Health Cost Savings Innovations Need Time: Obama Official

The Obama administration on Wednesday said its experiments at controlling healthcare costs could need up to a year to produce results, frustrating congressional lawmakers eager to know if new innovations in care delivery can actually work.

Dr. Richard Gilfillan, who is overseeing the initiative at the U.S. Department of Health and Human Services, told the Senate Finance Committee that his agency is now testing three-dozen care delivery models involving 50,000 healthcare providers and more than 1 million beneficiaries.

“We’re all eager to see the results of these models. But we need to be realistic. This change is difficult. Some models will work and some will not. It will take time to see the improvements we are after,” Gilfillan said in hearing testimony.

“We’ll be able to start sharing interim results with Congress within the year and start giving recommendations for payment or peer changes within the next two years,” he said.

Gilfillan’s caution about timing drew concern, and in some cases disbelief, from senators concerned about higher healthcare costs as sweeping changes brought by President Barack Obama’s Patient Protection and Affordable Care Act head toward full implementation on Jan. 1, 2014.

U.S. healthcare costs have been growing at a historically low annual rate of around 4 percent over the last three years. But growth of 7 percent is forecast for next year, according to administration analysts, heightening the prospect that government healthcare spending will accelerate as Congress focuses on ways to reduce the federal deficit.

“People in Congress are going to be a little impatient. They’re going to want results that are quantifiable, demonstrable, that you can identify and put your finger on and see. Not just grand goals and platitudes,” said the committee’s Democratic chairman, Senator Max Baucus of Montana.

Under the healthcare law, the Obama administration is looking for ways to change care delivery, primarily through Medicare, so that doctors, hospitals and other providers are paid for containing costs and improving care rather than for ordering costly tests and procedures under the traditional fee-for-service model.

All told, more than 4 million beneficiaries in Medicare, Medicaid and the Children’s Health Insurance Program are now receiving care from new care delivery models under separate administration programs.

The innovations range from so-called bundled payments that set a fixed rate for care related to a specific medical procedure or condition to patient-centered medical homes, which coordinate comprehensive care through a medical team headed by single physician.

Reform advocates see the administration initiative as a path toward reining in healthcare cost growth for government programs, and eventually, private-sector consumers across the $2.8 trillion U.S. healthcare industry.

But Gilfillan could point only to limited evidence of smaller-than-expected cost growth in Vermont and lower hospital admissions in North Carolina.

“It does appear that there’s some evidence, early, of bending the cost trend,” he said.

Senator Orrin Hatch of Utah, the panel’s ranking Republican, described Gilfillan’s Center for Medicare and Medicaid Innovation as suffering from “confusion and a clear lack of focus.”

“It seems to me that CMMI would function best if it would pick a few initiatives … and really devote the time to those initiatives to make sure they actually work,” Hatch said. “Instead, I fear you are trying to do too much at one time.”

Republicans also accused the agency of overspending on staff and elaborate office accommodations at a time when automatic budget cuts known as the “sequester” are trimming billions of dollars from government programs including Medicare.

(Reporting by David Morgan; Editing by Steve Orlofsky)

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