Leavitt Calls for Universal Standards, Competition in Healthcare System

HHS Secretary Michael Leavitt is calling for a new healthcare system in the U.S. modeled after the Medicare Part D drug benefit and based on competition and quality standards.

The federal government needs to partner with states and private providers, Leavitt told attendees of the PhRMA annual board meeting. The new market must rely on four cornerstones: electronic medical records; established quality standards; organization of "episodes of care;" and pay-for-performance incentives, Leavitt said.

The U.S. has a healthcare sector where patients cannot easily compare prices for the same service at different locations, Leavitt said. Experts should establish an average price for an episode of care -- a combination of procedures that a patient may need. The industry should also take an "honest assessment" and create standard measures of quality, so consumers can compare different plans based on value and cost, he added.

This is the system the government uses for Medicare Part D, which has been a "resounding success," Leavitt said. With Medicare, consumers have a choice of plans and the competition drives prices down, he said.

Leavitt said 17 states so far have joined the federal government in adopting his four cornerstones for the new market. These states will only do business with healthcare providers who use electronic medical records, measure up to quality standards, offer information on episodes of care and have performance-based incentives.