U.S. Health and Human Services Secretary Kathleen Sebelius paid a visit to Mayo Clinic in Rochester today, taking a look at how it’s using modern technology to track health care information. This up close and personal view provided her a chance to examine how the famed medical facility produces better health outcomes at lower costs than most hospitals in the country.

Secretary Sebelius’s visit serves as a reminder of what is going right with health care in Minnesota. And indeed, there is a lot to celebrate. However, as the cost of health care rises, most Minnesota medical facilities will not be able to keep pace with Mayo in delivering healthy outcomes at an affordable value unless the payment system changes.

Recognizing these flaws, the Obama administration is granting $400 million to hospitals nationwide that have kept down Medicare costs.  The bonus is intended to make up for a shortcoming in the Medicare payment system, where providers are paid per procedure, which research finds leads to more expensive but not necessarily healthier outcomes.

Mayo has been a sturdy rock against a roaring current of health care that incentivizes procedures over prevention, focusing instead on performance-driven and outcome-based measures.  Fortunately, the new health care law, passed last March, includes some experiments with such methods. A “bundling” program under Medicare will pay hospitals and clinics per-patient with minimum outcomes required and allow the health care providers to pocket any money they can save by focusing on prevention and wellness (less expensive) over procedures (more expensive).

Minnesota has played a proud role as a leader of smart, affordable, and effective health care in the past. Moving forward, we need to make maintaining that role a priority.

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It’s not news that our population is aging, that baby-boomers are graying, and we will have to find a way to provide health care for a larger population that will live longer than their forefathers and do so with chronic illness that will require long-term care. Those of us who have elderly family members or have thought about how we would like to spend our old age are also not surprised to find that many prefer to live at home rather than in an institution.

What may be news to us though, is that the actual cost of keeping the elderly living at home is much less than moving them to an assisted living facility or nursing home. Of course, it is hard to find that information if you, as a loved one, call around to inquire about the best options for your family. The system is not set up for at home living, and thus Medicare, Medicaid and private insurance often make institutions the more affordable option for many.

In order to provide high quality home care, there needs to be a system in place that incentivizes home visits by all health care providers, including the physicians. The system also needs to recognize the indirect cost to the providers from travel time and needs to explore the use of telemedicine to augment the providers’ home visits.

In October 2008, Minnesota Medicine ran a story about a doctor who set up a practice based on home-visits and it highlights the benefits, needs and obstacles in making this a common practice. In Europe, the move toward heavier reliance on home care has also revealed the need for easy-to-use, integrated technology to ensure quality of care. These are lessons we need to keep in mind when considering our own health care policies.

Improving home care and increasing access to it is just one of many important aspects of a big-picture approach to health care. Ensuring access to care for indigent populations, the working poor, our elderly and rural populations also cannot be ignored. Looking at the big picture and being innovative in how we approach health care will ultimately yield better care at a lower cost.

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Eager to pass its health care reform bill, the U.S. Senate dropped the public option in favor of expanding Medicare. The main changes would be to lower the age of eligibility from 65 to 55 and raise the cap on income eligibility to from around $10,000 to $13,000 (the House proposed upper limit would be $15,000).

Based on the most current census data, the increase in percentage of Minnesotans eligible based on the proposed changes in age limits would grow from 12% to 20%. The percentage of Minnesotans that would qualify for Medicare based on income would increase from close to 7% to 12%. In lieu of a government run plan, nonprofit insurance companies would provide plans that would be nationally accessible. Already tasked with helping federal employees and members of Congress decide on health care plans, the Office of Personnel Management would act as a clearinghouse for information on available plans.

Minnesota’s senators have been very active in the ongoing legislative health care reform battle royale in Washington. Senator Amy Klobuchar raised concerns about increasing the number of enrollees to Medicare when its trust stated that it will run out of money in less than ten years without the added clientele. The American Hospital Association issued a similar statement on their website. One of the problems with increasing Medicare enrollment is the fact that Medicare does not pay medical providers in full for procedures and the hospitals and clinics are forced to pass on the costs to private insurance plans.

Senator Al Franken addressed the issue of health care costs by proposing an amendment that would require that 90% of premiums are applied to patient services and restrict administrative costs to 10%. He argues that his amendment would shift the focus to patient care and diminish financial incentives for shareholders and executives of private insurance companies.

His legislation is based on the Minnesota model where nonprofit health care policies spend an average of 91% of premiums on patient care. While the spirit of the amendment is on target by shifting the raison d’être of insurance companies from profits to patient care, its disregard for the size of insurance companies could result in failing to accomplish its goal. The Congressional Budget Office found that administrative costs as a percentage of premiums amongst the largest insurance companies were far less than smaller insurance companies.

With Minnesota’s non-profit providers already in place and an expansion of Medicare, federal health care reform will likely benefit our state. However, the jury is still out on what the final package will include.

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Here’s your Wednesday news roundup:

Star Tribune: Lori Sturdevant: Life after ‘no new taxes’

An honest analysis of what needs to be done.

Pioneer Press: St. Paul, Minneapolis schools get flu-fighting hand sanitizer from Children’s Hospitals

It’s a good move. Schools are already facing tight budgets given the states billion dollar IOU. Hand sanitizer is a necessity that usually isn’t budgeted for.

MinnPost: Minnesota scores big win with new Medicare language in health care bill

This move guarantees Minnesota will be rewarded for the strides we have made to ensure cost-effective care.

“The proposal, which would be budget neutral, would establish a new payment structure for Medicare based on quality of care. If enacted, it would represent the most significant change to the Medicare payment model since the government-run program went into effect in 1966.

Medicare, which covers those age 65 and older, currently uses a fee-for-service model. The result is that states that provide fewer health care services — such as Minnesota, Wisconsin, North Dakota, Washington and Oregon — receive less money. At the same time, states that provide a greater volume of services — such as Florida, New York, California and Texas — receive reimbursements that can be more than double those paid to other states.”

MPR: Pawlenty’s current climate change stance differs from past

Mankato Free Press: Stimulus aids with new fire halls

Star Tribune: Tubby Smith pushes health insurance reform

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