"Encouraging plans to be efficient is a key element. Plans that are more efficient than FFS Medicare can provide extra benefits while maintaining financial neutrality with FFS. In a transition to new benchmarks, quality improvements could be promoted by paying more for better quality. After the transition, if plans' quality can be measured relative to FFS, plans providing better quality care than FFS would be paid more than FFS," wrote MedPAC.
That is exactly the type of thinking every private insurer in Medicare Advantage should support. Health insurers, such as Blue Cross Blue Shield of Massachusetts, are already testing quality as a payment measure—and that's the right way to go.
Not only does better quality lead to better patient outcomes and lower long-term health costs, but a greater focus on quality could actually help private insurers rescue Medicare Advantage. The Obama administration has already cut Medicare Advantage payments between 4% and 4.5% for 2010 and future cuts are expected.
The president was clear during his campaign that he does not like the program and called it a Republican giveaway to private insurers. But making quality a key determinant of payment level would show that private insurers that remain in Medicare Advantage after the change to quality-based payments are interested in improving beneficiary care. This revamped, quality-driven Medicare Advantage would no longer be considered—fairly or unfairly—a program that was created as a way to please private insurers.
This change to quality payments was buried in a lengthy document, but is an idea that both the federal government and private health insurers should explore further. It just might be the idea that rescues Medicare Advantage.