After the Election – What’s Next for Medicare

Now that the dust has settled, the votes have been counted, and those campaign ads are off the air, it is time for Washington to get to work on the major challenges that face our nation. Chief among them is the so-called “fiscal cliff” at the end of 2012.

It is clear that President Obama and Congress will need to come to an agreement over the next several months on a balanced plan to reduce the deficit while investing in job growth. Any plan that meets those basic parameters is bound to include savings in Medicare.

The question is, will the plan be carried out in a judicious way, with a scalpel that leads to a stronger Medicare, or will it be done with a hacksaw that simply tries to hit a bottom line number? You know my preferences.

A smart way to reform Medicare must be guided by goals of better health, better care and lower costs. Congress made a down payment on such an approach in the Affordable Care Act of 2010 (ACA).

I am sure you have heard by now that the health law included more than $700 billion in Medicare savings over 10 years and some of those savings were achieved by reducing payments to plans and providers, including a significant cut in Medicare Advantage benchmarks. Those cuts are still being implemented and it would not make much sense to heap another bunch on top of them.

The ACA also includes some very strategic investments in a value-based health care system that meets the goals of better health, better care and lower costs. For the first time, the Medicare Advantage program is paying for performance through quality incentive payments, which are based on established quality metrics and a rating system, also known as Star Ratings. In addition, the ACA created the Center for Medicare & Medicaid Innovation, which will test a series of innovative payment changes designed to better our health care delivery system so that it is more outcome focused and patient centered. It also begins to change payment policies for hospitals, nursing homes, home health aides and other health care providers in a move from a volume-based system to a value-based system.

Medicare has served our nation’s seniors and people with disabilities for nearly half a century. But there is clearly room for further reform of our health care delivery system, including Medicare. To be successful in serving future generations of older and disabled Americans, Medicare’s purchasing power should be used to incentivize better care and simultaneously lower cost growth. Traditional Medicare’s fee-for-service system creates perverse incentives for increased volume and effectively penalizes value. And traditional Medicare lacks the kind of transparency and accountability that has been a hallmark of Medicare Advantage. If the nearly 50 million Medicare beneficiaries are to have a real choice of how they get their care, this has to change.

As we embark on an effort to preserve Medicare for the next generation, let’s keep a simple thought in mind: Medicare should deliver the right care, the highest quality care, every bit of the care that people need – no less, no more.

-Patricia Smith
President and CEO, ACHP


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