A Road Map For Action On Health Care Spending And Value: Part IV – Value-Based Payment (Forbes)

FORBES | This is the fourth and final installment for my series on the Health Affairs Council on Health Care Spending and Value’s February 2023 report, “A Road Map for Action.” Each piece details one of the four priority areas within the report, which include recommendations on how the U.S. can take a more deliberate approach to moderating health care spending growth while maximizing value. I served as co-chair of this initiative, along with former FDA Commissioner Dr. Margaret Hamburg. This final piece outlines our recommended actions on value-based payment. Click here to read Part I, Part II and Part III

Over the past few years, the health care sector has undergone a cultural shift toward not only prioritizing better value and more comprehensive care but also in how these services are paid for. The days of strictly fee-for-service payment models – where physicians or health centers are paid for each individual service provided – are dwindling. And value-based payment models have stepped into the fold for both public and private sectors. 

In an effort to drive down rapidly growing healthcare costs, value-based care and payment models have garnered a lot of attention for their potential to curb costs while simultaneously improving outcomes. These models come in variety of shapes and sizes, combining innovative arrangements that prioritize quality of care rather than quantity of services provided. Some examples of these models include bundled payment, accountable care organizations, and even full global capitation.  

But the emergence of value-based payment models has not come without challenges.  

Read more at Forbes: https://www.forbes.com/sites/billfrist/2023/03/10/a-road-map-for-action-on-health-care-spending-and-value-part-iv–value-based-payment/?sh=2da6363f5d7a

A Road Map For Action On Health Care Spending And Value: Part III – Spending Growth Targets (Forbes)

FORBES | This is the third in a four-part series on the Health Affairs Council on Health Care Spending and Value’s newly released report, “A Road Map for Action.” Each piece details one of the four priority areas within the report, which provides recommendations on how the U.S. can take a more deliberate approach to moderating health care spending growth while maximizing value. Part three focuses on our recommendations on setting spending growth targets. Read parts one and two here and here.

The Health Affairs Council on Health Care Spending and Value looked to states to be laboratories for policy experimentation and innovation. One area the Council members spent time investigating, with presentations from experts over several meetings, is state efforts to set spending growth targets. Two states in particular have led in this area: Maryland and Massachusetts.

The Maryland Example

Maryland has a long-standing history of setting growth targets dating back to the 1970s when they established all-payer rate-setting for hospital payments. Enabled by a Medicare waiver, Maryland was exempted from certain federal health care regulations in exchange for ensuring that Medicare inpatient payments per admission grew at a rate below the national growth rate. The state set rates for hospital inpatient services, and all third parties paid the same rate. This effort evolved in 2014 to a global hospital budget that encompassed inpatient and outpatient hospital services. Under what became known as the Maryland All-Payer Model, the state created a prospective annual budget for each hospital based on historical spending trends, whereby annual revenues were subject to a fixed cap. Hospitals continued to receive fee-for-service payments, but had the ability to adjust their rates nominal amounts throughout the year to stay within budget.  

Read more at Forbes: https://www.forbes.com/sites/billfrist/2023/02/28/a-road-map-for-action-on-health-care-spending-and-value-part-iii–spending-growth-targets/?sh=1911a1843e35

A Road Map For Action On Health Care Spending And Value: Part II – Price Regulation And Supports For Competition (Forbes)

FORBES | This is the second in a four-part series on the Health Affairs Council on Health Care Spending and Value’s February 2023 report, “A Road Map for Action.” Each piece details one of the four priority areas within the report, which include recommendations on how the US can take a more deliberate approach to moderating health care spending growth while maximizing value. I served as co-chair of this initiative, along with former FDA Commissioner Dr. Margaret Hamburg. This piece outlines our recommended actions on price regulation and supports for competition.

Why does the US spend more per capita on health care than any other nation? Well, according to renowned health care economist Dr. Uwe Reinhardt, “It’s the prices, stupid.”

While that’s putting it simply, many believe, like Dr. Reinhardt so often stated, that our health care spending is more in large part because we are willing to pay more for it. And recent data suggest that we are indeed willing to pay a lot more for health care services. In fact, about 20% of our nation’s GDP was attributed to health care in 2020.

But it’s not just our willingness to pay more for health care in the US – and spending more or paying higher prices than other countries isn’t necessarily a bad thing. But doing either without seeing an improvement in quality of care is a problem. And this is exactly what is happening: high rates of growth when it comes to prices that are disproportional to the health and equity produced. This places a significant and increasing burden on everyone including our families, companies, and government.

Read more at Forbes: https://www.forbes.com/sites/billfrist/2023/02/21/a-road-map-for-action-on-health-care-spending-and-value-part-ii–price-regulation-and-supports-for-competition/?sh=b6115f63a2f1

A Road Map For Action On Health Care Spending And Value: Part I – Administrative Waste And Inefficiencies (Forbes)

FORBES | This is the first in a four-part series on the Health Affairs Council on Health Care Spending and Value’s newly released report, “A Road Map for Action.” Each piece will detail one of the four priority areas within the report, which provides recommendations on how the U.S. can take a more deliberate approach to moderating health care spending growth while maximizing value.

On February 3rd, the Health Affairs Council on Health Care Spending and Value released its report, “A Road Map for Action.” It’s the culmination of four years of study, debate, and collaboration between 21 experts in the healthcare field, each representing diverse sectors of the industry. Our goal was to take a nonpartisan, evidence-based approach to understanding our nation’s growing health care spending, the value we get from that spending, and to make recommendations on how we can maximize value while slowing spending growth.

I served as co-chair of this effort, along with former FDA Commissioner Dr. Margaret Hamburg. When we first embarked on this journey in January of 2019, we knew it would be a difficult challenge – reining in health care spending has been a stated goal of policymakers for decades, with little to show for it. Yet our task became even more complex with the upheavals in health brought on by the pandemic, and by the needed spotlight on inequities in all aspects of American life – including health care – that was raised by George Floyd’s tragic murder. As the world around us shifted, we worked to adjust, and extended our Council work by a year. We released our report this month, the product of four years of research and collaboration.

Read more at Forbes: https://www.forbes.com/sites/billfrist/2023/02/13/a-road-map-for-action-on-health-care-spending-and-value-part-i–administrative-waste-and-inefficiencies/?sh=1e8dc3a9fd74

Cost Sustainability

(Modern Healthcare, May 18, 2013)

By Bill Frist and Dr. Manoj Jain

We have done it. We have decreased the increase in the cost of healthcare. Let us explain. For three decades (1980–2009), the cost of healthcare has been increasing each year at an average rate of 7.4%—double the rate of inflation. However, over the past three years, the increase in healthcare expenditures has remained at a low 3.1%.

Is this decline the desperately needed bend in the healthcare cost curve or just the impact of the depressed economy?

Four leading studies point us in different directions. Last month’s Kaiser Family Foundation study deduced that 77% of the decline was attributable to the economic downturn and is likely temporary. A report by the Robert Wood Johnson Foundation echoed these conclusions.

In contrast, two articles in the May issue of Health Affairs point to structural changes such as “less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing and greater provider efficiency” as major causes of the decline, suggesting that only 40% to 55% of the decline was because of the economic downturn.

The final answer is probably somewhere in between, with about half of the decrease realized by encouraging changes in the way healthcare is delivered and the other half due simply to the downturn in our economy. Regardless, it is important to recognize—and celebrate—that the cost curve has bent without collapsing our healthcare system or being prompted by draconian measures in rationing of healthcare. Moreover, the decline has not led to deterioration in our quality measures. In fact, they have improved.

Now, the $2.7 trillion question is, “How can we sustain this slower growth over the next decades?”

Undeniably, during the past several years, the singular focus of conversation among policy makers has shifted from simply more care and better quality of care to better value in healthcare, where value is defined as quality over cost. The onset of value-based purchasing by Medicare and higher copays and deductibles for patients in employer-based plans has helped in disseminating this message to doctors and patients.

Yet if history is any indicator, the cost of healthcare will rise once again as our economy strengthens. So, last month the Bipartisan Policy Center made 50 bold recommendations on how to sustain the lower growth of healthcare costs. These recommendations are unique because they focus on improving the entire system of care over a prolonged period of time and break through the partisan rhetoric surrounding healthcare reform.

We want to highlight a few of the recommendations that will impact providers—hospitals and doctors. The BPC encourages advancing accountable care organizations to a 2.0 version where the entire spectrum of patients’ needs would be covered for a fixed payment, and in doing so replace the irrational and outdated sustainable growth-rate formula for physician reimbursement.

Also, the BPC policy paper suggests changing our present voluntary bundle payments program to the standard method of payments for certain DRGs. The impact of such a change in the payment system can be profound. When in the 1980’s Medicare changed payments to hospitals by DRG, length of stay and hospital payments declined.

If such measures are not successful in restricting the cost of healthcare, then a fallback spending limit or a “cap” would take effect based on annual per beneficiary spending growth to a target of GDP.

To sustain these reductions in cost, the availability of current cost data and transparency of such data are essential. At present when patients get their bills, they do not know the difference between healthcare charges, expenditures and costs. To borrow an analogy from car sales: the sticker price, the new owner’s price and the dealer’s invoice price, respectively.

As for providers, physicians are often unaware whether an antibiotic costs $150 or $15 when writing the prescription or a doctor’s order in the hospital chart.

These costs have real impact for Americans. One RAND Corp. study found that if healthcare costs had risen at the slower rate equal to the Consumer Price Index, an average American family would have had an additional $5,400 more to spend each year on education, entertainment, food and clothing over the past decade. But instead, the average family has spent that money on healthcare. With our healthcare system at this crucial crossroads, we need to take this opportunity and stop the collateral damage.

A slower growth of healthcare cost would mean less burden on the individual family, freeing that family to invest in and live a higher quality of life. And for communities it would free billions of dollars for education, businesses, job creation and future innovation.

The good news is that it can be done. And the blueprint for eliminating waste, lowering the cost and maximizing the value is actively being considered by voices that rise above partisan bickering.

Manoj Jain is an infectious disease specialist in Memphis, Tenn.
Bill Frist is a heart transplant surgeon and former U.S. Senate majority leader.

This article was originally published in Modern Healthcare.