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  • 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.

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