Nudging the value glacier

In just two years, seniors will spend a quarter of their monthly Social Security checks on Medicare out-of-pocket expenses, including premiums, co-payments and deductibles.Meanwhile, Medicare bookkeepers predict total health spending in the U.S. to increase from 2.2 trillion today to 4.3 trillion in 2017.

At that rate of growth, it won’t be long before the entire Social Security check goes toward medical care. So what’s the solution?

Barry Straube, CMS chief medical officer, said the solution is transforming Medicare into an active purchaser that seeks to get more bang — in terms of high quality care and improved health — for its buck.

In health care lingo, that’s called value-based purchasing – the topic of a two-day conference put on by the ECRI Institute that Straube,and other health care bigwigs attended this week in Washington D.C.

“Medicare should be paying for care that promotes health, prevents complications, optimizes quality and efficiency, and keeps health care costs down,” Straube said. “… We have a system that arguably is based on resource consumption and volume irrespective to the value associated with that care.”

Incentives in the current system discourage coordinated, patient-centered care
based on a robust system of primary care, which would improve health and
save money, said Ralph Muller, CEO of University of Pennsylvania Health

“There’s too many incentives for every hospital and every physician to set themselves up and run the taxi meter,” he said.

These aren’t new ideas. As Sean Tunis, former CMS medical officer, told the New York Times this week, he tried for most of his tenure to move Medicare in the direction of paying for quality, cost-effective care and felt he made little progress.

While it may make sense for the American wallet, too many groups stand to lose too much to go down without a fight.

just suggesting all of these broad concepts year after year is
just pussyfooting around the problems and never really tackling the
problems where the rubber meets the road," wrote Bob Laszewski, veteran health policy consultant.

The ECRI conference attendees, however, seemed optimistic that this glacial
pace of progress toward demanding high quality, efficient care would
soon quicken.

“I think there’s a unique opportunity," sad Bob Berenson, a senior fellow at the Urban Institute. "This election was about
change. Things that were never possible might be possible. We have a
major economic crisis. When you spend a trillion dollars on banks,
what’s another 100 billion on insurance? Cost-containment might be more palatable."

Propelled by the current financial crisis, lawmakers and the public may be willing to take more risks when it comes to
their health care and lowering costs, said Arnold Milstein, medical director of the
Pacific Business Group on Health.

Among those risks, he said, would be considering costs when deciding what to pay for. The consequences won’t be pretty for
everyone, particularly providers, Milstein said, but the only thing stopping this now is a lack of political will.

Representatives from large public and private payers and
health plans, said it is time to start talking about the costs of
procedures and treatments and not just efficacy when it comes to making
payment decisions.

A center for comparative effectiveness research to evaluate the
benefits of various interventions that fails to link costs to payments is an incomplete step forward, said Allan Korn,
chief medical officer of the Blue Cross Blue Shield Association.To be expected, there was little opposition to this idea at a conference on buying value. Representatives from device companies (Medtronic at least) were present, but stayed quiet.

Current law requires Medicare to pay for things that are “reasonable
and necessary.” There’s ambiguity about whether that definition can
include costs. Most likely Congress needs to explicitly change the law to allow for
the inclusion of cost effectiveness when deciding what to reimburse, said Peter Neumann, director of
Tufts Center for Evaluation of Value and Risk in Health.

The numerator in this value equation should be about improving health for the patient, experts said. Patients need tools to help them make good decisions (a.k.a. Health 2.0), but they also need more realistic expectations, said Janet Corrigan, president of the National Quality Forum

"I think that we have over the years created the perception to
patients that they can come to the health care system and there will be
a life saving intervention for them even if they’ve had decades of
poor health behaviors," Corrigan said. "We need to start being honest with the American public about what the health care system can and can’t do."

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  1. Barry Straube of CMS comments that today’s system is based on resource consumption and volume irrespective of the value associated with care. The taxi meter analogy by Ralph Muller in the article, in fact, is apt. But it is not just the hospital and the physicians who are interested in running the meter. There are two major reasons for the intractable problem that healthcare is and both are not going to disappear in a hurry.
    First, the beast that is Healthcare is actually a hydra-headed monster, each with its 100-plus year old history, constituencies, and deep roots that perpetuate a system of self-interest. Pussyfooting around this fact will do no good for practitioners, users, or lawmakers. Trying to address the issues either through Medicare, national insurance cover for all, or polishing existing private sector models to effect change cannot be expected to succeed against the tremendous might and entrenched interests of these several players in healthcare.
    Second, every single player in the value chain of healthcare delivery – or value constellation as some have sought to call it – merely deflects away the costs incurred. The providers do not have an incentive to contain costs because someone else pays for it and the manufacturers offer well-argued reasons pertaining to R&D and, likewise, are able to get away with huge price markups having convincingly faced up the threat to their turf in the 1990s. That leaves insurance, employers, and customers. Insurance will wake up when the payout begins to threaten their consolidated premiums, and this can be temporally tackled by raising the premia – a fact that is no stranger to any one studying the industry. Employers are a worried lot having borne most of the insurance until recently. They have sought to palm off a portion of it to employees to reduce the increasing load and this could be the wedge everyone’s seeking. Customers – or patients – will feel the pinch as they begin to bear more of the load, but as yet cannot be convinced enough, or motivated enough, to take the path of prevention and primary care.
    But “high quality care and improved health”, in my opinion, are nebulous enough to become mere buzzwords, leaving the issue of costs open to interpretation. The several healthcare constituencies will ensure none of this affects or poses a danger to them. The only solution to this may be to open up the sector to more competition – not just from within the borders from without as well. Let Medicare or private insurance be enabled to pay for quality services wherever they may be found – in Dublin, OH or Dublin, Ireland. And users provided with tax incentives to ask for, and get, the best and least cost alternative. Sure, there are issues of quality, accreditation, and liability but these were surmounted within the US as well. It’s time to acknowledge that the emperor has no clothes: in this case, that no single Healthcare constituency in the United States has a reason to change.

  2. Across the board, healthcare expenses are uncontrolled. There is no mechanism to transform this service industry into service mindset. We can not solve the problem by current system – no matter how much we modify it.
    The key is to rething….as mentioned here, why not transform the basic mission from cure to prevention. Let there be a metric on the wellness created not disease cured.
    When I started looking into it, I found that in addition to clinical, there are tremendous waste in the business processes, mgmt processes, etc. I have been thinking of writing a book on total healthcare transformation…if we can get enough credible authors to participate

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