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Medicare payment reform shown to cut costs and improve patient care

PT got Margie practicing on crutches, including going up and down a step.A few years back, the Centers for Medicare and Medicaid Services (CMS) made a straightforward change: No longer would it pay for easily preventable conditions that develop in the hospital. A care-team fails to help ambulate a patient following a hip or knee surgery and the patient develops deep-vein thrombosis? Unfortunate for the patient and unfortunate for the hospita, which now has to absorb the cost of that care.

It seems obvious, yet slightly disturbing, that this approach would be successful. In my idealized worldview, all patients are treated the same, regardless of who's picking up the tab.

But when you change the financial incentives, change happens. Stanford health economist Jay Bhattacharya, MD, PhD, and health economist Risha Gidwani,DrPH, who is affiliated with the VA and Stanford, found the prevalence of two preventable conditions - deep-vein thrombosis and pulmonary embolisms - for patients with a recent hip or knee surgery dropped after Medicare stopped paying. The study was published today in the Journal of General Internal Medicine.

From our press release on the work:

When CMS stopped paying for treating deep-vein thromboses and pulmonary embolisms, the incidence of those conditions after hip or knee replacement surgery dropped 35 percent in the Medicare population, Gidwani said. In the younger, non-Medicare population, the incidence of these two conditions increased, although they also decreased in the patients over age 65 who had private insurers. There are more than 1 million hip or knee replacements performed in the United States each year, and over 60 percent of them are paid for by Medicare.

“We have a win-win," Gidwani told me. "We have patients who are avoiding adverse events while Medicare saves money."

Previously: Beyond Berwick brouhaha: Medicare chief another step to health-care reform, Experts discuss high costs of health-care — and what it will take to change the system and Competition keeps health-care costs low, Stanford study finds
Photo by Dave & Margie Hill

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