The Medicare Payment Advisory Commission told Congress that out-of-control Medicare costs are partly due to the program’s fee-for-service payment system, which rewards more — even redundant — care, but doesn’t provide incentives for improving care.
“Medicare’s payment systems do not embody incentives for providers to produce appropriate, high-quality care at an efficient price. Rather, incentives induce providers to provide more care, without encouraging cooperation or rewarding quality,” MedPAC chairman Glenn Hackbarth wrote in the cover letter to the nearly 300-page “Improving Incentives in the Medicare Program” report, submitted to Congress June 15.
“Part of the problem is that Medicare’s fee-for-service (FFS) payment systems reward more care — and more complex care — without regard to the quality or value of that care,” according to the report. “In addition, Medicare’s payment systems create separate payment “silos” (e.g., inpatient hospitals, physicians, post-acute care providers) and do not encourage coordination among providers within a silo or across silos. Medicare must address those limitations—creating new payment methods that reward higher quality, promote efficient use of limited resources, and encourage effective integration of care.”
To that end, the commission recommended several fixes, including:
• Monitoring payments, penalizing providers of low-quality, high-cost care and rewarding high-quality care providers;
• Discourage unnecessary care, including redundant or unneeded diagnostic tests, especially when doctors have a stake in an imaging equipment maker;
• Cutting the payouts to Medicare Advantage plans run by private insurers — which are expected to cost an extra $12 billion this year.
And while the recommendations aren’t binding, both President Barack Obama and lawmakeres on Capitol Hill have suggested giving MedPAC more power, the Wall Street Journal reported (subscription):
“Obama said he is open to letting Congress vote for or against commission recommendations, but not alter them. And … he said he’s open to expanding the commission’s role.
“‘In recent years, this commission proposed roughly $200 billion in savings that never made it into law,’ Mr. Obama told the [American Medical Assn.]. ‘These recommendations have now been incorporated into our broader reform agenda, but we need to fast-track their proposals, the commission’s proposals, in the future so that we don’t miss another opportunity to save billions of dollars, as we gain more information about what works and what doesn’t work in our health care system.'”
And West Virginia Democratic Sen. Jay Rockefeller is pushing to transform the commission into an agency with the power to set Medicare payments, according to the Journal.