Last week, I spoke with Dr. Mark McClellan, the CMS administrator during the George W. Bush administration now at the Engelberg Center for Health Care Reform at the Brookings Institution. The center recently issued its own laundry list of possible pay-fors (See p. 30).
The plan is a well-thought-out mix of payment reforms and adjustments to the Medicare benefits plan that would not only pay for the doc fix, but put all providers—physicians, hospitals and post-acute-care providers—on a path toward reducing the system's use of fee-for-service medicine.
The single biggest change focuses on reorganizing how the CMS pays for post-acute care, which in recent years has been the fastest growth area within Medicare. Several recent reports have documented sharp regional variations in the use of skilled-nursing facilities, rehab hospitals and home healthcare agencies. Focusing on this sector has tremendous potential to generate substantial savings for the system.
Under the Brookings plan, hospitals would receive a set payment for the post-acute care of each patient, adjusted for severity, and then be held financially responsible for holding spending below that bundled payment. No longer would the CMS promulgate rules on what it will pay and when it will pay it in different types of post-acute settings. The caregivers will decide what kind of service the patient needs or prefers. The price will be a market-based negotiation between the hospital and the post-acute-care providers in its network.
This will create a huge financial incentive for all hospitals to closely coordinate post-acute care, not only the ones that have opted into experimental accountable care organizations. It will force them to pay much closer attention to the quality of care and the cost of the services offered by post-acute-care providers. And it should result in happier patients, since they usually prefer shorter nursing home and rehabilitation hospitals stays and more home health visits, which also happen to be the less costly alternatives.
Reforming post-acute care would pay for less than half of a permanent doc fix. The Brookings plan also calls for major changes in rules for Medigap plans and beneficiary copays to encourage smarter choices. That's likely to generate tremendous opposition from senior lobbies such as AARP, which financially benefits by putting its name on one of the most popular Medigap plans.
It takes real political courage to enact lasting change—more than the bipartisan bonhomie that generates headlines. Minor changes in physician incentives such as those in the bipartisan bill repealing the SGR will never generate enough money to pay for a permanent freeze in pay, much less the slightly higher payments for office visits and procedures included in the bill.
If Congress really wants a permanent SGR fix this year, it needs to throw systemwide payment reforms and insurance plan reforms into the mix.
Follow Merrill Goozner on Twitter: @MHgoozner
