It can be difficult to keep up with the jargon, countless proposals and complicated policies that surround the debate over Medicare reform. Whether you are discussing premium support, changing the eligibility age or Medicare for All, there is one relatively simple concept that patients should make a point to pay attention to – one that directly impacts them – and is the cornerstone of the debate. This concept has to do with the way Medicare currently pays providers versus the way it should pay providers, and how each of these payment structures influences the practice of medicine.
As most readers are well aware, Medicare currently pays providers on a fee-for-service (FFS) basis, meaning for each individual service they render, providers receive a fixed fee. Under this payment model providers are not only incentivized to provide more services, no matter their ultimate value to the patient, but their ability to innovate, coordinate across care settings and implement best practices is hindered. For example, if a physician in Austin, Texas comes up with a creative way to care for her complex patients with chronic conditions (her “hotspotters”) and it ends up reducing high cost visits to the ER, hospital or specialty office, the physician is penalized in a FFS system- her productivity numbers might appear low and she receives less reimbursement. Alternatively, new payment models, many of which are currently being tested or already in place across both public and private sectors allow for doctors and other providers to creatively coordinate care and potentially share in some of the savings that would simply go back to the insurance company. Additionally, bundled or episode-based payments for multiple services allow providers to work across different specialties and settings to achieve higher quality at a lower cost.
In addition to restructuring the payment system to promote coordination of care, we must also encourage a broader definition of what constitutes care that is worthy of reimbursement. Many innovative approaches that are adaptive to patient needs and modern demands, such as email or video consultations, co-location of behavioral health and primary care, comprehensive treatment plan development and tracking, and end-of-life counseling are often not reimbursed because it is hard to apply a dollar amount, or a “fee,” for their value. In the case of Medicare, we have an evaluation and management code for Telephonic visits (99441-3) but rarely reimburse these visits. Therefore, despite the fact that these practices are proven to improve the patient experience and potentially lower the cost of care, they remain uncompensated by FFS and thus sorely underused.
There are a great deal of promising pilots and efforts underway in Medicare such as the Comprehensive Primary Care Initiative (which allows multiple payers to come together and reimburse for population –based care as well as a number of Innovation Challenge Award winners who are introducing novel payment mechanisms. But pilots and initiatives are not enough.
The current FFS reimbursement model is a big problem for providers who want to deliver the best care to their patients, but it is an even bigger problem for patients. Patients deserve care that is personalized and works to meet their needs. We are seeing recognition of the need for this type of care with the development of new models such as accountable care organizations, etc.- there have to be complementary payment models that reward the type of care they aim to provide. This is precisely why the one-size-fits-all approach inherent to the FFS payment model is no longer viable.
Medicare patients may not realize this, but they should have a vested interest in seeing that Medicare move away from FFS to new payment mechanisms that allow providers the flexibility to innovate, not only because this will improve outcomes and better their health, but also because it will help reduce costs and sustain the program into the future. Sustaining Medicare into the future will undoubtedly require that care be adaptive to patient needs and new demands associated with increased chronic conditions, an aging population and myriad other factors. As a board member of the Partnership for the Future of Medicare, a bipartisan group dedicated to seeing that true, comprehensive Medicare reform is achieved, I am working with my colleagues to ensure that we begin the transition away from FFS Medicare and that these new payment models be brought to scale.
Kavita Patel is Managing Director for Clinical Transformation and Delivery, Brookings Institution, Engelberg Center for Health Care Reform. She could be reached on Twitter @kavitapmd.
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