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1992.12.11 :  Medicare Projects -- Coronary Artery Bypass Surgery

Contact:  Anne Verano (202) 690-6145
December 12, 1992

       The Health Care Financing Administration has added three
hospitals in Texas, Indiana and Oregon to a pilot Medicare program
aimed at reducing the high costs of coronary artery bypass surgery
nationwide, HHS Secretary Louis W. Sullivan, M.D., announced today.
       The new facilities are St. Luke's Episcopal Hospital in
Houston, Texas; Methodist Hospital of Indiana in Indianapolis; and
St. Vincent Hospital and Medical Center in Portland, Ore.
       "This continuing demonstration will assess the potential
benefits of negotiating an all-inclusive package price for heart
bypass surgery, while maintaining high-quality care," Dr. Sullivan
said.
       William Toby Jr., who directs the Medicare program as HCFA's
acting administrator, said that "HCFA has designed the
demonstration to help create positive incentives for health care
providers."
       Toby added, "The quality of care and outcomes for Medicare
patients are expected to improve at participating bypass centers,
while total costs to the Medicare program should drop
significantly."     
       The demonstration program began in spring 1991 with four
hospitals to test the feasibility of paying a negotiated package
price for hospital and physician services associated with this
heart surgery.  The original four facilities were St. Joseph's
Hospital of Atlanta, Atlanta, Ga.; St. Joseph Mercy Hospital in Ann
Arbor, Mich.; Ohio State University Hospital in Columbus, Ohio; and
University Hospital in Boston, Mass.
       The four hospitals are continuing in the program.  As of
October 1992, they had performed more than 1,800 surgeries under
the demonstration, with an estimated Medicare savings of over $7
million.
       HCFA selected the seven hospitals according to a
comprehensive set of criteria, which included the years and volume
of open heart surgery experience, comprehensiveness of pre-
admission review and quality assurance programs, intensity of post-
discharge patient follow-up, and the package price.
       Under the demonstration, beneficiaries requiring bypass
surgery receive enhanced patient management and attention
throughout the treatment period.  They also benefit from a
streamlined billing system resulting in fewer bills and lower
patient costs.
       This year, estimates are that more than 145,000 Medicare
beneficiaries will undergo heart bypass surgery, one of the most
frequent and most expensive inpatient surgical procedures, at a
cost to Medicare of over $3.5 billion.
       Participation by physicians and beneficiaries in the
demonstration is voluntary.  Hospitals not participating in the
demonstration will continue to provide services under the
traditional Medicare program.

       Lewin-VHI, Inc. in Fairfax, Va., and Health Economics
Research in Waltham, Mass., will provide technical support for the
implementation and evaluation of the demonstration.

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EDITOR'S NOTE:  HCFA, an agency of the U.S. Department of Health
and Human Services, directs the Medicare and Medicaid programs,
which help pay the medical bills of more than 62 million Americans. 
HCFA's estimated fiscal year 1993 expenditures are $230 billion,
the 12th largest governmental budget of any kind in the world.