Health outcomes over health outlays

The Hill reports on a proposal that is floating in Congress to change Medicare payment methodologies that has an unusual and perhaps effective set of sponsors behind it:

New legislation from Sens. Ron Wyden (D-Ore.) and Johnny Isakson (R-Ga.) and Reps. Erik Paulsen (R-Minn.) and Peter Welch (D-Vt.) would attempt to improve care for chronically ill seniors by revamping how their providers are paid.

Under the bill, voluntary “Better Care” plans and practices would specialize in treating patients with multiple chronic conditions. In return, they would receive specially tailored payments that reward good outcomes.

AARP backed the legislation in a statement, noting that 75 percent of healthcare dollars are spent on chronic disease.

“It is important to better coordinate and improve the quality of care for these individuals … rather than to just ask individuals to continue to pay more for their healthcare,” said AARP Legislative Policy Director David Certner in a statement.

The proposal seems to be a low strings attached capitation model with risk adjustments based on member age and pre-exisiting health conditions.  The AP has some more details:

The new proposal would build on the accountable care framework in the health care law. The new “better care” organizations would be paid a flat fee per patient. They would have more leeway on how to spend that money than is currently allowed under Medicare rules, for example, by charging lower copayments for certain kinds of high-value services. They would also be able to specialize in dealing with particular conditions.

Each senior who signs up with one of the groups would receive an individual care plan that would reflect their particular situation.

This is a capitated payment model for high cost Medicare patients.  The basic goal is to create customized health plans and payment models where coordinated care solves problems before they become expensive.

It is a twist on the Accountable Care Organizations (ACO) from PPACA as these better care programs (BCP) would not be paid from shared savings which is how the ACOs make their business case but from a flat payment where the government automatically saves.  Additionally, ACOs can’t directly bill for case management, instead they pay for case management from averted costs.  BCPs would have very few strings attached to their monthly capitated payment so they could spend the money however they wished.

This is an interesting attempt to take several Medicare demonstration projects to scale. The goal is to realign incentives away from segmented, more is better care to comprehensive care.  The ACO model is a segmented but comprehensive care model.  The BCP is an integrated/universal comprehensive care model.

In a rational political system, this is the type of bill that should easily advance as it addresses several concerns and priorities of all relevant stakeholders and veto players.  I consider the chance of enactment to be slightly higher than the Patriots drafting a quarterback in the first round of the 2014 NFL draft.

38 replies
  1. 1
    JGabriel says:

    Richard Mayhew:

    The proposal seems to be a low strings attached capitation model with risk adjustments based on member age and pee-exisiting health conditions.

    Pee-existing health conditions? That seems very limitiing. What if you have a poo-existing health condition?


  2. 2
    Baud says:

    Why? It passes the all-important bipartisanship test.

  3. 3
    Kropadope says:

    Always nice to see people considering alternatives to our fee-for-service model as well as Congressfolk actually making an effort to govern.

  4. 4
    Wag says:


    And because of that is likely DOA.

    That said, as a physician who spends most of my time providing primary care for Medicare patients in a large organization that could benefit under these rule changes, I am interested to see if this leads anywhere.

  5. 5
    Schlemizel says:


    I don’t know more about it than what I just read here but if Paulson is for it it is either a really bad idea or his is trying to appear normal as his beige district is turning a bit more blue. He is an unreliable partner.

  6. 6
    Yatsuno says:

    @Wag: Could be interesting to track this one, as I’m certain Richard will be more than happy to do for us. Since I’m a Medicare beneficiary (no I don’t have black lung!) I’m curious as to how this would affect me. Since almost all my healthcare is in the same system, does only the system get that pool of money and the few providers I do see outside get shafted? How do the groups get determined especially since a lot of health systems don’t directly interact? I think there’s a few points that might need clarification. Or I’m just missing the whole damn thing.

  7. 7
    WaterGirl says:

    You lost me when you went from BCP, which you defined, to BCO, which appears to be undefined. Or maybe I’m just slow on the uptake?

  8. 8
    Comrade Nimrod Humperdink says:

    Finally, the Death Panels we were warned about have a name…

  9. 9
    Comrade Nimrod Humperdink says:

    How goes the rehab yutsie?

  10. 10
    chopper says:


    Then you’re shit out of luck.

  11. 11
    Villago Delenda Est says:

    Oh, noes! We’re actually talking about rewarding good outcomes? ZOMG, the Invisible Hand will just shrivel up and die if that happens!

  12. 12
    Anonymous At Work says:

    Sen. Isakson is actually a good one to have onboard. It was his idea for hte original “Death Panel” proposal, to have Medicare pay for end-of-life consultation. He has actual interest in the area, even if wingers scare him.

  13. 13
    Villago Delenda Est says:


    Congressfolk actually making an effort to govern.

    Well, the teahadis will have none of that socialist crap, no sirree!

  14. 14
    Yatsuno says:

    @chopper: I both laughed and groaned. Help, I needs it.

    @Comrade Nimrod Humperdink: Tomorrow is more torture. Turns out I’m only getting it twice a week, but that’s okay. It actually doesn’t make much difference. I just forgot today was MLK Day observed. Yay me getting night differential without working!

    @Villago Delenda Est: Yeah. Hard to see how this gets moved out of the House at all. But maybe there’s some kind of plan for that.

  15. 15
    The Dangerman says:

    So, who is primarying Isakson and Paulsen?

  16. 16
    askew says:

    I am pretty suspicious of anything from Wyden on health care. He’s got some real rightwing ideas on health care. He proposed some awful stuff during the ACA debate in 2009.

  17. 17
    Villago Delenda Est says:


    Then there was that regrettable “partnership” with unspeakable scum Paul Ryan.

    I really wish there was someone in the Oregon Democratic Party who might challenge him the next time he’s up for reelection. However, he’s firmly entrenched, and he’s loads better than anyone the Oregon GOP might run against him, even with his flaws.

  18. 18
    Villago Delenda Est says:


    But maybe there’s some kind of plan for that.

    Work like mad to make Nancy Smash Speaker again.

  19. 19
    askew says:

    @Villago Delenda Est:

    Yeah, he seems a bit to the right of Oregon. But, I think he’s pretty liberal on environmental issues right?

  20. 20
    Kropadope says:

    @askew: Well, the devil is in the details, which the article provides few of. This proposal does appear to address a real issue, so hopefully it’s a real solution.

  21. 21
    askew says:


    His district is home to United Health’s headquarters and I can see them supporting this move.

  22. 22
    SiubhanDuinne says:

    @The Dangerman:

    Isakson’s seat isn’t up until 2016. This being Georgia, he’ll probably get primaried by some of the same RWNJ loons who are vying this year for Saxby Chambliss’s (soon-to-be-open) seat — if they don’t eat each other alive first.

  23. 23
    Wag says:


    I think where this could really benefit patients is by providing needed coverage that doesn’t currently exist.

    Concrete examples abound. Right now Medicare provides coverage for a patient to meet with a dietician only if they have diabetes. Morbidly obese and want help with losing weight? Heart failure and need help figuring out salt content in your meals so your lungs don’t fill with fluid? Not a chance.

    Depressed and need counseling? Not gonna happen unless you’re schizophrenic

  24. 24
    Yatsuno says:

    @The Dangerman: Isaakson is retiring, so his seat’s open. Dunno anything about Paulsen and too lazy to look it up right now. Yes I’m gonna be like that. :P

  25. 25
    JoyfulA says:

    I’m suspicious.

    I remember how great the HMO idea sounded and how horribly it worked.

  26. 26
    Yatsuno says:

    @SiubhanDuinne: Oops. Had them backwards. My bad.

  27. 27
    Villago Delenda Est says:


    Well, there are even questions about THAT.

    Right now, a lot of Oregon counties are in financial straits because they relied too much on timber revenue from O&C lands, which are mostly forest lands formerly granted to the Oregon and California Railroad back in the 19th century. Overcutting and the demise of old growth in easy to cut areas, along with new environmental awareness about the problems with clear cutting which make it tantamount to strip mining forests has disrupted that revenue stream that many counties relied on to expand services. Naturally since the free lunch counter has shut down, Wyden and DeFazio have come up with a new scheme that will provide short term relief with no guarantees about long term prospects, either fiscally or environmentally. The new scheme has to have enough gimmes to the usual jerb creator types to gather enough GOP support to clear the hurdle of stupidity in the House, natch. Local environment groups are up in arms over the proposal.

    Here’s the irony…the best choice for someone to challenge Wyden is probably DeFazio, but they’re in bed together on this. There are others who might take Wyden on (Steve Novick, for example, who ran a strong primary campaign but lost to Merkley in 2008) but the Dems, no more than the Republicans, don’t care much for challenging a sitting Senator in a primary in Oregon.

  28. 28
    Villago Delenda Est says:


    if they don’t eat each other alive first.

    A classic case of root for injuries.

  29. 29
    SiubhanDuinne says:

    @Villago Delenda Est:


  30. 30
    SiubhanDuinne says:


    No worries. At that, you know more about my Senators than I know about yours.

  31. 31
    Yatsuno says:

    @SiubhanDuinne: Patty and Maria are mostly awesome. Their biggest flaw is sucking up to defence contractors (because Boeing) but other than that they’re good workhorses and tireless Democrats. Plus having two women Senators who will have their jobs until eternity is pretty sweet as well.

  32. 32
    Yatsuno says:

    OT: Grandpa Walnuts iz gonna haz a sad. No war and no pudding dammit!

  33. 33
    ruemara says:

    @Yatsuno: Every time grampsy walnuts has a sad, an angel gets his wings.

  34. 34
    Yatsuno says:

    @ruemara: Not to mention AIPAC and Bibi. Hell I think this is the worst that could have happened to Netayahoo in a long time. Except him losing his coalition. That would be sweeter.

  35. 35
    Original Lee says:

    I would like to know more details. A Medicare patient in my family has noticed a significant degradation in quality of care since their primary care physician joined a group practice in the fall. So far my family member have been hospitalized once for a C. difficile infection that went untreated for a week because either the triage person or the doctor decided it was a tummy bug when M.F.M. called the office. M.F.M. currently has shingles that also went untreated for a week because either the triage person or the doctor decided it was not urgent when M.F.M. called. When M.F.M. finally got in to see the doctor about the shingles, the lesions were starting to heal, but it was obvious the outbreak had been bad enough that the doctor told M.F.M. that they should have been in the hospital. Yeah, that would have been good to know WHEN IT WAS FRACKING HAPPENING, if she could have been bothered to think about the fact that M.F.M. had just gotten done with a C. diff infection!!!

    My family thinks the practice is slow-walking the Medicare patients for monetary reasons. If this bill helps keep this kind of shit from happening, I’m all for it.

  36. 36
    TriassicSands says:

    There’s an article in the NYTimes about a surge in Medicaid sign-ups, and it made me wonder if the millions of poor and low income Americans who are getting health care coverage for the first time (or in a long time) will make a difference at the polls in 2014 and beyond.

    Will the poor who have been voting against their own interests, if and when they voted, respond by voting for Democrats to protect their newly won, life saving and life extending benefit? Or will they simply take the new benefit for granted and either continue to vote for Republicans, figuring now that they have coverage they can never lose it? Or not bother voting for the same reason? I wish I thought there would be a noticeable change in voting behavior, but I’d have to have a lot more confidence in my fellow Americans than I do to believe that will happen.

  37. 37
    Sam dobermann says:

    We must pray that the Repubs make repealing “ObamaCare” their top priority for the 2014 race as they have said they would. The more they talk repeal the more the Medicaid newbies will want to vote to keep it.

    We need to keep working on voter registration and then GOTV because the off years is where we have fallen down.

  38. 38
    Richard Mayhew says:

    @Yatsuno: If I am understanding the press release details correctly, the way it would work would be your PCP would form a Better Care Program for you. The PCP would get a big pot of money to spend on you, and if you needed to go see someone at a different provider group, the PCP would pay that provider from the big pot of money, and if you needed a ride to an appointment, the big pot of money would cover the cab/bus fare etc.

    It is HMO-ish in concept (there is very little new health policy, just tweaks on old ideas)

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