Medical Device Daily Washington Editor

The chairman of the Senate Finance Committee, Max Baucus (D-Montana), has been in hot pursuit of healthcare reform for some time, and the committee held a roundtable discussion Tuesday to look at how outcomes can be improved and costs reduced. Baucus opened the session by noting that this is the first of three such sessions he has scheduled with the hope of having a bill ready for the Senate by June.

Baucus said reform is essential because of the cost picture and poor outcomes. "Today's delivery system encourages more care rather than better care," he noted, but he made a now-or-never case for reform. "If we don't act now, the consequences will be dire," he said because "it will be harder to" pass reforms later, and healthcare inflation seems to have no end in sight.

"The time is now, the stars are aligned," Baucus intoned.

The committee's ranking GOP member, Chuck Grassley (R-Iowa), said "this is the toughest issue and the most needed issue that Sen. Baucus and I have ever been involved in." He noted that he supports reform, but cautioned that Congress "must make reforms in a fiscally responsible way." Grassley also asserted that "everyone will have to be willing to recognize strengths ... and find common ground."

During the roundtable, the committee voted on the nomination of Gov. Kathleen Sebelius (D-Kansas) for the post of Secretary of Health and Human Services. Sebelius appeared before the committee earlier in the day (Medical Device Daily, April 22, 2009), during which she refused to disavow the use of budget reconciliation to reform healthcare and declined to answer questions as to the administration's perspective on mandatory healthcare enrollment.

The committee affirmed Sebelius by a 15-8 vote that fell largely along party lines, with the only crossover votes coming from Republicans. The matter now moves to the full Senate.

Glenn Steele Jr., MD, president of Geisinger Health System (Danville, Pennsylvania), gave the panel a look at how one integrated health system provides care at lower costs. He said Geisinger's approach is to begin at the end. "What we start with is 'what is the end result we would like to get with those patients,' and back out from that for the correct incentives," he said, noting that the focus is on "where we want the patients to be in three to five years."

Steele said the Geisinger experience is scalable. "When you increase quality for these high utilization patients, you're also decreasing costs," he said.

He added that access is a problem for rural patients, but that Geisinger has "established a huge number of primary care physicians in 43 counties" in rural Pennsylvania, and works as much as possible with existing rural hospitals rather than building new ones. This latter move is not entirely free of cost, however. Steele said Geisinger has had to find ways "to extend our capital access to these hospitals in order for them to get up to snuff in very expensive technology."

On the other hand, he said rural care comes with an upside. "Everyone always bemoans rural areas, but we have a very stable population, which gives us an advantage because we can see the effects of what we do not just over 30 days or six months, but over many years."

Some 70% of Geisinger patients are fee-for-service patients insured by others, Steele noted, and the remaining 30%, who are in house, is "where we've committed our major innovation because ... we can have our insurance leaders and our doctors and nurses in a different conversation than with" the outside firms. All the same, he stated that "when we created innovation ... that takes cost out, it's obvious we do that for all patients regardless of who the payer is."

He also commented that Geisinger had little problem hiring or keeping primary care physicians (PCPs). "We pay them better than market because we cross-subsidize from our specialists. That's part of our social contract," he said, noting that specialists go along with the idea because they recognize the necessity of having a stronger primary care system to cut down costs and boost outcomes. "It's cultural, and a very important social contract that allows us to get those folks" to work for Geisinger, he said.

Geisinger's approach also economizes on PCP staff, Steele hinted. "We have a lot of PAs (physician assistants) and nurse practitioners now doing work that used to be assigned only to primary care physicians," he said.

Baucus said he recognized the value of Geisinger's approach, but asked how to migrate that to healthcare in general and Medicare in particular. Steele replied: "The first thing I'd do is to redesign CMS [Centers for Medicare & Medicaid Services]. I think CMS needs to be an engine of innovation, not a stultifying bureaucracy."

He added that such an overhaul should include an effort to zero in on Medicare's high-cost patients, who are also likely to experience poor continuity of care. From there, he said, CMS should determine "how you want to pay for that care."

Steele said that any such reforms will be difficult to master at first and argued "there is going to have to be some sort of learning network" to take the lessons learned from demonstration projects, "and make a much more rapid cycle time so that you're not waiting five to eight years for each demonstration project to give you an innovative approach."

Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC), said of Geisinger that most care in the U.S. "is not organized that way," but stated that he sees two opportunities in Medicare. "One is to change how we pay physicians, with particular emphasis on both increasing the level of payment for [and] the method of payment for primary care." This could entail "paying a lump sum per patient as is embodied in the medical home idea," he said.

Hackbarth said MedPAC also sees a focus on readmissions as a necessity, noting that "18% of Medicare patients are readmitted within 30 days." He referred to a "strikingly large variation" in this rate between hospitals, and said that informing each hospital where its readmission rate stacks up against other hospitals would be a good start.

CMS might then "follow that with a penalty on excessive readmission rates." This effort could be augmented by a pilot program for bundled payments. "If there's a single payment, there would be a strong incentive for all the participants ... to focus on how we can improve the readmission rate," Hackbarth observed.

Grassley commented that no one on the panel had stated that more money would be required to reform healthcare, which he said suggested "that we don't need to spend more money. Can I conclude that?"

None of the panelists answered in the affirmative, to which Grassley responded: "I think someone ought to tell me 'Yeah, we have to spend a lot more money.'"

Mark McClellan, MD, director of the Engelberg Center for Healthcare Reform (Washington), said in response, "if you're going to ask CMS to do more and more quickly to drive the kinds of reforms in healthcare ... they're going to need more support."

McClellan, who has headed both the FDA and CMS, said, "Some of the proposals you've heard about today do mean more spending, at least in the short term," such as for healthcare information technology and increased payments for primary care. All the same, he said, "we have to show some results to the American public," and this would require linking reforms "that might have some costs in the short term with real steps toward accountability."

He added, "I think you could get to the point where you're saving significant amounts of money over time and demonstrating to the American public that they're getting better healthcare as a result."

Hackbarth seconded McClellan's remarks, stating, "I do think you're going to have to make some targeted investments," including in healthcare information technology and comparative effectiveness. "Those are the two big investments in addition to universal coverage," he said.

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