The following is a post of the Mayo News Bulletin – shared with consent of the Mayo Health Policy Center.  Find additional news from the second most popular health site on the net, Mayo Clinic here.

In recent days, Mayo Clinic leaders shared with members of Congress and the Obama administration Mayo’s position on various health care reform proposals and key issues in the health care reform debate. Mayo is focusing its efforts around two key issues — reforming the payment system to reward value and providing insurance for all. Mayo is convinced that while insuring everyone is a critical step in health care reform, doing so without reforming the way we deliver and pay for care will result in failure to achieve the goal of providing higher value health care for all Americans.

Reforming the Payment System
Current proposals under discussion in the House and Senate focus on punishing providers for failures or rewarding them for completing process steps rather than achieving the best outcomes. In addition, pending proposals would not alter payments until 2013, would increase administrative complexity and would continue to focus on payments for performing tests and procedures, which have not been shown to correlate with patient outcomes. These proposals will not successfully address the serious deficiencies in the existing delivery system, nor will they produce long-term cost savings.

The Mayo Clinic Health Policy Center (MCHPC) is recommending the use of “value indexing” as an initial step to modify the reimbursement system. A value index can be constructed for many types of payment models, including hospital rates, physician fees, annual payment updates and other payment formulas and can be applied using current payment formulas to adjust payments to providers. If implemented, this payment approach could begin to provide appropriate incentives and rewards for high-value care providers. This is something Congress can do now as a first step toward quickly transforming health care. Longer-term, the MCHPC has recommended bundling of hospital and physician payments for selected high-cost procedures and chronic illness conditions in order to encourage and reward improved coordination of care, and a demonstration project aimed at creating and paying for high-value care.

Insurance for All
It is critical that covering the uninsured occurs in tandem with payment reform that is designed to reward and generate value. The MCHPC advocates guaranteed, portable health insurance that is patterned after the Federal Employees Health Benefit Plan (FEHBP) — a model with many attractive features. The FEHBP offers numerous choices; keeps down rates through large participant pools; insures everyone — no one is turned away due to preexisting conditions; covers prescription drugs; and has quality scores for its plans to help individuals make decisions about the coverage that’s best for them.

The MCHPC believes such a system would enable employers to continue to help employees pay for premiums. In addition, the coverage could be portable for individuals, so that if their employment status changes, they wouldn’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.

Government-Run Insurance Plan (“Public Plan”)
There is much debate over whether there should be a government-run (public) option within a national insurance exchange. Mayo opposes a public option that is similar to Medicare, but believes other options such as a co-op model deserve further exploration.

A key reason the MCHPC opposes a Medicare-like public option is that Medicare operates through price controls, which reduce the amount paid per procedure, regardless of how much the procedure costs the provider to perform. And because Medicare operates with a fee-for-service model, it provides perverse incentives, so that doctors and hospitals that order more tests and procedures get paid more, regardless of whether the tests and procedures actually make the patient better. It also has no mechanism to reward value in health care. This is an untenable situation for providers, as the cost of providing care escalates, while reimbursement shrinks. Additional problems with Medicare for health care providers are well documented:

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.
Medicare price controls cause about a 15 percent cost shift to employers and other payers.
Medicare rules are extremely complex and cause administrative burden for providers.
The Medicare program is financially unsustainable and faces insolvency within a decade.
Medicare reimbursement is too closely linked to political lobbying.

Conclusion
Mayo Clinic has been cited by President Obama and the media as an example of quality, cost-effective health care from which others around the United States can learn. We believe there are many ways the federal government can help incentivize all U.S. physicians and hospitals to focus on quality, not quantity, and ultimately deliver lower cost care with better outcomes for all Americans.

Click here to read the perspectives of Mayo Clinic on key issues currently being debated regarding health care reform in a letter sent to members of Congress and the Obama administration.