Efforts to 'fix' Medicare payments at center of reform

Jul 20 2009

The Wall Street Journal reports: "A plan to end a program that would cut government payments to doctors is emerging as the flash point in the debate over whether President Barack Obama's effort to overhaul the health system would increase the federal budget deficit.

The proposal was crucial to winning support from the politically powerful American Medical Association -- but it has also made it tougher to argue that the health overhaul would pay for itself. ... Health and Human Services Secretary Kathleen Sebelius, appearing on NBC's "Meet the Press," said costs associated with the legislation could be reduced significantly if lawmakers included the administration's recommendation to bolster the power of the Medicare Payment Advisory Commission, or MedPAC, to set Medicare payment policies.

The Journal notes: "The White House, which has insisted the health overhaul wouldn't raise the deficit, said the $239 billion figure [from a CBO report on the House health bill] doesn't tell the whole story. One of the biggest costs of the House bill is a provision that would override a cost-savings measure imposed earlier this decade that calls for the government to cut the payments doctors receive for treating Medicare patients by 21% next year. The House proposal would instead give doctors a slight payment increase, at a total cost of $245 billion over 10 years, compared with cutting payments by 21%. ... The possibility of increased payments to doctors is likely to pressure them to swallow some type of cuts to help reduce the cost of the bill" (Adamy, 7/20).

Kaiser Health News also reports on payment reforms and President Obama's search for best practices, such as the Mayo Clinic in Minnesota and Intermountain Healthcare in Utah, which are known for providing high-quality, low-cost care. KHN reports: "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. ... 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."

KHN reports: "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. ... 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" (Galewitz, 7/20).