During a speech at the Economic Club of New York yesterday, House Speaker John Boehner (R-OH) poured cold water on the fact that government can drive innovation in the health care sector. “Well, the idea that the government is going to drive innovation in our health care delivery, I believe is an oxymoron,” he said in response to a question from Pete Peterson. “And the fact is, the private sector can bring real change to our health care system in a way that protects the best health care delivery system in the world.” Watch it:
Boehner is entitled to believe what he wants, but as the largest U.S. purchaser and regulator of health care, Medicare actually “exerts a major influence on the rest of the health care system” and “its reimbursement and coverage policies have been widely adopted by private insurers and other public programs.” For instance, since Medicare has emphasized payment reform, “private plans generally use the public Medicare plan’s criteria for covering treatments as their standard of medical necessity, and they have adopted many of Medicare’s innovations in payment methods.” As Robert Berenson and Bryan Dowd wrote in a 2009 article for Health Affairs:
Traditional Medicare has been the source of important payment innovations, moving many payment systems away from FFS to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans, albeit with higher conversion factors producing higher fees than Medicare’s.
Further, many policy analysts and even some health plan executives think that because of its market reach, FFS Medicare should take the lead in testing and adopting other innovations, such as pay-for-performance (P4P). Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials—for example, for “never” events and medically ineffective treatments. Such payment reform undertaken unilaterally by private health plans could lead to charges of “rationing” or withholding care, although similar charges have limited traditional Medicare in this area as well.
The Affordable Care Act — which the GOP seeks to repeal — builds on this tradition by establishing an Innovation Center within the Centers for Medicare and Medicaid Services that tests, evaluates, and expands in Medicare, Medicaid, and CHIP different payment structures and methodologies to reduce program expenditures while maintaining or improving quality of care.