Since July 1 was the 50th anniversary of Medicare first enrolling (and paying benefits for) seniors, it’s a good time to think about modernizing the half-century old program.

A couple of weeks ago I tried to make the case for why we should improve Medicare. Now, let’s think about how.

Medicare needs to better serve a population of older adults who live longer and with more chronic conditions than they did in the 1960s. Medicare’s fee-for-service acute care model may have worked well in the days when treating heart attacks and strokes were a primary focus of health care. But in the past half-century, medical science has turned heart disease and even some cancers into chronic conditions. Unfortunately, these advances have also made it possible for more of us to live long enough to show symptoms of dementia. Roughly 90 percent of Medicare dollars are spent on seniors with chronic conditions.

A 21st century model

Those profound changes require a model of care that fully integrates medical treatment with personal assistance and social supports. It breaks down the artificial barriers that prevent older adults from receiving the full suite of holistic care that can help improve their quality of life. And it helps them manage those often complex multiple chronic conditions.

Such care does exist, though mostly for low-income seniors. For instance, the Program of All-Inclusive Care for the Elderly (PACE)  combines clinical care with adult day activities, care management, transportation, and home-based services.  Providers are paid a per-member-per-month fee (called capitation) by both Medicare and Medicaid.

Other models are known as Special Needs Plans (SNPs). One successful version is the Senior Care Options program operated by the Commonwealth Care Alliance in Massachusetts. It too combines medical care with personal care services, all aimed at helping people with chronic conditions to live at home and avoid unnecessary hospitalizations or a move to a nursing home. Commonwealth Care also receives a fixed, per-member-per-month payment.

Both operate with their own networks of doctors and other providers (though a recent change in the law allows some PACE enrollees to keep their own physicians).  Those network providers are key to both holding down costs and assuring quality.

Hospice is another model. Though its services are limited to those who agree to forego aggressive medical treatment at the end of life, it is another example of how well-integrated nursing, social, and spiritual care can improve quality of life, even at an extremely difficult time.

State experiments

Two dozen states are experimenting with a limited program of integrated care for those dually eligible for both Medicare and Medicaid (generally those who are both very poor and very sick). These “duals demonstrations” are still new, and in some states have struggled, but they are yet another model of coordinated care that bears watching.

Dr. Joanne Lynn of the Altarum Institute has created  the idea of MediCaring Communities  that would combine patient-centered medical care and social supports under the umbrella of community-based oversight boards.  A new simulation of cost savings in four locations finds that, after three years, the program would reduce net overall costs by between $269 and $537 per beneficiary, per month.

In Congress, lawmakers are beginning to focus on these issues. In 2014, senators Ron Wyden (D-OR) and Johnny Isakson (R-GA) sponsored the Better Care, Lower Cost Act,  which would make some integrated care easier, but only within services already funded by Medicare. Thus, the measure excluded personal assistance and other supports that are non-Medicare services but nonetheless key to care for frail elders. Perhaps the next version of this bill will break though that barrier that separates medical and personal care.

Medicare Advantage

For now, such coordinated benefits are unavailable through Medicare managed care (Medicare Advantage) plans. MA plans are closely watching the dual demos (some of the same companies are involved in both) to see how this integrated care affects their costs. For instance, by providing home-based services, or even care management, can an MCO reduce its overall medical costs? How close can these non-medical services come to paying for themselves by, say, reducing hospitalizations.

But while these integrated care models hold great promise, they are extremely controversial.

Conservatives argue that the law does not allow MA plans the flexibility they need to respond to patient needs. Here’s a nice explanation of why from health expert Bob Moffitt

At the same time, liberals and many patient advocates deeply distrust the insurance companies that operate most managed care organizations. Instinctively, these critics worry that insurers will provide poor care, either by limiting access to treatments or tests, or by including low-quality (but low-cost) doctors and hospitals in their networks. This article from Money magazine raises typical concerns about MA plans.

But despite these disagreements, a broad consensus is developing around the importance of better integrating care for older adults (and younger people with disabilities) in some form. And as we learn more, we will find new ways to modernize Medicare that can improve the quality of life of enrollees and reduce unnecessary medical costs. It’s time we sit down together and figure out how.