Mayo Executives Criticize Public Plan, Medicare Payment Proposals

By Alec MacGillis
For weeks, President Obama, his advisers and congressional Democrats have held up as their model for national health care reform the Mayo Clinic and a few other medical networks that provide high-quality care at a relatively low price. But now Mayo and some other highly admired medical groups are speaking out to criticize the proposals that Obama and those same Hill Democrats are pushing.

In a letter sent yesterday, a group of medical providers and networks primarily from the upper Midwest protested to Rep. Ron Kind (D-Wisc.) that they have "significant concerns" about the health reform proposal put forward this week by three House committees that was highly praised by Obama. The group includes the Mayo Clinic as well Intermountain Healthcare, a Utah network that, like Mayo, has won praise for its "accountable care" model -- coordinating a patient's care among various providers to improve quality of care and reduce unnecessary procedures.

The letter, co-authored by executives from Gundersen Lutheran hospital in LaCrosse, Wisc., criticizes three aspects of the bill: its creation of a government-run public insurance option for consumers, its failure to address regional payment disparities for Medicare providers and its failure to go further in linking federal medical payments to the quality of care provided, not just the quantity.

A public option with rates based on Medicare "will have a severe negative impact on our facilities," the letter states. The hospitals and networks who signed are already struggling today with the payments they are getting for Medicare patients, the letter says, and getting similar levels of payments for a larger fraction of those they treat would make things even worse.

"The implementation of a public plan with similar rates will create a financial result that will be unsustainable for even the nation’s most efficient, high quality providers, eventually driving them out of the market," the executives say. "In addition, should a public plan with inadequate rates be enacted, we will be forced to shift additional costs to private payers, which will ultimately lead to increased costs for employers who maintain insurance for their employees. We believe all Americans must have guaranteed portable health insurance, but it is critical that we not lose sight of the need to ensure adequate and equitable reimbursement."

The letter notes that the regional disparities in Medicare payment rates -- which pay less for care in the upper Midwest than for care in, say, Florida -- are even greater than the disparities for private insurance reimbursements. And it states that the proposals in Washington so far "simply continue the current payment methodology, despite the fact that formula changes have been identified to address this problem."

And the letter states that the bill falls short of measuring up to Obama's pledge to shift the medical system from rewarding the quantity of care to paying for the quality of care. The House bill lacks a "value index" under which Medicare reimbursements would be issued not just according to the procedure delivered but according to the quality of the overall care provided for a given episode, which would reward higher-quality providers and, in theory, reduce costs over the long run. "The system must be reformed to compensate for value instead of volume," the signers write.