Journal of the American Medical Association
Skinner JS, Weinstein JN, Fisher ES
CONSENSUS HAS EMERGED ON THE NEED TO SLOW Medicare spending growth, but there is no agreement on how best to do so. Although many approaches have been suggested, Congress is almost certain to consider across-the-board cuts in reimbursement rates. It is not hard to understand why: cuts are easy to implement and appear to deliver clear savings. But cuts in fees are a poor long-term solution to the problem of increasing health care costs. They make it more likely that physicians will decide not to accept new Medicare patients; further penalize already efficient systems; cause some to increase utilization to make up for revenue losses; and— most importantly—do little to encourage the collaborative efforts needed to improve health, better coordinate care, reduce regional duplication, and help beneficiaries avoid unnecessary care.
In this article, a “withhold” approach is proposed to slow Medicare spending. The objective is to achieve just as much savings while allowing motivated hospitals, physicians, and others who deliver Medicare services a way to recover the cuts and thus maintain, or even increase, their incomes. The idea is to return the withheld money—with interest—if cost growth in the health care region, or within the hospital or physician network, is less than expected. In the absence of such savings, Medicare keeps the money. Either way, Medicare saves.