Medicare Tries to Cut the Cost of Its Most Complex Patients
Medicare is trying new tactics to cut costs for complex patients and keep them healthier, although some health-policy observers say they don't go far enough.
Under the 2010 health overhaul law, the agency is giving health-care providers incentives to band together and coordinate care for groups of patients. If their costs fall by a great enough percentage, the providers get to pocket some of the savings.
Another part of the law will allow Medicare to impose financial penalties on hospitals that readmit high numbers of patients within 30 days of discharge. Readmissions like these often signal a preventable post-hospital complication. Federal officials are working to help hospitals reduce infections and other ailments that patients acquire inside hospitals by 40% over a three-year period under a piece of the law.
"Better quality care with fewer complications is actually less expensive," says Paul McGann, a deputy chief medical officer at the Centers for Medicare and Medicaid Services innovation center.
Past efforts by Medicare to coordinate care have yielded little, if any, savings. A report by the nonpartisan Congressional Budget Office this year found that Medicare paid 34 programs over a decade to coordinate care or provide disease management. The efforts, on average, had no effect on Medicare expenditures or hospital admissions, the report found.
Health care outside of Medicare follows a similar pattern, with research showing that the majority of U.S. spending also highly concentrated on a small group of high-cost patients. These typically include people with one or more chronic conditions, such as diabetes, high cholesterol, arthritis and cancer, said Steven B. Cohen, a director at the federal Agency for Healthcare Research and Quality.
The majority of that spending is unavoidable, but research shows a large portion isn't. Of the $2.5 trillion the U.S. spent on health care in 2009, $765 billion was waste, according to a study by the Institute of Medicine, an independent body that advises the federal government on health policy. That includes $210 billion on unnecessary services.
Health-policy experts say another way to tackle that problem is to give patients a better sense of their survival odds once they get really sick. Some are pushing for private insurers and hospitals to release data that would help them create better statistics on how long patients survived after long hospitalizations or with particular ailments.
"If you knew to say, 'I'd like to see how the last people who were relatively similar to my mother did,' think how important that would be," said Joanne Lynn, a director at the Altarum Institute, a nonprofit health-systems research organization, who has worked for the agency that runs Medicare and Medicaid. "Right now, the doctors are going on hunches."
Many experts say the key is to get patients to plan with doctors and their family for how much care they want when they approach the end of their life. Medicare doesn't currently reimburse doctors for visits devoted to that since the change was labeled a "death panel" and struck from the health-overhaul law. The cultural aversion to talking about your own death also hinders such planning.
"In this death-panels nonsense we have lost the ability to talk about a very important matter," said Donald Berwick, a pediatrician who ran Medicare and Medicaid until last year.
Republican lawmakers say the solution to controlling Medicare costs is to eventually stop enrolling Americans in the federal Medicare plan, and to instead give them a subsidy they can use to purchase private insurance, thus encouraging individuals to take a closer interest in the cost of health services.
Supporters of the plan say it would also reduce costs by centralizing payments through one private company, instead of having the more fragmented system that exists when Medicare's different components are splitting payments. "It could hardly make it worse and should make it better," said Gail Wilensky, who ran Medicare and Medicaid under President George H.W. Bush.
Obama administration officials warn that such a switch would only make the sickest patients more vulnerable to high health-care costs. They say the solution to controlling Medicare's cost lies only partially in better managing the most expensive patients.
The agency currently is focusing on reducing fraud and abuse in Medicare, and trying to eliminate overpayments for medical equipment such as wheelchairs, said Jonathan Blum, deputy administrator and director for Medicare.
Under the 2010 health overhaul law, the agency is giving health-care providers incentives to band together and coordinate care for groups of patients. If their costs fall by a great enough percentage, the providers get to pocket some of the savings.
Another part of the law will allow Medicare to impose financial penalties on hospitals that readmit high numbers of patients within 30 days of discharge. Readmissions like these often signal a preventable post-hospital complication. Federal officials are working to help hospitals reduce infections and other ailments that patients acquire inside hospitals by 40% over a three-year period under a piece of the law.
"Better quality care with fewer complications is actually less expensive," says Paul McGann, a deputy chief medical officer at the Centers for Medicare and Medicaid Services innovation center.
Past efforts by Medicare to coordinate care have yielded little, if any, savings. A report by the nonpartisan Congressional Budget Office this year found that Medicare paid 34 programs over a decade to coordinate care or provide disease management. The efforts, on average, had no effect on Medicare expenditures or hospital admissions, the report found.
Health care outside of Medicare follows a similar pattern, with research showing that the majority of U.S. spending also highly concentrated on a small group of high-cost patients. These typically include people with one or more chronic conditions, such as diabetes, high cholesterol, arthritis and cancer, said Steven B. Cohen, a director at the federal Agency for Healthcare Research and Quality.
The majority of that spending is unavoidable, but research shows a large portion isn't. Of the $2.5 trillion the U.S. spent on health care in 2009, $765 billion was waste, according to a study by the Institute of Medicine, an independent body that advises the federal government on health policy. That includes $210 billion on unnecessary services.
Health-policy experts say another way to tackle that problem is to give patients a better sense of their survival odds once they get really sick. Some are pushing for private insurers and hospitals to release data that would help them create better statistics on how long patients survived after long hospitalizations or with particular ailments.
"If you knew to say, 'I'd like to see how the last people who were relatively similar to my mother did,' think how important that would be," said Joanne Lynn, a director at the Altarum Institute, a nonprofit health-systems research organization, who has worked for the agency that runs Medicare and Medicaid. "Right now, the doctors are going on hunches."
Many experts say the key is to get patients to plan with doctors and their family for how much care they want when they approach the end of their life. Medicare doesn't currently reimburse doctors for visits devoted to that since the change was labeled a "death panel" and struck from the health-overhaul law. The cultural aversion to talking about your own death also hinders such planning.
"In this death-panels nonsense we have lost the ability to talk about a very important matter," said Donald Berwick, a pediatrician who ran Medicare and Medicaid until last year.
Republican lawmakers say the solution to controlling Medicare costs is to eventually stop enrolling Americans in the federal Medicare plan, and to instead give them a subsidy they can use to purchase private insurance, thus encouraging individuals to take a closer interest in the cost of health services.
Supporters of the plan say it would also reduce costs by centralizing payments through one private company, instead of having the more fragmented system that exists when Medicare's different components are splitting payments. "It could hardly make it worse and should make it better," said Gail Wilensky, who ran Medicare and Medicaid under President George H.W. Bush.
Obama administration officials warn that such a switch would only make the sickest patients more vulnerable to high health-care costs. They say the solution to controlling Medicare's cost lies only partially in better managing the most expensive patients.
The agency currently is focusing on reducing fraud and abuse in Medicare, and trying to eliminate overpayments for medical equipment such as wheelchairs, said Jonathan Blum, deputy administrator and director for Medicare.
