MedPAC -- Technocrats only a Policy Wonk can Love

Like children at an Easter egg hunt, our elected representatives have been looking for the bestest egg of all, the one with real chocolate candy instead of one or two gummy bears. After sniffing around aimlessly for months, someone finally pointed them in the right direction.

...the Medicare Payment Advisory Commission’s (MedPac’s) recommendations could serve as a brilliant blue print for overhauling Medicare...

Until now, most reform advocates have ignored MedPac. The reports that the independent advisory panel issues in March and June of each year are long. They are dense with detail. And they are very, very smart. The commissioners understand that health care quality could be higher if we spent less on care.

They have digested the Dartmouth research revealing that when patients in some parts of the country receive more aggressive and more expensive care, outcomes often are worse. They realize that doctors and hospitals should be rewarded for the quality of the care they provide, not the quantity. As HealthBeat has reported, they know that the fee schedule that Medicare now follows favors specialists while underpaying primary care physicians, and they have suggested re-distributing Medicare’s dollars “in a budget neutral way”-- hiking fees for primary care while lowering fees for some specialists’ services. They have pointed out that some very lucrative procedures appear to be done too often, in part because they pay so well. The Commission has advised targeting these procedures and comp ring them to alternative treatments—just in case a less expensive approach might turn out to be more effective (and not as risky for the patient), as pricier, more aggressive treatments.

Finally, MedPac notes that some hospitals actually make a profit on Medicare’s payments. This is because these hospitals are more efficient: patients typically spend fewer days in the hospital and see fewer specialists. There are fewer readmissions, And generally, outcomes are better. MedPac suggests that when private insurers pay hospitals more, they may simply be rewarding less efficient hospitals for lower quality care. (And of course, private insurers pass those higher payments along to their customers in the form of higher premiums.)

MedPac goes beyond looking at how we pay providers. Investigating Medicare Advantage, it has described the care that private insurers are providing as somewhere between “disappointing” and “depressing.” Taking a look at the boom in hospital construction, MedPac noted, in its March 2008 report that “much of the added capacity is located in suburban areas and in particular specialties, raising the possibility that health care costs will increase without significantly improving access to services in lower income areas”.