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Washington Post: Medicare Payment Structure Subsidizes Bad Medicine

According to the Washington Post, Medicare's payment structure causes it to subsidize bad care. The article is vague both as to what the problem is and what the solution should be, but apparently, Medicare's fee-for-service pay structure is the problem and either capitation, pay-for-performance, or pay for adherence to guidelines is the solution.

The Post's article cites and appears largely to be based upon a Dartmouth study published in Health Affairs last year. According to a press release, which is set forth in the "More" section below:


States spending more money per Medicare beneficiary are likely spending those dollars on intensive, expensive care instead of more effective care. In addition, high-spending states are likely to have a greater concentration of specialists, according to the study�s authors.

....

The study, which examined state-level differences in spending per Medicare beneficiary and the quality of care provided, found that higher spending did not translate into higher quality. For example, New Hampshire, which spent about $5,000 per Medicare beneficiary in 2001, had the highest overall quality ranking, while Louisiana, which spent the most per Medicare beneficiary at $8,000 per person, had the lowest overall quality ranking.

....

The study found that states with relatively more general practitioners show greater use of high-quality care and lower spending per beneficiary. Increasing the presence of general practitioners in a state by 1 per 10,000 people is associated with a rise in the state�s quality ranking and a reduction in overall spending of $684 per beneficiary. Conversely, increasing the presence of specialists by 1 per 10,000 people leads to a drop in overall quality and an increase in spending of $526 per beneficiary.

Among the study�s findings:

� States with lower spending often had better-quality care � such as higher use of interventions and screening methods, including prescribing beta-blockers at hospital discharge for patients treated for a heart attack, ordering mammograms every two years for women ages 65-69, and conducting regular hemoglobin tests and biennial eye exams for people with diabetes

� States with higher spending and lower-quality care had more frequent hospitalizations and use of intensive care units (ICUs) for patients in the last six months of life

� Medicare patients in states that spent $1,000 more per beneficiary spent an average of 1.3 more days in the hospital and were 3.9 percent more likely to be admitted to an ICU

The researchers based their analysis on twenty-four quality measures developed by the Medicare Quality Improvement Organization (QIO), as well as data from the Dartmouth Atlas of Health Care on the number of days Medicare beneficiaries in their last six months of life spent in a hospital and what fraction of them are admitted to the ICU.

....

While the study finds a link between higher spending and lower-quality care, the researchers emphasize that cutting Medicare spending as a way to improve quality could have the undesirable effect of reducing the quality of medical care in high-spending states even more.

Instead, the authors suggest concentrating on policies that improve the quality of care for beneficiaries, such as establishing national practice benchmarks for basic quality measures and encouraging greater access to general practitioners.


As previously reported, economist Arnold Kling asserts that differing payment structures motivate doctors to provide differing types of care. The Dartmouth study seems to be suggesting that Medicare should abandon what Kling calls "activist medicine" for adherence to quality standards.

However, the Post's article cites favorably an HMO, HealthPartners, which appears instead to be paid on a capitation basis. Other parts of the Post's article appear to cite favorably pay-for-performance concepts - that health care providers should be compensated according to the results they achieve.

So the Post's point is unclear.

MORE...

States with higher Medicare spending often provide lower-quality, less-effective care to Medicare beneficiaries, according to a new study released in April, 2004, in the journal Health Affairs. For policymakers, the study shows that spending more money does not necessarily translate into better quality of care for the elderly.

States spending more money per Medicare beneficiary are likely spending those dollars on intensive, expensive care instead of more effective care. In addition, high-spending states are likely to have a greater concentration of specialists, according to the study�s authors.

The study, which examined state-level differences in spending per Medicare beneficiary and the quality of care provided, found that higher spending did not translate into higher quality. For example, New Hampshire, which spent about $5,000 per Medicare beneficiary in 2001, had the highest overall quality ranking, while Louisiana, which spent the most per Medicare beneficiary at $8,000 per person, had the lowest overall quality ranking.

�Health care leaders should not make the mistake of thinking that we can only improve the quality of health care delivered to elderly Americans by spending more money,� says lead author Katherine Baicker, Ph.D., assistant professor in the Department of Economics at Dartmouth. �Instead, we could simply use existing dollars much more effectively.�

Baicker and her colleague, Amitabh Chandra, Ph.D., point out that higher spending is unlikely to cause lower-quality care but rather is an indicator of a particular style of health care provision and resources. In fact, the composition of the physician workforce � the mix of specialists and general practice physicians in a given area � plays a critical role in determining the use of highly effective care.

The study found that states with relatively more general practitioners show greater use of high-quality care and lower spending per beneficiary. Increasing the presence of general practitioners in a state by 1 per 10,000 people is associated with a rise in the state�s quality ranking and a reduction in overall spending of $684 per beneficiary. Conversely, increasing the presence of specialists by 1 per 10,000 people leads to a drop in overall quality and an increase in spending of $526 per beneficiary.

Among the study�s findings:

� States with lower spending often had better-quality care � such as higher use of interventions and screening methods, including prescribing beta-blockers at hospital discharge for patients treated for a heart attack, ordering mammograms every two years for women ages 65-69, and conducting regular hemoglobin tests and biennial eye exams for people with diabetes

� States with higher spending and lower-quality care had more frequent hospitalizations and use of intensive care units (ICUs) for patients in the last six months of life

� Medicare patients in states that spent $1,000 more per beneficiary spent an average of 1.3 more days in the hospital and were 3.9 percent more likely to be admitted to an ICU

The researchers based their analysis on twenty-four quality measures developed by the Medicare Quality Improvement Organization (QIO), as well as data from the Dartmouth Atlas of Health Care on the number of days Medicare beneficiaries in their last six months of life spent in a hospital and what fraction of them are admitted to the ICU.

Cutting Spending Not The Answer To Improving Care For Medicare Beneficiaries

While the study finds a link between higher spending and lower-quality care, the researchers emphasize that cutting Medicare spending as a way to improve quality could have the undesirable effect of reducing the quality of medical care in high-spending states even more.

Instead, the authors suggest concentrating on policies that improve the quality of care for beneficiaries, such as establishing national practice benchmarks for basic quality measures and encouraging greater access to general practitioners.

�Improving quality of care has everything to do with how the money is spent,� says coauthor Chandra. �And there is good evidence that, in many cases, we are not spending it wisely now. We need to determine how to make better use of health care dollars, especially with the baby-boom generation about to enter the Medicare system in the next few years.�

Read the study at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.184

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Copies of this Web Exclusive can be obtained at www.healthaffairs.org Address inquiries to Jon Gardner, Health Affairs, at 301-347-3930 or via e-mail, [email protected]


Posted by: Duncan Kinder on Jul 25, 05 | 10:04 am


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