KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Some States Praise Language To Change Medicare Pay Formula

Some states such as Washington and Minnesota see benefit in changes to the Medicare pay formula.

McClatchy reports: "A health care bill taken up Tuesday by the Senate Finance Committee overhauls a Medicare reimbursement rate formula for doctors and hospitals that has long penalized Washington and other states with efficient health care systems, said Sen. Maria Cantwell, D-Wash. Cantwell, a member of the committee, and other Washington lawmakers have considered a change in the formula an essential part of any reform bill. The current formula rewards doctors for the quantity of patients they see and the number of procedures they order, rather than the quality of health care they deliver."

Estimates indicate the changes could result in Medicare savings of nearly $100 million a year, and could help decrease private health insurance premiums. "One of every five dollars spent on health care comes through the Medicare system, Cantwell said. Without the changes, she said, Medicare could be broke in 10 years. ... The change in the Medicare reimbursement formula was included in a revised bill that Sen. Max Baucus, D-Mont., the chairman of the committee, unveiled Tuesday. ... The reimbursement rates in some states with less efficient health care systems are nearly double what they are in Washington" (Blumenthal, 9/22).

MedPage Today reports that the Baucus bill "would incorporate a 'quality' metric into figuring out how physicians should be paid for treating Medicare patients. By 2015, physicians who provided low-value care would be penalized, and by 2017, all physicians would be paid based on the quality of their care, which would likely ... include factors such as whether the treated patient remained healthy during a given period. Paying for 'quality over quantity' has been a popular catchphrase during the current healthcare reform debate, but the Finance bill is the only one to tie quality measures to payments in actual practice."

"'Many of the proposals explore value-based purchasing,' Douglas Elmendorf, director of the Congressional Budget Office said during Tuesday's markup. 'To me, this is the most substantive reduction to [the cost of] Medicare that has been introduced.' ... The Secretary of Health and Human Services would have the difficult task of defining what quality is and how to incorporate that into a payment formula. In 2014, the secretary would 'provide, to the extent feasible, information to physicians about the value of the care they provide.' The new formula, which would officially apply to all physician payments by 2017, would also take into account 'appropriateness' measures that affect costs, such as demographic characteristics and baseline health status of Medicare patients" (Walker, 9/22).

The Columbian in Washington state reports that Cantwell said: "28 senators signed a letter to Baucus saying Medicare reimbursement reform was 'a must-have' in the America's Healthy Future Act of 2009" (Durbin, 9/22).

Meanwhile, MinnPost reports that Minnesota will also benefit from the new language. It reports on Medicare's fee-for-service model and notes: "The result is that states that provide fewer health care services - such as Minnesota, Wisconsin, North Dakota, Washington and Oregon - receive less money. At the same time, states that provide a greater volume of services - such as Florida, New York, California and Texas - receive reimbursements that can be more than double those paid to other states. The problem with the current model is that more services do not equal better outcomes and quality of care, according to research conducted over the last 10 years by the Dartmouth Institute for Health Policy and Clinical Practice. The issue, however, has been a nonstarter for years, in part because such politically powerful states as Florida, New York, California and Texas benefit from the current model" (Dizikes, 9/22).

Meanwhile, NPR reports on the Mayo Clinic, which supports the language on changing Medicare's reimbursement system. NPR interviews the president of the Mayo Clinic, Dr. Denis Cortese, who says that one of the key's to the clinic's success is paying doctors a fixed salary (9/22).

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