Medical Device Daily Washington Editor

WASHINGTON – If there's one thing Congress and healthcare reform have in common, it's that big changes never happen in short time spans. And as any observer of Capitol Hill will testify, Congress often reverses itself when it comes to healthcare reform, as the competitive bidding program demonstrates (Medical Device Daily, July 11, 2008).

At the start of Tuesday's hearing on healthcare in the Senate Finance Committee, chairman Max Baucus (D-Montana), quoted author Aldous Huxley by saying, "the quality of moral behavior varies in inverse ratio to the number of human beings involved." And he noted that a lot of people are involved in healthcare.

Baucus said that his emphasis on improving healthcare during the 110th Congress has focused on cost, access and quality of care. Medicare, he said, makes payments based on the number of services, not on outcomes, and that an improvement of the quality of care "would improve the health and longevity of patients ... and reduce costs." Those costs, he said, "have been growing at 7% a year" in recent years.

"We simply cannot afford to continue paying for inappropriate care," Baucus said.

He said that the Medicare P4P demonstration program has shown that improvement is possible, but "we need to do more, much more."

Chuck Grassley (R-Iowa), the ranking minority member, said performance measurement is "a fundamental building block" toward rationalizing healthcare, and that the government must "devise a system" for giving incentives to providers to bring their work up to par.

"It is disgraceful that Medicare rewards poor quality," Grassley said, making the case that "these flaws [are] spread throughout the entire system," because private payers tend to align their reimbursement policies with those of the Centers for Medicare & Medicaid Services.

The first witness to speak was Peter Lee, director of national health policy at the Pacific Business Group on Health (San Francisco), who said the current system "covers too few, costs too much, and delivers inconsistent quality." He noted that premiums have increased 125% in the past eight years.

Lee said he sees "agreement across the political spectrum" that change is necessary. "We need to do that in a way that doesn't just shift costs" from one part of the economy to another in reference to expanding coverage. He stated that one necessary ingredient is "a national initiative" for comparative effectiveness "trusted by all stakeholders and is rigorous and transparent."

Lee also argued in favor of aligning payments to reward providers for preventive and primary care, and that Congress should look at MedPAC's recommendations to shift emphasis toward primary care "in a revenue-neutral manner." He said that in any efforts to reform healthcare, "the federal government needs to promote markets."

Greg Schoen, MD, medical director of Fairview Northland Health Services (Princeton, Minnesota), described Fairview as a rural provider participating in the hospital quality incentive demonstration.

Schoen said, "Once incentives became part of the picture, we found a cultural shift" occurred.

"Comparing measurable outcomes is a strong motivator," he said, making the case that pay-for-performance "can and does work in rural hospitals."

He said that the advantage of a small hospital is that staff members can quickly "get their arms around" the effort, but that in smaller hospitals a small number of patients can skew outcome measurements.

"We welcome the concept of being paid for quality," Schoen said, while recommending that hospitals that do not measure up should be helped to get up to speed initially, rather than being penalized. "We prefer the carrot approach," he said, while acknowledging that "penalties may be necessary" in the long run.

Kevin Weiss, MD, president/CEO of the American Board of Medical Specialties (ABMS; Evanston, Illinois), said his organization develops accreditation standards for 24 medical specialties. "The standards we set are used by almost all" residency and training programs, he said.

Weiss said most doctors want to give the best care but that incentives "cannot do the whole job. While performance measures are important, they are not sufficient to fully assess physician competency." Other essential ingredients include a "practice infrastructure ... to regularly identify at-risk patients and bring them in for a visit."

Weiss advocated a position that says, "public and private sectors must align themselves better" to promote accountability.

William Roper, of the National Quality Forum (NQF; Washington), said current measurement sets are adequate for getting things going but need to be expanded to other disease states and in greater depth for the disease states already covered.

He said, "we need to focus on managing an illness over time and across settings" and "build high-performing organizations."

Roper seconded the notion that healthcare reform is no overnight task, saying, "We need a long-term, sustained commitment" backed by "a permanent way of thinking about" quality."

Baucus asked the panel what Congress could do to get the stakeholders together and establish standards for care that many payers can use.

Roper aid Congress could "encourage this secretary [of Health and Human Services] and the current and successive CMS administrators "to make this a priority." He said, "We have to be pushed or we'll find other things to occupy our time."

He recommended that Medicare should "dramatically increase the amount of money that's at risk" for failure to bring up care standards.

He also cited healthcare information technology (HIT), saying that Congress should "push CMS and HHS to say we have to have an electronic healthcare system." Those who don't "can't participate in Medicare," he suggested. Roper also argued that the Agency for Healthcare Research and Quality (Washington) "is way underfunded."

Weiss also urged more money for AHRQ, but also stated "you have three major and a number of smaller oversight bodies ... that are not necessarily fully aligned" in terms of care standards.