Key Senate committee agrees Medicare payments must change

WASHINGTON, May 14 -- Senators and medical professionals agreed Tuesday that the Medicare payment system must reward quality of care, not the number of procedures administered.

The Senate Finance Committee examined ways the nation’s guaranteed health care program could move away from its current fee-for-service payment structure, one that rewards Medicare physicians based on the number of tests run.

The meeting comes on the heels of a similar meeting held by a House subcommittee last week. In it, a similar consensus emerged that the time has come to repeal the “sustainable growth rate,” the name for the reimbursement system.

Sen. Max Baucus, D-Mont., the committee’s chairman, said simply rescinding such a fee structure is inadequate because something must take its place.

“But we should not simply repeal the (payment model),” he said. “We also must change the underlying fee-for-services system that Medicare uses to pay physicians.”

Dr. Kavita Patel, a practicing physician who also works on health care reform with the Brookings Institution, the nonpartisan think tank, recommended tests be performed in lower-cost venues.

For instance, when an ultrasound examining someone’s heart is performed in an outpatient manner, it is much cheaper than when performed in a hospital under similar conditions. These low-cost settings can reduce expenditures by as much as two-thirds, Patel said.

She also advocated payments “roughly equally for equivalent services” that are more predictable. The existing reimbursement equation is complex — physician work, cost of procedure and region are all taken into account.

Sen. Maria Cantwell, D-Wash., made a push for accountable care organizations, saying she would prefer to “leapfrog” straight into this idea rather than slowly move toward this way of administering care.

Accountable care organizations consist of a range of providers, from doctors to hospitals, who come together to synchronize coverage for Medicare patients. They aim to ensure quality care is delivered and duplicate or unnecessary tests are avoided.

President Barack Obama’s health care reform law, the Affordable Care Act, takes a step toward this method. It gives financial incentives to accountable care organizations that succeed in bending health care’s cost curve.

Bruce Steinwald, who spent several years with the Government Accountability Office working on health care, presented several ideas for Medicare reform.

He encouraged pre-authorization for expensive medical imaging technologies and said Congress should “put some teeth” in measures that would not reward physicians for running unnecessary tests and procedures.

“Never underestimate the power of fee-for-service incentive to generate money,” he said.

Medical practices and physicians will be required to take on more risk if the U.S. program transitions to a value-based payment system, the Brooking Institution’s Patel said. It is relatively uncharted territory and providers could receive lower payments if care given does not reach a certain level.

With growing agreement that the reimbursement model be changed, Patel urged Congress to seize the moment.

“I do believe that, with a decade of discussion, I think we are ready to do it now,” she said.

The committee’s ranking member, Sen. Orrin Hatch, R-Utah urged action as well.

“We know this is not an easy task,” he said, “but physicians and patients deserve better. We must find a more stable foundation to pay physicians treating Medicare patients.”