My belief that Peter Orszag, director of President Obama’s Office of Management and Budget, (OMB) will play a pivotal role in making sure that comparative effectiveness research stands at the center of healthcare reform was confirmed by an article that appeared on Politico today.
According to the report, Orszag helped “shape the final compromise” on the administration’s first budget last Wednesday and is emerging “as a central figure and key negotiator in the Obama’s economic policy team.”
“Orszag . . . left a profound mark on the stimulus,” Ben Smith writes, “and the bill spends more than $1 billion on Orszag’s pet cause, research on the effectiveness of medical practices, which he sees as an opening to reforming American health care through sheer analytical will."
In the past, I have written about Orszag’s desire to use this research to rein in health care inflation. As the former Congressional Budget Office director has observed, there is so much waste in the system, “that there are opportunities to reduce costs without impairing health outcomes overall.” Less costly care does not mean lower-quality care.
President Obama will be releasing his budget next Thursday, and according to Politico, “the budget will begin in earnest the arduous process of health care reform. . . .'What has already been accomplished is a huge start toward a more efficient [health care] system,’" Orszag told Smith, “'and I think you’re going to see more in the budget.’"
“The next step on health care, he said, is a set of ‘changes to Medicare and Medicaid to make them more efficient, and to start using those programs more intelligently to lead the whole healthcare system. With a growing body of research finding some practices more cost-effective than others, the programs reimbursement rules can be used to force changes at those hospitals – a sort of back door to health care reform. Medicare and Medicaid are big enough to change the way medicine is practiced,’" Orszag added.
This is exactly what HealthBeat has been saying: Medicare reform can serve as a pilot project for national healthcare reform, laying the groundwork for a far more efficient system that uses evidence-based medicine to lift quality while containing spending. This is why The Century Foundation formed a Working Group on Medicare Reform last summer.
Raising Fees and Lowering Co-Pays for Some Services;
Lowering Fees and Raising Co-Pays for Others
In discussing how Medicare might use comparative effectiveness research, the Working Group has focused on a suggestion from the Congressional Budget Office’s December 2008 report, Key Issues in Analyzing Major Health Proposals: “Rather than denying coverage,” for less effective treatments, Medicare could “tie its payments to providers” to effectiveness, lowering fees for those treatments that provide less benefit. Meanwhile, patients could be required to pay for at least a portion of the additional costs of clinically less effective treatments.”
By the same token, Medicare could lower co-pays and raise fees for treatments that provide the greatest benefit to the patient.
Patients would not be denied access to products or services that they or their doctors prefer. But the financial incentives would encourage both patient and doctor to take a close look at the competing product or procedure. In this way Medicare could steer both patients and doctors toward evidence-based medicine. And because a patient would be bound to ask “why is the co-pay higher?,” Medicare would be calling both the patient’s and doctor’s attention to the medical evidence.
As one member of the Working Group put it: “Medicare would not be making a binary yes/no choice. Tiered pharmacy benefits have largely been seen as fair,” he added, “even by people who have a higher co-payment for a branded alternative.”
Using the Comparative Effectiveness Research We Already Have
When it comes to assembling the research, Medicare will not have to reinvent the wheel. As Osrzag’ Congressional Budget Office pointed out in December of 2007, we have comparative effectiveness studies on a wide range of treatments, pitting angioplasties against drug regimens for heart patients, gauging the effectiveness of surgery for patients with emphysema, testing statins, and weighing mammograms against the combination therapy of mammograms and MRIs for breast cancer.
Ultimately, “the potential impact on Medicare spending could be substantial,” the December 2008 CBO report noted, “If Medicare “link[ed] both new and existing evidence to payment rules or cost-sharing requirements . . . . Savings may be more likely to result,” the report added, “from a research agenda that explicitly prioritizes assessments of costly technologies that are suspected of being overused.”
Finally, let me be clear: the goal here is not simply to control spending, but to promote treatments that will provide the greatest benefit to the patient.
Here, CBO is following the recommendation of the Medicare Payment Advisory Commission. In its March 2007 report to Congress, MedPac observed: "Some Commissioners have argued that the relative value units of the physician fee schedule should be at least partly based on a service's value to Medicare. . . . For example, if analysis of clinical effectiveness for a given condition were to show that one service were superior to an alternative service, then Medicare's process of setting relative values might reflect that.”
Ultimately “value to Medicare” means “value to the patient” since the treatments that provide that provide the greatest benefits to patients simultaneously deliver the greatest long-term value to Medicare—even if those treatments are more expensive.
At present, as I have explained in an earlier HealthBeat post, Medicare’s fee schedule reflects only how much it costs the physician to provide a service in terms of time, physical effort, stress, amount of training needed, and technical expertise. Benefit to the patient does not factor into the equation.
If Orszag has his way, he will change that.
Just how much influence will he have over reform? “Orszag’s broad early agenda has taken him well onto the turf of a planned 'health czar' who has yet to be named,” Politico observes. I would add that, with former NIH bioethics director Dr. Zeke Emanuel as his chief healthcare advisor, Orszag is well positioned to be, at the very least, an unofficial czar. His grasp of the issues is unmatchable, and he is highly-respected in Congress.
Where does Orszag stand on universal coverage? When asked whether President Obama still plans to fulfill his campaign pledge to cover America’s uninsured by the end of his first term, Orszag said he sees this as “a goal.”
Given what the administration already has accomplished, and Orszag’s description of how he hopes to restructure Medicare and Medicaid to pave the way for national health reform, I am more and more optimistic that President Obama will meet his target.