May 12, 2000

Conference examines Medicare reform ideas

Featured Image

U.S. Sen. Bill Frist spoke at the Medicare reform conference. (photo by Tommy Lawson)

Conference examines Medicare reform ideas

The nation’s leading Medicare policy experts participated in Medicare Futures, a May 1 conference hosted in Nashville by Dr. Harry Jacobson, vice chancellor for Health Affairs. The event at Loews Vanderbilt Plaza Hotel was billed as a conference to refine the national debate on Medicare.

The following day found Jacobson and other conferees in Washington D.C., meeting with policy makers on Capitol Hill and holding a press briefing on the outcomes of the conference and the results of a pre-conference survey of attitudes about Medicare among health care professionals and policy leaders.

Many believe the time is ripe for reform. With 39 million beneficiaries, Medicare is the nation’s largest health care payer, having an enormous role in shaping the health care system. At the current funding and benefit levels, the Medicare trust fund is scheduled for bankruptcy by 2025. Meanwhile, popular legislative proposals call for new funding for expanded benefits, including a costly drug benefit.

The conferees agreed the Medicare program is at a crossroads. The recent news of trust fund solvency through 2025 provides breathing room but it does not ensure program resources sufficient to provide a drug benefit. Conferees also believed the fund may not be sufficient to ensure an adequate supply of health care providers to meet Medicare's needs.

The conferees agreed that securing Medicare's future would involve reforming the way medicine is practiced by establishing and distributing evidence-based standards of care that include both preventive health measures and chronic disease management protocols.

Jacobson welcomed conferees and introduced U.S. Sen. Bill Frist, formerly a member of the Vanderbilt faculty. Frist, a Republican, has teamed with Louisiana Democrat Senator John Breaux to sponsor Medicare reform legislation; but Frist said passage is not likely before the end of the legislative session and national elections. What may pass this session is a drug benefit, he said.

Dr. John Eisenberg, director of the Agency for Healthcare Research and Quality, said the Medicare program hasn’t changed fundamentally since it enactment in 1966. The current issues are the same that faced the program’s creators: What is the nature of the nation’s responsibility to seniors? What is the program’s appropriate relationship with health care providers? What is the quality of the program? Medicare is de facto the prime instrument for national health care policy, he said.

“It is without doubt a blunt instrument for health reform, but it’s one of the only instruments. Everyone is frustrated that Medicare is one of the few national tools for health care policy.” Eisenberg’s recommendations: give doctors and patients evidence to help guide decisions; use quality measurement to allow comparison of providers and practice and to allow the continuous evaluation of drugs and other technology; spend more for information systems to support gathering data on quality and efficiency.

Hal Quinley of Yankelovich Partners, Inc., presented the results of the pre conference survey of health care professionals and policy leaders. Survey respondents agree that Medicare faces a solvency crisis, that the public, the media and policy makers are all poorly informed about the issues, and that budget cutbacks are having serious negative impact.

The survey reported strong support for simplifying paperwork, increasing benefits to include items such as prescription drugs, and tying reimbursement to quality measures and use of evidence based protocols. Respondents disagreed about the accuracy of Medicare data, about the fairness of provider reimbursement, and about how best to reform the program.

The first panel examined the background and current performance of Medicare. The moderator was Richard D’Amaro, chairman and CEO of Greystone.Net. Presentations were by Gail Wilensky, chair of the Medicare Payment Advisory Commission; Dr. David Chin, of accounting firm PriceWaterhouseCoopers; Richard Jones, president of government programs for United Healthcare; and Mike Hamilton, director of health care advisory services with Ernst and Young.

Two important findings of this panel: enrollment in Medicare managed care plans is beginning to shrink and the plans themselves are folding in large numbers; care is highly variable, with geographic analysis showing huge variation in the use of various procedures to treat Medicare beneficiaries.

The first afternoon panel included presentations by Dr. Robert Berenson, who oversees the government’s relationships with managed care plans and providers; Ralph Muller, president and CEO of University of Chicago Hospitals and Health Systems; Tricia Neuman, a Medicare consumer advocate with the Kaiser Family Foundation; Dennis Farrell of Moody’s Investors Service; Jay Toole of Ernst and Young; and Dr. John Wennberg, from Dartmouth.

Some findings from this panel: the Balanced Budget Act has significantly diminished operating margins of teaching hospitals, and hospitals in general face downgraded bond ratings due to this legislation; despite having Medicare benefits, seniors are paying out 20 percent of their income for health care; the rise of the Internet has begun to sow irrevocable change in the delivery of health care; unwanted variation in practice represents a huge problem and a significant savings opportunity.

In the final panel, conferees heard from former U.S. Senator Dave Durenberger, now chairman and CEO of the National Institute for Health Policy; John Rother, director of legislation and public policy for the American Association of Retired Persons; Greg Scandlen of the National Center for Policy Analysis; and Jeff Lemieux of the Progressive Policy Institute.

Some findings from this panel: seniors are satisfied with access and quality but are dissatisfied with the complexity of Medicare and high out-of-pocket health care costs; there’s a lack of congressional leadership, urgency and bipartisanship around Medicare reform; leadership for reform must come from health care professionals.

Jacobson led the conferees to identify top issues for reform. In a poll of conferees, the top five issues were:

• long-term financial stability of Medicare;

• incentives to reduce practice variability, increase use of evidence-based guidelines and increase quality;

• simplification of regulatory processes;

• consumer information on quality performance and best practice;

• outpatient prescription drug coverage.

Based on the consensus from the conference, the next steps for reformers include: identifying how much savings may be available through elimination of unwanted variation and use of evidence based protocols; finding appropriate ways to influence how doctors practice; finding ways to inform consumers about the best health care practices.