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Remarks on Value-Based Healthcare

Alex M. Azar II
Physician-Focused Payment Model Technical Advisory Committee
September 6, 2018
Washington, D.C.

Getting better value from our health system and paying for value requires empowering patients to be consumers. But realistically, patients will also need physicians to help them navigate the healthcare system—and we need to give those physicians the right incentives to guide patients in making choices that will lead to good outcomes.

Good morning, everyone. It’s great to be here with PTAC, and thank you for the opportunity to speak to all of you today.

First of all, I’d like to thank all of you for your work as part of this committee so far and I’d like to thank everyone outside of the formal institution of PTAC who have contributed as well.

Members of PTAC signed up for a complicated, time-intensive task because you care deeply about building a healthcare system that serves patients better, and about the role that physicians will play in that transformation.

This is a significant time commitment, so we are extremely grateful that you have brought your considerable expertise to the table. Of the priorities I have picked for HHS, the most ambitious and furthest reaching is transforming our healthcare system into one that pays for health and wellness rather than sickness and procedures.

Mantras like that, and especially the term “value-based care,” are so common in healthcare circles that we don’t often pause to consider what they should really mean.

The outcome we’re aiming for is pretty simple: better healthcare at a lower price.

But the question of how we deliver this outcome is much more complicated.

There has been some progress on some of the tools we need to execute this transformation. We have more alternative payment models, more coordinated care, and more value-based compensation than ever before. But the results we hope for haven’t always materialized. As just one example, we saw in the analysis CMS released at the beginning of August that the burgeoning number of Accountable Care Organizations have not delivered significant savings when all costs and incentives are taken into account.

But notably, the best results we’ve seen have been in ACOs that took on two-sided risk—where providers have real accountability for outcomes. We’ve also seen better results from physician-run ACOs, as opposed to hospitals.

Without real accountability, we’re just offering bonuses on top of payments that may be too high already. That’s why we have now proposed to simplify the ACO system into two tracks, requiring them to take on risk sooner.

As our CMMI director, Adam Boehler, put it last week, if this means somewhat fewer ACOs, that’s okay with us.

We need strategies and models that provide better care at a lower price, not just new models for the sake of new models, and not new systems of payment for old systems that aren’t open to real change.

In some cases, as I’ve said before, that is going to mean mandatory models from CMMI and other mandatory reforms.

Requiring participation can be necessary to determine whether a model really works, but it may also be necessary to meet what we see as an urgent need for reform.

But we are not going to be overzealous in determining how these reforms happen. We’re interested in driving the outcome we want, rather than micromanaging how you get there.

Let me give you an example: I currently have a relative at a rehab hospital, and I recently had a conversation with some of his nurses and physicians. They mentioned the requirements that CMS imposes on them, like the ratio of how many patients you can have per nurse or physician.

Now, oversight of healthcare facilities is a responsibility we take incredibly seriously at HHS. But if you talk to any patient about what they want from healthcare, it’s not process, it’s outcomes.

The outcome that my relative and I want is for him to get out of the hospital and back on his feet as soon as possible.

So I had to ask [CMS] Administrator [Seema] Verma and Adam: We’re trying to move away from this idea of micromanaging through regulation, and just paying to make sure patients get healthy again, right?

Thankfully, the answer was “yes.”

So I want to be clear: We are going to tell you the what—better care at a lower price—and we’re going to reward you for delivering it. But how you deliver it is up to you.

We also want to take a broad view of how providers can take on risk and earn rewards for good outcomes. This means not just episodic bundles where providers can take on risk, but longer-term, longitudinal models where real rewards will be paid for keeping patients healthy and out of high-cost care settings.

To oversee these efforts, earlier this year, I appointed Adam as our senior advisor for value-based transformation and innovation.

You’ll hear him discuss later today the four Ps of driving toward value: making patients into empowered consumers, making providers into accountable navigators of the health system, paying for outcomes, and preventing disease before it occurs or progresses.

CMMI will soon be launching new, bold models that fall into these areas, and we hope you’ll use them as guideposts for your work.

Getting better value from our health system and paying for value requires empowering patients to be consumers. But realistically, patients will also need physicians to help them navigate the healthcare system—and we need to give those physicians the right incentives to guide patients in making choices that will lead to good outcomes.

We are very interested in ideas that can help physicians fill that role. Without physicians playing a key role, the transformation we need for American healthcare will never be possible—and PTAC’s perspective will therefore be an important piece of our drive toward value.

A number of the models advanced by PTAC have significantly influenced models we have in the works, but working with all of you, we want to go much further.

As we work on the transformation I’ve described today, Adam, Administrator Verma and I see PTAC as a crucial avenue for ideas and input. But PTAC is more than that, too: You all are really advisors to me, helping to discern what needs to be done to make physicians’ ideas a reality and inform HHS about how we can help.

All physicians interested in putting forth ideas to deliver better care at a lower price are going to find an attentive ear from Adam, from Administrator Verma, from me, and from the entire Trump administration.

I know all of you are interested in those goals, so I look forward to a close partnership with you in the years to come.

Thank you again for having me here, and I hope you all have a productive meeting today.


Content created by Speechwriting and Editorial Division 
Content last reviewed on September 6, 2018