Lawmakers Not Giving Up on Medicare Reforms

While the latest Medicare Trustees report showed slightly improved projections, the long-term challenges of health care cost growth and population aging remain unresolved. Fortunately, some policymakers in Congress remain committed to slowing the growing spending in Medicare and bending the health care cost curve.

In a speech last week, Senator Ron Wyden (D-OR) outlined several major reforms to improve the care of people with chronic diseases, which is a leading driver of health care spending growth. These include:

• Reforming the attribution rule for Accountable Care Organizations (ACOs) in the Affordable Care Act, which prevents ACOs from avoiding sick beneficiaries but also limits them from specializing in chronic care coordination. Senator Wyden proposes creating specific consumer protections for beneficiaries in plans that specialize in senior chronic care, while fully retaining the current protections against discrimination.
• Reforming Medicare reimbursement to target areas with high rates of chronic illness by rewarding providers who improve care and lower costs.
• Requiring individual care plans for seniors with more than one chronic condition.
• Enabling ACOs to create incentives to encourage beneficiaries to be as healthy as possible.

Wyden’s proposals offer a framework that could help change incentives toward greater care coordination for those Medicare beneficiaries who are the most expensive and most chronically ill. Especially as baby boomers become older beneficiaries in Medicare, targeted reforms that slow spending growth on chronic care can help to gradually bend the cost curve downward.

Similarly, the House Ways and Means Committee's Subcommittee on Health held a hearing on Friday on bipartisan proposals to reform Medicare post-acute care payments. Post-acute care is another high-cost area of Medicare spending, accounting for $62 billion, or 17 percent, of Medicare Fee-For-Service (FFS) spending in 2012. Additionally, Medicare post-acute care payment rates widely vary. One recent Institute of Medicine study found that variation in per capita spending on post-acute care caused 40 percent of the variation in overall Medicare spending.  To address these issues, a number of proposals, such as A Bipartisan Path Forward and the Bipartisan Policy Center’s health care cost containment plan, have offered reforms to improve the cost and quality of post-hospitalization care for beneficiaries. We highlighted a few of these reforms in our Health Care and Revenue Savings Options report.

At the hearing, CMS Acting Principal Deputy Administrator Jonathan Blum testified about some of the current efforts CMS has underway to improve post-acute care, but said that "more work remains to be done to make Medicare spending on post-acute care sustainable for the long term and improve the overall delivery of care."

MedPAC Executive Director Mark E. Miller also testified before the Subcommittee, outlining some of the post-acute care recommendations MedPAC has made in recent years, primarily focused on payment reductions, realigning payments with actual costs, and encouraging greater care coordination. Miller’s testimony came the same day MedPAC released their annual June report to Congress. In the report, MedPAC recommended equalizing Medicare payment across sites of care by aligning outpatient department payment rates with those of physician offices and ambulatory surgical centers for certain groups of services. MedPAC also provides an illustrative reform to bundle payments for post-acute care services within 90 days of a triggering event.

It’s promising to see lawmakers continuing to discuss these important reforms which target the delivery of high-cost care. The Ways and Means hearing was the fourth in a series examining bipartisan Medicare proposals, and the reforms outlined by Senator Wyden were yet another set of constructive ideas he has put forth in recent years. These are exactly the kind of discussions lawmakers should be having if they’re serious about putting Medicare spending on a more sustainable path.