Hospitals Divided Over Proposal For Medicare Payment Czar

While a cornerstone of President Obama’s plan to trim medical costs – an independent commission to determine how much Medicare pays doctors and hospitals – has run into strong opposition from powerful industry groups, certain hospital systems are breaking ranks and supporting it.

Many are these are so-called “model” systems, such as the Mayo Clinic. They pride themselves on holding down costs and improving quality and are fed up with how slowly Congress has moved to change the payment system.

Glenn Fosdick, CEO of Nebraska Medical Center, said the proposed independent council could help his hospital gain fairer payment. “It’s a better alternative than we have now,” he said. He called the proposal a “step in the right direction,” though he had doubts Congress would ever agree to give away some of its power over Medicare.

Setting Medicare payment rates is traditionally a process filled with political squabbling as members of Congress look to protect dollars going to their local hospitals and doctors rather than promote fees and payment plans that drive efficiency in the health system.

The Obama administration plan is to establish an agency called the Independent Medicare Advisory Council that would make recommendations on Medicare fees to the president. For Congress to overturn this council’s recommendations, lawmakers would have to pass a joint resolution within a month. It would work similarly to the Defense Base Closure and Realignment Commission, which was formed to reduce the political infighting involved in closing military bases.

“Generally, we like the concept of a non-partisan, less political way to establish payment policy and rates,” said Greg Poulsen, a senior vice president at Intermountain Healthcare, a large hospital system in Salt Lake City. “But we wonder about the devil in the details which have not been seen.”

Obama’s proposal is modeled after a bill proposed in the Senate Jay Rockefeller, D-W.Va. It would turn the existing Medicare Payment Advisory Commission (MedPAC), a nonpartisan panel of experts that advises Congress on Medicare issues, into an independent executive branch agency with power to set policy.

“Every expert out there says this can be a valuable tool to start reducing inflation over the long term,” Obama said at his news conference Wednesday night.

The hospital industry, whose three largest lobbying groups reached a deal with the White House and Senate Finance Committee on health reform that included them giving up $155 billion in Medicare payments over the next decade, said creating a super MedPAC would unfairly usurp legislative power. “We think it would create another layer of regulatory bureaucracy for Congress to weigh in on on Medicare,” Alicia Mitchell, spokeswoman for the American Hospital Association said Thursday.

The Association of American Medical Colleges, which represents teaching hospitals, had a similar view. “The new proposal represents an extreme shift of authority from the legislative to executive branch,” said Atul Grover, chief advocacy officer of the association.

But CHRISTUS Health, a Catholic health system with more than 50 hospitals largely in Texas and Louisiana, supports the Obama strategy.

“Although the AHA and Federation of Hospitals and multiple state hospital associations have aggressively opposed the Super MedPAC strategy, CHRISTUS Health still believes that an oversight mechanism must be put into place to assure accountability among all providers and health care constituents and ensure that they are implementing the strategies to improve quality and decrease costs,” said CEO Dr. Thomas Royer.