Healthcare Cost Containment and the 2019 Centers for Medicare and Medicaid Quality Conference

Photo of Dr. Gomez in Zion National Park.
Dr. L.E. Gomez is an expert in diversity and inclusion issues as well as a proponent for Medicare for All.

We have a tendency to blame individuals whose performances excel within a flawed system rather than analyze why the system rewards an unwanted behavior and perpetuates poor outcomes. Let’s take a look at some of the players attending the 2019 Centers for Medicare and Medicaid (CMS) Quality Conference to illustrate how it affects our healthcare system.

“Don’t Hate the Playa (Hate the Game)”-Tracey Lauren Marrow (aka “Ice-T”)

For context, I’ll begin with a brief overview of our health care system. Most of you know it is incomprehensibly expensive. But most don’t know expenditures accelerated logarithmically in the late 1980’s. I contend a major reason was legislators decided that instead of prosecuting a few bad actors, we should not trust any doctors. Stark Laws were passed in order to prohibit physicians from establishing financial relationships with profit-making health care entities.

Of course all this did was accelerate the movement of non-physicians into the vacuum of private profit-making health care enterprises who were specifically trained in finance, business and law. They accelerated and expanded the efficiency of billing and services, thus creating a windfall of revenue in the healthcare industry by more effectively serving their shareholders.

In the end, a relatively small percentage of physicians interested in business administration, merely redefined their roles and moved from seeing patients to help established networks that grew into those same managed care corporations. Rather than eliminate bad actors, they just changed job descriptions. The ‘no player hating’ approach would argue those individuals were not primarily physicians in the first place. Ironically perhaps, many have recently begun to recognize that the highest value for patient care seems to come from well trained and trusted care primary physicians who continue to see patients.

What the Healthcare Cost Game Looks Like Today

We spend about $3.5 trillion or 20 % of the GDP on healthcare in the U.S. according to estimates by Centers for Disease Control. Well over a trillion of that goes to hospitals, where 25% of all spending goes to administrative costs, primarily in the form of salaries. (That includes everyone from the hospital CEO’s to billing and coding clerks but not the physicians caring for patients.3 A bit under 16% of the pie goes to physician services, without distinguishing those that get paid for primary care and spend more time with patients from an episodic encounter with a surgeon you see only once.4 Over 32% goes towards the total cost of hospital care. Over $42 billion goes exclusively towards government administration of our healthcare system. Finally, health insurance costs us 6.6% or $210 billion and over 10% or about $325 billion goes to the pharmaceutical industry.5 Why?

Ask any physician that actually sees patients for hours every day rather than make administration of a practice or the business of healthcare their major concern, and they will likely admit they would not: order the number of tests; or order as many procedures; refer as many patients to sub-specialists; or hospitalize and re-hospitalize as many patients as they do, were it not for the medical legal system we operate under.

In addition the administrative oversight tied to benchmarks, or reimbursement incentives that limit their ability to continue to practice their profession has a negative impact on over-utilization. If the free market truly believe in the power of the invisible hand, the distancing between clinician provider and patients through the inescapable interposition of third party payers, health management organizations and agents subcontracted by CMS to oversee disbursement of payments for care, we could see those intermediaries are adding needless and potentially bankrupting cost to the system.  If this were truly understood and made transparent, might we not recognize why we are chasing our tails?

There is a spectrum of forces set up to work at odds in our healthcare system. Not the least of these is interfering with the singularly most valuable participant in the delivery of care: the primary physician who is touching the patient or emergency physician who is trying to save the patient’s life. Any time there is no life threat, the best option for the care of every patient is a primary care doctor. It may seem obvious, and perhaps the average citizen believes that is the case.

Here is the problem: as I’ve described in earlier posts, well-trained triage nurses and emergency physicians are strongly discouraged from telling patients: “you are not having an emergency right now, it is safe for you to go home and schedule an appointment to see your doctor in the morning.” There are myriad reasons for this, including incorrectly placed financial incentives. Part of it is the erosion of trust between patients and the health care system in general; part of it is that once you set up an adversarial system between payer and clinician everyone acts in a self-interested manner. The medical legal risk of being even slightly wrong is intolerable, and even if a condition that does not exist at the exact moment of the interaction with that clinician develops subsequently. In the end, you cannot compel ethical behavior in the unethical system. Assuming the worst will actually be a guaranteed way to lose revenue in the overall process. Suffice it to say for now that honest advice it is simply disallowed.

Professionals Do What They Are Trained to Do Best

The keynote speaker at this conference was Seema Verma, the top administrator for CMS who oversees its $1 trillion budget. She is the former CEO of Health Management Associates. Mrs. Verma has a bachelor’s degree in life sciences and a master’s degree in public health. She a policy consultant who founded SVC Inc. (Seema Verma Clinic, Inc.) although Mrs. Verma does not have a medical degree. In 2014, SVC Inc was awarded more than $3.5 million in Indiana State contracts and she was also employed with Hewlett-Packard at the same time, where she earned over $1 million. Her company apparently changed its name to Health Management Associates around that time.

Not surprisingly her keynote presentation praised the achievements of current White House initiatives under the Trump Administration and she cited successful actions to ameliorate deficiencies she perceives in the Affordable Care Act (ACA) including securing subsidies to insurance agencies to support premiums, preserving the private insurance market and promoting managed care oversight to ensure that ‘only those that absolutely need Medicaid’ are allowed to depend on it. (Who is she suggesting does not need Medicaid? Not the uninsured emergency patients from the inner city I serve?)

Many may recall that this past November 1st, 2018, Mrs. Verma sent out the following tweet accompanying the photo below:

“This year’s scariest Halloween costume goes to…

(pic of white young man wearing a black T with the words “Medicare For All”)

Then followed that one up later in the day with:

“Did I get your attention? Good. Medicare for All isn’t a joke. It’s a multi-trillion dollar drain on the American economy that will bankrupt future generations. It’s government controlled health care that will strip choice away from millions. It’s a bad idea. Ant it IS scary.-Administrator Seema Verma”

I include all of this only to point out that if you expect to hold someone accountable for understanding the effect of the current government controlled health care based on the medical care provided by physicians, perhaps one would prefer to consult practicing physicians.

I also met Dr. Paul Rosen, Medical Officer for Transforming Clinical Practice Initiative for CMS. His goal is to enroll hundreds of thousands of physicians in what is called an alternative payment model (APM) which instead of paying providers for the care they are providing their patients, rewards them for delivering high-quality cost efficient care, prevent hospitalization, prevent unnecessary tests and realize a multi-billion dollar cost savings to the government as a result. I shared my perspective on our current system of government sponsored health care reimbursement and the potential short-comings of business initiatives like six-sigma when it is misapplied to emergency medicine care. He assured me CMS would not interfere in patients being able to get the emergency care they critically need. (See page 38 of American Academy of Emergency Medicine “Common Sense” January 2019 @

I also, met Professor Robert Flemming, PhD in Health Services Research who has a strong background business with an MBA in Healthcare Management. He also does not have a medical degree yet as the Director for Transforming Clinical Practice for CMS is implementing the approach described above. He also promised to read my article in Common Sense on the unintended consequences of management initiatives.

Finally, there was my friend Jean Drummond CEO of Health Care Dynamics International (HCDI) who is both a part of the mission of CMS through contracted work similar to that of Mrs Verma made her reputation on and trying to help minority providers survive the current realities I am describing. She introduced me to Dr. Patrick H. Conway, CEO Blue Cross Blue Shield of North Carolina. He is former Deputy Administrator for Innovation and Quality at the federal CMS. Dr. Conway succeeded Mr. Brad Wilson in his current position who was one of North Carolina’s top health care officials in terms of compensation. According to BC/BS Mr. Wilson’s salary in 2017 was in excess of $1 million on top of which he earned a bonus of over $1.9 million. Why? Dr. Conway shared how he is aggressively addressing the social determinants of health the communities he serves. What else else would justify that kind of administrative compensation? Brace yourself for the barrage of acronyms.

If you are not willing to become conversant with this alphabet soup of acronyms, you have no hope of understanding why the U.S. Healthcare budget is approximately $1 trillion. Worse yet, you stand no little chance of understanding how any one could believe every citizen in our society should have a path to affordable health care and yet not endorse something called the Affordable Health Care Act (ACA). I predict that most folks will agree, it’s not the players, it’s the game. Let’s use the present examples. Now I have had extensive conversations with Jean and I can tell you her heart is in the right place with regard to helping providers that serve the most vulnerable underinsured and barely insured continue to survive in their practice. I will begin by admitting theirs is a small piece of the enormous budgetary pie that is in question. We will move on to the bigger players, insurers and hospitals in a bit, but let’s start with Jean’s operation.

HCDI is a Program Support Center (PSC) IDIQ (Indefinite Delivery/ Indefinite Quantity) contract holder, the largest multi-function shared service provider to the federal government. PSC is hosted by the U.S. Department of Health and Human Services (HHS) and provides support services focused on customer needs. PSC was established 20 years ago to reduce HHS’s annual spending and increase the quality of administrative services including performance measures for clinical care and clinical practice reimbursement from CMS. This function falls under TCPI which stands for Transforming Clinical Practice Initiative. PTN stands for Practice Transformation Network and SAN for Support and Alignment Networks. HCDI is focused on the latter.

As a result of the ACA, CMS funded a spectrum of programs to compel clinicians to realize small to large-scale transformation. At the ground level, individual practices are required to prove quality outcomes while simultaneously reducing costs, that is, while reimbursement from HMO’s and CMS is reduced. As the majority of the cost is salary therefore, payments to providers are an essential part of cost containment. Practice Transformation Networks (PTN’s) are peer based learning networks coach, mentor and assist clinicians to develop core competencies in order to retrain them to perform up to standards set by new benchmarks. Examples of PTN’s would be Baptist Health, Mayo Clinic, Vanderbilt University Medical Center…Support and Alignment Networks (SAN’s) use partnerships with national and regional associations to enforce core competencies, compel service and incentivize care through reimbursement for compliance with measurable standards of utilization and performance. SAN’s include American College of Emergency Physicians, American Medical Association, National Nursing Centers Consortium…

CMS calls the next phase, the Quality Payment Program (QPP) which will replace what was formerly referred to as the Sustainable Growth Rate for reimbursement. In other words, payment will be based on value assessed based on benchmarks so that data drives care not cost. Unfortunately, there is no self-awareness regarding the costs added by the administration of these vast networks for oversight. You see the above entities are but major categories and we have yet to consider HIIN, BFCC, QIN, ESRD…In fact, there were approximately 3,500 attendees to this conference, the overwhelming majority of whom, will make their careers and salaries on saving CMS money by cutting payments to providers, particularly troubling when one considers that primary providers that are touching patients are not the ones responsible for the majority of the $1 trillion in question and the only real avenue to reduction in cost. The solution is not in what you call it:

Affordable Care

Medicare for All

The solution is in recognizing where the value already exists and eliminating the costs of third parties interfering is what could be a simple transaction between patients and their physicians.

Dr. L.E. Gomez is a board certified emergency physician on the staff of Howard University Hospital where he serves as Assistant Professor of Clinical Emergency Medicine for their college of medicine. He received his formal education in medicine at Cornell University, Mt. Sinai School of Medicine, Boston University Medical Center, and the University of Chicago Hospitals. He is also a healthcare business consultant with an MBA in Healthcare Administration, member of the American College of Healthcare Executives and contributes to the study of minority leadership through the Physician Executive Section of the National Medical Association (NMA).

He is committed to leadership aimed at creating equitable and effective healthcare delivery. Dr. Gomez is an advocate for the ethical practice of medicine which he believes will one day lead to the elimination of health disparities and improved healthcare states for all patients. He chairs the Diversity & Inclusion Committee for the American Academy of Emergency Medicine where he also serves on the Government & National Affairs Committee. He supports the underrepresented patient population on the Maryland American College of Emergency Physicians Public Policy Committee and through the lobbying efforts of the NMA.

Last but not least, he is the father of three wonderful young adults and an ally to our local community of forward-thinking leaders in Anne Arundel County.

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