Health Care

Floor Speech

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Mr. MURPHY. Mr. President, I thank very much Senator Baldwin and thank the State of Wisconsin for, in a lot of ways, leading the way and showing us what is possible when it comes to delivery system reform.

It is pretty amazing some of those statistics Senator Baldwin used when she talked about how much waste there is in the system today. The estimates are from the Council of Economic Advisers, $700 billion; from the New England Healthcare Institute, $850 billion. To put that in context, even if the median of the two is right--somewhere in the high $700 billion range--that is $100 billion more than we spend every year on the military. That is enough money to provide coverage for 150 million more Americans. That is enough to pay the salaries of every single first responder personnel in the country, including firefighters, police officers, and EMTs for over a decade.

It is an enormous amount of money that we are wasting today because we have a reimbursement system, as Senator Whitehouse said as well, that essentially rewards providers and hospitals and health care systems for providing volume rather than providing quality.

We understand there is not a single health care provider in the country that does not get into this if not for their desire to provide quality health care. There is no malevolent motive involved here. But, ultimately, when you have to keep your doors open--as a medical practice, as a hospital, as a nursing home--and you get paid more the more medicine you practice and the more treatments you order and the more tests you have your patients undergo, then you are going to follow the money. It is time we reorient our reimbursement model under Medicare and Medicaid, and in partnership with our private insurers, so we are reimbursing based on the quality of medicine and the quality of the outcomes you provide rather than on how much stuff you order or prescribe.

Let me talk about three examples of how we have succeeded already when it comes to changing the model of reimbursement.

First, the issue of readmission rates. When you go into a hospital for a surgery, that hospital is going to get a set fee for the surgery and for the amount of time you spend in the hospital afterwards. It is called a bundle payment. Bundle payments are good because what it does is it encourages you to essentially use your resources wisely because you are not going to get paid more if you keep the person in the hospital for 10 days than if you keep the person in the hospital for 5 days.

But here is the problem when it comes to the care people were getting after a particular surgery. Because the hospital got a set payment for that period of time, they had an incentive to push the person out of the hospital as quickly as possible. That was an incentive not only because the payment itself did not get bigger the more amount of time you were in the hospital, but it also was incented that way because if the person went home too early and then they came back again to the hospital, the hospital got a second bundle payment when they came back. And if they came back a third time and a fourth time, they got another payment.

So what was happening is there was an incentive to send people home before they were ready because not only would that save you money on the first bundled payment, but it actually made the hospital or the health system money in the long run because the person came back a second or a third or a fourth time.

I do not think there was a single hospital in the Nation that was deliberately misaligning their care so they would have people coming back to the hospital a second or a third or a fourth time. I am not suggesting people were trying to game the system in that way. But what certainly was happening was that without an incentive that pulls you the other way--get the care right the first time--there was, unfortunately, insufficient care being provided.

So the health care bill says: Listen, we will pay you for maybe the first readmission, maybe for really complicated procedures we will pay you for a second readmission, but at some point there has to be an end to this model. At some point it has to be up to you as the hospital or as the health care provider to get the care right the first or the second time so we are not on the hook for readmissions occurring times three or times four. That is a pretty simple change, but it can save hundreds of millions of dollars.

The second example is accountable care organizations. We set up a bunch of Pioneer accountable care organizations. These are bigger systems of care, where you have primary care doctors networked with specialty care providers, working under one umbrella to coordinate the care of the sickest patients. There are different numbers, but they all tell the same thing, which is that the sickest 5 or 10 percent of patients in the country are taking up about 50 percent of annual medical expenditures. So if you do a better job of coordinating the care of that small percentage of the medical population, you are going to save a lot of money.

Accountable care organizations can do that. Instead of having siloed care, where a co-morbid patient goes to a primary care doctor over here, then a specialist here, then a specialist there, if they are all under one roof and they are talking to each other, then you can save a lot of money just by coordination. That is the theory. So the health care reform act put that theory into practice. It set up a pilot program by which Pioneer accountable care organizations--essentially, a beginning set of accountable care organizations--would be set up under a model through which Medicare would say: If you save money, we are going to deliver back to you some of those savings so that, in fact, there is not a disincentive to practice less medicine because if you practice less medicine, Medicare will take some of the savings and it will share with you some of the savings.

Well, we have only had a year or so of returns from this model, but the results are pretty stunning. The average increase in costs per beneficiary has been--in the Pioneer ACOs--less than 50 percent of that for non-Pioneer ACO models. That is a pretty significant savings.

In addition, go back to this question of readmissions. In 25 of the 32 Pioneer ACOs, there was a lower risk-adjusted readmission rate than in non-Pioneer ACOs. Coordinated care where you are reimbursing an organization as opposed to just the individual physicians actually saves you a lot of money.

Then third, the issue of outliers. What you find when you look at the data--and it may be that Senator Whitehouse talked about this--is that sometimes 60, 70, 80 percent of the system is practicing good medicine at the right cost, and it is really only a small handful of providers that are way outside of the median and all you have to do, when it comes to some subsets of reimbursement, is bring those outliers back into the median.

Home care was a great example. In the Accountable Care Act, we said that for home care providers that had utilization rates that were far outside the median, we were going to stop reimbursing for those episodes that were far outside the median. CBO was not sure how to score it because they did not really know that was going to change people's practice. But it did. And it is estimated that single change, in controlling for the handful of outliers when it comes to high utilization rates in the home care line item, is going to get us almost $1 billion in savings over a 10-year period of time.

When you look at home care, actually it is only a handful of areas in which you have these outpaced utilization rates compared to the rest of the country. It is places in Texas, it is places in certain counties in Florida. Most of the country is right where you should be. So part of reforming our delivery system is also taking care of these outliers.

We have seen savings, whether it be in controlling readmission rates, setting up accountable care organizations, or taking on outliers within our home care system.

Now it is time to do more because, before I turn it over to my good friend Senator Blumenthal, here is where the rubber hits the road.

In about 10 years, Medicare starts taking in less money than it sends out. It does not go bankrupt all of a sudden, but it starts to become fiscally insolvent. There are only a handful of ways to stop that reality from happening. You can either ask beneficiaries to pay more out of pocket; you can cut their benefits, give them less; you can ask people to pay more into the system while they are working or you can make the system more efficient.

It may be that we have to do a mix of those. But clearly the first three are not that palatable: reducing benefits, increasing copays, or increasing taxes. This is not a partisan issue. Both sides agree that in 10 years we have an accounting problem in Medicare. Both sides agree that we have to make changes today in order to stop that crisis from occurring.

It strikes me that if the most conservative Republican and the most liberal Democratic sat down at a table and looked at those four options--increased copays, reduced benefits, increased taxes, or increased efficiencies--we would all agree. The conservative Republican and the liberal Democrat would agree, along with probably every other Member of this body, that is the first place you should go is to reduce inefficiencies. That is what the delivery system provides. So we have set up a working group here in the Senate which is beginning its work this week, that Senator Baldwin, Senator Whitehouse, Senator Blumenthal, I, and others will be building over the course of the late summer and fall. We hope it will draw interest from both sides of the aisle so we can start to put some meat on the bones when it comes to the changes in our delivery system that can be made to increase efficiencies so as to forestall the need to balance the Medicare books on the backs of taxpayers, workers, or beneficiaries.

With that, let me yield the floor to my great friend from Connecticut, someone who both as a Senator and our State's attorney general has been fighting for health care consumers for a long time, Senator Blumenthal.

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