Medicare Blog 6: Committing to the Course and Paddling Hard -Part 1

So far in my blog series, I have talked about the serious imperative our nation has to change the course of Medicare.

I also discussed several parts of a political construct that would allow political action. Now I would like to frame up, at a high level, what a solution should look like from my perspective.

A Medicare System that would be solvent through the 21st Century would have three characteristics. First, value-of-care would replace volume-of-care as Medicare’s best-rewarded virtue. Second, Medicare parts A and B would operate like Part D. Third, each generation would carry its share of the load.

In Medicare, our most expensive patients are those with multiple chronic diseases. The combination of ailments compounds to magnify each other. The same is true with Medicare. Medicare has three chronic ailments that are defeating the system.

The first, I call Silo Syndrome: each medical action is paid for separately. That provides little opportunity or incentive for coordination among providers and it often results in bad referral decisions, sloppy hand-offs, duplications, fraud, and poor quality of care. The result is inappropriate care and unnecessary cost.

Medicare needs to use its power as the nation’s biggest payer to change this. It’s not only wasteful but it encourages unnecessary care and expensive medical mistakes.

The second category is Quality Indifference: doctors, hospitals and other medical providers are paid at the same rates for low-quality or high-quality performance. Physicians who take measures that prevent acute flare-ups of chronic conditions are paid no more than those who don’t. Skilled nursing facilities that prevent unnecessary re-hospitalizations are paid the same as those that don’t.

In fact, poor quality is often rewarded. When patients contract preventable hospital infections, costs skyrocket and in most settings, the hospital profits from it. Not only is our current system quality-indifferent, we reward poor quality!

Patients deserve to know the quality of the care they receive according to standards set by the experts. The information should be transparent, and most of all, we should reward quality.

This leads naturally to the third category of Chronic More: there are no mechanisms or incentives for controlling the volume and intensity of care. Not for the patient or the provider. The entire process rewards volume.

Doctor and hospital incomes rise as more units of service are ordered. If those units are more costly, they generate even more revenue.

It is the same for a patient. Our current payment system provides no means for a patient to know the cost and little reason to care.

These volume incentives need to be treated with strong doses of information transparency and by building incentives for high quality, efficient care directly into our payment structure. A variety of policies would force these changes, and luckily the infrastructure of quality metrics and strategies for rewarding value are available. It just takes Congressional action.

In my next entry, I will explain how changing Medicare Parts A and B to be more like Part D can drive quality up and cost down. I will also elaborate on how each generation can do its share to ensure benefits for future generations.

Comments

Dear Secretary:

All three valid points. If Medicare adopts my suggestions, I am certain that it will significantly reduce the current problem with overutilisation of services and volume-dependent practices. Here are my suggestions for Medicare reform:
1) Create a fully negotiable and transparent financial/reimbursement system recognising the fact that physician practices are in fact small businesses and need to be worked with on a level playing field. This way each patient is able to select his/her physician/hospital/pharmacy, etc. based on actual costs (not "allowables", etc.)
2) Eliminate all "automatic" trigger mechanisms which introduce and perpetuate a sense of uncertainty in medical marketplace (not knowing what a business' cash flow is 3 months in the future is not acceptable). Even Walmart would not do business with the government if confronted with such uncertainty.
3) While considering incentives for high quality service, first have Medicare reps visit those practices/hospitals that already provide high quality care; use these as base standards to asses other practices/hospitals, etc. Avoid using criteria such as being used under current PQRI program as surrogates of high quality - they can be fudged even by non-clinical workers. If Medicare wants to learn about true quality care, it must do a more extensive review, which will involve a lot more resources than PQRI.
4) As you know, the bulk of costs occur due to chronic diseases. So Medicare must freely employ methods proven to increase efficiency and effectiveness of managing chronic diseases. Current method of reimbursing "episodic care" is utterly inappropriate. There must be policy to reimburse "continuous care" for chronic diseases. This will result in long term cost reductions.

Finally, the only area where the government can be effective, in my opinion, is to educate the general public that they cannot expect unlimited care (especially end-of-life care). Setting up legal protections for physicians to use logical judgement in making end-of-life care decisions will go a long way in reducing potentially futile care in such circumstances.

Thanks for the blogs, Mr. Leavitt.

Posted by: Arvind Cavale | June 24, 2008 at 11:41 AM

Dear Secretary Leavitt,
Why is there not even one nurse on the 13 member advisory committee that will develop the Healthy People 2020 goals? The World Health Organization includes nursing representation when planning is needed for a nation's health care goals. Why does the United States omit nursing when nurses play a vital role in public health? To name one, Erin Maughan, PHD, RN Brigham Young University, has done international research on public health. Many many other nurses nationwide are highly qualified to be on this advisory committee and not assigned only to a working group. Please reconsider the make up of this very important advisory committee.
Thank you.

Barbara Heise, PhD, APRN, BC
Assistant Professor
College of Nursing
Brigham Young University
Provo, Utah
801-422-6352

Posted by: Barbara Heise, PhD, APRN, BC | July 06, 2008 at 12:44 PM

Mr Leavitts really should look deeper into the senior citizens needs to have access to quality care before he makes arguments about spending too much $$ on Medical Equip that can be purchased at a fraction of what is being charged. It is not a "Good Stuff Cheap" industry. You get what you pay for at his so called fraction of the cost. Would he want his parents to get cheaper Medical Equipment at a fraction of the cost

Posted by: bRIAN | July 09, 2008 at 11:37 AM

Mr Leavitts: I Just what to point this Comment I Just Saw about You!

___Posted by: Barbara Heise, PhD, APRN, BC | July 06, 2008 at 12:44 PM

Mr Leavitts really should look deeper into the senior citizens needs to have access to quality care before he makes arguments about spending too much $$ on Medical Equip that can be purchased at a fraction of what is being charged. It is not a "Good Stuff Cheap" industry. You get what you pay for at his so called fraction of the cost. Would he want his parents to get cheaper Medical Equipment at a fraction of the cost

Posted by: bRIAN | July 09, 2008 at 11:37 AM

So what Can you say about it?

Posted by: Frank | July 09, 2008 at 01:45 PM