Medicare lacks tools, incentives to enforce evidence-based coverage policies

According to new research at the University of Minnesota, Medicare lacks sufficient information in most cases to apply a policy and does not have the resources or incentives to acquire the information.

Medicare appears reluctant to aggressively enforce policies that affect medical judgments, even if those decisions are inconsistent with scientific evidence.

By law, Medicare must pay only for items or services deemed “reasonable and necessary.” Medicare has developed scientifically sophisticated, evidence-based coverage policies to evaluate when selected medical procedures will be covered, and if so, describes specific clinical conditions and other factors necessary for payment. Medicare contractors, the private entities that process claims for payment, are directed to apply these policies to determine when to pay or deny a claim.

“There has been much discussion among providers, payers, and policymakers to encourage evidence-based medicine as a means to improve quality and reduce costs,” said Susan Bartlett Foote, J.D., M.A., the principal investigator, and University of Minnesota professor in the School of Public Health's Division of Health Policy and Management. “Our research shows that there are considerable barriers to achieving that goal in Medicare.”

The bottom line is that Medicare simply doesn't have the tools to make evidence-based medicine work, Foote said.

“Policymakers assume that Medicare's coverage policies change physician behavior. Our research shows that they don't.

“Implementing coverage policies offers a promising way to reduce geographic variations and manage diffusion of technology. Unfortunately, despite Medicare's great strides in the area of evidence development, we are falling short on the implementation side.”

Foote also offers some solutions:

Improve information: Contractors must have all necessary clinical information to evaluate whether a claim is in compliance with the policy. Policymakers should convene experts to redesign claims forms and coding, or other mechanisms to acquire supplemental information.

Align incentives: Contractors are rewarded for efficient low-cost claims processing, not for enforcement of coverage policies. Policymakers need to modernize the role of contractors to incent them to pay only for value.

Invest in compliance: Contractors need additional resources to request and review patient charts in the absence of information on the claim. A highly effective and visible effort is necessary to inform providers that policies will be enforced.

Improve education: Contractors must educate providers on the importance of coverage policies. Patients need better information so they know how the science affects them as well.

Foote concludes, “Public and private payers are often reluctant to second guess doctors and other professionals. We have seen abuses where payers deny needed and necessary care. When Medicare was passed in 1965, professionals were assured that the program would not interfere with the practice of medicine. But Medicare is also directed not to pay for procedures unless they are reasonable and necessary. There's an inherent tension between these goals. However, in an era of rising costs and questionable quality, we must refine tools to ensure that patients get care based on scientific evidence.”