Raging debates about reducing the federal deficit, as well as state spending, have reiterated a common point – health care costs are too high. Medicare and Medicaid make up about 23 percent of federal spending, and their costs are growing faster than the overall economy. Because of this, the new “super committee” will likely be looking at health spending as part of deficit reduction. However, real deficit reduction will take real, systemic health care reform.

On this note, recent news of success in the Medicare shared savings demonstration project at Marshfield Clinic shows a glimmer of hope. Ten physician groups from across the country, including Marshfield, recently completed a five-year demonstration project with the federal Centers for Medicare and Medicaid Services and signed on for another two years. The goal of the project was to improve quality of care and reduce costs in order to achieve shared savings – central to this was paying for quality of care, not for quantity. Already, Marshfield Clinic has earned $56.2 million in shared savings payments from the project. This was 80% of the savings; the other 20% was kept by Medicare. Guy Boulton wrote about the pairing of savings and quality in the Journal Sentinel, and Jake Miller in the Wausau Daily Herald shared that, “Marshfield Clinic Impresses with Savings Success.”
Various aspects of the Affordable Care Act (the health reform law) attempt to build on these sorts of reform initiatives to improve quality while lowering the cost of health care. Specifically, Marshfield clinic’s successful demonstration project has laid the groundwork for Accountable Care Organizations (ACOs). ACOs, expected to launch in early 2012, will be patient-centered providers and suppliers of services working together to coordinate care for Medicare patients. This is intended to create incentives for providers to work together across care settings (including doctor’s offices, hospitals, and long-term care facilities), where the amount of shared savings will be determined by the quality of care. Though there are still questions about the feasibility and risks of ACOs, Marshfield Clinic’s experience leads us to believe that success is possible. (For more about ACOs, see healthcare.gov’s factsheet here.)

These sorts of real, quality reforms to the health care system will make the difference in health care costs. Merely reducing payments to states and providers without reforming systems will lead to cost-shifting, doing nothing to actually reduce health care costs. For this reason, we look forward to implementing and assessing the innovative approaches to health care reform in the Affordable Care Act – recognizing that effective deficit reduction can only be accomplished by reforming health care, not just cutting.

Sara Eskrich