Thursday, Sept. 30, 2004 | 11:14 a.m.
Medicare faces many challenges in the months ahead including adding prescription drug coverage and expanding disease management benefits for seniors. But the private system offers a good model to follow, a Medicare official says.
Centers for Medicare and Medicaid Services Administrator Mark McClellan told reporters in Washington on Wednesday that the traditional Medicare program could learn a lot from insurers that offer private Medicare plans. In the Las Vegas Valley, Sierra Health Services Inc. and PacifiCare Health Systems Inc. offer private Medicare plans to seniors, which offer more benefits than the traditional government plan.
Among the lessons to be learned are disease management programs for chronic medical conditions and financial incentives for physicians and other health care providers who provide quality patient care, McClellan said during an interview with the Kaiser Family Foundation, which focuses on health issues.
Traditional Medicare is a federal government health plan that defrays medical costs for people 65 or older, some disabled people under 65 and those with end-stage renal disease.
Private Medicare plans are open to anyone who is eligible for Medicare and cover everything traditional Medicare does and offer additional benefits such as prescription and vision coverage. The private plans often produce lower costs for physicians' visits and hospital stays, but they require patients to stay within a physician's network and obtain referrals before seeing specialists. Those with end-stage renal disease are ineligible and must use traditional Medicare.
McClellan said private insurers such as PacifiCare have seen significant payoffs when they paid health providers a bonus for meeting certain quality standards.
In 2002 PacifiCare added clauses into its providers' contracts that said it would pay a bonus based on improving the quality of care in 16 areas such as regular testing of people with diabetes and high cholesterol, treatment for asthma, and a variety of preventive screenings. This year, there were 20 quality measures and next year providers will be assessed in 27 areas.
Dr. Sam Ho, chief medical officer for PacifiCare, said in a separate interview that PacifiCare saw improvement in 12 of the 16 quality measures the first year.
"That's highly remarkable given that the program was in place such a short amount of time," he said.
PacifiCare's contracted health providers can earn a percentage of $18 million that the insurer allocated for the incentive program, depending on their improvements and the percentage of the patients they treat within PacifiCare's insured.
Traditional Medicare, which is what the majority of seniors use for their health coverage, will begin offering reimbursements to hospitals based on 10 quality measures in the next year, McClellan said.
He said hospitals should be rewarded when they provide quality care to patients "instead of paying when they have more complications and stay longer. Let's pay them more when they do the care right the first time."
The incentive reimbursements will be expanded to physicians, outpatient centers and nursing homes at a later time, McClellan said.
"When doctors are not being rewarded and encouraged to improve quality, and maybe even reduce costs, something's wrong with our system," he said.
Some state Medicaid programs are also implementing pay-for-performance programs to improve patient quality and reduce costs, McClellan said. For example, North Carolina's program reduced Medicaid acute care costs by 5 percent.
Another area where traditional Medicare lags private Medicare plans is in disease management programs, which provide regular care and education for diabetes, asthma, congestive heart failure and other conditions.
Traditional Medicare is conducting a pilot disease management program with 300,000 people and will likely be expanded nationwide in 2006. Preventive care such as breast cancer and prostate screening will be a covered benefit in 2005.
Another way Medicare is broadening health benefits is by issuing prescription drug discount cards this year, which will reduce drug costs until a prescription drug plan is offered in 2006.
Medicare recently launched a plan with community organizations to automatically enroll about 1.8 million low-income beneficiaries in the drug discount program.
So far, about 4.5 million of the 7 million people eligible for the drug discounts have signed up for a discount plan, McClellan said.
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