As a prior Army officer and Desert Storm Veteran, I have followed the VA hospital scandal with great interest, as I have earned the right to be cared for in the Veterans Administration system. As a physician, my clinic is one of the few in the Burlington area to accept Tricare. We do this out of gratitude and obligation to those who have served our country. These are the same reasons that the VA was set up for our veterans.
The North Carolina legislature is debating the DHHS proposal to “reform” our state’s Medicaid program by shifting care to an Accountable Care Organization (ACO) plan. Language for the reform plan comes directly from the Medicare Shared Savings/ACO program of the Affordable Care Act (Obamacare).
ACOs are artificial groups of practices, providers, and hospitals that are forced to join in a legal entity to deliver care to a population group. In short, ACOs are legally established entities complete with leadership, a board of directors, staffing, bank account, payroll, cash reserve fund, accountant, and tax returns. Under the proposed plan, the providers in the ACO care for their patients, and at year’s end DHHS performs a complex calculation on the ACO’s patients to determine if the ACO spent too much or saved money per patient. Then, the ACO is graded on its quality performance. Finally, if the ACO saves money for the state, they receive a shared savings bonus. If they cost too much, they must pay a penalty.
It is imperative to consider the outcome of instituting an ACO proposal in North Carolina, in comparison with the problems at the VA. The VA system is the equivalent of a long term, longitudinal study of the ACO shared savings system, in a single payer model. The results of the study are in, and it has proven to be a failure.
Each VA facility is essentially one big ACO. Each VA facility has a medical director, a lead administrator, and data reporting staff—just like the ACO proposal specifies. Each VA facility utilizes the ACO model of incorporating primary care, specialty care, and mental health care divisions into one group. Each VA facility is measured on standards of administration and on standards of medical care. Administrative standards focus on access of care, as well as patient satisfaction. Medical standards prioritize provider credentials, the provision of high-quality treatment, and preventative care for well and chronically ill patients. Finally, each VA facility receives bonus money based on how well they perform. The problem at the VA appears to be that access of care standards were falsified in order to qualify for bonuses. In other words, the system was “gamed” for financial gain, and it took years and a few whistleblowers for it to come to light.
The North Carolina ACO proposal incorporates a similar structure to the VA system. Each ACO is a defined legal entity that incorporates a medical director, a board of directors, an administrative staff, as well as a group of primary, specialty, and mental health care providers. The ACO shared risk proposal mandates that staff are hired to collect data from each ACO and report it to the state. Like the VA, the ACOs receive bonus money or are penalized based on the data they report.
Although the VA is a single payer health care system with all of its providers employed by the VA, the system of performance incentives is the same as that of the ACO model. Both models give health care providers incentive to falsify data in order to obtain more income and, in the ACO proposal, to prevent a financial penalty.
According to many sources, the VA budget from 2003 to 2014 doubled from $28 billion to $57 billion while the number of patients increased by only one third. An investigation by Open the Books of the Chicago VA found that it employs 4,230 people. Of these, only approximately 800 deliver care to patients, and only 309 of these are doctors. So, in the VA facility, roughly 81 percent of its staff is not delivering patient care. One can assume that a portion of these employees are necessary to meet the reporting and data collection requirements of the ACO model in which the VA facility operates. The NC ACO model would, by necessity, produce a similar outcome of increased administrative costs. It has become clear that the goal of many of these VA staff members was to meet their administrative performance targets in order to receive their bonus. Even if only some of the allegations are true, patients were harmed in order to meet these performance targets.
A recent Op-Ed in the Wall Street Journal by Dr. Hal Scherz, entitled “Doctors’ War Stories From VA Hospitals”, details the problems with delivering care to the veterans in the VA system. His stories mirror mine from my time in the Army medical system. Many physicians who have served these patients strenuously object to a health care system run in this manner, as it makes it nearly impossible to deliver excellent care to the patient due to the bureaucratic pressures of the system. To be clear, a physician’s idea of excellent patient care is not always the same as an administrator’s. Our goal is to deliver care, while theirs is to meet standards of administrative “excellence” set forth by other administrators, in order to meet performance standards and qualify for a bonus.
The actual results of attempts at using a performance bonus plan to improve patient care and decrease costs are mixed at best, according to several studies. These studies did not have the benefit of the revelations of the VA scandal to factor into their conclusions. It is clear that the VA bonus plan, while likely well-meaning, had an adverse effect on controlling costs—as concluded by the tremendous increase in the VA’s budget. It also seems to have had an adverse effect on patient outcomes.
Those considering the North Carolina ACO proposal should view it through the prism of the VA. The ACO shared savings and risk model has been proven to be a failure, based on the results of the VA “study”. It has not decreased costs, as evidenced by the VA budget. It has lead to the rationing of care in order to qualify for performance bonuses. It has increased administrative costs.
Finally, it has harmed patients that it was designed to serve. According to the recent VA auditor report, many of these employees were actually instructed to falsify their data entries. Given the VA auditor’s revelations of the number of employees acting to obscure wait times and the number of VA facilities involved in the scandal, the problem is not due to a few bad apples. It is system wide. It is clear that the problem was caused by the system that was in place to meet performance standards in order to qualify for a financial bonus. Failure to meet performance standards would bring adverse administrative attention to the VA facility (ACO), and would result in loss of bonuses.
Unfortunately, the North Carolina ACO proposal would provide ACOs with more financial incentives to “game” the system. In the NC proposal, ACOs that did not meet the performance standards would not receive their bonus, and would actually be financially penalized. The VA financial incentive system is a proven failure. The VA system has actually translated the fears of doctors like me into reality. Concerns over phony waiting lists, delayed patient care, and rationing of care are no longer theoretical. They have become reality. The cause of the problem is the system, and it is time for the system to be held accountable just like those who acted within it. Veterans died due to this system.
As Einstein so eloquently stated, “the definition of insanity is doing the same thing over and over again and expecting different results.” Surely North Carolina can reform Medicaid with a plan that does not mirror that of the failed VA system. There are ways for North Carolina to use its Medicaid dollars more efficiently without harming patients. Let us not prove our insanity by implementing a system that is already proven to be a failure while expecting different results. North Carolina has an opportunity to better care for the most vulnerable among us. The stakes are just too high for the patients that we serve for North Carolina to repeat the VA debacle in our Medicaid system.
Dr. Stein has been a Family Practice physician since 1992, and his experience includes 14 years in the Army health care system. Dr. Stein, along with his wife, runs the International Family Clinic (IFC), a private pediatric clinic in Burlington that serves nearly 6,000 children, of which 2,600 are enrolled in Medicaid.
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