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Medicare Fix Remains Elusive

 |  By Margaret@example.com  
   August 01, 2012

Medicare turns 47 this week. Here's to another 47…maybe.

What began as a program designed to help seniors and disabled persons with the cost of healthcare has exploded into what some would describe as a costly, complicated, ineffective magnet for fraud—an example of bureaucracy at its worse.

As the pace of healthcare reform quickens under the Patient Protect and Affordable Care Act, one thing is constant,  the inability of Congress to fix Medicare.

How to fix the entitlement program overseen by the Centers for Medicare & Medicaid Services has been the subject of intense debate among stakeholders and policymakers who have been searching for the elusive secret of how to balance Medicare funding against the growing demand for healthcare services and the need for providers to be sufficiently reimbursed for those services.

Congressional hearings on Medicare come and go. In recent months most have focused on the sustainable growth rate formula. The SGR, which was part of the Balanced Budget Act of 1997, was designed to help control Medicare costs by setting annual spending targets. That worked for a couple of years until it became apparent that significant cuts in physician reimbursements would be required to help reduce spending.

For about 10 years now Congress has stood firm in refusing to enact any cuts to physician reimbursements, choosing instead to defer the cuts for one or two years at a time. That was okay in the pre debt-reduction era, but now everyone seems to want Congress to actually do something. Will that happen?

The House likes to hold hearings about healthcare. It's good theater, but sometimes not much more.

Last month a House committee gathered a group of physician representatives to talk about the SGR formula and potential solutions. It seemed promising, and might have been, if Rep. Michael Burgess (R-TX) hadn't announced at the outset that he would introduce legislation to once again delay implementation of the SGR formula.

He wants to delay the cuts to physician services for another year to give the Congress time to "fully vet and evaluate" SGR replacement proposals. Huh? Wasn't that the purpose of all the recent hearings and discussions? It doesn't look like anything serious will happen there for a long time.

Medicare discussions on the Senate side just seem a lot more purposeful in seeking a real solution. Everyone should be paying attention to a series of roundtable discussions hosted by Sen. Max Baucus (D-MT), who is the chair of the powerful Senate Finance Committee. What seems to be taking place there is an honest, roll-up-our-sleeves-and-get-to-work effort from Republicans as well as Democrats.

Look at what Baucus has done so far. He has invited former Medicare administrators (May), representatives from the private sector (June), and physicians (July) to the committee to offer their ideas on how to resolve the physician payment issue and insure Medicare's future.

The roundtable sessions covered a wide range of topics, including models of care, specialty reimbursements, and quality and efficiency. There was agreement that the SGR doesn't work and needs to be repealed; that whatever new payment plan is developed needs to support patient-centered and coordinated care with an emphasis on quality; and that the wheel doesn't need to be reinvented because there are plenty of examples of providers and payers successfully incorporating new payment structures that could be modeled by Medicare.

It doesn't look like a single solution will percolate to the top, but let's look at the big ideas presented by each group during their roundtable meetings.

Former administrators for the Centers for Medicare & Medicaid Services or its predecessor, the Health Care Financing Administration Gail R. Wilensky,PhD; Bruce C. Vladeck, PhD; Thomas Scully; and Mark McClellan, MD and PhD, provided a letter to the finance committee laying out their recommendations:

  • The SGR must be replaced by a more practical system with administrable limits on total Medicare physician outlays. In the short term, that could mean freezing most fees at current levels while addressing the need for payment adjustments for primary care and rural providers. Over the long term, a benchmark or a formula could be used to identify growth targets.
  • While there should be alternatives to fee-for-service payments for physicians, participation should be voluntary. Physicians who remain in the traditional FFS payment system should be subject to a reformed spending limit.
  • The calculation of FFS payments should reflect evaluation, care coordination, and other cognitive services.
  • An independent entity with broad-based representation should be created to advise CMS on RVU (relative value unit) and physician payment reforms.
  • CMS should experiment with and implement the bundling of appropriate FFS CPT (current procedural terminology) codes into bundled payments to appropriate physicians or physician groups.
  • To reduce costs and improve quality physicians participating in Medicare must receive timely and usable data from CMS, which needs the resources necessary to improve its data systems, as well as its contractor's systems.

Private sector (Aetna, Blue Cross Blue Shield of Massachusetts, Humana, CareFirst BlueCross BlueShield, and Hill Physicians Medical Group) recommendations:

  • A holistic view of payment that integrates physician and institutional payment is necessary to counter fragmentation of care.
  • Any proposals to modify Medicare payment policy should be sufficiently flexible to allow for practice variations.
  • Payments to primary care physicians should recognize the role they play in developing and monitoring care plans for their sickest patients and reinforce the central role of primary care in helping members manage their health risks.

Physicians' (American Medical Association, American Academy of Family Physicians, Louisiana State University Health Science Center, Henry Ford Health System, and New Mexico Oncology Hematology Consultants) recommendations:

  • New models of care coordination and payment such as medical homes and bundled payments hold promise
  • No single payment system should replace the SGR formula, instead a blended payment system that combines FFS, care management fees, and quality improvement payments might be better.
  • For the treatment of chronic illnesses physician payment and incentives should reflect that outcomes are long term.
  • The Medicare payment system should be nimble enough to reflect changes in scientific understanding and physician practice standards.

There are good ideas out there to help shore up Medicare finances, improve care, and meet provider needs, but Congress needs to be willing to take those ideas and mold them into meaningful legislation. No need to reinvent the wheel. Settling this issue once and for all would be a nice birthday gift for the program.

At the end of each roundtable Sen Baucus has requested additional information from the participants. He hasn't promised to present legislation this year, but it's clear that the committee wants to do something more than just punt for another year.

Will that happen? The news the last couple of days isn't at all promising as Congressional leaders signal their intentions to delay big decisions until after the November elections. While the life of Congress may center around elections, in the healthcare world nothing has stopped.

Patients are still seeking care and physicians are still providing it, even under the cloud of wondering if Congress will ever fix the SGR formula problem.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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