Sebelius Pushes for Medicare to Pay Based on Quality, Value

In 11th hour negotiations last weekend with representatives from the White House and several House members who belong to the Quality Care Coalition, Health and Human Services Secretary Kathleen Sebelius presented a letter indicating that Medicare may be soon moving away from a fee-for-service system to a more quality- and value-based system.

In the letter, Sebelius promised steps to improve Medicare reimbursement rates for physicians and hospitals in regions of the country—particularly the Midwest and Pacific Northwest, where providers say they have been paid less for the delivery of care that may be more efficient—but smaller in volume.

In the letter, she called for:

• An Institute of Medicine (IOM) study, beginning in April, to reform the Medicare system to address geographic disparities for doctors and hospitals; implementation of IOM recommendations would be by December 2012.
• An IOM study, beginning in April, based on earlier House passed language, making recommendations to move toward high-quality, lower-cost care across the healthcare sector; implementation of the recommendations, as part of the new Independent Payment Advisory Board, would be by 2014.
• Additional direction to the new Center for Medicare and Medicaid Innovation to further test innovative models to incent high-quality, low-cost care across the provider spectrum.
• A commitment to convene a National Summit on Geographic Variation, Cost, Access and Value in Health Care in September of this year.

The 30-member Quality Care Coalition includes representatives primarily from Midwestern, Pacific Northwest, and rural states, who have complained that they have been strapped with low reimbursement fees over the years while often providing more efficient care.

As part of the reconciliation process, the House Rules Committee included on March 20 a new section, "Payment for Qualifying Hospitals," that would provide additional funding from the Medicare Hospital Insurance Fund for hospitals located on counties within the lowest quartiles of payment.