As the House and Senate prepare to bring their final bills to their respective floors, Mayo Clinic would like to highlight the areas of agreement and divergence in the bills and our positions on health care reform.  We are encouraged by much—including provisions to pay for value in health care, an insurance exchange, individual mandate, subsidies for people to achieve coverage, and pilot projects on accountable care organizations and bundling of payments.

At this juncture, Mayo Clinic will neither endorse nor oppose entire bills in the House or Senate, but will continue to point out provisions that we think move the country toward patient-centered health care and areas where we have concerns. Read more.

At Mayo Clinic, we take pride in delivering efficient, high quality care to each individual patient.  As an organization that has focused on the patient’s needs for over 100 years, the decisions that Mayo made last week to op-out of Medicare participation in a small Arizona family practice clinic and to discontinue Medicaid participation in Nebraska and Montana were very difficult for us. 

Medicare at Arizona Family Practice
Mayo Clinic in Arizona loses a substantial amount of money every year due to the reimbursement schedule under Medicare, a loss we cannot continue to sustain. The discrepancy between what Medicare pays and our cost of providing service is particularly acute for our primary care practices.  Due to these ongoing financial challenges for our primary care practices under the current Medicare system, the five physicians at Arizona’s Mayo Clinic Family Medicine – Arrowhead will opt out of participating in Medicare, meaning that Medicare will no longer reimburse for the services they provide.  This change, effective Jan. 1, will only impact primary care office visits at this site. Specialty care, laboratory services, imaging studies and ancillary services at Mayo Clinic will still be covered by Medicare.

Nebraska, Montana Medicaid Disenrollment
Also effective Jan. 1, Mayo Clinic will discontinue participation with Nebraska and Montana Medicaid due to the fact that these states are not part of our primary service area, along with significant administrative requirements, and low reimbursement levels.  It is unusual for any medical center to participate with Medicaid programs in states outside of their primary service area.  Based upon a review of Mayo Clinic patient records over the past two years, fewer than 50 existing patients will be affected by this decision, and Mayo is committed to working with Nebraska and Montana officials to ensure that these patients do not fall through the cracks during this time of change.

Signs that Reforms Must Pay for Value in Health Care
Even though Mayo has limited the impact of these decisions to affect as few patients as possible, it is disappointing for us to have to make business decisions such as these.  Nevertheless, decades of underfunding and paying for volume rather than value in government insurance programs have left us with few other options.  Recently the Medicare Trustees reported that Medicare will go bankrupt by 2017, and that Medicare will have to cut benefits or payment rates by 19 percent to balance its budget. 

Providers who do fewer unnecessary tests and services are paid the least, and they are the doctors and hospitals which will go out of business first if we don’t change the payment system.   For example, here at Mayo Clinic, the cost of providing services to Medicare patients exceeded the total amount paid on behalf of Medicare patients by $840 million in 2008. 

Unfortunately, Mayo is not alone.  There are hundreds of smaller clinics, family doctors, and hospitals across the country grappling with the same hard decisions.

This is why Mayo Clinic strongly supports health insurance reform and health care delivery reform.    Because the Medicare reimbursement system rewards piecework – performing diagnostic tests and procedures – health care delivery is laden with these expensive, fragmented pieces of care.  Health care delivery reform on behalf of the patients’ best interests means changing the payment system to reward value—defined as better outcomes, better safety, better service and lower cost—rather than simply rewarding the provision of more tests, visits and procedures.  Better outcomes or value result in fewer tests and decreased overall costs.

Some suggest that a system that would reward high quality, lower cost care would adversely affect high cost areas that treat poorer and sicker patients.  In fact, in February 2008, Peter Orszag, as director of the Congressional Budget Office, reported that three previous studies of patient health status found that patient acuity and income levels explained less than one-third of the regional differences in Medicare spending. 

As a not-for-profit organization, Mayo is committed to our mission of patient centered care. One of our four Health Policy Center Cornerstones is to work to ensure insurance coverage for all Americans.  Unless payment models are changed to reward value, expanding Medicaid and Medicare government-run, price-controlled, public plans will be financially disastrous to individual physicians, medical group practices, and hospitals, which will ultimately hurt even more patients who seek care.

Denis Cortese, M.D.,  president and CEO of Mayo Clinic, took time during a trip to New York yesterday to visit with reporter Reed Abelson at the New York Times. Abelson authors the “Prescriptions” blog at the Times.

During the conversation, Dr. Cortese had the opportunity to share the Mayo Clinic Health Policy Center view on how to best provide insurance for all Americans — an exchange-type organization similar to the Federal Employees Health Benefit Program (FEHBP) which currently offers insurance products to all federal employees including members of Congress.

Under this type of system, all Americans would be able to choose an insurance plan that best meets their needs, with the government providing sliding scale subsidies to those who can’t afford insurance. One of the benefits for patients is that this insurance would be portable — not dependent on an employer so people would be able to keep their insurance if they change jobs or lose their job.

Read the article.

And see the complete information about Mayo Clinic’s point of view on issues in health care reform including reforming the payment system to reward value.

Over 20 leaders in health care from across the country today wrote to Senator Max Baucus and members of the Senate Finance Committee to voice their support of key provisions in proposed legislation, and to offer additional thoughts on moving Medicare to pay for value. 

These leaders agree that only way to improve health care delivery and bend the cost curve is to change the payment system so that it rewards providers who offer high quality care at lower cost.  They are encouraged by elements of proposed legislation designed to move Medicare in the direction of paying for value rather than volume. 

The leaders expressed support for the following specific elements in proposed legislation:

• Setting up guidelines for Accountable Care Organizations (ACOs),
• Establishing an Innovation Center within CMS,
• Creating a national strategy to improve the health care quality infrastructure, and
• Sen. Maria Cantwell’s amendment to incentivize value in the Medicare physician payment formula.   

In addition, Sen. Baucus was encouraged to consider a more aggressive implementation timetable — not one that starts in 2014 or later, but finishes by 2014 — to allow more immediate financial results for the Medicare system.  

Organizations signing the letter to Sen. Baucus included: Altru Health System, American TeleCare, Bellin Health, The Dartmouth Institute for Health Policy and Clinical Practice, Fairview Health Services, Franciscan Skemp Healthcare, Gundersen Lutheran Health System, HealthPartners, Marshfield Clinic, Mayo Clinic and the Mayo Clinic Health Policy Center, McFarland Clinic, North Texas Specialty Physicians, Park Nicollet Health Services, Scott & White Healthcare, The Everett Clinic, the University of Minnesota, Virginia Mason Medical Center, the Wisconsin Hospital Association and the Wisconsin Medical Society.

 Mayo Clinic’s perspective about how to get high-value health care is the focus of a Perspectives article in the New England Journal of Medicine, published online on Sept. 23, 2009, and in the print issue on Oct. 1, 2009.

“We must hold physicians and other providers accountable for providing high-value health care, defined in terms of both quality and cost,” say Denis Cortese, M.D., president and CEO of Mayo Clinic and Jeff Korsmo, executive director of the Mayo Clinic Health Policy Center. To help achieve this goal, Cortese and Korsmo recommend basing a portion of Medicare payments to physicians and hospitals on value scores (measurable good outcomes, safety and service delivered at a lower cost), rewarding those providers who deliver high-value care and providing an incentive for others to improve.

In their essay, Dr. Cortese and Korsmo emphasize other key points to achieve true patient-centered health care reform including:

• Coordinating patient care services across people, functions, activities, sites, and time
• Reducing conflict of interest so physicians have less of a personal financial incentive to order unnecessary tests or procedures

Read the entire article online.

Note: The New England Journal of Medicine also published a Mayo Clinic survey on physicians’ beliefs and health care reform in the Sept. 14 issue. View the survey online.

We applaud the House and the Senate for their ongoing efforts to obtain universal coverage for all Americans and to reform the current insurance system through measures such as eliminating pre-existing condition exclusions.

Mayo Encouraged by Co-op Public Option

Mayo Clinic believes that the provision in Finance Committee Chairman Max Baucus’ bill to foster the creation of consumer operated and oriented plans (CO-OP) is an encouraging step toward securing access to insurance to all Americans.

This option will give patients more opportunities for health care choice than a Medicare-like, price controlled plan. In addition, the Co-op plans, which will be member-run, nonprofit insurance companies, will be truly public plans because they will be owned and run by the consumers who use them.

Insurance reform that gives access to everyone

We recommend an individual mandate where individuals can purchase insurance in various ways: through employers, on the individual market, through exchanges, through co-operatives, or through a model like the Federal Employees Health Benefit Plan (FEHBP).

In our plan, employers would be free to provide the insurance if they desire. People should be able to choose the coverage they want. Americans would own their own policies and their coverage would be portable. The role for government would be to help people afford the insurance through sliding scale subsidies as needed.

The FEHBP model, which utilizes an insurance exchange to make available multiple private plan choices—just like Members of Congress and all federal employees have—is the best “public plan” for enabling insurance for all.

If the “public plan” means a government-run, price-controlled, Medicare-like insurance model, we do not support it because it has been shown over many years that such a model has not controlled costs and has punished doctors, hospitals and others that provide high-quality, affordable care.

Mayo Clinic supports Senator Maria Cantwell’s (D-WA) amendment to incentivize value in the Medicare physician payment formula in the Senate Finance Committee health care reform bill.

Mayo Clinic and the Mayo Clinic Health Policy Center strongly support the need for Medicare to pay for value. Indeed, paying for value in healthcare is one of the four cornerstones for reform that emerged from our consensus driven health policy process. Value is defined as the equation of quality (outcomes, safety and patient satisfaction) over the cost of care over time.

We support provisions in the Senate Finance Committee bill that help move Medicare in this direction. We express thanks to Senators Klobuchar and Cantwell for their efforts to strengthen the provisions in the Chairman’s initial bill, and to Chairman Baucus for his leadership and support for moving Medicare toward a model that rewards value rather than volume.

Mayo Clinic believes that the provision in the Finance Committee Chairman Max Baucus’ bill to foster the creation of consumer operated and oriented plans (CO-OP) is an encouraging step toward securing access to insurance to all Americans.

This option will give patients more opportunities for health care choice than a Medicare-like, price controlled plan. In addition, the Co-op plans, which will be member-run, nonprofit insurance companies, will be truly public plans because they will be owned and run by the consumers who use them.

Mayo Clinic applauds Senators Amy Klobuchar (MN), Maria Cantwell (WA) and 26 other Senators for urging President Obama to realign Medicare spending in order to provide greater value to patients and lower costs.

In a letter to the President, the bipartisan group focuses on the many benefits of instituting payment models in Medicare that would reward health care providers for the quality of care they deliver, not the quantity of services they provide.

In the letter, the 28 Senators, representing more than one quarter of the entire Senate, point out that “the current Medicare payment structure penalizes those who proivde efficient care, while rewarding those who order unnecessary tests and services. To incentivize more efficient health care practices, Medicare needs to incorporate a payment system that factors in the quality of care provided relative to its cost. This new payment methodology needs to reward providers who achieve good quality outcomes at a low cost. Such a change is critical to reining in costs and improving patient outcomes.”

Letter to the President

An article in today’s Washington Post, entitled “Is the Mayo Clinic a Model or a Mirage? Jury is Still Out” highlights Mayo Clinic and similar institutions as part of the national health reform debate.

ROCHESTER, Minn. — The Mayo Clinic looms out of the prairie here like the mecca it has become, a world-renowned medical complex that is often cited by President Obama as his model for national heath-care reform.

“Look at what the Mayo Clinic is able to do. It’s got the best quality and the lowest cost of just about any system in the country,” Obama said in Minneapolis this month. “So what we want to do is we want to help the whole country learn from what Mayo is doing. . . . That will save everybody money.”

Read the rest of the article here.