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Changing Medicare Payment to Help Improve Quality

By Mary Agnes Carey, CQ HealthBeat Associate Editor

September 16, 2008 -- Raising the Medicare reimbursement for primary care and having the program test the concept of a "medical home" for beneficiaries could help lead the way for major changes in the nation's health care system, experts told the Senate Finance Committee Tuesday.

Problems with the current health care system include a lack of care coordination, poor quality and high costs, witnesses said. Medicare Payment Advisory Commission (MedPAC) Chairman Mark E. Miller said the payment systems in Medicare's traditional fee-for-service program create separate payment "silos" that do not encourage care coordination.

"We must now move beyond those limitations—creating new payment systems that will encourage providers to change how they interact with each other," Miller said in testimony. "Providers need to increase care coordination and be jointly accountable for quality and resource use."

Panelists discussed the need to increase payments for primary care, stressing that the failure to do so is discouraging medical students from becoming primary care physicians, which they said is creating shortages of primary care doctors, family physicians, general internists, and general surgeons.

Payment disparities are encouraging medical students to enter the specialties of radiology, orthopedics, anesthesiology, and dermatology, "which in addition to being highly remunerative also support gentler lifestyles, usually without emergencies outside of regular work hours," said Robert A. Berenson, senior fellow at the Urban Institute.

Tuesday's session was part of an ongoing series the Finance panel has held to discuss the complicated issues involved in overhauling the nation's health care system. Previous sessions have focused on controlling health care costs, expanding access to care and improving quality.

Problems with the current health care payment system, which pays most often based on the number of services performed rather than on the quality of care delivered, causes patients to receive duplicative tests, "inadvisable prescriptions" and surgeries that cost thousands of dollars "only to be ignored when they leave the hospital," said Finance Chairman Max Baucus, D-Mont. Unnecessary and poor quality care costs wastes more than 30 cents of every health care dollar, or more than $600 billion a year, he said.

Glenn D. Steele Jr., president and CEO of Geisinger Health System, said its patient-centered medical home has reduced costs and improved medical quality. Staff "get to know the patients and their families, follow their care, help them get access to specialists and social services, follow them when they are admitted to a hospital, contact them to confirm that they are taking the appropriate medication dosages and are available for advice 24 hours a day."

Having the Medicare program broadly test the medical home idea, especially for beneficiaries with chronic conditions, would help assess if such programs would help reduce Medicare costs and provide better coordinated care, Miller said. Other payment changes MedPAC proposed in its June report to Congress include changing payments for hospital readmissions and bundling of payments for services around a hospital admission.

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