Public, Private Payers Should Partner To Change Health Delivery, Payments

Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...

By Sara Hansard

Public and private payers of health care need to work in partnership to change the way health care is delivered and paid for, Centers for Medicare & Medicaid Services Administrator Donald Berwick said at a health insurance industry conference Sept. 12.

“Neither of us can do it alone,” Berwick told about 550 attendees at America's Health Insurance Plans' Medicare and Medicaid conferences. “It takes us both, [in a] public and private partnership together, to achieve the full set of changes that we really need for our country,” he said. AHIP represents about 1,300 health insurers that cover about 200 million people.

Private health insurers “have distinct strengths, and we need to leverage those strengths with each other to get the best out of the health care system,” Berwick said.

Berwick repeated the same themes of a Sept. 8 speech he gave at a Health Affairs briefing that health care costs are the most urgent problem to be dealt with in the health care system and that it is better to control costs through quality and productivity improvements rather than by simply cutting payments (see related item in this issue).

Medicare, Medicaid, and the Children's Health Insurance Program have size and leverage “to institute critical improvements in health care delivery systems,” Berwick said. The federal government is in a position to set up new delivery systems enacted in the Patient Protection and Affordable Care Act, such as accountable care organizations, bundled payments, and value-based purchasing, he said.

Private insurers “have versatility,” Berwick said. “You have maneuverability to test those changes and to find your own innovations and ways to improve care and bring cost down through improvement.”

Federal health care programs and private payers are moving in many of the same directions, Berwick said. Medicare has begun to cover preventive services with no cost sharing under PPACA, “and we've seen nearly universal steps on the private payment side in Medicare Advantage to offer [the] same services, and an increasing focus on prevention,” he said.

Medicare Advantage Being ‘Strengthened.’

Medicare Advantage is being strengthened under PPACA, Berwick said. “We're doing more to reward high-quality plans, more to give Americans interested in Medicare Advantage vibrant and meaningful choices among the plans that are available to them,” he said.

“We'll soon have even more good news for the American people about the choices that they have in Medicare Advantage, about the levels of their participation and about the cost they should expect to see,” Berwick said.

Asked about that comment by reporters after his speech, Berwick said, “There'll be a couple of things coming out very soon that I think will show the increasing strength” of the program. He would not elaborate further.

But he said that “the program is ever stronger.” Many “tiny little fee-for-service plans, a lot of them are going away. The strength of the options that patients have are much more meaningful, much more digestible for patients. We want to make it possible for people to really have meaningful choices.”

ACO Final Rule ‘Soon.'

As the Medicare Shared Savings Program is established under PPACA to set up accountable care organizations to coordinate care for Medicare beneficiaries, the private sector has launched “quite a large number of ACO-like endeavors that have taken off, they've shown us lessons already, they're giving us ideas that can strengthen the Medicare effort,” Berwick said.

CMS's ACO proposal, which received about 1,200 public comments, is to be finalized “soon,” Berwick said.

The Pioneer program for ACOs that are ready to take risks to produce savings under the program is likely to be in operation before the shared savings program starts January 2012, Berwick told reporters after his speech. He would not divulge the number of applicants for the Pioneer program, but he said there are a “very healthy number.”

Accountable care organizations show “that it's possible to create really fully coordinated care” in an environment “which remains fee-for-service,” Berwick said. Since patients can go outside of the ACO to other providers, “the accountable care organization has to work, not with restriction, but with attraction to the idea of seamless care,” he said.

‘Immense’ Savings From Reducing Waste

The CMS administrator also said that reducing waste in the health care system can lead to “immense” savings. The potential gains from reducing waste through improving productivity “will potentially dwarf the relief that we can get from shorter-term, less stable, much more blunt manipulation of the direct levers,” such as reducing payments, he said.

Reducing waste includes a number of areas, such as failing to coordinate care, he said. “Failure to coordinate leads to avoidable complications, it leads to readmissions, it leads to duplication of efforts, it leads to confusion and pain and disarray for the very people that we are trying to help,” he said.

The approximately 9.2 million people who are eligible for both Medicare and Medicaid are a good example of how expensive it is not to coordinate care, Berwick said. People eligible for both programs, known as dual eligibles, account for some 40 percent of state Medicaid spending, he said. Yet only about 100,000 dual eligibles are in coordinated care programs, he said.

“That's not good. These people need coordinated care in some form. They've got multiple problems, they're seeing multiple providers, they're [going] in and out of hospitals,” Berwick said. “We need to make their care better. And if we do that their costs will fall dramatically.” The federal government must work in partnership with the states to correct the problem, he said.

Berwick also listed “problems in health care pricing” as an area that leads to waste in the health care system. The problem occurs “when market forces are not allowed to exert their influence on proper relationships between supply and demand,” he said.

CMS has had “extraordinarily successful” results from competitive bidding for durable medical equipment, which shows “just how powerful those forces can be in achieving better and more affordable pricing on behalf of beneficiaries and patients through innovation,” he said.

Providers Will ‘Hit Any Pitch.’

Berwick expressed confidence that health care providers can change their ways to reduce costs and improve quality. Providers “will hit any pitch we throw at them,” he said. “If we throw them a pitch that says we will reward the volume of services you provide or the quantity of care, then that's the pitch they'll hit. They will simply do more, whether or not that ‘more’ really helps people get healthy and stay healthy,” he said.

“If we throw them a pitch that says it is not quantity that we want, it is quality … that's the pitch they'll hit,” he said.

Feds Ready for Exchanges in 2014

Answering questions from the press after the session, Berwick said that the federal government “will be prepared” to open health insurance exchanges in 2014 as required under PPACA. The law requires the Department of Health and Human Services to open exchanges in states that do not open their own exchanges in accordance with PPACA‘s requirements.

“There will be federal exchanges,” he said, since some states will not open their own by 2014. “We don't know how many, but we'll be prepared.” Asked whether HHS has enough money to operate federal exchanges, he answered, “We have the money we need to take the next steps.”