A perspective on current health reform issues from Mayo Clinic Leadership

June 26, 2009

Mayo Clinic has been cited by President Obama on several occasions as well as in several media outlets   (most recently in the attached Time magazine article) as an example of quality, cost  effective   health care   that others around the United States can learn from. We believe there are many ways the federal   government can help incent all U.S. physicians and hospitals to focus on quality, not quantity, and   ultimately deliver lower cost care with better outcomes for all Americans.   Below are the perspectives of Mayo Clinic on key issues currently being debated regarding health care  reform.

  Medicare like   plan will lead to financial ruin for patients, doctors and hospitals

Mayo Clinic firmly believes that a government run  public plan with price controls structured like  Medicare would be financially disastrous to individual physicians, medical practice groups, and  hospitals, which will ultimately hurt patients who seek care. The current system of Medicare payment  punishes the most effective and efficient providers. Twenty five  years of experience with price controls  has proven that price controls do not control spending.   A majority of Medicare providers currently suffer great financial loss under the current program.  Mayo  Clinic alone lost $840 million last year under Medicare. Mayo Clinic and other providers are reaching  the point where they cannot afford to see Medicare patients.   We believe further exploration of Sen. Conrad’s coop  type plan is needed. If it proves not to be an  extension of a Medicare like,  price controlled  system, it could provide a reasonable option to traditional  private insurance plans, one that could keep America’s doctors and hospitals practicing and focused on  caring for patients.

FEHBP type   coverage for all

When it comes to expanding coverage, we believe the Federal Employees Health Benefit Plan (FEHBP)  is a great model, and it does not have a government run  plan option with price controls. We see where  many of its features can be replicated in an Insurance Exchange:

· FEHBP offers numerous choices.

· Because of the large pools, rates are kept down.

· No one is turned away for preexisting

conditions.

· Prescription drugs are covered.

· Plans have quality scores to help individuals make decisions about the coverage that is best for  them.

A FEHBP type  system would enable employers to continue to help employees pay for premiums. In  addition, the coverage could be portable for individuals, so that when their employment status changes,  they don’t have to change their health coverage. The government should provide sliding scale  subsidies  to those who need help with premiums, or do not have access to employer premium support.   We believe all Americans must have guaranteed portable health insurance, but it is critical that we not  lose sight of the need to reform the Medicare payment system at the same time.

Support an individual mandate

We support an individual mandate that will broaden the pool bringing in healthier and wealthier  Americans. This will balance those at the lower end of the economic scale who are already getting  government subsidized coverage through Medicaid and Medicare.

As Blumberg and Holahan stated in the June 17 issue of the New England Journal of Medicine, “An  enforceable individual mandate, with adequate subsidies and benefits, as well as a choice of plans, is the  most politically feasible route to universal coverage in the United States today.”

Reexamine WydenBennett

Congress needs to take another look at the original WydenBennett  bill that repeals the tax exemption  for health benefits. This could raise the billions of dollars needed to expand coverage.  A CBO analysis done in May 2008 deemed the WydenBennett  bill budget neutral. What’s more, it  would not only be budget neutral in the first year it is fully applied, but it would actually reduce the  projected future budget deficit. 

Insert Value into the Reimbursement System

We need to focus on defining, measuring, and paying for "value" as the only tactic that will "bend the  cost curve" in U.S. health spending. Currently, Medicare pays the most to areas of the country that  provide the worst outcomes, safety and service, and pays the least to providers who demonstrate better  outcomes, safety and service. The Medicare payment system must be reformed to pay for value rather  than pay for volume.

A bill recently introduced by Rep. Kind and others entitled the Medicare Payment Improvement Act   (H.R. 2844) is designed to address this issue. It is a simple concept to insert value into the Medicare  physician fee schedule. A similar bill has been introduced in the Senate by Sen. Klobuchar and others  (S. 1249). A value index can be constructed for many types of payment models, including hospital  rates, physician fees, payment updates, and other payment formulas.   We also support the creation and piloting of new payment mechanisms such as the Accountable Care  Organization model and bundled payments.

Health Board modeled on Federal Reserve

We agree that there are many health care decisions in Congress that could be insulated from political   influence. We don’t believe a refashioned  MedPAC gets us there. In March, the Mayo Clinic Health  Policy Center gathered a group that included Steve Lipstein, chair of the Eighth District Federal Reserve  Bank and representatives of the Blue Ridge Academic Health Group to discuss the Health Board  concept. We strongly favor a board modeled on the concept of the Federal Reserve Board an  entity  that could shield critical health care functions from the political process. This would be a longerterm,

problem solving  body that is outside of yet accountable to the U.S. government.

We also agreed that the new board should have the authority to change the health care payment system –  but not set prices. Conducting payment pilots would be part the board’s role, but the goal should be to  move away from fee for service  medicine and toward paying for teambased,  coordinated care.

This perspective is written by Dr. Denis A. Cortese, president and CEO, Mayo Clinic; Jeffrey O.   Korsmo, executive director, Mayo Clinic Health Policy Center; and Bruce Kelly, director of government   affairs, Mayo Clinic.