Putting patients first: Advancing Medicare payment reform

Lawmakers from all sides are pushing to reform Medicare’s physician payment model toward a system that rewards performance over the volume of services provided. The drive for payment reform coincides with a general concern across the nation over inconsistent and sometimes excessive hospital pricing. (The royal baby’s birth on Monday cost $15,000; in the U.S., pregnancy care and birth are billed, on average, $30,000). Frustrations escalated this weekend, when a Washington Post investigation revealed the method used to value physician services in the United States. According to the Post, the American Medical Association (AMA) sets prices in a closed-door annual meeting, often inflating costs by as much as 100 percent.

ACHP member plans are ahead of the curve when it comes to implementing innovative policies that put patients first. Washington may be getting the hint.

In May, Pat Courneya, M.D., medical director for HealthPartners in Minneapolis, testified before the House Ways and Means Health Subcommittee to explain his organization’s transition into a system of care that holds physicians accountable to quality standards.

Last month, Tom Foels, M.D., chief medical officer at Independent Health in Buffalo, provided testimony at a hearing of the U.S. House of Representatives Energy and Commerce Subcommittee on Health. Independent Health has improved health outcomes by reforming payment for primary care physicians.

On Tuesday, the House Energy and Commerce Health Subcommittee advanced legislation drafted by a bipartisan group of members to redesign Medicare’s physician payment system by repealing the sustainable growth rate (SGR) and creating a payment system that links doctor pay to patient outcomes. More effort is needed before such legislation becomes law, but this is an important first step.

The U.S. spends far more on health care than its peers, with no evidence of better health outcomes. In February, Time magazine published a cover story by Steven Brill entitled “Bitter Pill: Why Medical Bills Are Killing Us” that examined why health care costs are so high in the U.S. Brill posits that about 25 percent of spending is due to overpayment, driven in part by lack of transparency in how much medical care actually costs.

In May, the White House released never-before-seen data showing the variation in hospital prices for basic services nationwide and revealing major inconsistency in Medicare payments.

-Sophie Schwadron
ACHP Intern