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Monday, September 28, 2009

Health The Cantwell Amendments: Fee For Service

Posted by Eli Sanders on Mon, Sep 28, 2009 at 11:38 AM

After several months of public concern about where exactly she stood on health insurance reform, Washington Senator Maria Cantwell recently used her status as a member of the powerful Senate Finance Committee to offer several amendments to a proposal by her committee chairman, Max Baucus (D-Montana), for overhauling the broken American healthcare system.

Among these amendments, the most revealing and easy to understand is the one Cantwell co-sponsored with Sen. Charles Schumer (D-New York). It would delete Baucus's proposed "co-op compromise" and insert a strong public option. Question answered: Cantwell is, in fact, willing to challenge her committee chairman on the issue of whether to create a government-run insurance plan as a way of bringing down health care costs for all Americans.

But that's probably the least likely of her amendments to pass, so let's take a stroll through the other ones, starting with Cantwell Amendment #D-1, otherwise known, via its "short title," as the Incentivize Value in the Medicare Fee-For-Service Physician Payment Formula Amendment.

Wake up!

Despite that awful title, this amendment actually contains a hugely important idea, one that was described in far less snooze-inducing language by Atul Gawande in the June issue of The New Yorker. The idea is that the way Medicare currently reimburses physicians—on a fee for service basis—is making the whole system untenable and leading to insane outcomes like the situation in McAllen, Texas, where doctors have found that the best way to make money under the fee-for-service formula is to, duh, provide way more services than their patients actually need. The doctors in this little corner of Texas get rich; their community gets no more healthier; places like Washington State, where doctors tend to be more responsible, get financially screwed; and the whole system gets closer to insolvency. As Guwande writes, the debate over whether to have a public option or not may actually be less important than the debate over fee for service:

When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes. You get McAllen.

That's what Cantwell is trying to do with this amendment: reconfigure the Medicare reimbursement structure in a way that incentivizes "high-quality, low-cost" care by, essentially, reviewing whether procedures in a given area are effective and appropriate. The less efficacious and appropriate the procedures are, the less reason for the government to be reimbursing them.

Full summary of the amendment—whose ideas have now been accepted into the current draft of Baucus's bill—in the jump.

Cantwell Amendment #D-1 to America’s Healthy Future Act of 2009

Short Title: Incentivize Value in the Medicare Fee-For-Service Physician Payment Formula

Description of Amendment: The Secretary of Health and Human Services shall apply a separate payment modifier to the physician payment formula, independent of the Geographic Adjustment Factor. This separate payment modifier will, in a budget neutral manner, pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. Quality shall be based upon a composite of appropriate measures of quality that reflect the health outcomes and health status of Medicare beneficiaries served by physicians or groups of physicians. Costs shall be based upon a composite of appropriate measures of cost that take into account justifiable differences in input practice costs, as well as the demographic characteristics and baseline health status of the Medicare beneficiaries served by physicians or groups of physicians.

The Secretary would be required to specify, during fee schedule rulemaking applicable for 2011, how the measurement of quality and cost would be structured, as well as specifying the prospective performance period. During the performance period, which will begin in 2012, the Secretary will provide information to physicians about the value of care they provide. Performance would be assessed and the Secretary will implement payment consequences beginning in 2013.

The payment modifier shall be applied in a way that promotes systems-based care. The Secretary shall coordinate these value-based purchasing reforms with other HHS initiatives that are intended to incentivize more integrated and coordinated delivery of efficient and high-quality care.

The Secretary would be required to ensure that: (1) the VBP report to Congress includes a plan for moving the physician payment system to a value-driven model; (2) the plan is phased-in, in accordance with the schedule described in the plan, ensuring implementation as quickly as practicable, but no later than within five years of the initial implementation of this section. By this time, all physicians or groups of physicians must be participating in a payment system that holds them accountable for the value of care they deliver to Medicare beneficiaries.

Offset: This amendment is budget neutral.

Comments (11) RSS

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Nice summary, ES. Thanks.

Posted by PedestrianMe

on September 28, 2009 at 11:42 AM

Just have Obama take a page from Bush and take whatever gets passed, add a signing statement saying he understands it to be single-payed coverage and enforce his own will.

Posted by The Amazing Jim

on September 28, 2009 at 12:16 PM

3 Comment Pulled (Spam) Comment Policy

Um, all well and good, but three-quarters of American citizens want single payer national health care and we're not going to stop demanding it, just because you're a bunch of cowards.

Posted by Will in Seattle

on September 28, 2009 at 12:33 PM

She's also in a good position to defend the public option. She needs to here from constituents that support this option.
Her DC office # is (202)224-3441.
Takes two minutes to call. Might make a difference.

Posted by codswallower on September 28, 2009 at 12:56 PM

I don't think the amendment would do as you suggest. It might make a tiny tiny dent where procedures and tests are being ordered with little medical necessity, but the sort of over-ordering Guwande is talking about is othe overutilization of tests and procedures that are arguably part of appropriate care. It's just a very aggressive and expensive form of care where a cheaper and more conservative option is necessary. One wouldn't expect this sort of overuse to negatively impact patient care at all, so it wouldn't tend to make the care provider suffer vis-a-vis quality of care metrics, and it wouldn't ultimately affect their compensation.
There's really only one way to fix the problem Guwande is talking about: don't cover or only partially cover expensive courses of care where more conservative ones are available and deemed medically adequate.

Posted by kinaidos on September 28, 2009 at 1:18 PM

First off, a spelling correction. The name is Atul Gawande, not Guwande.

Anyway, I remember being quite struck by his New Yorker article some months ago. If Cantwell's amendment is indeed a serious challenge to the perverse incentive that is fee-for-service, I commend her.

After the lack of competition for health insurers, the fee-for-service model could well be the biggest economic problem with our current health care/insurance system.

Posted by cressona on September 28, 2009 at 1:50 PM

Why not do it like England - pay more based on outcome. More healthy your patients, more money you get!

Posted by kersy on September 28, 2009 at 1:52 PM

I like how Cantwell is showing that her early deference to her committee's chairman was just good Senate politics.

Posted by josh

on September 28, 2009 at 3:03 PM

Re previous comment, dictators making laws with signing statements will very swiftly result in massive death and destruction, and fantasizing about a benevolent dictator making a law you like (only to have the next guy whom you don't fantasize about overturn it) distracts from the real need to stop thinking about the emperor or senators and focus on compelling House members to represent us -- which is the only real shot we have.

Posted by David Swanson on September 29, 2009 at 8:30 AM

The situation in McAllen is more complicated than presented. It also has sky-high malpractice claims - and this is chicken or egg issue - where doctors justify more tests as a shield when plaintiffs argue they weren't thorough enough. There are also too many patients for not enough clinics/hospitals/doctor's offices. I'm no fan of "tort reform" but the medical system in South Texas is badly broken.

Posted by know something on September 29, 2009 at 7:39 PM