Medicare Modernization:
Suggestions From Two Articles
Robert Berenson
AcademyHealth
22 January 2003
Using Managed Care Tools in
Traditional Medicare – Should
We? Could We?
Robert A. Berenson and Dean M.
Harris. Law and Contemporary
Problems; 65 (4), Autumn 2002
Current Policy and Administrative
Constraints
• Concern about exercise of market power
• Procedural restrictions, e.g. Administrative
Procedures Act
• General notions of fairness and fair
process in a public program
• Uniform policies and national deployment;
whereas much purchasing is local
• Mandatory spending accounts vs.
discretionary administrative budget
Selective Contracting
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•
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Hallmark of managed care
Produces price discrimination
Managed care is cutting back on its use
Opportunity in Medicare to influence
consumer choice, i.e., to channel, but not
exclude (except for certain vendor
services for inanimate objects, e.g.,
devices, clinical lab)
Prior Authorization
• Note Medicare experience in PRO 3rd
scope of work with P.A.
• Managed care execution has been flawed:
– Evidence-based medicine run amok, e.g.
“drive through deliveries”
– If some prior authorization works well, more
must be better
– Not targeted, by condition or by provider
Prior Authorization (cont)
• In Medicare, would initially apply where:
– High unit cost
– Relatively infrequent
– Elective
– Clinical decision based on transferable
objective information
– Can document or expect variation in use
– Can effect quality as well as cost
Gatekeeper/Case Manager
Programs
• Tower of Babel terminology
• 12 European countries use gatekeeper
physicians, partly to control referrals
• U.S. models range from strict physician
gatekeepers through primary care case
managers (PCCM) in Medicaid to case
managers external to physician/patient
relationship
Confronting the Barriers to
Chronic Care Management in
Medicare
Robert A. Berenson and Jane
Horvath. Health Affairs. Web
Exclusive; 22 January 2003
Medicare Statute Based on
Indemnity Insurance Models of ’60s
• Kenneth Arrow: For people with chronic
illness, “insurance in the strict sense is
probably pointless.”
• Why? Moral hazard
• Yet, nearly 80% of beneficiaries have one
or more chronic condition and the 20%
with 5 or more chronic conditions account
for two thirds of program spending
Test case: Should Medicare
Reimburse for Emails?
• Why not phone calls, while you’re asking?
• In a FFS payment system, reimbursement
barriers include:
– Relatively high transaction costs relative to
value of the service
– Substantial program integrity concerns
– Nuclear force moral hazard
Components of Wagner’s Chronic
Care Model
• Specialized assessment tools to identify
patients at risk
• Multi-professional team responsibility and
delineation of roles and duties (no longer
physician as “captain of the ship”)
• Promotion of patient self-management
• Proactive follow-up, not based on the
anachronistic, yet pervasive, office visit
Capitation Can Logically Support
the Model, FFS Can’t
• Capitation shifts determination of nature and mix
of services to provider, away from necessarily
inflexible reimbursement rules
• Lets physicians figure out how to deal with
“email fatigue”
• But capitation had become a four letter word
• And the M+C program penalizes plans for
attracting patients with multiple chronic
conditions and is a program “on the ropes”
• PACE works, but impact limited
Potential Incremental
Improvements in FFS Medicare
• Increased office visit payments for patients
with multiple chronic conditions
• New, limited home visit benefit
• Clinical care management:
– Voluntary physician case manager program
– Payment alternatives –
• Monthly administrative fee to a practice
• + professional capitation for primary care services
to qualifying organizations