'Model' Health Systems Press Case for Medicare Fix
in Reform Legislation
Debate involving Medicare taking on new urgency amid
doubts if the health overhaul will meet Obama's goal of slowing health
care costs
By Phil Galewitz, Kaiser Health News
July
20, 2009 - When talking about his vision for the U.S. health care
system, President Barack Obama points to places like the Mayo Clinic in
Minnesota and Intermountain Healthcare in Utah, which are known for
providing high-quality, low-cost care.
"We need to identify the best practices across the
country, learn from the success, and replicate that success elsewhere,"
he said last month.
But officials at these institutions, called
"integrated" because of the close relationships between hospitals and
doctors--say the congressional health overhaul bills, at least in their
current form, would do little to reward them or encourage others to
follow their lead.
They're pressing lawmakers to move much more
aggressively to revamp the way Medicare pays for care to discourage
unnecessary services and reward "value" over volume.
"Unless we get the incentives right, nothing else
in health reform really matters," said Greg Poulsen, senior vice
president at Intermountain Healthcare, a nonprofit system of hospitals
and doctors in Salt Lake City.
Partly at their behest, members of Congress from
Minnesota and Wisconsin last month introduced a bill that would create a
Medicare “value index” to change the way doctors are paid, but the
legislation so far hasn't been included in any health overhaul bills.
Because of that and other issues, several
integrated systems expressed "significant concerns" about the House bill
in a letter last week to Rep. Ron Kind, D.-Wis., one of the sponsors of
the value-index legislation. They said the legislation doesn't meet the
goal of "compensating for quality rather than quantity."
Nicholas Papas, spokesman for the Department of
Health and Human Services, said the administration is pleased with the
legislation and is "confident there will be opportunities to keep
working with the committee leadership to refine the proposals that are
emerging."
Other ideas backed by the integrated health
systems—such as "bundling" payments to doctors and hospitals together
for a patient's illness to encourage more efficient care—may get backing
only as pilot programs. The Senate Finance Committee bill, which may go
further, hasn't been released yet.
The debate about Medicare, the federal health
program for the elderly, is taking on new urgency amid growing questions
about whether the health overhaul legislation would meet Obama's goal of
slowing costs, or "bending the curve." Last week, Douglas Elmendorf,
director of the Congressional Budget Office, said that the legislation
would add to the federal deficit.
Obama, in his weekly address on Saturday, countered
that by improving quality and efficiency, "the reforms we make will help
bring our deficits under control in the long term.” And the White House
renewed its push for shifting control of Medicare spending from Congress
to a proposed independent commission—something it said would restrain
costs over time.
Other Hospitals Worry
Medicare accounts for 22 percent of all U.S. health
care spending and is often emulated by private insurers. It has enormous
influence over how health care is paid for in the U.S.
But it's unlikely that Congress will restructure
its payment system any time soon, experts say. One reason is that the
integrated health systems pushing for a rejiggering make up just a
sliver of all the nation's hospitals. Another is that most institutions
aren't ready to be more financially tied to their doctors or fear a
payment change would hurt them.
About two-thirds of hospitals lose money on
Medicare patients and many hospitals worry "they’ll lose even more money
under payment reform," said Len Nichols, director of the Health Policy
Program at the New America Foundation, a Washington think tank.
In most communities, doctors work independently of
their local hospitals and are paid by Medicare and most private insurers
under fee-for-service arrangements. Hospitals, meanwhile, are typically
reimbursed based on patients' diagnoses, so they get paid for doing less
for each patient. The incentives are sometimes at cross purposes, and
aren't based on how well patients do.
|
Mayo Clinic said it lost about $840 million
by treating Medicare patients, money it had to make up by
treating privately insured patients. |
By contrast, Mayo doctors are paid salaries, and
don't get paid more for providing more care. And they take a team
approach to coordinating care, working to reduce unnecessary tests and
office visits and using electronic health records to monitor patients'
outcomes. These steps save money, but Mayo itself doesn't benefit
financially.
Based on their experience, Mayo and others say that
"global" or "bundled" payments would prod all hospitals and doctors to
improve and streamline their care. Under this idea, providers get a flat
fee for treating a patient’s illness or handling a patient’s condition
over time. For example, the government would pay a single fee for a
patient’s hip replacement to cover the hospital stay, surgery and
rehabilitation at home or in a nursing home. The fee would be higher for
providers who delivered better care at lower cost.
“By having Medicare make a single payment to a team
of providers, you change the culture and changing the culture is what
allows the hospital and multiple doctors to act as a team as opposed to
acting independently,” said Poulsen of Intermountain Healthcare.
Many hospitals are worried about proposals to
“bundle” payments because of the possibility that managed care companies
would end up controlling Medicare dollars previously paid directly to
them. “Who gets the bundle is the key question,” said Linda Quick,
president of the South Florida Hospital and Healthcare Association,
which is based in Hollywood, Fla. and represents about 50 hospitals.
Overhaul proposals by the House Democrats and the
Senate Health Education, Labor and Pensions Committee call for pilot
programs to test new Medicare payment systems, including a new type of
provider arrangement called “accountable health organizations,” groups
of hospitals and doctors that get paid based on how well they meet cost
and quality targets. But the programs don’t go far enough fast enough,
the officials from integrated health systems say.
“There is not sufficient attention being paid to
the fundamental problem of reforming Medicare,” said Oliver Henkel,
chief government relations officer at the Cleveland Clinic. “We don’t
yet see enough meat on the bones of Medicare payment reform.”
Payment Changes Lag
The last major Medicare payment change for
hospitals was in 1983, when Medicare switched from paying hospitals a
fee for each service to a fee based on a patient's diagnosis, said
Poulsen of Intermountain Healthcare. "That was a great first step, but
we've yet to make a second," he said.
Integrated health systems also are taking aim at
the tremendous regional variation in Medicare spending. The program
spends about $6,600 a year per enrollee in Minnesota compared to about
$15,000 in southern Florida. The integrated systems, a number of which
are in the Upper Midwest, want those disparities reduced, but such a
change would likely draw strong opposition if it came at the expense of
high-cost areas like New York and California.
Quick of the Florida hospital group said that her
member hospitals expect to get paid less after a health care overhaul,
but that she doesn't expect "at the end of the day anyone will get paid
more."
Both the American Medical Association and the
American Hospital Association say they favor additional study of new
payment strategies, rather than any major revamping now.
That's the approach Congress seems to be pursuing.
In addition, lawmakers are on track to approve across-the-board federal
payment reductions of $155 billion over 10 years for hospitals,
reflecting a deal reached recently by major hospital groups, the White
House and Senate Democrats. That agreement assumes that the hospitals
will see increased revenues as reform legislation results in fewer
uninsured Americans, whose care is now a financial burden.
Mayo and similar health systems object to the
sweeping cuts. "Across-the-board cuts will be harmful to everyone and we
think it is particularly bad to penalize the high-value organizations,”
said Jeff Korsmo, executive director of the Mayo Clinic Health Policy
Center.
“We will have to violate our values in order to stay in business
and reduce our access to government patients.”
As a result of low reimbursement rates, Mayo’s
Arizona operations in 2007 stopped accepting new Medicare patients
seeking primary care. About half of Mayo’s patients are on Medicare.
Last year, Mayo said it lost about $840 million by treating Medicare
patients, money it had to make up by treating privately insured
patients.
|
This
information was reprinted from
kaiserhealthnews.org with permission from the Henry J.
Kaiser Family Foundation. You can view the entire Kaiser
Daily Health Policy Report, search the archives and sign up
for email delivery. © Henry J. Kaiser Family Foundation. All
rights reserved. |
