House Democrats have reached a deal on Medicare payments that will secure critical support from heartland and Pacific Coast lawmakers for President Barack Obama's goal of revamping health care.
The agreement announced Thursday holds the promise of changing the way Medicare pays hospitals and doctors, to reward quality care instead of the sheer volume of tests and procedures. It also would address geographic disparities that lawmakers say penalize hospitals and doctors in certain areas. With hundreds of billions of dollars at stake, it would rely on recommendations from neutral experts to drive sweeping changes.
The announcement came as House Speaker Nancy Pelosi, D-Calif., is putting the finishing touches on a revised health care bill to cover the uninsured and try to rein in medical costs, delivering on Obama's top priority. The Medicare agreement is incorporated in the legislation.
"There is nothing tougher to deal with in Congress than a formula fight. This has been a strategy to avoid that kind of fight," said Rep. Dave Obey, D-Wis. "The end result is that Medicare will reimburse on the basis of quality, not on the basis of how many votes each faction has."
At issue is an old problem with the government's health care program for seniors and disabled people. In some states, Medicare recipients get quality care at lower cost than in many other places. But hospitals and doctors in frugal states aren't rewarded. Instead, they make less money per patient than providers in higher-cost areas where the medical care is no better, and sometimes worse.
The deal with Pelosi attempts to address the disparities without busting the budget.
It calls for two expert studies on changing how Medicare pays hospitals and doctors. One would address geographic differences in payment. A second — and more crucial one — would reset how Medicare pays hospitals and doctors to reward quality, not just volume. The studies would be carried out by the Institute of Medicine, which is affiliated with the National Academies of Science.
The institute's recommendations could not lead to an increase in total Medicare spending. They would be carried out unless Congress objects.
The deal was announced by 15 lawmakers representing states from Michigan to Washington. They called it essential to their support for a health care overhaul, and one warned the Senate that it must be included in any final legislation.
The lawmakers said they had been concerned that a government-run insurance plan called for in the House bill would only make matters worse. In the House bill, the public plan's payments to hospitals and doctors would be based on existing Medicare rates. Without any changes, the lawmakers worried that low reimbursement levels could force some hospitals in their districts to shut down.