WASHINGTON — The Democratic health care legislation comes
studded with cautious plans to test proposals for reining in Medicare costs.
History suggests, however, that even if the experiments are successful, the
odds aren’t high that their lessons will be applied to the entire program.
Consider the case of a 1990s pilot project that earned the
support of a president, several key legislators and successive Medicare leaders
from both parties. A five-year test showed that lumping together payments for
doctors and hospitals for some heart surgeries encouraged them to be more
efficient and reduced Medicare’s cost by 10 percent. But the project ran into
relentless opposition from doctors and hospitals. The result: Congress has
never approved the change for widespread Medicare use, and Medicare continues
to study the issue.
Successful Medicare experiments are “certainly not
enough to change policy,” said Paul Ginsburg, the president of the Center
for Studying Health System Change, a nonpartisan research group in Washington.
Yet Democrats’ hopes to “bend the cost curve” hinge in large part on
introducing successful Medicare experiments into the system. Because of
Medicare’s clout as the insurer for 45 million older and disabled Americans,
many private insurers follow its lead.
Medicare has conducted hundreds of tests, called pilots or
demonstration projects, since the mid-1970s, but it can’t apply them to the
entire system without congressional approval. Lawmakers have made other
important changes to Medicare, but pilot projects rarely have been the
catalyst.
Most experiments haven’t been expanded because they failed
threshold tests; they didn’t save money or improve care. Others passed that
test but were derailed by objections from hospitals, doctors and other
providers, or were caught up in political fights as control of Congress
shifted. Only a handful resulted in broad health-system changes. Two became
permanent programs. The biggest success — a more efficient way to pay hospitals
— occurred 27 years ago.
Congress is frustrated at the lack of innovation, aides
said. But they also said political leaders were hesitant to change the Medicare
system without such rigorous study and without consensus because they feared
that alterations could result in unintended dire consequences on a massive
scale.
Still, in the overhaul legislation that’s working its way
through Congress, lawmakers have added provisions that they hope can improve
the odds for implementing successful demonstrations. One measure seeks to
circumvent the difficulties of getting congressional approval for changes. It
would give the secretary of health and human services the authority to expand
demonstrations that work; Congress’ permission wouldn’t be needed.
Another would create an “innovation center” that
would allow Medicare to pursue promising ideas more quickly. Yet another would
set up an independent commission to recommend savings that would be implemented
if Congress didn’t act.
The 1991 heart-surgery pilot project shows how difficult it
is to prod Congress to change Medicare in the face of opposition from
providers. Gail Wilensky, who was then the head of the agency that runs
Medicare and Medicaid, began the test during President George H.W. Bush’s
administration. In the demonstration, Medicare combined a number of separate
payments usually made to hospitals and doctors for specific procedures and
follow-up care in an effort to discourage them from performing excess services.
Wilensky no longer ran Medicare by the time the
demonstration’s results were in, but as an adviser to Congress she said that
she thought the program was ripe for expansion. Her Democratic successor, Bruce
Vladeck, agreed, and Bush had supported the project.
His efforts to expand the demonstration fell flat, however,
because of broad opposition from such heavyweights as the Mayo Clinic in
Rochester, Minn., the American Hospital Association and — after Medicare
officials suggested including joint replacement surgery in the program — the
American Academy of Orthopaedic Surgeons.
That wasn’t the only promising demonstration to be quashed.
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In 1997, Congress instructed Medicare to test a plan under
which suppliers of durable medical equipment — oxygen tanks, diabetes supplies
and wheelchairs — would submit bids. Medicare would use the bids to generate a
range of prices that it would pay and would require suppliers who wished to
sell to its patients to meet those prices. After the demonstration showed a 20
percent savings, legislators in 2003 ordered Medicare officials to expand the
program.
However, by 2008, medical supply companies, worried that
they’d lose money, pressured lawmakers to reconsider details of the program.
Congress came to share the suppliers’ view that the bidding process was unfair
to smaller companies and delayed the project until 2011.
In late 1999, a similar experiment to extract better prices
from managed-care plans was jettisoned. Lawmakers had mandated the program two
years earlier, but when Medicare officials chose Phoenix as one of the test
sites for the project, insurers appealed to local members of Congress and the
program was killed.
A rare victory came in the 1980s. In 1981, Medicare’s
hospital costs were up more than 17 percent. That put pressure on Congress to
find a way to bend the cost curve. One demonstration found that paying a flat
rate for hospital services limited spending growth compared with the
traditional method of reimbursing hospitals based on how much they spent, plus
a small bonus.
Congress approved that change in the way hospitals were paid
in 1983. By 1985, hospital spending was growing by only 5.7 percent, according
to federal officials.
Democrats also point to other successes, such as a
managed-care program for social services, and the Program of All-Inclusive Care
for the Elderly, which pays groups of providers a monthly lump sum for
providing all care to frail, low-income Medicare patients.
In the current legislation are demonstrations that would
test “accountable care” organizations — also known as medical homes —
and combining physician and hospital payments for post-acute care. These
projects could change the way health care is delivered, increase its efficiency
and, over time, lower costs for consumers.
“Out of those pilot projects could come significant
changes in Medicare,” said Clifford Gaus, who directed Medicare’s
demonstration programs in the 1970s. “It just could take a long time. The
bending-the-cost-curve problem is now, not in five years.”
Via McClatchy-Tribune News Service.
