Policy & Regulation News

Senate Finance Committee, Conway, Address Medicare Spending

By Jacqueline DiChiara

- Medicare beneficiaries with chronic conditions will hopefully receive greater assistance due to a new legislative proposal from the Senate Finance Committee. The committee will soon acquire stakeholder input regarding a bipartisan legislation process which will evolve over the course of the next 6 months. Its primary objective is to develop policy options to address how Medicare can function more effectively for those with chronic illnesses, especially those receiving care within rural communities.

Chronic Illness

Chronic illness accounts for a substantial portion – 93 percent – of Medicare spending, says Ranking Member Ron Wyden (D-OR) at a hearing yesterday. “Today, the vast majority of Medicare dollars are spent caring for patients living with multiple persistent, chronic health conditions that require a variety of services,” Wyden confirms. “Although it’s a good thing that care is being provided outside the hospital, but this care is – more often than not – uncoordinated and costly. With a trend this clear, it’s time for both parties to tackle this issue head on,” he adds, referring to an imperative need to build off of last month’s Sustainable Growth Rate (SGR) formula repeal in order to truly strengthen and advance quality of coordinated care.

The Baby Boomer generation is costing the healthcare industry a pretty penny. Providing high quality care that is high in value and low in cost must be an active priority. Fee-for-service Medicare spent $32,000 per beneficiary with at least 6 chronic conditions compared to only $9,000 for other patients, confirms a statement from Committee Chairman Senator Orrin Hatch (R-UT). “While disease management and chronic care coordination have been widely used by private sector health insurers, their application in fee-for-service Medicare has been largely restricted to demonstration programs,” states Hatch, “[that] have shown, at best, mixed results.”

The dominance of chronic disease within the healthcare industry has high economic implications, states Patrick Conway, MD, MSc, Deputy Administrator for Innovation & Quality and Chief Medical Officer, within a witness testimony statement. “In 2010, among the 14 percent of Medicare beneficiaries with six or more chronic conditions, over 60 percent were hospitalized, which accounted for 55 percent of total Medicare spending on hospitalizations,” Conway maintains. “Beneficiaries with six or more chronic conditions also had hospital readmission rates that were 30 percent higher than the national average,” he adds.

  • AHA Cites Antitrust Concerns Over UnitedHealth-Change Healthcare Deal
  • AHIMA Reviews Top ICD-10 Implementation, Coding Challenges
  • Lessons Learned from the First Year of ICD-10 Implementation
  • Fee-for-service payment systems fail to support effective care management for those with chronic disease, Conway explains, noting the Centers for Medicare & Medicaid Services (CMS) is actively working to encourage enhanced chronic care management in both fee-for-service and Medicare Advantage. Additionally, Conway says CMS is testing new models to improve quality of care.

    Conway adds CMS is primarily focused on improving the methods of provider payment. “We want to pay providers for what works – whether it is something as complex as preventing or treating disease or something as straightforward as making sure a patient has time to ask questions,” he adds.

    Conway says CMS is also focused on promoting advancement in care delivery. “With more emphasis on coordinated care, patients are more likely to get the right tests and medications rather than taking tests twice or getting procedures they do not need,” Conway explains. “Better care coordination can also mean giving patients more quality time with their doctor; expanding the ways patients are able communicate with the team of clinicians taking care of them; or engaging patients and families more deeply in decision-making.”

    Conway adds a third focus for CMS is to promote transparency via the wide dissemination of information to providers and consumers to support smarter decisions while advocating for privacy. “As we look to improve the way information is distributed, we are working to create more transparency on the cost and quality of care, to use electronic health information to inform care, and to bring the most recent scientific evidence to the point of care so we can bolster clinical decision-making,” confirms Conway.

    As the Baby Boomer generation collectively ages, chronic conditions within Medicare beneficiaries are becoming more prominent and cost the healthcare industry a tremendous deal of money. “There are no easy answers,” maintains Hatch. It is hopeful care coordination efforts will be better examined and analyzed so the healthcare industry can not only address what fails to work, but actionably comprehend what works best following this week’s initial hearing.