“We believe we can drive real progress on our shared goal in part by simplifying things. This administration is going to be very clear about what we want: better healthcare at lower prices. But we’re not going to be overly prescriptive about how that goal is reached.”
Thank you, Mark [McClellan], for that introduction, and good afternoon, everyone.
I’d like to thank the American Heart Association and the Duke-Margolis Center for Health Policy for having me here today and for convening this important initiative around cardiovascular health.
Initiatives like this one are vital, because it’s so important to put some real meat on the bones of mantras like “value-based care.” Terms like it have become 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 lower prices.
In a number of years that we’ve been talking about value-based care, some progress has been made, but it has been too slow. Prices have continued to rise faster than outcomes are improving.
In part, that’s because the question of how we deliver the outcome we want is incredibly complicated, because healthcare is complicated.
But we believe we can drive real progress on our shared goal in part by simplifying things.
This administration is going to be very clear about what we want: better healthcare at lower prices.
But we’re not going to be overly prescriptive about how that goal is reached.
Let me give you an example of what I mean. I’ve got a relative who is currently in a rehab hospital, and I was visiting him recently.
One of the interesting things about being HHS Secretary is that you get to have a lot of conversations about health policy right when you’re on the front lines of making healthcare decisions.
I imagine this is also an experience you have if you’re the CEO of the American Heart Association or a former FDA commissioner, too.
One of the nurses who was caring for my relative, knowing my job, mentioned to me the staffing ratios that are imposed by CMS regulations.
I have a sort of natural instinct about these things, so I started scratching my head, “what the devil do we have to do with telling healthcare facilities about precisely how to do their staffing?”
Now, oversight of healthcare facilities is a responsibility we take incredibly seriously at HHS. It is really important.
But if you talk to any patient about what they want from healthcare, it’s outcomes, not process.
The outcome that we want for my relative is that when he leaves that rehab hospital, he’ll be walking out the door, rather than leaving in a wheelchair.
It’s a pretty simple measure: You ought to get paid if you get him back on his feet. That’s what value-based care means to me, what it means to a patient.
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 largely up to you.
To coordinate value-based efforts at HHS, I appointed Adam Boehler earlier this year as our senior adviser for value-based transformation and innovation, in addition to the hat he wears as head of the Center for Medicare and Medicaid Innovation.
He’s laid out four avenues for driving toward value, four Ps: 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.
I know the patient perspective has already been a highlight at this event today. We believe getting better value from our health system and paying for value requires empowering patients to be consumers and to be stewards of their own health.
There has sometimes been skepticism about whether patients can become consumers—do Americans really want to shop for healthcare? First of all, there is robust evidence that transparency and shopping tools do work, when we empower consumers to spend their own dollars and see the savings. I had a high-deductible health plan with a funded HSA for many years, and I can tell you I saw my own behavior change.
But we are also moving in this direction generally, as a whole country. More and more seniors are now shopping for plans via Medicare Advantage. Most seniors now shop for Part D plans. Younger generations have more experience with HSAs and consumer-driven health plans, and eventually, like all of us, they will age into being our highest-cost patients—but after years of getting used to being consumers.
There is also now great potential to empower patients through the use of technology and electronic health records. This has been an area of interest since back when I was working for Secretary Mike Leavitt, when we needed to get physicians to get used to entering EHR data into programs on their desktop computers.
Back then, when I was a young lawyer, “apps” were what you ate at an evening reception because you’d skipped lunch at work. It was generally acknowledged that apps really did not make you healthier.
But today, the world of mobile apps has tremendous potential to empower patients and inform clinical decision-making.
Through the work of CMS and the Office of the National Coordinator for Health IT, we are using open APIs to allow patients to connect their data to apps run by private tech developers. We’re leveraging the private sector to let the patient own, use and understand their data.
We’re laying out the what, not the how: We want to get to where patient data is usable and interoperable, but we’re not going to dictate exactly how that happens.
We want to put patients in the driver’s seat as much as possible. But we recognize that they will often need physicians and other providers to help them navigate the healthcare system—and we need to give those physicians the right incentives to produce good outcomes.
We are very interested in ideas that can help physicians take accountability for outcomes. Without physicians playing a key role, the transformation we need for American healthcare will never be possible.
The same, of course, goes for all players in the healthcare ecosystem: payers, hospitals, benefit managers, employers and more. But in some corners, the move to value has been seen as disempowering physicians—when really, it is all about rewarding them for providing high-quality care.
That’s why CMS has made it a priority to engage physicians and think about what we can do to make them better at driving value for their patients.
One example is the dramatic simplification we’ve proposed in how providers are paid for evaluation and management visits.
Too often, doctors have to focus their attention on copying and pasting text across a patient’s record for billing purposes, rather than on taking down information that’s important to treating the patient.
We have proposed a radical simplification of this system, which we estimate will save clinicians 51 hours of paperwork each year—more than an entire workweek that can now be devoted to better patient care.
We also want to consult physicians on ideas for payment models. Yesterday, I spoke to PTAC, an advisory committee that accepts proposals from physicians regarding new alternative payment models.
A number of the models recommended by PTAC have significantly influenced models we have in the works, and we see the committee as a key avenue for new ideas and a source of advice for HHS on how to turn ideas into a reality.
One key element we are looking for in new models is paying for outcomes.
Since the idea of value-based care first caught on, HHS and the private sector have made significant progress in shifting toward new modes of payment.
We have more alternative payment models, more coordinated care, and more value-based compensation than ever before. But the results we sought haven’t always materialized.
As just one example, we saw in the analysis CMS released last month 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.
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.
If this ends up meaning somewhat fewer ACOs, so be it.
We need ideas that provide better care at a lower price, not just new models for the sake of new models, and not new bonuses for old systems that aren’t open to real change.
We’ve seen from CMMI’s models that when they just pay for new services or new bundles, the results are mixed. But when the model involves paying for outcomes, we see some real results.
This should be no surprise: Incentives work. People respond to bonuses, but they really respond to losses.
So we are especially interested in ways that we can expand outcome-based payment and sharing of risk to as many sectors of the healthcare system as possible. 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, and it may be necessary to meet what we see as an urgent need for reform. But we understand that different levels of risk are appropriate for different sectors of healthcare.
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.
The initiative you all are discussing today has opportunities for insights on all four of the areas I’ve discussed.
But we also, like you, are looking at this issue holistically: Better care at a lower price means not just improved care delivery, but also new cures and faster innovation.
That’s why Commissioner [Scott] Gottlieb has made it a priority to advance FDA’s work in drug and device approvals, maximizing the use of new technologies to accelerate clinical trials, lower their cost, and make better use of data and modeling.
Another of my top priorities, lowering the price of prescription drugs, is also relevant in the context of innovation. Our immediate goal is lower list and net prices so that Americans can afford the drugs they need.
But there is a long-term view, as well.
A broken drug pricing system, always under threat of price controls or national formularies, is not going to support the next generation of cures. We need a real market for drugs, one that encourages competition and serves the consumer.
So I’ve told you where we want to go: better healthcare at lower prices. We are open to ideas about how to get there, as we have been on drug pricing.
All parties interested in putting forth ideas toward this end are going to find an attentive ear from Director Boehler, from Administrator [Seema] Verma, and from me. We’re hungry for ideas, and, like all of you, we’re impatient for change.
So thank you all for having me here today, and thank you for what you are doing to advance us toward an American healthcare system that delivers better care at lower prices. Together, we can make that vision a reality.