One would like to know what she means by “Fees have been going up very modestly while spending in part B has been increasing rapidly — 12 to 15% per year”. As far as I know, physician reimbursements from Medicare have remained at 2005 levels. So one would like to know where this 12-15% per year spending increase is going – certainly not to reimburse physicians for medical care.

I would also like a simpler explanation for this statement – “Getting to the right type of reimbursement will be difficult as long as physicians practice in small, single specialty groups, since any payment strategy that focuses on paying for narrowly defined, specific interventions is inconsistent with paying for efficiently-provided, high quality care”. So if I get it right, Ms. Willensky will even try to tell physicians how they should set up their practices. We could practice in Russia or Cuba in the same manner, not in the U.S., the bastion of free enterprise capitalism; or is this thinly veiled Socialism?

Finally, why is the concept of fostering a trusting relationship between providers and consumers of healthcare so alien to Ms. Willensky? We don’t trust the same people who take of our health to make decisions on health care? Or do we trust the bean counters more? I am appalled by this statement by Ms. Willensky. Maybe looking at healthcare from a political background is not the best way to approach it.

Finally, how can the physician community speak with one voice, when Medicare and other carriers have so successfully implemented the “divide and rule” policy over the past 15 years or more? I as an individual physician have come up with specific ideas, which Ms Willinsky conveniently avoids addressing or pooh-poohs, rather ineffectively.

Doherty’s right that simply grafting P4P onto the existing system itself isn’t like to affect change—certainly not at the levels of performance-based payments currently under consideration. I would also emphasize that, like P4P, payments for coordination of care, whether under Doherty’s proposal or any other, can’t simply be grafted onto the current system. We need to transform the payment system, not just add new payments to the old ones.

I’m troubled by aspects of the other two comments that don’t seem to see the need for this kind of transformation. David Catron seems to be saying that everything would be fine if we would just let the market work. As a market-oriented economist, I have a lot of sympathy with trying to rely on markets, but that’s hard to do in a Medicare system that in some areas dominates the market. It’s also hard to do in health care generally, where 1) people are using someone else’s money because third party payment as a strategy makes sense at least for low probability-high cost events; 2) spending in very concentrated; and 3) many seniors don’t have sufficient income to pay for even the significant amounts of routine care they use. Nonetheless, some strategies are better at trying to mimic market incentives than others. The Medicare fee schedule coupled with a spending limit is particularly perverse in the incentives it provides, but an unconstrained fee schedule would be even more perverse. If Catron has a whole new world he is proposing in place of Medicare, that’s different, but he needs to tell us how that world would work.

Arvind Cavale sets up a straw man when he says Medicare spending is bound to keep rising because of the aging population. No one is suggesting controlling spending in the sense of preventing it from increasing at all — rather the attention is on moderating spending increases, which Medicare has not been doing very well — especially in Part B. Fees have been going up very modestly while spending in part B has been increasing rapidly — 12 to 15% per year. That kind of spending growth, particularly given what we know about variations in mix and severity of use coupled with mediocre outcomes, is a real problem and will only get worse if not confronted directly.

In a recent IOM report for which I was a member of the panel, we emphasized the need to build performance measures that cross all of the institutional and individual clinicians who treat a patient with chronic disease for a particular episode of illness or a particular period of time. P4P based on those sorts of measure is not a panacea for all of our spending problems, but it is one important step among a variety that are needed. Getting to the right type of reimbursement will be difficult as long as physicians practice in small, single specialty groups, since any payment strategy that focuses on paying for narrowly defined, specific interventions is inconsistent with paying for efficiently-provided, high quality care.

Cavale pleads for trust in the medical community, but in a world where patients only receive, on average, 55% of the care appropriate, and where spending goes up at a rate of 12 to 15% while fees go up by 1.5% or not at all, it’s hard to imagine just turning over the decision-making to the medical community and “hoping for the best” — even if patients would find this attractive, which if they knew more, they probably would not. Maybe Cavale means Medicare needs to take steps to engender trust within the medical community as a partner. If that’s what he means, a first step might be for the medical community and its leadership to come forward and suggest credible ways to reconfigure payment that reward the provision of high quality/efficient care.

“Medicare needs to institute policies that … reward providers for the efficient use of services … Figuring out how to create the right bundles and recognizing the significant power shifts that could result will be difficult and time-consuming.”

The market will reward providers for “efficient use of services” if the policy makers will allow it to do so. The current central-planning methodology is “difficult and time-consuming” because no group of experts, no matter how sophisticated, can possess all of the information that the market instills in a price.

Indeed, any government-imposed “sustainable growth rate,” whether it is based on the CPI, per capita GDP, or the effusions of the Delphic Oracle, is doomed to failure. Such efforts succeed only in creating perverse incentives that CMS must then attempt to fix by even more regulatory interference in the market.

I wish Milton Friedman were still alive and in charge of CMS.

The smart policymaker will look into how these Medicare dollars are best utilised. This is where the ACP’s concept of Patient-Centered Medical Home will fit well. All these years Medicare dollars have been spent largely in covering catastrophic events and procedures. For example, a physician will get paid better to treat a patient who has a heart attack than if he spent most of his/her energy in educating and managing chronic diseases and prevent a heart attack.

Unfortunately P4P as currently envisaged is a very poor method to asses efficient and effective care. The ideal method to asses overall outcomes of medical interventions involves the patient, patient’s caregivers and physicians. How does one prove objectively that an intervention actually saved an Emergency Room visit or hospitalisation? There is no good method to do this. The best alternative is to change the reimbursement concept for chronic disease management from an “episodic” to a “continuous” care model. Here one can clearly document (with an EMR for example) how ongoing interventions (such as regularly reviewing blood glucose logs for diabetics) potentially prevented the patient from seeking Emergency Care in a particular time period. In fact such interventions can clearly be shown to reduce even repeated office visits. However, without appropriate reimbursement for such active interventions, it is unlikely that physicians will adopt such methods on a large scale. What this also entails is adoption of appropriate technology so that there is rapid and effective transmission of critical information from the patient to the physician’ s office, thereby interventions can be made in a timely manner, so that unnecessary visits to the E.D. can be minimised. Such technologies are currently available, but their use is not encouraged by the payers, so severely under-utilised. We have a beautifully documented records of such activities (wholly unreimbursed but achieving great results).

Eventually, it comes down to how we as a society assign value to medical service and whether Medicare is willing to encourage an enviroment of trust in the medical community. If the average Medicare consumers had a say in this, I bet they would chose this model of care. We can only hope that the policymakers realise this soon.

The short answer is no. The SGR (a Medicare guardrail, if you will, for physician reimbursement increases) has been zapped by Congress every year of its existence because letting it actually go into effect is unpalatable — it would cut

I also agree with Dr. Wilensky that Medicare should begin moving in the direction of paying physicians for care coordination and acquiring the systems needed to coordinate care, especially for patients with multtiple chronic diseases. I co-authored a paper for the American College of Physicians, my employer, which proposes that Medicare pay physicians who demonstrate the capability to coordinate care through a patient centered medical home under a hybrid system that would: combine bundled, prospective and risk adjusted payments for care coordination (for the physician work outside of a visit and the practice level systems needed, such as patient registries and evidence-based clinical decision support), a fee for service componet for face to face encounters, and a performance based component. More information can be found at: http://www.acponline.org/hpp/statehc07.htm. This model would require, though, a willingess by Medicare and payers to recognize the value of care coordination and to pay primary care and principal care physicians at a high enough level that recognizes the value, work and expense involved. It also would require a willingness to break down Medicare’s payment silos, so that physicians who are able to reduce avoidable hospitalizations for patients with chronic diseases (such as by helping a diabetic patient avoid complications leading to amputation) can share in part of the savings in Medicare Part A. The Medicare Medical Home demo, enacted by the 109th Congress, is a start, since it would pay physicians who demonstrate the capabilty to coordinate care for patients with chronic illness under a different payment structure:, consisting of a care coordination fee and shared saviings from reducing Part A exxpenses.

One thing should be evident: none of these or other other promising appproaches to redesigning Medicare payment policies will succeed if physicians are facing an SGR cut of almost 10% next year and cumulative cuts over more than 40% over the next several years. The SGR simply has to go if we are to be able to move forward on re-aligning Medicare incentives to reward physicians for managing and coordinating care, for following evidence based guidelines at the point of care, and for acquiring the HIT and systems needed to do this effectively. Congress shouldn’t wait until all the demos are completed to recognize this reality and act accordingly.