A group of health CEOs want to end Medicare fee-for-service payments

Jun 13 2009

A group of more than a half dozen CEOs from some of America's largest health care providers on Friday called for an end to fee-for-service payments under Medicare, and for incentives to create administrative efficiencies to lower costs to help pay for America's health care reform.

The CEOs, from companies including Denver Health, Catholic Healthcare West and Blue Shield of California, held a forum Friday where they detailed steps their organizations have taken to become more efficient at saving the health care dollars, maintaining that upwards of 30 percent of the resources spent on health care in the United States are wasted because of a lack of quality and failure to coordinate care. Their report was released in a white paper, "Realiging U.S. Health Care Incentives to Better Serve Patients and Taxpayers."

To curb the systemic waste, the group pressed for an end to Medicare's fee-for-service payment method. It also suggested reform efforts that would hold providers accountable to cost and quality standards and build bundled payments structures to pay for health outcomes instead of the current system where physicians are paid for what type and how many procedures they perform.

The forum featured a short introduction by White House health care czar Nancy Ann DeParle, who commended the CEOs for their efforts before she went back to the Senate to work with key House and Senate members on reform plans.

"You're putting your money where your mouth is by doing the hard work of identifying ($500 billion) to $600 billion in savings that can be achieved in Medicare alone over the next 10 years if we really put our minds to it," she said. "We embrace a lot of the ideas that you have here, such as developing and transitioning towards bundled payment models, which is part of the president's proposal."

"We especially support creating clear incentives for providers for the people who deliver care to focus on quality and efficiency," she added.

Among the more than a dozen recommendations, the CEOs proposed to reform medical malpractice laws to protect providers who embrace quality and efficiency standards. They also called for greater investment in health information technology.

The group also supports health insurance exchanges or marketplaces to help consumers choose a coverage plan that's right for them. They endorse requiring providers to stop discrimination based on pre-existing conditions, subsidizing some care and mandating that every individual American carry insurance. Opponents are worried that exchanges are the first step on the track of government paying for and providing all health services.

Patricia Gabow, CEO of Denver Health, detailed the ways her company has used integrated systems to improve care and reduce cost. Health care, she said, is an information business. Inpatient charges at Denver Health, Gabow said, are much lower because of health information technology and integrated systems. The average inpatient charge to Medicaid per day at Denver health is $5,835 compared to $8,491 for all of metro Denver.

"Any HIT won't work, it has to be appropriate and effective," Gabow said.

Len Nichols, director of the New America Foundation's Health Policy Program, said information is the best ally of the patient, the physician and the payer. Any reform won't work unless patients buy into the product, he said. "It doesn't work unless the patient has total confidence," Nichols said. "This country won't adopt anything where at least a large majority of people feel pretty comfortable."

By Andrew Villegas, The Henry J. Kaiser Family Foundation