Managed Care - March 2009 - (Page 8) NEWS AND COMMENTARY Regional Spending Variations Tied to Doctor Care Methods careful look at variations in Medicare spending growth and patterns across the country might hold one key to reining in the rapid growth of health care costs, according to an analysis by Dartmouth University researchers. They looked at Miami, Dallas, and other cities that are experiencing much faster growth in costs than some cities. San Francisco and Pittsburgh, for example, seem to have attained sustainable growth rates and are able to build on successful models of delivery-system and payment reform. The researchers ruled out two explanations: technology (residents of all U.S. regions have access to the same technology and it is doubtful that physicians in slow-growth regions are denying their patients needed care) and the current payment system. They surmised that the causes lie in how physicians respond to the availability of technology, capital, and other resources in the context of the fee-for-service payment system. Physicians in high- and low-spending regions were about equally likely to recommend specific clinical interventions when supporting evidence was strong. Those in the highestspending regions, however, were much more likely to recommend discretionary services, such as referral to a subspecialist for typical gastroesophageal reflux or stable angina. Current payment methods encourage spending by expanding the services that doctors and hospitals provide. Any attempt to control costs, according to Elliott S. Fisher, MD, professor of medicine and of community and family medicine at the Center for Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice and one of the authors, needs to address how doctors and hospitals are paid. The researchers propose that there is a need for policies that encourage high-growth (or high-cost) regions to behave more like low-growth, lowcost regions. To accomplish this, they propose fostering the growth of more organized systems of care and implementing fundamental payment reform. Insurers could promote greater collaboration and offer incentives — such as larger payment updates or subsidies for implementing electronic health records — to providers willing to establish care systems. The current volume-based payment system could then be adapted to incorporate partial capitation, bundled payments, or shared savings. A Premiums Shrink Under Reform Plan An insurance framework proposed by the Commonwealth Fund includes a national insurance exchange that would offer both private insurance plans and a new public plan option “that would achieve near-universal coverage.” The report estimates that premiums for the public plan option would be at least 20 percent below those currently available for a comparable package of benefits in the private market. The public plan option would prompt private plans to innovate and reexamine the way they operate. As described in “The Path to a High Performance U.S. Health System: A 2020 Vision and the Policies to Pave the Way,” the system would change the way care is paid for by increasing the value of primary care. It would move from a fee-for-service design to more bundled methods of paying that encourage coordinated care. It would also hold providers accountable for improving health outcomes. Individual and small businesses would benefit because the new option would provide a less expensive alternative for the uninsured and underinsured than what is now available. Savings would derive from lower administrative costs and use of Medicare’s reformed provider payment rates. Cathy Schoen, senior vice president at the Commonwealth Fund, says private insurers would want to participate in the exchange because they “would have access to the entire under-65 market. If you didn’t participate in the exchange, employers and individuals would have a hard time finding you. If an insurer did not participate, it would lose access to business. The public plan is a major new competitor, and a private insurer would want to be seen side by side with it.” The report estimates that implementing this type of insurance exchange could result in a cumulative reduction in national health expenditures through 2020 of $3 trillion. But Schoen cautions that “the insurance reforms alone won’t be enough. If you don’t have the payment and the information system reforms, we won’t see that $3 trillion savings.” 8 MANAGED CARE / MARCH 2009
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