Insights

Principles for a Sustainable Medicare Program

By: 
PFM
PFM Guard Rails

The Partnership for the Future of Medicare (PFM) is a bi-partisan, non-profit organization focused on ensuring the long-term security of Medicare.  We have come together to educate policymakers and beneficiaries with research-based solutions that ensure the survival and sustainability of the program for generations to come. PFM recognizes that while Medicare’s financial outlook needs to be stabilized, reform that focuses on financial outlook alone as a measure of sustainability will not succeed, and that the delivery of health care must also be improved. We therefore support solutions that advance and ensure both the quality of the services provided to the program’s beneficiaries as well as its financial sustainability. Representing a range of stakeholders in health care, PFM has identified five major principles to serve as guard-rails for a successful Medicare debate and subsequent reform.

 
1.  Reward Quality Over Quantity
 
While the fee-for-service model has dominated the program over the years, we believe the time has come to move forward with a modern delivery model that changes economic incentives from volume to value and introduces accountability. We must improve how we treat chronic diseases by breaking down silos and achieving greater care coordination. Medicare needs to continue exploring new health care delivery models that reward quality over quantity of care. The testing of innovative ideas designed to move the system from volume to value and create greater accountability must be encouraged, ideas that are proven successful should be scaled and widely implemented.  
 
Proposed cuts to various aspects of the Medicare program, including provider reimbursements and physician payments, do little to change the fundamental spending patterns that have led the program down its unsustainable path.  This, in turn, highlights the need for new delivery models and payment mechanisms that truly change the program’s funding and expenditure approach. Therefore, PFM believes that in order to make Medicare fiscally and clinically sustainable,  any changes aimed at reducing spending must be based on evidence or research that also demonstrate an improvement in the delivery of care.
 
2.  Encourage Competition, Innovative Ideas and Public-Private Partnerships Designed to Improve Patient Health
 
As a bi-partisan organization we advocate for models of care that embrace innovation and take advantage of the best practices and knowledge from the private sector and government allowing efficient use of resources to offer beneficiaries better access to comprehensive coverage that can improve care coordination and overall health outcomes. A recent study highlighted that Medicare Advantage enrollees had 20 to 30 percent lower rates of ambulatory visits and hospitalizations in addition to 10 percent fewer hip and knee replacements than traditional Medicare enrollees.  Other research is showing that Medicare Advantage is reducing preventable hospital admissions and readmissions.  Innovation, whether in delivery or health IT, is largely driven by the private sector while the federal government is still lagging behind. As Congress faces the challenge of implementing the Affordable Care Act and addressing the federal deficit, we urge that experiences demonstrating real results be leveraged across the program to promote more innovation in the Medicare program and to give the beneficiaries improved options for receiving their care.
 
3.  Advance Transparency, Accountability and Data to Empower Beneficiaries and Providers
 
PFM supports efforts to improve the transparency and the availability of data, which are critical elements that empower beneficiaries to make informed decisions on their care. For example, the ACA continues to implement Medicare Advantage rating systems and reward plans for achieving high-quality standards, using over fifty scoring measures, providing consumers with the information they need to choose between health care options. These same data should be made available to  beneficiaries throughout the delivery system, including those in traditional fee-for-service Medicare.  HHS has also taken the lead and published over 300 data sets to improve research and develop innovative tools. Additionally, the Medicare Data Sharing for Performance initiative helps standardize data for evaluations and quality reporting.  While efforts like these shed light on challenges we face in our health care system, they also suggest what types of reforms are needed to improve care delivery.
 
4.  Support Vulnerable Populations and Address Chronic Disease Population
 
PFM supports initiatives to improve efforts that serve vulnerable populations like those dually eligible for Medicare and Medicaid, and those who have special needs. In particular, we support coordinated care efforts that increase the quality and accountability of care for these populations.  In 2008 more than nine million Americans were dually eligible and more than half had incomes below the federal poverty level. Sixty percent of the dually eligible had chronic diseases, accounting for 81% of Medicare spending as these beneficiaries rely on multiple prescriptions and doctor visits.   We support efforts to coordinate care through a variety of vehicles including the Financial Alignment demonstration, Special Needs Plans (SNPs) and the establishment of the CMS Medicare Medicaid Coordinated Office, as they help better serve vulnerable populations and also ease the administrative burden.
 
5.  Strengthen Program Integrity
 
Fraud, waste and abuse continue to be a challenge to the Medicare program with $20.6 billion in recoveries since 1997.   Through increased accountability, transparency and better use of data, CMS, working with its contractors and private sector partners, can improve efforts to strengthen program integrity.  PFM supports funding for initiatives that will help detect and recover improper payments.