Putting teeth into Medicare Reform
If President Obama has his way, another such unelected authority will be created -- a manager and monitor for the vast and expensive American health care system. As part of his health reform effort, he is seeking to launch the Independent Medicare Advisory Council, or IMAC, a bland title for a body that could become as much an arbiter of medicine as the Fed is of the economy or the Supreme Court of the law.
The idea has gained a warm initial reaction on Capitol Hill. But with the delay in action on the overall reform effort until fall, there will be more time for reflection on IMAC and its authority.
Since 1997, the bureaucracy has included a similarly titled advisory body to Congress known by its nickname, MedPAC. But, as Obama has noted, its semiannual reports and recommendations have been quickly shelved, because it lacks any action-forcing mechanism. Its 17 expert members and small staff are conscientious but have no authority.
Obama is recommending that the successor agency, IMAC, be smaller and potentially more decisive. Under his plan, the president would name five physician or health care-savvy members to serve for five-year terms on its board, picking one of them as chairman. Like the nominees to the Fed and the Supreme Court, they would have to be confirmed by the Senate.
Each year, IMAC would have two responsibilities. First, it would recommend to the president the updated fees Medicare would pay doctors, hospitals, rehab centers, nursing homes, labs, home care and ambulance services, equipment manufacturers and all other providers. That is now done by Congress itself, and the lobbying by potent home-town individuals and institutions is one reason Medicare costs keep growing. In order to control costs, IMAC's recommendations could not exceed the "aggregate level of net expenditures" under Medicare.
Second, IMAC would annually recommend a set of broader reforms to improve the quality or reduce the cost of medical care. On each report, the president would have 30 days to approve or reject the recommendations, but he would have to act on the whole package, not pick it apart.
If he approved, it would go to Congress, and the package could be overruled only by joint action of the Senate and House within 30 days. Absent that, the secretary of health and human services would order the changes into effect.
Because Medicare looms so large in the overall health system, the changes mandated by IMAC would undoubtedly transform all private delivery systems as well. And that is why Obama sees it as a key to lowering the cost curve for health care long-term and moving it in the direction of the Cleveland Clinic and the Mayo Clinic -- his models of high-quality, low-cost medicine.
The kind of system changes you might expect from IMAC are suggested by the June report from MedPAC. Among other things, it proposes that Medicare take steps to penalize hospitals with abnormally high readmission rates for their patients, while allowing them to reward staff members for reducing those rates.
It also suggests experimenting with flat-fee payments for each patient hospitalized with certain common ailments, rather than the current open-ended billing for each test and treatment -- as an incentive to hospitals to control costs.
Obama's proposal almost certainly would accelerate change in the way health care is delivered -- and it might actually save money in the long run.
But Congress will have to decide if it is willing to yield that degree of control to five unelected IMAC commissioners. And Americans will have to decide if they are comfortable having those commissioners determine how they will be treated when they are ill.