Medicare and Health Reform: Part II



In his closing remarks to the Senate Finance Committee last week, Senator Baucus pointed with special pride to the effect the Committee’s reform bill will have on shaping the health care system in the longer run:

One point I want to make… is about delivery system reform.  We are starting here in this bill to finally reform our delivery system so it’s based much more on quality and patient focus, moving ever so slowly, but inexorably, from fee for service….which causes a lot of the waste in our system. We’re not going to see savings, the benefits, to the system for a while… but after four, five, six years from now, we’re going to see the real benefits of reform.

There is no doubt that the Committee’s America’s Healthy Future Act devotes considerable attention to fixing what’s wrong with the existing delivery “nonsystem” and improving government oversight. Title II (Disease Prevention and Wellness), Title III (Improving the Quality and Efficiency of Health Care), Title IV (Transparency and Program Integrity) and Title V (Fraud Waste and Abuse) of the Act consume 143 pages of the 259-page Chairman’s Mark.

And well it should.  As Professor Bill Sage’s aphorism, “It’s the delivery system stupid,” suggests, changing the structure and interactions of health care providers has long been seen as critical to efforts to control cost and improve quality.  Given serious questions about the strength and effectiveness of competition among private health insurers, especially without a public plan option to spur them, Medicare reform stands as the only viable means to bring about delivery system change.  Policy analysts have made the point that “Medicare is the place to start delivery system reform,” recommending payment reforms that reward accountable health organizations and move toward bundled payments  as a means to spur needed integration in health care delivery.

But how quickly can all this be accomplished?

The Kaiser Family Foundation report,  Strategies for Reining in Medicare Spending Through Delivery System Reforms: Assessing the Evidence and Opportunities throws some cold water on Senator Baucus’ hope for realizing significant savings in 5-7 years.  It concludes that some popular ideas–medical homes, electronic health records, bundled payments, accountable health records, and comparative effectiveness  research, while promising significant help in the long run, will need considerable fine tuning and are “unlikely to reduce costs significantly in the next five to ten years.”

At the same time the KFF report describes a number of steps that the Medicare Coordinate Care demonstrations indicate have the potential to reduce Medicare growth in the next five to ten years, such as care coordination and efforts to reduce hospitalizations and readmissions; extending the Resource Use Reporting project to inform physicians about relative resource usage; alteration in the bidding and incentive
structure of the Medicare Advantage plans; and other steps to improve the infrastructure supporting quality and efficiency.  The key question of course is: how do we implement these changes ?

Ultimately, realizing either short or long-term benefits depends on patience and politics.  Pham, Ginsburg and Verdier
have set forth a variety of changes in the  decision making process governing Medicare provider payment and other reforms to the delivery for the program that would serve “to ensure that the crafting and refinement of reforms, particularly those affecting payment for providers, is driven as much as possible by data rather than politics.” Notably the Committee’s America’s Healthy Future Act (at page 189) takes an important step in that direction by creating a fifteen member, bipartisan Medicare Commission that would be tasked with presenting  to Congress for fast track consideration proposals that:

  1. to the extent feasible target reductions to sources of excess cost growth;
  2. to the extent feasible, improve the health care delivery system, including the promotion of integrated care, care coordination, prevention and wellness and quality improvement;
  3. to the extent feasible, protect beneficiary access to care, including in rural and frontier areas;
  4. to the extent feasible, consider the effects of provider payment benefit changes on beneficiaries;
  5. to the extent feasible, consider the effects of proposals on any provider who has, or is projected to have, negative profit margins or payment updates; and
  6. to the extent feasible, improve the quality of care delivered to Medicare beneficiaries;
  7. to the extent feasible, consider the unique needs of individuals dually eligible for Medicare and Medicaid; and
  8. prior to December 31, 2019 not impact providers scheduled to receive a reduction to their inflationary payment updates in excess of a reduction due to productivity in a year in which the Commission’s proposals would take effect.

Professor Greaney’s is a nationally recognized expert on health care law and the Chester A. Myers Professor of Law and the Director, Center for Health Law Studies, St. Louis University School of Law.  Thomas Greaney has spent the last two decades examining the evolution of the health care industry. He is also a frequent contributor at Health Reform Watch where this post first appeared.  His testimony to the Senate on “Competition in the Health Care Marketplace” may be found here.

Read “Medicare and Health Reform: Part I”

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21 replies »

  1. Has anyone noticed that (as of June next year) the government has directed that certain benefits will no longer be available under any Medigap plan? No longer will preventative care and home care benefits be included in any supplemental plan. The government, however, is adding a hospice care benefit, that is an end-of-life benefit.

  2. AFTER ALL the boloney, if you are a senior/medicare user, the Baucus/Pelosi/Obama bill CUTS PAYMENTS TO DOCTORS & HOSPITALS. It’s as simple as that.—I can’t speak for everyone, but in New York doctors are fleeing Medicare—They just will not accept Medicare patients because the fees are TOO low to cover the paper work & overhead.–After the Feds enact Medical Reform even more M.D.s everywhere will refuse Medicare. What Medicare patients will be left with will be the incompetents and foreign educated M.D.s (India, Pakistan, So. American, Russian, etc). You will NOT understand them & they will NOT understand you!!! Cheaper? YES=–DANGEROUS? OF COURSE!! The good quality M.D.s will be free to charge as much as they want (WOW). It is just common sense. You CANNOT add 35 million new patients to the mix without INCREASING THE COST! Any one who thinks otherwise is just dreaming. DON’T BELIEVE THE GOVT. The pols will tell you anything to get thier plan passed. I am NOT affilliated with any Insurance Company or political group. JUST AN OLD CODGER WHO KNOWS THAT, IF YOU ARE LUCKY, YOU GET ONLY WHAT YOU PAY FOR!!! NEVER ANY MORE. HOW ABOUT SOME COMMON SENSE?

  3. While any thinking person can admit that improvements in efficiency and a reduction in costs is always the holy grail, what do we loose in the process is the real question.
    The complexities of this health care overhaul are legion. Yet, the bureaucrats are making decisions based on myriad political agendas in a very short period of time.
    Additionally, this citizen is very concerned with the health care council the President has surrounded himself with, namely Ezekiel Emanuel.
    Emanuel’s writings prove he is a health care rationer of the highest order. Sure, cut costs by reducing services and sunsetting the Hippocratic Oath, rather a high price to pay.
    Furthermore, with health care and related services making up about one sixth of the gross national product, the idea of further infusing the system with the inherent bumbling and inefficiency of large government control is spooky to this writer.
    The pundits are saying this hot potato in Congress will come to a head before Thanksgiving…cross your fingers.
    This is a terrific BLOG. This fellow is glad to have discovered you in his time of concern.
    Tony Lorizio

  4. I thought we were reforming health care insurance… that’s what the President said wasn’t it?
    So how has the delivery been reformed? And what’s this about paying for half the ‘reform’ Baucus worked on that is paid for by cutting Medicare?
    That doesn’t make any sense to me.

  5. To buy into the Baucus theory, one must believe that a large majority of physicians use the fee-for-service system to defraud the government and taxpayers.
    If this is true, then the fedral government is at fault since they establish the fee’s, yet do nothing to gauge their effectiveness. But as far as fraud is concerned, news reports show that huge amounts of fraud exists based on Medicare “buying” non-existant wheelchairs and paying claims for physicans service by physicians who have been dead for years or for patients that do not qualify as they have been deported, enprisoned or also are dead!
    Fee for service is based on a series of numbers which the government do not verify, while paying any and all claims quickly is their main goal. Paying everything doesn’t require much administration costs so Medicare and Medicaid proudly claim their cost is only a few percentages of the cost. For this low percentage taxpayers get zero value.
    So now we are being told that cutting fees will reduce waste, fraud and abuse? Wasn’t Baucus the Greek God of wine? What is he drinking – Obama Kool Aid? Cutting fees will increase acceptability and participation by physicians

  6. Congress in its typical fashion is missing the point and ignoring the unintended consequences. We have gone from reforming the health care system to controlling the government’s cost for Medicare while shifting those costs to everyone else.
    There may be some high sounding worthy goals in the reform sections of the Senate bill, but don’t hold your breath, we have ten more years of Congressional meddling before there is any chance of savings.
    You may want to read this short commentary:

  7. It is a mystery to me why barely anyone propagates to simply reform the medicare fee schedule; a doctor doing angioplasty or an EMG should get the same or just a little bit more (based on need for increased training and risk, if applicable) than for providing so called cognitive services. We have so many hysterectomies because they pay so well.

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