GAO Bolsters Case for Medicare Payment Reform
Medicare is often described as a fee-for-service program, meaning exactly what it sounds like: physicians and hospitals bill the government for each individual service they provide to Medicare beneficiaries, and Washington writes them a check in return. The more services rendered, the more providers are paid — a system that’s fine when those services are necessary, but also creates a perverse incentive for doctors and hospitals to conduct more tests and procedures than might be needed. Indeed, the fee-for-service model is commonly criticized as a large reason that Medicare spending is rising unsustainably.
Democrats are trying to move away from fee-for-service Medicare, aiming instead to create a system that pays for the quality and outcomes of health services, rather than the mere volume of them.
This week those lawmakers got a little push. The Government Accountability Office on Monday issued a report finding that over-prescription of some medical procedures are inexplicably endemic to certain regions of the country, suggesting that care regimens are influenced by a nebulous medical culture that differs from place to place. “[C]ertain types of physician services, such as advanced imaging and minor procedures, are performed more frequently in potentially overserved areas relative to other areas, suggesting differences in physician practice patterns,” GAO found.
[P]otentially overserved areas had 44 percent more minor procedures — which include services such as ambulatory procedures, eye procedure treatments, and colonoscopies — per 1,000 beneficiaries than other areas. Potentially overserved areas also had 29 percent more laboratory tests and 19 percent more imaging services per 1,000 beneficiaries than other areas.
The agency defined “potentially overserved areas” as those “in the top half in both the level and growth in utilization of physician services.” Importantly, increasing the number of procedures doesn’t produce tangible health benefits for the patients on the receiving end, GAO found.
The findings weren’t lost on Sen. Max Baucus (D-Mont). The Senate Finance Committee chairman is leading the effort to transition Medicare’s payment system away from fee for service. In a statement issued Monday, Baucus said the GAO report is just further evidence that that transition is necessary.
This report makes clear that serious work remains in determining why the use of certain services under Medicare – like imaging and minor procedures – is much higher in certain parts of the country than others, irrespective of a patient’s real need, health status or the availability of doctors.
Moreover, the potential abuse and excessive spending revealed in this report is further evidence the status quo of rising health care costs is unacceptable for America’s seniors and the long-term fiscal health of the Medicare program.
Baucus’s health reform bill attempts to tie more physician and hospital payments to performance surrounding a number of quality measures.