Improving Medicare Coverage Policy

The Urban Institute and the Robert Wood Johnson Foundation have a new policy brief (summary) on Medicare enhancing the quality and efficiency of the program by improving its coverage policy (what care and services are covered for beneficiaries).

This is in keeping with Medicare’s programmatic “triple aims” they note:

  • improve patients’ experience of care
  • improve population health
  • reduce the rate of increase in per capita costs

Medicare has a mostly passive coverage policy, and the brief notes that much could be done to change this within existing authority. Since its creation, Medicare has been authorized to cover and pay for:

…services that are reasonable and necessary for diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member

In practice, coverage decisions are typically deferred to patients and physicians with regional claims processing contractors approving care; however, these processors are mostly judged on efficiency and speed of processing claims and remitting payment to providers. There are some Medicare-wide coverage decisions made, called National Coverage Determinations (NCD) but these are rare, and inconsistent in the sense that it is often unclear why a NCD is issued in one area but not in another. This leads to:

The coverage process as currently applied does not prevent ineffective, unproven and/or harmful technologies from widespread adoption in Medicare, fails to identify and promote broad use of effective and high-value services…

The brief provides five recommendations to improve this situation:

  • Strengthening the evidence base and putting it to use in coverage policy, including extensive use of so-called “coverage with conditions” that would expand the available evidence-base
  • Increasing the use of comparative effectiveness research
  • Improving consistency in coverage policy
  • Explicitly considering costs in coverage policy
  • Adopting a general strategy of “least costly alternative” pricing/payment/coverage in specific clinical circumstances

I wrote yesterday that we need to make Medicare a more active purchaser of health care, and this brief lays out practical ways to move in that direction. In perhaps the understatement of the year, the authors (all former CMS officials) note the barriers:

Even when CMS has strong, scientific evidence that casts doubt on whether a technology or service effectively improves patient health and well-being, progress has stalled, in part because of a political environment in which evidence-based policy-making meets strong resistance from affected stakeholders


About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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