Cantwell Urges Health Secretary to Adopt Medicare Reforms that Reward Value

Current system penalizes WA state for its high-value, low- volume health care system

WASHINGTON, D.C. – U.S. Senator Maria Cantwell (D-WA) this week pressed Health and Human Services Secretary Sylvia Mathews Burwell to move as quickly as possible to meet recently announced goals for reforming Medicare into a system that pays health-care providers based on quality of care rather than the volume of services they deliver.

During a Senate Finance Committee hearing Wednesday on the Obama administration’s proposed 2016 budget, Cantwell said that the current Medicare system penalizes states such as Washington, which is a leader in providing efficient medical care and receives less in Medicare reimbursements as a result. That’s due to the standard fee-for-service model, which often encourages health care providers to perform unnecessary medical tests and procedures.

Cantwell has led efforts to reform the Medicare reimbursement system and authored a provision in the Affordable Care Act of 2010 that incorporates a quality-and-cost ratio to Medicare payments that rewards providers for positive health outcomes instead of quantity of services.

“We’re efficient and we are penalized all the time for our level of efficiency, so we want the country to move as fast as possible to that new model,” Cantwell said. “It’s saving money, it’s better care for the patients, and we don’t want to lose doctors in the Northwest just because they get paid less, because they’re more efficient.”

Burwell testified before the committee following the Obama administration’s recently announced goal of tying 30 percent of traditional Medicare payments to alternative payment models by 2016, and 50 percent by 2018.  Alternative payment models include Accountable Care Organizations, Medical Homes, and other arrangements that pay health providers based on how well they manage and coordinate patient care.

“That is music to our ears in the Pacific Northwest and any state that already is making its way down the system of more efficient care focused on the patient,” Cantwell said of the Obama administration’s goal.

Cantwell asked Burwell to develop a plan that builds on the progress of the Medicare Value Based Modifier, a provision she authored in Affordable Care Act. Cantwell’s Medicare Value Based Modifier incorporates a quality-and-cost ratio to Medicare physician payment calculations. This moves the Medicare fee-for-service system toward a system that rewards providers for positive health outcomes instead of quantity of services. The Centers for Medicare and Medicaid Services will this year begin applying the modifier to Medicare payments for physician groups of 100 or more.

“I want to make sure we are not setting a big goal of having 30 percent shift over to that, but having the incentives be so small that we are not really changing behavior,” Cantwell said.

Transitioning to a value-based system will particularly benefit patients and providers in Washington state, where Medicare reimbursements are far below the national average. The average yearly cost for a Medicare patient in Washington state before health care reform was $8,497, roughly $1,500 less than the national average, with 40 states having higher per-person Medicare costs than Washington.