The Next Round of Reform

Fee-for-service doesn’t work. We don’t measure what matters. The definition of ‘health care’ is too narrow. And we’re getting to the party too late.

How will we address these challenges? It starts with a consensus for change.

“Can I see your insurance card?”

It’s the first question you hear when entering a doctor’s office, and it says everything about our country’s approach to health care. Unless they’re in an emergency room, sick patients’ ability to pay is determined first — then medical care is provided.

This fee-for-service model has contributed to the last century’s steady increase in health care costs. Today, the system wastes about $750 billion each year on unnecessary, disorganized, overpriced, badly measured and sometimes harmful services, according to assessments from the Institute of Medicine of the National Academies.

If there is a consensus, it is for change. Something has to change.

The obstacles are numerous. At the national level, progress is stagnated by a political tug-of-war focused on insurance coverage. But many experts agree that reform should address care delivery and health outcomes before tackling the problem of access. Mark McClellan, former head of the U.S. Food and Drug Administration and Centers for Medicare and Medicaid Services, is one of them.

“The next round of health care reform will hopefully include more direct efforts to try to get the cost of coverage down and the value of care up,” says McClellan, director of the Robert J. Margolis Center for Health Policy at Duke University and a senior health policy advisor at Dell Medical School at The University of Texas at Austin. “That will make it easier to reach agreement on the difficult issues of cost and access to care for all Americans.”

Mark McClellan, MD, PhD, shares health policy insight during a lecture at The University of Texas at Austin.

As part of this effort, McClellan, MD, PhD, recently co-chaired a group supported by the National Academy of Medicine to identify reforms that could generate bipartisan support and accelerate a shift to a focus on value and improvement in population health. A comprehensive summary review of the committee’s work, “Vital Directions for Health and Health Care,” was released in March.

McClellan is part of the team at Dell Medical School working to implement a number of the committee’s recommendations as it develops a patient-centered, value-based system and works to “revolutionize how people get and stay healthy.” Scott Wallace, an expert in health care strategy who is managing director for the school’s Value Institute for Health and Care, is a key leader in these efforts.

“To move forward, we have to stop talking about money and start talking about health,” says Wallace, JD, MBA. “Health policy doesn’t take a direct role in delivery — the main connector that currently exists is financial, which disorients the system. It’s built around how you get paid, not how you achieve health.”

Changing the Way We Pay

Imagine a truly person-centered system: rather than tallying services rendered, payment innovation provides incentives for good health outcomes — the heart attack avoided, the failure to thrive thwarted. The business of medicine, fundamentally altered.  

“By shifting from a supply-focused, fee-for-service system to a demand-focused system that pays for what patients need, we can increase value,” McClellan says.  

By shifting from a supply-focused, fee-for-service system to a demand-focused system that pays for what patients need, we can increase value.
Mark McClellan, MD, PhD

One possibility is a population-based payment model that holds teams of practitioners and networks of providers accountable for all care, preventative or otherwise, necessary to achieve good outcomes for a defined population during a specific time period. Many Accountable Care Organizations — doctors, hospitals and other care providers who elect to give high-quality, coordinated care to the patients they serve — use this model, and its prevalence in Medicare, Medicaid and commercial programs has grown steadily in the last several years.

No matter the path, McClellan says successful payment reform will mean economic rewards and incentives structured to reward population-wide progress as well as standardized ways to assess results.

Measuring What Matters

Treatments. They’re what we train physicians to deliver, what we track and what we pay for. But invasive surgeries and high-powered medications aren’t always the best solutions for health care challenges.

For example, spinal fusion, an operation that welds together vertebrae, is an invasive and risky procedure commonly recommended to address back pain associated with aging. In the early 2000s, four clinical studies — rare for surgical operations — showed that surgery was no more effective than physical therapy and exercise. Yet during the last two decades, spinal surgeries have been on the rise.

Until we begin to measure and incentivize treatment outcomes, Wallace says the system will continue delivering procedures and services that aren’t working. 

Treatments don’t equal health,” he says. “While people are frustrated by the cost of health care, they’re most upset that it doesn’t work well. The question is, how do we get something really good for what we’re spending and then spend differently in pursuit of that?”

A portrait of Scott Wallace
Scott Wallace, JD, MBA, as photographed near his office at Dell Medical School.

Wallace believes it comes down to what we measure and how we measure it: “If we can determine patients’ true needs and outline the best ways to address them, we will fix the system’s cost problem.”

Enter electronic health records (EHRs). They are primarily information systems designed to drive reimbursement and to track billing, not patient outcomes. But the tool is ripe for adaptation, and efforts at Vanderbilt, Beth Israel Deaconess and Dell Med are focused on the problem. EHR vendors such as Cerner, Allscripts and AthenaHealth are also opening up their architectures to support innovation, particularly around quality and outcomes. Wider adoption of these innovations could make the collection and assessment of metrics a matter of course.

“We are at an inflection point,” says Rick Peters, MD, chief information officer at Dell Med, which is working with partners to develop next-generation EHR functionality. “Physicians are frustrated with EHRs and their negative effects on workflow and physician-patient interaction. At the same time, EHRs have not delivered — even with extensive investment from their customers — the quality and outcomes we need. As physicians, we clearly understand that the reimbursement model has to change and that quality and outcomes will drive reimbursement going forward. Therefore, we have to radically transform our EHRs. They need to be tools that equally serve both patients and health providers to promote health, not just track and bill for it.”

Rethinking What Counts as ‘Health Care’

The most effective and cost-efficient health interventions aren’t always medical. For the 86-year-old with osteoporosis, they may include home modifications that enable him to age in place safely, avoiding a fall, a broken hip and a hospital stay. For the expectant mother, they might include access to fresh fruits and vegetables not available at the convenience store where she does most of her shopping.

By removing barriers to the integration of social and medical services, we can achieve better outcomes, reduce inequality and increase cost savings, says Lisa Kirsch, a senior policy director at Dell Med who works closely with McClellan.

“There are a number of lower-cost interventions that lead to high-value health care that aren’t currently reimbursable,” Kirsch says. “Access to housing, healthy food, transportation and other support services — those aren’t solutions at physicians’ disposal.”

Integrated practice units — a term coined in 2006 by Michael Porter, PhD, and Elizabeth Teisberg, PhD, to describe care teams of physicians, social workers, allied health professionals and others who work together and are compensated based on outcomes — narrow the gap. An osteoarthritis-focused team in Austin has already proved its ability to see patients more efficiently, reducing a waiting list for care for the un- or under-insured from more than a year to less than a month. The next step is to prove that quantity does not compromise quality.

“The old standard was if you get the patient seen by a specialist, that signals victory,” says Karl Koenig, MD, MS, an assistant professor at Dell Medical School who leads the osteoarthritis care team. “We’re leapfrogging all of that and saying yes, being seen is an important metric, but we’re tracking patient-reported outcomes to measure ourselves and to evaluate the care.”

A loosening of regulations limiting at-home health services supported by wireless or remote technologies may also help lower costs and make care more convenient. A number of states, including Texas, are enabling greater use of telemedicine services, which connect patients with doctors remotely to receive diagnoses and prescriptions. In late May, Gov. Greg Abbott (R-Texas) signed a bill making it legal for doctors to see patients by video without having met with the patient in the past or having another health care professional present.

“We’re always talking about ‘access,’ but it’s crucial to ask ourselves what patients actually need access to,” Wallace adds. “The answer is not always a doctor in a hospital.”

David Lakey, MD, chief medical officer of The University of Texas System, agrees. “You have to work beyond the walls of the doctor’s office or the emergency room,” he says. “You can’t just take care of somebody when they’re sick and then not consider the fact that they’re going to live on the street once you discharge them.”

Getting Patients Care Earlier

The emergency room is not the answer. But it is often the option of last resort for people without access to a regular doctor. Wallace and McClellan foresee the implementation of policies that expand access to primary care and help more people avoid reaching health crises that result in costly emergency room visits.

“The singular achievement of the Affordable Care Act (ACA), President Obama’s health care law, was that it brought more people into the system,” Wallace says. “Very few medical conditions disappear over time. If people with pre-existing conditions lose insurance coverage and can’t access health care, they will get worse.”

As the Trump administration rolls back facets of the ACA, McClellan hopes that bipartisan support can be found for basic, accessible plans that focus on primary care.

“I see potential for the introduction of less costly, more basic insurance plans that also provide access to a low-cost primary care network with no premiums to enroll,” he explains. “At the same time, it’s going to be difficult to reach consensus on any insurance-related solutions until the sky-high costs of health care are addressed.”

It’s a chicken-or-the-egg conundrum, and yet there is consensus: for change. Something has to change.