Medicare Reform: Improving a Good Thing

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Medicare ReformImproving a Good Thing

• Stuart Guterman
• Assistant Vice President
• Director, Program on Medicares Future
• The Commonwealth Fund
• Families USA Annual Meeting Health Action 2009
• Endangered Species? Talking About Medicares
  Fiscal Health
• Washington, DC
• January 29, 2009

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Medicares Accomplishments

• Medicare has improved access to care and
  financial security for 44 million beneficiaries
• Before Medicare, about half of all Americans over
  age 65 had no health insurance
• Medicare effectively ended racial segregation in
  hospitals
• Medicare beneficiaries are highly satisfied with
  their coverage and feel confident in their
  ability to obtain care

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Profile of Medicare Elderly Beneficiaries
andNon-Elderly with Employer Coverage,
byPoverty and Health Problems
Health problems, lower income 7
No health problems, higher income 15
Health problems, lower income 38
No health problems, lower income 8
Health problems, higher income 24
No health problems, lower income 14
Health problems, higher income 40
No health problems, higher income 56
Employer Coverage, Ages 1964
Medicare, Ages 65
Note Respondents not reporting income level were
excluded lower income defined as lt200 of
poverty health problems defined as fair or poor
health, any chronic condition (cancer, diabetes,
heart attack/disease, and arthritis), or
disability.
Source The Commonwealth Fund Biennial Health
Insurance Survey (2003).
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Access Problems Because of Cost
Percent of adults who had any of four access
problems in past year due to cost






Note Adjusted percentages based on logistic
regression models age groups controlled for
health status and income insurance status
controlled for health status, income, and
prescription coverage.
Note Access problems include Did not fill a
prescription did not see a specialist when
needed skipped medical test, treatment, or
follow-up did not see doctor when sick.
Significant difference at plt.01 or better
referent categories are ages 1964 and
Medicare 65.
Source The Commonwealth Fund Biennial Health
Insurance Survey (2003).
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Access to Physicians for Medicare Beneficiaries
and Those With Private Insurance
Percent
No problem finding physician
Never had a delay to appointment
Source MedPAC Report to the Congress Medicare
Payment Policy, March 2006, p. 85.
6
Rating of Current Insurance
Percent of adults who rated their current
insurance as excellent or very good





Note Adjusted percentages based on logistic
regression models age groups controlled for
health status and income insurance status
controlled for health status, income, and
prescription coverage.
Significant difference at plt.01 or better
referent categories are ages 1964 and
Medicare 65.
Source The Commonwealth Fund Biennial Health
Insurance Survey (2003).
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Confidence in Future Care
Percent of adults who were very or somewhat
confident they will get best medical care
available when they need it



Note Adjusted percentages based on logistic
regression models age groups controlled for
health status and income insurance status
controlled for health status, income, and
prescription coverage.
Significant difference at plt.01 or better
referent categories are ages 1964 and
Medicare 65.
Source The Commonwealth Fund Biennial Health
Insurance Survey (2003).
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But There Are Many Challenges

• Although Medicare spending growth has been about
  the same as private insurance, it is claiming an
  increasing share of the federal budget
• Out-of-pocket spending can be burdensome,
  especially for beneficiaries with lower incomes
• There is wide variation across the country in
  spending per beneficiary and the quality of
  carebut not generally in the same direction
• Medicare is oriented toward acute care needs,
  while an increasing number of beneficiaries have
  multiple chronic conditions

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Making Medicare More Sustainable

• Paying providers and plans
• Physicians
• Hospitals
• Post-acute care providers
• Medicare Advantage plans
• Managing chronic illness
• Increasing value for the Medicare dollar
• Quality
• Efficiency
• Care coordination
• Protecting beneficiaries (particularly those who
  are most vulnerable)
• Improving the programboth for its own viability
  and as a model for the entire health system

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Medicare Payment Reform

• Payment reform Medicare provider payment choice
  of per patient or per episode global fee payment
• Physician payment choices
• Fee-for-service
• Blended fee-for-service, patient-centered medical
  home fee
• Primary care per patient global fee
• Ambulatory care per patient global fee
• Admitting physician inpatient care global fee,
  90-day follow-up
• Hospital payment choices
• DRG per hospitalized patient
• Global DRG fee for hospitalization, 90-day
  warranty
• Integrated delivery system choices above
  options, plus
• Global DRG fee for hospitalization and physician
  services, 90-day warranty
• Full capitation

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Medicare System Reform

• Quality standards and quality reporting
• Physicians, hospitals, integrated delivery
  systems electing global payment must be
  accredited/certified as capable of assuming
  accountability for bundled services and meeting
  quality standards
• All providers must report quality measures, with
  more comprehensive outcome and care coordination
  metrics for providers assuming accountability for
  bundled services
• Payment rewards for quality and outcome results
• Transparency Medicare publishes quality,
  accountability, and provider profile information
• Information technology electronic medical
  records within five years 1 assessment of
  private insurers and Medicare outlays to finance
  information exchange networks and safety net
  providers personal health records accessible to
  beneficiaries
• Comparative effectiveness center to evaluate
  comparative effectiveness of drugs, devices,
  procedures benefit design tied to recommendations

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Health policy experts have suggested various
changes to the Medicare program. Do you favor
changing Medicare in the following ways?
Source The Commonwealth Fund Health Care Opinion
Leaders Survey, June 2005.
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An Agenda for Change

• Short-term actions Medicare budget savings
  targeted on high cost areas, high cost providers,
  waste, and unsafe or ineffective care
• Freeze on payment updates to hospitals and
  physicians in high-cost regions
• Incentives for reduced hospital readmissions
• No payment for hospital-acquired infections and
  never events
• Offer Medicare Extra as a choice to small
  employers and individuals, eliminate two-year
  waiting period for disabled, and buy-in for older
  adults financial protection for beneficiaries
• Offer global fee payment options to physicians,
  hospitals, and integrated care systems
• Accountability for quality and care, rewards for
  results
• Transparency
• Health information technology and information
  exchange networks personal health records for
  beneficiaries
• Comparative effectiveness
• National leadership and public-private
  collaboration

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Conclusions

• Medicare has served beneficiaries well for 40
  years
• Medicare is likely to face fiscal strains in the
  years ahead as the baby boomers retire
• Medicare today is undertaking the most extensive
  changes in its history
• There are several policy options that could make
  Medicare more effective in achieving its mission
  in the future