A Look at the Potential Consequences of Reforming Medicare Into a Competitive Bidding System

The success or failure of the Affordable Care Act (ACA) will determine the costs/benefits of reforming Medicare into competitive bidding system, write Zirui Song, PhD, David M. Cutler, PhD, and Michael E. Chernew, PhD, in a "viewpoint" published on July 31 in the Journal of the American Medical Association

"Premium support, based on competitive bidding may offer a fiscal solution if ACA reforms fail, but at the cost of making Medicare beneficiaries responsible for solving Medicare’s fiscal crisis," they write. "Success of the ACA can make premium support less risky by lowering traditional Medicare costs and helping to monitor and improve quality in private plans. Given the current fiscal pressures, this may be acceptable, but it is a major shift from traditional Medicare that may have deleterious consequences."

Additional Resources
While there is much debate on the topic, this is not a novel Medicare reform model. The Medicare Advantage (MA) program, in place since 2006, is centered on a benchmark payment rate set by Medicare and relies on rebate offers to attract enrollees. Community on Payment Innovations editorial board member Joseph G. Cacchione, MD, FACC, indicates three components at play in MA plans that are not incorporated into traditional Medicare: patients have more "skin in the game," providers have more risk and there are elements of medical management. Cacchione stresses, "the focus should be less on competitive bidding and more on effective medical management utilization by health plans via approaches such as novel payment systems and the use of tools such as FOCUS for optimizing appropriateness."

Read more and share your thougts on this topic in the ACC/AJMC Community on Payment Innovations.

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