Conference Calls for Changes in Medicare/Medicaid

Published March 1, 2005

The second annual World Health Care Congress convened in Washington, DC on January 30-February 1 with common messages echoing through the three days of meetings: increase quality, reward the best, increase communication, decrease costs, and reform Medicare and Medicaid. The gathering was promoted as a forum to achieve affordable, accountable, quality health care in the United States. Medicare and Medicaid were discussed often.

More than 1,500 CEOs and senior executives representing employers, hospitals, health plans, and pharmaceutical and biotech companies attended and participated, along with senior government officials and speakers from as far away as the United Kingdom and Bangladesh.

Medicare and Medicaid Addressed

Mark McClellan, M.D., Ph.D., head of the Centers for Medicare and Medicaid Services (CMS), addressed the need for change, saying, “Better care should be rewarded, and thanks to growing support from health care providers and other stakeholders, we have better approaches to doing so than ever before. It is time that we pay for the quality of the health care provided to our beneficiaries, not simply the amount.

“We are working to apply this in every setting in which Medicare and Medicaid pays for care,” McClellan said.

McClellan announced that 10 large physician groups across the United States will participate in the first pay-for-performance initiative for physicians under the Medicare program. Currently, Medicare reimburses physicians and other health care providers based on the number and complexity of services provided to patients.

The Physician Group Practice demonstration is designed to encourage health care providers to anticipate patient needs, especially for those with chronic diseases, and to intervene before expensive procedures and hospitalizations are required.

Quality and Performance Assessed

During the three-year Physician Group Practice project, CMS will reward physician groups that improve patient outcomes by coordinating care for chronically ill and high-cost beneficiaries in an efficient manner. The physician groups participating in the demonstration are in Connecticut, Michigan, Minnesota, Missouri, Montana, New Hampshire, North Carolina, Pennsylvania, Washington, and Wisconsin.

CMS will assess both quality performance and quality improvement under the demonstration. The quality measures will focus on common chronic illnesses in the Medicare population, including congestive heart failure, coronary artery disease, diabetes mellitus, and hypertension, and on preventive services such as influenza and pneumococcal pneumonia vaccines and breast cancer and colorectal cancer screenings.

“By bringing the same kind of enhanced support for better quality to physicians, we are reaching the providers that have the greatest impact on decisions about patient care. This approach has great potential for improving care for our beneficiaries and strengthening the Medicare program,” McClellan said.

Medicaid Called Unsustainable

The director of the Congressional Budget Office, Douglas Holtz-Eakin, Ph.D., also addressed the conference, saying the current growth in Medicare and Medicaid is unsustainable. He stressed it is important to look at the budget over the long term.

Over 50 years, he said, Medicare/Medicaid will represent 20 percent of the Gross Domestic Product (GDP), which is the current size of the entire national budget.

“Overall,” he said, “the United States will become older and richer and will spend more, not less, on health care. We need to match dollars for unit of high-quality care. There is no silver bullet. A series of incremental changes will spell the future of the system.”

In his first major speech since being confirmed as secretary of the Department of Health and Human Services, Mike Leavitt closed the meeting repeating earlier sentiments about Medicaid.

“Until just over a year ago, I was this nation’s longest-serving governor,” Leavitt said. “I was responsible for making Medicaid work in my state. And I know from experience that Medicaid is not meeting its potential. It is rigidly inflexible and inefficient. And, worst of all, it is not financially sustainable.

“Over the past 10 years, Medicaid spending doubled. And this year, for the first time ever, states spent more on Medicaid than they spent on education,” he noted.

Need for Integrity Emphasized

Leavitt recommended three components to a successful discussion on Medicaid.

1. Keep faith with the commitment this nation has made to provide access to acute and long-term care services for people with low incomes or disabilities, the elderly, and children.

2. Create enough flexibility in Medicaid that states are able to continue serving optional groups and expand the number of people they serve.

3. Ensure the financial sustainability of Medicaid by returning integrity to the funding partnership.

“We must find every inefficiency,” said Leavitt, “because waste means covering fewer people. We must stop overpaying for prescription drugs. Pharmacies and Medicare buy drugs wholesale for a low price. But under Medicaid, state governments usually pay a much higher price.

“We must change the law so that states pay the same low rate. This will save the federal government $15 billion over the next 10 years. It will save state governments $11 billion.

“Medicaid must not become an inheritance protection plan,” Leavitt continued. “Right now, many older Americans take advantage of Medicaid loopholes to become eligible for Medicaid by giving away assets to their children. … There are ways families can preserve assets without shifting the costs of long-term care to Medicaid.

“We must close these loopholes and focus Medicaid’s resources on helping those who really need it. Doing so will save $4.5 billion during the next decade,” he projected.

Insurance Options Suggested

Whereas mandatory-coverage populations–such as elderly, disabled, and low-income persons–require a comprehensive package of benefits, according to Leavitt, optional populations may not need such a comprehensive solution.

“Most of them are healthy people who just need help paying for health insurance,” said Leavitt. “We’ve already proven a way to provide that help. The State Children’s Health Insurance Program (S-CHIP) has allowed 5.8 million children in low-income families who don’t qualify for Medicaid to have health insurance.”

One of the key reasons S-CHIP has been successful, said Leavitt, is that it allows states to ask the question, “What is quality basic health coverage?” Each state can choose from five answers: the health benefits state employees get, the benefits federal employees get, the best private health plan in their state, Medicaid, or some hybrid of private and government plans.

“Fewer than 20 states and territories chose the straight Medicaid option,” Leavitt said. “A majority chose some other combination. It costs states less, on average, to provide health insurance than to provide comprehensive care.”

Susan Konig ([email protected]) is managing editor of Health Care News.