MedPAC Provides Solutions, Congress Looks the Other Way

In President Obama’s letter to the Senate, he expressed support for expressed support for making the recommendations of the Medicare Payment Advisory Committee (MedPAC) more than easy-to-ignore suggestions.  As such, it’s worth looking at their latest report (issued last week) and imagining what could be if Congress were required to vote on the whole package.  What would happen this year if MedPAC ruled the world?

Right off the bat, they once again recommend that Medicare Advantage plans be capped at 100% the payment for a normal Medicare recipient – an area of fat (Medicare Advantage averages 114% per enrollee without producing better health outcomes) that has also been targeted by the White House and, in theory, Congress for years, although no one’s made that cut happen yet.

They encourage a rethinking of residency programs.  Currently, the overwhelming majority of residencies for newly-graduated physicians are done in a hospital inpatient and outpatient environment.  They’re great for teaching those skills, but a lot has been left out of the equation – skills like complex coordinated care where doctors work as part of a multi-specialty team, or learning the cost-effectiveness of procedures as well as the raw skills to execute them, or seeing what patient care is like in non-hospital, community settings.  Unremarkably, the areas that prove the hardest to change in Medicare and where some physicians offer resistance are precisely in these areas.  Learning the skills in residency, the theory goes, will make physicians more willing to try pilot programs that improve efficiency and lower costs.

They also heavily target is physician self-referral for imaging services.  The report recognizes that there would be good reasons why a physician or a practice would have an MRI or CT scan on the premises, as it allows for a quicker and more efficient diagnosis – a very good thing when time is of the essence.  But we also know there’s a problem here, and an inherent conflict of interest.  As the report notes, “Between 2002 and 2007, the volume per beneficiary of imaging services paid under the physician fee schedule grew nearly twice as fast as all physician services.”  Even more interesting, more frequent self-referral for imagine services has a correlation to more use of resources in treatment just in general.  MedPAC doesn’t have a recommendation on how to fix this, but wants to look at restructuring image service payments to take into account how much technology has advanced (i.e., it’s not as expensive to do these tests as it used to be) as well as what’s a clear temptation to do more MRIs if you happen to have an MRI machine.

I’m barely scratching the surface.  From cover to cover, MedPAC is filled with interesting solutions to simultaneously save costs and reward quality.  Some of these paradoxically require spending more money on the things we don’t do enough of.  Some of them involve cuts on programs that haven’t shown their worth.  None of them have, to date, survived resistance from the lobbyists of the various industries:  Medicare Advantage is the poster-child for spending money for no reason, but the insurance lobbyist has fought off cuts; hospitals like to keep residents working full time in the hospital, thank you very much, and are resistant to change; and anything that changes the perverse incentives for physicians to be tempted to run up the score with more imaging scans will draw the ire of medical device makers and physicians.  We have an overabundance of ideas for cutting costs and improving care, thanks to MedPAC.  But until these recommendations have any teeth, Congress is likely to conveniently look the other way.

(Photo credit:  Corporal Cacophony (ClintJCL) on Flickr.)