WASHINGTON, D.C. — When it comes to the complexities of health care reform, there are few issues that Minnesota’s politically diverse congressional delegation can agree on. But changing the Medicare system to reward quality, as opposed to the number of tests, happens to be one of them.
In a strongly worded letter sent to President Obama on Wednesday afternoon, all of the North Star state’s representatives and senators banded together to broadcast this message: Minnesota’s national status as a high-quality, underpaid state is “no longer tolerable.”
“Furthermore, any public insurance option that is based on Medicare’s current reimbursement formula would only further penalize Minnesota and undermine the very success our state has attained in delivering efficient, quality care,” the letter stated. “Please know that we view any health care reform legislation that perpetuates or extends the current inequity in Medicare as harming Minnesota’s health care system which is obviously unacceptable to us and our constituents.”
The geographic inequities in Medicare payments sprung from a formula that was based on the historic cost of health care services. The result has been that states that provide fewer health care services — like Minnesota, Wisconsin, North Dakota and Washington — receive less money. Meanwhile, states that provide a greater volume of health care services — like Florida, New York, and Texas — receive reimbursements that can be more than double those paid to other states.
This would be fine if the greater volume of health care services actually equaled better outcomes and quality of care. But research by the Dartmouth Institute for Health Policy and Clinical Practice over the last 10 years has shown that is not the case.
“The findings are remarkably consistent,” the Dartmouth Atlas Project reported recently. “Higher spending does not result in better care, whether one looks at the technical quality and reliability of hospital or ambulatory care, or survival following such serious conditions as a heart attack or hip fracture.”
Minnesota, for instance, has consistently ranked as one of the top states in the country for providing quality health care. Yet, according to Dartmouth Atlas data from 2006, its Medicare spending was 21 percent below the national average.
In 2006, the Medicare spending per enrollee was $6,600 in Minnesota compared to $9,564 in New York and $9,379 in Florida, which were 15 percent and 13 percent above the national average, respectively.
Across the country, providers have long struggled to make do with Medicare payments, which are 20 to 30 percent lower than private insurance payments. But high quality states like Minnesota argue that their reimbursement rate should be increased because of the service they provide.
“If we continue to reimburse [highly] for those that provide the least efficient care, we are going to create a system that the country can’t afford,” said Jeff Korsmo, the executive director of the Mayo Clinic Health Policy Center. “And I worry that some Medicare patients won’t get access to care.”
At the Mayo Clinic, one of the best health care organizations in the world, the total Medicare reimbursements resulted in an $800 million loss in 2008, according to Korsmo.
Making matters worse, the House health care bill calls for about $500 billion in Medicare and Medicaid cuts over 10 years to help pay for insuring an additional 46 million Americans.
More cuts in Medicare could result in more Minnesota doctors reducing the number of Medicare patients that they see.
The public insurance plan that is offered in the House bill could also prove problematic on this front. Currently, it employs the Medicare payment system with only a 10 percent boost in payments.
“We are concerned that if we move forward, as we should, to insure everybody, that we will be bringing millions more people into a health care system that is not delivering on value, and is frankly contributing to the financial mess of our country,” said Korsmo, who emphasized that the Mayo Clinic was still supportive of health care reform and optimistic about the government’s ability to include quality of care as a factor in reimbursements.
The House bill, which is still being worked out in committee, currently attempts to address this issue by creating bonus payments for states that provide high quality care at low costs and implementing a comprehensive study to provide suggestions on revising the payment system.
But for Minnesota lawmakers these measures do not go far enough and do not recognize the fundamental problem, which is that quality should be driving the country’s health care system.
“Another study is just procrastination, we don’t need to study this,” said Rep. Betty McCollum, D-Minn., who has led the rally in the House to include an index in the bill that would reward quality and efficiency of care. “We know that the current system is broken.”
The so-called “value index” has been pushed and shaped by about 20 representatives from low-cost states and providers like the Mayo Clinic. It would essentially make “quality” the driving factor in determining reimbursement rates. In general, the quality measures would reflect health outcomes and the health status of the Medicare population, patient safety and patient satisfaction.
“This is fundamental reform,” said Rep. Tim Walz, D-Minn., who represents southern Minnesota, including the Rochester area. “This isn’t a ‘nice to have.’ This isn’t ‘we’re not getting ours.’ The problem is that we’re saying is, we have a limited number of dollars to spend on health care; let’s spend them wisely.”
Changes expected to be proposed
An amendment to include a value index is expected to be offered either Friday or early next week in the House Energy and Commerce Committee. Although political momentum in Congress and the White House has been building behind the use of stronger quality measures, lawmakers were still uncertain whether a value index would ultimately be included.
The dilemma is nothing new. The politically fraught fight over Medicare reimbursements has essentially been around since the nation’s biggest health care program, which covers Americans 65 and older, was founded.
“It is a very contentious issue in the [Democratic] caucus,” Walz said. “The big conflict is that there is a belief among some members in the high reimbursements states that this isn’t a fundamental problem.”
In other words, states that benefit from the current funding model may not be so quick to scramble for change. In spite of the administration’s support of restructuring Medicare payments, this reality has prompted some pessimism among policy analysts.
“For every Iowa delegation and Minnesota delegation there is a New York delegation and a California delegation,” said Joseph Antos, a health policy expert at the conservative-leaning American Enterprise Institute. “And it is pretty much a political draw. It is hard to think that anything will be changed substantially.”
In addition, there are concerns that while the idea may be good in theory, there could be difficult ramifications from changing the decades-old model too quickly.
One possible complication is that high quality providers in high cost markets may be punished if the value index is implemented at the regional level, according to Elliot Fisher, who directs the Center for Health Policy Research at Dartmouth.
“There is a lot of risk, there is a lot of concern,” Fisher said. “So, I think we have to think through this more carefully.”
Although Fisher is in favor of changing to a system that rewards value, he said that the current quality measures that are in place are not good enough.
“I think we know how to [measure quality], but we’re just not doing it,” Fisher said. “The measures we have in place are not good enough to justify the kinds of value-based indexes they are talking about. We need to be looking at health outcomes, we need to be looking at patient’s experience, which are not included in the current measures of quality, and we need to move from regional measures of quality to provider and organizational measures of quality.”
To do this, Fisher advocates aggressively moving forward with a set of pilots. The successes from those pilots should then be rapidly implemented, Fisher said.
This week, health care experts, the White House and Congressional leaders also reached an agreement on creating an independent Medicare advisory commission, which would seek to work out the problems with Medicare payments.
Hospital costs compared
This plan, of course, has stirred up different arguments from lawmakers who want to see Medicare payment authority remain with Congress.
Still, in his speech on health care Wednesday night, President Obama mentioned the negotiations over a potential MedPAC program.
“[We] want to create an independent group of doctors and medical experts who are empowered to eliminate waste and inefficiency in Medicare on an annual basis — a proposal that could save even more money and ensure long-term financial health for Medicare,” said Obama.
The administration has previously acknowledged that adopting models like the Mayo Clinic’s system could result in significant savings.
When looking at end-of-life care, for example, total Medicare spending per enrollee during the last two years of life was $53,432 at St. Mary’s Hospital in Rochester. For the same period, spending was $105,068 at NYU Medical Center in Manhattan and $82,816 at Mount Sinai Medical Center in Miami. This means that had the other two hospitals performed at the level of St, Mary’s, the government would have saved $130,844,714 and $89,560,320, respectively, according to the Dartmouth Atlas.
During interviews this week, Minnesota lawmakers and the Mayo Clinic said that they are supportive and open to the creation of an independent board and to different ways of implementing a value index or incorporating quality into the equation.
Korsmo added, however, that the advisory council should be willing to move quickly to reform the Medicare payment system if a value index is ultimately not included in the bill.
“We believe there have been a lot of people gathering and studying the data and drawing conclusions about the data regarding quality and cost for many years,” Korsmo said. “Yet, we still haven’t put any of it into practice. In our experience, if you don’t start using the data, you won’t know how to improve it.”
From a political standpoint, the Minnesota delegation also sees this unique moment as a critical time for action.
“I am fearful that the political pressure of the regional differences will be too strong to overcome this if we miss this opportunity,” said Walz. “It will be hard to get the stars and momentum aligned again.”
Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.