CMS Takes a Business Approach to Health Care Policy Amid Budget Constraints

Mark McClellan, the new director of the Centers for Medicare and Medicaid Services (CMS), addressed a group of hospital, group purchasing, and supplier executives on March 2, outlining a new approach to health care policy. As the nation's largest insurer, CMS is facing the added challenge of federal budget cuts, and McClellan is trying to shift the focus from cutting payment rates to a performance-based reimbursement system. This approach, already tested in regional programs, aims to redistribute limited funds on a fairer basis, encourage technology improvement, and focus on patient care.

Key Takeaways:

• The CMS's new director, Mark McClellan, is taking a business approach to health care policy, focusing on performance-based reimbursement and quality measures.
• The plan, called "Pay for Performance," will base Medicare reimbursement levels on specified quality measures or the degree of improvement shown by hospitals.
• The goal is to create an environment that encourages high-quality care, tying payment to results rather than just treatment.
• McClellan is pushing for hospitals to make pricing more transparent, discourage defensive medicine, and limit liability for medical errors.
• Automation, including electronic medical records and electronic prescribing, is also part of the plan to make health care operations more efficient.
• The Medicare Modernization Act requires electronic prescribing, and McClellan is working to promote the business case for health IT.

Statistics:

• 25% of Americans depend on the CMS for health care.
• The CMS has 1,300 members of the Federation of American Hospitals (FAH) to address in their plan.
• By the end of March, McClellan will release a quality information report comparing a sample of hospitals to be used as a guide for measuring hospital performance nationwide.

Sources:

• Federation of American Hospitals (FAH) meeting with Mark McClellan, March 2.