WASHINGTON, D.C. - Rep. Betty McCollum, D-Minn., and House Democratic leaders announced today that the health-care reform bill will seek to change the Medicare payment system to reflect quality of care. The agreement, reached in late-hour negotiations Thursday night, could represent a major victory for states like Minnesota that provide high-quality health care but get reimbursed at lower rates than states with poor care.

The agreement includes two studies: one that will examine geographic variations in payments and another that will look at how “value” can be reflected in reimbursement rates, as opposed to the current system, which rewards number of tests and services.

The goal of the studies will be to create a payment system for Medicare, and any public insurance plan that is established through the health-care reform bill, that rewards value, according to McCollum.

“The agreement today moves us toward a system that will reward high quality and [efficiency] as opposed to volume,” McCollum said this afternoon at a press conference with reporters.

The studies will be conducted by the Institute of Medicine. According to the agreement, the study looking at geographic adjustment factors will be completed one year after enactment; the study on rewarding value will be completed by September 2011.

Based on study results, the secretary of Health and Human Services will then implement a new payment rate and submit the plan to Congress. The bill provides $4 billion in 2012 and 2013 to make payment-rate adjustments. The agreement specifies that no region will lose money during 2012 and 2013.

The Government Accountability Office and a new independent Medicare advisory board, which has also been proposed as part of the health care reform bill, will evaluate the report. The recommendations will automatically go into effect unless the House and Senate pass joint resolutions of disapproval by Feb. 28, 2012.

McCollum said there is no estimate of how these studies might affect Minnesota’s current Medicare reimbursements. As of 2006, Minnesota’s payments were 21 percent below the national average.

It is also not clear what kind of resistance this agreement might receive from House members whose states could stand to lose money in a new payment system. The politically charged issue has long divided states like Minnesota, Iowa and Wisconsin, from those that currently receive higher reimbursement rates like New York and California.

McCollum acknowledged Friday that the negotiations had been very “tough.”

“People were afraid of giving something up,” McCollum said. But “what we focused on was moving people forward.”

In recent days it became increasingly clear that House leaders would have to listen to McCollum, and to more than 20 representatives who have similar concerns, if they wanted their legislation passed.

The bill is not expected to draw Republican support, and Democrats have been struggling to get the conservative end of their party on board.

This situation, and White House support for Medicare payment reform, put McCollum and her team in a unique position to move forward on an issue that has been stalled for decades.