Medicare Compliance & Reimbursement

To provide high-quality, cost-effective treatment, Medicare must launch demonstration projects exploring financial-reward systems for top-quality providers and expand its use of competitive pricing, the Medicare Payment Advisory Commission recommends in its June report.

Medicare should explore financial incentives for quality in sectors where quality-measurement tools already are in development, such as health plans and skilled nursing facilities. However, quality demos should also be launched in sectors for which data collection and quality measurement are scarcer but which affect large numbers of beneficiaries, such as the physician and hospital sectors, says MedPAC.

To promote effective and efficient care for chronically ill patients, Medicare also should develop systems that ensure quality care for patients requiring treatment in more than one setting, the panel says. Among specific recommendations for multi-setting care: paying for disease management, sharing risk with providers for a bundle of chronic-disease services, and providing incentives for providers within a specific geographical region to coordinate their care to achieve better outcomes among a particular Medicare population.

Congress also should give the Department of Health and Human Services authority to launch competitive-pricing demonstrations on its own and to implement competitive-pricing in Medicare when a demonstration proves successful. "Congress should have a fixed period of time to review and approve any implementation plan," in those instances, MedPAC says.

If, as envisioned under pending House legislation, fee-for-service Medicare is put into competition with private plans, this recommendation could give the FFS program the flexibility it would need to compete on more even terms.

Recent competitive-bidding demonstrations involving durable medical equipment and services related to heart bypass surgery "suggest competitive pricing can reduce costs without adversely affecting quality or access." However, "neither approach has been subsequently adopted as an extended demonstration, nor as a permanent part of the program," because Congress has dragged its feet, MedPAC suggests.

The panel wants a role change for Congress on the matter of competitive-bidding pilots, all of which legislators have either slowed or stopped. Congress should "have an opportunity to intercede" if a demonstration is perceived to be failing, i.e., not saving money or hurting beneficiaries' access. But Congress should get less of a chance to "micromanage or delay" successful projects or review site choices. "The [HHS] secretary is best equipped to assess the appropriateness of a given geographical area," says the panel.