Remaking Health Care: Change the Way Providers Are Paid

November 19, 2012

Mark T. Bertolini, Chairman, President and CEO, Aetna Inc. ?Larry J. Merlo, President and CEO, CVS Caremark Corp. ?Brent L. Saunders, President and CEO, Bausch & Lomb Inc.

Subject Expert

Mark D. Smith, M.D., President and CEO, California HealthCare Foundation

In the debate over the nation’s finances, health care is one of the biggest items on the agenda. How do we bring down soaring costs as more people get coverage and more baby boomers head into retirement?

The Wall Street Journal’s Laura Landro moderated the task-force discussion on remaking health care. Here are edited excerpts of their presentation of priorities to the CEO Council.

Eliminate Waste

LAURA LANDRO: Mark Smith, chief executive of the California Health Care Foundation, gave us some initial proposals. We ended up with some very provocative ideas about national standards for quality and price transparency, even looking at the agricultural subsidies that might contribute to bad habits like smoking and consumption of high-fructose corn syrup. A lot of people are also very concerned about the limited time that we have to get state insurance exchanges. How are we going to get insurance to our employees? Should we be taxing people for health benefits above a certain amount? For our top priorities, I’m going to turn over the first two to Mark Bertolini.

MARK BERTOLINI: The Institutes of Medicine last year published a report that said we have $750 billion a year of waste in the health-care system. If we solve that problem, over the next 10 years we solve half of the nation’s deficit. And if we just get 20% of it, which is a 6% change in health-care costs, we pay for the Affordable Care Act.

What happens in our system is if you get paid by a unit of service, you do more units of service. Our notion was to shift to population management. You assess the disease burden, the demography and the trends in the community and build a system and budget around that. You reward the system for improving the productivity and health of the population they serve.

If we were to say, “Here’s the budget you have to take care of all these people. It is yours. You manage it effectively,” then the system should organize itself appropriately and look for opportunities to make it better. Seventy-five percent of the next $10 trillion in the nation’s debt is Medicare and Medicaid. If we can stem the increase, we can work on the deficit.

The second notion is transparency. We need to have a true market where people understand what the prices are for health care. Today, that’s concealed.

Imagine a supermarket where you go in with your cart and pull items off the shelf with no prices on them. You take it up to the counter. It’s scanned. The clerk swipes your card and says, “In 30 days you’ll get your credit-card bill, and you’ll know how much your groceries cost.” Would you shop there? But that’s how the health-care system works. We need to create transparency in the system so people can understand how much health care costs.

The Role of Care Givers

LARRY MERLO: The third one that we talked about is new delivery models, focusing on the role of licensed health-care professionals such as nurses and pharmacists. This is responding to a shortage of primary-care physicians that exists today and is expected to continue to grow.

What we can do is to harmonize the licenses of health-care professionals to a scope of practice that is based on their education, training and experience versus just the regulations within the state where they practice. At the same time, this would allow for the cross-licensure of these professionals across states. Only 16 states have standardized scope-of-practice regulations to allow nurse practitioners to practice independently and really complement primary-care physicians. At the same time, you look at the ability to expand pharmacist-administered immunizations. It’s inconsistent across the states.

The goal is to increase access to care, reduce costs and improve the quality of care. Tied to this is health-care information-technology connectivity. This would enable health-care providers at all points of care to engage patients, to see if they’re adhering to prescriptions and having preventative checkups.

The fourth one is primary care, and it picks up on the theme of today’s shortage of primary-care physicians. We talked about incentives to improve the balance between specialty and primary-care physicians, like education and emphasizing reimbursement rates. At the same time, there’s forgiving medical-school loans. Some of these same principles would also apply to the nursing profession.

The Top Four Recommendations

1. Population Health Management Explicitly gear our system around population health. Create public-private partnerships to encourage healthy behavior, and identify specialty populations with unique needs, such as the seriously mentally ill. Reshape financial incentives to meet the goal of population health, and build capacity and reimbursement systems to support it. Have the administration clarify how to deal with the huge shift into insurance exchanges.

2. Transparent Standards The Center for Medicare and Medicaid Services should develop, and require all public-health programs to adopt, uniform standards for health-care service quality, performance and price transparency so consumers can make value choices. And it should encourage states to follow suit.

3. New Delivery Models Use the full continuum of care givers, such as nurses and other professionals. Create uniform standards for licensing care givers across the country, and encourage more care in retail clinics, pharmacies and other sites. Require patients’ medical data to be available electronically.

4. Primary Care Provide incentives to correct the imbalance of specialists to primary-care doctors by changing reimbursement rates, increasing funding for undergraduate and graduate medical education for primary care, and forgiving medical-school loans. Increase focus on advanced nurses and nurse practitioners as care providers.

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