In today’s healthcare discourse, Medicare has
become the sine qua non of impassioned debate. And during the 2019
Forbes Healthcare Summit, the current Administrator of the Centers for Medicare
and Medicaid Services (CMS), Seema Verma discussed its future. Although,
she did emphasize that changes needed to be made, she also made sure not to
make them political. In itemizing these changes, she cited three critical areas
that require scrutiny and improvement: the lack of healthcare cost and care
transparency; the accrued complexity of government healthcare regulations; and
the legislative impediments to making responsive changes when presented with
new circumstances.
The overall theme for Ms. Verma’s remarks was
the need to slow the growth of healthcare costs in the U.S. while at the same
time, improving patient care and patient outcomes. She reflected on one
bright spot in U.S. healthcare — the decrease in the overall cost of healthcare
as a percentage of GDP, which has happened for the first time in 13 years.
However, healthcare costs are now growing faster than the rate of GDP
growth, and Congress has done nothing to bend this cost/growth curve.
Ms. Verma also highlighted the gaps in
Medicare coverage that need to be fixed. These coverage gaps reduce the
quality of life for patients, impose additional costs to patients, and
ultimately result in added costs for the Medicare system. One example of
this phenomenon, is insulin monitor coverage for diabetic patients. These
monitors are highly effective for regulating blood sugar and thereby reduce
complications of diabetes. They are routinely covered by commercial health
insurance, but when an insulin-dependent patient enrolls in Medicare, insulin
monitors aren’t covered, due to outdated coverage allowances that are
prohibitively difficult to update.
She then focused on increasing transparency,
which is being implemented by a Presidential executive order that requires
hospitals to disclose the negotiated prices that insurance companies are being
charged for different procedures. However, hospital groups, including the
American Hospital Association, are resisting this initiative through lawsuits
to prevent disclosing what insurance companies pay for hospital services.
The objective of price transparency is to
reduce the prohibitively high cost of co-payments and deductibles. The
belief is, when patients are informed about costs and have the ability to
compare costs, they will be able to choose better care at lower cost and at the
same time reduce costs to Medicare. A provision of this initiative
requires hospitals to make pricing machine-readable so that CMS can evaluate
price/performance data. If such information is not provided, the
institution could be fined. New Hampshire and Kentucky have both
experimented with price transparency and their costs for healthcare have also
decreased.
The rules and regulations that govern
physicians who treat both Medicare/Medicaid and private patients have become
burdensome and in some cases outdated. The Stark Law is an example of
legislation that was appropriate when introduced in 1989, and even with several
amendments, is out of step with today’s healthcare environment. This law
was intended to prevent abuse in a procedure-based healthcare system, but
medical practice is continuously evolving, and today’s evolution to a
value-based or coordinated-care system is being thwarted.
In value-based, or coordinated care practices,
teams of physicians and other medical providers can work together to
effectively and efficiently care for patients. These teams succeed because
the members refer patients to each other, which is currently prohibited by the
Stark Law. The Department of Health and Human Services has proposed
changes to modernize and clarify the regulations in the Stark Law and the
Federal Anti-Kickback Statute, but Ms. Verma pointed out that necessary changes
through Congressional legislation could take years to implement, thereby
delaying improved medical practices and postponing cost containment.
The proposed new rules would ease the
compliance burden for healthcare providers, while maintaining safeguards that
protect patients and programs from fraud and abuse. When finalized, they
could facilitate outcome-based payment arrangements. Patients with end-stage
kidney disease, for example, could be furnished with two-way, real-time
interactive communication systems that operate between the patient, healthcare
facility, and physician. Caregivers could have access to data analytics
software to help monitor patients in real time. Hospital re-admissions
could be reduced when physicians are able to provide discharged patients with
care coordinators and remote monitoring technology to assure appropriate
follow-up care, or alert physicians and caregivers when healthcare intervention
is needed to prevent unnecessary ER visits and re-admissions.
The last critical issue that she spent
time explaining needed resolution, was how to pay for multi million-dollar
drugs now being introduced, which can correct inherited diseases, thereby
reducing the lifetime cost of treating people with rare and debilitating
disorders. Such curative and cost-saving therapies are of no use to
patients if they can’t afford the new drug.
One new concept in healthcare that is being
explored for reimbursement of highly expensive drugs is payment
indemnity. Under this concept, the manufacturer would only be reimbursed
for the full price of the drug if the patient makes full
recovery. Otherwise, reimbursement would be a percentage of the full
price, based on the extent of beneficial impact of the drug. Again, going
back to current law, the present Medicare law makes it a challenge to
introduce this form of pricing, since the average price for a drug becomes the
basis for a fixed Medicare price, often referred to as a drug’s Best
Price, which would severely reduce reimbursement to the manufacturer and delay making
them available to Medicare patients at more affordable rates through
indemnity plans. Delaying introduction of these new drugs because
outcome-based reimbursement would make them unprofitable, would have a negative
effect on treatment outcome and increase cost of care.
Ms. Verma’s ultimate message is that
innovative medical practices must be implemented to both reduce the growth rate
of healthcare costs and to improve patient outcome. Competition should be
the key to achieving both of these objectives because competition is always
beneficial. She alluded to the need to act now, while the economy is
flourishing, otherwise healthcare’s problems will surely multiply during the
next recession. Like all other sectors of healthcare, Medicare’s costs are
guaranteed to grow, but Medicare isn’t the problem. The real problem
is the total healthcare industry and the norms that are taken for
granted. If we could begin to control costs in Medicare, which is the
largest healthcare consumer in the U.S., then we would understand how to
control overall healthcare costs for the benefit of patients, providers,
insurers and taxpayers.
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