| January 31, 2003


For Release: 9:30am EST, January 31, 2003
Contact: Jill Braunstein, (202) 452-8097

WASHINGTON, DC—As the population ages and chronic conditions increase among the elderly, Medicare needs to be improved in order to better serve beneficiaries, according to Medicare in the 21st Century: Building a Better Chronic Care System, a report released today by an independent, bipartisan panel of experts convened by the National Academy of Social Insurance (NASI).

Currently, 87 percent of Medicare beneficiaries have one or more chronic conditions, 65 percent have multiple chronic conditions, and more than a third have a serious chronic condition. In 1965, Medicare, like private insurance, was designed to meet acute care needs, not to keep people healthy or manage the complex health care needs of beneficiaries with chronic conditions. While Congress has changed the law over the years to bring Medicare more into line with the contemporary practice of medicine, the panel finds that it is still woefully outdated.

“Because Medicare is the largest health care payer in this country and because its beneficiaries are more likely to have chronic conditions, Medicare should take the leading role in improving chronic care,” said study panel Chair David Blumenthal, M.D., Director of the Institute for Health Policy, Massachusetts General Hospital/Partners HealthCare System.

The experts recommend the addition of new benefits and some changes in the way Medicare interprets policies. Prescription drugs are an essential part of modern medicine and chronic care, and need to be part of the Medicare benefit package. Additionally, Medicare currently has no limit on out-of-pocket spending, which jeopardizes the financial security of many beneficiaries with high medical costs. The study panel recommends a reasonable limit on annual out-of-pocket spending.

Because of its original focus on acute health care, Medicare policies have frequently been interpreted in ways that impede the care of beneficiaries with chronic conditions. For example, beneficiaries must be homebound to qualify for home health services, durable medical equipment must be used primarily in the home, and rehabilitative services are sometimes approved only if a beneficiary’s condition is expected to improve. These policies do not help beneficiaries with chronic conditions maximize independence, or maintain or slow deterioration of function. The study panel recommends that the Centers for Medicare & Medicaid Services (CMS) revise these policies.

The study panel also recommends that Medicare better support physicians who provide chronic care:

  • It should adjust payments to physicians to better account for the complexity and length of time it takes to care for beneficiaries with chronic conditions, and
  • It should improve physicians’ training in chronic and geriatric care.

The study panel believes that Medicare should lead the way in developing better models of chronic care. Information systems that can track beneficiaries across multiple providers and care settings would make a substantial contribution to this effort, the study panel said. CMS should also conduct demonstrations to test alternative payment models in both fee-for-service and Medicare+Choice and fund research on ways to improve chronic care. The study panel also recommended that CMS significantly increase its efforts to measure and report on the quality of chronic care.

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The National Academy of Social Insurance is a nonprofit, nonpartisan organization made up of the nation’s leading experts on social insurance. Its mission is to promote understanding and informed policymaking on social insurance and related programs through research, public education, training, and the open exchange of ideas. It does not lobby or take position on policy issues. Medicare in the 21st Century: Building a Better Chronic Care System is the final product from an expert study panel convened as part of NASI’s “Making Medicare Restructuring Work” project. The Robert Wood Johnson Foundation provided grant support for the project.

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