Sunday, October 26, 2014

Who rounds 2.4 up to 3? Who reports 14 as 29?

Martha Coakley either will or will not be Governor-elect on November 10, but she will still be the incumbent Attorney General when the Court takes up arguments that day on her proposed deal with Partners Healthcare System.

Much has been said about the supposed cost advantages that will result from giving PHS the right to add new hospitals to its already dominant market presence.  The Attorney General has remarkably ignored her own research over the years that demonstrates the excessive rates received by this system because of its substantial market power.  Notably, she dismissed those findings in her proposed settlement, saying those factors were not relevant to the complaint she had filed against PHS.

But I wonder if she and her staff have kept up to date with another set of claims made by PHS with regard to its ability to achieve cost savings.  It's all there in the public record, but let me summarize here in case these items have not made it to the McCormack state office building.

There were five Massachusetts health systems that opted to participate in the Pioneer ACO program run by CMS, the Medicare agency.  The idea was that managing care across the continuum (i.e., practicing population health management) and putting the provider groups at a certain amount of risk would bring about higher quality care and lower costs.

How did Partners do compared to the other Massachusetts P-ACO health systems in the first year?  Just fair.  According to this report from CMS, PHS came in third place in terms of achieved savings:

BIDCO:  4.2%
MACAIPA:  3.4%
PHS:  2.4%
Steward:  1.1%
Atrius:  -1.0%

Remarkably, Partners' press release describing these results says the following:

During the first year of the initiative, Partners HealthCare was successful in slowing the rate of cost growth by approximately 3% as compared with the reference trend that Medicare used to measure Partners’ performance.

Hmm, 2.4% somehow got rounded up to "approximately 3%."

Here's how all of us learned how to do rounding:

So, 2.4% should actually be described as "approximately 2%."

The July 2013 press release also says:

This translates into approximately $14.4 million in shared savings that Partners will receive from Medicare. 

Remember that number.

Now look.  In the company's January 2014 filing to the Health Policy Commission justifying one the mergers, on page four, it repeats the 3% and then goes further:

During its first year as a Pioneer ACO, Partners slowed the rate of cost growth by approximately 3% over CMS's reference trend, translating to nearly $29 million to be shared with Medicare.

Now $14 million has more than doubled, to $29 million.

I can't find any rule for rounding that suggests that kind of exaggeration.

Let's go further and see how PHS stacked up against the others over two years of the program:

Partners ranked 3rd in Year 1, worst in Year 2, and 4th over both years combined.

Well, how did PHS describe these results?

Strangely, while Partners proudly announced its results from Year 1, it issued no statement that I could find about its Year 2 performance.

Given these actual results, why would we expect any likelihood of any savings (let alone any savings that get funneled back to payers and consumers) from Partners taking over more hospitals?

Given the looseness with which Partners presents the "facts," how can we be assured that future Attorneys General or the state Court will be able to accurately monitor PHS cost and rate increases and enforce the terms of the settlement deal?

Please, Attorney General Coakley, withdraw your deal with Partners and let your successor revisit the issue.

Please, Attorney General candidates, call upon the incumbent to do so--before Election Day.


Addendum at about 9pm.  I just received the following email and post it for your consideration, with thanks to the sender:

I agree that reporting of 2.4% as 3% is inappropriate, but I think the differences in the 14 and 29 are due to reporting the shared savings with Medicare in two different ways.

From your post:

"translating to nearly $29 million to be shared with Medicare."

"This translates into approximately $14.4 million in shared savings that Partners will receive from Medicare. "

So it seems Partners has stated this accurately, although confusingly. The first quote references the total amount of savings before the split with Medicare and the second just refers to the amount Partners will receive.

This sounds like a plausible explanation to me.  If true, then we should perhaps just ask why the company chose to utilize the lower number in one place while emphasizing the higher number in the later HPC document trying to justify the merger.

And the point about substandard performance over two years compared to the other P-ACOs remains.


Additional addendum added at about 9pm the next day, repeating a comment posted below:

I'm not sure I see the $29 million anywhere. The CMS website shows $14.4 total, $7.2 is Partners share.

I think the $29 million is incorrect. 


Anonymous said...

Thanks for your post. Partners deserves modest credit for achieving at least some savings in the Pioneer ACO (although, as you point out, less credit than other Boston systems), but the savings are for Medicare, where prices are fixed by CMS, not by the market power of the provider. For non-government patients (i.e., most of us), the AG's deal puts modest restrictions on Partners' ability to raise their (already very high) prices, but no restrictions on their ability to raise the cost of care. Price is important, but cost is even more important, and there are many reasons to doubt that the merger will lower costs. [since I am in the health care biz, I am submitting this anonymously.]

Anonymous said...

I'm not sure I see the $29 Million anywhere. The CMS website (link above) shows $14.4 total, $7.2 is Partners share.

I think the $29 Million is incorrect.