Medicare seeks savings with payment models

November 1, 2010

There is great optimism that new payment models and comparative effectiveness research will improve quality of care and curb unwarranted spending

The federal government is poised to invest millions in research and pilot programs to better understand which therapies work best for different patients, and how new payment mechanisms can improve care.

Under a new Patient Centered Outcomes Research Institute (PCORI), federal resources will support clinical trials and outcomes studies on how to prevent, diagnose, treat, monitor and manage disease. By 2014, this independent, not-for-profit is slated to have a $500 million annual budget, funded largely by a 1% tax on health insurance premiums-a strategy designed provide stability by insulating the program from the annual Congressional appropriations process.

Although there is concern that CER could limit access to certain treatments and lead to government-run medicine, health insurers regard such research as key to obtaining more accurate information to make better use of limited resources.

Medicare cannot use CER study results to establish cost-effectiveness thresholds, set practice guidelines, or make coverage or payment recommendations. However, private insurers and payers are free to tap CER evidence in their coverage decisions, as they have done for years. And federally funded outcomes studies will support efforts by payers to negotiate lower rates for treatments demonstrating only modest effectiveness.

INNOVATION CENTER

CMS also moved to establish the new Center for Medicare and Medicaid Innovation (CMI), also authorized by the reform legislation. CMS Administrator Donald Berwick named Richard Gilfillan, former president of the Geisinger Health Plan, as acting director of CMI. At Geisinger, Gilfillan helped design the ProvenCare system to reward providers for delivering quality care. A physician, Gilfillan came to CMS a few months ago to help establish performance-based payment models.

As head of CMI, he will test payment methods for bending the Medicare cost curve. The program, which begins next year, is authorized to spend $10 billion through 2019 to assess payment initiatives such medical homes, care coordination, bundled payments and remote patient monitoring, among others.

In a June report on CMI, the Commonwealth Fund recommended that pilot programs include private sector payers along with public programs. Transparency will be important, as well as efficient monitoring to identify successes and failures.

CMI study results will be available to the controversial Independent Payment Advisory Board, which is slated to start work in 2014 with the authority to make specific moves to control Medicare spending.

Jill Wechsler, a veteran reporter, has been covering Capitol Hill since 1994.