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In Retooled Health-Care System, Who Will Set Limits?

Scott Wallace, a Bush administration official who is now the Batten Fellow at University of Virginia's Darden School of Business, said factoring cost into treatment decisions would create the same backlash that HMOs encountered in the 1990s. "A mother of five with cancer wins against any rationing scheme ever created," he said.

Many physicians and health care-experts argue, though, that it is precisely by marshaling better research data, partly with the help of electronic health records, that a case can be built for limiting certain treatments. If doctors were to demonstrate to heart disease patients how few advantages coronary artery bypass graft surgery has over less expensive treatments, for example, many patients probably would not elect to undergo the surgery.

At Kaiser Permanente, the California-based health network that relies heavily on such research, Permanente Foundation Executive Director Jack Cochran said fears of treatment denials were exaggerated. Doctors, he said, need to be more realistic about not raising vain hopes about expensive, last-ditch treatments: "Comparative effectiveness is a hot-button issue because everyone sees their pieces of pie coming under scrutiny. But all of our pieces should be under scrutiny."

All signs in Washington suggest that cost considerations will be kept at arm's length as health-care legislation moves forward. Carolyn M. Clancy, director of the Agency for Healthcare Research and Quality, said the emphasis will be on clinical outcomes alone.

The draft legislation in the Senate Health and Education Committee, meanwhile, stresses that any research findings "shall not be construed as mandates for payments in coverage and treatment."

A senior administration official who requested anonymity to speak candidly acknowledged that while research might point to obviously wasteful practices, the reform would for the time being not get at the "harder question" of what to do "if new technology does work better and reduces risks but costs a lot more, and how to evaluate that."

The other half of the "saying no" challenge, reformers agree, is giving providers the right incentives and structures to deliver high-quality care as affordably as possible. The goal is to spread the "accountable care" models featured by the Mayo Clinic and others, where a network of providers works closely together to coordinate a patient's care, increasing the odds of keeping them healthy and decreasing unnecessary procedures.

Massachusetts, which has achieved near-universal health coverage but is struggling with high costs, is considering major changes in this direction. A legislative commission is about to release a report recommending that the state goad providers into joining networks that would receive payments for each enrollee, rather than for each procedure delivered.

Proponents say it would differ from the "capitation" approach -- fixed payments for each member -- used by the HMOs in the past because there would be more focus on performance and long-term value than on simply keeping costs down.

Skeptics say such a system would force the state's many solo practitioners or small groups of physicians into big networks and would renew complaints from the HMO era about limiting patients' choice. In Massachusetts, for instance, most parents with a sick child would demand access to Children's Hospital; and most cancer patients would want to go to the Dana-Farber Cancer Institute, no matter what network those were in.

The plans being considered in Washington do not go nearly as far in seeking to change providers' spending habits. They contemplate changing some Medicare payments from fee for service to a "bundling" system in which providers would be paid for an entire episode of care, giving them an incentive to reduce repeat hospital admissions. Another idea is to empower the Medicare advisory panel whose recommendations now tend to be ignored by Congress, or to create a separate, Federal Reserve-like entity to make tough decisions about federal health-care spending.

John C. Goodman, president of the conservative-leaning National Center for Policy Analysis, questions this approach, citing new research by his group that shows that areas with high Medicare spending do not correlate with high medical spending overall, suggesting that fixing excesses in Medicare will not necessarily translate to the broader system.

Henry J. Aaron of the Brookings Institution, who co-wrote a 2006 book called "Can We Say No?" said that real cost reform would mean giving all physicians incentives to leave behind the fee-for-service model for accountable care networks. The transition will take a long time, he said, and at first, people could still sign up for fee-for-service plans. But they would see their neighbors getting good care at a much lower price and hopefully switch over themselves.

"We're just not going to be able to all have everything . . . regardless of cost," Aaron said.

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