[Congressional Record Volume 145, Number 50 (Tuesday, April 13, 1999)]
[Extensions of Remarks]
[Page E616]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      INTRODUCTION OF LEGISLATION TO SAVE MEDICARE LIVES AND MONEY

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Tuesday, April 13, 1999

  Mr. STARK. Mr. Speaker, today I am introducing the first in a series 
of bills to modernize Medicare for the future: the ``Centers of 
Excellence Act of 1999.'' Not only will this legislation save Medicare 
money, it will save the lives of many of its beneficiaries.
  Centers of Excellence has already been proven to decrease mortality 
and lower cost.
  Centers of Excellence originated as a demonstration project in the 
early 1990's to evaluate the effect of volume on quality and mortality 
for coronary artery bypass graft (CABG) surgery. The Department of 
Health and Human Services selected facilities on the basis of their 
outstanding experience, outcomes, and efficiency in performing these 
procedures. They found that hospitals that do large volumes of a 
certain type of procedure tend to have better outcomes and quality. The 
demonstration resulted in an 8 percent average annual decline in 
mortality and saved Medicare an average of 14 percent on CABG 
procedures. This year, CBO has scored the Centers of Excellence 
proposal as saving $300 million over five years and $600 million over 
ten years.
  Since the early 1990's, numerous reports have come out documenting 
higher quality care and lower mortality in facilities that perform a 
large volume of cancer treatments, cardiac surgeries, and transplants, 
among others. These conditions often require highly specialized care 
that should only be provided by the highest-rated facilities.
  Centers of Excellence is currently being used in the private sector 
to improve quality and decrease cost.
  Many private sector employers are requiring higher quality standards 
from their health plans. Not only are these employer groups able to 
improve quality through Centers of Excellence, they are also able to 
negotiate deeper discounts with high-volume facilities. Medicare should 
be given the authority to contract with certain hospitals for quality 
and volume--both to save money and to deliver better health care.
  Centers of Excellence has already been approved by the House in the 
past.
  The bill we are introducing passed the House in the 1997 Budget 
Reconciliation bill (H.R. 2015). H.R. 2015 would have made the Centers 
of Excellence program a permanent part of Medicare by authorizing the 
Secretary to pay selected facilities a single rate for all services, 
potentially including post-acute services associated with a surgical 
procedure or hospital admission related to a medical condition. As with 
the CABG demonstration, selected facilities would have to meet special 
quality standards and would be required to implement a quality 
improvement plan.
  The amendment was dropped in conference because of resistance from 
the Senate. Some Senators from States where no hospitals were 
designated as Centers of Excellence felt that the program tended to 
cast into doubt the quality or excellence of non-designated hospitals. 
Mr. Speaker, the name of this program is not important--what is 
important is that it can save money and by encouraging beneficiaries to 
use hospitals that have high volume, quality outcomes, it can save 
lives.
  Like Lake Wobegon, where all the children are above average, it is 
human nature for all Members of Congress to want their local hospitals 
to be above average. But not all hospitals are above average--and this 
is a serious matter. In fact, it is a matter of life and death.
  Indeed, good health policy in this nation would prohibit hospitals 
from doing sophisticated procedures if they do not have sufficient 
experience. This principle is applied to liver transplants, for 
example, and ought to be applied to other complex procedures as well. 
We may all have pride in our local hospitals, but the fact is: some of 
them are killing people because they do not do enough of certain types 
of procedures and therefore are not skilled in those procedures.
  I regret that this important provision has been subjected to pork-
barreling by previous Congresses. I hope that this body will see that 
it is included in the next Medicare bill that moves through Congress.
  Some members of the now defunct Medicare Commission are proposing 
radical and unnecessary changes to Medicare. Before we cut back 
benefits and ask beneficiaries to pay more, we should explore every 
possible cost saving in the system. This bill is a step in the right 
direction: it saves money and improves the quality of care provided to 
seniors and the disabled.
  The 1999 Trustees report projects that the Part A trust fund will 
remain viable until 2015, one of the longest periods of solvency ever 
projected in the history of the program. Simple changes, such as the 
Centers of Excellence proposal, are all that are needed to improve 
Medicare for its beneficiaries.
  As further explanation of why this legislation makes great sense, I 
am including below ``Extracts from the November, 1995 Research Report'' 
on the Centers of Excellence Demonstration.


    Centers of Excellence Demonstration Extracts from November 1995 
                            Research Report

  Rationale for the Demonstration: Physicians operate under different 
payment incentives than hospitals, so hospital managers have 
difficulties implementing more efficient practice patterns. A global 
fee that includes physician services aligns incentives and encourages 
physicians to use institutional resources in a more cost effective 
manner.
  Design of the Demonstration: Under the demonstration, Medicare paid 
each of the hospitals a single global rate for each discharge in DRGs 
106 and 107, bypass with and without catheterization. This rate 
included all inpatient and physician services. The standard Medicare 
hospital passthroughs were also included, i.e., capital and direct 
medical education, on a prorated basis. Any related readmissions were 
also included in the rate. Pre- and post-discharge physician services 
were excluded except for the standard inclusions in the surgeon's 
global fee. All four hospitals agreed to forego any outlier payments 
for particularly expensive cases. The hospitals and physicians were 
free to divide up the payment any way they chose.
  Medicare Savings under the Demonstration: From the start of the 
demonstration in May 1991 through December 1993, the Medicare program 
saved $15.3 million on bypass patients treated in the four original 
demonstration hospitals. The average discount amounted to roughly 14 
percent on the $111 million in expected spending on bypass patients, 
including a 90-day post-discharge period.
  Ninety percent of the savings came from HCFA-negotiated discounts on 
the Part A and B inpatient expected payments.
  Eight percent came from lower-than-expected spending on post-
discharge care.
  Beneficiary Savings under the Demonstration: Beneficiaries (and their 
insurers) saved another $2.3 million in Part B coinsurance payments.
  Total Savings under the Demonstration: Total Medicare savings 
estimated to have been $17.6 million in the 2.5 year period.

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