New Marketplace

Signal or Noise? Navigating Health Care Policy — Part 1

Roundtable · July 3, 2018

Donald Berwick Melinda Buntin Patrick Conway Raymond Vara Edward Prewitt head shots IHI forum discussion on health policy

A discussion from the Institute for Healthcare Improvement National Forum. Part 1 of a two-part series.


The Participants:

  • Donald M. Berwick, MD, MPP, President Emeritus and Senior Fellow, Institute for Healthcare Improvement
  • Melinda B. Buntin, PhD, Professor and Chair, Department of Health Policy, Vanderbilt University School of Medicine
  • Patrick Conway, MD, President and CEO, Blue Cross and Blue Shield of North Carolina
  • Raymond P. Vara, Jr., MBA, ACHE, President and CEO, Hawaii Pacific Health
  • Edward Prewitt, MPP, Editorial Director, NEJM Catalyst


Edward Prewitt:  Let’s talk about transformation in health care. You’ve all touched on it in one way or another, and it’s something that this audience is deeply interested in. Value-based payment is embedded into the ACA, and yet the logic of value-based payment, value-based care, is strong and doesn’t necessarily depend on policy changes. Help our audience tease that out. Ray, let me start with you. You said you’ve got to continue on a day-to-day basis just working on this, keeping cost down, improving quality. How much of that is dependent on policy changes?

Transformation in Health Care


Raymond P. Vara, Jr.:  Well, obviously, I’d love to say none of it because we know what needs to be done, but the reality is that we’re going to be affected by policy. We’re going to be impacted; but again, you’re part of a group here that believes there’s 30% waste [in health care], and I think if we’re able to continue to work on that and drive those solutions, we’ll be in a better position to really focus on the policy issues as they arise.

The other thing is we have to also recognize our communities and the impact of things beyond the care that we provide, and this gets to some of the issues Don [Berwick] was mentioning: the social determinants of health and what burden or responsibility we have — given our size, scale, and scope in the community — to address those issues, make sure that we have awareness out in the community, that we’re educating our community, that we have great programs in our schools, to make sure that our youth are equipped to grow up into adults who can make good lifestyle decisions, making sure our economies, as a whole, are thriving, and making sure that we’re addressing affordable housing and homelessness and all the other social issues that face our community, long before our patients come into the walls of the places where we provide care.

Prewitt:  Melinda, what’s your take? You know CMS just announced that bundled payments would no longer be mandatory. They’re pushing voluntary. Does this undermine the transformation movement?

Melinda B. Buntin:  I have a number of concerns about that. . . . While we’ve been talking about the movement toward value in this country for a long time, it feels like, at least probably for the people in this room, we’ve got a lot to work out. We’ve got a long way to go.

We don’t have agreement on common quality metrics in all areas. We’re reexamining what’s going on with MIPS and things like that, but I would say, as far as those demos go, I was disappointed to see them made voluntary. I think that we’re going to have the same types of issues with understanding their effects that we’ve had with other demonstrations in the Medicare program, which is that we know that the organizations that have sent people to this conference, the organizations that are really at the forefront, are going to do well, and others will hang back as long as they can. And that’s not the way to get the best quality care to all our patients.

Prewitt:  Don, your thoughts about the transformation agenda?

Donald M. Berwick:  I’ve started to change my mind a bit about value-based payments. First of all, I am very sad that the mandatory bundled payments went back, but you know we did the right thing. As a country, we came up with a very sound theory, we tested the theory, the data are pretty clear. It’s not the messiah, but it really makes a difference, and then we say, no, but we’re not going to do it. There’s something wrong with not using knowledge that way, but it seems to me that . . . I’m mincing my words.

I think maybe value-based payment isn’t the right idea, because there’s another step beyond that, which I might call thriving-based payment or health-oriented payment. Because what I really want to do, in the end, is put in Ray Vara’s hands some money to help his people be healthier, and I don’t think that has particularly as much to do with exactly the incentive structure as it does with the opportunity structure, with the flexibility structure.

There are bad actors out there that we’d have to hold accountable, but I think we’re missing a chance here . . . well, not missing. If we were to move sensibly, we would have more population-based opportunities for leaders to develop business models, delivery models, with clinicians, full partnership with communities, to help people thrive. We don’t do that now. We pay them to keep the bed full or the machine going. So, we’re overthinking the incentive part and underthinking the opportunity part. . . .

Patrick Conway:  I couldn’t agree more with Don. As you shift and you truly pay for population-based payments — and I won’t give you all the data, but in Maryland, population-based payment for hospitals, improving quality, lowering cost — the data’s fairly clear. Pioneer ACOs, places like Montefiore that literally invest in temporary housing for their homeless population (and you mentioned you want to go to global payments as well, so I’d love to hear more), and [when it comes to] improving quality, lowering cost, and Next Generation ACOs, they told us, a large system, the only reason they’re in it is they finally deliver care the way they want to. When you unleash the power to get as close as you can to payment to care for a population, that’s when you drive real change, plus or minus 2 to 4 to 6%, based on some quality and cost metrics. . . .

Vara:  I don’t have as much concern about some of those programs going away because I look at them as training wheels to get us to a point where we can accept a global payment in order to be able to be innovative, and so I think eventually the training wheels have to come off. It’s just a matter of, do we have a deliberate plan to get us to the end-state before we do that, because frankly if we get to the end-state and we still have the training wheels on, they just become a drag on the system. I don’t know that we have a national pathway to get to where we need to be, so maybe it is a little premature to pull those models away, but I do think at some point it’s appropriate.

Prewitt:  I want to canvass the audience again. How many of you or your organizations are very concerned about rising drug costs? This is an element of health care policy that’s kind of nonexistent, but there’s been a lot of discussion about value-based pricing, perhaps even some price controls of drug prices. Do you panelists foresee anything happening in 2018 or even beyond on this front?

Rising Drug Costs


Buntin:  At the Congressional Budget Office, we would predict the consequences of Congressional options, but we’d never predict what Congress might do, ever. So, I would say that drug costs are a very legitimate source of concern. They have been the fastest-rising sector of health care cost for a few years now. They weren’t last year, but that’s partly because there was such a huge hepatitis C drug bubble that it had to stop escalating quite as fast as it had been. So if you hear about a little reprieve in drug cost rise, it may not last. That said, I think that there is some possibility that we’ll start to talk about per-unit cost for drugs.

Value-based payment [for drugs] is something that has been discussed. Bundling drugs with the types of value-based demonstrations that Patrick [Conway] and Don [Berwick] were mentioning proved very difficult to do — didn’t happen in lots of cases, didn’t happen with ACOs, didn’t happen with the oncology care model.

It is a real challenge. I know that there are dozens of health economists at pharmaceutical companies modeling the best way to structure value-based payments to make sure that profits are maintained on drugs, and I think that we would have a real regulatory challenge in trying to outmaneuver that by turning the dials that Don was talking about. So I don’t actually have a lot of hope for that. The only hope I have for value-based payment for drugs is that it will at least orient drug manufacturers and developers toward what is the right thing they should be thinking about when they’re doing research and development, what are the high-value drugs, and maybe that’ll affect things over the long term in the pipeline.

Berwick:  I’ve got to stratify this question. There are different drug markets and they’re all behaving pretty badly, but they’re very different. For example, [in] the generic drug market, we have the price of insulin doubling quarterly in some cases. Scott Gottlieb, the new FDA Commissioner, has spoken out, I think very constructively, about some really interesting policy maneuvers to get on top of this generic drug problem. It could be approached with market-based solutions and more competition, and I think we should watch that space. It’s pretty bad and it’s hurting people badly.

Then there’s the anomaly of patentable simple drugs. That’s what happened with Colchicine becoming Colcrys and 17-hydroxyprogesterone becoming Makena, and, oh, you know the list. This is a defect in the patent law, and it would need a statutory change, I think. We don’t see a Congress right now that’s likely to do that, but it’s fixable with pretty simple changes.


Read/watch part 2 of this discussion.

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