In early June 2018, Joseph Grogan, associate director for health programs for the Office of Management and Budget (OMB), spoke out against the Obama-era strategy to move the healthcare system from one based on volume to one based on value. Grogan, speaking at the start of a three-day conference on accountable care organizations (ACOs), bundled payments, and MACRA, said the push from volume to value has resulted in “a big sprawling complicated series of byzantine programs that few understand” and that it “sucks more value out of the system than it delivers.”
Grogan specifically called out the Center for Medicare & Medicaid Innovation (CMMI), a division of the Centers for Medicare & Medicaid Service (CMS) that was created via the Patient Protection and Affordable Care Act (PPACA), saying that “so far, CMMI has failed to deliver.” He also referenced a recent rescission package that includes an $800 million cut from what Congress had previously appropriated to CMMI.
CMMI was created to develop pilot programs such as accountable care organizations and value-based reimbursement. According to an administration official, “The issue with this program is, they got $10 billion under Obamacare for last 10 years; they can’t spend this $800 million and they’re about to get another $10 billion — under the mandatory law that Obamacare is — in 2020. So nothing we’ve found that suggests that we can’t rescind this money without having any programmatic effect.”
Grogan specifically mentioned CMMI’s experiment with ACOs where doctors and hospitals work 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.
Grogan said that in effect, these designs are trying to get doctors and hospitals to act more like insurance companies, absorbing losses that occur if their enrollees and beneficiaries end up using too many expensive services. But the complexity of these program designs has become overwhelming. The Trump administration 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?”