How to Fix Medicare & Medicaid? 6 Hospital CEO's Weigh In

Expensive PET Scan SystemHere is food for thought: six CEO’s of Hospitals around the country have given their responses to the question: “How Would You Fix Medicare and Medicaid?

These responses highlight issues that are not commonly covered in the public debate about how to address the mushrooming medical costs that threaten the future of Medicare and Medicaid. The responses of the six hospital CEO’s were published today in the journal, Hospital Review.

There seems to be consensus that our Medical System’s focus on payment for services-provided, without regard to health outcomes, coupled with no incentive for Medicare or Medicaid patients to watch costs themselves for the care they demand, produces economic incentives for hospitals and doctors to give ever more costly – but sometimes unnecessary – medical tests. This escalates the costs of health care at ever increasing rates.

The Affordable Care Act includes a program to include health outcomes in the mix in determining Medicare and Medicaid reimbursement rates. But, these Hospital CEO’s point out that if a performance-based reimbursement program fails to take into account the life circumstances of patients, this may end up discouraging doctors and hospitals to serve the most vulnerable populations who present greater challenges to securing good medical outcomes.

As stated by Steve Lipstein, president and CEO, BJC HealthCare (St. Louis), “When Medicare in particular measures health outcomes because they want to reward those medical professionals who produce the best outcomes, they don’t take into account a patient’s income, literacy level, obesity, education, or other life circumstances. And there is much evidence to suggest it is easier to produce good health outcomes in communities that are characterized by high income, high education levels and good health status.”

“The Medicare program now is beginning to pay for performance using value-based purchasing and accountable care organization models,” Mr. Lipstein explains. “Medicare will pay more to hospitals and physicians who produce better outcomes at a lower cost.” “But,” he challenges, “we have to ask: Will ACOs serve vulnerable populations if an easier and more reliable path to financial success comes with locating in high income, high education communities?”

Lipstein goes on to advocate adjustment of health outcomes based upon a “life circumstances index” in the formula for determining Medicare reimbursement rates under the new performance-based system being developed under the Affordable Care Act.

“An important fix for Medicare would be to introduce the development of a life circumstances index, something akin to the current Medicare case mix index used to differentiate patients according to medical condition and severity of illness,” he states. “A life circumstances index would take into consideration a patient’s individual income, English reading literacy, education level, obesity, smoking history, the presence of a physical or emotion disability and substance abuse history,” he explains.

For further enlightening views by Mr. Lipstein, as well as by Jeff Fee, president and CEO, Providence St. Patrick Hospital (Missoula, Mont.), Patrick Quinlan, MD, CEO, Ochsner Health System (New Orleans), Mark Robitaille, president and CEO, Martin Memorial Health Systems (Stuart, Fla.), Craig Svendsen, MD, chief medical quality officer, HealthEast Care System (St. Paul, Minn.), and Kevin Unger, president and CEO, Poudre Valley Health System (Fort Collins, Colo.), see the article in today’s issue of Hospital Review.

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