JAMA Forum: Much Ado About Narrow Networks

Andrew Bindman, MD

Andrew Bindman, MD

The bumpy rollout of the health insurance coverage expansion by the Affordable Care Act (ACA) through private insurance exchanges ultimately exceeded enrollment expectations. The question is no longer whether the public will embrace these new health insurance marketplaces, but whether individuals are happy with their ability to use their new plans to access care.

In several states, there are concerns that the networks of physicians available through health plans sold in insurance exchanges are sometimes too narrow, limiting access to care and disrupting long-standing patient-physician relationships for some enrollees. The concern has surfaced mainly in the form of anecdotes, with no reliable estimate of how many individuals are negatively affected. But physician organizations have been quick to ring the alarm bell on behalf of patients and, presumably, their own self-interests.

Cost-cutting Déjà vu?

There is a striking familiarity about this concern that harkens back to the 1990s, when consumers pushed back against attempts by managed care organizations to limit their choice of physicians. In response, many health plans redirected their cost-cutting efforts away from narrow networks and focused instead on limiting benefits and finding ways to keep high-cost patients from joining their plans.

The regulatory requirements within the ACA have removed these cost-saving maneuvers by standardizing the essential benefits health plans must provide and by eliminating opportunities for health plans to select against high-cost patients. With these options constrained, it is perhaps not surprising that health plans would once again turn to narrow physician networks as a means to control costs.

Narrow networks can reduce a health plan’s cost by reducing access to high-cost services and by directing patients to physicians who accept lower payments in return for promises of higher volume. There would appear to be obvious potential for savings, as the recently released Medicare physician payment data revealed marked variation in the intensity of services and payment amounts to physicians; fewer than 2% of physicians generated 24% of the total payments. If plans are able to avoid these sorts of high-cost physicians, who are disproportionately clustered in a few specialties, there is the potential for real savings. How much might plans save by using a selective process to prevent high-cost physicians into their networks? Estimates vary, with some suggesting it could be as high as 25% of costs.

The outcry associated with narrow networks might be more muted if it were clear that networks were excluding only extreme high-cost outlier physicians and including physicians of similar or better quality who could provide the same services. Patients are particularly interested in having their regular source of primary care available through a plan’s network—and when that’s not the case, it raises concerns about the quality of all of the available physicians.

The lack of transparency about how plans decide who is in the network and who is excluded undermines the patients’ and physicians’ confidence in the process. What’s more, during the initial rollout of insurance exchanges, many of the participating plans provided consumers with misleading information about their physician networks. As a result, many individuals signed up for a plan that they believed would include their regular physician, only to find out afterwards that that was not the case.

Strength in Numbers

Physicians are attempting to outflank plans’ attempts to form narrow networks by forming groups with significant market control. By negotiating as a large group, physicians hope to prevent plans from being able to select among them to create narrow networks at lower rates. To further reinforce their position, physician organizations are encouraging legislators to pass “any willing provider” laws that would require plans to contract with any qualified physician.

Although these strategies maximize the potential for access, they provide high-cost physicians with a safe haven to continue practice as usual, which could undermine the effectiveness of health plans to control costs. What is needed are clear ground rules for how and when health plans should be allowed to narrow their networks, rules that would balance the competing interests of preserving access and quality while allowing for some cost controls. Health insurance exchanges might be a good place for establishing these rules, particularly in states where the exchange has already positioned itself as an active purchaser working on behalf of consumers.

Standards are needed for physician network adequacy, just as there have been standards established for different levels of insurance coverage (bronze, silver, gold, and platinum tiers). Such standards should address the number of physicians by specialty categories that are available on a population and geographic basis for the plan. For example, there are some rudimentary federal standards for the number of primary care and specialist physicians needed on a population basis that were derived from data in integrated health plans. These could be updated and perhaps modified to take the population’s health risk, geographic barriers, and other priorities into consideration when applying to the health plans in a particular state.

Out-of-pocket Costs

There should also be a routine assessment made of how a plan’s network affects out-of-pocket costs for its enrollees. Plans with overly narrow networks are likely to have more patients receiving care outside of the network, care that incurs higher out-of-pocket costs. Including these patient costs in the assessment of the actuarial value of a plan would result in a more honest valuation of a plan in an insurance exchange.

Insurers should also be required to be transparent in how they decide which physicians are included or excluded from a plan’s network. Physicians and consumers should be able to see the data on costs, quality, and other factors used to make network decisions so that there is both a shared understanding of how physicians are being evaluated and an opportunity to identify and correct erroneous information. If the decision is based on the performance of the physician’s group as opposed to the specific performance of the physician, that should be made explicit as well. Ideally, insurers would disseminate a clear set of performance standards that would let physicians and consumers know what physicians in a plan are expected to achieve in terms of access, costs, and quality in order to be a part of the plan’s network.

In the end, patients will decide if they are willing to accept narrow networks as a means of lowering health care costs. Although this approach failed in the 1990s, plans may have few alternatives as a means to control costs this time around. Faced with narrow networks or steep increases in premiums, patients may be willing to give up some amount of choice, particularly if they can be convinced that their plan is excluding physicians who are the true high-cost outliers and not the patients’ relatively low-cost primary care physicians.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

 

JAMA Forum: We Are the 98%

Andrew Bindman, MD

Andrew Bindman, MD

The Occupy Movement against social and economic inequality popularized the slogan, “We are the 99%”—a phrase highlighting the enormous income disparity in the United States between the top 1% of earners and the other 99%. The 1% of highest income earners, defined in 2011 as an adjusted income of more than $389 000, includes many physicians, but it also turns out that physicians have their own version of “payment inequality.” And this payment inequality, particularly when it is done with public dollars, has important social implications.

Medicare’s first-ever public release of physician payments in April revealed that 2% of physicians accounted for approximately a quarter (23.6%) of the $63.9 billion total Medicare payments to physicians in 2012. The largest portion ($3.3 billion) was paid to the 2995 ophthalmologists who received average Medicare payments of more than $1.1 million dollars each that year. Several other specialties were disproportionately represented among the 2% highest earners, including hematologists-oncologists, cardiologists, radiation oncologists, and dermatologists.

Medicare comprises about 20% of most physicians’ revenue, which varies by specialty and individual practice. Medicare payments are not equivalent to net income, as some portion would typically be used to cover office expenses. Some cases of high payments, for example, may involve physicians who specialize in procedures that require expensive drugs or medical devices, and a substantial portion of Medicare payments for those procedures may ultimately end in the pockets of drug companies or device makers. But it is reasonable to assume there’s often a strong correlation between payment and net income.

Raising Questions

The extraordinary size of the Medicare payments to a small number of physicians raises questions about the legitimacy of this reimbursement and whether all the care that was provided was appropriate. One also has to wonder whether the Medicare population is best served by investing 23.6% of its physician resources in 2% of the physicians and whether concentrating so much of Medicare’s physician payments in specialty areas such as ophthalmology and dermatology is the best way to derive value in this publicly financed program.

Primary care might offer a better return on investment, but the payment differential between primary care and specialty care prevents many students from choosing this career path. The more than $15 billion paid to the 16 485 of highest-paid physicians in Medicare would have entirely erased Medicare’s portion of the pay differential with specialists for the more than 160 000 primary care physicians participating in the program.

Some physicians might wonder if it is their place to question the amount Medicare pays their colleagues, but they need to realize that they have a shared interest in how Medicare’s payments are distributed. Because Medicare’s Sustainable Growth Rate (SGR) formula used to set physician payments establishes a fixed pool of resources for this purpose, the disproportionately high payments to 2% of physicians come at a cost to the other 98%. A payment amount beyond the fixed pool established by the SGR formula triggers an across-the-board payment cut. Congress has always passed legislation to prevent payment cuts from occurring, but it is a source of recurring tension in the physician community.

Physician organizations frustrated by the uncertainty in Medicare payment have lobbied Congress to replace the SGR with a more dependable revenue stream. Congress seemed poised to do this prior to the end of March this year, but it failed when Republicans and Democrats could not agree on a source of savings in the budget to offset the increased amount it would require to pay physicians.

After seeing the distribution of Medicare payments to physicians, one has to wonder whether the recurrent showdowns between physicians and Congress regarding the SGR is mainly for the benefit of the highest paid 2% of physicians. It’s not possible to examine trends in physician payments based on the data released by Medicare, but if payments to physicians parallel what is observed in our society at large, the largest growth in Medicare spending over time is most likely among those who are also among the highest paid. Perhaps the SGR problem could have been fixed some time ago had the medical community overseen the distribution of payments by Medicare and recognized that the amount paid to the 2% in 2012 was 50% greater than the amount needed to patch the SGR shortfall for that year.

The medical profession should have an interest in ensuring that physician resources are used to maximize benefits for the population. But when the American Medical Association (AMA) spent 35 years in court fighting the release of Medicare physician payment records, it may have put the interests of the highly paid 2% ahead of the other 98%.

Before releasing the information on physician payments, the Centers for Medicare and Medicaid Services requested public input about taking this action. Among the dozens of public comments from professional organizations, there was a mix of opinions among physician organizations that were concerned about physicians’ privacy, the data’s accuracy, and the public’s ability to understand it. But none stated an interest to work with Medicare to help identify physicians whose billing practices might be threatening the reputation of the profession and undermining the capacity of the overwhelming majority of physicians to meet the health challenges of the Medicare population.

Collective Actions Needed

Although lawyers inside and outside of the government line up to identify whether the information contained in the Medicare physician payment database reflects fraudulent billing by those who are several standard deviations beyond the average provider, physicians who are committed to their patients, to upholding the integrity of the profession, and to restoring the public’s trust in our ability to self-regulate and behave in a socially responsible manner might pursue a series of collective actions through their professional organizations in response to these data.

First, the physician community should establish standards and methods for regularly reviewing physician practice patterns. A high level of payment by itself is not proof that a physician has done anything wrong. But there needs to be a means to identify physicians who derive excessive payments for care of questionable value so that corrective action can be taken to conserve resources and protect patients from unnecessary care.

Second, the profession should encourage payers aside from Medicare to be similarly transparent with their physician payment data. This would eliminate the secrecy that can allow a minority of physicians to abuse different payment systems.

Third, the profession should examine the role that the American Medical Association /Specialty Society Relative Value Scale Update Committee (RUC)  in setting the prices Medicare pays physicians. The RUC wields enormous power, and it has been criticized for its part in creating an imbalance in payments among different specialties. Given the physicians who are among the highest earners in Medicare are so disproportionately concentrated in just a few specialties, it is reasonable to question whether the RUC is serving the broad interests of all physicians or only a select minority.

Finally, the profession should reflect on whether the fee-for-service system continues to be the best way to meet the interests of both physicians and patients. It should do all it can to support the development of payment models that reward physicians for their hard work and for using health care’s limited resources in the most effective and efficient ways.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

 

JAMA Forum: Henry Waxman: Architect of the Health Care Safety Net

Andrew Bindman, MD

Andrew Bindman, MD

As a medical student in New York and then a resident in San Francisco, I received a substantial amount of my training in safety-net hospitals. Like many students who have this sort of opportunity, I loved learning in an environment where the effects of my efforts to help were immediately visible and appreciated.

I didn’t pause to ask where the resources sustaining the health care safety net came from; I was just thankful that there were institutions that supported my interest in learning how to fight against disease and for social justice. Each patient I cared for offered a lesson on the harmful effects of barriers to health care and the capacity of a safety-net institution to aid healing.

After my training, I became an attending physician at San Francisco General Hospital, a public safety-net health system. I came to understand the fragile nature of the safety net’s funding and the degree to which it relies on Medicaid. In addition to functioning as the main payer of claims for safety-net hospitals, Medicaid also provides supplemental payments to safety-net hospitals to help offset their uncompensated costs for uninsured patients. In California, for example, about 70% of patients served by county-operated safety-net hospitals are either Medicaid beneficiaries or are uninsured.

A 40-Year Legacy

In 2009, as a Robert Wood Johnson Health Policy Fellow, I had the opportunity to meet and work for one of the primary architects of the health care safety net, Congressman Henry A. Waxman (D, California). During that time I joined the staff of the US House of Representatives’ Energy and Commerce Committee, which Rep Waxman chaired.

Although Henry Waxman was not in Congress when Medicaid was enacted in 1965, his legislative efforts during his 40 years in Congress steadily broadened the proportion of the low-income population that is eligible for Medicaid coverage, providing them financial security against catastrophic health events. As patients use this coverage, financial assistance flows to the safety-net providers whose mission it is to care for them.

I observed Rep Waxman perform his legislative feats during the passage of the Affordable Care Act (ACA). Through his role as chairman of the Energy and Commerce Committee, he was a leading figure in drafting the legislation and negotiating its passage. He used the ACA as another opportunity to expand the health care safety net by providing Medicaid coverage for millions of low-income childless adults, the one remaining group of US individuals living in poverty who were not entitled to Medicaid coverage until the ACA became law. Waxman hoped to make this expansion a federal requirement, but the Supreme Court decision that upheld the constitutionality of the ACA also gave states the authority to block the expansion. To date, 26 states have moved ahead with the Medicaid expansion and several more are expected to follow soon.

Throughout his career, Henry Waxman has worked toward the goal of universal health insurance coverage, while also leading federal efforts to ensure that a network of financially viable safety-net providers would be available to care for underserved communities. For example, in 1981 he worked with Sen Robert Dole (R, Kansas) to establish the Medicaid Disproportionate Share Hospital (DSH) payment program for hospitals serving a “disproportionate number of low-income patients with special needs.” Over the next 3 decades, he led legislative efforts (in 1987, 1988, 1991, 1993, and 2009) to defend and refine this program in the face of federal and state opposition. The program currently provides $11.5 billion in supplemental funding to safety-net hospitals nationwide. It is far from perfect in how states distribute the resources to serve the most needy, but there is no question that these funds have been critical in preserving the financial viability of hospitals, like mine, that otherwise might have closed.

Survival of Safety-net Clinics 

During his time in Congress, Henry Waxman also championed the financial survival of safety-net clinics. In the 1980s, community health centers faced great financial risk as states reduced their Medicaid payment rates to providers and private physicians dropped out of the program. This left community health centers overwhelmed with additional patients and insufficient funding for their care. To address this financial crisis, Rep Waxman worked with the late Sen John Chafee (D, Rhode Island) in 1989 to create a federal law requiring states to pay Federally Qualified Health Centers rates for Medicaid patients based on the full cost of their services. In subsequent years, he expanded the policy to include tribal-run clinics (1990) and urban Indian clinics (1993). Without his efforts, many of the community health centers poised to play a significant role in turning the ACA’s expansion of health insurance coverage into access to care in underserved communities would not be available today.

Henry Waxman’s success comes from using strategies that we admire in medicine. First, he is an extremely smart and hardworking individual who, like a top specialist, is the go-to expert among his colleagues when it comes to health care policy. Even his political foes acknowledge that it would be hard to find someone inside or outside Congress who is more knowledgeable than Henry Waxman about Medicaid and the health care safety net.

Second, he recognizes and values teamwork. His long-standing relationships with members of his staff are an anomaly in Congress, where it is routine for staffers to leverage their current positions for something better. Rep Waxman has cultivated extraordinarily bright staff members who share his ability to maintain focus over time, to not lose sight of the details, and to persevere in the face of adversity. They don’t tend to seek a “better” job because they know they already have it.

Third, he is committed to using science and research to improve health and health care. This was perhaps most visibly demonstrated when he chaired public hearings on the tobacco industry’s concealment of their own scientific knowledge of the dangers of smoking. He used their misuse of science as the basis for creating statutory requirements regarding the labeling, marketing, and sale of cigarettes and smokeless tobacco.

On January 30, Rep Waxman announced that he would be retiring from Congress when his term ends later this year. It is difficult to overestimate the void his departure will create in Congress. Henry Waxman has been to the health care safety net what Robert Moses was to designing the landscape in and around New York City. There is no member of Congress who has Waxman’s depth of knowledge about and commitment to Medicaid and the health care safety net.

With the ACA’s expansion of health insurance coverage, questions are emerging about the future of the health care safety net. Will those who gain coverage continue to rely on the safety net or will they seek care elsewhere? How does the payment model used to support care in the safety net need to evolve to promote greater value and accountability? Without Henry Waxman in Congress, finding answers to guide the health care safety net into the future is likely to become significantly more difficult.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

JAMA Forum: Remodeling Health Care Requires a Care Coordinator

Andrew Bindman, MD

Andrew Bindman, MD

The failed launch of HealthCare.Gov, the federal health insurance marketplace website that is intended to help individuals shop for health insurance in states without their own state-based marketplaces, has been a focus of recent news and a source of great embarrassment for the Obama Administration. In response, President Obama has appointed management consultant Jeffrey Zients to ensure repair of the website as soon as possible. One of the first actions taken by Zients was to hire Quality Software Services “to manage the overall effort like a general contractor on a home improvement project.”

Home improvement projects often require the specialized expertise of electricians, plumbers, masons, and many others, coordinated by a general contractor who is paid to make sure that the combined activities of these specialists fit together to achieve the intended outcome. Zients’ comment indicates that the failure of HealthCare.Gov could be attributed, at least in part, to a lack of coordination among multiple software companies with areas of highly technical specialty expertise.

In many ways, the lack of coordination in building the federal health insurance marketplace website parallels the same lack of coordination in the delivery of US health care. The United States has developed and incorporated into its health care system some of the greatest technological advances of specialty medicine available anywhere in the world. However, it deploys these tools through a highly fragmented delivery system. As a result, the outcomes that many patients receive are suboptimal—akin to what would occur if building specialists remodeling a house were left to do their respective work in isolation, without a particular concern for how it would all come together.

Analysis of Medicare claims reveals how complicated health care coordination can be. A typical Medicare beneficiary sees 2 primary care physicians and 5 specialists in a year. On top of this, many patients have their health needs supported with the assistance of home and community-based service providers. For practitioners, it’s a struggle to understand all of the providers involved in a patient’s care, let alone find the time and a way to coordinate care with them. And several features of the US health care system conspire to undermine the delivery and value of care coordination services.

First, the fee-for-service payment methodology pays for face-to-face time with patients. It also does not offer incentives for efforts to coordinate care with others or for the outcomes of a shared effort.

Second, physicians of all specialty types function with a great deal of independence, and there is no consensus within the profession regarding who is meant to fulfill the care coordination role. Primary care physicians identify care coordination as one of the central features of their professional activity, but as reflected in a recent proposal to create a care coordination payment code, the American Medical Association did not identify primary care physicians as uniquely qualified to furnish this service and promoted the role of specialists as care coordinators for patients with complex health conditions. In the US health care system, primary care physicians are outnumbered 2:1 by specialists, and their minority status undermines their ability to assert their role as care managers in the delivery system.

Third, physicians spend the majority of their training time in a hospital. Although they become familiar with care coordination challenges within that setting, most have limited exposure to, and training in, coordinating across the continuum of care.

Finally, even when physicians accept the responsibility of coordinating care, they find that it is a difficult task to accomplish without all parties involved in a patient’s care having access to a shared electronic record that includes all of the patient’s essential clinical information whenever the patient has a need for service. Without a shared understanding of the care plan among all participating providers and a communication strategy that allows for updating all providers about changes in the care plan, coordination is largely unachievable. Most physicians do not practice in environments where all of these elements are in place, so they either give up on the idea of coordinating care or experience regular bouts of frustration when learning about missed opportunities to have intervened to prevent a complication, a hospitalization, or even a death.

The Affordable Care Act is supporting experimentation with new payment models for Medicare, including patient-centered medical homes, that provide payment for care coordination. If this sort of payment reform is broadly adopted, it will encourage interest among physicians to accept greater responsibility to coordinate care. However, this may not be sufficient, and it could even undermine coordinated care if the physicians who pursue payment for this role either are ill-equipped for the task (based on a lack of practice capabilities) or inadvertently contribute to confusion by working independently to try to coordinate care for the same patient.

Payers can help organize physicians’ roles in care coordination activities by establishing clear standards of what a physician would be expected to do as a care coordinator and what practice capacities a physician would be expected to have. For example, as a part of a proposed care management policy for Medicare, the Centers for Medicare & Medicaid Services suggested that payment for these services would be limited to physicians who (among other things) provide 24/7 access with the support of an electronic health record system that meets up-to-date standards for meaningful use, as well as adequately sized staffing with mid-level practitioners whose job descriptions include care coordination. Payers should also require patients to designate one physician who meets the payers’ standards for providing care coordination. Although the designated care coordinator need not necessarily be trained and practicing as a primary care physician, one might anticipate, based on the experience in integrated delivery systems in the United States and around the globe, that this role will be fulfilled most often by a primary care physician rather than a specialist.

Perhaps with technological advances that provide patients with greater access to their own medical information and the tools to understand it, they will be prepared to coordinate their own care in the future. This seems achievable for patients with less complex medical problems. However, patients with multiple chronic conditions and other complicating factors are likely to need the help of a chosen practitioner as a regular source of care to help them in this task so that health care resources are used efficiently, effectively, and safely together.

I hope that a coordinated effort will quickly result in a functioning federal marketplace website. The fix for the actual delivery of care is likely to be much more complicated. That is why it is essential that physicians work together  to convince payers of the importance of reimbursing for care coordination services, as well as to ensure that these resources are then invested in the practitioners who have the capacity, skill set, and commitment to do the job.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum:  JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

JAMA Forum: Health Care Safety-Net Ambivalence

Andrew Bindman, MD

Andrew Bindman, MD

I’m conflicted about the health care safety net. I say this as someone who has worked as a primary care physician in a public hospital for more than 25 years. The health care safety net I’m referring to includes public hospitals, community health centers, and other health care organizations and practitioners who care for a disproportionate number of Medicaid and uninsured patients.

The patients cared for in the health care safety net are among the nation’s most vulnerable. They have a disproportionate burden of disease and are at risk for suboptimal outcomes due to a variety of social factors, including their race, ethnicity, socioeconomic status, lack of insurance, sexual orientation, and immigration status. They often come to the health care safety net for their care because they do not have other options. The resources in the safety net are limited, but the efforts of safety-net practitioners often seem boundless because they are extraordinarily committed to do their best to help.

There’s something truly inspiring about working shoulder to shoulder with those who attempt to combat social injustice by helping patients who seek care in the safety net. But the inconvenient truth is that the safety net often lets these patients down. The safety net does not achieve a level of performance found in non–safety-net institutions.

Assessments of the safety net’s performance are confounded by the differences in the patients it serves as compared with those cared for by practitioners at other health care organizations. But the evolving literature on disparities indicates that a contributing factor is the segregation of vulnerable populations among a limited number of practitioners who, on average, face overwhelming challenges due to the limited availability of resources. This suboptimal performance raises questions about whether the health care safety net is the remedy for the needs of those who are most vulnerable or whether these underfunded sites for care, segregated from the mainstream, are contributing to the problem.

I’m not alone in my conflicted feelings about the safety net. Local governments that are committed to providing health care safety-net services have seen health care inflation crowd out the funding for other local services such as fire departments, schools, and libraries. They have wondered whether they can continue to afford to support a public health care safety net, and sometimes that answer has come back as “no.” Typically, these painful decisions evolve over time as communities slowly starve their public safety-net institutions of financial resources to the point that quality is undermined—and then the conflict is resolved by a growing consensus that it would be safer to close the public institution.

Judging by the policies in the Affordable Care Act (ACA), the federal government also appears to be conflicted about the future of the safety net. On one hand, the ACA increased funding for federally qualified health centers by $11 billion, but at the same time, it reduced payments to safety-net hospitals provided through the Medicaid Disproportionate Share Hospital program by $14 billion. It is possible, but not guaranteed, that safety-net hospitals will be able to make up for this payment reduction by retaining patients who are currently uninsured but who gain coverage as a part of the ACA.

With the implementation of coverage expansion under the ACA in 2014, many patients who currently receive care in the safety net because they lack insurance may find that they have options to seek care from other health care organizations and practitioners. This will lead patients to face their own conflicts about the health care safety net. Patient satisfaction surveys suggest that patients cared for in safety-net hospitals have a less favorable view of their care than those cared for in non–safety-net hospitals, and these ratings are diverging over time. With the expansion of coverage in 2014, we will learn whether current users of the health care safety net have new options for care and whether patients choose to exercise their new market power by seeking care elsewhere. The implications of that choice for the viability of safety-net institutions are enormous.

Previous expansions of insurance coverage, including the expansion of Medicaid eligibility in the 1990s to include higher-income pregnant women, resulted in a substantial shift of these patients away from safety-net health care organizations. Although the same pattern might occur among newly insured individuals after the implementation of the ACA, the experience in Massachusetts, which implemented a state-based expansion of coverage that is the model for the ACA, was associated with an increase in demand for safety-net services.

Somemight regard the preservation of the health care safety net as a proxy for ensuring access to care for this nation’s most vulnerable patients; however, there is scant evidence to indicate whether this approach of furnishing services is truly in the best interest of the patients these organizations aim to serve. Safety-net practitioners are committed to the mission of delivering care to those who need it regardless of their ability to pay, but at the same time, the availability of safety-net practitioners removes the burden of responsibility from the majority of practitioners to contribute toward a goal of providing access and equitable care to all. Charity care delivered by private physicians has been declining over time.

These developments may explain why states as politically different as California and Texas are pursuing similar strategies to preserve their safety-net hospitals. Both have obtained Medicaid waivers from the federal government to direct projected federal savings from using Medicaid managed care as a delivery model toward an investment in their safety-net hospitals. This investment will provide these states’ safety-net hospitals with resources to improve their capacity to deliver services to Medicaid and uninsured patients, while also limiting the requirement of their states’ private hospitals to deliver uncompensated services.

I would prefer a health care system that did not segregate low-income patients in the safety net. I suspect health care and outcomes would improve if we instead provided sufficient means for everyone to access care from the same pool of health care organizations and practitioners, recognizing that in many geographic areas, the option for everyone is a community health center or some other kind of health care safety-net organization.

However, given that millions of individuals, including undocumented immigrants as well as many legal immigrants, are excluded from the coverage expansion options in the ACA, it would be highly problematic and unethical to dismantle the health care safety net without first ensuring that patients who rely on these organizations and practitioners have an equivalent or better alternative for care. Even then, we need to be cautious in establishing policies that could threaten the viability of the health care safety net, because chances are good that once a safety-net institution is closed, it would be nearly impossible to resurrect.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum:  JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

JAMA Forum: Eliminating Wasteful, Unnecessary Care Is the Best Way to Preserve Medicare

Andrew Bindman, MD

Andrew Bindman, MD

The release this past week of the Medicare Trustees’ report was met with widespread enthusiasm among health economists and supporters of the federal health reforms in the Affordable Care Act (ACA). The report confirmed that Medicare costs continue to exceed projected revenues over time, but the date by which Medicare’s resources are expected to run dry is now later than previously anticipated because the growth in Medicare’s costs have slowed, consistent with a bending in Medicare’s cost curve.

Health economists are poring over the data to understand how this happened. One common belief (as discussed in a recent article in Health Affairs and another by researchers at the Kaiser Family Foundation) is that the recession has reduced demand for health care similarly to the way that it reduced demand for a wide variety of other services. Analysts disagree on the scale of the recession’s contribution to the deceleration in Medicare spending, but they agree that the recession alone does not explain it all.

Reduced Medicare spending might be a small silver lining of the recession, but it is not a strategy anyone would pursue to preserve the program. A significant financial barrier to health care not only raises important moral questions, but also it is not an effective way to selectively reduce unnecessary care. Researchers have found that when individuals reduce their demand for health care services in response to financial incentives, they are just as inclined to reduce necessary care as well as unnecessary care. Ideally, we want to slow Medicare costs while maintaining or improving access to and quality of care.

Recessions aside, there are only a small number of ways policy makers can attempt to slow Medicare’s cost growth over time. The available approaches vary in terms of the size of the political obstacles and by the degree to which they might alter access to and quality of care.

For example, Congress could lower Medicare’s costs by adding new restrictions on eligibility. Republican Congressman Paul Ryan, chair of the House Budget Committee, has repeatedly proposed increasing the age at which someone becomes eligible for Medicare as a part of his policy solution for the federal deficit. However, there is staunch opposition among Democratic members of Congress, who are concerned that this would leave older workers and retirees vulnerable to the high costs of health care coverage, and therefore at risk for the negative consequences of delayed care, for a longer period of time before they would be eligible for Medicare. Although this approach might reduce Medicare cost growth, the savings would be largely offset by increases in federal payments for premium tax credits for marketplace coverage, a reduction in Medicare premiums contributed by beneficiaries, and increased payments for those who would become eligible for Medicaid.

A second potential approach for lowering Medicare’s costs is reducing Medicare’s health care benefits. Lawmakers have for the most part avoided this strategy out of concern that it could be harmful to patients and be interpreted as a sign that the government is rationing health care.

A third approach to lowering Medicare costs is reducing the growth in payments to clinicians, health care facilities, health plans, and other service providers. Although this is politically more palatable to the general population than restrictions on eligibility and benefits, payment cuts could potentially affect beneficiaries’ access to and quality of care, especially if they result in providers leaving the program. This has been a significant problem in the Medicaid program, where payment rates lag behind those in Medicare.

The ACA included significant reductions in the growth of Medicare payments to hospitals, health plans, home health and a few other selected service providers, but it generally excluded new pay cuts to physicians beyond those previously incorporated into the 1997 Sustainable Growth Rate (SGR) policy. Even then, Congress has repeatedly voted to override the physician payment cuts in the SGR policy out of concern that if implemented, they could have a negative effect on patient care.

A fourth strategy for lowering Medicare’s costs, one that enjoys widespread support but offers limited financial return, is the reduction of fraud and abuse. In 2012, Medicare collected approximately $3.5 billion through its fraud and abuse program. While this was nearly a doubling of collections from 2011, it still represented only a tiny fraction of Medicare’s annual expenditures of $574 billion in 2012. Despite the somewhat limited financial return, a strategy for addressing fraud and abuse is nonetheless important as a deterrent to prevent these illegal practices from becoming a significant source of Medicare cost growth.

Ultimately, the only strategy that can significantly reduce Medicare’s cost growth without threatening access to and quality of care is for health professionals to engage in the redesign of health care to eliminate wasteful and unnecessary practices. The ACA is attempting to catalyze the process through a series of payment reforms—some in the form of carrots and others as sticks. One example is the financial penalty Medicare applied to hospitals in 2012 based on their readmission rate. While an evaluation of this policy’s effectiveness is still in progress, a recent report suggests that in 2012 Medicare’s hospital readmission rates decreased for the first time in several years.

Financial rewards are becoming increasingly available within Medicare’s fee-for-service delivery model based on reporting or demonstrating improvements in performance. More significantly, clinicians are also being given opportunities to work together to share in savings from bundled payments for specified procedures and for population-based care delivered through a primary care medical home or an accountable care organization. Another promising area for reducing costs and improving quality that allows collaborating states to share in savings that they can subsequently pass on to participating clinicians is through the integration of financing and care of beneficiaries who are eligible for both Medicare and Medicaid. Results from the evaluations of all of these efforts should start to be available over the next couple of years.

One way or another, Medicare’s costs will need to come under control if this program is to remain a robust health care safety net for the elderly and those with chronic disabilities. Medicare spending growth per beneficiary over the next decade is now projected to be no greater than the growth in the gross domestic product (GDP). This is a dramatic decrease over the historical spending growth rate of 2 percentage points above GDP. However, there will still be financial pressure on the program from the growth in the number of beneficiaries.

Congress anticipated that it might not have the political will to make some of the hard choices necessary to control Medicare’s spending and empowered a commission, the Independent Payment Advisory Board (IPAB), to implement Medicare spending cuts if targeted reductions in growth are not achieved over time. Although the IPAB is charged with developing fast-track legislation designed to reduce Medicare’s costs, it won’t be able to act with the precision that health professionals could use with each patient to eliminate unnecessary care while preserving what is most important for patients’ health. To avoid the crude actions of the IPAB, health professionals will need to work fast and in unison to develop not just one-time sources of Medicare cost savings, but strategies for becoming more efficient over time.

With the unanticipated help of the recession in slowing the growth in Medicare’s costs and some early successes in the ACA, we have a little breathing space. But health care cost inflation is on our tail and we have a lot of catching up to do.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum:  JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

JAMA Forum: Will the Evaluation of the ACA Be Health Services Research’s Finest Hour?

Andrew Bindman, MD

Andrew Bindman, MD

The Affordable Care Act (ACA) provides an unprecedented opportunity to expand insurance coverage and to reform the health care delivery system in the United States. The political debate about its merits and shortcomings has been highly partisan and unrelenting and not particularly evidence-based. With the most significant portion of the health insurance coverage expansion scheduled to begin on January 1, 2014, we can expect more of the same for some time to come. Ultimately, the best way to trump the inevitable unsubstantiated rhetoric is through evidence acquired through the performance of rigorous and objective scientific studies.

The investigators who focus on questions related to the performance of the health care system are health services researchers. The origins of health services research as a scientific field of inquiry dates back to the 1960s, when several key academic leaders from a small number of institutions developed conceptual approaches to studying important questions about access, cost, and quality of care.

The number of investigators has grown over time, but their work is hampered by federal research funding that is available in relatively small amounts and fluctuates with the annual appropriations process. The Agency for Healthcare Research and Quality (AHRQ), the lead federal agency for health services research, had an annual budget of $400 million in 2012, which was approximately 1% of the $32 billion spent by the National Institutes of Health on research related to specific diseases in the same year.

Given the $1 trillion investment the federal government is making to expand insurance coverage through the ACA, it would seem to be an appropriate time to reconsider the budget available to monitor the policy’s effect. The ACA established the Center for Medicare and Medicaid Innovation to test new payment models and the diffusion of promising new models of health care delivery that can improve quality and lower cost. It also established the Patient-Centered Outcomes Research Institute to support studies of comparative effectiveness of treatment options. However, the AHRQ remains the only federal agency designed to leverage the expertise of the research community in developing tools and strategies to conduct an unbiased assessment of the health care system’s overall performance.

But whatever the amount of the available resources for health services research, it is imperative that they be used wisely to yield a meaningful evaluation of the ACA’s effects. Clarity is needed on how best to measure the intervention of insurance expansion and the outcomes it produces. Studies that demonstrate the mechanisms of action between intervention and outcomes will increase confidence in the validity of the findings. For example, because health insurance is a financial tool, we might expect that if the ACA is successful, it will lower the rate at which individuals experience financial hardships, as reflected in bankruptcies related to medical expenses. Successful coverage expansion should also lower financial barriers to receiving care, as reflected in a measure such as the percentage of the population who have a primary care visit in a year.

Less clear is whether and how the ACA will contribute to a change in the anticipated growth of health care costs over time. Will coverage expansion merely increase demand for services, or will it produce off-setting savings by supporting a more efficient way of delivering those services through primary care rather than through emergency department visits or hospitalizations? There are also reasons to be skeptical about whether we should expect health improvements with health insurance expansion. Health care is a relatively minor contributor to health outcomes when compared with the effects of education, socioeconomic status, physical activity, and a variety of health behaviors.

Because the ACA is not being implemented as part of a randomized experiment, assessing its effects will be challenging. Attempts to attribute changes over time in the performance of the US health care system to the ACA will require an accurate assessment of the baseline performance of our health care system before its implementation and also will be confounded by changes over time in the natural history of what would have happened regardless of the ACA becoming law. Furthermore, the ACA’s effects are likely to vary greatly across communities that have had greater or lesser resources available to care for the uninsured through a safety net and differences in other health care characteristics, such as the number of available doctors per capita. We will want to know not only the average effect of the ACA on a national level, but also the degree of variation from that mean across states and local communities. This endeavor creates sample size and research design challenges to ensuring reliable estimates at each unit of analysis.

Perhaps the greatest challenge health services researchers will face in evaluating the ACA is in providing a timely answer. Given the political and financial context associated with implementing the ACA, any void resulting from a lack of data is sure to be filled by the voices of those who are less likely to be concerned about an objective truth than they are with their own special interests. The shaping of public opinion through anecdotes and hyperbole during this time may prove difficult to overcome even by well-performed studies if it takes years to get the results.

Health services researchers face a great challenge. It will prove to be the field’s finest hour if investigators can produce timely, accurate, and meaningful results that can help monitor federal health care policy and, if necessary, amend it. However, if they fail to produce rapid results and engage in the public discourse about the law’s effects, this failure may raise damaging questions about the value and future of the field.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum:  JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.