Prepared by: Abubakar Binji
Synopsis:
The concern of providing pleasing medical overhaul to all the citizens of the United States at costs which can be focused and succeeded is an unrelenting one. Presently, many Americans do not receive medical care that is satisfactory both in quantity or quality or equality, and the costs of such services are in equably dispersed due in part of healthcare disparities. The result is an incredible amount of needless physical pain and mental suffering, needless deaths, economic disorganization, and social and community waste. Besides, these circumstances and attitudes are principally unnecessary. The United States has the economic resources, the establishing capability with the capacity to act and react to these issues, and the technical familiarities to solve these problems of quality, quantity and cost effectiveness of our health care system. The Medicare program has a significant inspiration on the shape of health care delivery system in the United States, and, inversely, trends in the delivery system will affect how the Medicare program grows. The success or failure of new system to reform Medicare payment will depend on features in the health care system, such as industry structure and consolidation, inventions in payment systems, benefit structures, and other aspects of health care delivery. As I present today and analyze this article, its main purpose relies on proposing the use of Medicare payment system to change and transmute while enlightening the performance of the U.S health system.
Introduction:
Transforming health care delivery is arguably the single greatest current challenge in health care policy and practice today – more technically difficult, although less politically provocative, than its coverage expansion. There is no single change in policy or practice that will suit; instead, the problem must be addressed through a range of concurrent, sequential, and mutually reinforcing changes. The U.S. spends a higher percentage of its Gross Domestic Product (GDP) on healthcare than other industrialized countries; in 2003, it was 15%, versus an average of 8.6% in the OECD nations (the Organization for Economic Co-operation and Development, a group of major industrialized countries). The United States also spends more per capita than any other industrialized country, spending $5,635 per capita in 2003, versus the OECD’s $2,307. And coupled with high expenditures is the high cost of care for individuals.
The most important point of this article is that our nation’s health care providers — physicians, nurses, hospitals, and others — work hard to provide life-saving and life-improving care to millions of Americans. However, the level of quality and efficiency of care provided varies significantly but inversely across the country and across many levels in different healthcare organizations. It has become increasingly evident that the way health care is paid for in our system does not always encourage the right care, at the right time, for each and every patient. Today’s payment systems more often reward providers for the quantity of care delivered, rather than the quality of care and discourage, rather than encourage providers from working together to offer patients the best possible care. As a new approach and a key idea to understanding the article’s solution to the problem, Medicare would identify bodies of provider at different stages of incorporating the organization, compromise a sort of payment model that more suitably apply to such entities in the context of their present organizational configuration, and inaugurate rewards and requirements both to inspire improved quality and value, and to provide incentives for those organizations to move “up the hill” toward increased integration….
Medicare is a federal program that wages for certain health care cost for people aged 65 or older, under 65 and disabled, or any age with End-Stage Renal Disease (permanent kidney failure that requires dialysis or a transplant). The Medicare program is funded through a mix of premiums and cost sharing, payroll taxes, general revenues, and other sources. In addition to its dedicated funding sources, in 2010, $205 billion in general revenue, equivalent to 19 percent of all income taxes collected by the government, went to support the Medicare program (Congressional Budget Office 2011a). Workers pay into Medicare with deductions from each paycheck. This means that by age 65, a worker with full career has paid into the system for several decades. Medicare allows workers to pay into the system in small sums over an extended period of time and then receive benefits in much larger sums as they need them. Because most people who pay into the system will receive some benefits eventually, Medicare functions like a health savings account, in addition to a health insurance program. The money recipients get from Medicare represents payback for a lifetime of assistances. Those who are eligible and enrolled must pay deductibles and co-payments, but much of their medical expenses are protected by the program.
Medicare is divided into four parts. Part A covers hospital bills, Part B covers doctor bills, and Part C (or Medicare Advantage) provides the alternative to choose from a package of health care plans. Part C may help lower costs of receiving medical services, or beneficiary may get extra benefits for an additional monthly fee. Potential beneficiary must have both Parts A and B to enroll in Part C. Part D (prescription drug coverage) is deliberate and the costs are paid for by the monthly premiums of enrollees in Medicare. Medicaid and Medicare are two governmental programs that provide medical and health-related services to specific groups of people in the United State. Although the two programs are very different, they are both managed by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services. Medicaid is a means-tested health and a medical service program for certain individuals and families with low incomes and few resources.
The goal of Medicare payment policy should be to obtain good value for the program’s expenditures, which means maintaining beneficiaries’ access to high-quality services while encouraging efficient use of resources. Anything less does not serve the interests of the taxpayers and beneficiaries who finance Medicare through their taxes and premiums. Our general approach to developing payment policy recommendations attempts to do two things: first, make enough funding available to ensure that payments are adequate to cover the costs of efficient providers; and second, improve payment accuracy among services and providers. Together, these two steps should maintain Medicare beneficiaries’ access to high-quality care while creating financial pressure on providers to make better use of taxpayers’ and beneficiaries’ resources.
Alternative Payment Approaches: In addition to the continuum of bundled payment methods, the article’s proposed payment approaches to provider organizations, explicitly designed to reward quality of care- a kind of incentive program that rewards organization by encouraging high measure toward integration to achieve greater rewards. The author sets a new payment approach, in tallying to an already existing provider payment under Medicare’s present physician fee schedule and hospital diagnosis-related group case-rate payment– as one of the implications of reasoning if followed appropriately. These new payment approaches include (1) a global fee for primary care; (2) a global DRG case rate for each hospitalization, including post-acute care, subsequent hospital admissions, and emergency department (ED) care for thirty days after the initial discharge; and (3) per enrollee payment for IDSs. Each of these payment approaches are designed to provide some sorts of incentives for more coordinated and efficient care. Organizations achieving savings in the use of resources would share with Medicare in those savings—subject to their capability to meet performance standards.
One of the consequences that are likely to follow under these reforms is that providers organized as primary group practices, hospital systems, or integrated delivery systems would be eligible for alternative Medicare payment approaches, suited to a range of organizational structures, that align financial incentives with delivery of care focused on patients’ overall needs, rather than the provision of individual services. Each provider would have to meet certain requirements—accreditation, evidence-based care, electronic information capacity, and public reporting—to be eligible for alternative payment and the corresponding financial rewards. For example, qualified physician practices could receive a monthly risk-adjusted, per-patient global fee to cover all primary care services, with part of the amount covering the services provided as a patient-centered medical home. An integrated system, meanwhile, could be paid a global payment per enrollee to cover all Medicare services, including inpatient and post-acute care, ambulatory care, and prescription drugs. Organizations could earn rewards for high performance and share savings with Medicare program.
Rewards for Provider Performance: As was already mentioned above, rewards for provider distinction would be given to those organizations that performed well while displaying enhancement on pertinent sets of performance metrics. For the format to follow, the degree of these recompenses could be set for each type of provider organization to relate to the level of integration.
Beneficiary Rewards and Responsibilities: Medicare beneficiaries could designate a qualified physician practice to serve as their primary source of care, or they could be auto-enrolled into a practice if no choice were made. A relationship with an enduring, long-term source of care is the key to avoiding fragmentation and waste. Financial incentives such as lower premiums and reduced deductibles or coinsurance would be used to encourage beneficiaries to use services or referrals within the designated practice or delivery circle.
Medicare’s Role in Supporting Improved Provider Performance: In addition to designing and implementing an array of payment methods, Medicare would provide timely reports to provider organizations on their performance relative to comparative benchmarks. Medicare would also encourage provider participation by offering enhanced payment updates and rewards for quality and prudent use of resources.
Medicare, the federal health insurance program for 50 million elderly and disabled Americans, helps to pay for hospital and physician visits, prescription drugs, and other acute and post-acute services. According to Kaiser Family Foundation, Fact Sheet on Medicare Policy, in 2012, spending on Medicare accounts for 15% of the federal budget. Medicare also plays a major role in the health care system, accounting for 21% of total national health care spending in 2012, 28% of spending on hospital care, and 24% of spending on physician services. But Medicare, as the major payer, can and must also play an important role in any solution to its problem of higher federal spending. Medicare benefit payments are expected to total $556 billion in 2012; roughly two-thirds is for Part A (Hospital Insurance, or HI), and Part B (Supplementary Medical Insurance, or SMI) services. More than 20% is for Part C, Medicare Advantage private health plans covering all Part A and B benefits and just over 10% is for the Part D drug benefit. Medicare’s growth in spending and growth in health care spending overall affect beneficiaries in three ways—monthly premiums for Part B and Part D, cost sharing (coinsurance and deductibles), and out-of-pocket spending for services not covered by Medicare (such as long-term nursing home care). Approximately 90 percent of Medicare fee-for-service enrollees have additional coverage—private medigap policies, Medicaid, or employer coverage—to supplement Medicare’s traditional benefit (Medicare Payment Advisory Commission 2011a).
The impact of the new payment approaches will be greater if, as happened with the Medicare physician fee schedule, Medicare’s payment methods are adopted by private insurers and Medicaid/State Children’s Health Insurance Programs. By establishing a totally transparent payment system, Medicare could further encourage change throughout the health care system. Finally, there is a genuine concern that creating larger provider organizations might also increase their market clout with commercial insurers, leading to higher bundled prices. Although Medicare as a major purchaser is likely to be able to set fees at a rate that achieves savings with adequate provider participation, smaller purchasers might not be. It could be necessary to enact policies that counter this monopoly power, such as (in the extreme case) legislation that makes defined monopoly provider organizations “public utilities” responsible for an area-wide budget. In such cases, Medicare and commercial payers would shift to paying full capitation based on risk-adjusted and geographic cost-adjusted per capita spending.
This article proposed a new outline approach for the reform of Medicare provider payment, a model that shows promise of meeting all of the goals for Medicare payment reform that was set out above. It would (1) create incentives that empower health care providers to take broader accountability for the care and outcomes of their patients and enable them to benefit from doing so; (2) improve care coordination and reduce fragmentation in the delivery system; (3) slow the growth in Medicare outlays; and (4) serve as a model for private payers to increase the value obtained for health care spending.
A key question of this article is whether providers will choose to participate in this new approach. There is no guarantee, of course, that the new payment system would attract substantial “takers” in the provider community. However, some of the attractive features of the approach discussed above should encourage their participation. A number of entities could participate from the beginning. The trick is in designing payment incentives so that additional providers find it attractive to become qualified for the alternative payment mechanisms.
If we take this line of reasoning seriously, the risk and implication could evolve within the new system which could lead to overpayments or higher expenditures than under current payment methods. Providers who already excel at care coordination and controlling costs could be expected to be among the first adopters. However, Medicare could reduce the risk of overpayment by tracking baseline data on the continuum of care for the different payment methods for participating organizations during the start-up period and adjusting payment rates to avoid initial large windfall gains for provider organizations.
To date, efforts to increase value have centered on developing appropriate measures of quality and efficiency; collecting data on provider performance according to those measures; establishing mechanisms for reporting those data so that payers, users, and providers can use them to make appropriate decisions and indicate, facilitate, and implement required improvements; and determining and operationalizing the criteria and methodology for financial incentives at the margin to achieve high performance. The next phase should be aligning the financial incentives not only at the margin but built into the underlying payment mechanism to encourage and reward accountability and performance—in particular, higher quality and more-coordinated and efficient care. A flexible approach to calibrating payment rates and performance incentives, as well as disincentives for non-participation, will need to be followed, learning as experience is gained, with rapid turnaround of programmatic information and monitoring of utilization and savings.
It is indispensable that the bundled payment system be striking to both providers and their patients; it is equally indispensable that providers be able to reassure Medicare and their patients that they can meet certain requirements in needed. To change the way health care is systematically structured, the article supported the need to transform the way it is paid for—to move from FFS payments to bundled payments, which would enable and encourage providers to consider their patients’ needs in a broader context and provide more appropriate, integrated, and efficient care. In using bundled payments system, it would consist of a single payment for all services provided to a patient during a period of treatment. It does not carry self-interested view against services, rather it would include hospital and physician care while in the hospital and in the post-acute phase, regardless of the number of services provided. These bundled payment rates should be adjusted for the strictness of the patient’s illness (risk adjusted) in order to account for the additional resources required to treat sicker patients.
The main reference and conclusion to this article is that we will face great peril if our health system continues on its current course of high cost and suboptimal performance, especially as other countries surpass us in improving mortality and other indicators of high-quality care. In our very large and mostly privately owned and operated health care delivery system, changing payment incentives is one of the few tools available for inducing higher performance. The framework presented in this article shows how Medicare, using payment incentives, could lead the nation to higher health system performance and yield great benefits for individuals, providers, and society as a whole. For example, the point to understand in regard to the issue of healthcare system outside United States is that the advent of economics has never come to rescue the quality and efficiency of economy in general. Many may argue against such, but until the last few hundred years; land was even virtually the only economic `resource” with few minor exceptions, mainly metals. There have been number of cases of actual resource scarcity – or even exhaustion – usually limited to a particular resource or country. Rapid changes in healthcare systems require new professionals with a deep understanding of health and healthcare issues and a wide spectrum of skills to promote and manage changes at the organizational and policy level. One of my major concerns is that the uninsured will put off medical treatment until it becomes more urgent, which results in more and more expensive medical procedures in United States.
The author’s main assumption is that Medicare could help slow its cost growth, improve the value obtained for the dollars it spends, and serve as a model for broader health system change. Furthermore, the article’s main approach is to use Medicare’s payment policies to explain and stimulate important organizational changes of care in improving quality and ease cost growth. Medicare has much to advance from rewarding providers who are willing and able to be accountable for a broader gamut of care and heartening more providers to become so. Bundled payment intensifies the predictability of Medicare expenditures. Also, the new payment system creates compression on traditional providers to operate in more-organized systems of care and acquire the assistance needed to reach needed levels of performance. The next phase of efforts to increase value in health care spending should focus on aligning the financial incentives not only at the margin, but in underlying payment structures, to encourage and reward accountability, higher performance, and more effective and coordinated care.
Work Cited:
- Guterman S., Davis, K., Schoenbaum S., Shih A. (2009). Using Medicare Payment Policy To Transfrom The Health System: A Framework For Improving Performance. Health Affairs (published online), 2(28), 238-250.
- Anderson, G. F.,Frogner, B. K., Johns, R. A., Reinhardt, W. E. (May, 2006). Health Care Spending and Use of Information Technology in OECD Countries. Health Affairs, 25(3), 819–31.
- Kaiser Family Foundation: Medicare Policy. ( November, 2012). Medicare Spending and Financing. Retrieved December 10, 2012 from http://www.kff.org/medicare/upload/7305-07.pdf
- D.R. Rittenhouse et al. (2008). Measuring the Medical Home Infrastructure in Large Medical Groups. Health Affairs, 5(27),1246–1258.
- Paulus, R. A., Davis, K., and Steele, G. D. (2008). Continuous Innovation in Health Care: Implications of the Geisinger Health System Experience. Health Affairs, 5(27), 1235–1245.
