doctors would get an immediate message to go to the doctor's office, or, if things are really dangerous, to go to the emergency room.

Susan D. DeVore, president and CEO of Premiere Healthcare Alliance, shared McCallister’s vision of high-tech, high-savings. Premiere Healthcare Alliance includes more than 2,700 hospitals in shared purchasing and technology. “We have big data, and can put it together in ways not seen before,” she said.

 “We need to move to outcomes measures (from process measures),” which show how patients health has improved or gotten worse after a course of care and treatment,” she said. And the emphasis must be on care close to home. “No matter what happens in Washington, we need to shift to take care of patients in their community.”

While health care industry officials on Wednesday’s panel were enthusiastic about the prospects for ACOs to save money, history offers a cautionary note, said Robert Berenson, M.D., a fellow at the Urban Institute and an internist. Experiments in the 1990s that gave hospitals an expanded role in overseeing care didn’t save money, he noted, quoting a former health expert who liked to say, “Hospitals know how to fill beds, they do not know how to keep people out of them.”

The tone of skepticism about government involvement was deepened further by panel members who lamented the impact of the sequester, with its cuts in spending.

At the country’s 137 academic medical centers, the cuts “hit deep in the belly,” said Ora Pescovitz, M.D., CEO of the University of Michigan Health System and a pediatric endocrinologist. Cutting “$1.5 billion from health research spending is doing something truly devastating to our nation,” she said. “What will be lost is “the kind of research that changes your life.”

Gail Wilensky, senior fellow at Project Hope, an economist and a former director of the Medicare system, denounced the sequester as “an incredibly mindless set of reduced spending strategies. We can’t seem to have an adult conversation about this.”

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