Under the Medicare Modernization Act (MMA), the new Medicare prescription drug benefit (aka, Medicare Part D) includes a retiree subsidy to encourage the continuation of employer-sponsored drug plans for retired Americans.

Here are some excellent resources to help employers understand the Medicare retiree subsidy:

- White Paper on Retiree Drug Coverage Under Medicare. From Centers for Medicare and Medicaid Services (CMS). CMS also provides a brief summary of the purpose of the retiree subsidy.

- Covington & Burling provides an excellent, reader-friendly summary of the retiree subsidy and the relevant provisions of the CMS proposed rule (PDF).

- Hewitt Associates has an detailed overview and analysis of the retiree drug subsidy (PDF).

- Aon Consulting Worldwide offers a brief summary of the issues for employers (PDF).

- Last year, the American Academy of Actuaries and the Society of Actuaries held an excellent briefing for Congressional staff on how to determine the actuarial equivalence of Medicare prescription drug plans (PDF).

- For folks needing background on the bigger picture, the National Business Coalition on Health (NBCH) provides an excellent guide for employers on managing prescription drug benefits (PDF) and an informative white paper on trends in pharmaceutical benefits (PDF).

In an excellent new piece for HealthLeaders, E. Preston Gee asks an fascinating question with wide ranging implications for health care: "What if the mass merchandising giants like Wal-Mart or Target got into the healthcare delivery business in a big way?"

Highly efficient, consumer friendly, and tech-savvy companies like Wal-Mart and Target stand in sharp contrast to health care delivery. Many health strategists, including myself, have noodled on what it would take for hospitals and clinics to adopt consumer-focused, competitor-savvy practices of high performing industries like these "big box" retailers.

As Mr. Gee notes, the big retailers may never enter health care but that is beside the point. Health care providers must adapt to the new market realities. Employers and other demand-side players expect an end to the inefficiency, poor quality, and high error rates that plague much of health care delivery. After providing thoughtful advice on how they can adapt, Mr. Gee calls on health care executives to "lead their organizations into and through this new era of heightened expectations and emerging market-driven dynamics."

Preston Gee has written widely on market-driven, consumer-oriented strategies in health care. His latest book is Service Line Success: Eight Essential Rules. It shows how provider execs can apply the principles of service line management to meet tough market challenges. Service line / product line management is proven and often profitable in other sectors but rare in health care.

States will play a key role in the new Medicare prescription drug benefit. This includes financing much of the drug costs for low-income seniors and persons with disabilities. Here is some useful information for state leaders:

- Implications of the New Medicare Prescription Drug Benefit for State Medicaid Budgets. From Kaiser Family Foundation (KFF).

- Implementing the New Medicare Drug Benefit: Challenges and Opportunities for States. From National Health Policy Forum (NHPF).

- Medicare Drug Benefit and Issues for Dual Eligibles with Disabilities and Serious Conditions. From KFF.

- The "Clawback": State Financing of Medicare Drug Coverage. From KFF.

- Medicare Part D: Financial Issues for States. From the American Academy of Actuaries.

- Overview of Dual Eligible Beneficiaries. From Medicare Payment Assessment Commission (MedPAC).

- Fundamentals of the Prescription Drug Market. From NHPF.

There is ample evidence America has a serious problem with poor quality health care and high rates of preventable medical mistakes.

Thankfully, there is no shortage of caring professionals motivated to improve care and the problems are solvable. As with any effort to improve performance, measurement is the first step to improving care and reducing medical mistakes. As I often remind clients and colleagues: you can't fix what you can't see.

However, measuring hospital and physician quality is complex. And too often efforts to measure quality get bogged down - perfect becomes the enemy of good and analysis becomes the enemy of action.

Quality Health Care: A Guide to Developing and Using Indicators serves as an excellent, up-to-date guide on how to design and implement an effective quality measurement program, particularly in hospitals. While paying close attention to the importance of clinically sound measurement, this guide focuses on providing practical and actionable advice. Specifically, the book provides:

1. Helpful overview on quality measurement, the increasing demands of consumers and purchasers for public disclosure of provider quality, and the information consumers find most valuable in their decision making.

2. Practical advice on how to select quality indicators, collect and organize data, and create a dashboard to monitor progress.

3. Technical guidance on how to analyze data effectively, including how and when to accept limitations and variations.

4. Cases studies on how to use quality measurement to improve both clinical and operational performance.

The author, Robert Lloyd, PhD, is executive director of performance improvement at the Institute for Healthcare Improvement and a highly regarded expert in quality measurement.

Escape Fire is collection of compelling speeches by one of America's leading crusaders for health care quality and patient safety - Don Berwick, MD, founder and president of the Boston-based Institute for Healthcare Improvement.

Each year, IHI hosts the National Forum on Quality Improvement in Health Care. The influential annual event draws 4,000 health care leaders from around the world in person and 6,000 via satellite.

In many ways, Dr. Berwick's keynote lectures set the tone for quality improvement efforts across the US. With an effective blend of common sense, real-life stories, persuasive metaphors, and out-of-the-box thinking, Dr. Berwick's presentations make for fascinating reading for anyone interested in improving America's $1.7 trillion health care system.

For example, in his 1999 keynote, Dr. Berwick recounts the 1949 Montana wildfire that killed thirteen young men and applies lessons learned from the catastrophe to today's health care system.

In the typical hospital, nurses spend only about 30 percent of their time on patient care. The remaining 70 percent of their long days are spent largely on paperwork. This lopsided situation is seen as a major cause of poor quality, patient dissatisfaction, nurse turnover, and operating inefficiency.

Thanks to the ideas of the Institute for Healthcare Improvement and funding from The Robert Wood Johnson Foundation, a dozen of the nation's most innovative hospitals are studying ways for nurses to spend the bulk of their time taking care of patients.

Transforming Care at the Bedside, a two-year pilot program, is designed to improve the patient-caregiver relationship. The effort will look at practical ways to reduce paperwork, improve teamwork among nurses and physicians, reduce medication errors, increase the quality of bedside care, and increase job satisfaction and retention.

If President Clinton had to wait weeks or months for urgent bypass surgery like patients in Canada or the UK, he would be dead. Mr. Clinton's physicians said he was at serious risk of a major, life-threatening heart attack. He needed the bypass quickly and got it.

In Canada, patients needing urgent attention wait over three weeks to see a cardiologist and another two weeks or more to have an urgent bypass operation. If the surgery is not absolutely ugent, add a couple more months. Waiting lines in other government-run health systems are even longer.

In an excellent op-ed in the New York Post, Michael Cannon, director of health policy studies at the Cato Institute, shows how the former president should be thankful his massive health reform proposal of 1993 never passed.

President Clinton was released from the hospital today and is recuperating at home. We all wish him well for a quick and full recovery.

Health insurers, whether commercial health plans or public programs like Medicaid and Medicare, only wish to pay for care that is necessary. Every day they make decisions on what is and is not "medically necessary."

Gov. Phil Bredesen has proposed a new definition of medical necessity for TennCare, Tennessee's long-troubled Medicaid program. To be covered by TennCare, a health care service must be (1) required to diagnose and treat an enrollee's medical condition, (2) safe and effective, (3) the least costly alternative course of treatment adequate to address the enrollee's medical condition, and (4) not experimental or investigational.

Beneficiary advocates, who have a long and effective history of challenging TennCare in federal court, are concerned that the new definition is vague and overly restrictive. The Governor has promised to further refine it in regulations to minimize unintended consequences.

All this reminded me of the definition of medical necessaity I wrote for the Wisconsin Medicaid program in the 1990's. While no definition is perfect, you might find this one interesting:

“Medically necessary” means service or item that is:

(a) Required to prevent, identify or treat a recipient’s illness, injury or disability; and

(b) Meets the following standards:

1. Is consistent with the recipient’s symptoms or with prevention, diagnosis or treatment of the recipient’s illness, injury or disability;

2. Is provided consistent with standards of acceptable quality of care applicable to the type of service, the type of provider and the setting in which the service is provided;

3. Is appropriate with regard to generally accepted standards of medical practice;

4. Is not medically contraindicated with regard to the recipient’s diagnoses, the recipient’s symptoms or other medically necessary services being provided to the recipient;

5. Is of proven medical value or usefulness and is not experimental in nature;

6. Is not duplicative with respect to other services being provided to the recipient;

7. Is not solely for the convenience of the recipient, the recipient’s family or a provider;

8. With respect to prior authorization of a service and to other prospective coverage determinations made by the department, is cost–effective compared to an alternative medically necessary service which is reasonably accessible to the recipient; and

9. Is the most appropriate supply or level of service that can safely and effectively be provided to the recipient.

Rick Wagoner, chairman and CEO of General Motors, is calling on both political parties to work together to solve the nation’s crisis of health care costs. US manufacturers, especially in the heavily unionized auto industry, are at a severe competitive disadvantage to their European and Asian counterparts. Foreign manufacturers benefit from taxpayer-financed health insurance, fewer retirees, and a younger workforce.

General Motors will spend $4.8 billion this year on health care for its one million retirees, employees, and their dependents. While unions are pushing for government-run, taxpayer-financed health care, Wagoner appears to favor a middle path that includes transparency of provider performance, a greater role for consumers, and incremental, yet major reforms to existing health programs.

To address the enormous deficiencies in quality of health care, health care organizations need to make a business care for improvement. That is, they need to demonstrate a compelling rationale for the significant financial investments necessary to improve quality and reduce medical errors.

To make decisions, businesses traditionally look at the potential return on investment (ROI). However, ROI projections are tough to make in health care. Data sources are limited and decision support tools are often outdated or nonexistent. Most health services research is purely academic, offering no actionable or timely advice to decision makers. The fragmented delivery system means that organizations that invest in performance improvement benefit other players more than themselves. Finally and most critically, incentives are terribly misaligned. Providers are paid for how much they do, not how well they do it. When patient care improves and medical mistakes decline, provider revenues can drop like a stone.

The savvy folks at Bailit Health Purchasing LLC offer a new framework for building a business care to invest in quality improvement. In an excellent new issue brief published by The Commonwealth Fund, Michael Bailit, MBA and Mary Beth Dyer, MPP provide “a mechanism for an organization to consider a broad set of factors affecting a business case for quality.”

Taking into account key financial, strategic, and organization factors, they offer 10 practical business care arguments. By looking beyond bankable dollars, hospitals, clinics, and other providers can create compelling business cases to improve their performance.