Witnesses Claim Performance-Based
Payments Would Reduce Premiums and Expand Coverage
January 30, 2004 - Performance-based reimbursement
was among several proposals discussed at a Jan. 28 Senate
Health, Education, Labor, and Pensions Committee hearing
on the relationship between rising healthcare costs and a
growing uninsured population.
According to Congressional Budget Office (CBO) Director Douglas
Holtz-Eakin, large increases in healthcare spending and subsequent
growth in premiums "offer a plausible explanation for
at least some of the reduction in coverage." Dr. Holtz-Eakin
testified that "economic incentives for innovation and
the development, deployment, and utilization of new technologies"
drive a substantial portion of spending increases. He also
disputed claims that new technologies can reduce spending,
claiming that "examples of new therapies for which long-term
savings have been clearly demonstrated are few." Dr.
Holtz-Eakin added that new life-saving medical technology
"paradoxically" increases spending by extending
patients' lives and, subsequently, their use of healthcare
services.
Pacific Business Group on Health Medical Director Arnold
Millstein, M.D., M.P.H., claimed that "wasted spending"
accounted for about 40 percent of healthcare expenditures.
Dr. Millstein, also a physician consultant for Mercer Human
Resource Consulting, testified that public release of provider
and procedure efficiency/quality ratings would greatly reduce
the level of waste. He added that, if the Centers for Medicare
and Medicaid Services (CMS) shared claims data with health
plans, the plans could "improve their precision in identifying
the best performing providers and treatment options."
Finally, Dr. Millstein testified that CMS and other health
plans should give providers "more favorable payment"
for making "clinical performance improvements."
He also urged patient incentives (e.g., lower out-of-pocket
costs) for selecting cost-effective healthcare options. Incentives,
Dr. Millstein added, would "also send an important signal
to new medical technology developers" by creating a market
that is "more sensitive to their effect on the affordability
of health insurance, in addition to their effect on health."
Gail Wilensky, Ph.D., current Senior Fellow at Project Hope,
supported performance-based reimbursement. In addition, Dr.
Wilensky testified that malpractice concerns must be addressed
in a way that reduces defensive medicine. However, she felt
that capping non-economic awards was not effective. Finally,
Dr. Wilensky encouraged efforts to reduce rates of obesity
and smoking.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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