09 Dec Roy Beveridge, Humana: Interview Q&A

Q: Precision medicine will have a huge economic impact on health care. As a result, value-based versus cost-based pricing needs to be considered from a patient, pharma, and payor perspective. What are some of the challenges of implementing value-based pricing, and how can we ensure it will be available not just to patients who can afford it? How should %22value%22 be assessed and why is this important?

A: Value healthcare is outcomes-driven healthcare. This means: when you start looking at value, you are looking at outcomes. Looking at outcomes should never be more expensive for the system or the patient, nor should it be restricted to just a few people. With ACOs (Accountable Care Organization) and MACRA (The Medicare Access and CHIP Reauthorization Act of 2015), value healthcare is here to stay and will become an important method of payment over the next five to ten years.In thinking of value medicine, you automatically bring in precision medicine, defined as the right treatment for the right patient at the right time; we need to include the fourth category: “at the right price.”

Q: There is a concern that our healthcare system is broken and too complex, and it seems there is no simple solution – currently much time is spent on using a complicated and bureaucratic system. How did we get here? And how can this be best addressed from a “fair payment” perspective?

A: Yes, without a doubt, the healthcare system as of now is too complex and too bureaucratic. I believe a big underlying factor is the fee-for-service mentality that we adopted after World War II. Simply put, physicians and hospitals are being paid every time they do something as opposed to achieving a stated outcome goal. For example, they are paid just to see a patient and check hemoglobin A1c with a test; a classical fee-for-service scenario. What we in fact should do is to pay the physician or provider only for the value provided, pay him/her for the results,the outcome. Such a change would allow you to get completely aligned with what is best for the patient,and you reduce complexity. If we move to the end-result, with the goal being an improvement for the patient’s condition, then I believe the complexity begins to disappear, because the outcome can be clearly stated and is foreseeable. We will ultimately get there, but the path will differ throughout the world.

Q: Why should the emphasis be on quality care, with the patients being treated well, and the physicians being properly compensated according to care provided and based on quality metrics? What are some of the metrics that will measure quality?

A: The questions is“what is the emphasis on quality care?” In a-fee-for-service world, there is very little attention to quality. While in a value-focused world,the quality becomes an extremely important differentiation component in terms of how well physicians are doing. In the “old world,” the mentality is: I saw the patient. I delivered a service, so you need to pay me! In the“value world”- where you apply precision medicine – you pay based on the outcome, which must meet nine to ten agreed-upon quality metrics. So in essence, the focus needs to be on changing the payment paradigm toward a system where the physician gets paid for achieving improved quality metrics that the patient needs and deserves.

Q: Delivering affordable, value-based health care solutions likely will require health plans and providers to make considerable investments in infrastructure, technology, and clinical processes. What are your thoughts on that?

A: For a hospital system or large physician group to apply precision medicine, i.e.value medicine, a supportive infrastructure is required. Such an infrastructure is in the process of being built right now and will continue to be built over several more years.Why is this important? In a fee-for-service world, you were paid just to order something. In a value, world, you have to track it. Did you do it? Did you follow up? Did you implement change?

Let me explain this with a couple examples:

If one of the quality metrics is: “I pay you if your patient has received an influenza vaccine with a desired outcome to avoid the patient being hospitalized with pneumonia or the flu.”Therefore, if you immunize all your patients we should pay you more, because it is the right thing to do for all the patients.Right? Now think of a possible scenario where a patient comes into the doctor’s office and the doctor asks “Did you get the flu shot?” The patient’s response may be: “I don’t know.” A supportive infrastructure allows the payor to immediately send back information to the provider saying “Ms. Jones did in fact receive that influenza vaccine.”

Or another example: a physician writes a prescription for a diabetes medicine. But how does the doctor really know whether the patient actually took the medicine?Well, the information is available since the payor knows the exact time the patient picked up the prescription. The most cost effective way of knowing if a patient took their medication and followed up might be working with a health plan and their data systems. Value-based care requires significant investments but it’s better for those investments to be done centrally as with a health plan system with data being fed through all of the provider organizations.

So yes, you do need to have the technology, but it is technology built for and with the appropriate people in mind. That means, you need to align either with CMS (Centers for Medicare & Medicaid Services) or you need to align with each payor, because they are the ones who have the needed information.

In the end, if a provider does this infrastructure investment by themselves, it will be very expensive. If they partner with a payor, it will be much less.

Q: Many different industries experience dramatic changes with disruptive innovations. Do you believe that health plans are at risk of being outflanked in a similar way without substantial innovation and a measurable focus on value?

A: Let’s look at the banking industry fifteen years ago. Everyone used to go into the bank to deposit a check. They signed the check, waited in line, deposited it, and that is how banking used to be. Now, this has changed with disruptive technologies. Most checks are received electronically, or if you receive a check,you take a picture with the smart phone app to deposit the check electronically.

Another great example is the airline industry and what happened there. In the “old days,” one called a travel agent to book a flight. Now, going online you can see every price for every airline –this is called transparency. One click further allows us to look at the quality of each airline, or find out baggage fees, etc.

Compare this to where we are right now in healthcare: we have no transparency. We have no ability for cost comparisons;we have no ability to look at and compare outcomes. The disruptive events that are going to occur in the healthcare sector will actually facilitate precision medicine by honing in and focusing on the outcomes, quality, and cost. But until we have such transparency, we can’t succeed.

Q: Do you agree with the thought that the health plans and providers will need to collaborate to gain scale in the new value-driven marketplace?

A: If the provider is to be successful taking care of patients from a quality standpoint, the provider has to work with health plans. Health plans have the data, and there is no question that this collaboration is starting to occur and will increase.

Q: How important is clinical integration for successful adoption of value-based reimbursement?

A: Clinical integration is absolutely required! If you’ve got numerous providers in a system or a large group taking care of a patient, they have to be integrated: the specialist, the hospital, the whole health group, and the pharmacy. Until these people are aligned looking at endpoints, you are not going to be successful.

What we have found at Humana, with our focus on value delivered by providers,is that this clinical integration – when done correctly – results in are markable reduction in overall cost. It is in the range of a 20% cost reduction compared to a fee-for-service system. Importantly, as a prerequisite, you need to have this integrated clinical network in play.

Q: Is there anything else you would like to share with us?

A: I think that people need to be aware that precision medicine is something that already exists in so many things we do – look at breast cancer with the use of anti-estrogen treatment or tests that have been used now for 30 years. Precision medicine will continue to evolve in being instrumental in how we care for every individual, or most individuals, and it is really completely aligned with value medicine. So people sometimes think that precision medicine is different from outcomes-based medicine. And I would say if you believe in outcomes medicine you have to use precision medicine, or it can’t possibly work.

In other words, precision medicine is a tool in the toolbox for value medicine.