Bending the Curve in More Ways Than One

TUESDAY, OCTOBER 13TH, 2009 AT 2:57 PM
Bending the Curve in More Ways Than One
Posted by OMB Director Peter Orszag
Cross-posted from the OMB blog.

Over the past few days, a number of news articles about health reform have suggested that efforts to control the growth of health care costs are in jeopardy. Great strides to control long-term health care costs have been made in both the Senate and the House — fulfilling a key goal of the President's health reform effort.

The two provisions that get the most attention are found in the Senate Finance Committee's mark. The first is an excise tax on insurance companies offering high-premium plans — which would create an incentive for more efficient plans that would help reduce the growth of premiums. The second is a Medicare commission — which would develop and submit proposals to Congress aimed at extending the solvency of Medicare, slowing Medicare cost growth, and improving the quality of care delivered to Medicare beneficiaries.

These are both crucial facets of a reform plan, but too often other important delivery system reforms are ignored — which is unfortunately the case for those recent news articles. The result is a failure to recognize how far the entire political system has come in putting us on the verge of passing fiscally responsible health insurance reform.

Consider these important reforms found in many of the bills:
•Bundled payments. Bundled payments, which pay a fixed amount for an entire episode of care rather than piecemeal for each individual treatment or procedure, would help improve patient care by encouraging better and more coordinated care than under a fee-for-service system. Bills in both the Senate and the House would develop, test, and evaluate bundled payment methods through a national, voluntary pilot program. Once we see what works and what doesn’t, bundled payments can be quickly scaled up across the country.

•Penalties for high readmissions. Too often, patients are discharged from the hospital without the necessary follow-up care — leading to re-hospitalization, risks to one’s health, and higher costs. Under the proposals being considered, Medicare would collect data on readmission rates by hospital and would assess penalties on those hospitals with high, preventable readmission rates.

•Accountable care organizations (ACOs). Under the current system, quality and efficiency are not sufficiently rewarded, and there is little incentive for physicians to collaborate in the coordination of patient care. Legislation in both houses would encourage and reward ACOs, which are groups of providers that are jointly responsible for the quality and cost of health care services for a population of beneficiaries with chronic conditions.

•Quality incentives for physicians. These proposals would expand quality incentives for physicians and provide more timely feedback on physician performance based on their submitted data.
These — and other measures — are why a bipartisan group of experts recently wrote that health reform legislation under discussion "offers many promising ideas to improve the overall performance of the U.S. health care system. In addition to steps that would reduce the number of Americans without insurance coverage, the plan includes ways to slow long-term spending growth while building the high-value health care system our nation urgently needs." The Administration looks forward to working with the Congress as the legislation proceeds to continue to refine and improve these cost-containing steps.


Peter Orszag is Director of the Office of Management and Budget