[Congressional Record Volume 144, Number 1 (Tuesday, January 27, 1998)]
[Extensions of Remarks]
[Page E2]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




IMPROVING MEDICARE QUALITY-SAVING MEDICARE LIVES: SUPPORT FOR H.R. 2726

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, January 27, 1998

  Mr. STARK. Mr. Speaker, the AARP Public Policy Institute issued a 
paper in December of 1996 by Dr. David Nash, entitled ``Reforming 
Medicare: Strategies for Higher Quality, Lower Cost Care.'' It is a 
excellent paper on a number of ways to improve and extend the life of 
Medicare.
  One proposal in Dr. Nash's paper is the ``centers of excellence'' 
concept, in which Medicare can contract with certain hospitals to 
provide a high volume of complicated procedures in exchange for a lower 
global payment. The results of Medicare's ``demonstrations'' of this 
concept shows that Medicare can save money while increasing quality for 
beneficiaries.
  Following is Dr. Nash's discussions of the Heart Bypass Center 
Demonstration. The Administration had proposed legislation in the FY 97 
Budget Reconciliation bill to implement this type of proposal 
nationwide. The House passed the proposal, but it was dropped in 
Conference. I hope that Congress will revisit this issue in 1998 and 
enact this concept.
  It is not just a matter of dollar--it is a matter of lives.

       Medicare, like most private insurance, has historically 
     paid hospitals and doctors separately. Since 1983 with the 
     introduction of the Prospective Payment System (PPS), 
     Medicare has paid hospitals a fixed price for most care based 
     on the patient's diagnosis. Doctors, whose medical decisions 
     still affect nearly 80 percent of hospital costs, continue to 
     be reimburse on a fee-for-service basis that rewards them for 
     doing more, not less.
       The Medicare participating Heart Bypass Center 
     Demonstration project is an experimental project implemented 
     by Medicare in early 1992. Two primary events drove the 
     planning for this important demonstration project: namely, 
     the results of numerous studies showing a strong correlation 
     between relatively higher volume, lower cost, and better 
     outcomes in open heart surgery services, and unsolicited 
     proposals from individual hospitals willing to provide 
     coronary artery bypass graft (CABG) services for a fixed 
     price.
       This demonstration project was implemented to answer four 
     basic questions: 1) Is it possible to establish a managed 
     care system with Medicare Part A and Part B payments 
     combined, including all pass throughs for capital, medical 
     education, etc., and pay a single fee to the hospital for 
     treating patients? 2) Would it be possible to decrease the 
     Medicare program's expenditures on CABG surgery while 
     maintaining or improving quality? 3) What is the true 
     relationship between volume and quality in CABG surgery, and 
     can hospital procedure volume be increased without decreasing 
     the level of appropriateness? and 4) What is involved at a 
     hospital operational level--can such a program be sustained 
     over a period of time without draining financial resources 
     and dragging the organization down?
       Preliminary results evaluating the Medicare participating 
     Heart Bypass Center Demonstration project, I believe, 
     strongly support its immediate national expansion to 
     appropriately realign the incentives between hospitals and 
     their physicians. By creating a strong financial incentive to 
     be more cost effective in their use of resources, hospitals 
     and doctors will be able to implement the tools of continuous 
     quality improvement, practice guidelines, critical pathways, 
     and the nonpunitive feedback of information about 
     performance. In a word, they will utilize many of the tools 
     mentioned throughout the body of this report to improve 
     quality and lower costs.
       For example, the seven experimental heart surgery site 
     institutions have reported numerous operational changes 
     resulting in lower costs and improved quality as a result of 
     the HCFA demonstration project. Quick transfers out of 
     intensive care, shorter patient stays after surgery, fewer 
     laboratory and radiology tests, and the use of care 
     management and critical pathways, are some of the cost 
     cutting measures being employed at each of the participating 
     institutions. Expensive consultations with other physicians 
     were also targets for cost saving. Participating institutions 
     report a nearly 20 percent decrease in the use of 
     consultation with no demonstrable changes in overall case 
     out-comes. At four demonstration sites, doctors and 
     administrators together are challenging long-standing 
     patterns of care and scrutinizing the use of everything from 
     $5 sutures to intensive care unit beds at $800 per day. At 
     St. Joseph's Hospital, in Atlanta, Georgia, neurologists were 
     charging between $364 and $1,676 for a neurologic 
     consultation before the program began; now the hospital pays 
     them a flat rate of $371. In the post-operative period, 
     physicians are removing particular chest drainage tubes in 
     certain patients within 24 hours rather than waiting the 
     customary 48 hours, a strategy that even may foster quicker 
     healing. Physicians describe the demonstration project as 
     making them rethink each step along the patient care 
     continuum. If each step is not supportable on a scientific 
     basis, and is not in the patient's best interest, it is 
     removed, and, as a result, costs are reduced.
       Of course, many managed care organizations and some 
     specialty practices have often charged a global fee for 
     procedures or for a specified time period of care such as one 
     calendar year. A growing number of managed care companies 
     have negotiated special package price deals for expensive or 
     high-tech procedures including organ transplantation, 
     maternity care, and cancer care. The Medicare program should 
     proceed quickly with preliminary plans to expand the 
     participating Heart Bypass Center Demonstration project and 
     begin a `National Centers of Excellence'' program on other 
     high-cost, high-volume procedures. The literature is clear 
     that practice makes perfect and an expansion of this program, 
     which would realign incentives, reduce costs, and inevitably 
     improve quality, ought to be implemented quickly.
       Finally, consideration should be given to expanding the 
     current prospective payment system to include outpatient 
     care. Studies ought to be undertaken to link inpatient and 
     outpatient claims for particular procedures and particular 
     diagnoses such as congestive heart failure, pneumonia, 
     diabetes and other high-cost, chronic illnesses. With the 
     availability of improved outpatient case mix systems, HCFA 
     has an opportunity to provide national leadership and use its 
     evaluative capacity to realign incentives between doctors and 
     hospitals.



     

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