By Rebecca Adams, CQ HealthBeat Associate Editor
October 22, 2010 -- The new health care law contains several elements that are designed to revolutionize the way that Medicare pays for medical services. But leading policy analysts said at an American Enterprise Institute briefing Friday that many political and institutional challenges could keep that promise from being fulfilled.
The experts at the AEI briefing discussed a wide range of ideas in the health legislation (PL 111-148, PL 111-152) that will soon be tested via demonstration projects by the Centers for Medicare and Medicaid Services (CMS). The goal of many of the payment changes is to pay less for a higher quality of medical care.
But the political interests of affected providers and lawmakers can slow things down, said Michael O'Grady, a senior fellow at the National Opinion Research Center.
Demonstration projects do not automatically lead to policy changes, and findings can take years to develop. During that time, advocates for expanding a program may leave an agency, lawmakers could intervene to block a policy adjustment or the program could be overlooked among other priorities.
"It's not enough to have good data, smart analysts, and clever, elegant design," he said. "You do have to be smart about politics and how you're doing it....This is a pluralistic society, and people will have to be convinced this is a good idea."
O'Grady cited a long-term care partnership program as an example. Congress exempted some long-term care insurance from being counted toward Medicaid eligibility for patients. Four states submitted proposals to test the idea, O'Grady said, and then lawmakers led by Rep. Henry A. Waxman, D-Calif., repealed the authority for it because they were concerned that more middle-class people would start trying to get Medicaid to pay for their care. Over time, however, O'Grady said that support for the program was restored.
Robert Berenson, an Urban Institute fellow, and Mark McClellan, director of the Brookings Engelberg Center for Health Care Reform, noted that CMS has tested different ideas that appeared to work well and then the projects have lingered without being scaled up for the entire Medicare population.
McClellan highlighted the Medicare Physician Group Practice demonstration that he oversaw as CMS administrator—it took five years to start up and, after nearly 11 years, is still being evaluated.
One idea that has gotten attention recently—a concept known as accountable care organizations (ACOs)—involves groups of providers such as doctors, hospitals and skilled nursing care facilities that will coordinate on a patient's care. The idea is to start incentivizing providers to organize patients' treatments in a more holistic way and avoid duplicative tests. Experts say that the current system drives up spending through financial incentives because Medicare pays doctors and hospitals more for providing each additional service in a piecemeal way and delivering more complex types of treatments, instead of providing preventive care that can be better for patients.
The health care law calls on CMS to create demonstration projects that, starting in 2012, will test out whether ACOs can provide better medical care and save money. The providers would share in any savings. (See related story, July 16, 2010)
LMI Center for Health Reform senior fellow John M. Bertko suggested that CMS initially move slowly on trying out the ACO model, by partnering with perhaps 20 sites in 2012. He said that he is enthusiastic about the prospects for saving funds through more organized care.
Bertko noted that ACOs have some common traits with health maintenance organizations. Both groups seek to encourage medical providers to work more closely together and communicate more about the best way to treat all of the medical problems a patient faces, rather than just paying for each service in an uncoordinated way. But he emphasized that ACOs will be different than HMOs, which faced a backlash from consumers in the 1990s, in that HMOs will not restrict patients from choosing doctors outside of a network or officially enrolling patients or acting as gatekeepers that can deny medical services.
Other models will be tested out through a new CMS division, known as the Center for Medicare and Medicaid Innovation (CMI), that will allow agency officials to experiment with new payment models starting early next year. CMS Administrator Donald M. Berwick has said that he spends more of his time focused on that center than almost anything else.
The center will spend about $10 billion over a decade to test out new payment methods and health care delivery systems that are supposed to cut costs while improving the quality of care delivered to patients.