A Window of Hope for Fixing Medicare

Simplistic rhetoric that Medicare is “broken” fails to diagnose where the real challenge lies in creating enduring financial stability for this critical program. Medicare is doing exactly what it was designed to do: draw in funds from working individuals and beneficiaries to help millions of older Americans and people with disabilities pay for medical care. A fundamental problem is how Medicare pays for services and how the delivery system responds to that payment structure.

The current medical care delivery system that Medicare pays for is fragmented, uncoordinated, favors the health care provider over the person receiving care, and is exceedingly expensive. How traditional Medicare pays for services — through a fee-for-service model that values quantity of services over quality of health outcomes — validates the current delivery system. However, with growing overall health care costs, increased use of expensive high-tech medical services, and the coming of age of baby boomers, rising Medicare costs for this broken delivery system threaten to upend the program and bankrupt the nation. But there is hope: Medicare can be used to transform our broken health care system by changing the way it pays for services.

Medicare’s antiquated payment system and the inefficient health care delivery system it encourages creates an even more egregious problem for those individuals who are part of Medicare’s most expensive population: seniors who have chronic health conditions (such as heart disease, asthma or cancer) combined with difficulty with activities of daily life. They see multiple doctors, take numerous medications, and are faced with the difficult task of managing this complex array of providers, services and treatments on their own. The 15 percent of seniors who have both chronic conditions and functional impairments account for nearly one-third of total Medicare costs. Medicare spends almost three times more on these individuals than on those with chronic conditions alone.

Seniors with chronic conditions and functional limitations usually have one other thing in common: the need for daily living assistance. This entails a variety of services and supports, ranging from help at home with bathing or preparing meals to transportation assistance, all the way to needing nursing home care. Nearly half of this population is low-income, making them eligible for Medicaid, which covers these long-term care costs. Yet the other half of this group does not have Medicaid. Without coverage for these critical supports, vulnerable seniors who have a daily living crisis — even if it is not medical in nature — can end up in the emergency room or hospital, which are the least intimate and most expensive care settings. Using the hospital as a back stop in the absence of long-term services and supports is costly and bad public policy.

The best place to seek solutions that catalyze payment and delivery system reform is within this most expensive group of Medicare beneficiaries. The key to more efficient and effective care for people with chronic conditions and functional impairments lies in addressing both the patient and the underlying person — the illness and its functional impact. This is how we define “person-centered care,” a concept that when properly executed can both bring down costs for Medicare while also enabling people to age with dignity and independence. Person-centered care focuses on an individual’s desire to retain choice and independence in their lives, even in the presence of substantial health conditions and functional impairment. This can be done through improved targeting of care matched with robust care coordination efforts across the full range of services, encompassing long-term care as well as medical care for people who need both.

Successfully targeted care considers the range of variables in a person’s life that drive health care use and costs, and in return offers the right mix of services to meet their needs. The result is that people receive the right care, by the right provider, at the right time, in the right place, and for the right cost. This includes long-term services and supports when necessary, a critical component to help keep people out of the hospital when they do not have to be there. Providing substantive, person-centered, coordinated care is the glue necessary to deliver targeted services, a critical function that is simply not available nor paid for in any meaningful way by traditional Medicare. Seeing the patient first as a person and focusing on their daily functioning in the context of existing health conditions are the keys to making Medicare more cost effective, humane and sustainable.

Bruce Chernof, M.D., is president and CEO of The SCAN Foundation, an independent, non-profit public charity devoted to transforming health care for seniors in ways that encourage independence and preserve dignity. In February 2013, House Democratic leader Nancy Pelosi appointed Dr. Chernof, along with several others, to the bipartisan Commission on Long-Term Care, created earlier this year and responsible for developing a plan to establish, implement and finance a comprehensive set of long-term care services.

8 replies »

  1. Medicare provides limited coverage unlike long term care insurance. The funds for this federal program aren’t enough to accommodate those who are in need of extended long term care. They are partly to blame because they failed to do planning for long-term care coverage but it’s too late to point fingers and the best thing that the government could do is expand funding for this program or extend the coverage. We all know that not everyone can afford long term care insurance even if they explore their options. I just hope there will be changes made on Medicare and this will become more beneficial to people who are in dire need of long term care. In order to avoid ltc problems in the future, better start planning early. Learn how right here: http://www.ltcoptions.com/planning-for-long-term-care/.

  2. Medicare alone is not the problem. The insurance industry itself is the bigger problem. It will take someone, some group, smart enough to track and trace the flow of money to fix this problem in healthcare and our economy. Significant changes must take place, but all the present plans and proposals are way off course.

  3. Once the patient goes to the doctor the meter is running no matter what…

    To cut costs, the patient must have a disincentive towards going to the doctor at all.

    The chronically ill have identified and defined needs. It is the random wants that are up to the patient. Every visit of this kind is a raid on the treasury. The patient should pay for those. The patient should pay for scooters and lift chairs, as well.

    Home health is a farce.
    Dialysis is out of control. Lots of fraud here.
    Prescription drugs have gone wild.

    Someone above referenced the politician…they are not going to fix this.

  4. Most of the literature on comorbidities seems to build on the following assumptions:

    a. these persons have lots of hospital admissions
    b. co-ordinated care will reduce the number of admissions
    c. this will lead to lower medical costs

    This is not a sure thing. We have been reducing days-in-hospital and the rates of admission for over 20 years, and hospitals take in more money than ever.

    They mainly do it by systematic upcoding. Where they once had three admissions at $12,000 each, now they charge $36,000 for one admission.

    The highly graded fee schedules in most health plans — public and private — have let them do this.

    Even beyond the hospital question, there is another and perhaps more difficult challenge in this area.

    Some of the persons in this category are just dying. That is blunt, but I have worked in a nursing home and it is pretty obvious. Their bodies are breaking down. I do not have the answer here, but I wanted to get some blunt language into the discussion.

    Bob Hertz, The Health Care Crusade

  5. While both comments above can bed said, it remains that substantitive, coordinated and person centered care is essential in supporting elders with functional and medical problems – without it costs will remain high as we treat each episode separately and as we continue to fail to see the connections between medical and social complexities. Sometimes the solutions are simple and commonsense – other times they are logistically complex. Until care coordination is viewed as essential, the high cost of fragmentation will continue.

  6. As Einstein observed, if we knew what we were doing, it wouldn’t be an experiment. One mist keep trying until a solution emerges. Castigating others about this or that dollar expenditure accomplishes nothing, except to postpone action. The main reason we haven’t solved the problems inherent in all aspects of health care and health insurance is that politicians care more about getting re-elected than about initiating or taking action.

  7. Dr. Chernof
    I agree with your description about how person centered care would improve care. However the argument for the widespread adoption of person centered care would be much stronger if you could provide evidence that costs would be managed or reduced using this approach.

  8. Traditional Medicare still works (quality and cost-wise) trillions of times better than the alternative of privatized health unsurance.