At Mayo Clinic, we take pride in delivering efficient, high quality care to each individual patient.  As an organization that has focused on the patient’s needs for over 100 years, the decisions that Mayo made last week to op-out of Medicare participation in a small Arizona family practice clinic and to discontinue Medicaid participation in Nebraska and Montana were very difficult for us. 

Medicare at Arizona Family Practice
Mayo Clinic in Arizona loses a substantial amount of money every year due to the reimbursement schedule under Medicare, a loss we cannot continue to sustain. The discrepancy between what Medicare pays and our cost of providing service is particularly acute for our primary care practices.  Due to these ongoing financial challenges for our primary care practices under the current Medicare system, the five physicians at Arizona’s Mayo Clinic Family Medicine – Arrowhead will opt out of participating in Medicare, meaning that Medicare will no longer reimburse for the services they provide.  This change, effective Jan. 1, will only impact primary care office visits at this site. Specialty care, laboratory services, imaging studies and ancillary services at Mayo Clinic will still be covered by Medicare.

Nebraska, Montana Medicaid Disenrollment
Also effective Jan. 1, Mayo Clinic will discontinue participation with Nebraska and Montana Medicaid due to the fact that these states are not part of our primary service area, along with significant administrative requirements, and low reimbursement levels.  It is unusual for any medical center to participate with Medicaid programs in states outside of their primary service area.  Based upon a review of Mayo Clinic patient records over the past two years, fewer than 50 existing patients will be affected by this decision, and Mayo is committed to working with Nebraska and Montana officials to ensure that these patients do not fall through the cracks during this time of change.

Signs that Reforms Must Pay for Value in Health Care
Even though Mayo has limited the impact of these decisions to affect as few patients as possible, it is disappointing for us to have to make business decisions such as these.  Nevertheless, decades of underfunding and paying for volume rather than value in government insurance programs have left us with few other options.  Recently the Medicare Trustees reported that Medicare will go bankrupt by 2017, and that Medicare will have to cut benefits or payment rates by 19 percent to balance its budget. 

Providers who do fewer unnecessary tests and services are paid the least, and they are the doctors and hospitals which will go out of business first if we don’t change the payment system.   For example, here at Mayo Clinic, the cost of providing services to Medicare patients exceeded the total amount paid on behalf of Medicare patients by $840 million in 2008. 

Unfortunately, Mayo is not alone.  There are hundreds of smaller clinics, family doctors, and hospitals across the country grappling with the same hard decisions.

This is why Mayo Clinic strongly supports health insurance reform and health care delivery reform.    Because the Medicare reimbursement system rewards piecework – performing diagnostic tests and procedures – health care delivery is laden with these expensive, fragmented pieces of care.  Health care delivery reform on behalf of the patients’ best interests means changing the payment system to reward value—defined as better outcomes, better safety, better service and lower cost—rather than simply rewarding the provision of more tests, visits and procedures.  Better outcomes or value result in fewer tests and decreased overall costs.

Some suggest that a system that would reward high quality, lower cost care would adversely affect high cost areas that treat poorer and sicker patients.  In fact, in February 2008, Peter Orszag, as director of the Congressional Budget Office, reported that three previous studies of patient health status found that patient acuity and income levels explained less than one-third of the regional differences in Medicare spending. 

As a not-for-profit organization, Mayo is committed to our mission of patient centered care. One of our four Health Policy Center Cornerstones is to work to ensure insurance coverage for all Americans.  Unless payment models are changed to reward value, expanding Medicaid and Medicare government-run, price-controlled, public plans will be financially disastrous to individual physicians, medical group practices, and hospitals, which will ultimately hurt even more patients who seek care.

Over 20 leaders in health care from across the country today wrote to Senator Max Baucus and members of the Senate Finance Committee to voice their support of key provisions in proposed legislation, and to offer additional thoughts on moving Medicare to pay for value. 

These leaders agree that only way to improve health care delivery and bend the cost curve is to change the payment system so that it rewards providers who offer high quality care at lower cost.  They are encouraged by elements of proposed legislation designed to move Medicare in the direction of paying for value rather than volume. 

The leaders expressed support for the following specific elements in proposed legislation:

• Setting up guidelines for Accountable Care Organizations (ACOs),
• Establishing an Innovation Center within CMS,
• Creating a national strategy to improve the health care quality infrastructure, and
• Sen. Maria Cantwell’s amendment to incentivize value in the Medicare physician payment formula.   

In addition, Sen. Baucus was encouraged to consider a more aggressive implementation timetable — not one that starts in 2014 or later, but finishes by 2014 — to allow more immediate financial results for the Medicare system.  

Organizations signing the letter to Sen. Baucus included: Altru Health System, American TeleCare, Bellin Health, The Dartmouth Institute for Health Policy and Clinical Practice, Fairview Health Services, Franciscan Skemp Healthcare, Gundersen Lutheran Health System, HealthPartners, Marshfield Clinic, Mayo Clinic and the Mayo Clinic Health Policy Center, McFarland Clinic, North Texas Specialty Physicians, Park Nicollet Health Services, Scott & White Healthcare, The Everett Clinic, the University of Minnesota, Virginia Mason Medical Center, the Wisconsin Hospital Association and the Wisconsin Medical Society.

 Mayo Clinic’s perspective about how to get high-value health care is the focus of a Perspectives article in the New England Journal of Medicine, published online on Sept. 23, 2009, and in the print issue on Oct. 1, 2009.

“We must hold physicians and other providers accountable for providing high-value health care, defined in terms of both quality and cost,” say Denis Cortese, M.D., president and CEO of Mayo Clinic and Jeff Korsmo, executive director of the Mayo Clinic Health Policy Center. To help achieve this goal, Cortese and Korsmo recommend basing a portion of Medicare payments to physicians and hospitals on value scores (measurable good outcomes, safety and service delivered at a lower cost), rewarding those providers who deliver high-value care and providing an incentive for others to improve.

In their essay, Dr. Cortese and Korsmo emphasize other key points to achieve true patient-centered health care reform including:

• Coordinating patient care services across people, functions, activities, sites, and time
• Reducing conflict of interest so physicians have less of a personal financial incentive to order unnecessary tests or procedures

Read the entire article online.

Note: The New England Journal of Medicine also published a Mayo Clinic survey on physicians’ beliefs and health care reform in the Sept. 14 issue. View the survey online.

Dr. Denis Cortese, President & CEO of the Mayo Clinic, discussed health care reform at the National Press Club (NPC) on Sep. 18, 2009.  He emphasized the importance of both health insurance and health care delivery reform and the critical need to appropriately reward providers that deliver high quality, affordable health care.  Watch the entire speech on C-SPAN.

Dr. Cortese appeared on the Washington Journal Sep. 18, 2009 and discussed the clinic’s systems and practices.  Watch the entire interview on C-SPAN.

In addition, on July 19, 2009 the Chicago Tribune published “Bending the Curve on Health Spending” authored by Denis Cortese, M.D. and Jeff Korsmo.

In case you missed the June 24 broadcast, President Obama was on ABC News Primetime discussing health care reform.   In a question-and-answer format, the president spent an hour and a half describing his vision for health care in the US.  Yet again, he mentioned Mayo Clinic (about twelve minutes in to the program) as a great existing model of how health care can be delivered much more effectively in this country.

In an exclusive interview with Diane Sawyer on ABC’s Good Morning America President Obama continued to point to Mayo Clinic as an example of health care that delivers better outcomes at lower cost. The interview precedes a town hall meeting on health care reform being held at the White House on June 24, 2009. Responding to a question about whether Americans will need to make do with fewer tests and procedures in the future, President Obama commented, “I think what’s important is to say to the American People that you should get the best possible care to make you well. And that the measure of the quality of care is not quantity, but whether or not it is making you better. Now, what we’ve seen is that there’s some communities and some health systems that do this very well. Mayo Clinic, a classic example. In Rochester, Minnesota. People go there. They– spend about 20-30 percent less than some other parts of the country, and yet have better outcomes.”

Read the complete transcript of the interview.