Could an approach used 23 years ago by a single state, targeted only at its Medicaid program, be applied on a national scale for reforming the vast U.S. healthcare system? The answer is Yes.
Oregon in 1994 decided to cut services instead of cutting patients in response to a Medicaid budget squeeze. The governor used an innovative cost-benefit analysis to rank-order 709 services from most beneficial to least. Actuaries determined the cut-off (Line 581) at which the projected costs would cover all eligible citizens but stay within the tight budget appropriation. The least costworthy treatments were eliminated from the plan while still covering basic, comprehensive, cost-effective care. See more details at The Big Fix.
Here’s how Oregon’s plan could be adapted to a national scale:
Step 1: Demonstration Project
Medicare and Medicaid are constantly trialing “demonstration projects” and “waiver programs” to find new treatments and delivery methods. See Medicare website. Some examples currently underway are accountable care organization alternative value-based payment models, patient-centered medical homes, beneficiary shared decision-making, and diabetes prevention programs. The Oregon Health Plan originally started in 1994, in fact, as a Medicaid waiver program. Medicare would be wise to use the tried-and-true demonstration strategy for starting health system reform.
Step 2: Step-Wise Implementation
Centers for Medicare & Medicaid Services have well-established systematic procedures for implementing changes in their plans, such as innovations coming out of successful demonstration projects and waiver programs. Medicare is administered through regional insurance carriers, like Aetna and Blue Cross Blue Shield. Medicaid is administered by each state, often through contractors. CMS works through these insurance carriers and state Medicaid programs to implement new policies. CMS has an orderly process for developing laws and regulations, putting them up for public comment, and then issuing formal final approvals. CMS then works through professional associations, trade publications, and its own internet-based education systems to implement new policies. In some cases, new policies are phased in one region at a time. Then, CMS audits providers and insurance carriers for compliance with the new policies. All doctors, hospitals and other professionals are accustomed to this orderly process, and often see themselves as partners with CMS to carry them out seamlessly and smoothly.
Step 3: Dissemination
Medicare policy percolates into the rest of the healthcare system. Here’s how a medical journalist described Medicare’s influence in a Managed Care article:
There’s nothing new about Medicare’s influence on commercial carriers. . . Kenneth Kizer, MD, MPH, a safety expert and former CEO of the National Quality Forum, clocks the time it takes for a health plan to respond to Medicare policy changes at two nanoseconds. “They immediately look at what Medicare does.” Medicare’s billions of dollars in payments give it plenty of clout, but it’s not just the money that influences plans. “It’s the government,” adds Kizer, himself a former top official at the Veterans Health Administration, “and the government doesn’t go out on a limb and do things that haven’t been carefully considered. That sends a signal to the rest of the industry.”
Step 4: Citizen acceptance
American consumers are familiar with large national business models that grew from small local innovations. Think McDonalds franchises or Wal-Mart stores. They also accept large national corporations providing administrative services, like Bank of America. And they are familiar with national government-run programs providing local services, such as Medicare, the Postal Service and the Veterans Affairs medical centers.
The Hard Part
The mechanics of healthcare reform is the easy part. It is the values dilemma and the politics that pose the main obstacles to healthcare reform. The key concept to unlock healthcare reform is to realize that all healthcare services are not of equal value. We can and should eliminate drugs and treatments that have virtually no marginal benefit.
Doing so would serve notice that America can no longer afford to keep giving healthcare a “blank check.”
Now, take action.