Former Beth Israel CEO Paul Levy: Payment Reforms Aren't Enough to Fix Medicare

Paul Levy, former CEO of Beth Israel Deaconess Medical Center in Boston, warned in a blog post that payment reforms alone are not going to fix Medicare, as many have been persuaded to believe.

Mr. Levy penned the entry on his blog "Not Running a Hospital" in response to an op-ed in the New York Times by Ezekiel J. Emanuel, MD, soon-to-be vice provost and professor of medical ethics and health policy at the University of Pennsylvania, and Jeffrey B. Liebman, a professor of public policy at Harvard, both White House advisors on healthcare reform, which calls for doing away with fee-for-service payments in favor or bundled or capitated reforms. The op-ed argues that reforming payment is the best way to change the behavior of providers, who hold the key to reducing unnecessary medical spending.

Mr. Levy counters that many payment reforms being pursued by CMS are flawed. For example, he says:

"The ACO framework prescribed by Congress is inherently flawed because Congress could not and will not limit patient choice.  An ACO cannot manage patient care if there is a PPO structure in place, allowing patients to shift care not a non-ACO provider at will. Meanwhile, the ACO framework also has risks of market concentration that are drawing the attention of federal antitrust regulators."

He views this focus on payment reforms as troublesome because it takes away from other efforts to reduce costs that may be more impactful.

"How much damage is being done and how much time is being lost by our society by a religious belief in a payment scheme that has not been proven and that has many inherent difficulties?  As I have noted, not the least of the difficulties with capitation is in deciding the transfer payments among the different medical specialists."

Mr. Levy closes his entry by calling upon physicians and hospital administrators to take charge of lowering costs and improving care through patient-centered approaches, rather than relying on the government to dictate changes that may not be successful.

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