November 21, 2017

Alex Azar must commit to ‘righting the ship’ for health care payments

In the Affordable Care Act and other subsequent reforms, Congress directed the Department of Health and Human Services to test new ways to pay for health care, challenging health care providers, hospitals, and private insurers to provide better care for less money. Under President Trump and former HHS Secretary Tom Price, that work slowed and, in some cases, stopped altogether. With Price out the door1, the nominee to replace him, Alex Azar2, should commit to righting the ship.

Congress passed payment reforms to test several simple but powerful notions: First, paying doctors and other health care providers for the quality of their care, not just the number of tests they order, ought to improve the health of their patients. Second, keeping patients out of hospitals3 and other institutions ought to lower costs. Third, preventive strategies should keep people healthier and lower costs. Finally, holding health systems accountable for quality and total cost of care ought to drive innovation.

Achieving those goals would make Americans healthier and help us save on the more than $3 trillion we spend on health care every year. We far outspend4 the most expensive, universal coverage health care systems in the world, and we aren’t getting better results. Our life expectancy5 is comparable to Chile and the Czech Republic. More than 250,000 Americans die due to medical errors6 every year.

Under Price’s leadership, HHS walked away from addressing these problems. He proposed canceling or shrinking Medicare programs to prompt innovation8 in joint replacements and cardiac care, which could lower costs across the health care system. In September, under Price’s instruction, Medicare chief Seema Verma9 signaled a “new direction”10 for the Center for Medicare and Medicaid Innovation, which Congress set up to test promising new ways to improve care and reduce system-wide costs. Instead of vigorously pursuing that mission, the Innovation Center is now looking for ways to loosen protections for Medicare patients, pushing payment systems that would allow unlimited charges for medical services, and even voucherizing the program for seniors. Apparently, the agency’s “new direction” is backwards.

Payment reforms are showing results in states like mine. In Rhode Island, two health care networks, Coastal Medical and Integra Community Care, have been designated by HHS as accountable care organizations11. That allows them to share in savings if they lower costs and meet quality standards. Both have seen real success. Coastal has saved $28 million over the last four years. Integra saved more than $12 million over two years. And they have gotten there by improving the quality of care they give their patients.

If we can spread Rhode Island’s success across the country, the promise of reforming our health care delivery system is immense. The Institute of Medicine (now the National Academy of Medicine) estimated that at least one-third of U.S. health care expenditures have no value13. That means more than $1 trillion of our health care spending is wasted. There’s a lot of room to realize savings while improving care and outcomes for patients. We need to accelerate our innovation, not take our foot off the gas.

Failing to align incentives in our health care system has real, lasting, life-or-death consequences. Azar needs to convince Congress that he will correct the course that Price set and renew HHS’s commitment to lowering health care costs and improving quality. The American people deserve better than the inefficient and costly system we have today.

By: Sheldon Whitehouse