October 12, 2009 in City

Medicare’s shortcomings have some seeking revamp

Proposed changes would base payments on quality, not quantity, of services
Jacob Barker Correspondent
 
Dan Pelle photo

Medicare patient Nita Jensen had to switch clinics when her doctor retired and she became a “new patient.”
(Full-size photo)

Medicare payments

•Medicare paid physicians nationwide about 80 percent of the amount paid by private insurance for the same services, according to a report released earlier this year by the Medicare Payment Advisory Commission. The agency was created in 1997 to advise Congress on issues affecting the Medicare program.

•Spokane doctors receive less in Medicare fees per visit than the national average, ranging from 88 percent to 94 percent, according to a study commissioned by the Spokane County Medical Society.

About a month ago, Nita Jensen visited the Rockwood Clinic to make an appointment for a physical. Her physician there had just retired, and she wanted to find a new doctor at the clinic near her South Hill home.

Covered by a Medicare Advantage plan, the 88-year-old didn’t expect any hassles. So when the receptionist told her the clinic was not accepting new Medicare patients, Jensen was taken aback.

“I always thought they took some kind of oath,” she said. “But anyway, they’re not holding up to it.”

The receptionist gave Jensen a number for someone else at Rockwood, who helped her find a doctor at The Physicians Clinic of Spokane. But even there, new Medicare patients are subject to doctor approval.

Doctors’ hesitation to accept new Medicare patients has been a problem in Washington and Idaho for years. Doctors and their advocates say the Medicare reimbursement formula either costs them money or barely covers expenses.

Fewer than a third of primary care doctors in Spokane said they were accepting new Medicare patients, according to a study released this year commissioned by the Spokane County Medical Society. As baby boomers begin to enroll in Medicare, the problem could get a lot worse, according to Patrick Jones, one of the study’s authors and the director of Eastern Washington University’s Institute for Public Policy and Economic Analysis.

Medicare’s inability to cover physicians’ expenses in Washington has been a talking point for the state’s representatives to Congress, who often say the state is penalized for providing efficient care. But changing the formula requires overcoming the regional politics that protect it.

Sen. Maria Cantwell, D-Wash., may have found a way to minimize a formula fight in Congress. As a member of the Finance Committee, she was able to get language into the committee’s health care reform bill that would move Medicare toward a payment formula that rewards efficient, quality care rather than paying doctors for each service provided.

“We’re basically sticking a stake in fee-for-service and changing to an outcome-based system,” Cantwell said.

When the current Medicare reimbursement system started in the early ’90s, it used historical data to create a formula that pays doctors based on the “relative value” of a service and then adjusts it based on the cost of living in that area. Politicians from the Northwest say that because the area had already been providing efficient, low-cost care, it’s been penalized by the formula.

Under the Finance Committee’s proposal, the Department of Health and Human Services would establish guidelines for “quality outcomes” by 2012. The goal is to pay more to a doctor whose patient gets better after one test and one operation, than to a doctor whose patient gets well after three tests and two operations for the same condition.

“We are already better than the national average,” Cantwell said. “So we will do better and get more money than we are today.”

Also significant, Jones said, is the substantially lower number of services provided in the Northwest. That reinforces the claim that the area is penalized for efficient care, he said.

“There’s a real pattern across the northern tier states, where utilization rates are quite low compared to national averages,” Jones said.

‘A huge problem’

Dr. Gary Knox, associate medical director of the Rockwood Clinic and president-elect of the Spokane County Medical Society, said Rockwood tries to keep at least one primary care physician at each clinic who can accept new Medicare patients. But it depends on what the doctor’s current mix of patients is, he said, and Rockwood has had to put limits on how many new Medicare patients it can accept.

Knox sees the problem of access for Medicare patients “hitting a crisis point” in a few years.

In Idaho, too, many practices have limited new Medicare patients, and some have stopped seeing them altogether, said Idaho Medical Association CEO Susie Pouliot.

In a state with the lowest number of physicians per capita in the country – Idaho and Mississippi are tied at 2.1 per 1,000 people – that doesn’t leave many options for Medicare patients.

“It’s a huge problem, and the Medicare problem only exacerbates it,” Pouliot said. “With the payment rates as they are, it makes it harder for physicians to choose to go into primary care.”

Sen. Mike Crapo, R-Idaho, also sits on the Senate Finance Committee and doesn’t usually see eye to eye with Cantwell. But when it comes to changing fee-for-service, he’s on her side.

“The bottom line is, Medicare needs to be significantly reformed,” Crapo said. “We need to get to the point where the reimbursement rates more properly reflect the cost and the market realities for the providers, so we don’t have more and more providers refusing to provide Medicare service.”

Some areas of the country benefit from the Medicare formula, thus there’s an economic incentive to perform more tests and procedures. A study released last month by the Government Accountability Office measured the growth in the number of Medicare services provided in counties across the country to find areas that overused the system. There were few areas west of the Mississippi classified as “over-served,” while states like Illinois, Florida and Alabama were almost entirely over-served. The Northwest had no over-served counties.

Jones said he thinks it’s pretty clear that fee-for-service is nearly broken.

“If it were a universe of payers that were more or less paying the same, I don’t think you’d find that kind of behavior,” he said.

Ripple effect

Moving toward a pay-for-performance system has its own problems.

Tom Curry, CEO of the Washington State Medical Association, said he agrees with Cantwell’s idea in principle, but cautioned against implementing it too quickly. Defining quality will be an issue, he said, because if it’s not done right it could drive service disproportionately to healthy patients with a better chance of improved health. And increased reporting requirements could impose undue burdens on small practices, he said.

What’s more, changing Medicare’s payment system could affect the whole industry. Most insurers anchor their reimbursement to government-run plans like Medicare, Jones said. Crapo pointed out that federal policy usually has a significant impact on private sector activity.

Jones said it will take a lot of time and resources to make a new system work.

“If Medicare was compelled to do this, I think they could probably develop a (pay-for-performance) system,” Jones said. “But it won’t be easy.”

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