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A Different Way to Fix Medicare

By Kim Bellard, April 5, 2012

Two recent public statements made me both smile and despair about saving Medicare.

The first was President Obama’s recent attack on the budget proposal put forth by Rep. Ryan and passed by the House.  The President has no shortage of issues with that budget, but one of his specific attacks was the way Ryan proposes to reform Medicare, by turning it into a premium support program.  The President and many other leading Democrats charge that the approach would be the end of Medicare as we know it. 

“Ending Medicare as we know it” is a curious bogeyman.  The benefit design is overly complicated and archaically incomplete (forcing most senior to buy Medigap policies), the program is hyper-regulated, it has a terrible track record on combating fraud and abuse, and it is one of the biggest fiscal time bombs for the country.  This is what we are fighting to keep?  The thing Medicare does uniquely well is its near universality, and the existing program structure is not the only way to accomplish that goal.

The critics don’t seem to recognize that the Ryan proposal wouldn’t impact existing beneficiaries, and doesn’t really look all that different from the way they plan to have the under-65 obtain coverage through the health insurance exchanges under the Affordable Care Act (ACA).  By the same token, Republicans shouldn’t be too smug, because it’s hard to rationalize their support for delivering Medicare for all through the private market via public premium support with their bitter antipathy for ACA.  They are two sides of the same coin.  In both cases, the important question is whether the premium support/subsidies would actually be realistic – as opposed to becoming balancing items for future budget cuts. 

Short of a single payor system, it’s hard to see a long or even moderate-term future that doesn’t end up looking like something built on the Ryan-Wyden frame.  Medicare can only limp along so long in its current form.  It’s too bad the partisan politics cannot recognize the areas of commonality and work towards compromise. 

More encouraging was the recent call by nine physician specialty societies to reduce the use of many common tests and procedures.  Each society offered up five such tests or procedures.  “More isn’t necessarily better,” said Dr. Christine Cassel, president of the American Board of Internal Medicine.  “There are a number of things that not only aren’t necessary and potentially costly, but also have a risk of harm for the patient.”  The specialties are launching a “Choosing Wisely” campaign to encourage the various stakeholders to discuss potentially unnecessary care.

Well, kudos to the various specialty societies for finally admitting this, although one has to wonder: why now?  Perhaps they were worried that the IPAB, the review board charted by ACA to recommend ways to slow Medicare spending, would do this for them.  It would have also been nice had the call been accompanied by some teeth.  I.e., are they going to monitor the use of these tests and procedures?  Are there any consequences to physicians who continue to use them unabated?    

Which brings me to fixing Medicare.  We need to recognize that not all care that is delivered is appropriate – and not all physicians are equally good at delivering it.  Yet we continue to pay providers while largely ignoring those facts.   There are “value-based purchasing” approaches in ACA, but are far too modest to have significant impact.  Accountable Care Organizations may well be “the” answer, or at least part of an answer, but they still beg the question of how to identify more effective providers.  This is an area where the federal government can help:

  • Quality measures: Give the various medical specialty societies one year to propose how quality should be measured for each specialty, subject approval by CMS.  The societies would most likely object to both the mission and the timeline, but, honestly, they’ve had decades to think about it.  Whatever measures they propose would have to be quantifiable, be based on patient outcomes, and reflect at least in part patients’ views about their care.  They also must not discourage physicians from seeing sicker patients.
  • Measuring quality: once the measures are established, there should be a year to collect the applicable data for each physician.  Obviously, obtaining the data through EHRs would most likely be most accurate, but inability to collect data from a physician practice would not be an excuse.
  • Tiering physicians: Medicare payment levels would be based on tiers of performance.  I.e., the top thirty percent of physicians would be paid, say, fifty percent above the fee schedule for E&M codes, and perhaps an extra twenty percent on procedure codes.  The next thirty percent of physicians might get an extra twenty percent on E&M.  The next thirty percent would face a reduction of twenty percent on both E&M and procedure codes, and the bottom ten percent (and practices not reporting) would also receive the twenty percent cut, but also would be on “probation.”  Two continuous years of bottom ten percent performance would cause them to be ineligible for Medicare payments.
  • Public disclosure: The performance results and tiers of physicians would be readily available and disseminated to Medicare beneficiaries, who hopefully would use them to seek out better performing physicians.  Ideally, Medicare would change its coinsurance so that beneficiaries using higher tier providers pay lower copay amounts (since the payment levels – and thus the corresponding coinsurance amounts – would be higher). 

Of course, the same approach could, and should, be applied to hospitals and other Medicare providers.  There is an implicit assumption that higher quality providers are not also higher cost providers, although that has not been solidly demonstrated.  Cost/benefit could be part of the metrics, but with the specter of rationing and “death panels,” we may not be ready for that. 

Personally, I’d also wipe out the Part A, Part B Part D distinctions and institute a more modern, comprehensive design with unified deductibles and coinsurance, as well as the unlimited maximums ACA imposes on private plans.  The advisability of Medigap policies has to be questioned as well.  Those policies reflect seniors’ desire to limit their exposure, but may end up protecting them a little too much.  Having consumers face some direct financial consequences to health care choices is not a bad thing, as long as those consequences have appropriate limits. 

I have no doubt that such a change would be a tsunami for our health care system, with both intended and unintended consequences.  We probably would not get it entirely right straight out of the gate.  I also have no doubt such proposed changes would meet with fierce opposition from lobbyists and Medicare loyalists.  It’s hard to argue against pay-for-performance in principle, but they could fairly point out that we have neither the desired measures nor effective mechanisms with which to collect them.  Those may be valid points, which simply underscores the point: why not? 

American politicians like to brag that we have the best health care in the world.  It may well indeed be available here, but no one can plausibly claim it is uniformly distributed or easy to find.  Proximity and familiarity cast a rosy glow over local providers.  We can and should do better.  So let’s use the big Medicare stick to finally start measuring and paying for better performance.  

Reader Comments (1)

Interesting read on fixing the problems several people experience with medicare supplemental insurance.

May 18, 2015 | Unregistered CommenterPlan Medicare

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