Peggy Noonan vs. the New England Journal of Medicine
by Maggie Mahar

The reform proposal now being debated in Washington would put a brake on health care inflation. As an eye-opening essay in the most recent (March 4) issue of the New England Journal of Medicine explains, Medicare would, at last, have the power it needs to lead the way, not by cutting benefits, but by restructuring how it does business.
Meanwhile, pundits such as Peggy Noonan feel free to pronounce health care reform “a disaster” and “a colossal waste of time”without giving any indication that she has ever read the legislation. Presumably Noonan bases the opinions that she expresses in her recent Wall Street Journal Op-ed on what other pundits have said.
But her response is purely rhetorical: “Does anyone believe this?"
That’s the problem with Op-eds—no proof, no evidence. Much bombast, trimmed with rick-rack (metaphors found in the Notions’ Department of the mind.)
By contrast, one of the nice things about articles in peer-reviewed medical journals is that they are footnoted. This doesn’t mean that they’re always right, but at least you can track what the author is relying on as facts.
The Evidence: How the Legislation Contains Spending
The piece by Robert Mechanic and Stuart Altman in last week’s NEJM may be less colorful than Noonan’s, but in place of self-expression, it offers truth grounded in careful analysis of the legislation: The Senate and House reform bills lay out a blueprint for cost-containment, spelling out precisely how Medicare can squeeze waste out of the system while simultaneously lifting the quality of care. Anyone who tells you that seniors will no longer have access to needed tests and treatments is, pure and simple, lying.
You may think that you have heard talk of Medicare slowing health care inflation in the past -- with little in the way of tangible results. But as Mechanic and Altman point out, this legislation is different: The Secretary of Health and Human Services (HHS) will have the authority to expand pilot programs and put them into practice—without going through Congress. In the past, the need for congressional approval has derailed initiatives. This will no longer be the case.
Moreover, even if the reform legislation now under consideration doesn’t pass, the authors argue that Congress will then be forced to pass stand-alone Medicare reform legislation that targets fraud and waste. “Whatever the fate of current reform proposals, Congress cannot avoid important decisions about Medicare,” they declare. (As I wrote earlier this week, I very much doubt that Obama and Pelosi have gone out on a limb planning to join hands and jump: I believe that Congress will pass the comprehensive legislation.)
But even in the worst-case scenarios, if legislators should fail, the authors argue that Congress will have no choice but to address Medicare spending in a separate piece of legislation. I agree.
How can Mechanic and Altman be so sure that legislators will roll up their sleeves and take on the hard task of putting a lid on the nation’s spiraling Medicare bill? “Without new legislation [Medicare’s ] Hospital Insurance Trust Fund will become insolvent by 2017. Regardless of whether Congress addresses these challenges in separate [Medicare reform] legislation or as part of a broad reform package,” legislators have no choice. They must find a way to make sure that we begin to get better value for our Medicare dollars. No one wants to be responsible for letting Medicare slide south on his or her watch.
Either way, I see reason to be optimistic. Whether Medicare is overhauled as part of the broader legislation, or in a separate bill--the effect will ripple throughout our health care system. Private insurers already have told the Medicare Payment Advisory Commission (MedPAC) that if Medicare takes the lead, changing the way it pays for care so that it is rewarding providers for quality rather than quantity, private insurers will follow. They just want Medicare to provide political cover.
Road to Reform Already Spelled Out in the Legislation
The plans for a Medicare overhaul that would lead to substantial savings are embedded in both the House and the Senate bills. The key is a series of voluntary pilot programs that would change how health care is delivered, what we pay for, and how we pay for it. Because these will be “pilot programs” and not simply “demonstrations” the Secretary of HHS will be able to implement them on a “nationwide” scale without waiting on Congressional approval. (See the Senate Bill, H.R. 3590, Patient Protection and Affordable Care Act, § 3021 (2009), establishment of Center for Medicare and Medicaid Innovation within CMS, p. 723).
Affordable Health Care for America (AHCA) staff explain the difference between a pilot and a demonstration: Unlike a demonstration project, a pilot does not need explicit permission from Congress for continuation—the agency (HHS) holds all the power. In fact, the House bill converts the existing acute care episode demonstration project into a pilot program—presumably for that reason.
“This provision is critical,” Mechanic and Altman note, because in the past, lobbyists have blocked efforts to make successful initiatives part of the program—even though we know these programs work.
We Already Know How Medicare Can Save Billions
The legislation promises that Medicare can save billions over the next ten years, and we already know how this can be done. As an example, Mechanic and Altman point to Medicare’s heart-bypass demonstration project which paid a single global fee for services provided by hospitals and cardiac surgeons involved in a bypass operation, including doctors who saw the patient both before and after he left the hospital. (This is also known as “bundling” payments.)
As a result, participating providers did a better job of coordinating care, patient satisfaction rose, Medicare saved money and both hospitals and doctors saw higher profits.
What more could you want? (Medicare rolled out this voluntary program nation-wide , why wouldn’t private insurers follow suit, reducing their own costs while pleasing both doctors and patients?)
Yet for reasons best known to politicians, Congress never expanded the program beyond the seven initial hospitals. For more on the success of this project, scroll down to “The Medicare Experience” here .For a general discussion of global fees, see this Commonwealth Fund report.
Who blocked implementation? My best guess is that hospitals and doctors who never read the final report on the project feared that they would lose under a global fee system, and so lobbied against it. As Dr. Don Berwick, president of the Institute for Health Care Improvement (IHI) points out in the film, Money-Driven Medicine, a great many stake-holders worry, needlessly, that they will lose something under reform. Berwick acknowledges that “some oxes will be gored” as those who profit from waste lose revenue. “But a lot of people with oxen that won't get gored think they will,” Berwick notes. And this "coalition of the people who would be better off under reform” plus those “who are needlessly afraid of change . . that's an immense coalition, “ he observes, “That's eighty percent of America!”
Conservatives who oppose reform are always available to confirm a stake-holder’s most paranoid fears. Those who support reform should counter the spread of misinformation. Unfortunately, it’s much, much easier to “frame” a lie than it is to explain the truth. Lies lend themselves to one-liners. Typically, the truth is far more complicated. I understand why reformers have had a hard time explaining reform.
Mechanic and Altman offer a second example: a demonstration project that tested competitive bidding for durable medical equipment between 1999 and 2002, and discovered that the bidding reduced Medicare expenditures by 19% . Needless to say, those who profit from making equipment were not thrilled. They were horrified—and with some reason. They, in fact, would lose under a competitive bidding system. Ultimately, Congress authorized the Centers for Medicare and Medicaid (CMS) to expand the program, but it delayed implementation until 2010.
The Senate and House bills also propose a program that would let accountable care organizations that successfully control growth in spending while simultaneously meeting quality goals share in Medicare’s savings. In addition, the bills recommends rewarding doctors who create medical homes that focus on disease management—and keep patients out of the hospital.
A Center for Medicare and Medicaid Innovation
Perhaps the most important cost-saving innovation in the legislation that the president is championing calls for a new independent Center for Medicare and Medicaid Innovation (CMI). “Several aspects of the proposed CMI offer hope that this effort could be fundamentally different from previous Medicare-sponsored experiments” Mechanic and Altman explain. (See the Senate bill, H.R. 3590, Patient Protection and Affordable Care Act, § 3021 (2009) (establishment of Center for Medicare and Medicaid Innovation within CMS, p. 723)For one, as noted, the Secretary of HHS could roll out successful pilot projects on a broad scale, making them part of the Medicare program.
Secondly “although the CMI proposal lists 18 payment or delivery models for consideration, the center would have broad authority to select the programs best suited to its objectives.” By contrast, today, "the CMS’s Office of Research, Development, and Information has far less flexibility, because a large proportion of its resources are devoted to congressionally mandated projects."
A third critical difference is that the CMI would not have to require projects to be budget-neutral during their initial testing period. “Many health care innovations require initial investments in staff, training, and infrastructure to achieve long-term efficiencies. But federal budget-neutrality requirements frequently discourage potential applicants, leave valuable concepts on the cutting-room floor at the Office of Management and Budget, and cut short promising programs that appear to be increasing Medicare costs [short-term.]”
Finally, the proposal includes a $10 billion appropriation for the CMI through 2019. “This would allow the CMS, which has faced chronic shortages of administrative resources, to build the capacity necessary to manage the program effectively. It would also allow the CMI to pay for services such as care coordination that aren’t covered by traditional Medicare and to support activities such as electronic data sharing, performance measurement, and quality improvement at participating health care systems.” Keep in mind, both medical research and practical experience show that when it comes to health care, higher quality and lower spending go hand in hand.
Rewarding Providers Who Want to Be More Efficient
The CMI would encourage delivery innovation by creating alternative payment structures for organizations that would like to reduce waste, but have been held back by the knowledge that, under the fee-for-service system, if they “do less,” they will lose money. Mechanic and Altman suggest that CMI might “follow the new quality-based global payment model that Blue Cross Blue Shield of Massachusetts has already implemented in contracts covering about 20% of the providers in its health-maintenance-organization network. Medicare participation would magnify the potential rewards.” In other words, CMI wouldn’t have to reinvent the wheel. In various parts of the country, providers have moved away from fee-for-service, and watched local health bills fall while outcomes remained at least as good—if not better—as they had been when doctors and hospitals were paid piece-work.Setting priorities will be crucial. The authors of the NEJM article highlight the importance of making sure that Medicare payments are “aligned with scientific evidence about what works. One opportunity for moving in this direction lies in having the CMI fund delivery systems that document which care processes are the most effective for specific medical conditions. Having this information would help the CMS develop payment policies that reward hospitals and physicians who follow best practices.
“One model described in the CMI proposal is a collaborative of health care organizations equipped with electronic records that could document and implement best practices and assist other institutions in employing them,” Mechanic and Altman explain. “In such a rapid-learning network, participants would embed decision support into their electronic health records to guide clinicians through specific care processes, document outcomes, report results, and adjust clinical practices on the basis of those results.” Such a collaboration could also “provide valuable information for the proposed national center for comparative-effectiveness research , but would be fundamentally different, because the CMI would pay for clinical services, not just sponsor research.” This is important—Medicare needs to move beyond theory to practice. Reform legislation would let Medicare do just that.
Mehanic and Altman go on to explain that, under the reform proposals, CMI would have the opportunity to align Medicare payment with state and local reform initiatives: Individual states and most private payers do not have sufficient clout to implement payment reforms if providers are reluctant to participate. However, "a Medicare waiver could allow states such as Massachusetts, which has proposed moving toward a global payment system, to establish a uniform structure of incentives that reward organizations for becoming more integrated and more accountable for cost and quality.”
Providers would not be forced to participate. But under such a system, doctors and hospitals who are prepared to accept alternative payment models would be rewarded. Mechanic and Altman acknowledge that incomes might nor soar the way they do today when some providers make up for flat fees by “doing more.” Still, those who experimented with alternatives such as “bundling” payments to doctors and hospitals would receive bonuses for good outcomes.
And they would no longer have to paddle harder just to keep up with rising costs. Many providers don’t want to have to “do more” just to keep the lights on. They would like to be able to spend more time with patients—and to be paid for the quality of their care, rather than how quickly they are able to “churn” patients. That’s what Medicare’s restructuring of how it pays for care is all about. The goal is to change “how” care is delivered.
Let me be clear: doctors would not be forced to accept “alternative payments” from Medicare. Those who chose to remain in the fee-for-service system” could, but they “ would face diminishing financial prospects.” In other words they wouldn’t be eligible for the bonuses for better outcomes under alternative payment systems.
New Leadership for CMS
Mechanic and Altman acknowledge that “success is ultimately about execution. The CMI would have to overcome a risk-averse CMS culture that promotes rigid adherence to rules. Although risk-averse behavior may be rational in a government bureaucracy, it often kills innovation. ““What would it take to establish an effective innovation group within the CMS? “ they ask. “The first step is to select a leadership team that understands health care delivery and federal government operations, thinks outside the box, and is willing to accept occasional failures as it pursues its objectives. It will need to interact regularly with innovators and build on existing knowledge about what works.”
The Obama administration has not yet appointed a new director for CMS. I have argued that I believe that White House health care policy-makers want to select someone strong enough to pursue a relatively radical agenda. My guess is that the White House did not want to face a battle over Senate confirmation of such a candidate while fighting the larger war over healthcare reform.
Rumors have circulated in Washington for months about who will be offered the position—and who may have already turned it down. All of the names I have heard would be excellent candidates: visionary, experienced, articulate and iconoclastic. They would be willing to break the bureaucratic mold, as needed, discarding worn ideas, embracing new ones and admitting to mistakes along the way, in a process that IHI’s Don Berwick describes as “continuous improvement.”
It is clear that, as Mechanic and Altman suggests, we need a CMS director who will overhaul how we pay for care, penalizing inefficiency, ferreting out fraud, and squeezing out waste, while rewarding better, safer, more collaborative care. . Medicare must pay for Value, not Volume.
Mechanic and Altman conclude: “Successful innovation is essential to the long-term sustainability of Medicare and Medicaid. The CMI would cost relatively little in the context of the overall CMS budget, but if it were successful, the long-term effect on the U.S. health care system could be priceless.”
Yes. Since I began this blog in 2007, I have argued that Medicare reform will pave the way for health care reform. And we don’t have to wait for the broader reform legislation to roll out in 2014. Medicare can begin saving money and improving quality this year.
Already, CMS has announced that it will no longer pay for an excessive number of preventable hospital readmissions, that it is cutting cardiologists’ fees while raising fees for primary care doctors and nurse practitioners, and that it is slashing fees for some diagnostic tests that are being recommended more and more often --with no medical evidence of better outcomes for patients.
The Wall Street Journal has reported on the proposed changes and how much money could be saved here.
But I guess Peggy Noonan doesn’t read the Wall Sreet Journal, she just writes for its editorial pages.
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