Feeds: 
symbol identifies content for paid subscribers only.
RIGHT FOR THE WRONG REASONS.
by Shannon Brownlee
As much as it pains me to say it, President Bush may have been right to veto legislation that delayed Medicare pay cuts for doctors by cutting payments to Medicare Advantage plans, but he was right for the wrong reasons. The legislation reverses a mandatory 10.6 % pay cut for doctors, and it finds the money to do so by reducing reimbursements to private Medicare Advantage plans. That last bit is the part to which the White House objected. Medicare Advantage plans cover about 20 percent of Medicare beneficiaries, and in 2006, the federal government paid $59 billion to these plans — an estimated $7.1 billion more than it would have paid if the care had been delivered under fee for service. President Bush said, "I support the primary objective of this legislation, to forestall reductions in physician payments. Yet taking choices away from seniors to pay physicians is wrong.”
Taking money away from Medicare Advantage is the wrong thing to do, but not because it reduces “choice” for Medicare recipients. Medicare Advantage, which pays a premium to health maintenance organizations, preferred provider organizations, and so-called private fee-for-service plans, was originally enacted 25 years ago to encourage the growth of HMOs. It was intended to help true staff model health maintenance organizations, like Kaiser and Group Health Cooperative of Puget Sound, which deliver high quality care – and have high patient satisfaction – for lower costs. And at first, that’s who signed up to participate in Medicare Advantage. Now, practically any old insurance plan that calls itself managed care can qualify, and a lot of the plans that participate are better at managing profits than making sure providers deliver high quality care.
Instead of cutting Medicare Advantage payments across the board, Congress should think about being more selective. Why not make it harder to qualify for Medicare Advantage? Get rid of the riffraff. The Centers for Medicare and Medicaid Services should be bolstering the market position of true HMOs and other efficient group practice models, like Intermountain Healthcare and the Mayo Clinic. These systems have trouble growing and moving into new markets, in part because employers and patients don’t judge providers on the basis of the quality or efficiency of care they deliver. Why not give a boost to systems that do a better job for less?
COMMENTS (7)
As someone who rarely agrees 50% with what I read here, much less 100% . . . I have to agree 100% with this one. Selectivity is what allows the marketplace to work--if the customer (in this case, the government) doesn't discriminate between low-quality and high-quality product, there will be less high-quality product, more low-quality product, and the insurance plan will pocket the savings, rather than passing it on.
Why not give a boost to systems that do a better job for less?
It's the government. Bureaucracies tend not to be very good at implementing the principles embodied in that simple sentence. The larger the bureaucracy (public or private), the harder it seems to be.
Posted by: Kevin S. Willis | August 12, 2008 10:01 AM
Excellent, excellent post.
This type of thinking requires folks to put partisanship/ideology aside on both sides-- Republicans to stop justifying increased payments because of blind faith that "markets will do better" so they are willing to undermine Medicare at all costs; and Democrats to stop pretending that "Medicare-for-all" is the solution, since they have the same cost issues as our private plans. Smart government incentives, as you suggest above, is the best approach.
Posted by: wisewon | August 12, 2008 10:36 AM
Shannon Brownlee,
I loved you book "Overtreated". I am glad to read your post here. They are far more objective that the suff normally posted here.
Posted by: floccina | August 12, 2008 2:51 PM
thanks, floccina! (I failed to put my byline on a couple of previous posts. In case you're interested, they are SHARE AND SHARE ALIKE and USE EVIDENCE, SAVE LIVES.)
Wisewon, I agree -- partisan, channelized thinking won't fix health care.
Posted by: Shannon Brownlee | August 12, 2008 3:08 PM
Ummm.. respectfully, did you read the freakin bill?
It does not "cut payments to Medicare Advantage." The majority of the savings in the bill come from requiring private fee for service plans to have networks. These plans currently can arbitrarily decide whether to cover this or that provider at the time of service. Providers can also decide whether to accept the coverage while the patient is sitting in the waiting room. And since most of these plans pay late, deny coverage, and generally shaft docs, more and more providers are choosing not to accept them. (Example: the University of PA medical centers.) For providing this "advantage," these plans get paid approximately 117% of what it costs to provide traditional Medicare, even though they were pitched as a Republican example of how the private sector was going to "do it cheaper and better than government." Those overpayments to private plans end up costing regular Medicare - and Medicare recipients - more money. SO, the bill requires that by 2012 these plans have to have networks. Since so many of these plans have a business model designed around denying coverage, some of them won't like that, so there may be fewer of them, which is a very good thing. Fewer plans that cost more than regular Medicare (or other MA plans) will mean savings - for the system AND for beneficiaries.
The other savings come from reducing the extra payments that MA plans get in urban areas with university medical centers. They were supposed to pass those payments through to the university hospitals, with the theory that care is more expensive in those areas. Turns out, the university hospitals are not benefiting from these payments. It is, instead, just one more source of profit for the private plans.
MA plans are overpayed, and that should be reduced. Unfortunately, this bill did not do that. But, it at least took a small step towards curbing the growth of the worst and most expensive kind.
Posted by: mdale | August 12, 2008 9:14 PM
mdale- I strongly disagree with your interpretation that many MA plans "have a business model designed around denying coverage". If you really believe this-how do you think requiring networks will resolve this issue? HMOs already have networks.
There are so many compliance issues to address, it's nearly impossible to charge premiums and just simply deny coverage for the sake of denying coverage. I would encourage you to learn more about the larger HMOs offering MA plans. The reason most are able to make a profit is by covering services Fee For Service Medicare doesn't cover such as many preventive care services. Keeping members healthy is how many MAs save money. MAs are then required to pass some of that savings on to the members with reduced premiums or additional benefits.
I agree with Ezra's suggestion, to "give a boost to the systems that do a better job for less".
Posted by: vizsla | August 14, 2008 2:45 PM
I really believe that these social networks will have a huge impact on what we can accomplish as groups, it'll help us be very organized and communicate.
Posted by: tiffany & co jewellery | November 10, 2009 12:22 AM