The Obama-era strategy to move the healthcare system from volume to value is too complicated and isn’t working well, a Trump administration health official said here Wednesday.
The volume-to-value push has resulted in “a big sprawling complicated series of byzantine programs that few people understand” and it “sucks more value out of the system than it delivers,” Joseph Grogan, associate director for health programs for the Office of Management and Budget (OMB), said at the start of a three-day conference on accountable care organizations (ACOs), bundled payments and MACRA. The OMB oversees $3 trillion in healthcare spending.
Grogan took specific aim at the Center for Medicare & Medicaid Innovation (CMMI), a division of the Centers for Medicare & Medicaid Services (CMS) created by the Affordable Care Act. He said his office recently sent a rescission package that includes an $800 million cut from what Congress has appropriated to CMMI, “because so far, CMMI has failed to deliver.”
Take, for example, CMMI’s experiment with ACOs — groups of doctors and hospitals working together to deliver high-quality, low-cost care to a defined group of patients. When the Congressional Budget Office scored ACOs in 2011, it estimated that the ACO model called the Medicare Shared Savings Program “would save $4.9 billion over 10 years,” Grogan said. But so far, programs using that model have cost over $384 million, according to CMS actuaries.
“There were a lot of broken promises and failed estimates in the ACA. But the hope and promise of these complicated value designs is certainly one of them,” he added.
In effect, these designs are trying to get doctors and hospitals to act more like insurance companies, absorbing any losses if their enrollees and beneficiaries end up using too many expensive services, Grogan said. But the complexity of these program designs has become overwhelming.
The Trump administration, he said, is trying to reduce reporting requirements, use broader claims data, begin to move toward passive data collection efforts, “and see if we can get people to spend less time treating codes and entering on an iPad, and concentrate more on the patient.”
One problem is the way defenders of these models have tried to justify them, saying the metrics used are unfair, and if different data were used, the picture would be different, Grogan said. “If we’re constantly using counterfactuals to evaluate (the programs) and waiting for another study to bear out … They’ll never be termed as failures.”
Under the current system, he said, it takes 18 months for a new model to get off the ground at CMMI because it must work through at least six different government offices. “Is that because we can’t find simple examples of waste to be wrung out of the system, with $1.3 trillion in healthcare spending, there’s no low-hanging fruit?”
Solutions are on their way under CMMI’s new director, former Landmark Health CEO Adam Boehler, appointed in May by HHS secretary Alex Azar, Grogan said. “He understands the need for simple high-impact models that can be stood up quickly and deliver value to taxpayers,” or be shut down fast if they don’t work.
One example of Azar’s efforts to improve the system is drug pricing proposals designed to reduce costs, which “may be the most promising area for value to be captured from the system,” Grogan said.
