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Health Care Policies Focusing on Quality Instead of Volume, Official Says

By Melissa Attias, CQ Roll Call

February 28, 2013 -- Policies aimed at moving the health care delivery system toward a focus on value rather than volume of services are showing signs of progress, an Obama administration official told the Senate Finance Committee last week.

Jonathan Blum, the head of Medicare at the Centers for Medicare and Medicaid Services, pointed to four pieces of information that he said are reasons for optimism. But Finance Chairman Max Baucus indicated that he wants his panel be kept in the loop as the new efforts are implemented and to work out a system to share interim results.

"We want to keep informed and, frankly, just keep your feet to the fire," said Baucus, D-Mont.

As the first of his four points, Blum said there are more than 250 accountable care organizations in operation that serve more than 4 million people in Medicare. The model brings teams of doctors and other providers together to coordinate care and allows them to get a share of the savings if they provide high-quality care using less money.

Blum also noted that hospital readmission rates are starting to decrease. The 30-day readmission rate fell to 17.8 percent in the last quarter of 2012 after varying between 18.5 percent and 19.5 percent for the past five years, according to his written testimony.

In addition, Blum said 37 percent of the people enrolled in Medicare Advantage—or private health plans in Medicare—are in a four- or five-star rated plan, with five stars representing the highest quality. Four years ago, that number was 16 percent, he noted.

But Blum said he was most excited that the growth rate of Medicare spending per beneficiary has been historically low for the past three years.

"To be sure, we have more work to do, but the work to date and the data that we are seeing should give us great hope that we can bring Medicare to sustainable financial footing and to improve the quality of care," said Blum, who is the acting principal deputy administrator of CMS and director of the Center for Medicare.

In response to a question from Baucus, Blum later noted that while he thinks the new payment policies and care models are producing results, the challenge is how to assign cause and effect. He also said many projects were started in the last one to two years and that they expect it to take two to three years for the results to be fully seen.

Senators from both parties also used the hearing to quiz Blum about a number of issues related to Medicare and the 2010 health care law (PL 111-148, PL 111-152), including payment reductions to Medicare Advantage that CMS is considering. Orrin G. Hatch of Utah, the top Republican on the Finance Committee, said external estimates say the combined effect of the impending budget sequester, the health care law's cuts and higher taxes, and other policies will cause at least an 8 percent cut to the program in 2014.

Blum said part of the reason that reduced rates are being proposed is that overall Medicare spending is lower. He also maintained that Medicare Advantage enrollment has grown since passage of the overhaul and that premiums have decreased.

Hatch, along with House Energy and Commerce Chairman Fred Upton, R-Mich., and House Ways and Means Chairman Dave Camp, R-Mich., recently sent a letter to CMS Acting Administrator Marilyn Tavenner about the payment issue. The Republicans outlined a number of concerns and asked for a written response by March 15.

During the hearing, Republican Sen. John Thune of South Dakota also questioned why the so-called Independent Payment Advisory Board is necessary given the initiatives that CMS is implementing to improve outcomes and reduce costs. The board was established under the health care law to make cost-cutting recommendations if Medicare spending exceeds target growth rates.

Blum said he couldn't speak to the board directly because it's not part of CMS, but he maintained that it is helpful to have pressure from boards and Congress to keep spending low.

"The pressure needs to stay on," Blum said. "There are multiple ways to receive that pressure."

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