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Senators Klobuchar, Gregg, Cantwell Introduce Bipartisan Legislation to Reform Medicare to Reward Quality, Efficient Care

Medicare Payment Improvement Act would reform system by rewarding efficiency and addressing geographic disparities to save billions Moving to integrated care systems could save Medicare an additional $100 billion a year

June 12, 2009

Washington, D.C. –Today, U.S. Senators Amy Klobuchar (D-MN), Judd Gregg (R-NH), Maria Cantwell (D-WA) introduced legislation to reform the Medicare payment system to reward quality, efficient care.  The Medicare Payment Improvement Act would reform Medicare by paying providers for the quality, not quantity, of care.  These changes would reduce the dramatic differences in Medicare spending throughout the nation and help move the nation to a coordinated, integrated delivery system – like Minnesota, New Hampshire, Washington and other high efficiency states currently have.  Studies have shown that more integrated care could save taxpayers an additional $100 billion a year. 

“We need to reform Medicare to pay doctors for the quality care they provide and transform the current health care system into one that concentrates on delivering the best care for patients,” said Klobuchar.  “Americans deserve a better Medicare system – one that rewards quality and pays providers fairly.”

Senator Gregg stated, “Health care spending already takes up around 17% of our nation’s economy, significantly more than any other industrialized nation.  We don’t need to spend more money on health care, we need to spend it better.  Sadly, Medicare too often pays providers based on volume of work, rather than the quality of work. The bipartisan legislation introduced today works to turn those tables by improving how the Medicare payment system operates so we can provide higher quality care at a lower price for patients throughout the country.”

“We’ve been hearing talk about controlling health care costs for years,” said Cantwell, who yesterday introduced the Medical Efficiency and Delivery Improvement of Care Act, which contains similar language to this bill.  “Washington state and Minnesota have been doing something about it – delivering high quality service at cost levels far below the national average. And we are being penalized for that good work because Medicare reimbursement formulas reward quantity rather than quality. Our legislation will reward efficient, coordinated health care practices, while ensuring patients have access to the best health care services possible.”

Specifically, the Medicare Payment Improvement Act will increase efficiency by creating a value index within the formula used to determine Medicare physician fees. Linking rewards to the outcomes for the entire payment area creates the incentive for physicians and hospitals to work together to improve quality and use resources efficiently. 

Currently, Medicare does not take into account the value of care provided by physicians when determining their payments for providers. Despite periodic efforts at reform, Medicare pays for volume, not value. More tests and more surgeries mean more money – even if the extra tests and operations do nothing to improve a patient’s condition. 

States that have historically delivered excessive procedures are still rewarded for the wasteful practices of the past, while efficient states such as Minnesota, New Hampshire and Washington are punished.  For instance, studies have shown that while Medicare spends roughly $15,000 per patient per year in Miami, Florida a patient in Minneapolis, Minnesota receives about $7,000 worth of care over the year. Put another way: Medicare will spend $50,000 more on a 65 year old patient in Miami over the course of his or her lifetime than on a comparable patient in Minneapolis.

Yesterday, Klobuchar and a bipartisan group of Senators sent a letter to the Chairman and Ranking Member of the Senate Finance Committee calling for performance benchmarks to be included in the health care reform legislation.  The letter said that high efficiency states can help lower costs to Medicare and improve patient treatment, while saving taxpayers billions of dollars each year.

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