ATTENTION: This is a beta website, the final version will look significantly different. Thanks for bearing with us while HJM is under construction! Posts can now be found here.

WARNING: Elliott Fisher wants to switch from ACOs to PHOs

August 7, 2020

Topics: Quote of the Day

By The Geisel School of Medicine at Dartmouth
Medical Xpress, August 5, 2020

The coronavirus pandemic has highlighted the numerous weaknesses in the U.S. healthcare system. Millions have lost their health insurance and millions more can barely afford it. Racial, ethnic, economic, and geographic disparities in health are widening as death rates from COVID-19 rise. And the financial solvency of hospitals and physician practices is at risk. At some point soon, health care reform will be high on the political agenda.

In the lead article for the current issue of NEJM Catalyst Innovations in Care Delivery, Elliott Fisher, MD, MPH, professor of medicine and health policy at Dartmouth, and one of the policy leaders who developed the concept of Accountable Care Organizations, lays out a path to reform that would provide universal coverage, real-time data and performance measures, and more robust payment models that would enable the market to improve care for all through informed choice of population health organizations (PHOs), providers, and treatments.

“There is a real risk that policy makers will get stuck in a fruitless debate between ‘single payer’ and ‘multi-payer’ approaches to achieving universal coverage,” said Dr. Fisher. “If we get another crack at major reform after the upcoming elections, we should address the underlying reasons that healthcare in the United States is so expensive and unequal.”

Responding to a pre-publication copy of the paper, Representative Peter Welch (D. VT), said: “Dr. Fisher helped develop the ACO model that has garnered strong bipartisan support. He has now clarified why costs nevertheless continue to rise and how we could do better. Dr. Fisher’s recommendations about how to empower the market to improve care and lower costs for all deserve serious attention. I look forward to working with my colleagues across the aisle—as we did with ACOs—to explore these ideas.”

The concept at the heart of the proposal—Population Health Organizations—is intended to address the limitations of the current ACO model, under which primary care focused provider organizations are responsible for the quality and total cost of care for their assigned patients and receive a share of any savings they achieve if they continue to meet quality standards. More than 30 million Americans now receive care under this payment model. “We should celebrate the broad bipartisan support and high levels of adoption seen for ACOs and other value-based payment models,” Dr. Fisher said. “And we must admit that while these models appear to achieve some savings, their overall impact has been less than what we hoped for.”

In his Catalyst paper, Dr. Fisher explains why the U.S. continues to see the inexorable increases in costs that have made healthcare unaffordable for so many. “Fragmented delivery, payment, and insurance systems have long been recognized to pose serious challenges to care coordination,” he writes. “Fragmentation also weakens incentives, discourages innovation, and makes it easy for providers and insurers to avoid efforts to control costs.” ACOs, for example, can be rewarded for lowering costs for the patients in their ACO contract while at the same time increasing costs to others. “Our current system can be seen as a balloon: push on one part and the expansion simply continues somewhere else.”

The solution is to shift from thinking of ACOs as a contract to seeing them as organizations paid under capitation to manage the health of all of their enrolled primary care patients—as Population Health Organizations. Fisher recommends that all Americans get to choose their PHO on statewide insurance exchanges where uniform benefits, limited cost-sharing, and transparency on quality would enable market forces to drive meaningful improvement in both cost and quality.

Other key elements of the “Single System Solution” include:

  • A single, unified health information system, ensuring that clinicians have all of their patients’ health records when needed and where comprehensive quality and outcome measures empower consumer choice of treatments, providers, and PHOs;
  • Universal coverage under which everyone would have access to the same basic benefit packages and choice of PHOs on statewide exchanges, which is the single best way to reduce disparities and eliminate the sense of exclusion experienced by those now relegated to the “safety net.”
  • Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.


Reforming Health Care: The Single System Solution

By Elliott S. Fisher, M.D., M.P.H.
NEJM Catalyst, September-October 2020 (Released August 5, 2020)

Full article (behind paywall):


By Don McCanne, M.D.

The policy community and politicians have gone out of their way to protect the private insurance industry from enactment and implementation of a national health program, especially the single payer model of Medicare for All.

The Affordable Care Act was designed specifically to maintain a role for private insurers both by protecting the private employer-sponsored plans and by establishing an exchange of competing private plans in the individual market.

Although the managed care revolution and its HMOs suffered from a backlash, it was decided that the concept of competing integrated health systems could be perpetuated by creating accountable care organizations (ACOs). Under this model health care professionals would be provided incentives to be accountable for both the quality and costs of the care provided.

Although the ACO experiment continues, it has largely failed to accomplish its goals of higher quality at lower costs. Elliott Fisher and his Dartmouth colleagues were primary architects of the ACO model. Now even he concedes, “their overall impact has been less than what we hoped for.”

There were some very significant design defects in the ACOs that caused a few of us to predict their failure. Fisher now proposes changes to correct the perceived defects (though he misses the fundamentals). His primary proposal is a switch to Population Health Organizations (PHOs). The concept is that the PHO is a “single system solution” (perhaps a rhetorical takeoff on the popularity of single payer reform?). All PHOs would provide the same benefit package, paid under capitation, while having a uniform national fee schedule, and share a unified health information system. The PHOs would be offered through exchanges that would operate as “active purchasers” (required to meet certain standards to qualify for listing) where they would compete based on quality and performance, but not prices.

It is ironic that the Dartmouth release touts PHOs as follows, “Administrative simplification and a uniform fee schedule, with common benefits (instead of an infinite number of plan designs), a single billing system, and a national fee schedule that would not only reduce the influence of monopoly pricing but reduce the violence done to physicians’ professional values in a system that encourages providers to discriminate on the basis of patients’ ability to pay.” Those are characteristics of single payer Medicare for All more so than they would be of a market of competing PHOs with all of their administrative complexity.

But is a market of competing PHOs really a single system solution? Each PHO would have a separate network of hospitals, physicians and other health care professionals. With the entire health care system fragmented into competing silos, health care choice would certainly be limited, perhaps severely so if enough entrepreneurial-oriented PHO managers are competing in a small space.

Where this proposal really breaks down is that Fisher says that we should not waste an opportunity for reform by “arguing about single payer, multi-payer, or repeal and replace.” He states, “the single system approach — if implemented in a multi-payer model that preserves a role for private insurers — should satisfy the core interests of all key stakeholders: better, less expensive care for consumers; better support, information, and working environments for clinicians; and a continued important role not only for hospitals, but for insurers, too. Conflict is also likely to arise between advocates of single- or multi-payer approaches. I believe this is a false choice. It is certainly possible that a streamlined and well-regulated private insurance system could be as effective as government agencies that have been captured by provider interests — as is plausibly the case under Medicare” (referring to private Medicare Advantage?).

So the policy community is still fixated on the market concept of competition as a means of controlling costs. Competing private insurers have been responsible for much of the excesses, fragmentation and especially the profound administrative waste of our current health care financing system. It is not competition but rather cooperation that best serves the interests of patients. Instead of a fragmented system of competing PHOs, if we had only one single “population health organization,” composed of the entire health care delivery system, then patients and their health care professionals would have complete free choice in obtaining the best care possible. Of course, Medicare for All makes the entire health care delivery system a de facto single health organization for the entire population – the only “PHO” that you would need, though we wouldn’t call it that.

In a recent Quote of the Day we noted that Stuart Butler, an architect of the Affordable Care Act, wants us to “improve” ACA by moving private Medicare Advantage plans into the exchanges. Elliott Fisher, an architect of ACOs, now wants us to “improve” ACOs by converting them to PHOs. Both are recommending changes because of the failures of their own models. Please. No more failures. Let’s move smartly into the model that will work well for all of us: single payer improved Medicare for All.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

See All Posts

You might also be interested in...

© Health Justice Monitor
Facebook Twitter