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Klobuchar Says Medicare Reform Must Aim for "Best Care at Best Price"

Medicare Shortchanges High-Quality, Low-Cost States Like Minnesota

July 14, 2008

St. Louis Park, MN – At a forum with health care leaders and senior advocates, U.S. Senator Amy Klobuchar said today that reform of the Medicare system must aim for “the best care at the best price” by paying health care providers according to the actual quality of care they deliver rather than the volume of procedures they perform.

Created in 1965, Medicare provides health coverage to nearly 44 million Americans, including about 37 million people age 65 and older and another 7 million adults with permanent disabilities.  Medicare’s annual spending is over $400 billion and accounts for about 14 percent of the federal budget.

On Wednesday, July 9, Klobuchar voted in the Senate to preserve access to quality health care for Medicare beneficiaries by avoiding a harmful cut in physician payments and by beginning to create new incentives to reward quality-improvement practices.  The “Medicare Improvements for Patients and Providers Act” passed the Senate by a vote of 69-30 and now goes to the President.

But Klobuchar said that, sooner rather than later, Medicare requires fundamental reforms to control costs and promote better-quality care for patients.

At the forum hosted by Park Nicollet’s Methodist Hospital, Klobuchar noted that the average senior in Miami costs Medicare about twice as much per year as a senior in Minneapolis.  Yet, Medicare’s own reports show that the quality of care is significantly higher in Minnesota.  (Demographic and cost-of-living differences account for only a portion of the geographic disparity.)

Klobuchar pointed to a color-coded national map of Medicare spending per patient.  It shows a broad expanse of the Midwest and the West with low Medicare spending, while areas in the East, the South and California have spending levels that are twice as high or more.  (See map below.)
 
“Instead of rewarding doctors and hospitals for quality care,” Klobuchar said, “Medicare is making payments based on the sheer volume of services, regardless of need or outcomes.  As a result, states with traditionally high utilization of services but poor quality outcomes get reimbursed at a higher rate.  A high-quality, low-cost state like Minnesota gets shortchanged.”

Klobuchar said there is now overwhelming research that more medical procedures often do not produce better medical outcomes.

She pointed to research at Dartmouth Medical School, which examined the records of millions of Medicare patients who died from 2001 to 2005 and who had at least one of nine severe chronic illnesses.  Total Medicare spending for this population during that period was $289 billion.

According to the Dartmouth study, if Medicare spending per patient everywhere in the country mirrored the efficient level of spending at the Mayo Clinic, Medicare could have saved over $50 billion on this group of patients alone.

“The current Medicare payment system isn’t doing right by our seniors or our taxpayers,” said Klobuchar, “and it’s not doing right by our health care providers, either.”

Klobuchar said the solution is for Medicare to tie its spending to quality care and medical outcomes.  She is offering three specific proposals for Medicare to begin moving in that direction:

-Incentives for Quality Care.  Medicare should provide stronger incentives to reward providers for delivering quality care. For many illnesses and health conditions, the medical profession has widely-accepted practice guidelines proven to result in better outcomes.  These quality guidelines should be the basis for Medicare payments to providers.

-“Bundling” Services.  Medicare should adopt a “bundling’’ approach for its payments. Instead of paying indiscriminately for any and all procedures, Medicare would pay for a “bundle’’ of services appropriate for a patient’s specific condition, which would encourage better care coordination and less incentive to bill Medicare purely for volume.

-Hospital Certification.  Medicare should base its certification of hospitals on how well they educate patients about appropriate health care and health care choices. Studies show that educated patients are more efficient, healthier consumers of health care.

Klobuchar acknowledged that there will be no action this year on these proposals.  But, she said, the momentum for reform will be strong in 2009, with a new president and many new members of Congress who must answer to the public’s demand for change.  In addition, the financial pressures on Medicare will only get more severe because of the aging Baby Boom population.
 
In addition to Senator Klobuchar, participants in the forum included:
 
-Dr. Sam Carlson, Chief Medical Officer of Park Nicollet Health Services
-Dr. Jennifer Lundblad, CEO of Stratis Health
-Dr. Ben Whitten, representing the Minnesota Medical Association
-Lee Graczyk, Issues Director for the Minnesota Senior Federation
-Michele Kimball, AARP Minnesota State Director

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