Can the Center for Medicare and Medicaid Services Walk the Talk?

Evidence-based strategies to address preventable health-related problems have been pushed to the forefront. We see advocates like the U.S. Preventive Service Task Force (USPSTF) recommend the nation invest in 50 plus health screenings for prevention based on the strength of evidence and magnitude of net benefit (benefit minus harms). Each of the recommended screenings has a present cost with a long range benefit, maybe. But, if CMS and special interest groups are truly interested in prevention, there is a program that is “self-funding” with an immediate benefit if CMS can "walk the talk."

In 2006, the Administrator of the Center for Medicare and Medicaid Services (CMS) told a U.S Senate committee that it would be better if Medicare paid for the prevention of medical errors rather than more when they occur (the talk). Well, unfortunately when it comes to healing a hospital acquired decubitus ulcer, Medicare limits its cost to $735 for a decubitus that cost $3,539 to heal and $1,410 to prevent (the reality). CMS saves $675 by ignoring prevention and saves $2,804 with price controls when a patient is subjected to a decubitus. What looks like a $2,804 loss for the hospital actually becomes a “rewarding failure tax” placed on commercial insurers because of cost-shifting.

Cost shifting is what Congress crucifies drug companies for doing. An example is when drug companies negotiate cheap drug prices with Canadian provinces and then recoup the discounts with higher prices for Americans. Although Congress criticizes the practice, it uses price controls to force discounts onto hospitals and then hospitals acting as a CMS surrogate, add the discounts to the charges non-Medicare citizens pay. Medicare cost shifting acts like a stealth federal tax inflating commercial premiums presenting the illusion that commercial insurers are greedy profiteers and that Medicare is a model program.

If we calculate a USPSTF “benefit minus harm” grade, we find CMS’s practice of price controls/cost shifting is harmful to premiums and patients with only government benefiting. There is a self-funding alternative with a substantial benefit to all patients, commercial premiums and even government if it has the discipline and courage to participate in the free market. It is the tried and true free market concept of paying for excellence and penalizing failure. I call the program "pay-for-excellence not failure" (P4ENF).

It is estimated that 4-14 percent of hospital patients acquire a decubitus ulcer. If we use a lower recently published percentage of 3.4, the nation’s cost to heal preventable ulcers is $4.7 billion and could be as much as $19.4 billion. If insurers and Medicare paid hospitals $1.9 billion of the cost to heal for prevention, the nation would save $2.8 billion in insurance premiums, taxes and out of pocket expenses in the first year, and possibly more if we had better statistics. If Medicare and insurers took back the prevention allowance ($1,410 per patient) when a hospital failed to prevent a decubitus, hospitals would have both the incentive and financial resources for prevention and be subject to market forces when they fail.

If CMS wanted to “walk the talk” in October 2008 when Medicare plans “downward adjustments” for preventable infections in hospitals, they would share projected savings with hospitals for prevention (the walk). If we utilize the state of Pennsylvania 2005 data, all insurers, including Medicare, were projected to have paid hospitals 6.7 percent more because of preventable infections. If we utilize this percentage as a national average, the nation spent $43.7 billion on preventable hospital infections. Utilize the data from an independent study published in Public Health Reports, March-April, 2007 the number approaches $80 billion and 98,987 deaths! If CMS shared half the projected savings for prevention, the nation would “benefit” $21.85-$40 billion the first year. Again, hospitals would have the financial resources and incentive to prevent infections (patients and hospitals benefit) and be subject to refunding prevention funds if they failed (non-performers are “harmed”). Plus, all insurers and hospitals would have the incentive to achieve accurate data on hospital acquired infections rather the “guestimates” one presently has to use.

For CMS to “walk the talk” means CMS has to put patients first and play by the same rules as commercial insurers, a big transformation for a self-serving bureaucracy that gets a flunking “benefit minus harms” grade when it comes to prevention of medical errors. In other words, “Sicko” continues to place Medicare’s money on Death to win, Suffering to show and Excellence to fail.