POLICY: WHCC-McLellan and Reinhardt

Now we’re getting into some meat. Mark McLellan head of CMS is on the same panel as Uwe Reinhardt. Bob Galvin from GE is the moderator. Two main issues are whether price controls work, and how we determine coverage…

Mclellan—Price controls aren’t working well in Medicare, and its no good just setting prices, as the level of the price doesn’t matter when you see massive differences in utilization

Uwe agrees. He thinks that at the moment we’re not ready for price controls. Pharm might force up prices using its political power, OR the Congress facing up to budget realities might price below marginal cost.

The audience here, not too surprisingly felt that there shouldn’t be price controls on pharma and medical products. (77% to 22%).

But now the harder question. How do we deal with coverage?

Ask the audience….If a new treatment extended life for 6 weeks, should it be covered 8%? Not Covered at all 22% or not covered but available for people to pay if they can afford it 68% 

Uwe says that he offered Manhattan Inst, and the WSJ Editorial Board the same choice.  They haven’t answered him, because they won’t put their name to it so far! Other countries do it the other way; it’s not covered, (I guess you can pay retail).

Mark says, those drugs are covered under part B in Medicare, and we’re going to move to performance….but essentially he can’t really answer the question. Uwe says that at some point there has to be a price for a life. In England a QALY is 50,000 GBP.

Question—How do we continue to encourage innovations in new technologies such as new equipment and devices and yet address the current irrational situation in which sales commissions and physician ‘incentives’ can and often do exceed equipment actual cost and physician payments for installing said devices?

Mark—At the moment we are paying for volume. We need to change the way that we pay like the Medicare demos to pay based on quality, and that changes incentives. Then you’ll see investment in EMR, and avoid the incentives that are a consequence of the payment system we have set up.

Uwe—one idea is to treat based on probability of paying for likelihood to getting sick over a life cycle. It doesn’t pay an insurer to invest money for long term pay-off. We need to think how that sort of health maintenance to be financed. At the moment Duke is trying it but no insurer is prepared to fund it.

Mark—need to learn more about the value of treatments when they’re on the market. As genomics comes down the track we’ll need to know more and more about this. To do that we need better data systems of real life clinical use.  Now we’re seeing some movement from private sector to find out more about that.

Uwe—that information must be publicly funded and supported; But at the moment there’s almost no government funding of that information in health services research. Doesn’t make sense for all private sector to reinvent the wheel. Government has to help fund this. Government has to spend more, especially on IT.

Mark—well we are spending “some” more. And there is some collective private (plans and employers) efforts on looking into this

Uwe—what have the private employers done?

Bob G—Not enough (and that from the head of this at GE!). We need to do more, but for some populations (the elderly) the government must do more….

Uwe—Mark, how can we get more money for IT? Who’s rear end do we have to kick?

Mark— most potential for supporting IT comes from those initiatives that pay for more lower cost of care. Want to identify what constitutes high value health care and paying more for it. That’s the best avenue. Most IT investment he sees is in software to maximize billing in Medicare. He wishes that there was relatively more put into clinical information systems.

Mark’s question to Uwe—What are we not thinking about? What’s new that we should be looking at?

Uwe—we need to make up what’s after this! You know there’s something after consumer care!  Perhaps the answer is figuring out via psychology how people make health care decisions. What do they use to judge those decisions

Mark—Now have some 20 measures in Medicare. But that might be a universe of hundreds of dimensions…how do we turn that into information that consumers can use….

Despite some obvious political differences with McLellan, he is a very, very polished presenter, and very bright. And Uwe is of course great…..at TCHB we ♥ him.


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