Will The CBO Score Obama’s MedPAC Proposal?

piggy-bank-on-money-md2After Congressional Budget Office director Douglas Elmendorf suggested that the current reform legislation would do little to reduce the growth of health care spending, the White House doubled down on its support for establishing a MedPAC-like commission — MedPAC is an independent agency advising Congress on issues affecting the Medicare program — that would help lower future health care spending.

Every year, MedPAC publishes two reports chock full of the kind of payment reform that could truly transform the health care system from incentivizing quantity to quality and value of care and every year Congress ignores them. By giving a MedPAC-like panel the power to implement the kind of payment reforms that MedPAC has always advocated, the proposal would free the panel from the constraints of congressional politics and allow it to actually influence Medicare spending patterns. The goal is to adopt reforms that slow the growth of Medicare spending and modify payment methods — reforms that the private sector could then emulate.

As Tim Foley explains, under the White House’s proposal, every year the new panel would release a set of recommendations for how to best control Medicare expenditures. “The President could choose to submit all of MedPAC’s recommendations as a package deal. Congress would have 30 days to intervene, but they couldn’t pick and choose what proposals they’d like – they could only vote up or down on the whole package.” This kind of proposal kicks payment reform into high gear. While the current legislation already expands the use of models and allows the Center for Medicare and Medicaid Studies to implement successful variations, this proposal would more aggressively change the incentives in the system.

As Greg Poulsen, senior vice president at Intermountain Healthcare, a nonprofit system of hospitals and doctors in Salt Lake City, points out, “Unless we get the incentives right, nothing else in health reform really matters.” Poulsen is part of a group of officials at so-called “integrated” institutions that already operate using MedPAC’s many of recommendations and are generally able to provide quality care more efficiently. The group believes that “the congressional health overhaul bills, at least in their current form, would do little to reward them or encourage others to follow their lead” and is “pressing lawmakers to move much more aggressively to revamp the way Medicare pays for care to discourage unnecessary services and reward “value” over volume.”

The administration is a strong proponent of these reforms, but the challenge lies in pleasing the CBO — which finds savings by following Potter Stewart rule life: “I know it when I see it.” However, since the MedPAC-like proposal is predicated on the President accepting its recommendations and Congress not voting them down, (and MedPAC is only required to not “increase in the aggregate level of net expenditures under the Medicare program,”) the CBO — which rarely defines the criteria of savings — is unlikely to “see” savings.