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AIS's Health Business Daily
Featured Story October 14, 2008 Former CMS Head: 2009 Will Be an 'Ugly Year' for Medicare Reprinted from HEALTH PLAN WEEK, the industry's leading source of business, financial and regulatory news of health plans, PPOs and POS plans. By Steve Davis, Managing Editor, (sdavis@aispub.com) Former CMS Administrator Tom Scully predicts that 2009 will be "a big ugly year" for Medicare in general and Medicare Advantage (MA) plans in particular. He made that prediction during a "CMS Administrator Roundtable" discussion at the America's Health Insurance Plans (AHIP) annual Medicare and Medicaid conference in Washington, D.C., Sept. 23. The panel, which included two other former CMS chiefs, offered their perspectives on the future of Medicare. "There hasn't been a major Medicare [reform] law in several years, and some people think it can't happen," Scully told attendees (apparently not regarding the July 2008 law as major). "But it can happen, and it likely will happen next year almost for sure." Such a bill, he added, will almost certainly target rates paid to MA insurers. Nancy-Ann DeParle, who left the agency - then known as the Health Care Financing Administration (HCFA) - in 2000, agreed that a major Medicare bill is inevitable next year given the turmoil on Wall Street and the growing national deficit. "And if I'm correct, health plans need to get ready," she warned. Insurers that sell MA plans, she added, need to provide CMS with a rationale for the price differential between MA and traditional Medicare fee-for-service (FFS). "I could actually argue in favor of paying [MA insurers] more under Medicare if they are really doing something to manage care and are showing results," she said. With the Medicare system expected to be insolvent by 2019, Congress has some time to revamp the way it reimburses physicians, former HCFA Administrator Gail Wilensky, Ph.D. said. A key problem under the existing Medicare FFS model, she told attendees, is that the quality of care that physicians provide has no effect on their level of reimbursement. "Nothing they do, good or bad, impacts their fees," she said. "It's a broken part of Medicare that urgently needs to get fixed." One of the problems with FFS Medicare is that when you pay a physician a fixed dollar amount for an office visit, you are not paying him or her to do chronic care management, she explained. And MA insurers haven't yet demonstrated that they can improve the health of enrollees, according to Wilensky. "Medicare Advantage insurers have the ability to lead the way and demonstrate to policymakers, beneficiaries and taxpayers that they are providing real value. That is the challenge for plans in the year ahead." However, she cautioned against trying to make too many changes to the system at once. "I would advocate a more moderate approach over the next 10 years," Wilensky said. Scully agreed and said the traditional Medicare FFS system rewards providers and health plans for the quantity of services provided rather than efforts to improve health. CMS contracts with Blue Cross and Blue Shield plans to administer the Medicare FFS program. "They write the checks, and [CMS] pays them a 0.5% administration fee," he explained. "When you do that, you become incredibly fast at writing checks and don't care how many services or CT scans you pay for." Instead, Scully says, the contracted Blues plans should receive a flat, annual per-member fee for managing care. "You get a better performance when you put the third party at [financial] risk." "The fundamental problem with Medicare is price fixing….Hospitals and doctors get paid the same whether they do a good job or bad job," Scully contended. Wilensky agreed and said Medicare has traditionally focused on controlling the price of health care services rather than controlling spending. |
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