Health Care Reform: Incentives May Reshape Medicare

| April 18, 2011

April 18, 2011 ( The Obama administration on Thursday released an ambitious and complex plan to alter Medicare’s payment incentives, hoping to persuade doctors and hospitals to form partnerships focused on coordinating care while minimizing costs.

The proposed rules spell out how medical providers can form highly regulated groups that have a chance to pocket part of what they save Medicare – if they prove they meet key quality care standards.

The rules have the potential to reshape not just Medicare but health care in general, said Manny Fernandez, chief executive officer of Medical Specialists of the Palm Beaches, because private insurers are looking for similar results.

His group has invested millions in new digital medical record and practice management software in anticipation of becoming an Accountable Care Organization as defined by the rules, he said.

This next, major step in the unfolding of the federal health overhaul is one that will last, regardless of legal challenges, Fernandez predicted.

”The concept of payment reform is not going to go away,” said Fernandez, who runs the largest primary care group in Palm Beach County. ”The system, the way it is funded, is broken. Something fundamentally has to change.”

Administration officials stressed the ”perverse incentives” of the current system. Doctors aren’t paid for time spent discussing patients’ care with other doctors. And hospitals earn more if Medicare patients are injured or have to return to the hospital because of an infected wound.

That’s about to change, said Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services.

”One in every five Medicare beneficiaries who leaves the hospital is back within 30 days, and in many cases it’s because they failed to receive appropriate follow-up care,” Sebelius said. ”These results are unacceptable, but when you look at how our health system works, they are not surprising.”

Under the new rules, primary care doctors – the internists and family practitioners who offer general care – will take on the role of ”quarterbacks,” tracking the health of patients with chronic diseases like high blood pressure and diabetes, dispatching patients to specialists when needed.

Their electronic medical records will be used by Medicare to assess their performance. If costs are kept down because patients aren’t getting care, the organization won’t get its incentive payment.

Many of the measures depend on patients’ following their doctors’ orders and taking their medication.

The government proposed 45 quality measures in all, organized into five groups: patient experience, care coordination, safety, preventive health, and care of at-risk and frail elderly patients.

Health care Reform Incentives They include reporting on the percentage of hypertension patients who have kept their blood pressure under control, the percentage of heart-attack patients prescribed beta blockers, the percentage of diabetes patients who had an annual eye exam.

It’s those type of one-size-fits-all quality measures that may make some doctors uncomfortable, said Dr. Mark Gocke, a Jupiter physician.

”That’s one of the problems – to say that every individual should be treated as x-y-z? It’s like saying everyone should or shouldn’t eat one food,” Gocke said.

South Florida health providers who join Accountable Care Organizations may have a tougher time qualifying for the incentive payments than their peers elsewhere in the nation, cautioned Linda Quick, president of the South Florida Hospital & Healthcare Association.

That’s because South Florida hospitals and doctors now have some of the highest costs per Medicare beneficiary in the nation, and it’s likely they may have to make much greater changes than their counterparts in other parts of the country, she said.

”Specialists, in particular, are disconcerted over this,” she said. ”South Florida is sort of the poster child for perhaps overuse and physicians who have used defensive medicine as a rationale for more tests, more care.”

Corporate health attorneys like Jeff Cohen, of the Florida Health Care Law Firm in Delray Beach, said everyone in his industry is poring over the finer points of the rules. What has surprised him so far is the extent to which Medicare beneficiaries have a say in whether to stay in an Accountable Care Organization if their doctor joins one, and to decide whether their data will be used in the performance accounting.

”I think it is a tremendous responsibility and invitation being made to the public to take a more active role in their health care, and participate in this experiment,” he said.

The expectation of the rules has been fueling a major surge in consolidations at every level of medicine, he said. To qualify for the incentives, the partnerships must cover at least 5,000 Medicare beneficiaries. The mergers will continue, he said.

The public will have 60 days to comment on the new rules, which are to take effect in 2012.

Payment reforms are needed, Cohen said. But will the rules as written succeed in the twin goals of improving quality and lowering costs?

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