Capitation and Managed Care Return as Global Payments and Accountable Care Organizations

Massachusetts covered 97% of citizens under its requirement that residents purchase health insurance. The state assists residents with health coverage based on household income. However, Massachusetts doesn't like the cost. It plans to shift payments from fee-for-service. NYT reported:

Instead, primary care physicians, specialists and hospitals would group themselves into networks that would be responsible for a patient’s well-being and would be compensated with a flat monthly or annual fee known as a global payment.

Global payments, it is thought, would reward health care providers for keeping their patients well rather than for merely treating their ailments. If the cost of treating a patient was less than the global payment, the provider networks, called accountable care organizations, would keep the difference as profit.

It is thought? America did this in the 1990's. It was called capitation and payments were made to managed care organizations. It produced widespread dissatisfaction by those covered. Eventually, businesses moved away from managed care due to employee complaints.

Note Massachusetts' first step covered the vast majority of people. The second step may control costs via a "new authority that would be created to establish and oversee the new payment system." That's the Obama game plan, require people to buy health insurance and control payments via MedPAC, an unelected body.

The House Ways & Means Committee read their health reform bill. I noted from the CSPAN program that taxes associated with reform begin in 2011, while reform itself doesn't start until 2013. Watch Massachusetts. They are the model.

Don't believe politicians who say they'll improve on capitation and managed care.

Global payments are hardly a new idea, as the concept closely resembles the capitation model that incited a backlash by consumers who accused health maintenance organizations of skimping on care. But members of the Massachusetts commission said their plan would offer financial incentives for performance that would transform physicians into care coordinators rather than gatekeepers.

Financial systems for performance? Is this is addition to the incentive to provide care below the capitated payment? What will be incented? The last round saw:

Per-member/per-month visits, pharmacy utilization, specialty referrals, inpatient days, ER visits, and charges per case or visit.

It produced widespread physician resentment and a public outcry about perceived perverse incentives. Politicians promise better measures, but the result will be the same. Doctors and hospitals will focus on maximizing payment, not quality.

Recall how incentive pay imploded Wall Street. They packaged investment junk for the public. Goldman Sachs bet against the products held by their customers. It made them billions. Goldman is as unpopular as managed care at the moment.

Don't forget the decade of widespread stock option backdating by corporate executives. Stock options were the "most pure form" of incentive compensation. Yet, nearly 30% lied, cheated or stole.

Incentives distort, a clear theme in high quality care communities. Doctors are paid a fair salary and supported in a laser like focus on quality.

Global Payment and Accountable Care Organizations are repackaging, simple bait and switch. You can buy it. I'm not.

Update 8-3-14:  Restricted provider networks are back and people aren't happy, but there's no employer to complain to and the government doesn't listen to people..  

Politicians Head Financial Crisis Probe

Congressional leaders announced the appointment of a commission to investigate the financial collapse. Ex-California politicians Phillip Angelides(D) will head the study group, Bloomberg reported:

When he ran for California governor in 2006, Angelides’s campaign received $578,521 in donations from people in the securities and investment industry.

Bill Thomas(R) will serve as Vice Chair.

Representative Thomas received $328,716 from securities & investment industry and $167,000 from commercial banks over his Congressional career.

The report is due December 15, 2010. Financial regulatory reform will likely be done. I smell a whitewash in the making. Will it be Katrina Lessons Learned worthy?

Frances Townsend Lands Spot on National Security Preparedness Group

The 9-11 Commission has been repackaged by the Bipartisan Policy Center. It's now the National Security Preparedness Group (NSPG). The group will further examine the changing threats to the United States.

Note, the Bipartisan Policy Center acts as an incubator for policy efforts that engage top political figures, advocates, academics, and business leaders in the art of principled compromise. Where's the general public? Noticeably absent.

Amongst the NSPG luminaries is Frances Townsend, former Homeland Security Adviser to President George W. Bush and current Partner with Baker Botts LLP.

Fran Townsend knows about omissions. While not the bipartisan 9-11 Commission Report, Ms. Townsend crafted the Bush Hurricane Katrina Lessons Learned report. She omitted the hospital with the highest patient death toll post landfall. Memorial Medical Center lost 34 patients, 24 in the LifeCare Hospitals unit and 10 in MMC. Tenet Health owned Memorial, while The Carlyle Group purchased LifeCare weeks before landfall.

None of this information made her investigative tome. How is this competent, much less principled compromise? The political connections to Memorial Medical Center are as impressive as the 9-11 Commission.

Michael Allen will serve as Executive Director for the new effort. He was mentioned in a WaPo article titled "The NSC's Sesame Street Generation." The article stated:

Don't ask the 32-year-old Allen about the era of bipartisanship; he never experienced it.

Maybe this is his chance. In Harry Markopolos like fashion, I've gone "O fer" in my questions to accountable officials, both red and blue. Never the less, Fran's yellow brick road continues. She will co-chair a Homeland Security Task Force charged with a 60-day review of the nation’s color-coded terror-alert system.

Obama's New Surgeon General Eschewed Pay for Performance

President Obama’s new Surgeon General would not change a thing under pay for performance (P4P), a foundational element of his health care reform plans. Consider her stance after Hurricane Katrina destroyed her clinic in coastal Alabama:

Dr. Regina Benjamin, 49, had laid out $800 to open her family-practice clinic in this impoverished community in 1990, and many thousands more to keep it going. If people couldn't pay -- and many couldn't -- she treated them for free. Clearly, she wasn't in it for the money. But now her head swirled as she stared into the ruins of her life's dream. Then she steeled herself: I can be sad and depressed later.

Dr. Benjamin eschewed financial rewards while practicing as a primary care physician. She wouldn't be enticed by bribe schemes. Here's what's odd. Obama’s P4P scheme is more in line with Richard Scott’s Columbia/HCA which incentivized providers with pay. HCA hospitals and doctors, like Wall Street executives, lied, cheated and stole to maximize incentive compensation.

Obama’s plans have nothing to do with the New Yorker article he loves or the Surgeon General’s story he told this morning.

Where Have the Leaders Gone?

Many American leaders operate from horrific management theory. They use divide and conquer, fail to share their underlying beliefs and motivations, optimize their finances at the expense of the greater good, cover up illegal activities, create scarcity, and bribe people with incentives which end up as rewards/punishments. They contract out everything, because they have no leadership/management skills.

Our elected officials are obligated to know more, to make long term decisions for the benefit of the people. Instead, many optimize their reelection chances or their political party, failing the public miserably.

A less compassionate "bootstrap world" of personal responsibility looms. It's a push back on rising consciousness, the sense that all are one. It's knowing what happens to my brother or sister in humanity, happens to me. The push back appears to be gaining strength. Should the Inquisition return (pressed by government/religious powers) , the enlightened would be at risk for physical harm. But that's the way it's always been.

Is anyone to blame? It's difficult to know what one doesn't know. It's easier to remain unaware and be spoon fed by society, to swallow the swill offered by America's two political franchises.

Many leaders are intellectually lazy, incurious. Others know, but don't want to break the system that put them in power.

For the public, it's easier to believe platitudes foisted by those in power, myths intended to keep people divided. Fortunately, not all settle for being kept in the dark. They become aware of the game, some from finding out the fictions don't hold true for loved ones. They question, which hegemonic powers dislike intensely.

Consultants teach politicians to bear hug the questioner, while delivering a scripted answer that maintains the fictions. Madison Avenue refined things a bit the last century. The British Empire created artificial distinctions between people, pitting them against each other in their various colonies. They kept the lower classes occupied competing for scarce resources, while stoking the fires of hate. It enabled rulers to rape a country. The drive toward the lowest global common denominator on worker pay/benefits and taxes continues.

Thus a need for awareness, just to name what is happening. Maybe, that's what I did with my three blogs (State of the Division, PEU Report, and Ari's Freedom Switch). Maybe not. Regardless, the game continues. Peace to all!

The Double Edged Sword of Reward & Punishment

Under conservatorship and the beneficiary of $180 billion in taxpayer money, AIG is predicted to have negative equity. The bleak picture would normally squelch any suggestion of performance pay, but no. Top management deserves their incentive pay, despite creating pay systems that suboptimize the company. But it doesn't stop there. WaPo reported:

In March 2010, AIG is scheduled to pay more than $200 million in bonuses aimed at retaining executives at AIG Financial Products, the unit whose complex derivative contracts nearly wrecked the insurance giant last fall.

American leaders love to tamper with people's pay, repeatedly pressing the pedal on the fifth or six greatest workplace motivator. Their insistence on bribing people like rats has predictable results. When extrinsically trained employees push on the bar and no bonus checks appear, it's a shock. They feel punished. Some play payback.

What happens if AIG's derivatives traders don't get bonus money?

They could abandon the firm. Company executives have warned that a wholesale loss of expertise could endanger taxpayers' investment in AIG.

AIG Chairman Edward M. Liddy, in testimony to Congress earlier this year, warned that the deals at Financial Products could still "cause irreparable damage."

Bribes and punishment work both ways. Live by the extrinsic motivator, die by the extrinsic motivator. Note: Pay for performance is President Obama's solution for the ills of health care and education. Expect them to work as well as they did on Wall Street. There will more suboptimization at the peril of the greater system.

Congressional Pro's to Deform Health Care

Provider payment
Reform for
Margins
Outcomes
Evidence
Transparency
Hassle-reduction
Excellence
Understandability and
Sustainability

Now that's a mouthful. With several decades of community work done to improve access to care for the uninsured, Congress looks to a pilot payment program begun January 2009 as the basis for health reform. They also plan to bundle payments for care across health care organizations.

Prometheus is a complex pay for performance effort. News reports justify the scheme as a response to provider "fee for service. " They ignore that DRG's, capitation, and per diems provide incentives to manage care within financial boundaries. Not everything a provider does is paid for by insurers. It's not even close.

But reformers want to step heavily on the financial pedals. Rewards are the gas pedal and penalties are the brake. They are intended to get providers to change behavior. What's the goal?

In this country we already have so many examples of small and large physician practices and hospitals that deliver very close to defect-free care. Our job collectively, particularly on the payer side, is to pay them so it reinforces that behavior every day.

Whoa, hospitals are achieving such performance without Prometheus? What are they doing within current payment systems? They pay physicians a fair salary, give them time to focus on patient care, and have a laser like focus on quality. They do everything possible to focus on the work, not payment schemes.

That's the real answer, sound management theory and clinical practices. It's not "pay for performance" schemes and bundled payments. Incentive pay produced a litany of bad outcomes, ranging from an imploded Wall Street to Rick Scott's Columbia/HCA to widespread stock option backdating over a decade long period. Surely, doctors and nurses are as smart as CEO's.

Managed care and vertically integrated health care organizations were the health care solutions in the 1990's. They were based on the same assumptions as Prometheus and bundled payments. How did that change work? A physician's practice had to reach 40% managed care patients before their clinical behavior changed. Vertically integrated health care organizations fell apart.

Congress should listen to Forrest Gump. Ignorance is as ignorance does. Bribing providers will backfire, as will having organizations compete for a chunk of a bundled payment. Deform is coming, courtesy of America's horrific leadership. America's quality guru, Dr. W. Edwards Deming, might have said, "Will they ever learn?" God rest his soul.

Prometheus tricked the gods into eating bare bones instead of good meat. His punishment was to suffer daily under a God imposed system. An eagle picked out his liver, a dreadfully painful experience. His liver would grow back, only to be plucked again. It's like hope for health care reform, repeatedly picked apart by the beaks of for-profit health care.

Marketing "Business Forward", Blue Version of K Street

The Politico headline read "Labor Declares War on Chamber." The story stated:

One effort is being led by the Service Employees International Union, which is attacking the Chamber’s history of opposing legislation aimed at helping the working class.

Note: SEIU President Andy Stern said employer sponsored health insurance is "dead and not coming back. " How does that help the working class, Mr. Stern? It seems the leader of a health care worker union shouldn't be the first to cave.

The Politico story pointed out the Chamber of Commerce's new lobbying competition:

Yet another new group, Business Forward, has organized to create a new, more amiable bridge between the White House and corporate world.

Business Forward differs from the Chamber in that it doesn’t lobby on issues but acts a conduit for the exchange of ideas and information between the administration and boardrooms.

Still, David Sutphen, a Business Forward board member, said his group “is an example amid a series of things that are happening that reflect a lot of people’s perspective that there isn’t one voice for the business community.”

Lobbying firm Brunswick Group is behind Business Forward, which operates on a "pay for access" business model.
It's hard to know who's a lobbyist and who operates forums for the free exchange of ideas. Tom Daschle wasn't a lobbyist for Alston & Bird, yet hall mates Tom Scully and Bob Dole were. Tom almost became the White House Health Reformer, but the post went to a private equity underwriter, Nancy-Ann DeParle of CCMP Capital Partners. Nancy-Ann recently hosted a health care reform session with Business Forward leaders.
Don't forget the Washington Post's influence peddling sessions, charging $25,000 to $250,000 for access to White House staffers and members of Congress. The Blue team corporafornicates as well as the Reds. It's time for real change. Throw the money changers out of America's hallowed halls of government.
(Update: 9-29-09 Three power companies will leave the U.S. Chamber of Commerce. Will they land under the auspices of Business Forward?"

Update 2-1-2018:   The public relations firm Brunswick Group has hired Bob Zoellick, the former president of the World Bank.  Zoellick is a former PNACer.

Declaration of Independence

America grew out of legitimate concerns. Our Founding Fathers would be appalled by America's interventionist policies around the globe and the loss of critical rights. The Declaration of Independence states:

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

As a graduate of Thomas Jefferson's University, I note similar quotes by this Founding Father:

"The oppressed should rebel, and they will continue to rebel and raise disturbance until their civil rights are fully restored to them and all partial distinctions, exclusions and incapacitations are removed." --Thomas Jefferson: Notes on Religion, 1776. Papers 1:548

"As revolutionary instruments (when nothing but revolution will cure the evils of the State) [secret societies] are necessary and indispensable, and the right to use them is inalienable by the people." --Thomas Jefferson to William Duane, 1803. FE 8:256

There are many abuses and usurpations, ranging from a corporate bought Congress and White House, to an unchecked Unitary Executive, to a mostly unused Judiciary. The Founders' checks and balances morphed into cashed checks and higher account balances.

Once aware, one is free to choose a response. I celebrate the ideal of America this July 4th, which includes freedom of thought and speech. I add compassion and love for my fellow man, for all of humanity. Peace to all this Independence Day.

The Ten Political Commandments

There is a new political faith, with key tenets. It is practiced by the red and blue teams, especially in the permanent political campaign. I'm sure there are more than ten commandments, but I became nauseous and had to stop.

1. A blinding facial concussion for an eye. Overwhelming force, repeatedly applied, is the best teacher. (Ignore the cycle of violence it teaches/creates. Ignore that it doesn't deal with root causes of the first eye loss, which could have been accidental or the result of bad processes.)

2. The government can't do anything right and the private sector is infallible. (It is government's job to contract everything to the private sector. Ignore the layers of contractors, each with their 15-20% profit motives. This poison will spread to health care via business process outsourcing. The worst hospital administrators I knew acted like general contractors, the current model of our federal government. There is a widespread failure in leadership.)

3. God blesses those he loves with resources and wealth, i.e. the prosperity gospel. (Who is the government to intervene with God's will by changing tax codes?)

4. Competition brings out the best in everyone and is the best allocator of resources. (Ignore that the government purposefully restricts competition in many markets and major purchase decisions. Ignore the damage competition does to complex processes that require collaboration.)

5. People are motivated by money, thus pay for performance will solve the ills of any problem, especially education and health care. (Ignore that P4P caused people to focus on/manipulate their pay scheme, not improving financial products on Wall Street. Expect the same distortions in teaching and health care delivery)

6. Anyone can be a boot strapper, i.e. pull themselves up from debilitating situations. All it takes is a little grit. (Never mind the mentally ill, the addicted, the frail elderly who lost all their retirement money to Bernie Madoff. Buck up Granny and grab your bootstraps.)

7. Taxes are evil. (A rational discussion of resources required to shepherd our country is not possible, not in the race to the global lowest common denominator on taxes and worker pay/benefits. Congress' corporate sponsors get value for their donations.)

8. The liberal media is the Fourth Estate, holding the other three estates in check. (Corporate owned media is not close to fulfilling its sacred mission. Most talking heads are a diversion, many are a perversion.)

9. Virtually every important freedom is limited, the right to bear arms, the right to pray, free speech, the right to drill for oil offshore, the right to invade any country we want for whatever reason we want, and the right to donate freely to political candidates.

10. Satan did it. He likes making Republicans look bad more so than Democrats, because Democrats are on Satan's side. (When Repugnican'ts mess up, it's clearly the Damnocrats fault.)

As an independent voter, I find most political rhetoric off base, a tool for manipulation. Our elected leaders operate from bad management theory. Ignorance means most solutions will make matters worse.