Responding to the Obama administration’s push for health care reform, the left-leaning Center for American Progress published a report by Dr. Paul B. Ginsburg, president of the Center for Studying Health System Change and former executive director of what is now the Medicare Payment Advisory Commission, which highlights five key methods to lower the costs of health care. This report was published just as President Obama urged Congress to pass health care reform before the end of the year and the health industry promised to cut costs by $2 trillion over a 10 year period.

The report identifies five ways Congress can act to lower the cost of healthcare. In addition to the reform agenda’s goal of expanding health care coverage for Americans, Dr. Ginsburg emphasizes the need to target health care costs, warning that the failure to address costly inefficiencies and low quality of care will deprive more Americans of the care they need and place heavy burdens on state and federal budgets.

1. Update the Medicare physician fee schedule so that payments to health care providers for services are in line with the actual cost of the services. Physicians, hospitals, and other care providers receive payments for services according to rates set by the Centers for Medicare and Medicaid Services (CMS). Ginsburg reports that rates have not been adjusted commensurate with decreases in the relative value of certain services provided, leading to forgone savings. Moreover, inflated payment rates for some services removes providers’ incentive to deliver other services such as “evaluation and management services” that are essential to preventative care. Ginsburg recommends the CMS or an independent panel regularly adjust payment rates and increase reimbursement for preventative care services.

2. Change the system of payment rates to incentivize providers to focus on more integrated, quality care. Currently, health care providers are reimbursed for services they render, without regard for the services that others provide concerning the same episode of care for a patient. Ginsburg suggests a “multi-provider episode payments” option, in which payments cover all the expenses of a patient’s episode, encouraging care providers to coordinate their actions. Alternatively, Ginsburg offers a population-based approach in which payments are given based on a population of patients who are in a health care plan. This would also encourage providers to work together to provide quality, efficient care that keeps their patients healthy in the long term.

3. Institute “all-payer rate setting.” Health care reform advocates hope that changes in Medicare payments will lead to changes in payments by private insurers and Medicaid, but there is no guarantee that this will happen; in fact, instead of making their care more efficient as a response to decreased, more accurate Medicare reimbursements, health care providers could very well begin to charge private insurers more for services rendered. Therefore, Ginsburg suggests the possibility of establishing a panel that sets rates for both public and private insurers. In this way, providers are forced to adjust their practices in accordance with reimbursements they receive for services, and allow private insurers to compete with a public option (if it pays Medicare rates), should a public option be created.

4. Tax employer-provided health care that exceeds a certain actuarial value. Currently, employer contributions to employee health care are excluded from taxation, and although this may encourage employers to insure their employees, Ginsburg asserts that this system also breeds higher health care costs. Instead, he suggests that contributions employers make towards their employees’ basic health care be excluded from taxes, while coverage beyond such a baseline be taxed to raise revenue that could support health care options for the poor.

5. Conduct comparative effectiveness research. Testing the efficacy of different treatments could lead to more effective care for patients and potential savings from use of better health care methods.

Ginsburg presents each of these methods as options that might be implemented separately or in conjunction with each other to promote health care reform. He emphasizes that Congress must act with a long term vision of health care reform instead of seeking short term solutions to deep-set inefficiencies in the system. Moreover, he urges Congress to set broad policy goals for cost-cutting and quality assurance that give broad powers to the Obama administration or an independent health review board capable of implementing health care reform.