Delivery System Day: Peter Orszag
You’ve been in a lot of these internal discussions. How much of the work here has focused on reforming the delivery system?
The Finance Committee mark includes most of the proposals that have been put forward. That’s why folks from Mark McClellan on the right to lots of folks on the left have said the mark is impressive. You don’t get to that point without having done a lot of work ahead of time.
Why do they get less attention than insurance market reforms?
For a few reasons. Insurance market reforms are more immediately salient., Everyone knows what it means to say no more preexisting conditions in terms of affecting coverage. What exactly you mean by accountable care organization, or bundled payments, is more esoteric. People don't really see the plumbing beneath the system.
Many of these changes seem modest. As opposed to the insurance market, where we ban practices we don't like, or add structures we do like, the delivery system side of things seems concentrated around pilot programs and demonstrations and experiments.
I’d say it’s a mixture. But yes, what needs to happen is we need to put into place the infrastructure to aggressively experiment with what works and what doesn’t, and a lot of what this bill is doing is putting that infrastructure in place, through the Innovation Center and the demonstration projects. But don’t forget that there are direct and immediate changes taking place to provider payment updates and home health reimbursements and so forth.
Which of the policies strike you as most promising?
Let me answer that by harkening back to what I think is the key to a higher-value, lower-cost system over time. The first is we need to digitize the system, and that was part of the Recovery Act. We need a lot more evidence on what works and what doesn't, and Recovery Act had some of that, and the Mark goes further. The third is we need to move away from fee for service and towards fee for value, and the Chairman’s Mark does a lot of that through bundled payments and medical homes and value-based payments for hospitals and accountable care organizations.
I would also include in that bucket the Innovation Center and the Medicare Commission. Both are aimed at trying lots of things, seeing what’s working and what’s not, and having policy adapt to what’s working immediately. This allows for the dynamic and iterative nature of cost containment over time. We don’t know exactly how to get from here to a high value, low cost system because the health-care sector dynamic. So you need a process.
What's the Innovation Center?
The Innovation Center is a $6.6 billion fund to test out different ways of linking payments to quality. The key is that they’re creating a structure in which you can try out different things. That then feeds into the commission that will help expedite changes in Medicare policy. You can go from aggressively testing something out to implementing it quickly.
That's a point I hadn't heard before about the MedPAC proposal: that it's part of a whole chain. In that telling, it sounds like much of this is providing support for MedPAC's work.
Exactly. You need these feedback loops. You can digitize medical records, so then you have much more information on what outcomes are. That gets fed into experiments to see what works and what doesn’t. Which gets fed into policy changes. And hopefully, the electronic health records system will also have decision-making tools so the doctor has research at his fingertips helping show what's best for the patient.
It's like a Google brain for doctors.
Right. This is building out the Google brain for the medical system. And just like with Google, we can’t just put in an IT system where physicians scroll through 30 pages of data. Doctors are people too. The system needs a simplified template. Your patient seems to have the following conditions, you might want to test for x. And you can click through for more.
I'd heard that the IT system was still troubled, as crucial decisions about standards and interoperability hadn't been put into place.
David Blumenthal is now in place as the Health IT coordinator over at HHS. A lot of progress is being made. There’s a process.
How do the delivery-side reforms interact with the insurance market?
Several ways. Perhaps most immediately, your premiums will ultimately be driven by the underlying cost of health care. To the extent these reforms help to contain costs over time, they have a significant influence in the insurance market through the level of premiums. It’s also the case that Medicare can lead the private insurance market in terms of moving towards a value-based system, and we’ve seen that in past examples. In the ’80s, Medicare moved towards fixed payments for each hospital stay, and that created an incentive for hospitals to reduce the length of stays. The result was shortened stays for everyone and not just Medicare patients. And many of the changes floating around with regard to Medicare in this bill have similar potential.
Photo credit: Getty Images
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