November-December, 2001 Web Exclusive: A New Proposal for Reform
Health Affairs
Medicare+Choice: Doubling Or Disappearing? by Robert A. Berenson
Robert A. Berenson, senior advisor at the Academy for Health Services Research and Health Policy:
Abstract:
Although the changes in the program created by the Balanced Budget Act are often viewed as the reason for the current instability in the Medicare+Choice (M+C) program, in fact, health plans are having difficulties in all of their markets, not just in Medicare. It may be time to reconsider the purpose of the program and to fundamentally redesign how payments are made to managed care organizations contracting with Medicare. Two alternative approaches are suggested: treating M+C like another provider type by severing the payment linkage to spending under traditional Medicare, and overhauling the program by creating a value-based purchasing orientation rewarding plans that provide higher-quality care to beneficiaries with chronic diseases.
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Comment: Although all objective evaluations to date have revealed that the Medicare + Choice program has failed miserably in its goal to reduce costs and improve quality, our policy leaders continue to flog this dead horse. Costs have been higher for comparable patients in the Medicare + Choice (M+C) plans than they have been in the traditional fee-for-service (FFS) Medicare program. The quest for quality has eluded the M+C plans with several studies suggesting that the level of quality may actually be lower.
Ignoring the rigor mortis of this horse, Robert Berenson has proposed two life saving measures. Suggesting that the plans be rewarded for advancing quality is an admirable recommendation. But rewarding quality should not be the exclusive domain of the M+C plans. Once we have adequate methods of evaluating quality, a reward system can and should be applied to all patient care, certainly including that in the FFS program. Thus quality rewards should not be considered to be a specific reason to extend the M+C options.
His other recommendation is much more problematic. It is clear that it is impossible to show that M+C will ever be able to save the taxpayers money as long as the fiscal mechanisms are linked to the traditional FFS program. By their very design, costs of administering private plans (e.g., M+C) will always be higher than publicly administered programs (e.g., FFS Medicare). Also, they have now proven that aggressive managing of care is not capable of achieving savings that will offset the higher administrative costs.
Yet, Berenson recommends that the link of M+C options to the FFS program be eliminated so that M+C options can be evaluated on a stand-alone basis. This might hide the inefficiencies of the M+C plans, but it will never create a new model which would, in fact, reduce costs below the FFS model. Hiding inefficiencies through creative accounting is hardly a solution to the fatal flaws in the M+C program.
This report, appearing in the web version of Health Affairs, brings up another painful issue. Health Affairs is considered by many to be the leading journal of health policy. As such, it has a responsibility to cover the spectrum of ideas in traditional and innovative health policy. In this instance, the editor invited five different responses to Berenson's proposals. This should fulfill the editor's responsibilities in providing a spectrum of opinions. But what happened here?
The five responses all, to some degree, discuss mechanisms for salvaging the M+C program. There was not even a hint that the program should be terminated based on its now-proven failure (though one suggested utilizing a "payment to organizations" authority, allowing private plans to survive in a FFS model). The decision of the editor to continue to publish articles heavily biased toward market solutions should be challenged. To assemble five pro-market solutions, while excluding consideration of the option of terminating the M+C program (while repairing the publicly administered FFS program), in my opinion constitutes editorial malpractice. To maintain its academic integrity, Health Affairs needs to open its coverage to all reasonable health care policy options. Managing editorial policy based on sightings on the political radar screen is not acceptable.
Don McCanne