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Higher Quality Should Be Goal of Medicare Payment Reform

"Congress faces a challenging dilemma in considering how much to pay physicians," Stuart Guterman, senior program director for the Fund's Program on Medicare's Future, told the U.S. House Energy and Commerce Committee in invited testimony at a July hearing on Medicare physician payments. According to Guterman, the current "sustainable growth rate" mechanism used by the federal government offers no control over the volume and intensity of care provided by individual physicians, and in fact may create incentives to increase volume and intensity to offset reductions in fees.

Guterman urged Congress to consider cost reforms in conjunction with measures to improve the quality of care. Medicare's administrators must ensure that beneficiaries get the best possible care, and the program gets the most value for its investment.

Innovative payment mechanisms can be used to improve the quality of beneficiary care. Pay-for-performance initiatives launched by public and private payers show promise; indeed, results from some of these programs indicate that it is possible to achieve a higher level of quality at lower cost.

Other tools, such as information collection and dissemination, can help improve performance by securing better cooperation and coordination among health care providers. Supporting providers through entities like Medicare's Quality Improvement Organizations can also enhance their ability to improve.

Medicare can be an important platform on which to build performance improvements in the health care system, Guterman said. He suggests devoting greater resources to research on best practices, implementation of quality standards, and the development of tools to improve the performance of the health care system for Medicare beneficiaries and all Americans.

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