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Senators Klobuchar, Kohl and Franken Call for Value-Index Approach to Combat Medicare Costs

Senators Say Medicare reform should use Minnesota's model of low-cost, high quality health care

July 30, 2009

Washington, D.C. – Today, U.S. Senators Amy Klobuchar (D-MN), Herb Kohl (D-WI) and Al Franken (D-MN) introduced legislation to reform the Medicare payment system to reward hospitals for quality, efficient care.  The Medicare Payment Fairness Act of 2009 would reform Medicare by paying hospitals for the quality, not quantity, of care.  These changes would reduce the regional differences in Medicare spending by shifting the nation to a coordinated, integrated delivery system – like Minnesota.  Studies have shown that more integrated care could save taxpayers an additional $100 billion a year. 

“We need to reform Medicare to pay hospitals for the quality of care they provide and transform the current health care system into one that concentrates on delivering the best care for patients,” said Klobuchar.  “This bill complements the Medicare Payment Improvement Act that I introduced last month, and is another step towards rewarding quality care and improving our Medicare system.”

“As it stands, the Medicare reimbursement system provides perverse incentives,” said Kohl.  “Currently, geographic areas that provide the most inefficient care oftentimes get the highest reimbursements.  We need to ensure that all health care systems provide better care in a more efficient way, and reward those systems that already do so.  Otherwise, we’ll never get costs under control.”

“As Congress considers national health care reform, they have a lot to learn from how we do things in Minnesota,” said Franken. “We understand that health care quality ought to be rewarded, and that patient-centered health care is better for Minnesotans than a profit-centered system. Implementing a Value Index is not just a critical step in reforming our national health care costs, it’s also a step towards ensuring that Minnesota doctors aren’t penalized for being ahead of the curve.” 

Specifically, the Medicare Payment Fairness Act will increase efficiency by creating a value index within the formula used to determine Medicare hospital reimbursements. 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 hospitals 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. 

Last month, Klobuchar introduced similar legislation with Senators Judd Gregg (R-NH) and Maria Cantwell (D-WA) to reward value over volume for Medicare physician payments.

Also last month, 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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