Nudging the value glacier

By Sarah Arnquist

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 System.

“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.

"Maybe 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."