REFORM: Medicare versus Cassandra

As promised, we're back from our Medicare conference where we learned a new word - the wonkosphere...

New America's director of Health Policy Len Nichols started us out with a nod to Cassandra, arguably Washington's favorite prophetess. Medicare faces trouble - at least in the long run. More retiring Boomers, more chronic disease and inefficient, costly ways of treating elderly people that vary sharply from one part of the country to another without any rhyme or reason. To avoid what Nichols called "some really ugly choices" down the road, we need to make smart choices now to protect Medicare's sustainability, the health of our seniors, and the federal budget.

So what do we have to do? And is Congress politically or institutionally able to do it?

The talks at our day-long event focused on two big themes - governance of Medicare, and "value-based purchasing," which as veteran actuary and RAND adjunct staff member John Bertko put it means "the right mix of quality, efficiency and appropriate services. " Dr. Robert Berenson of the Urban Institute, Len Nichols' co-principal investigator for this project, gave a more detailed definition, encompassing:

• Provider eligibility requirements
• Benefit design
• Payment policies
• Coverage policies
• Technical assistance
• Consumer information and education
• Pay for performance
• Collaboration with purchasers and providers
• Direct intervention in care delivery
• Regulation

Lawrence Casalino, a physician and professor of health policy at the University of Chicago, outlined ways of building on the current system to improve care coordination, create ways for doctors and hospitals to better work together, and stimulate development of more medical homes - which in his view should serve not just people with multiple chronic diseases but any Medicare beneficiary that chooses one. He also described "Accountable Care Systems." Those would be a medical home plus a large enough organization to take on responsibility for the overall cost and quality for a given population of patients. The incentives would reward measurable quality of care, not just managing costs. (See details of his and other presentations coming soon here. A webcast should be up Friday, and a transcript a few days after that.)

Charles Boult, MD, of the Johns Hopkins Bloomberg School of Public Health, looked at what we already know about care programs that work for medically vulnerable Medicare patients, people with such diseases as congestive heart failure, and how we diffuse and replicate proven programs that, for instance, help in that dangerous transition period between hospital and home, or help train caregivers for the chronically ill. Several speakers predicted that if Medicare innovates, private health plans will follow.

Casalino had the enviable - or unenviable, depending on your place in the wonkosphere - assignment of envisioning new care models without worrying about whether they were feasible. But these ideas, or similar ones, are now beginning to become part of a serious bipartisan dialogue in Washington and among experts around the country. MedPAC, whose executive director Mark Miller took part in the conference and agreed with much of what Larry Casalino said, has been influential in moving the debate on delivery system reform, and both Obama and McCain have picked up on elements of it. As Casalino said, the national conversation has evolved to the point where "things may not be as infeasible as I thought."

Alas, Timothy Jost, a law professor at Washington and Lee, stepped in with a legal analysis that dampened any outburst of feasibility fever. If there's a legal impediment to Medicare reform, Jost's paper addressed it. Luckily, he also identified enough safe harbors to keep health care innovators safely afloat among the shoals of anti-kickback and self-referral laws, gainsharing obstacles, anti-trust legislation, and the due process provisions of the U.S. Constitution.

The second half of the story: even if Medicare figures out where it needs to go, can it get there? Will Congress manage, micromanage or insert its 535 heads in the sand? As several speakers noted with concern, the perpetual postponement of a competitive bidding program for durable medical goods (like oxygen tanks or wheelchairs) does not bode well; health care providers are also constituents, and often powerful ones at that.

Len Nichols put forth the idea of creating some kind of new board of trustees or overseers for the program, to alleviate some of the political pressures. Several speakers, including John Rother of the AARP, referred to various proposals that have been floated to create some kind of "Federal Reserve-like" board that would make some of the more technical pricing and coverage decisions. Or a "MedPAC on steroids." Those approaches could take Congress out of the business of making detailed small bore pricing and benefits decisions, and insulate them if, for instance, makers of orthopedic devices for diabetics happen to live in their district. And create jobs. Or donate to their campaigns. But it is not clear at all that Congress wants to give up any of its authority, even authority it may be ambivalent about exercising.

Overall though, there was a general sense that a consensus may be emerging, and that we may be able to take action in time to avert those "really ugly choices." We know what direction we need to go in. Berenson, for instance, spoke about visiting a hospital that had made truly dramatic strides in reducing the number of patients who were readmitted to the hospital in less than a month. The hospital had misinterpreted a Medicare policy and erroneously concluded that Medicare would not pay anymore for any readmissions. If an urban legend can bring about positive results, Berenson said, think about what we could do if we had a genuine payment policy.