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The American health care industry wastes $1T by some estimates, and possibly as much as 30% of health care spending by others. US health care expenditures are twice the OECD average – for instance, we spend twice what the UK does on health care (as a percentage of GDP) – and American health care costs are growing at 5% a year.Healthcare presents one of the greatest policy challenges for our country because profit incentives and care for the patient are often misaligned. It’s clear that the government is going to play some role in making sure the least well-off Americans have access to medicine, but we need healthcare policies that incentivize providers and payors to educate patients to make informed, data-driven choices. Only intelligent consumer choice will stimulate functioning, competitive markets in insurance, patient care, the pharmaceutical industry, and elsewhere. Today, pharmaceutical companies, health providers, electronic health record (EHR) systems, and other actors often have misaligned incentives and fail to enable more efficient solutions that do more for the patient per dollar - indeed, often the winners in these areas are those that unnecessarily charge more. Aligning incentives will spur top technology startups to develop innovative healthcare solutions, bring down costs, and deliver superior outcomes to American patients. Here are a few necessary reforms:Medical SchoolsExperts project a total physician shortfall of between 42,600 and 121,300 by 2030.* We need more medical schools fast, but the Liaison Committee on Medical Education accreditation process takes 8 years on average and most states require new medical schools to obtain a “certificate of need” before beginning construction. In addition, medical schools are required to sustain the high overhead of medical research rather than focusing exclusively on training doctors, and inflexible requirements prevent medical schools from experimenting with new curricula. Organic chemistry and other undergraduate prerequisites are completely irrelevant to becoming a good practicing doctor, and should be optional.High medical school costs force students to become high-earning specialists, e.g. plastic and orthopedic surgeons, when our country really needs more primary care physicians (PCPs). Primary care physicians, nurse practitioners, and physician’s assistants are far cheaper than specialists, but limited medical school and residency supply as well as occupational licensing concerns keep them out of the market. In addition, foreign doctors are almost always required to complete a full residency before being allowed to practice in the United States. Given a current skills gap of 30,000 doctors, adding 30,000 new PCPs, nurse practitioners, or physicians assistants could save $2.3B, $5.1B, or $6B in salary costs alone relative to the current mix of specialists and primary care doctors.In addition, primary care doctors achieve better health outcomes for patients than specialists by engaging in long-term counselling, tracking, and preventive care. Scholars estimate that replacing specialists with primary care physicians at a density of 1 per 10,000 population could save $931 per beneficiary a year. Adding a supply of 30,000 primary care physicians would save our country about $150-200B a year.*If implemented correctly, data-driven telemedicine can ameliorate demand for physicians somewhat. Doctors should be able to digitally prescribe most drugs, and data from increasingly sophisticated wearables will enable physicians to swiftly and efficiently diagnose patients.Reform PBMsIn 2017 the Centers for Medicare and Medicaid Services (CMS) spent $175B on prescription drugs alone, and there are currently shortages of vital drugs across the country. An oligopoly of Pharmacy Benefit Managers (PBMs) generates $200B a year in revenue by forcing drug manufacturers to pay rebates and other kickbacks in order for the PBM to place their drug on the “formulary”, or list of insurable drugs. Securing a place on the formulary is a matter of life and death for manufacturers, and by one estimate the current value of rebates and other price concessions from manufacturers to PBMs increased from $59B in 2012 to $127B in 2016.After speaking extensively with politicians on both sides, we were thrilled to see the Senate recently outlaw PBM “gag-orders” on pharmacies by a 98-2 vote. We are encouraged to see that Alex Azar’s Department of Health and Human Services (HHS) is planning to subject PBM rebates to anti-kickback law, but we would go further and require full price transparency on PBM contracts in the style of Colorado HB 1260. Although some rebate money flows to insurers, we estimate that reforming the space could save America on the order of $50B.End of Life Palliative CareAlthough discredited by hyperbolic language about “death panels”, counselling patients at end-of-life is both cost-effective and humane. 30% of Medicare expenditures are attributable to 5% of beneficiaries who die each year, and acute care in the final 30 days of life accounts for 78% of the costs incurred in the final year of life. While acute-care for the dying should obviously be available to those who want it, our country must shift to a model of counselling and palliative care at the end of life.Just having an end of life discussion with the cancer patient reduces medical costs by 35.7% on average, and given that there are roughly 600,000 cancer deaths in the United States a year, would have saved $687M a year for cancer patients in the last week of life alone! In addition accountable care organizations (ACOs) have saved $12,000 per patient during the final three months of life by implementing home-based palliative care. If extended to all cancer, end stage renal disease, and congestive heart failure patients this program could save the country $11.7B a year.We all agree that we must treat families of the dying with delicacy and compassion. But introducing a program by which families will share in Medicare/Medicaid savings from palliative care would help families and patients factor the overall social cost of end-of-life care into their decision calculus. We estimate that extending proven programs and testing different incentives structures could save our country $30-50B a year.FDA ReformClinical trials are an arduous multi-year process and have become drastically more costly in the last 30 years. Phase II and III efficacy trials cost roughly $400M per new drug, which severely limits the number of drugs that make it to the final stage of Food and Drug Administration (FDA) approval. A “progressive approval” approach would allow drugs to be repurposed for other uses and possibly sold after passing Phase I safety trials, which establish that a drug has a favorable risk balance and qualifies as value-based care. Drug companies could gradually establish efficacy by logging the effects the drug has on each person who opts to use it over the next several years.The extreme costs of clinical trials and FDA approval not only stymie drug development and the application of treatments to new indications, they effectively privilege Big Pharma over other innovators, inhibiting innovation and medical progress. A data-driven approach in which doctors and hospitals verify drug efficacy over time would allow the FDA to concentrate its resources on ensuring safety, particularly as the market for new drugs becomes sophisticated at assimilating information from the progressive approval process. While ramping up the number of drugs approved may not save our healthcare system money on net, a framework which encourages innovation will positively impact millions of lives by improving quality of care.Give Medicare Negotiating PowerTo pass the Affordable Care Act (ACA), the Obama Administration made a critical concession: Medicare would not be able to negotiate the price of drugs by controlling which drugs make it onto Medicare’s formulary. As a consequence, our federal government is a “price taker” that must blindly accept whatever prices drug companies demand, and the American government winds up subsidizing drug development costs for the rest of the world. Drug prices at home are extremely high, representing 10% of total healthcare expenditures, and about $144B of federal healthcare spending.In many other developed countries, governments use their monopsony or near-monopsony buying power to force pharmaceutical companies to sell drugs at much cheaper rates. For instance, Canada spends 70% of what the US spends on brand name drugs, the UK 40% of what we spend, and Denmark only 35%. If the US federal government used its considerably larger “countervailing power” to negotiate reduced drug prices – whether on a case by case basis or by pegging the value of a Quality Adjusted Life Year at a generous but fixed rate - savings could be in the range of $30-40B, possibly even as high as $90B a year.Pharmaceutical industry lobbyists (PhRMA) argue that high drug prices are necessary to stimulate R&D which generates many new life saving drugs every year. But in fact, median R&D spending on new cancer drugs – the most difficult to develop – is only around 40% of total revenue. In addition, most R&D is funded by American universities, and manufacturers of silver-bullet specialty drugs could continue to charge high prices to a federal payor. Giving government negotiating power isn’t a novel solution, but it’s one of the correct solutions to driving down drug costs for Americans.Tort LawThe threat of malpractice lawsuits forces doctors to engage in costly defensive medicine. Although the current administration has made some progress on tort reform (making arbitration legal for federal contractors and nursing homes), Congress must insist on Texas-style reforms including capped punitive and noneconomic damages from healthcare providers, eliminating contingency fees for speculative tort lawyers, reinforced federal preemption doctrine for food and drug products, and more. Unfortunately the trial lawyers lobby – one of the biggest political donors in the country – will fight reform at every step of the way.Some studies estimate that reducing physician malpractice fears to “somewhat concerned” about malpractice would decrease costs by 14%, saving the country $100B a year. Others argue that medical liability reform could save our country up to $210B a year. Congress must protect our doctors from being attacked by unscrupulous prosecutors in order to reduce the cost of healthcare for American citizens. We all agree that we must insist on protecting patients, but unchecked tort lawsuits just punish American patients and taxpayers with an unaffordable system.Data InteroperabilityThe ACA’s “meaningful use” requirements did little to make healthcare data accessible. As of 2015, only 6% of health care providers could share patient data with other clinicians who use an EHR system different from their own. Although 21st Century Cures Act made “information blocking” illegal, big EHR vendors routinely prevent their competitors from importing patient data by disclosing health records in garbled, incoherent formats. As a result, physicians are unable to make fully informed decisions about their patients.Judy Faulkner, CEO of EPIC, famously condescended then Vice-President Biden, “Why do you want your medical records? They’re a thousand pages of which you understand 10.” The answer is that only real, semantic interoperability which makes health data available to third parties via and open application programming interface (API) will allow an innovation ecosystem of apps, medical devices, and novel insurance plans to flourish. Granular, transparent healthcare data will allow entrepreneurs – whether college students or IBM executives – to invent new solutions from the bottom up and swiftly incorporate best practices into their businesses. In addition, direct service-to-service comparisons will allow consumers to make informed decisions about how to stay healthy, stimulating market competition for their dollars.We have been excited to see CMS’s Blue Button 2.0 API program formalize the Fast Healthcare Interoperability Resources (FHIR) standard for health records, which includes programmer resources, a complete API, and gives beneficiaries full control over their data – but EHR providers are refusing to use it. While any EHR system should ensure compliance with the Health Insurance Portability and Accountability Act (HIPAA) by storing protected health information on secure servers, we need to make interoperability truly mandatory.If patients could easily share their medical records with new providers and selectively reveal their data to health apps, fitness devices, diagnostic companies, insurers, and academic researchers, our entire healthcare industry would become hugely more affordable and effective. Reliable, real-time information about which treatments work, which failed, and what they cost will enable hospitals to identify and minimize cost centers as they strive to produce care more cheaply than federal benchmarks and share in the savings.Financing ReformOvertreatment and poor physician incentives may be the main driver of health care costs. Most hospital networks are local monopolies with limited incentives to innovate or save money. Replacing this broken system with value-based care models will immediately save over $100B in total, and should grow steadily over time to $200-300B as doctors harness digital technology interventions and other new techniques to make care cheaper and more effective. We break down a few potential sources of savings below:Bundled PaymentsThe Bundled Payment Care Initiative (“BPCI”) introduced in 2013 shows serious promise in making acute care clinical workflows more efficient, particularly in orthopedic care and oncology. Results continue to improve as providers adapt to the program.After adopting a bundled payment model, the NYU Medical center reduced costs to Medicare by 10% and reduced patient stays by 25% for total hip arthroplasty procedures, and a private practice joint arthroplasty generated 20% savings for CMS per episode while decreasing readmissions. The Congressional Budget Office estimates that a voluntary bundled payments system could save Medicare $6.6B a year. If CMS makes bundled payments mandatory for both Medicare and Medicaid, achieves health record interoperability, and allows the ecosystem to iterate on data-driven incentives, we expect savings to surpass $100B.Accountable Care OrganizationsACOs are widely seen as the Affordable Care Act’s main instrument to rein in health care spending, and ultimately we expect that bundled payments will be folded into a broader ACO model. To date ACOs have generated modest savings on average, but some, such as the Memorial-Hermann ACO, have generated 11% savings for Medicare. ACO contracts are more efficient if they involve two-sided risk (rewards for savings, penalties for overages), but studies have shown that even early versions of upside-risk only ACOs are associated with a 3% reduction in Medicare reimbursement. In addition, Medicare ACOs have improved quality measures across the board, despite their old, sickly populations.Provider networks are still adjusting to the ACO model, and returns will increase in the future. Projecting savings at 5-10% and assume that all Medicare beneficiaries are enrolled in ACO providers, ACOs would save Medicare $30-60B a year. If extended to Medicare and Medicaid, full ACO enrollment could generate between $56-112B a year.Preventive MedicineThe ACA now mandates coverage for all evidence-based prevention in non-grandfathered plans, so preventative screening and vaccinations have increased since the advent of Obamacare. However we need to drastically increase the scope of preventive medicine under the aegis of value-based care. Preventable chronic diseases are 7 of 10 top causes of death in the country, and account for 75% of health care costs. Half of American adults have chronic disease, and surprisingly, chronic illness among those younger than 65 years accounts for 67% of total medical spending. 70% of American adults are overweight, and 1 in 3 American kids and teens is overweight or obese. Prevalence of obesity has tripled since 1971.Some of the most cost-effective, successful preventive health interventions include childhood immunization, youth and adult tobacco counselling, alcoholism interventions, aspirin use for people with heart disease, and screenings for common cancers, STDs, and chronic conditions like hypertension. Evidence suggests that many other preventive health interventions are cost-neutral or increase long-term medical costs (because they extend lifespans). However critics often miss the fact that preventive health measures will extend the working careers of Americans, and pay for themselves in the long-run.In kidney care, for example, the federal government subsidizes extremely costly dialysis treatments for end stage renal disease patients but has not crafted incentives to perform preventative treatments before a patient advances to this critical, debilitating condition. Rather than fill the coffers of the corrupt duopoly that runs the dialysis industry, we should give providers incentives to halt the progression of kidney disease in its tracks. As a country we spend $42B on hemodialysis. Just getting prevention right here could save our system north of $10B a year.ConclusionFixing our sprawling, tangled healthcare system is one of our nation’s greatest policy challenges. In the coming years, America should move swiftly to embrace value-based care models which align market incentives to produce a wealth of patient data and an ecosystem of new information technologies geared at preventive treatment. At the same time, we must address specific areas where poor incentives have throttled the production and delivery of medical services. Replacing bureaucratic mandates with proven Western values of entrepreneurial innovation and educated individual decision-making will yield better patient experiences and results for Americans from every walk of life while saving our country $600-$900B annually – a transformative amount of money for the well-being of our nation.

TL/DR: There are a few ways for a physician to provide free care for a patient in the U.S., but government regulations are making it more and more difficult to do so.Also, I’m answering this question in the vein of doctors choosing not to bill patients, rather than patients who just skip out on their bills.At the personal level, it is certainly possible for a doctor to provide care to an individual free of charge. Some physicians are willing to take care of family members, friends, and neighbors for minor issues without formally making them a patient. Many states still allow physicians to write prescriptions for themselves and family members, though there can be ethical and legal issues if you are prescribing controlled substances.However, when you consider treating someone for their chronic high blood pressure or someone that needs some sort of surgical procedure, you don’t want to do that without formally establishing the physician/patient relationship.That’s where CMS (Center for Medicare and Medicaid Services - don’t ask me why they only put one M in the acronym) comes in. Any physician, clinic, or, hospital that accepts Medicare and/or Medicaid* is subject to innumerable regulations about how they provide care and how they bill for that care. While I’m not directly involved in such matters, my experience has been that the capacity for providers to offer “free” care for the indigent is severely hampered by CMS regulations. As I see it, the underlying problem behind these regulations is the impetus for a government program to appear impartial. Because of that, a number of things become evident in the rules they hand out.Providers are required to bill everyone equally, regardless of their payment provisions. If you receive services of any sort, your pre-adjustment bill is going to be the same whether you are with Kaiser, Aetna, Medicaid, or paying out of pocket. Of course, the private and government insurers have pre-existing agreements that they’re generally not going to pay anywhere near the amount billed. It’s the guy without insurance who gets stuck with the whole unadjusted amount.Hospitals and the government know that this is problematic, so they allow self-pay patients to make partial payments and/or to make payments over time. Portions left unpaid get written off by the hospitals. But, they don’t allow those deductions to zero out the bill. By government logic, if you’re too poor to pay anything, you should be enrolled in Medicaid, so self-pay patients have to be able to pony up some cash for the services they’ve received. Never mind that the qualifications to receive Medicaid are written independently of the rules on self-pay patients.Hospitals must demonstrate that their provision of charitable care is being applied equally to all comers. That is to say, you can’t selectively write off bills for one patient that you feel needs the write off more, while persisting to charge others in similar financial conditions. Sounds great until you look at how that applies.I once cared for an uninsured young woman in the ER with meningococcal bacteremia. That’s as scary as it sounds. You very rapidly lose blood supply to your extremities and vital organs due to a particularly nasty bacterium. If you survive, as this young woman did, you are likely to go into kidney failure and at least temporarily need dialysis. Your limbs die off, so you frequently have to amputate various extremities. You’ll spend weeks in the ICU and months/years in rehab. And then, because of your disabilities, you’ll have a lifetime of recurring problems and a need for lots of ongoing care. This young woman’s hospital bill for three weeks of care (not including the separate charges filed by the different physicians who cared for her) was over $1.4M. One of our hospital administrators explained to me that they took advantage of every loophole they could find, but ultimately could only reduce her charges to about $200k. Why? “If we write her down to zero, then we also have to write down to zero all the patients with similar incomes who come to the ER every time they get a cold and every patient with COPD who is spending their limited funds on more cigarettes.”There are a lot of people writing the rules, and they’re frequently not paying attention to the rules made by others. This sets up potentially conflicting rules, as well as systems that just don’t make sense.As with many hospitals, we served a large number of uninsured patients who came to the ER for issues that could be reasonably addressed in a primary care clinic. At one point, the hospital set up a clinic exactly for these patients. They received grant money from the federal government to help with the costs of operation, and they did an aggressive outreach program to patients as they came into the ER to encourage them to seek future non-emergent care at the clinic. About 6 months in to the project, I met with one of the clinic administrators who was extremely frustrated that a number of patients enrolled at the clinic were still using the ER for non-emergent problems. When all else fails, follow the money, right? In order to receive federal funds, the clinic operated on an income based sliding scale. The lowest end of that scale involved a $22 co-pay from the patient at the time they received services. Meanwhile, EMTALA mandates that the ER see everyone regardless of their ability to pay. So, for many people it makes more sense to get an ER bill that they know they can ignore rather than going to a clinic. It would be financially better for the hospital to run the clinic and not charge patients, rather than writing off all of their expensive ER bills, but the government doesn’t allow “free” care in that vein.Other physicians (or healthcare administrators) may be aware of particular situations where the regulations aren’t so tight and it is easier for a provider to give free care to a patient. My experience, though, is that the more the government gets involved, the harder it is to provide charity as you see fit.For a more historical context on the economics of U.S. healthcare (including ways physicians were once able to provide charitable care, but now cannot), I strongly recommend listening to this EconTalk podcast.*While less than 70% of physicians accept Medicaid payments, about 95% accept Medicare. It’s a little harder to find numbers for hospitals and clinics, but there are some that don’t accept Medicare or Medicaid. Who doesn’t accept these government payments?Dermatologists, plastic surgeons, and other physicians whose care primarily focuses on cosmetic procedures. Many of these also do not accept private insurance. Cash only, please.There are a smattering of physicians through the country (a lot in Texas, as I hear it) who are going to a cash only model, and patients can then submit to their insurers for reimbursement. As best as I know, this really only works for office based practices, not hospital based care.Payments to the VA and active military hospitals (and the physicians that work there) do not come through Medicare/Medicaid. Of course, they have their own regulations to follow and do not provide any free care. Similarly, Indian Health Services are on a separate line of government funding.Shriner’s Hospitals provide care for a set of very specific conditions for children. Traditionally, they bill private insurers for those who have policies, and they have an $8 billion dollar endowment to support their charitable works. They’ve recently come into a partnership with the Mayo Clinics, so I’m not certain how that might affect them taking Medicare/Medicaid.

The six major government health care programs—Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), the Department of Defense TRICARE and TRICARE for Life programs (DOD TRICARE), the Veterans Health Administration (VHA) program, and the Indian Health Service (IHS) program—provide health care services to about one-third of Americans. The federal government has a responsibility to ensure that the more than $500 billion invested annually in these programs is used wisely to reduce the burden of illness, injury, and disability and to improve the health and functioning of the population. It is imperative that the federal government exercise strong leadership in addressing serious shortcomings in the safety and quality of health care in the United States.RECOMMENDATION 1: The federal government should assume a strong leadership position in driving the health care sector to improve the safety and quality of health care services provided to the approximately 100 million beneficiaries of the six major government health care programs. Given the leverage of the federal government, this leadership will result in improvements in the safety and quality of health care provided to all Americans.Suggested Citation:"2 Overview of the Government Health Care Programs." Institute of Medicine. 2003. Leadership by Example: Coordinating Government Roles in Improving Health Care Quality. Washington, DC: The National Academies Press. doi: 10.17226/10537.The six major government health care programs serve older persons, persons with disabilities, low-income mothers and children, veterans, active-duty military personnel and their dependents, and Native Americans. Three of these programs—Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP)—were devised for groups for whom the health care market has historically failed to work because of their high health care needs and low socioeconomic status. The remaining three programs—DOD TRICARE, VHA, and IHS—serve particular populations with whom the federal government has a special relationship, respectively, military personnel and their dependents, veterans, and Native Americans.Many millions of Americans receive services through multiple government programs simultaneously. Low-income Medicare beneficiaries who qualify for both Medicare and Medicaid account for 17 percent of the Medicare population and 19 percent of the Medicaid population (Gluck and Hanson, 2001; Health Care Financing Administration, 2000). These “dual eligibles” account for a total of 28 percent of Medicare expenditures and 35 percent of Medicaid expenditures. Native Americans eligible to receive services through IHS may also qualify for Medicaid if they satisfy income and other eligibility requirements, and those aged 65 and older may qualify for Medicare. Nearly 45 percent of veterans are 65 years and older and also qualify for Medicare (Van Diepen, 2001b). In addition, many Americans eligible for these programs have private supplemental insurance as well. Thus, patients and clinicians would surely benefit from greater consistency in quality enhancement requirements, measures, and processes across public and private insurance programs.Table 2-1 provides a capsule summary of the six government health care programs. A more detailed description of the programs is provided in the following section. The broad trends affecting the needs and expectations of the programs’ beneficiaries are then reviewed. The final section examines some key features of the programs beyond their quality enhancement processes.MEDICARE1Medicare provides health insurance to all individuals eligible for social security who are aged 65 and over, those eligible for social security because of a disability, and those suffering from end-stage renal disease (ESRD)—a total of about 40 million beneficiaries and growing. While chronic condition and 63 percent have two or more (Anderson, 2002). The over 30 percent of the Medicare population that has a physical and/or cognitive impairment accounts for about 60 percent of expenditures (see Figure 2-1). Medicare beneficiaries with three or more chronic conditions account for the bulk of program expenditures (see Figure 2-2). The most prevalent diagnoses in persons aged 65 and over—high blood pressure, osteoporosis, chronic obstructive pulmonary disease, asthma, diabetes, heart disease, and stroke—are all chronic illnesses requiring medical management over extended time periods and multiple settings (Medical Ex-Suggested Citation:"2 Overview of the Government Health Care Programs." Institute of Medicine. 2003. Leadership by Example: Coordinating Government Roles in Improving Health Care Quality. Washington, DC: The National Academies Press. doi: 10.17226/10537.FIGURE 2-1 Medicare beneficiaries with cognitive and/or physical limitations as a percentage of beneficiary population and total Medicare expenditures, 1997. NOTE: A person with cognitive impairment has difficulty using the telephone or paying bills, or has Alzheimer’s disease, mental retardation, or various other mental disorders. A person with physical impairment is someone reporting difficulty performing three or more activities of daily living.SOURCE: Reprinted with permission from Moon and Storeygard, 2001.penditure Panel Survey, 1998). The fastest-growing sectors in Medicare in terms of spending (though not the largest proportion of total program spending) have been home health, skilled nursing facilities, and hospice care, reflecting a shift in demand toward more chronic care.MEDICAID2Medicaid serves about 42 million people who are poor and who require health care services to achieve healthy growth and development goals or meet special health care needs. The program covers low-income people who meet its eligibility criteria, such as children, pregnant women, certain low-income parents, disabled adults, federal Supplemental Security Income (SSI) recipients (low-income children and adults with severe disability), and the medically needy (non-poor individuals with extraordinary medical expenditures who meet spend-down requirements generally for long-term care). There is a good deal of variability across states in the maximum income for eligibility.Unless otherwise indicated, data in this section are based on Centers for Medicare and Medicaid Services, 2000a.Suggested Citation:"2 Overview of the Government Health Care Programs." Institute of Medicine. 2003. Leadership by Example: Coordinating Government Roles in Improving Health Care Quality. Washington, DC: The National Academies Press. doi: 10.17226/10537.FIGURE 2-2 Medicare beneficiaries with five or more chronic conditions account for two-thirds of Medicare spending.SOURCE: Centers for Medicare and Medicaid Services, 1999.Medicaid is administered and financed jointly by the federal government and the states, although the federal government pays for over 50 percent of aggregate program expenditures (U.S. Government Printing Office, 2002). There is a good deal of variability in methods of health care delivery and financing across states. Medicaid programs rely extensively on private-sector health care providers, managed care plans, and community health centers to deliver services and, to a lesser degree, state, county, or other publicly owned facilities or programs. Nationwide, over half of the total Medicaid population is enrolled in Medicaid managed care arrangements. Institutionalized, disabled, dually eligible, and elderly beneficiaries are most likely to receive services through FFS payment arrangements.The majority of Medicaid beneficiaries are children (54 percent), most under the age of 6 (see Figure 2-3). Each year, over one-third of all births in the United States are covered by Medicaid. While a minority of the program in terms of population (26 percent), the aged/blind/disabled account for 71 percent of program expenditures. Over half of Medicaid expenditures are for long-term care services, with the majority going to institutional long-term care providers (Centers for Medicare and Medicaid Services, 2000a).While coordinated collection of Medicaid data from the states is lacking, other data sources indicate a substantial prevalence of chronic condi-Suggested Citation:"2 Overview of the Government Health Care Programs." Institute of Medicine. 2003. Leadership by Example: Coordinating Government Roles in Improving Health Care Quality. Washington, DC: The National Academies Press. doi: 10.17226/10537.FIGURE 2-3 Distribution of persons served through Medicaid and payments by basis of eligibility, fiscal year 1998.NOTE: Disabled children are included in the aged, blind and disabled category.SOURCE: Centers for Medicare and Medicaid Services, 2000a.tions in the program. These conditions include asthma, diabetes, neurological disorders, high blood pressure, mental illness, substance abuse, and HIV/AIDS (Centers for Medicare and Medicaid Services, 2001c; Medical Expenditure Panel Survey, 1996; Westmoreland, 1999).STATE CHILDREN’S HEALTH INSURANCE PROGRAM3Designed as a joint federal-state program, SCHIP was created in 1997 to provide health insurance to poor and near-poor children through age 18 without another source of insurance. Approximately 4.6 million children were enrolled in SCHIP as of fiscal year 2001 (Centers for Medicare and Medicaid Services, 2000b). SCHIP is targeted to children with incomes that exceed Medicaid eligibility requirements but remain under 200 percent of the federal poverty level (FPL) (Rosenbach et al., 2001). Some states recognized American Indian and Alaska Native tribes. IHS currently provides health services to approximately 1.4 million American Indians and Alaska Natives belonging to more than 557 federally recognized tribes in 35 states.The provision of these health services is based on treaties, judicial determinations, and acts of Congress that result in a unique government-to-government relationship between the tribes and the federal government. IHS, the principal health care provider, is organized as 12 area offices located throughout the United States. These 12 areas contain 550 health care delivery facilities operated by IHS and tribes, including: 49 hospitals; 214 health centers; and 280 health stations, satellite clinics, and Alaska village clinics. Almost 44 percent of the $2.6 billion IHS budget is transferred to the tribes to manage their own health care programs.Poverty and low education levels strongly affect the health status of the Indian people. Approximately 26 percent of American Indians and Alaska Natives live below the poverty level, and more than one-third of Indians over age 25 who reside in reservation areas have not graduated from high school. Common inpatient diagnoses include diabetes, unintentional injuries, alcoholism, and substance abuse.BROAD TRENDS AFFECTING THE NEEDS AND EXPECTATIONS OF BENEFICIARIESIn identifying ways to improve the quality enhancement processes of government health care programs, it is important to understand both the needs and expectations of today’s beneficiaries and the trends likely to affect these needs and expectations in the future. As beneficiaries’ needs and expectations evolve over time, so, too, must the government health care programs. This section highlights two important trends: the increase in chronic care needs and expectations for patient-centered care.Chronic Care NeedsTrends in the epidemiology of health and disease and in medical science and technology have profound implications for health care delivery. Chronic conditions (defined as never resolved conditions, with continuing impairments that reduce the functioning of individuals) are now the leading cause of illness, disability, and death in the United States and affect almost half the U.S. population (Hoffman et al., 1996). Most older people have at least one chronic condition, and many have more than one (Administration on Aging, 2001). Fully 30 percent of those aged 65–74, and over 50 percent of those aged 75 and older report a limitation caused by a chronic condition (Administration on Aging, 2001). The proportion of children and adolescents with limitation of activity due to a chronic health condition more than tripled from 2 percent in 1960 to over 7 percent in the late 1990s (Newacheck and Halfon, 1998).Thus, the majority of U.S. health care resources is now devoted to the treatment of chronic disease (Anderson and Knickman, 2001). This trend is strongly reflected in the government health care programs. In the Medicare and VHA programs, most of the beneficiaries have multiple chronic conditions. Diseases such as asthma, diabetes, hypertension, cancer, congestive heart failure, and mental health and cognitive disorders are important clinical concerns for all or nearly all of the programs.The increasing prevalence of chronic illness challenges systems of care designed for episodic contact on an acute basis (Wagner et al., 1996). Hospitals and ambulatory settings are generally designed to provide acute care services, with limited communication among providers, and communication between providers and patients is often limited to periodic visits or hospitalizations for acute episodes. Serious chronic conditions, however, require ongoing and active medical management, with emphasis on secondary and tertiary prevention. The same patient may receive care in multiple settings, so that there is frequently a need to coordinate services across a variety of venues, including home, outpatient office or clinic setting, hospital, skilled nursing facility, and when appropriate, hospice.There is mounting evidence that care for chronic conditions is seriously deficient. Fewer than half of U.S. patients with hypertension, depression, diabetes, and asthma are receiving appropriate preventive, acute, and chronic disease management services (Clark, 2000; Joint National Committee on Prevention, 1997; Legorreta et al., 2000; Wagner et al., 2001; Young et al., 2001). Health care is typically delivered by a mix of providers having separate, unrelated management systems, information systems, payment structures, financial incentives, and quality oversight for each segment of care, with disincentives for proactive, continuous care interventions (Bringewatt, 2001). For individuals with multiple chronic conditions, coordination of care and communication among providers are major problems that require immediate attention.There are many efforts under way to develop new models of care capable of meeting the needs of the chronically ill. For example, Healthy Future Partnership for Quality, an initiative in Maine now in its fifth year, enrolls insured individuals (from leading health plans and the state Medicaid program) and uninsured individuals (covered by a 10 percent surcharge on the fee for each insured participant and paid by insurance companies) with chronic illness in an intensive care management program that provides patient education, improved access to primary care and preventive services, and disease management (Healthy Futures Partnership for Quality Project, 2002). The diabetes telemedicine collaborative in New York State (IDEATel, 2002) is a randomized controlled trial supported by CMS and others. It involves 1,500 patients, half of whom participate in home monitoring (using devices that read blood sugar, take pictures of skin and feet, and check blood pressure), intensive education on diabetes, and reminders and instructions on how to manage their disease.The changing clinical needs of patients have important implications for government quality enhancement processes. These processes and the health care providers they monitor should be capable of assessing how well patients with chronic conditions are being managed across settings and time. This capability necessitates consolidation of all clinical and service use information for a patient across providers and sites, a most challenging task in a health care system that is highly decentralized and relies largely on paper medical records.Patient-Centered CarePatient-centered care is respectful of and responsive to individual patient preferences, needs, and values and ensures that patient values and circumstances guide all clinical decisions (Institute of Medicine, 2001). Informed patients participating actively in decisions about their own care appear to have better outcomes, lower costs, and higher functional status than those who take more passive roles (Gifford et al., 1998; Lorig et al., 1993, 1999; Stewert, 1995; Superio-Cabuslay et al., 1996; Van Korff et al., 1998). Most patients want to be involved in treatment decisions and to know about available alternatives (Guadagnoli and Ward, 1998); (Deber et al., 1996; Degner and Russell, 1988; Mazur and Hickam, 1997). Yet many physicians underestimate the extent to which patients want information about their care (Strull et al., 1984), and patients rarely receive adequate information for informed decision making (Braddock et al., 1999).Patient-centered care is not a new concept, rather one that has been shaping the clinician and patient relationship for several decades. Authoritarian models of care have gradually been replaced by approaches that encourage greater patient access to information and input into decision making (Emanuel and Emanuel, 1992), though only to the extent that the patient desires such a role. Some patients may choose to delegate decision making to clinicians, while patients with cognitive impairments may not be capable of participating in decision making and may be without a close family member to serve as a proxy. Patients may also confront serious constraints in terms of covered benefits, copayments, and ability to pay (discussed below under benefits and copayments)American Society of Internal Medicine (ACP-ASIM) Foundation, and the European Federation of Internal Medicine embodies three fundamental principles to guide the medical profession, including:Principle of Patient Autonomy. Physicians must have respect for patient autonomy. Physicians must be honest with their patients and empower them to make informed decisions about their treatment. Patients’ decisions about their care must be paramount, as long as those decisions are in keeping with ethical practice and do not lead to demand for inappropriate care (American Board of Internal Medicine et al., 2002, p. 244).The current focus on making the health care system more patient-centered stems at least in part from the growth in chronic care needs discussed above. Effective care of a person with a chronic condition is a collaborative process, involving extensive communication between the patient and the multidisciplinary team (Wagner et al., 2001). Patients and their families or other lay caregivers deliver much if not most of the care. Patients must have the confidence and skills to manage their condition, and they must understand their care plan (e.g., drug regimens and test schedules) to ensure proper and safe implementation. For many chronic diseases, such as asthma, diabetes, obesity, heart disease, and arthritis, effective ongoing management involves changes in diet, increased exercise, stress reduction, smoking cessation, and other aspects of lifestyle (Fox and Gruman, 1999; Lorig et al., 1999; Von Korff et al., 1997).Pressures to make the care system more respectful of and responsive to the needs, preferences, and values of individual patients also stem from the increasing ethnic and cultural diversity that characterizes much of the United States. Although minority populations constitute less than 30 percent of the national population, in some states, such as California, they already constitute about 50 percent of the population (Institute for the Future, 2000). A culturally diverse population poses challenges that go beyond simple language competency and include the need to understand the effects of lifestyle and cultural differences on health status and health-related behaviors; the need to adapt treatment plans and modes of delivery to different lifestyles and familial patterns; the implications of a diverse genetic endowment among the population; and the prominence of nontraditional providers as well as family caregivers.Although there has been a virtual explosion in Web-based health and health care information that might help patients and clinicians make more informed decisions, the information provided is of highly variable quality (Berland et al., 2001; Biermann et al., 1999; Landro, 2001). Some sites provide valid and reliable information. These include the National Library of Medicine’s Medline Plus sites (Lindberg and Humphreys, 1999); the National Diabetes Education Program, launched by the Centers for Disease Control and Prevention and the National Institutes of Health (U.S. Government Printing Office, 2001); and the National Health Council’s public education campaign. There are also notable efforts to provide consumers with comparative quality information on providers and health plans. Examples are the health plan report cards produced by the National Committee for Quality Assurance and by the Consumers Union/California HealthCare Foundation Partnership and nursing home quality reports produced by CMS (Centers for Medicare and Medicaid Services, 2001a; Consumers Union/California Healthcare Foundation Partnership, 2002; National Committee for Quality Assurance, 2002). These efforts are discussed further in Chapter 5. There is little doubt, however, that we are embarking on a long journey to determine how best to make valid and reliable information available to diverse audiences with different cultural and linguistic capabilities (Foote and Etheredge, 2002).In general, communication with consumers is enhanced through the use of common terminology, standardized performance measures, and reporting formats that follow common conventions. At the program level, the predilection of each government program to design and operate its health care quality enhancement processes independently is a serious problem.KEY PROGRAM FEATURESAlthough the focus of this report is on quality enhancement processes, the committee believes it important to acknowledge other important program features—such as benefits, payment approaches, and program design and administration—that influence quality. Just as the quality enhancement processes of the government programs are being assessed in this report, these other aspects of program design must be evaluated in the future for alignment with the objectives of those processes.Benefits and CopaymentsHealth insurance was established in the United States in the 1930s and 1940s as a way to help the average person cope with the high costs of hospital care (Stevens, 1989). Today hospital care, although still very expensive, consumes about one-third of the health care dollar, and other facets of health care, such as prescription medications (9 percent with a growth rate of 13.8 percent) have grown in importance (Centers for Medicare and Medicaid Services, 2002c; Strunk et al., 2002). Increased demand for these other facets of care reflects the growth in chronic care needs discussed earlier as well as new treatment options stemming from the extraordinary advances made in medical knowledge and technology, including minimally invasive surgery.The benefit package of an insurance program has a direct effect on the likelihood of patients receiving needed health care services (Federman et al., 2001). Although there are frequent changes in the benefit packages of the various government health care programs, these modifications have not always kept pace with the needs, especially the chronic care needs, of the populations being served (Bringewatt, 2001).When one assesses the extent to which the government health care programs provide coverage for benefits important to persons with chronic conditions, the results are mixed (see Table 2-2). The basic Medicare package, for example, generally does not cover outpatient prescription drugs or personal care, and coverage is very limited for preventive services, nursing home services, family counseling, and dietitian–nutritionist services. Medicare payment mechanisms are designed for acute care, often by a single provider; there is no Medicare payment mechanism that recognizes care delivered by a team of providers to an individual with multiple chronic conditions or that rewards prevention efforts such as extensive patient education for self-care.Other government programs offer important benefits in specific areas. VHA provides extensive mental health outpatient and inpatient services, especially for veterans with service-related disabilities. Medicaid provides residential care to the disabled and mentally retarded and long-term care for the elderly as a major part of program spending. Its benefit package is very comprehensive, including complex therapies for chronic conditions and congenital neurological disorders, such as cerebral palsy and Down syndrome, although states vary substantially in the scope of such benefits. Both Medicaid and SCHIP programs cover outpatient prescription medications. Note that IHS is not included in Table 2-2 because it is not an entitlement program or an insurance plan; therefore, it has no established benefit package (Indian Health Service, 2001). It is estimatedCost-sharing provisions are also important. Persons with chronic conditions are the heaviest users of health care services. Deductibles and especially copayments can be sizable for these individuals. Some government health care programs, such as VHA, have minimal cost-sharing provisions, while others, especially Medicare, make more extensive use of such provisions.Also important is how the different programs interpret “medical necessity.” Even when a service is covered, payment for that service to a particular patient can be denied because of failure to meet a medical necessity criterion. In some instances, the quantity and duration of certain repetitive services may be limited unless the person shows functional improvement, not just stability or a slowing of decline (Anderson et al., 1998).The committee believes that each of the six government health care programs should review its benefit package and medical necessity criteria to identify enhancements in coverage or cost sharing that would facilitate the provision of more appropriate care to today’s beneficiaries. Such analyses should be conducted under alternative financial scenarios, including budget neutrality and varying levels of growth in expenditures. Efforts should also be made to understand how well the benefit packages of various government health care programs meet the needs of vulnerable populations and how well these packages fit together for those who are dual- or triple-eligible.Payment ApproachesEfforts to improve quality of care will be far more effective if implemented in an environment that encourages and rewards excellence. Unfortunately, current methods of payment to health plans and providers have the unintended consequence of working against quality objectives. This is true for both capitated and FFS payment methods.Capitation is a payment arrangement in which health plans are paid a fixed amount for each enrollee under their care, regardless of the level of services needed by and actually provided to the person. Some health plans also pay physicians on a capitated basis for certain outpatient care, putting them at some degree of financial risk.Capitated payment rates are usually based on the average cost per enrollee of the enrolled group, often with adjustments for demographic characteristics (e.g., age and sex). Capitation rates are usually not adjusted for the health status of the enrolled population. Therefore, health plans and providers receive the same payment for someone who is less healthy and more likely to use a large number of services, such as a person with a chronic condition, as they do for someone who is healthier and likely to use no or fewer services during the year.Health plans or clinicians that develop exemplary care programs for persons with chronic conditions may, as a result, attract a disproportionate share of these individuals. Under capitated payment systems, this situation has a highly negative financial impact on the health plan and providers (Luft, 1995; Maguire et al., 1998). Persons with chronic conditions are more likely both to use services and to use a greater number of services during the year than those without chronic conditions. In 1996, for example, mean health care expenditures for a person with one or more chronic conditions were nearly 4 times the overall average ($3,546 versus $821) (Partnerships for Solutions, forthcoming). The average number of inpatient days per year is 0.2 for persons with no chronic conditions compared to 4.6 for those with five or more such conditions.Risk adjustment is a mechanism designed to ensure that payments to health plans and other capitated providers more accurately reflect the expected cost of providing health care services to the population enrolled. Capitated plans and providers caring for a population that includes less healthy, higher-cost enrollees should receive higher payments. As more states require their entire Medicaid populations, including those who are disabled and have high health care needs, to enroll in managed care, adjustment of payments becomes even more necessary to ensure quality of care for enrollees (Maguire et al., 1998). Some states have addressed this issue. Michigan, for example, has created a separately funded capitated option for children with special health care needs (Department of Health and Human Services, 2000).Numerous options exist for risk-adjusting payments, but their application in government health care programs has been limited (Ellis et al., 1996; Hornbrook and Goodman, 1996; Newhouse et al., 1997; Starfield et al., 1991). The Medicare+Choice program has initiated demonstration projects to pilot the application of capitated payments adjusted for health status (Centers for Medicare and Medicaid Services, 2000d).Regardless of whether the beneficiary is enrolled in an indemnity or capitated plan, the physicians on the front line of care delivery in the private sector are generally compensated under FFS payment methods (Center for Studying Health System Change, 2001; Institute of Medicine, 2001). FFS is the most common method of payment to physicians under Medicare, Medicaid, and SCHIP.Under FFS payment, physicians have strong financial incentives to increase their volume of billable services (e.g., visits and office-based procedures and tests). Sometimes the incentives of FFS or other physician payment methods are attenuated by incentives (e.g., bonuses) tied to performance (e.g., measures of safety, clinical quality, service), but this is not the norm. In a 1998–1999 survey of a nationally representative sample of physicians, fewer than 30 percent indicated that their compensation was affected by performance-based incentives, a result similar to findings from a survey conducted in 1996–1997 (Stoddard et al., 2002). When they are used, performance-based incentives are more likely to be tied to patient satisfaction (24 percent) and quality measures (19 percent) than to measures that may restrain care, such as profiling (14 percent).The principal “reimbursable event” under FFS is a face-to-face encounter between a physician and patient, which may or may not trigger other reimbursable events, such as diagnostic tests and minor office procedures. Services such as e-mail communications, telephone consultations, patient education classes, and care coordination are important for the ongoing management of chronic conditions, but they are not reimbursable events. Moreover, physicians who communicate with patients through e-mail or telephone to emphasize patient education, self-management of chronic conditions, and to coordinate care may experience a reduction in overall revenues if these uncompensated services have the effect of reducing patient demand for or time available to devote to reimbursable face-to-face encounters.There is no perfect payment method; all methods have advantages and disadvantages. FFS contributes to overuse of billable services (e.g., face-to-face encounters, ancillary tests, procedures) and underuse of preventive services, counseling, medications, and other services often not covered under indemnity insurance programs. Overuse, especially the provision of services that expose patients to more potential harm than good, is a serious quality-of-care and cost concern. On the other hand, capitated payments may contribute to underuse—the failure to provide services from which patients would likely benefit. This is especially true when there is a good deal of turnover among plan enrollees so that the long-term cost consequences of underuse tend to be borne by another insurer. Although particular payment methods may contain a bias towards underuse or overuse, it is important to note that the quality-of-care literature contains ample evidence of both phenomena occurring in both FFS and capitated payment systems, reinforcing the notion that payment is but one, albeit an important, factor influencing care (Chassin and Galvin, 1998).The committee believes enhancements can be made in both capitated and FFS payment approaches to encourage the provision of quality health care. It should also be noted that there are some promising efforts under way to design alternative payment approaches and evaluate their impact on quality. The National Health Care Purchasing Institute, a nonprofit research institute supported by The Robert Wood Johnson Foundation, has identified various incentive models that might be effective in motivation.The Buyers Health Care Action Group, an employer coalition in Minnesota, provides gold ($100,000) and silver ($50,000) awards to care systems for performance on quality improvement projects (Bailit Health Purchasing, 2002a)PacifiCare in California has developed a quality index that profiles providers on the basis of measures of clinical quality, patient safety, service quality, and efficiency. This information is used to reward providers on the basis of their performance, as well as to construct a tiered system of premiums, copayments, and coinsurance rates for enrollees that vary inversely with provider performance in terms of quality and efficiency (Ho, 2002)The Employers’ Coalition on Health in Rockford, Illinois, makes incentive payments to provider groups based on whether the group completes care flowsheets on 95 percent of its diabetic encounters and maintains hemoglobin A1c levels below 7.5 for the majority of patients. Incentive payments to medical groups have been approximately $28,000 per year ($3.60 per member per year) (Bailit Health Purchasing, 2002a)Blue Shield of California has introduced a variable cost-sharing model under which patients pay either an additional $200 copayment or 10 percent of the hospital’s fee each time they are admitted to a hospital that is not on Blue Shield’s preferred list. Blue Shield rates hospitals on the basis of measures of quality, safety, patient satisfaction, and efficiency (Freudenheim, 2002)General Motors’ value-based purchasing approach rates health plans according to their performance on various clinical quality measures, patient satisfaction measures, NCQA accreditation results, and cost-effectiveness measures, and adjusts employee out-of-pocket contributions so that those choosing the best-ranked plans have the lowest contributions (Salber and Bradley, 2001).It may be hoped that much more will be known about the impact of various financial and non-financial incentive models in the near future. The Robert Wood Johnson Foundation (National Health Care Purchasing Institute, 2002) has recently announced an initiative entitled “Rewarding Results,” which will provide support for payment demonstrations that reward improvements in quality. This initiative is being evaluated under an Agency for Healthcare Research and Quality contract.Program Design and AdministrationBenefits coverage and payment methods are among the most important design features of the six government health care programs reviewed in this report, but they are not the only ones that influence the likelihood of patients receiving high-quality care. Other important features include delivery system and provider choices, fluctuations in eligibility and delivery system options, and administrative efficiency.In some government health care programs, consumers have multiple options in terms of delivery system and choice of providers, while in others the options are more limited. Under Medicare, 87 percent of beneficiaries have chosen to enroll in FFS arrangements, which provide extensive choice of clinicians and hospitals. Most Medicare beneficiaries who live in metropolitan areas also have the option of enrolling in Medicare+Choice plans, enrollment that historically has been associated with enhanced benefits for little or no additional out-of-pocket expense. Enrollment in managed care is mandatory for the majority of the Medicaid population in most states, and in some instances, there is little or no choice of plan. DOD TRICARE, the VHA, and IHS programs are all structured to encourage, and in some cases require, use of their own health care delivery systems, which are similar to group or staff-model health plans.Studies of the clinical quality (in terms of both medical care processes and patient outcomes) in managed care and indemnity settings consistently find little or no difference between the two (Chassin and Galvin, 1998; Miller and Luft, 1993; Schuster et al., 1998). But it is clear that some consumers have strong preferences for one delivery system over another, and that most prefer to have choice (Gawande et al., 1998; Ullman et al., 1997). Limited choice of health plans may or may not seriously constrain the choice of clinicians and hospitals, since plan networks vary greatly in size and structure (Lake and Gold, 1999). In the private sector, there has been a pronounced trend in recent years toward larger networks of providers in response to consumer demand for more extensive choice (Draper et al., 2002; Lesser and Ginsburg, 2000). In the absence of comparative quality information on providers, consumers apparently equate choice with quality.The design and financing of some government health care programs result in frequent changes in eligibility and delivery system options that disrupt patterns of care delivery. Since the implementation of changes in Medicare payment policies stemming from enactment of the Balanced Budget Act of 1997, there has been a steady erosion of health plans participating in the Medicare+Choice program. Since 1998, 2.2 million Medicare beneficiaries have been involuntarily disenrolled from Medicare+Choice plans, affecting approximately 5 percent of beneficiaries in 2002. Of the health plans that remain, the proportion offering prescription drug coverage during the period 1999 through 2002 dropped from 73 to 66 percent, and the proportion charging zero premiums to beneficiaries from 62 to 39 percent (Gold and McCoy, 2002). Under Medicaid, beneficiaries move in and out of the program as their eligibility changes in accordance with minor fluctuations in income, causing beneficiaries to lose contact with providers and further complicating the tracking of care. For many eligible children and women, the re-enrollment process is initiated only when they present themselves at a hospital or physician’s office seeking service for an illness; this process results in adverse selection in capitated plans.Lastly, efforts must be made to reduce administrative burden. In recent years, there has been a steady growth in regulatory requirements in most if not all of the government health care programs. The Secretary’s Advisory Committee on Regulatory Reform estimates that about two regulations are published each week, resulting in the promulgation of more than 120 regulations in each of the last two years (Wood, 2002). The American Hospital Association (2002) has identified 100 new or revised regulations pertaining to hospitals that have been issued by federal agencies since 1997, of which 57 are significant. Some of these regulations relate to quality enhancement processes and data requirements, while others relate to such areas as payment, patient confidentiality and privacy, and fraud and abuse.The current practice of promulgating separate regulations for each type of provider (e.g., hospital, home health agency, nursing home, ambulatory care provider) has produced excessive burdens and barriers to the provision of coordinated care. Unnecessary regulations frustrate clinicians and reduce the time available to devote to patient care. They can also interfere with the movement of individuals across settings, thus hampering the transition from hospital to nursing home to home health agency, for example.Regulatory burden must also be fair. For example, the quality measurement and reporting requirements applied to Medicare+Choice plans should be applied to FFS Medicare institutional and individual providers. These issues are addressed further in Chapters 3 and 4.In summary, while technically comprising separate areas of analysis, the issues of benefits, payment, program design, and administration are inextricably linked to achieving consistent levels of high-quality care.