two ways to limit medicare costs

6/3/2015 Two Ways to Limit Medicare Costs - Bloomberg View

http://www.bloombergview.com/articles/2015-05-14/two-ways-to-keep-a-lid-on-medicare-cost-increases 1/2

Medicarecostsarerisingabitfasterthantheyhaveduringthepastfewyears.Butbyreinforcingsomethechangesthatarealreadyoccurring,wecannipthisincreaseinthebudandtwodevelopmentsshowtheway.

First,hospitalsarestartingtomoreaggressivelyscreenskillednursingandotherfacilitiesthattreatdischargedpatients.Second,theMedicareactuariesnowhaveacknowledgedtheevidencethatit'spossibletoreducespendingbychangingtheformofpayment,andnotjustbymakingbluntcostcuts.

Policymakersandinsurancecompanieshavebeentryingtopayhealthprovidersbasedonthequalityofcareratherthanhowmuchcaretheyprovide.Oneexampleistheuseofsocalledaccountablecareorganizations,whichgivehospitalsandotherprovidersthefinancialincentiveandresponsibilitytoorchestratecomprehensivetreatmentforpatients.

Hospitalsdoseemtobelookinginsomeoftherightplacestocutwastefulspending.AnInstituteofMedicineanalysisin2013showedthatspendingonoutpatientcareistheprimaryreasonthatMedicarecostsvarysomuchfromplacetoplace.Andamorerecentanalysissuggestedthatexcessivespendingafterapatientwasdischargedactuallydidharm.Thosefacilitiesthatspentmoreonoutpatientshadworseresults,includinghighermortalityrates,thanlowercostfacilities.SkillednursingfacilitieswhereaboutafifthofMedicarepatientsgoafterleavingthehospitalwerethebiggestoffenders.

Thesefindingssuggestalotofunnecessaryspendingcanbecutafterapatientleavesthehospitalandhaveapositiveeffectoncarequality.Hospitalsareontotheproblembasedonarecentarticle

HEALTHCAREREFORM

TwoWaystoLimitMedicareCosts

ByPeterR.Orszag

MAY14, 20154:06PMEDT

aA

6/3/2015 Two Ways to Limit Medicare Costs - Bloomberg View

http://www.bloombergview.com/articles/2015-05-14/two-ways-to-keep-a-lid-on-medicare-cost-increases 2/2

inModernHealthcare.Therearesignsthattheyarescrutinizingskillednursingfacilities,andtryingtosendpatientstoonesthatproducebetterresults.Doingsorepresentsasubstantialopportunitytoreducecostandimprovequality,theheadofBethIsraelDeaconessMedicalCentersaidrecently.Iagreewholeheartedly.

TheotherencouragingdevelopmentisthattheMedicareactuarieshavenowcertifiedthataccountablecareorganizationsaremakingheadwayinholdingdowncosts.OnesuchorganizationsavedMedicare$384millioninitsfirsttwoyearsofexistence,accordingtoMedicareactuaries.Thatisn'tahugeamount,butstrongerversionsoftheACOconcepthaveshowngreatercostreductionsinMassachusetts,especiallyastimewenton.What'simportantisn'tthefindingbutthattheactuariessaidit.SuchcertificationisrequiredfortheHealthandHumanServicesDepartmenttoexpandvariouspilotprogramsthataretestingwaysofmovingtonewpaymentsystems.

Letshopetheactuariesfindandcertifycostreductionsandqualityimprovementsfromotherpaymentmodels,followedwithaggressiveeffortsbyHHStotransformthesuccessfulpilotprogramsintonationalones.Whencombinedwitheffortsbyhospitalstoseekoutmoreefficientcare,especiallyforoutpatients,wemightbeabletobeatbackanyrenewedsurgeinMedicarecosts.

Tocontacttheauthoronthisstory:PeterOrszagatporszag3@bloomberg.net

Tocontacttheeditoronthisstory:JamesGreiffatjgreiff@bloomberg.net