New Payments, Benefits Could Help Medicare
Better Address Needs of Chronically Ill--Health Affairs Article

Former Top Medicare Official Says Current Framework
Leaves Program Vulnerable To High Costs, Inefficiencies

BETHESDA, MD—Medicare should increase payments for physician office visits by seniors who have multiple chronic diseases or should pay a special management fee to physicians who agree to coordinate health care services for chronically ill seniors, a former senior Medicare official writes in a new Health Affairs Web exclusive.

The article by Robert Berenson, senior adviser at AcademyHealth and former director of the Center for Health Plans and Providers and the Centers for Medicare and Medicaid Services, and Jane Horvath, deputy director of the Partnership for Solutions at Johns Hopkins University, also suggests that Medicare offer a physician home visit benefit for seniors who have serious chronic conditions.

The authors write that their proposals are ways to incrementally improve Medicare chronic care while Medicare awaits the results of some care-management demonstration projects, and while Congress and the White House debate structural reforms to the program that could improve how the Medicare+Choice program could be used more effectively to manage patients with chronic diseases.

Medicare is now ill-equipped to manage the costs of chronic illnesses and the quality of care for the 78 percent of beneficiaries who suffer from one or more chronic conditions, the authors write. Medicare is still largely a fee-for-service health care insurer covering a population with a high prevalence of chronic illnesses. This means it faces high costs from the frequent treatments, such as hospitalization, necessary to care for the chronically ill, as well as inefficiencies because it covers hospitalizations but not the services that might reduce the need for them.

"For the most part, Medicare is precluded from applying the coverage, payment and delivery system tools some private health plans and provider groups now use to manage care more rationally and effectively for special populations with ongoing care needs," the authors write.

Among those tools are greater reliance on electronic communications with patients, such as telephone and e-mail, in place of office visits; clinical information systems; patient self-management with an increased role for nurses in education and patient support; and an increased reliance on teams to care for chronically ill beneficiaries, they write. Using telephone and emails as an example, the authors describe the difficulties confronted by the traditional Medicare program in attempting to reimburse for these services in a fee-for-service manner.

Given these constraints, the authors suggest that prepaid capitation payments may be a better approach to covering chronically ill seniors, but that attempts to introduce capitation into the program have not been very successful. They term their fee-for-service proposals as "modest" improvements that Medicare could make while the program assesses its future direction in chronic care.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

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©2003 Project HOPE–The People-to-People Health Foundation, Inc.