Broader approach to value-based purchasing sought for Medicare

Policymakers and physicians must get beyond thinking that the concept is only about slashing spending, says a speaker at an insurance industry forum.

By Chris Silva — Posted April 3, 2009

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A comprehensive, cross-disciplinary approach to managing Medicare benefits based on the value that they provide to patients is one of the keys to major reform of the health care delivery system, said Robert A. Berenson, MD, senior fellow at the Urban Institute, a nonprofit organization based in Washington, D.C.

Dr. Berenson, who spoke at a March 11 policy forum hosted by America's Health Insurance Plans, said this concept of value-based purchasing goes much deeper than a simple attempt to cut dollars out of the program's budget. "It's not about just trying to get costs lower, but also about getting better quality and responsiveness to patients."

The Medicare physician fee schedule, for example, might be based not only on the relative costs of providing the services but also on the value provided to beneficiaries. A value-based purchaser might try to adjust payment levels to increase geriatric services for patients with multiple chronic conditions rather than boost advanced imaging services that already are overvalued, Dr. Berenson said. "Physicians should not be locked into rigid formulas that do not accomplish policy goals, and one thing we don't do well is targeting chronic diseases."

The reform issue also goes beyond deciding which services are most valued to deciding which ones are legitimate. Dr. Berenson said the Centers for Medicare & Medicaid Services must be better about identifying fraud and abuse. He cited the postponed competitive bidding program for durable medical equipment as a model that could help lower program costs if given sufficient resources.

The introduction of a Medicare Part E benefit that provides catastrophic coverage should improve cost-sharing and eliminate the need for beneficiaries to purchase supplemental medigap coverage, Dr. Berenson said. The concept of Part E, or Medicare Extra, was proposed in an October 2005 Health Affairs article co-authored by Marilyn Moon, PhD, vice president and director of the health program at the American Institutes for Research in Washington, D.C.

"Essentially, the idea is to create a more efficient Medicare program that would cover at least a reasonably comprehensive benefit package," Moon said. "We propose an option for Medicare that would change the deductible and cost-sharing, and add catastrophic protection."

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