Don Berwick’s Impossible Job

Today’s Managing Health Care Costs Indicator is $509 billion

The General Accounting Office offered testimony today to Congress about why Medicare is a government program at “High Risk.”  They’re right – Medicare costs the government (us)  $509 billion annually, and doesn’t have the infrastructure or the regulatory latitude to do a superb job of improving health care.  CMS Administrator Don Berwick doesn’t have the tools to change this.

The GAO observed
·        10.5% rate of improper payment on the fee for service business (and 14.1% rate of improper payment to Medicare Advantage plans)
·        Large-scale fraud in home health care
·        Overspending on oxygen therapy
·        Inadequately vigorous oversight of nursing homes

Here are the GAO’s recommendations:

  1. Implement an effective physician profiling system
  2. Better manage payment for imaging (such as radiology)
  3. Reduce fees when appropriate as technology lowers provider resource costs
  4. Readjust the GPCIs – the geographic payment adjustments for rural providers
  5. Improve contract oversight (including better review of claims at high risk of fraud and better nursing home oversight)

This is all sensible.  Fraud is certainly a problem in Medicare, and the feds have been late to move to predictive modeling and automated approaches to ascertain potential fraud. There is huge variability of care.  Imaging costs too much.   Payment differentials among areas don’t make economic or clinical sense, and while specialty societies go to the RUC (Relative Value Scale Update Committee) to complain about under-reimbursed procedures, but no external party keeps eyes out for over-reimbursed procedures.

But how realistic is this? Can CMS Administrator Don Berwick effectively follow the GAOs gameplan to make Medicare more effective?

Medicare can profile physicians, and has a large enough penetration of most adult practices that the profiling would be better than most.   BUT – legislation requires that Medicare offer participation to any willing provider. Physicians can be removed for the program for fraud – but not for inefficient resource use.  There is no ability to change benefit design to encourage Medicare members to go to higher value providers.  So it’s not clear that Medicare has the leverage to make profiling meaningful.   It’s also a huge job that ideally requires substantial engagement of practicing physicians – and Medicare isn’t resourced for this.

Medicare has lowered radiology professional fees substantially – but of course radiologists and hospitals oppose any fee concessions.   Reducing fees to account for efficiencies in technology means there will be losers. Those who get a financial haircut are almost always vocal. 

The GPCIs, and even local fee schedules, have long been micromanaged by members of Congress.  I’ve noted before that Ted Stevens obtained a permanent 35% rate increase for Alaska Medicare providersbo just before he left the Senate.     

CMS has been improving the oversight of contracts, but doesn’t have the staff to do more nursing home site visits. Separately, the GAO noted that bundled payments (such as for transplants) are administered by private health plans, but CMS doesn’t have the case management infrastructure to do this for Medicare beneficiaries.

A few ideas:

·        We should acknowledge that as much as we hate to see dollars spent on administration, Medicare’s administrative budget is too small for a program of its size. 
·        Congress needs to back off – and leave determination of prices to bureaucrats who can implement rules
·        We need to resource the RUC to do independent evaluations, as opposed to relying on testimony from specialty societies.

We need to be patient.  For its size, Medicare is remarkably effective at procuring care for our elderly and disabled. Its inflation rate has been consistently lower than the overall market (although to some extent this represents cost shifting to the private market).   Medicare has been run by able folks – both in Republican and Democratic administrations.  But they need a little more leeway, and some time to get the Medicare house in order.