MedCity Influencers

A “Grand Bargain” To Improve Quality and Decrease Medicare Costs

There are just a few key reasons why Medicare has become inordinately expensive. There is no end in sight for cost escalation. But there are some obvious solutions and they all begin with chronic illnesses. Chronic illness – diabetes, heart failure, cancer, chronic lung disease, etc. – are increasing at exponential rates; are caused largely […]

There are just a few key reasons why Medicare has become inordinately expensive. There is no end in sight for cost escalation. But there are some obvious solutions and they all begin with chronic illnesses.

Chronic illness – diabetes, heart failure, cancer, chronic lung disease, etc. – are increasing at exponential rates; are caused largely by lifestyle behaviors; and consume 70-85% of all claims paid. Medicare enrollees tend to have chronic illnesses; 85% have at least one and 50% have three or more and many are taking 5-7 prescription medications. Any attempt to control costs must begin with chronic illnesses.

Is there a good solution to the Medicare cost rise issue? Are there approaches that could be instituted now that would have an immediate impact on improving quality of care and thereby reduce costs? There are and could be the basis of a “grand bargain.” Here are five workable suggestions.

1) The first recommendation is to recognize that one is never too old to benefit from sound preventive measures. Most chronic illnesses are related to excess calorie consumption, lack of exercise, chronic stress and tobacco. And aging leads to impaired mobility, vision, hearing, dentition and cognition. So Medicare should strengthen the wellness, health and preventive programs with specific funding to PCPs to engage in detailed, in depth preventive care. The new annual preventative care session built into the Affordable Care Act (ACA/Obamacare) is a good start in this direction but it must be augmented since a single yearly session is not sufficient to deal with the serious lifestyle issues leading to and exacerbating these chronic illnesses. This will improve health now and substantially bring down costs in the longer term.

2) The second recommendation is to recognize that older individuals with multiple chronic illnesses on multiple prescription medications who may have visual, hearing, mobility and cognitive impairments cannot be effectively diagnosed and treated in short time periods. There must be time – to listen, think, prevent and treat. This means adequate reimbursement per visit to spend the time required. And it means Medicare must pay the PCP sufficiently and specifically to provide chronic illness care coordination. This must be done in a way that is a quid pro quo – higher reimbursements but only in return for the care the patient needs and deserves. This will markedly improve quality, substantially reduce costs and do so immediately. It means the PCP must substantially reduce his or her case load from today’s 2000 plus to no more than 1000 (and preferably substantially less) so as to have the time required for each patient. (Many believe that it best to convert from a fee for service to a fixed reimbursement system, capitation system or a salaried approach. That is probably a good idea but only if the system grants the PCP the critical needed time per patient, i.e., assignment of a limited number of patients or a large enough payment per year per patient so as to keep the total number of patients under care low enough to give the time needed.)

3) The third recommendation is that Medicare should reconsider its approach to hospital care alternatives. For example, today a patient becomes eligible for nursing home care only if he has been hospitalized for three or more days. Costs could be dramatically reduced if a patient could be sent directly to a well-qualified nursing home by his PCP who certifies in writing as to appropriateness. Similar consideration should be given to home antibiotic administration and other home care alternatives which mean better quality and lesser costs.

4) The fourth recommendation, somewhat of an alternative of the second, begins with the realization that primary care is generally not expensive. Indeed when Medicare originated, it was the patient’s responsibility to pay for primary care and should be again. Medicare should institute high deductibles with the opportunity for a health savings account (HSA) to pay for primary care with tax advantaged dollars. Patients begin to ask questions and challenge recommendations when they are paying for primary care directly. They can request more time per visit and pay for it through their HSA. Both have the result that the care quality goes up and the overall cost to Medicare goes way down because the patient gets the time needed by the PCP to give good care, avoid excess testing and avoid the reflex to refer to the specialist unless really appropriate. The patient-doctor relationship is corrected to being a direct contractual relationship leading to better care at much lower cost. Most studies suggest that the deductible needs to be high enough to be meaningful, often about $1000 or more. This could be reduced for those of lesser means. Given the importance of preventive care, that might be excluded and continued to be paid for by Medicare. High deductibles will be politically difficult. But high deductibles are available thought the private plans for Medigap and for the Part D prescription drug policies so the precedent is there. This would lead to a much more responsible use of the entire system with better care and much reduced costs.

Meanwhile, many PCPs are switching to a direct pay system where they no longer accept Medicare and either expect to be paid per visit by the patient or be paid a flat annual amount (retainer). Medicare is losing these physicians now who are providing better care but at a cost to the patient. Better that Medicare reexamines its policies and adapts now.

5) The fifth recommendation relates to end of life care. Americans believe in individualism and the right to whatever care is available, damn the expenses. And physicians are trained to treat death as an obstacle to be surmounted rather than to be accepted as ultimately inevitable. This plays out eventually towards the end of life where “one last” drug, procedure, etc. is proposed or requested or both. Generally this occurs because the physician has not engaged in a constructive, honest and empathetic conversation with the patient well ahead of time and ongoing. This is fundamentally irresponsible use of the medical care system by both patient and doctor. Much better is reasoned, empathetic discussion between patient (and family) and the doctor followed by humane, compassionate active support and emotional care – in other words, death with dignity. End of life discussions are not only logical but humane. And it must be stressed that this recommendation has nothing to do with so called “death panels” or some nefarious means of rationing care.

Each of these recommendations incorporates a balancing of rights and responsibilities. The first offers the enrollee added wellness and preventive services but it must come with the responsibility to use them effectively. The second grants the PCP added revenue per patient but only for the commitment to take the needed time with patients and of offering extensive preventive services and chronic illness care coordination. This of course means limiting the total number of patients under care per PCP. The third grants a new approach to paying for alternative care but only provided that it is certified as appropriate. The fourth places the responsibility for first dollar coverage on the patient/enrollee but with it must come a right to a better doctor-patient contractual relationship – one that the patient can void if the response is not adequate for the dollars expended. And the fifth recommendation places a responsibility on patient and doctor alike to have in depth and rational discussions regarding end of life options and needs while expecting Medicare to pay not only for the discussion time but also for the option selected.

These five recommendations could have a major impact on Medicare expenditures, beginning immediately. The real benefit of course is that these recommendations will improve health care quality while leading to more satisfaction by patient and doctor alike. It would be a valuable “Grand Bargain.”


Stephen C Schimpff, MD is a quasi-retired internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center. He chairs the advisory committee for Sanovas, Inc. and is a senior advisor to Sage Growth Partners. He is the author of The Future of Health Care Delivery- Why It Must Change and How It Will Affect You from which this post is partially adapted.

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