Medical Device Daily Washington Editor

WASHINGTON — The Medicare Payment Advisory Commission (MedPAC) met yesterday to continue its work in developing policy recommendations for cost control for Medicare, which it has been doing since 1999. So it comes as no surprise that there was little in the way of new ideas in circulation.

While some ideas have come into sharper focus over that time, Congress's refusal to hold the line on spending for Part B doctor's fees drew several negative comments at the morning meeting.

In the day's first briefing, staff analyst Evan Christman cited a series of well-known facts and figures, such as the fact that cost growth is "a challenge for all payers" and that the Congressional Budget Office pegged the growth of Medicare as being 2.4% faster than GDP growth between 1975 and 2005. He also reminded the commission that Medicare will devour more than 10% of GDP by 2070, given a standard set of assumptions about demography and economic growth.

The caveat was that "these projections assume the SGR mechanism is not overridden," Christman said in reference to the sustainable growth rate mechanism (SGR) that Congress authorized in 2003 to constrain the cost of physician services under Medicare Part B. Congress has repeatedly backed off those growth caps, including the most recent reauthorization of the Medicare budget (Medical Device Daily, July 11, 2008).

In reference to the percentage of the U.S. economy that goes to healthcare which currently stands at 16% to 17%, depending on the measurement Christman observed that "some have suggested that a nation as wealthy as the U.S. should spend 30% of its income on healthcare," but that view is far from universal and is generally seen as a level that will cripple the economy.

As a matter of Medicare perspective, Christman pointed out that "in 1970, Medicare was three fourths of 1% of GDP." Factors in the growth include technology, which Christman described as including drugs, devices and biologics. "Most analysts believe that 50% or more of the growth [in Medicare spending] is due to technology," he noted, reminding members "there is not an adequate evidence base" to compare clinical effectiveness of various treatments. However, increasing life-spans are another boost, along with the encroaching tidal wave of retirees.

During discussions, panelist Karen Borman, MD, of the University of Central Florida College of Medicine (Orlando, Florida), remarked that "one segment we left out ... is understanding the expectations of patients," which she said feeds demand for discretionary services, including cosmetic procedures. "What you expect and what the government provides as a baseline may be two different things," Borman noted, adding that such data "would be important to add to the conversation."

In reference to an earlier question about the impact of the Medicare drug benefit (Part D) on overall Medicare spending, Tom Dean of Horizon Healthcare (Wesson Springs, South Dakota) said he is aware of "a projection that pharmaceutical costs are going to grow rapidly due to biologics," which he characterized as "a whole new approach to care that will be extremely expensive."

Dean also made the argument that "it's a mistake to leave out the SGR" when calculating future spending, insisting further that "it can't be ignored forever."

Arnold Milstein, MD, of the Pacific Business Group on Health (San Francisco), suggested that MedPAC try to establish specific numbers on the value of various reforms. "Even a rough estimate would be a valuable addition" to the discussion, he said. He also said that any reforms should be described as either delivering a one-time reduction in the baseline of spending or alternately as something that would improve both care and costs over time.

One of the recurrent themes of the panel discussion is that MedPAC's reports to Congress should break out definitions of the problem and proposed solutions into separate chapters.

In reference to a chapter defining the problem, MedPAC Chairman Glenn Hackbarth, an independent consultant, said "the context chapter has an audience" even on Capitol Hill, "but maybe what we need to do is separate into another statement" the proposed solutions. He also recommended a stronger sense of urgency in defining the problem, condensing that section into a smaller, punchier document.

Hackbarth also made reference to a need for a change in the mindset of beneficiaries that acknowledges that "new and better is not always best," adding that "until we have some change in the payment system," that system will perpetuate perverse incentives.

John Bertko, who retired last year as the chief actuary for Humana (Louisville, Kentucky), seconded Hackbarth's call for a stronger sense of urgency, and said that while the 45% threshold for the Medicare Trustees report may seem arbitrary to some, the collapse of the Part A trust fund, which is projected to take place in 2019, "is not arbitrary."