Pawlenty touts success, but health care savings are slim

Tim Pawlenty
Former Gov. Tim Pawlenty at LifeWay Christian Store in Woodbury, Minn., on January 18, 2011. Pawlenty signed copies of his book "Courage to Stand" at the religious bookstore.
MPR Photo/Nikki Tundel

As he prepares for a possible run for the presidency, former Gov. Tim Pawlenty has been touting the success of Minnesota's home-grown health reforms during his national book tour.

Pawlenty, a Republican, said the state has designed a good blueprint for reining in costs that the rest of the nation should follow.

While it's true that Minnesota has been experimenting with new ways of paying for care, some health care observers believe it's a stretch to say that Minnesota's experiments have had much of an effect on costs.

MPR News picked out two of Pawlenty's Minnesota reform claims and examined them.

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During an interview on National Public Radio last month, Pawlenty sharply criticized the federal health care overhaul, saying it largely focuses on expanding access and will do virtually nothing to control costs. In Minnesota, he said, it's the other way around. Getting a handle on out-of-control medical costs comes first.

"Don't just say we're going to pay you for endless volumes of procedures," Pawlenty said. "We've got to start paying them for better health, and better health care outcomes. And that's what we've done in Minnesota. And when you do those kinds of things, even in the primitive or early-stage ways that we've done it, it's extremely promising and it works."

Pawlenty was referring to an experiment in Minnesota that bundles medical services into so-called "baskets of care."

Providers who create baskets for conditions like diabetes or asthma receive a single, comprehensive payment that covers all of their services -- rather than individual payments for individual office visits.

Bundling care into baskets or packages gives providers an incentive to get their patients healthy as soon as possible. If they do, they'll make more money. If they don't, they're on the hook for any costs that exceed the bundled payment.

But so far, Minnesota's baskets-of-care experiment hasn't really lived up to its potential.

"I think what you ended up with in some cases was some of the baskets being a little bit less bold," said Julie Sonier, a senior research fellow at the University of Minnesota's School of Public Health.

Sonier said no providers have been willing to try out the original baskets of care that were created by the state. Some have worked out their own basket agreements with private health plans. But those providers had a lot of influence over how their basket was structured.

For example, Sonier said, the obstetrics basket only includes prenatal care -- not the delivery of the baby, which can be a very costly procedure.

"Providers don't really want to be on the hook for financial risk associated with that," she said. "So it includes the parts of the care that are more predictable and stable. That's the risk they were comfortable with taking and not necessarily so much with some of those bigger risks."

Excluding delivery greatly reduces the potential for saving money on an obstetrics care basket.

The state hasn't been able to track any cost-savings associated with baskets of care because all of the projects so far have been private market arrangements. Some insurers and providers have told Sonier that they still see a lot of potential in the concept. But no one has publicly reported any significant health care savings at this point.


Pay-for-performance incentives are another way Minnesota is trying to save money on health care. During his NPR interview, Pawlenty said doctors who consistently deliver the best outcomes should be rewarded with bonus payments.

"We're interested in 'did this person get optimal care? Did they get better quicker?'" Pawlenty said. "And if they did, and you get more and more of your patient load meeting those kinds of criteria, we'll pay you more as a provider."

The pay-for-performance program has motivated some providers to improve their care. But, state Sen. Linda Berglin said the majority of doctors have not been inspired to compete for the relatively small pot of money that's available for bonus payments. Berglin, DFL-Minneapolis, said a lot more doctors will need to get behind the program before the state will notice any savings.

"I don't think it saved any. I think it's cost us," Berglin said. "These payments were on top of what they were getting before."

That doesn't mean Berglin thinks either of these two Minnesota health reform experiments are bad ideas. As a lawmaker she helped get some of these initiatives rolling. But she said the reality is that they're small projects that at best have had little effect.

Berglin believes the federal health care law championed by President Obama will be a much more effective tool for capturing health care savings. She said while the legislation promotes pilot programs that are very similar to Minnesota's, those experiments will reach many more doctors and patients.


Pawlenty dismissed the potential of national reform law.

"Well, it has all kinds of little pilot projects in it, but fundamentally that's not the direction the law or the health care delivery system's going to go," Pawlenty told NPR.

Former U.S. Sen. Dave Durenberger disagrees. He thinks the national reforms are the only way to give Minnesota's initiatives some teeth.

Durenberger, a Republican, said Minnesota has been tinkering with programs to track and measure health outcomes for at least 20 years, but the the state still hasn't managed to make much of a dent in health care costs.

"You would think we'd be way ahead of everybody else's curve," he said. "But unfortunately, we're not there yet. So we're still experimenting here in 2011. We're still at the demonstration level. We're still at the experimentation level."

Durenberger said Minnesota's health reform experiments have been hindered by much larger forces that shape the national health care market.

For one, states are in a fierce competition with each other to recruit the very best doctors. That automatically inflates the price of care for everyone. In addition, state reforms can't change the way federal payments for programs like Medicaid are structured. So they can't save much money on the programs that eat up the bulk of their spending.

That, at least, is something Durenberger said the new federal health care law will attempt to fix, which is why he doesn't understand Pawlenty's criticism of the legislation.

"The idea that we can change all of these programs on our own without the help of federal financing and the changes in federal policies or national policies is a bit beyond me," Durenberger said.

But Scott Keefer, vice president of policy and legislative affairs at Blue Cross Blue Shield of Minnesota, understands Pawlenty's concerns with the federal law.

Keefer said he intent of the federal legislation may support innovative reforms. But he said following through on those dramatic changes will require a lot of cooperation -- something that is far from assured in Congress.

"The record of Washington is not one that is sort of admirable if you will in terms of moving forward on these broad elements of change," Keefer said. "And I think the question is whether Congress will support or whether Congress will impede efforts to move forward."

In the meantime, Keefer thinks it is appropriate for former Pawlenty to showcase Minnesota's health reform ideas -- even if the programs are still in their infancy. He believes the state will continue to strengthen and expand its experiments, and ultimately prove that the ideas can save substantial money.