Washingtonpost news updates: Center for Medicare and Medicaid Innovation aims to cut health-care costs

Monday, February 27, 2012

Center for Medicare and Medicaid Innovation aims to cut health-care costs

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Center for Medicare and Medicaid Innovation aims to cut health-care costs

Text SizePrintE-mailReprints By N.C. Aizenman,

The Obama administration touts it as a key solution to the nation’s runaway health-care spending: a new national center set up by the 2010 health-care law to test and implement groundbreaking ways to cut costs while improving patient care.

On Thursday, a little more than 14 months after the center opened, officials will release a report summarizing its progress: 16 recent initiatives, funded with more than $1.7 billion in federal money, that will involve more than 50,000 providers over the next five years.

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?WONKBLOG | Health care spending grew more slowly in the past two years than it has in over five decades. Even with health care costs growth slowing, the U.S. still devotes 18 percent of its economy to the sector, more than most other industrialized countries. These charts explain how that happened, what drives up health care costs and whether they’ll continue to slow in years to come.

The Center for Medicare and Medicaid Innovation is technically limited to experimenting with payment incentives and methods of delivering care within Medicare and Medicaid, as well as the Children’s Health Insurance Program (CHIP). But its director, Richard Gilfillan, said he will work with providers who also see a large share of private patients, to ensure that the models tested are effective for those populations as well.

The sheer number of seniors covered by Medicare and low-income Americans covered by Medicaid suggests that any changes embraced by the doctors and hospitals that serve those patients could soon be adopted system-wide.

“The reality is that over the years, the private sector has by and large followed Medicare’s lead in payment systems,” Gilfillan said. “Medicare has been the most innovative payer if you look back over the last 30 years.”

With $10 billion in total funding to spend through the end of 2019, Gilfillan said he anticipates rolling out additional initiatives soon. They could include ideas that emerge at an “innovation summit” the center will hold in Washington on Thursday with about 1,500 representatives from the health-care and health technology fields.

The initiatives — the longest of which has been running for a few months — could take 15 to 18 months to produce results, he said. If an approach is found to either reduce spending without lowering the quality of care, or to improve the quality of care without increasing costs, Health and Human Services Secretary Kathleen Sebelius will have new authority to implement it nationwide.

Some health-care experts question how many of these experiments will result in significant savings.

They point to a study released by the Congressional Budget Office last week that found that savings were produced in only one of 10 major Medicare demonstration projects tried by administrations since 1967 — all of them similar to initiatives the innovation center has begun.

“It would be wrong to assume we shouldn’t do these new projects just because the last ones didn’t succeed,” said Robert Laszewski, a health-care consultant with clients across the industry. “If Thomas Edison had stopped the first time he failed, we wouldn’t have the light bulb.”

Still, he said, it is worth focusing on the key feature of the one experiment that did succeed: It penalized providers that did not produce savings.

“What we’ve learned is that you can’t rely on people to do the right thing just because you’ve provided them with more information,” he said. “You’ve got to change the way they’re paid so that there is a downside to not doing the right thing. .?.?. You can’t have all carrot with no stick.”

The center’s current list of initiatives is a mixed bag in that regard.

Several are focused on incentives — for instance, offering extra compensation to primary-care providers to coordinate patients’ treatment and prevent them from developing costly illnesses.

Another initiative will spend $77 million to test whether doctors and hospitals can save money by forming “accountable care organizations” that receive a set amount for each patient and then coordinate care. It offers pioneering ACOs a choice: They can keep a large amount of any savings they produce, but take a hit if their costs exceed government targets. Or they can choose to be insulated from that financial risk in exchange for a smaller share of any savings.

Among the most ambitious experiments is the “Partnership for Patients,” which will provide more than 7,100 organizations — including more than 3,200 hospitals — $500 million to help them reduce hospital-acquired conditions.

In exchange, participating providers have pledged to reduce preventable harm in hospitals by 40 percent, and to cut readmissions to hospitals within a month of discharge by 20 percent over the next three years. The partnership initiative itself will not penalize them if they fail. Providers will, however, have an incentive to succeed because of a separate provision of the health-care law: Beginning this fall, Medicare will dock the pay of hospitals with a high percentage of preventable readmissions.

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