WASHINGTON — It’s not often that public figures admit failure in their job. But one did just that at Thursday’s meeting of the Medicare Payment Advisory Commission (MedPAC).
“I don’t think we operate with the right level of urgency,” said MedPAC commissioner Warner Thomas, MBA, of Ochsner Health System in New Orleans, upon hearing that the Medicare’s hospital insurance trust fund will become insolvent by 2026 unless something is done to slow down the spending curve. “In some ways, I think I’ve failed as a commissioner because I don’t think we’ve taken enough bold steps to move this curve.”
Commissioner Brian DeBusk, PhD, of DeRoyal Industries in Powell, Tennessee, agreed. “One thing that jumps out at me … is the word ‘unsustainable,'” he said. “Healthcare spending is going to continue to erode federal budgets, state budgets, and household incomes … I’d like us to focus a little bit more on how we fix this.”
The commissioners were listening to a report from MedPAC senior analyst Jennifer Podulka, MPAff, about Medicare’s financials and the program’s effect on healthcare spending. Podulka noted that “as Medicare enrollment rises, the number of workers per beneficiary continues to decline … By 2027, when most baby boomers age into the program, the [Medicare] trustees project, there will be just 2.5 workers for every beneficiary, creating a financing challenge for the Medicare program.” That worker-per-beneficiary number is down from a high of about 4.5 in 1970.
Insolvency Effects Unclear
Thomas asked Podulka what would happen if Medicare became insolvent. “[It’s] unclear,” she said. “Hopefully what happens is that the impending [insolvency] date causes sufficient change from Congress or, potentially, CMS [the Centers for Medicare & Medicaid Services] to push out that date … [or] we could be paying bills until the fund is out of cash, or pay pennies on the dollar. It’s unclear what would happen.”
Commission vice-chairman Paul Ginsburg, PhD, said this is not a new issue. “There have been a number of cases where the trust fund was getting close to insolvency,” he said. “It just served to force congressional action on Medicare spending and payroll taxes … [It was a] device for Congress to force itself” to deal with the problem.
DeBusk, using an analogy that compared Medicare’s fee-for-service system to a classic car, said the country might want to consider getting a new model. “I think we need to send a message,” he said. “We’re going to keep doing incremental improvements, but ultimately it’s going to take a new car … maybe it’s innovation on the Medicare Advantage side, maybe it’s a next-generation ACO [accountable care organization], or maybe it’s one of the new contracting models.”
Commissioner Dana Gelb Safran, ScD, of Blue Cross Blue Shield of Massachusetts, in Boston, wanted to turn the commission’s attention to solutions. “What can we say about what it would take to avoid the catastrophe you’ve shown us? … What are our levers to make the kind of change of [a] 1% a year [cost reduction] to give some chance of hope and empowerment to act, as opposed to just these incredibly sobering facts?”
Factors to Consider
Commissioner Jonathan Perlin, MD, PhD, of HCA Healthcare in Nashville, pointed out a couple of factors that might be influencing Medicare spending. Although people often talk about the high costs that some Medicare beneficiaries incur at the end of life, “another period where utilization is very high is at the advent of becoming a new Medicare beneficiary,” he said.
“For the first 7 years [of being in the program], that’s directly related to variable access to healthcare services prior to … becoming a Medicare beneficiary. So Medicare inherits not only variable access to health insurance, variable access to care, and also a chronic disease burden that’s also part and parcel of the current context … We need to call out the accelerated burden of chronic disease, and [the] variable access to care that precedes eligibility for Medicare.”
The commissioners also discussed a report by MedPAC principal policy analyst Jeffrey Stensland, PhD, about the “spillover” effect of Medicare Advantage (MA) plans on spending and coding in fee-for-service Medicare. The question Stensland and colleagues looked at was whether, in geographic areas that had lots of Medicare Advantage plans, changes that the MA plans induce physicians to make in their practice patterns “spill over” into the way those physicians treat their fee-for-service patients. The analysis found that while there may be a spillover effect, it’s pretty small, and it “doesn’t change the conclusion that MA results in higher Medicare spending in some markets and lower Medicare spending in other markets,” Stensland said.
Changes Wrought by Medicare Advantage and Managed Care
Is it possible that the “spillover” effect happens not at the doctor level, but from changes at the provider organization that the doctor is part of? wondered Lawrence Casalino, MD, PhD, of Weill Cornell Medical College in New York City.
“It could be that the effects on physician decisions were huge in the early days, and now they’re minimal,” he said. For example, “when I started in practice, it was routine to put patients with herniated disks or low back pain in traction, and keep them in the hospital for a week. And it was routine for patients to come in the day before surgery to get tests done and get used to the hospital. It was Medicare managed care and MA that said, ‘You can’t do that any more,’ and now no physician would think of doing that.”
Commission member Marge Ginsburg, BSN, MPH, of Sacramento, California, said she wasn’t sure how helpful the “spillover” analysis was. “I don’t understand where the ‘there’ is on this … I think we’re grasping at straws to figure out how we change everything.” However, she added, the analysis did raise the question of how MA plans compensate their physicians. “It seems to me we’re always holding MA up in some ways as a target, as what we’re aiming for [in order to] get more responsible physician practices. Wouldn’t we want to really understand how all these different MA plans actually function?”
MedPAC chairman Francis Crosson, MD, of Palo Alto, California, rushed to correct Ginsburg about the idea of MedPAC holding up MA plans as the superior models. “We’ve said MA is good; we’ve said fee-for-service is good … I just want to be clear on that for the record.”