Controlling Medicare Costs By Asking the Correct Question


Stephen C Schimpff, MD
Senior Advisor
Sage Growth Partners

The Democrats and the Republican parties’ approaches to Medicare are quite different.  Which approach is better? That is the wrong question. Or at least not the most important question. Instead we should consider what could be done now to actually improve patient care quality as a means to reducing costs.

Is there a good solution to the Medicare issue? Setting aside either the Democrats’ approach to basically enact price controls by ratcheting down reimbursements or the Republican’s plan to re-structure Medicare to a defined contribution plan, albeit not for ten years, are there approaches that could be instituted now that would have an immediate impact on improving quality of care and thereby reducing costs? There are but first we need to understand some of the issues facing Medicare today.

First and foremost, primary care physicians (PCPs) have been marginalized by Medicare for decades with low reimbursement rates for routine office visits and essentially no reimbursement for them following two critical quality care needs. The first is offering extensive preventive care and the second is coordinating the care of the patient with chronic illness. Recall that 85% of Medicare enrollees have at least one chronic illness and 50% have three or more. These are mostly the result of years of adverse behavior patterns but it is never too late to begin preventive care so time spent here is valuable for better health quality and ultimately reduced costs. And those with a chronic illness need to have their team of caregivers coordinated – every team needs a quarterback and the PCP is the obvious choice. But Medicare does not reimburse for this critical function which when done correctly means less reliance on specialists, tests, procedures and prescriptions. The result of this low reimbursement for routine visits and lack of reimbursement for either extensive preventive care or chronic care coordination over the years is a PCP shortage, current PCPs no longer accepting Medicare, and the remaining PCPs trying to see 24 to 25 patients per day, each for 15 minutes despite the patient’s complex problem list. And this means less than stellar patient care in many instances.

The result is a real problem facing Medicare right now – the rapid loss of primary care physicians (PCPs) who will no longer accept Medicare. The ACA does include an extra 10% increase to primary care providers but this will probably too little too late. And if the mandated 27% across the board physician cut in reimbursement now scheduled for December 31, 2012 is not exempted by Congress (as it usually has been in the past, always at the last minute) then it is reasonable to expect that there will be a mass exodus from accepting Medicare reimbursements by all physicians, not just PCPs.

All of this strongly suggests that Medicare needs to greatly increase reliance on “front end” care, meaning primary care and wellness/preventive care. This must include addressing lifestyle issues (diet/nutrition, exercise, stress and smoking) as part of a wellness, disease prevention and health promotion action. And concurrently it needs to assure that those with chronic illnesses get the type of care coordination that they desperately need.

One step in this direction came with passage of the ACA. There is now an annual preventive care session with the PCP paid by Medicare with no deductions or co-pays and, as noted, all PCP reimbursement rates are scheduled to rise by about 10% over time.

Another major issue and reason for high Medicare costs is how America deals with end of life care. In our society there is a strong tendency to expect “heroic” attempts to prolong life and prevent death. This is played out as another round of cancer chemotherapy when it is clear that there is little chance for benefit but a high likelihood of further toxicities. Or a surgical procedure that will have little chance of success but mean a prolonged recovery period when the patient’s body is less than able to cope. It means time in the ICU, more procedures, more testing all of which result in unpleasant last days and weeks for the individual and of course much higher medical costs. Often this is driven less by the patient than by the patient’s family, often as a result of guilt. And it is the tendency of physicians all too often to go the extra mile rather than carefully explain the futility of such actions. This is fundamentally irresponsible use of the medical care system, one that requires both doctors and patients to address together honestly, carefully and compassionately.

So improving care quality through appropriate reimbursement by Medicare for 1) routine visits, for 2) extensive preventive care activities and for 3) chronic illness care coordination would all lead to better care quality, more satisfied patients and substantially reduced costs. And encouraging physicians and patients to have quality discussions about end of life care would be of real value to all. Medicare would benefit substantially and more medical school graduates would enter primary care again. A good bargain for patient, doctor and Medicare.

Stephen C Schimpff, MD is an internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center and is chair of the advisory committee for Sanovas, Inc. and senior advisor to Sage Growth Partners. He is the author of The Future of Medicine – Megatrends in Healthcare and The Future of Health Care Delivery- Why It Must Change and How It Will Affect You from which this post is partially adapted.