Medicare Compliance & Reimbursement

Critics call for payment system reform

Starting in January, Medicare reimbursements to physicians face a 10 percent reduction, but new legislation from the Senate Finance Committee seeks to prevent that cutback from occurring.

To raise the nearly $20 billion needed to maintain current physician reimbursement levels, the bill would appropriate the reimbursement funds allocated to Medicare Advantage plans.

Democratic aide Shawn Bishop insisted that the cuts in MA funding do not represent an attempt to eliminate the practice of preventative medicine, which distinguishes many MA plans. "This is not a slash and burn exercise here on Medicare Advantage," Bishop said in a statement.

Despite Bishop's reassurances, Medicare Advantage plans have recently come under fire from Finance Committee Chairman Max Baucus (D-MT).

"I'm pleased that CMS has pledged more oversight and enforcement of the marketing of these private fee-for-service Medicare plans," Baucus said. "The recent unscrupulous tactics by some MA plans have led me to be skeptical about how well this market works for seniors, and [...] I will continue to stand up for a Medicare program that delivers quality care and excellent value for America's seniors and for all taxpayers."

Given the growing levels of public dissatisfaction with the MA program, however, the Medicare program may offer preventative treatments through more traditional channels in the future rather than through MA plans.

Shifting preventative care to the mainstream Medicare program should not affect its efficacy, according to Peter Orszag, director of the Congressional Budget Office.

"Many Medicare Advantage plans offer disease management, care coordination and preventative care programs, but little information is available on the degree to which the plans generate better health outcomes than the traditional Medicare program," explained Orszag.

While this shift in the distribution of preventative care to alternate channels may result in health care efficiency gains by cutting out more costly MA plans, critics of the Medicare payment system advocate more comprehensive reform.

A new report from the Commonwealth Fund urges policy makers to consider shifting the structure of Medicare physician compensation packages.

Current "fee-for-service payment systems reward providers for supplying more services, even if the services are unnecessary or of low value," claimed Harold Miller, president of Future Strategies, a management and policy consulting firm.

"Moreover, payment systems generally pay for services regardless of whether all of the processes recommended in clinical practice guidelines are performed by the provider, and research has shown that large proportions of patients do not receive important elements of care," said Miller.

Even newly introduced pay-for-performance models present a disturbing range of potential problems. Miller finds that P4P systems:

• Offer bonuses too small to provide any real incentive for providers to achieve performance increases;

• Focus on rewarding processes instead of outcomes, unintentionally deterring potentially beneficial innovations; and

• Provide incentives for providers [...]