Congressman Earl Blumenauer (D-Ore) and other members of the Quality Care Coalition announced an agreement that will address Medicare geographic inequities as part of insurance reform. Blumenauer has been leading the charge to make sure that states providing high quality, efficient care are not penalized.  This includes Portland, Oregon where – according to the latest figures – federal spending for a Medicare enrollee averages $7,000, while an enrollee in Miami, Florida averages $17,000. 

“This is a huge victory for states like Oregon that provide high quality care at lower costs,” said Congressman Blumenauer. “I have been working for years to get the federal government to stop rewarding health care inefficiencies.  These perverse incentives burden people in more efficient, low-cost regions such as Oregon, where we have had to subsidize expensive and unnecessary treatments in high cost regions. At a time when we are working to recover our economy and spur job growth, subsidizing other regions that overspend on care simply isn’t an option. This agreement and the recommendations that will be made by the Institute of Medicine are a significant step in improving care across the nation and reining in costs.”

The Quality Care Coalition unveiled the final legislative language, which will establish two studies to be conducted by the independent and respected Institute of Medicine, to improve geographic inequities and improve quality care. The recommendations from both studies are schedule to be implemented prior to 2013, when enrollment for the public plan begins. The first study will evaluate and make necessary corrections to the current geographic adjustments to physician payments.  The second study will provide recommendations on changing the Medicare payment system to reward efficient delivery of high quality, evidence–based, patient centered care. 

More Detailed Info on the Studies and the House Agreement on Medicare Variation and Promotion of High Value Care

Section 1157

Geographic Variation Study

The Institute of Medicine will conduct a study to evaluate and make recommendations to improve the geographic adjustment factors in the Medicare reimbursement formulas which will be completed one year after enactment.

Section 1158

Revision of Medicare Payment System

The Secretary of HHS will implement a payment rate that takes into account this study that can be implemented immediately after the study’s completion.

This bill invests $4 billion per year in 2012 and 2013 to make payment rate adjustments.  No area will lose money during 2012 and 2013; after 2013 the provision will become budget neutral and payment rates will be based upon the study.

Section 1159

High Value Study

The Institute of Medicine will also do a study and provide recommendations on changing the Medicare payment system to reward value and quality which will be completed by April, 15 2011.

This would define value as the efficient delivery of high quality, evidence–based, patient centered care and develop a phased-in value adjustment to payment rates.

GME, DSH and Health IT will not be included in the analysis, so as not to adversely effect lower-income, urban areas.

Section 1160

Implementation plan

Not later than 240 days after the report, the Secretary of HHS will submit to Congress an implementation plan based on the IOM studies.

MedPac and GAO will evaluate the report in a timely fashion.

The IOM’s quality and value-based payment recommendations will automatically go into effect unless the House and Senate pass joint resolutions of disapproval by May 31, 2012.  The reforms would go into effect in 2013 when the public option is scheduled to start.