Rewarding Mediocrity or Improving Senior Care?

There was the briefest of lulls in the healthcare reform battle over the past few weeks, but today the Government Accountability Office (GAO), the nonpartisan investigative group in Congress, is launching a new volley.

The federal investigators have decided that Medicare is squandering more than $8 billion on an experimental program that rewards companies providing nothing but perfectly mediocre health care.  Further, the program is most unlikely to produce any useful results.  The most useful result, and here we all agree, would be to improve the quality of care for older Americans.  In their opinion, this is not happening.

The Obama administration officials overseeing the project defended their work and said the project would not be canceled.  All this is part of the 2010 health care reform law, in which Congress cut Medicare payments to managed care plans, known as Medicare Advantage, and then okayed bonus payments to those providers marketing high-quality plans.  The investigators are now claiming that most of the bonus money is being paid to “average-performing plans”, plans rated lower than the high-quality plan models Congress had in mind.

There are rumblings in the House and Senate that Medicare officials abused their authority when these changes were made.  Senator Orrin G. Hatch of Utah, the senior Republican on the Finance Committee,  and Representative Dave Camp, Republican of Michigan, and chairman of the Ways and Means Committee, issued a statement in which they expressed concern that the government could be “using taxpayer dollars for political purposes, to mask the impact on beneficiaries of cuts in the Medicare Advantage program”, something the administration denies.

And there are more claims and counterclaims.  According to the independent Medicare Payment Advisory Commission, Medicare spending is already a very serious problem,  and extending quality bonus payments to so many plans is very likely to lessen any incentive among providers to work towards real savings and quality improvement in their offerings.  The GAO considers the project to be poorly designed, in fact so poorly designed that there is no way to gauge if any improvements in care have actually occurred.  The bonus payments can be used by the insurers to offer policyholders extra benefits, including lower premiums or dental and vision care.

At present, more than 12 millions Americans are in Medicare Advantage plans, and about a 30 percent of them are in plans eligible for bonus payments under the 2010 law.  In this demonstration program, says the GAO, 90 percent are in bonus-eligible plans.

The Obama administration considers all Medicare Advantage plans to be part of the demonstration, while the Medicare commission countered that “demonstration authority is intended for smaller-scale projects” that investigate and test innovative ways to finance and deliver health care.

The administration also said that it hoped to encourage faster and broader improvements in health care to seniors with the bigger bonuses.  The health care reform law cut payment to Medicare Advantage plans after a number of studies found the private carriers were being overpaid.  According to the President, the private plans were getting the benefit of “unwarranted subsidies” that “pad their profits but don’t improve the care of seniors”.

It’s exhausting, isn’t it?  We must say,  relentlessly applying the business model to every aspect of life — whether it fits or not — is more than a little tiresome.  All we really want is decent coverage that’s easy to access for a reasonable premium.  How is it that this is so very hard to organize?

We will keep you posted!

Special thanks to Robert Pear, NY Times. 


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