Medicare Reform Must Include Incentives
to Improve Quality of Care

NCHC Writers
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The federal government should take steps now to improve the quality of care available to the 38 million Medicare beneficiaries – those in the “traditional” fee-for-service Medicare program as well as those enrolled in managed care plans, a new study says.

The study was funded by the National Coalition on Health Care, the nation’s largest non-profit and non-partisan alliance of 90 businesses, labor unions, consumer and medical professional groups, religious organizations, and academic health centers. The Coalition has long been concerned with the quality of the nation’s health care and has released two previous studies on Medicare which demonstrated the seriousness of the problems.

“Improving the quality of care should be a central goal for the entire health care system, including Medicare,” according to Henry E. Simmons, M.D., president of the Coalition.

The Coalition’s most recent study, Quality Health Care: New Challenges as Medicare Evolves, was conducted by The Lewin Group, a private health care research firm based in Fairfax, Virginia. The study finds that current efforts to ensure that beneficiaries get high quality care in the Medicare fee-for-service program are not on a par with initiatives to measure and improve the quality of care for beneficiaries in Health Maintenance Organizations (HMOs). The study also concludes that any restructuring of the Medicare program in the future must include incentives for doctors, hospitals, nursing homes and managed care plans to improve the quality of their services and their clinical outcomes.

The study comes just weeks before a federal advisory commission is scheduled to release recommendations to modernize the Medicare program and secure its financial solvency over the next 50 to 75 years. Congress may begin debating major changes in the program this year.

“Any major reform of the Medicare program must be designed from the ground up to include features that ensure the quality of care for all Medicare beneficiaries,” the study says. The report states that moving to a Medicare system that makes private health plans compete on the basis of cost and quality would likely, over time, enhance the quality of care seniors get. However, such reform of the program should not be relied on as the sole or principal means of improving the quality of care available to Medicare beneficiaries.

The study reports that evidence has mounted rapidly over the past few years that the care received by Medicare beneficiaries varies dramatically from one area of the country to another. Studies in recent years also show that some treatments lacking substantial proof have been overused. At the same time millions of seniors do not get treatments for which there is more solid scientific evidence.

The study cites research showing, for example, that senior citizens in Miami spent almost four times as many days in a hospital intensive care unit during the last six months of life as did seniors in Minneapolis. A study of Medicare recipients with hip fractures indicates that up to 22% did not receive appropriate care. Other studies have found that only about half of Medicare beneficiaries receive recommended preventive care, such as flu shots.

The authors recommend that the government move on a number of fronts to improve the quality of care. It should require hospitals taking Medicare payments to demonstrate actual improvements in care over time. This could be done as an extension of the continuous quality improvement (CQI) program recently required as part of the hospital accreditation process. This process requires hospitals to collect outcomes and performance data on common procedures, treatments and patient services. The government is already moving to require demonstration of quality improvements from managed care plans.

The government should also begin collecting data nationally on common procedures, according to the study. Such an effort could be modeled on programs currently underway in New York and Pennsylvania. The two states collect and disseminate data on hospitals’ heart bypass surgery success rates. There is substantial evidence that the programs have helped to reduce the mortality rate associated with the surgery, the researchers say.

At the same time, Medicare’s administrators (the Health Care Financing Administration, or HCFA) should more aggressively promote the spread of “best practices” and evidence-based medicine to hospitals, doctors, and nurses. The authors urge HCFA to lead the nation in moving the health care system to the evidence-based care model now endorsed by an increasing number of health care experts. Such a shift would save lives and money in the long run by reducing inappropriate, and potentially harmful, medical care, the study observes.

The study states that HCFA should also begin to provide beneficiaries with objective information on the performance of doctors and hospitals – not just health plans. Measures could include: the number of procedures or operations a doctor or hospital performed (higher volume is often linked with better outcomes); results from patient satisfaction surveys, and clinical certification. The agency has begun compiling such information for HMOs and Medicare + Choice plans and intends to put it on a web site.

The study presents a comprehensive and detailed overview of past and current quality improvement initiatives in the Medicare program. It also reviews the literature on the quality of care seniors receive. It finds that the government’s effort to measure the performance of Medicare HMOs is gaining momentum and rapidly improving. However, far less progress has been made in the government’s programs to track the quality of care in Medicare’s much larger fee-for-service (traditional) program, the authors conclude. Even so, the authors say the research to date does not permit a judgment about who is getting the best care: beneficiaries enrolled in HMOs or those enrolled in traditional Medicare. (About 17% of Medicare’s 34 million elderly beneficiaries are currently enrolled in HMOs; the rest have traditional Medicare coverage.)

The latest study, as well as the first two, Rethinking the Medicare Eligibility Age and Comprehensive Medicare Reform: Defined Benefit vs. Defined Contribution, can be obtained by calling (202) 637-6830 or by visiting NCHC’s web site,

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