Editorial: Hinge pay on outcomes to trim cost of Medicare
It has come to the attention of Congress that comprehensive health care reform will be expensive. Expensive enough – $1 trillion or more – to dash President Barack Obama’s and federal lawmakers’ hopes of enacting legislation this year.
One objective of health care reform is to curtail the cost, of course. But extending access to some 50 million more people is a big upfront expense, complicated by a shortage of primary care physicians.
So rather than abandon the reform effort, policymakers should focus first on achieving the savings it will take to make expanded coverage plausible. Starting where? How about by revamping the Medicare reimbursement system that President George H.W. Bush’s Medicare adviser, Robert Pear, has called “hands down the most broken part of Medicare”?
Physicians in Washington and Idaho know what he means. They have been remarkably efficient health care providers as measured by Medicare expenditures per patient. But they pay a price under the fee-for-service foundation on which reimbursement is based.
The Dartmouth Institute for Health Policy and Clinical Practice has been tracking such expenditures for 20 years and has revealed wide geographical disparities in reimbursement rates, with no indication that quality of care matches payment levels. In 2006, for instance, the average Medicare cost per patient was $8,304 nationwide, but $7,110 in Washington state and only $6,975 in Spokane.
In McAllen, Texas, highlighted this month in a New Yorker article as the most expensive Medicare area in the country, the figure was $14,946.
In many cases, costlier areas produce worse medical outcomes.
Surprisingly, physician fees haven’t soared. But per-patient usage has: more doctor visits, more and longer hospital stays, more surgery and more tests and other medical procedures – each generating a separate bill.
The Dartmouth Institute contends that Medicare would save tens of billions of dollars a year if U.S. health care as a whole was modeled on systems such as that at the Mayo Clinic in Minnesota. Sen. Maria Cantwell, D-Wash., estimates Medicare would save $55 billion a year if it simply replicated what happens in Washington state.
Therefore, she is sponsoring legislation aimed at just that outcome, and as a member of the Senate Finance Committee, which is working on the Senate’s version of reform, she may be in a position to make something happen.
No one bill will fix health care. The needs are many and complex. But expansion of coverage will be impossible until expenses are under control. Basing reimbursement on outcomes rather than procedures would be a promising first step.