Time for 21st Century Medicare Cost Solutions

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How is it that we live in an age where data analytics can be used to accurately predict our shopping habits or how we might vote, but cannot augment decisions about what kind of medical treatments would be the most effective for patients, both from a cost and health perspective?  Medical policy should be driven by precision and big data analytics, including augmented intelligence and machine learning, where the prime directive is to preserve high-quality, long lives while reducing the cost for that preservation. Other industries are using these tools to better anticipate the needs of clients, and it’s time that our health care system does the same.

The utilization of data analytics would be particularly useful when it comes to managing the Centers for Medicare and Medicaid Services (CMS). CMS is the largest indemnity insurer in the United States, reimbursing 36 percent of all health care in the country. This market dominance, combined with the authority it has to mandate extensive changes to the Medicare program, has widespread impact on the ability of patients to access quality care. Its actions shape the health care marketplace so much that the market is being driven by experimental reimbursement policies informed by CMS that operate outside of the safety protocols that were designed to protect patients.

A recent example is CMS’ Advanced Notice of Proposed Rulemaking (ANPRM) that signals their intent to pilot changes to Medicare Part B reimbursements. Medicare Part B drugs are medications that are given in doctors’ offices, hospitals, and outpatient clinics. They are currently bought by doctors and hospitals, and when administered they are reimbursed by Medicare based on the average price the drug company charges, plus a percent of that charge.

CMS’ proposal, called the International Pricing Index (IPI), seeks to dramatically alter the reimbursement structure of the Medicare Part B program in hopes of lowering program costs. These changes, however, will have a negligible impact on long-term Medicare spending, while putting access to quality care at risk and likely stifling the innovation needed to produce long-term savings and improved health outcomes.

The sickest, most vulnerable beneficiaries make the most use of Medicare Part B, which covers vital medications that treat serious and chronic illnesses like autoimmune diseases, rheumatoid arthritis, and cancer. In fact, data shows that 87 percent of total out-of-pocket spending for Medicare Part B treatments was made by just 10 percent of Part B beneficiaries. Similarly, 85 percent of total government spending on Medicare Part B is going to the treatment and care of about 10 percent of Part B beneficiaries – also likely because these are the sickest patients, requiring more care. Patients living with these chronic diseases usually work with their physicians to find the most effective treatments. This requires access to a range of treatment options that provide physicians the flexibility to define and adjust care plans as needed for the benefit of the patient.

The proposed IPI appears to discount these factors, and recommends changes that could put these patients at risk for significantly restricted access to treatment options. The model intends to develop an IPI target price that is based on rates from 14 other countries and includes detailed provisions to turn the Part B program over to private-sector vendors who would negotiate prices for drugs while competing for physician and hospital business. The model provides add-on payments to physicians to hold them “harmless” by guaranteeing their “current revenue to the greatest extent possible.”  The hope is that for-profit vendors would create incentives to encourage appropriate drug utilization by removing the incentive to prescribe higher-cost drugs (read, innovative medicines) and create incentives to prescribe lower-cost drugs (read, older medications), and thereby reduce costs.

The discerning reader will quickly recognize that this IPI model has great potential for compromising the health of Medicare beneficiaries. Nothing in the model describes how these private sector vendor incentives would evaluate quality of care, or how they might ensure that each individual beneficiary was receiving medications that meet their clinical need. In fact, the Quality Measures section of the 60-page ANPRM is alarmingly brief. CMS states that it is considering collecting quality measures to help better understand the real-time impact of the IPI model on beneficiary access and quality of care. However, CMS does not specify the steps they will take to course correct if harm is identified “in real time.” 

There is no place in the 21st century for experimental reimbursement strategies that operate without accountability to or for the patient. We must never forget that the patient is not ancillary to the health services conversation. They – we—are the point. If the market loses sight of that fact, that is a misalignment of priorities and mission that must be corrected. CMS, whether through the Centers for Medicare and Medicaid Innovation (CMMI), other centers, or private sector relationships, must cease its disingenuous experimentation on Medicare beneficiaries and acknowledge the very real impact of reimbursement changes on patient care.

A focus on price controls, whether indexed to other “developed” countries or based upon an America-centric model, is short-sighted at best, and harmful at worst. If CMS, as the most influential payer in the United States, is serious about addressing its long-term financial exposure while maintaining or improving health care quality, they must utilize the knowledge and technology available in the 21st century to change the health/cost paradigm. More data sharing and collaboration among critical stakeholders, including patients, will enable the health services delivery system to more precisely anticipate, diagnose, and treat diseases. CMS should also propose initiatives that support an increased focus on digital medicine, encourage data-based treatment plans, and help innovative companies develop breakthrough therapies. 

Health care cost solutions must embrace the 21st century. Medical treatment and reimbursement policy, driven by precision medicine and big data analytics, can produce cost-saving initiatives that put patient needs first and ensure that future beneficiaries have quality treatments that fully address their needs. It’s time CMS moves away from price control models and toward the benefits of big data analytics. The shift is both possible and imperative.

Dr. Gary A. Puckrein is the President and CEO of the National Minority Quality Forum (www.nmqf.org). Dr. Puckrein possesses a unique business and academic background. He graduated Phi Beta Kappa from Brown University where he received his doctorate (1978) and master’s degrees (1974).

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