The launch of the test sites by the end of 2011 is just a first step in changing the fundamental ways the government pays physicians and hospitals. Over 10 years, the innovation center’s work is expected to save $1.3 billion on the $500 billion annual budget of the Centers for Medicare and Medicaid Services, the sprawling federal insurance bureaucracy Berwick now leads. Health care policy advocates had sought far more aggressive cost-control measures.
But Medicare officials and advocates still expect that the center will help the government begin to phase out wasteful “fee-for-service’’ health insurance and increase the use of “global payments.’’
Under global payments, physicians are paid flat fees for coordinating care for populations of patients, with built-in financial incentives for keeping them healthy and reducing hospital stays.
Well, it does sound like managed care all over again. Recall that managed care, which in many parts of the country peaked in the late 90s, achieved a modest and temporary cost savings at the price of a public relations disaster.