Transcripts For CSPAN3 Health Care Costs 20171101

Committee. At 2 p. M. , hear testimony from sean edgette of twitter and kent andwalker, general counsel for google. Watch them live, online or listen live on the free cspan radio app. A panel of healthcare policy officials shared their views on lowering costs while trying to maintain quality. Topics included changes in payment models and transitioning from a fee for service to a valuebased reimbursement system. This was hosted foundation. Good afternoon. So wed like to go ahead and get started. Im nancy chalkly. Im delighted to welcome you here today. We have an incredible panel of business and policy leaders. They come at the problems from different perspective. But one unifying theme between all of them is their concern for what rising healthcare costs do to americans. And the need to increase value in our Healthcare System. So each of them will present their own ideas of how to increase value or how they are increasing value in the Healthcare System. A nonprofit nonpartisan organization. And we believe by bringing people together with different perspectives, we can improve healthcare through evidence and collaboration. We have a wonder of audience today. I recognize some of you out there. We want to bring you in to the conversation. So at the end of the program weve allowed 30 minutes of q and a. If you could fill out the cards in your pack ket. Somebody will be around to pick them up and well use them to ask the panelist. We have had a last minute change to the agenda. You may notice bob is not up here. He got injured playing hockey. You have to love that at his age. So he was not able to join us. But mike graciously has offered to cover some of the points that he was going to make. And really the implications of the increasing costs and why theyre such a call to action to increase value in our Healthcare System. So ill start first by introducing each panel each panelist and sit down. And go on. So ill start with miketure new. One of the nations most maily regarded economists. And really bha distinguish ts mike is hes brilliant on the theory and the research, but probably more than any other economist he understands how markets work. And he leads much of the healthcare policy work coming out of harvard medical school. And sits on harvard benefits committee. Where he learns firsthand why markets are not always efficient. Is that fair to say . So, he also serves on cbo panel of health advisor. Member of the Massachusetts Healthcare connecter board of directors and vice chair of med pack. We have the good fortune of having mike serve on our Foundation Advisory board. He is one of the pioneers of value based insurance design and the go to researcher for evaluating medicare and private sector Accountable Care organizations. Please join me in welcoming mike to the panel. I am thrilled to be here. Nick um does an incredibly good job and nancy is always too nice in her introdestruction. Tremendous to see you here. Which is a testament to the caliber of my fellow panelists. Ill talk broadly about payment reform, benefit design. But because bob was going to talk about the budget i want to start with some comments about the budget. The quiz question im not sure bob would have had this. What do these decades have in common . The answer is in every one healthcare spending growth exceeded Income Growth. By varying amounts in the 70s we were 2 faster healthcare spending than Income Growth. In the 90s which was a considered a very good decade for at least healthcare spending growth. We healthcare spending growth exceeded income by 1. 6 . Thats a real fundamental challenge. If healthcare is growing much more quickly than national income. So we have had i think one reason why its great to be here today an Ongoing National discussion about what to do in the healthcare sector. And im going to larnlly talk about a broad ideas. I want to make an important distinction. In many debates when people talk about the challenges we face regarding National Healthcare spending theyre talking about total spending in the country. National health expendsture. Other conversations when people are discussing the challenges associated with ridesing health care spending. What they mean is the government is spending too much. Those are different issues chls theres Different Solutions for how youre trying to address the total efficiency of the Healthcare System and total healthcare spending in america. Relative to a concern about what the government is spendsing. Because i spent time in a number of dirnt settings i will make a quick comment about medicare challenge. So in 2015, roughly speaking medicare was 3 and a half, more. Of gdp. Take that for what you will. If healthcare spending growth continued to exceed Income Growth by 2 points which is roughly the average. By 2035, wed be up to 8 gdp. If yooer really successful and able to reduce healthcare spending growth to 1 percentage point. Midcare spending would be a little more than 6 and a half percent of gdp. If we were stuningly successful. Medicare would still rise as a share of over all spending. And the reason is because we have more Medicare Beneficiaries. We have fundamentally two problems. The policy solution for which are different. One of them is there has been rising spending historically in the Healthcare System. The second is in medicare, were struggling with how to finance a growing proportion of the population on medicare. It shouldnt be surprising that if we have more Medicare Beneficiaries per worker the workers will have to pay more to finance. Thats not Rocket Science math. But the implications of how you deal wa a growing population are how you deal with rising spending per capita. Its not just a medicare problem. I think theres been some discussion about medicaid. In the state house and dc. And as medicaid spend lg grows, it crowds out a bunch of other things at the state level. Theres a huge challenge not just about how we finance medicare. But how we finance medicaid. To give you some rough numbers, basically theres other parts of the budget we can think about cutting from. But if you try to fund hlk spending growth through taxes alone, no borrowing. Just taxes and raised everybodys income tax proportionally and it grew 1 faster than income. Tax rates by 2060 would have to rise for the highest income group in the neighborhood of 70 . Im waiting for the gasp. Hello . I dont think taxes will be 70 in 2060. It is true that the power of compounding can make numbers seem enormous if you go far enough. The fact remains. Fiscal challenges are real and they create enormous amount of tension in the system. As nancy mentioned i chair the i have the honor of chairing maybe the misfortune. Honor of chairing the benefits committee. About bha to do with our benefit package. And when we look at the numbers, we can see projection of spending growth that put huge pressure on the wages and the salaries of people that work at harvard university. So although we often talk and as i mention about the sort of federal spending or the state spending problem this is also a huge private sector issue. About how we can control spending growth. So what i want to spend the time on is solutions. And i just to be clear i use that word loosely because im not going to have a great magic bullet. If thats what you came for. We have other panelists. Ill talk about two broad areas. There are ores. One is payment reform. And the other is what i call consumer strategy or benefit design. Things related to engaging consumers through the different ways. Through insurance packages. It turns out that one strategy you might use to pay less is to pay less. It scores really well to cbo and you have seen that in recent Health Reform discussion. Where the assumed increase in fees to physicians and hospitals and Healthcare Facilities are lower than had been in the past. No one that i know or i sit is thrilled about the just pay them less strategy. Theres Energy Around alternative payment models. Paying differently. The two big types of episode payments or bundles. And a Population Based payment model. In the federal context thats largely aco. So to give you some idea of this is from brokings. We had a system for paying physicians. It was not sustainable. So we have now have a rule called mac ra. Which governs the way in which physicians are paid. Theres a portion called nips. A pay for value component. Which is fine. The thing i think is most important to understand about the system is the scheduled fee increases for physicians. Or essentially flat in nominal terms. For decades to come. Theres bonuses and stuff. But the key thing is by roughly speaking 2042 physician fees is sort of the base lel of physician fees are scheduled to rise by a little bit less than 10 . The fed is shooting for 2 inflation. Slowly over time there would be a reduction in the real value of the fees to physicians. And through the aca there are similar adjustments for payments to facilities where their fees are scheduled to go up less than their input prices. Thats i believe going to be a challenge for the providers system decades to come in the fee for service system. What we have been trying to do is build a somewhat different type of payment model where physicians in the Delivery System or broadly can capture some of the efficiency. And by pooling those efficiencies out and allowing the providers system to share in some of the savings, they can perform better financially. Than if theyre just having the fees eroded by inflation. Over 20 or 30 years. Thats the theory of how the models should work. In the advantage of the models i was listening to a well known venture capitalist. He said these flexible payment models allow innovators to make changes in ways that is arent distortded by needing to create revenue. By charging more for very specific services. Theres economic appeal to broader payment models. Ill go through what the mode els are. Three characteristics. They tend to transfer risk fro viders. That can be go or bad. The risk means they share some of the that. They include always pay for performance component. A value component. And increase i have grown to appreciate the data support. To enable providers to succeed under the models because it is hard when you change a sector business model. Often these new models go under the monokerr of value based pamtd and you see this all over the place. Reconcile and prevention and value. From volume to value. Its a commonly yoused word. It begs the question of what do we mean by value. My personal view maybe a little contrary. The word value is a little bit of the sugar that makes the medicine go down. What were really trying to do is shift some of the responsibility and the accountability for providing high quality care to providers and then hold them accountable for the financial component shifting risk and we call it value because it is sounds much more appealing than risk base model. A lot of whats going on here is not your standard pay for performance model. Its transferring risk and responsibility down the to the Delivery System. Episode based payments i have a lot of attention. I dont have time to go through an exhaustive literature. Although i would love to do that. In general, i think the evidence is clear that they save money. There are examples where they save large amounts of money. On average they save 5ish percent. Theres concerns for example that you save money per episode. We havent seen a huge impact on quality. There havent been big consistent impacts on quality. Theres several concerns with episode based payment. One is that the episode models work well for certain types of conditions. Hips, knees, maybe other things. The problems we have in the country a lot deal with complicated interrelated chronic conditions. That are harder to put into episode model and its uncloer how far you could go in a capturing the total spend of the country or population in episode based frame work. And the second concern we have is the induced use. So let me jump to Population Based payment model. Theres differences with capitation. The basic idea is that the Delivery System gets a fixed fee to care for a population of patients over time. Al of these theyre all built. Are built on a fee for service. Thats during the year the money is flowing in a fee for service way. The Delivery System the organizations that except this accountability are responsible for reconciliation in the end. Between what is spent and the total budget. So again i would love to spepd an hour and talk about the evidence thats controversial if you follow twitter. This is like the half the places where i am is arguing this point. I believe the evidence is clear that population baitsed payment model ts reduce spending by a small amount. Many people get dispinted. Small amount it differs across populations. The private sector does better. And part of the reason why is because theres wide variation of price in the private sector. And in the models it turns out the physicians the organizations that accept this risk can shop better and can safe money by directing patients to lower price settings and providers. It seems clear the results improve over time. And it also seems clear at least in medicare that physician independent physician organizations do better. Thats a generalization. Im an academic. Im paid to generalize. As as general rule, it seems to be the case if you want to save money by keeping out of the hospital it helps if youre not a hospital. So the other thing thats really important to understand and i dont know why its so hard to explain it seems that i keep saying this and doesnt sink in. In a shared savings model, the savings gets shared. Just so you understand how it works. If you save 100, and less spending. That youre not going to keep the whole 100. You shared it. So if you look after a year youre never going too to do as well as had you not shared savings. It is the encentive to induce the savings. If you didnt share you wouldnt have savings. To then share. I think we have to worry about trying to create a Healthcare System thats working in 2019. So just to be clear i really want the Healthcare System to work. But im much more interested in us getting on a path where the Healthcare System will work in 2025 and 230. If we spend all the time trying to get a big win in 2019, we risk abandoning a path that might get us somewhere successful in 2025. So the reason why i have been supportive of the models is not because the evidence suggests huge savings. I must admit if it saves money and improving quality, if youre saving money and improving quality in my book thats a win. It might not be slam dunk. But thats a win. And the reason why we should keep moving on this path is because if we get all the regulations right it enables the Delivery System to control their destiny and to capture some of the efficiency which is i think where were going to want to go. The details matter. We often say aco they succeed or fail. The details are very different. And the other thing thats important to understand is execution matters. Its not simply put it in aco is it gets implemented. How it works how the organizations that are doing this work accomplish their task ends up being really important. Dont under estimate the importance of management and execution. My summary. We want a mansion we have a delap dated house. We know how to build a tiny house. I dont know if you watch tinemy house. The point remains its a house and hopefully over time we can put on additions. Comparing episode and Population Based payment. They maybe able to Work Together. Quick summaries. Both of them seem to lower spending. The problem with episodes is they with narrow. If you save 10 on 5 of care. You havent saved that many on a population basis. The other models are broader. The concern is that not all areas are ready to support population base payment. For a while were going to have mix of these mod helds moving on. And its the case that specialists engage specialists better. The others tend to be focussed on the organization. You can take that as better or worse. Should they continue . Again i believe they should. In part because macros current law and will be challenging given the fee level. Its going to be hard to put in more money. So my general view is when money gets tight, and i hope my beginning slides convinced you money will be tight. The providers are going to want to control the money. And the over arching theme behind the new payment models are mechanisms to allow the providers to control the money. To capture and share in the savings they create. Ill switch gears to benefit design. Understand that one thing about insurance, is the goal is mitigate risk. It shouldnt be surprising the purpose of insurance is insure. Sometimes we forget that part. Were balancing risk spreading and incentive. The goal of cost sharing is not to lower premiums. Its relatively easy to have premiums go down if the make the patient pay more at the time of sfts. Thats not a clear win. Its shifting from a premium to the poipt point of the service. Which adds risk. That doesnt diminish risk. The other issue is the goal is not tax the sick. If you have high cost sharing who pays. The sick people pay. The goal is not balance or meet the healthcare challenges we face by charges all our goal is not charge young families. To support our healthcare spending. The reason why we have cost sharing. Is were trying to improve the incentive in two particular ways. One of them is we want to reduce excess utilization. And you probably know theres waste in the system. We would like to have less. We would like to encourage price chopping. Particularly in the private sector. With a huge variation of price. You would like to use benefit design to encourage the price shopping. Theres high deductible and copay plans. Essentially models that charge patients more. Those tend to be very blunt instruments for a variety of reasons. Sick people for example get above the out of pocket max and face no incentive for cost sharing. Most of the newer more advanced benefit designs try to target a purpose. Either price chopping or reducing over utilization. Reference pricing is the basic idea you pick a price if an employee goes to a higher price provider they pay the price out of pocket. That steers them. And lower the prices. Tiered net work is a similar concept. Its for all of your admissions or care. That so both reference pricing and tier net works are about steering pash patients to lower. The value based insurance is the idea of trying to align copays with value. So my colleague would be frustrated with me if i didnt mention that if you look at the care that we get some of the care is high value. And we want people to consumer that care. Other care is lower value. And we would rather discourage people from using that care. Theres a nuance. To align the cost sharing with the value to encourage the high value discourage the low value care. The basic results from the studies is it is thankfully to an economist good news that people respond to cost sharing. Financial incentives matter. Financial incentives matter. They shift the sight of care. Patients in reference move to lower price. Not all of them. A relatively small age. Theres movement associated with that. To give you some idea. Theres large savings in a reference pricing model. On narrow amount of care. Hips or knees. In a tiered model one Study Suggests a 5 savings on a population basis. It is also clear that higher cost sharing reduces use. High deductible plans have 5 to 14 savings on use. The results depend on exactly what you have done. How much emphasis on encouraging use of High Value Services and discouraging use of low vl services. How you design will determine the financial implications oftd plan. Some basic concerns. This is the one thats important. And disturbing to an economist. Cost sharing does influence patients behavior. Patients dont respond the way that clinicians might want them to. They reduce the use of high value care and low value care in the same proportion. They reduce their use of high value pharmaceuticals. Theres a number of for treating diabetes, Heart Disease a whole slew of things. Charge people more for those they actually use less of the high value things. Theyre not that good at discriminating. You can use the cost sharing it alo al allows you to set up. Theres another concern with the benefit designs that youre transferring risk. Remember the purpose of insurance is met gait risk. If you charge people a lot youre undoing that. And of course one thing we have been worried about is disparity. If you charge people out of the pocket you have to worry thats going to impact some populations more than others. And so a consumer oriented strategy always have to with the disparity concern. Particularly given people are arent always the best Decision Makers in terms of care they should get. A few final thoughts. Keep it simple. It is really easy to come up with dramatically complex Nuance Solutions where people have to choose among different providers and services and benefit design. Or complicated regulations about how theyll do things. Quality Measurement System in the country im a big fan of quality measurement. It has become a big complex entity. That creates cost throughout the system. Youll see this if you spend any time talking to anybody thats a had anything to do with mips. Theres concern about that. I think its a guiding principle we should do our best to keep the system simple. To avoid this sort of crushing administrative distraction. And the last point is maybe the most important, dont be so impatient. If you came here today and if you go to whatever talk youre going to next week, if youre going hoping this will be some magic solution and if we just get rid of whatever were doing now and put in this spectacular thing, thats not the way the system will work. By and large my view is that the road to success is always under construction. And we should be happy with small wins and incremental improvement. Driving in a direction we think will promote value using incentive to the Delivery System. Payment reform and patient benefit design and hopefully well be able to get to a place thats fiscally sustainable. One way or another well control healthcare spending growth. In the end math is going to win. We have to fig yir how how to do that in a way that maintains the quality of care for folks. We have a Healthcare System designed to meet needs. I think were on a reasonable path. Hopefully with continued work well keep moving in the right direction. So thank you very much. Mike, thank you. That was terrific. Very thorough and actually very clear, too. In a very complicated subject. Thank you. Now its my great pleasure to introduce cur tis bar net. The president and ceo of arkansas Blue Cross Blue Shield. A nonprofit Mutual Insurance company which is the Largest Health insurance in the state of arkansas with 2 million members. Hes really a champion for improving the health of his fellow citizens in arkansas. The most Vulnerable People there. The most vulnerable population. And under his leadership the arkansas Blue Cross Blue Shield has instituted a number of programs around opioid addiction. Health literacy and food scarcity. Hes here to talk about one of his really key components to his vision of making healthcare more accessible and affordable. And thats a movement to alternative care model. In collaboration with the state and federal government. And they have had a remarkable amount of success in arkansas. It served as a model for other states. As you can hear today hes pretty passionate about building a better Healthcare System. And were really pleased to have him with us today. Thank you. Thank you, nancy. I think its fitting for me to follow michael in our comments today. Michael has been a considerable apt of time in my home state. Studying the affects of many of the initiatives ill be talking about this afternoon. When i joined arkansas Blue Cross Blue Shield in 1993, i worked with a product called the primary care net work. That was a product we made available to large employers and located in rural parts of the state. These were communities with populations as small as 3,000 to as large as 20,000. The communities that had primary care physician clinics and at least one large employer. Sometimes more. And tended to be fortune 500 companies with a plant or mill located in arkansas. These were gate keeper type models so care for the employees and family members were directed to the primary care physician. And those physicians treated those patients as well as coordinated their care and referred them for additional services. The physicians were under financial risk how the plans perform. And one of my main job was to Work Together on a regular basis with employer leadership and physician leadership to bring them together to manage the programs and we would go through extensive Data Analysis to do that. You can imagine in 1993 these were mounds of data and reports we would work through. What we were trying to do in the setting is to look at which primary care physicians were performing the best. Which are the most effective and efficient hospitals and specialists to refer care to. We were aligned together to manage those healthcare costs because we all had an interest in keeping those jobs and local communities. We were really trying to work towards two objectives. One was to establish the primary care physician as the care coordinator. And identify and reward value. Now fast forward 24 years. And while we do not continue to have that particular product in our state, as an industry we continue to work towards those objectives today. Its what consumes us almost day in and day out. I would say that over the 24 years we have seen progress towards the two objective ts. And especially in the last five or six years. Some of that i think a big part of that is we have had a new partner involved with us as we pursue the objectives. And that partner has been the public sector. For what i want to do today is give you a look at what public and private collaboration has looked like in arkansas. I want to go over the initiatives. Talk about some of the support thats needed to make them work. And then just end by talking about really how all of this work is influenced our view and our approach to driving the Healthcare System towards value Going Forward. The healthcare challenges are in arkansas are not different too different than other rural states especially southern rural states. Its hard to navigate its fragmented. Theres little visibility across the spectrum of care. When youre thinking about quality and cost. Healthcare spending is growing its growing at rates that its severely straining the public and private payers in the state. And the Health Status of the tends to be poor. We rank at or near the bottom in a nrm of key health measures. Where it be obesity. Diabetic. Preventable hospitalization. Prenatal care or smoking. We tend to rak towards the bottom. But by woshlg working together. Begun to transform the Healthcare System in the state of arkansas. This is the frame work for how we have been going about that work. Its called the arkansas payment and improvement initiative. Two main components to this. The first is a Patient Centered medical home model that we have been had in place. The pilot with the Company Going back to 120. It ties directly into the comprehensive primary care initiative. Episodes of care component. Which we put in place in 2012. Then all of this work was helped tremendously in 2013 when our state received a state innovation model grant from cms. I think its important the to note that Arkansas Payment Improvement Initiative is not just a Public Private collaboration. It truly is a multipayer initiative. As you can see, all the major private payers in our state are involved in this program. At some level. And have been supportive. As well as major employer groups. Large employers who have a commitment towards value based care. Have been partners in this as well. I want to start by talking about our Patient Centered medical home approach. These are the objectives of the well designed Patient Center medical home. To achieve these objectives a practice has to go through significant transformation. For example, they must commit to a Team Approach to care. They must identify their top 10 priority patients. Have care plans. Use Electronic Health records, arrange for 24 7 live access to care Going Forward. So all of these are important activities. They have to under take in order to transform the practices to be Patient Center medical homes. In return, these practices do receive up front payment. Which help fund those transformation activities. In 2010, our company put a stake in the ground. And we said that if were going to have a sustainable Healthcare System Going Forward. We have to have a strong primary care infrastructure. So we embarked upon what turned out to be a two year pilot program. To see if we could transform primary care Physician Practices into Patient Centered medical homes and assist in the process. These are the goals that we sought to achieve. In only two years we saw very good results. We saw hospital readmission rates for those patients who are attributed to Patient Center medical home go down. Emergency room visits and related cost go down as well. We saw the appropriate use of the emergency room actually go up. As well as generic drug prescribing rates. We came away from the pilot which very significant and valuable Lessons Learned. Probably chief among those is the need for payer alignment. When you pursue the types of initiatives. Even with our market share, we realize very quickly that any one private payer would not represent enough vol youm to get the practices to make the investment that were needed to transform their practice the way they need to be practiced. Occur. So we understood that very quickly that without much more volume these tended to be a one off effort and would have a very short shelf life. You can see we have other important Lessons Learned as well. So, in 2012, we cms opened up the opportunity for mashlgts to aply for the primary care program. Or cpc. We took our Lessons Learned and ginned with arkansas medicaid and our state Surgeon General and other healthcare and political leader in the state, and we made applications and we seized that opportunity at that time. You can see in the period from 2012 to 2016 we were one of the seven markets that were selected. One of four that were statewide. We had 68 practices slegted. 268 providers and five payers participated including arkansas medicaid. And again that was critical to have the patient volume needed. Now we had the patient volume we could offer the incentive necessary that would be sufficient enough for the primary care practices to make investments in infrastructure and changes in their clinical Decision Making and operational processes that were needed to transform the clinic. The volumes were critical to do in that. Over the course of the time period that we participated in c prkts c and whats now a called the classic program, you can see that we did participate throughout that time period. We saw improvements and Patient Satisfaction and experience of care. During that time period we saw reduction in hospital admission rates by the patients who were part of the Patient Center medical home program. 15 . Which led the country. Reduction in emergency room utilization. Improvement and quality. And the information that was kept there. And arkansas and 2015 and 2016 did have net sai savings result of the program. We have came away feeling like it was a very much a success. Of the experience that we had, in cpc classic program. Led us to want to pursue to be part of the c plus program. Which went into effect january 1 of 2017. Were a part of that as well. One of 14 regions around the country that have been selected for cpc plus. We have grown our participation across the board. We have 182 practices now part of that. 689 proid providers. Up to seven payers supporting this initiative. Thats important because we think this will allow us to have a greater impact. Going forward. I want to turn my attention and talk about the episode of care program. We work very closely with arkansas medicaid to basically develop and implement the episode of care program. The purpose of this program was to include. It was to improve quality. And to basically reduce the variation in the types of procedures that were used to treat conditions. And so we feel like it was Important Movement in the right direction. For each of the episodes a clinical leader is identified. Which is called a principal accountable provider. So that individual is identified. There are quality standards that were established. And thresholds established. Which laid out the commendable, acceptable and unacceptable cost level for each of those episodes. Then we provide regular reporting back to the clinical leads. They can look at the episodes across the entire spectrum of care and look at not only how the quality measures are performing. Also the utilization in cost associated with the different episodes. To date we have 22 episodes of care. Each of the payers is free to decide which of the episodes they want to implement. Based upon the population they serve for arkansas blue cross we have implemented 14 episodes of care. This is an example of how the payment model works for the episode of care program. And you can see that at the end of the performance period, an average cost per episode is calculated for each of the clinical leads. This is usually at the end of the one year period of time. And there are commendable level ts acceptable and unacceptable levels. Those who perform and mote the commendable level do qualify for gain sharing. And so that is shared back with those particular clinical leads. Those who perform above the unacceptable level. Have to share in the kansas of that program. A portion of their payment is then recooped as a result of that. Since put lg the program in place we have seen what the intended effects were meant to be. Which is we have seen variation reduced. Quality improve. And so we feel like this has been Important Movement in the state. These are some high level results from a couple of the episodes that we have had in place. Probably the longest for the state for our plan. The prenatal quality cost down. And also total knee hip replacement. I want to point out the Cost Reductions are not adjusted in any way for inflation. If you were to do that assuming cost would be growing year over year. Then i think the Cost Reduction would have an even greater impact. I did mention this earlier. But arkansas was one of the several states selected for state innovation model grant. 42 million to help fund the Arkansas Payment Improvement Initiative. The activities that i have been talking about and help develop those episodes. Help develop the Patient Centered medical home process and we think that that partnership was part of this is certainly indicative of how private and public organizations should Work Together. As you can see we have been having an impact in our state. I dont think i can over emphasize the importance of data and communication when supporting these types of programs. When we implemented these programs we rolled them out. We worked cloetsly with arkansas and medicaid. Especially on episode program. And we held 21 Public Work Group Meetings in eight low kagtss around the state. We received feed back from over 500 providers. Patients. And other stake holders. Who helped really shape how the new models look and how they work. Ongoing communication is critical. We have teams each of the payers have team ts who are involved in this on a regular basis. We have weekly, monthly. Quarterly meetings. Its not just the payers getting together to work on the program, were also including in many cases the arkansas hospital association, the arkansas medical society, as well as the practicing physician participating practices as well. What were doing the sessions were sharing challenges, were talking about Program Changes and as much as anything were talking about best practices. Data is also absolutely critical to the success of the programs. We decided early on that if we were to try to build whole new Technology Tools from scratch, they would add tremendous cost. Arkansas blue cross made available our advance Health Information net work very early on in the program. So it was already used by 99 of providers in arkansas. So it already had a presence in the offices. We were able to use that as really the way to push information and data out to all the provider practices and especially all the reporting. We think that was critical to cope the providers from having to log in to multiple systems and learn multiple report formats to get them to feel comfortable with the program. We provide a variety of dash boards. To our participating practices. As part of this initiative. Theres drill down capability they can see exactly how they are performing and areas for improvement. One of the things that we did early on also is we established a dedicated resource center. That providers can contact and also out reach to them to help them understand the reporting. And help them understand how to use that information to help drive practice improvement. I want to end by really going back to my comments at the out set. I feel like we have made in our state very Good Progress at those objectives i talk about. That is to improvement care coordination into identify and reward value. We think a lot of that progress is really the occurred as a result of the collaboration between the public and private sector. By working with cms we have been able to bring together a much bigger impact than we could have before. Arkansas blue cross were convinced that we need to continue to move this market toward value based payment. We think thats critical to having a sustainable Healthcare System Going Forward. And we also believe that all the initiatives that we have worked on that i have spent the last few minutes talking about. Aco like models that we were worked with in the state. We feel like all those efforts have really helped lay a foundation that we can continue to pursue this Going Forward and were working on the plans today. We also want to continue to collaborate with Public Programs and i encourage public agencies whether it be state or federal level to continue to view the private payers as partners in innovation. We think thats critical. Finally just to heave you with one other remark. We have seen firsthand in our state the by working with Better Together, by combining our Patient Value yum. By combining our different perspectives. Combining our different areas of exper toes. By combining our resources. That we can pursue common strategy that could be scaled to address common challenges. And we believe by working Better Together that we can have a much greater impact than any one company or any one agency can have working alone. Thank you. [ applause ] thank you. For your remarks and really for your collaboration and leadership with public sector. And we look forward to getting future updates on how you all are continuing to make progress. So now its my great pleasure to introduce david anderson. President and ceo of Blue Cross Blue Shield of western new york. And dave leads the regions Largest Health insurance which a Community Base td nonprofit plan with 1 million members. And dave is really a forward thinking entrepreneur and executive. And hes leading a number of innovative efforts to improve the health of new york. Including a community out Reach Campaign to address the oip yoid epidemic and home based care with behavior and social support. As youll hear today hes committed to strengthing the primary care to support improved care. Better Population Health and lower health cost. Hes led a new Payment Program to empower primary care providers with flexibility and resources to better manage patients care. Please join me in welcoming dave to the podium. Good afternoon. Pleasure to be here. I have enjoyed the comments of our prior speakers and i think the sequence is good. Michael is more of a macro level and talking con accept shlly. Cur tis comments were specific to the arkansas. And to those segments and i want to spend time today talking about a very specific market based value based initiative that we have brought to that market called best practice. It its very regionalized and also focussed on the to help primary shortage of primary care. That we have in that area of western new york. So ill give you context around the population that ill be talking about. And the area. This is us. Headquartered in western new york. We operate in buffalo. Western new york is an area that has actually had some shrinkage in population over the past decade. Population is ageing a little bit. So those are factors in the effort that we have made to transform the population. This is where were located. Ill talk about specifically about western new york. Although we will begin to roll out similar processes in other locations as well. This is the region that we focus on. Its an eight county service area. As i mention it has static population trends. Two major hospitals systems. In that area. And controlling about 80 of in patient care. And theres one distinct cancer specialty hospital. Roz well park is in the area as well. Fairly typical of legacy territories that are hospital driven. They are very doctor centric. Not patient centric. And as we have evolved into more of a patient centric and consumer oriented segment in healthcare we we have a need to flip that around. We looked at the area and said how can we begin to transform the provider systems and in this specific area to make it patient centric and bring value based contracting to the region. There was a very high degree or concentration of specialists. Also not that unusual when you have hospital driven communities. And they were a very much a late adopter to any form of reimbursement other than fee for service. Our program is called best practice. And ill it really had two main objectives. One to transform into a value based and provide and realign incentive with the provider system as both michael and cur tis talk about. We have a pretty critical shortage of primary care physicians in western new york and you can see the numbers there. Showing our deficit. And they are shrinking all the time. Not unusual in a number of communities around the country. Because they have not been supported either economically or within their practices. In a way that makes primary care the preferred specialty if you will. In the provider system. As i mention we had an ageing population. And the result of the model the fee for Service Model calls primary care physicians to be reimbursed and their income levels to be such that they have a general incentive. To move towards specialties. And in a volume based reimbursement model the only way that primary care physicians can progress is to to do more volume. Which is exactly the opposite of the incentive we want to provide. So the current relationship is broken. Much of this you know and have heard. The responsibility of our system in a fee for Service World really falls on the patient. Pcp primary care physicians and specialist do not collaborate as well as they should. Often Electronic Medical records and other forms of patient records dont follow as concurrently and accurately as they should. That results in redundant testing and procedures. And theres also a fee for Service Environment an inability to reward pcps based on performance. Essentially theyre all reimbursed in the same way. And the result that we have today is our higher cost. Lower Patient Satisfaction scores. Very difficult to measure quality scores in that environment. And so we have moved forward towards best practice. This is primary care as we felt it should be. Its not perfect. And we did not want to go from a to z all in one year. That wouldnt be possible. Its a step in the right direction. First of all the pcp coordinates care and would be compensated accordingly. If to have a pcp assignment doesnt have to be an hmo type plan. Where its chosen. We use a tool to attribute all of our members to certain pcps such that they have a full panel. We focus on the total health which i think should become apparent in minute. Not just treating illnesses. The pcp becomes the source of referral. And reprovide support. We have changed the provoider support model such that the pcp has concurrent data to share with specialists. The net result of the Financial Model is reward out comes. We have already seen higher Patient Satisfaction scores. And we are early this program that ill display in a second, started january 1. We are already beginning to see primarily because of changes in referral patterns we are beginning to see cost decline. So functionally, and ill apologize for the granularity. Its important you know functionally what value based contracting can mean. Its not the only model. But its a terminology that we use a lot. And to bring it right down to a relationship between the health plan, the member and the provider is important to understand. We launched ours in this eight county area on january 1. We started the april before. And began educating the pcs in our region for nine months prior to implementation. We now have 1,000 pcps participating and about 400,000 of the members attributed to the pcps. One of the disadvantages although conceptionally aco arrangements or even Patient Centered medical home arrangements. One of the downsizes they generally work on smaller population. Theyre specifically about named population. It might be a segment based that might be very small regional basis or whatever that particular Provider Group can provide care for. We want a bigger effort than that. We want to transform the membership in an eight county area across the board. One of the things that we have been able to do is were including med kale. Were including medicare and including our employer population. Whether its selffunded or fully insure. It has a broader impact across the population. What we have done is created a combination. Of fee for service which we have just been saying is a bad thing and i know we have been saying that been saying is a bad thing and i know weve been saying it all morning but there are aspects where fee for service actually works. As well as a Monthly Payment that we refer to as a Care Management fee. Also because michael indicated we dont want to use cap taigs anymore. So we refer to it as a Care Management fee. But i have put cap taigs back into this explanation on purpose because i think it makes the point although it is not cap. Tation in the way most of us remember it. Heres generally how it works. What we did is took those 400,000 members. We looked back over a period of time. We started in 14. We have that claims data. On a per member per month basis we created a base rate and said the cost of that population historically on those claims under that traditional model is a certain amount per member per month, thats our base rate. We then used a form of capitation adjustment which has historically been age and gender related. Thats nothing new. But what we then did is we used the makesen risk scoring tool which looks back at and then can actually begin to predict what costs will be based on an individual score. And we applied those factors for everyone of those numbers. So for example a primary care physician has 100 of our members. He actually has a risk score that is different for every one of those 100 members base on on whether they have chronic illness, based on theyre very well, based on their age. So they are all different. We then take that population and we look to the providers. We use our heat of scoring methodology, and we create ten guidelines within our reports and we apply those against the factor on a per patient basis. Now, we could debate hetus. Its not perfect. However, we find that weve used the 3m system, risk scoring system as well. We found the results of those two analysis to be fairly similar. So were fairly comfortable that using our hetus scores was an adequate measure of quality. And we also because of our work on medicare advantage, like most health plans were having to do the hetus scoring methodology and do the code checking as well. Then on the efficiency model we used the mckesen risk scoring tool for that because it has a prospective measure to it and we combine those two and that is applied toward every one of those members risk score. What that creates is an actually capit ation to the monthly scare physician which is unique to every one of the patients that is attributed to that pcp. And as i said, there are a number of things particularly in the preventive and wellness areas that we want to have happen and we continue to pay them on fee for service. So that creates the reimbursement model for the primary care physician. We believe everybody wins. I wont Read Everything on the chart. Certainly available if youd like to have it. But one of the things it does is it creates a baseline level of cash flow for a primary care physician to be able to build their practices and to know they have a certain income level attributed to their patients that they can count on. And there are factors in that base level of compensation that then allows because theres revenue there every month for a physician, it allows them to manage their patients the way they think its best. And a good example is under the traditional model of fee for service, in order for them to receive any compensation for a consultation the patient has to come into the office. It nay not be necessary. This way if they want to use telephonic or videoconferencing to communicate with their patients around conditions that are not as severe, theres actually a piece of that service fee that contemplates that, and they feel they have adequate compensation in order to adjust their practice accordingly. They also have access to cost and quality data that they traditionally had not had. And that cost data is important in the referral pattern process. Most times what we have found is the primary care physician making a referral to a specialist at one place or another had no idea of what the cost, quality and efficiency measures were for the specialist they were referring to. Now, thats a work in progress, but we are already seeing a difference in the referral patterns against this population from the primary care to the specialist. Because that as wellness and health of that population improves for those patients that are attributed to that primary care doctor then he begins to receive more money because of the way that the Monthly Service fee is calculated. And his reimbursements go up. Hes rewarded for the higher Health Status of his population. So he wants them to go. He wants his patients to go to the most effective, highest quality environments they can, to receive their care. Historically, he did not know where that was. The member, theyre dedicated to a pcp. Generally, we find our members, although choice is always important, want to have a pcp that helps them guide them through the system. The care is not limited to a Standard Office visit, as we mentioned. Its up to the physician and the patient to determine how that care, primary care would be administered. Its better coordinated. So when they leave their primary care on referral, their records are largely supported, and theyre very current. And that allows the member to have shared Decision Making with their pcp. On our side, on the payers side, it is aligned with our hedis measures, and affects our risk scoring, can affect our risk scoring for risk adjustment revenue. As well as star ratings. Theres a greater focus on Population Health. And as i mentioned, one of the things we have seen that we have underestimated a little bit, there is a change in referral patterns to more Cost Effective specialty environments. So its a major step from fee for service. Western new york was very traditional. I arrived there about four and a half years ago. There was essentially no valuebased contract in the market at all. So it was a territory that had lagged a little bit. And as i mentioned, we now have 90 of our pcps. And essentially all of our attributed population on the basis of that contract. I mentioned we spent nine months educating in advance. One of the critical things i heard curtis say the same thing, that it is essential in these environments that you change your provider support model. They need data in a different way and in different timing in order to make the right decisions over what they have had in the past. We have added about 25 Provider Service representatives that do nothing but administer these contracts with those thousand pcps. So outcomes. As mentioned, 90 are working with us now. We were told directly by cms that we were awarded a cpc plus contract as one of the 14 pilots for 2017 specifically because of our best practice program. I had hoped i would have a little runway in this process, but my largest competitor has copied us almost already. And i guess thats a way of saying that we feel we made some of the right decisions. And then after one year, were not quite done with the year yet. What do we expect to see . We would have a higher degree of cost transparency at the pcp level. Thats also helping them make appropriate referrals. We have, as i mentioned, a couple times, a change in the referral patterns as a result. We have a very different level of provider engagement. And our valuebased literacy among pcps, which they didnt know even two to three years ago, and we have seen hedis score improvement greater than traditional pay for performance programs. Which has helped us in risk adjustment processes as well as our star rating. As far as actual savings, what were looking at, were pretty aspirational. We think probably on an overall basis, around 2 in 2017. We dont know that yet. It looks like thats about what were tracking. And again, i think maybe i agree with the comment michael made. That may not seem like a lot. It seems like a lot of work and a transformation of an entire provider system for 2 . But this is a multiyear arrangement. And we think in year one, that would really be excellent. And remember that in a compounding environment, that 2 savings resets the baseline. So as you move that forward, that 2 becomes very significant over time once that baseline continually is reset. So thats best practice. Weve well hopefully have a chance to come back and report towards the beginning of next year after we have a full year in. But hopefully, that was helpful to give you some granularity around how some of these concepts are applied at a market level. Thanks for having me. Appreciate it. [ applause ] so, dave, thank you so much for that granular look at how these contracts really work, and its very impressive that you already have 90 of your primary care physicians under contract with it. So now well hear from avik roy. Always interesting. Avik is the cofounder and president of the foundation for research on equal opportunity. A nonpartisan, nonprofit think tank that conducts original research on the impact of Public Policies on americans with incomes or wealth below the u. S. Median. So its a very topical issue that youre addressing in your new foundation. You know, you will know him. Hes a leading conservative change agent. Hes advised three republican president ial candidates and influences and informs the policy debate in his role as opinion editor at forbes. He also has experience in medicine and finance as a former medical student and jobs early in his career at bain capital and jpmorgan. Were also honored to have avik as a member of nicms advisory board, and hes a Senior Adviser to the bipartisan policy center. Hes a fierce advocate for the free market and a very effective advocate for the free market and patientcentered reforms to lower the cost of Health Services and Prescription Drugs. Were just delighted to have him here today. Thank you, avik. [ applause ] thanks, nancy. Its great to be with you all and share the stage with what i thought were really interesting presentations from some very impressive people. As nancy mentioned, our new think tank, the foundation for research on equal opportunity is focused on trying to find ways to achieve the goals and the principles of both progressives and conservatives, to say lets find solutions. Lets find reform ideas that can move the needle for the people who have the least Economic Opportunity in america today. I think all of you understand that Prescription Drug prices is one area where affordability and health care are particularly impactful to lowincome communities, because we all go to the pharmacy. And pay those copays when we pick up our prescriptions. So its an area where, of course, its not alone in terms of being a place where health care is expensive, as we have heard today, but its an area where in particular, patients are exposed to those costs. We published in may a white paper called the competition prescription. And the point of this paper was to try to break through the log jam we have had in Prescription Drug pricing. As you all know, the dynamic we have had for the last several decades has been, well, the democratic side, theres been a lot of concern about high Prescription Drug prices. Advocacy of price controls and variations of price controls to try to regulate the problem. And on the conservative side or the republican side, the view has been, well, we dont like price controls. So were basically going to change the subject. I think the argument here is to say, actually, the situation we have today where we have such high prices for Prescription Drugs, its not the result of a free market. Its the result of specific policy decisions that congress and the fda has made that have allowed prices or incentivized prices to go up the way we have. And the solution to that problem is actually more competition. Competition has been the biggest driver of reducing pharmaceutical prices in the United States. So we have successes and failures. And the goal here is to hopefully learn from the successes to address the failures. So you all know this story. The story of the fact that americans pay a lot more for Prescription Drugs than everybody else. Right . So per capita, Prescription Drug spending in the United States is basically double the rest of the wealthy countries in the world. At 1327 per person in i believe 2014 is what this data comes from. So thats a lot. Right . What you might not know is that, you know, its particularly thematic in the context of the value and volume debate. Were actually the best country in the world at putting people on cheap, lowcost, unbranded generic drugs that cost less to manufacture than a bottle of water. So you know, we talk about the high prices in america. But those high prices are driven in particular by the fraction thats not that 82 . Its the 18 . The 18 of drugs that arent generics that are branded drugs, and particularly the subset of those are like the patented brand of drugs, thats where the high prices are. The vast majority of prescriptions in the United States are for cheap, unbranded generic drugs. There were doing well, thanks to one of the farsighted laws this institution has ever passed, the hatch waxman act of 1984, which did a lot to stimulate the growth in prescribing generic drugs. Compared to the european median of 21 , were actually four times better in terms of making sure that where theres a cheap generic alternative available, people have access to it, theyre using it, and the clinical effectiveness of the generics is as good as the old patented competitor. Were doing a great job, actually, at engineering and encouraging competition when a lot of drugs go off patents. The problem is that for the branded drugs, the prices are going up. Youll hear people say, well, you know, growth in pharmaceutical spending is growing by x percent. What often you dont see in those charts or those slides or those tables is that actually, if you just look at branded drugs, the inflation is even higher. Right . So in 2012, were spending 228 billion on branded drugs. In 2016, spending was up 50 , 50 percent on branded drugs. Spending on generic drugs and this is nominal data, not inflational data. In 2012, unbranded generics were spending 52 billion. And 2016, we were spending 50 billion. So there was actually a real decline, a nominal decline in the dollar value of our spending on generic drugs even though the prescription share of generic drugs were going up. Generic prices were going down. Thats the untold story about drug spending in america. Is that where cheap, generic drugs are available, costs are actually declining. But for those branded patented drugs, costs are skyrocketing. One thing you hear the pharmaceutical industry point out is that, well, you cant just go by those prices you see in the newspaper. The list prices. The list prices arent actually what we receive in revenue. You have to account for all of the discounts that come out of that list price before it actually gets to the consumer. And they do have a point. But i think its also overstated to say that the net price that pharmaceutical industry reports is actually the true price thats paid by the consumer. Thats not true either. And i try of walk through it here. Theres the list price. Thats the price that almost nobody pays. But its the Sticker Price, you could say. Then there are wholesalers and distributors. The three best known are amerisource, cardinal health, and mckesson. They actually buy these drugs in bulk from the pharmaceutical manufacturer and then sell them to pharmacies. And so they take a discount for buying in bulk. And they have calculated that for branded drugs its on average about 16 . You discount the Sticker Price by about 16 to get what ims called the invoice price. Then to get the net price, you subtract out a few other things. So, for example, what pharmacy benefit managers do, they get rebates from the pharmaceutical administrator to get a more favorable position on a formulary. Certain drugs over other drugs. Sometimes if you have a lot of cholesterol lowering drugs, some are generic and some are branded. The branded ones have to give rebates to the pbms which are contracted with insurers to incentivize the pbms to stimulate more utilization of the branded drugs when the generic drugs would otherwise take over. Yes, thats money coming out of the pharmaceutical industry to get their drugs to consumers. But its actually a mixed bag in terms of whats happening with consumers. In some cases, theyre using a costlier drug, which drives up Health Insurance premiums. The cost to the consumer actually goes up. Another example is copay assistance. A lot of pharmaceutical companies will say we know our drug costs several hundred thousand dollars per patient per year but for lowincome patients who cant afford that well pay their copay and deductible so they dont have any outofpocket costs. Its a win win, right . Because they get to say that theyre, you know, being very charitable to lowincome populations, and they get a lot more utilization of their drug. But the higher utilization of a high cost drug means what . Spending goes up and premiums go up. So the end result for the consumer is not the net price. The net price is the end result maybe to the Pharma Company, but the price to the consumer is actually higher than the net price because theyre paying for these higher premiums as a result of higher utilization of expensive drugs. I try to illustrate that in this next chart. If we look at the other wealthy countries in the blue there, thats the average pharma spend per capita for them. And then we say, okay, what is it in the United States . And what are the different components . So 899 is the net price, if you add all this up, its like 1600. Thats like the list price, the Sticker Price. The real impact to consumers is basically this piece plus this piece. Its about 1150. So you know, yes, we should factor in the fact that the price that consumers pay is lower than the Sticker Price. That should be part of your thinking about high drug prices, but even if you take that into account, were talking about prices that are more than double the rest of the wealthy economies in the world. So its still a huge policy problem. So i alluded to in the beginning, why are we in this situation . A lot of people say its the free markets fault. The free market has lowed the high prices to emerge. If we had more price control, we wouldnt have higher prices. Im not dismissing the fact if you regulated prices, you could in theory have lower prices than we have. Thats true, but its also true that we dont have a free market for drugs, let alone anything else in health care. And thats also a big driver. In fact, a primary driver of why drug prices are so high in the United States. So here, i have a bunch of bullets on many of the ways in which we through, again, congressional policy and fda policy, have made it easier for Drug Companies to charge higher prices, because theyre insulated from competitive pressure. So the most important is that not only do we not pay for drugs directly for the most part if we have insurance, we dont actually shop for the insurance ourselves. We have thirdparty payment of drugs and then we have thirdparty payment for the insurance that pays for the drugs with a third party. Theres really ninth Party Payments for drugs and Everything Else in health care, and no wonder that patients are divorced from the clinical value and the cost of the drugs that theyre using. Right . They say, hey, i have insurance. My plan should cover this drug. But they dont always have a real sense of how much that drug costs the system because theyre so indirectly exposed to those prices. Theres also the fact that there are legal monopolies, constitutionally sanctioned monopolies. If you have a patent, that patent lasts 20 years and ten of those years might actually still be active when the drug gets through the fda approval process. And we dont want to get rid of that, right . We want to reward innovation. We want people to develop innovative drugs and capture an award for that, but thats not a market. When you have a monopoly, its not exactly a market. Theres also the fact that federal Health Care Programs like medicare, like obamacare, and medicaid and v. A. , in different ways all basically mandate that drugs be covered. So medicare, basically every drug thats approved by the fda has to be covered by medicare. So guess what. That gives companies, pharmaceutical and Biotech Companies incentive to charge high prices knowing their drugs have to be paid for by the taxpayer, regardless of what that price actually is. So this is particularly a problem in oncology. In cancer, who gets cancer . Mostly old people who get cancer. Medicare is the Health Insurance for old people. So thats why oncology drugs in particular have high prices. In those areas of medicine that primarily affect people below in the workforce, preelderly individuals, theres a lot more leverage that Insurance Companies can use to fight that off and say hey, were not going to reimburse for this or pit you against a generic drug or what have you. In particularly diseases that affect the elderly, thats where the leverage has been the lowest because of the situation where medicare is effectively required to pay for everything. Its true in obamacare too. This is more of a cms regulation, but cms basically issued regulation in the last administration that for every therapeutic class, there has to be one branded drug reimbursed by a plan participating in the obamacare exchanges. What does that mean . That means the companies have leverage to charge higher prices. Theres also the fact that there isnt a level Playing Field for most situations where insurers and Drug Companies are fighting against each other. Right . So the drug company if its a Branded Company has monopoly, but the insurers are competing with one another. Theyre fragmented. Theres a monopoly on the other side, and the end result is that the drug company has more leverage to say hey, if youre not going to reimburse for this drug but your other competitors are, youre the bad guy. Youre the one not paying for this lifesaving drug, and the patients because theyre insulated from all the price signals complain to the insurance company, not to the drug company, for charging the high price in the first place. Theres also the fact that the cost of r d has gone up considerably over the last several decades. That, of course, means that venture capitalists, pharma companies, Biotech Companies try to recoup their costs through higher prices. Its very important to say you hear a lot of people say, well, we have to charge high prices because of the cost of innovation. Theres basically no correlation, and the paper that the study is based on, we actually have gone through a lot of this data. There is almost no correlation between the cost of developing a specific drug and the price that the manufacturer of that drug actually charges. Thats more driven by market power. If youve got a monopoly situation where you know insurers have to pay for the drug, youre going to charge a high price. If youre developing the tenth cholesterol lowering drug, you dont have a lot of leverage and you might have to charge a lower price. Market power, not the cost of innovation, is driving a lot of prices. A great example is the ultra rare disease area. You might have a drug for a disease where the disease only affects about 4,000 people in the u. S. , and youre charging 300,000 or 500,000 per patient per year for developing that drug. The cost of developing the drug is quite low because the cost of r d is directly correlated to the size of the Clinical Trials you have to do. If youre doing a 40patient clinical trial, because theres only 400,000 people in the country with that disease, your costs are low. If youre doing a test with 20,000 people for diabetes, the costs are in the billions of dollars for developing the drug. But diabetes drugs cant charge high prices because theres 20 other diabetes drugs out there. So its really market power, not the cost of innovation, that drives prices. Whenever you hear somebody say, well, we have to charge this high price because the cost of innovation, roll your eyes. The fda, and im going to highlight this in the next slide, the fda has actually in certain ways created artificial monopolies for drugs that are off patent. The famous example is the Martin Shkreli drug in the news. That was actually a really old drug that had been off patent for a while, but because of an artificial monopoly the fda helped create, that drug was no longer a monopoly and shkreli could raise the price. There are a number of ways in which the fda regulations have created prices and there should be more competition. Biosimilars are a very important emerging area for more competition. As many of you know, but maybe not everyone, theres a difference in fda regulation between small molecules which are pills you could synthesize in a High School Chemistry lab, like aspirin, like lipitor, versus monoclonal antibodies and other big proteins which come out of the dna revolution of the last several decades. Those larger proteins have to be manufactured much more carefully and much more specialized ways. And theyre not so easy to replicate. And as a result, the fda has been much tougher on and has created much higher regulatory barriers for generic competition for those biologic drugs which has meant that the original manufacturers of the original innovative drug have had much longer runways in terms of having their monopolies than they would have had otherwise. Well get into that more later on as well. Theres also a kind of intellectual and cultural bias at the fda and elsewhere against socalled meto drugs. We have to have innovative drugs not metoo drugs. Metoo drugs are bad. Thats not true. If you have metoo drugs that are similar in profile and structure to an existing drug, guess what that means . If you have two or three or four drugs competing for that group of patients, prices go down. So it has this bias against metoo drugs because intellectually, we say thats not as innovative, but economically, from a Public Health standpoint, its very important to encourage the development of metoo drugs because metoo drugs mean lower prices for every american. Lets focus on these three areas in particular. Before we get to that, let me talk about one of these ideas, which is orphan drugs. This is an example of where congress has created artificial monopoly. In 1984, Congress Passed this law called the orphan drug act. Basically, in order to stimulate r d for diseases with less than 200,000 patients in the United States. The idea being that because those markets were relatively small, they had fewer patients, the Drug Companies and Biotech Companies didnt have an incentive to develop drugs in those areas. Basically what the law did is said okay, even if the molecule youre testing has no patentability, its an old drug, around 100 years, if you develop it for a disease thats relatively rare, well give you seven years of monopoly exclusivity, as if you had a patent. Whats happened effectively because of that law, which has a lot of good intent and good policy results behind it, is Congress Kind of overshot. I shouldnt say kind of, it really overshot. So the end result is what companies can do now, okay, we can develop a drug and study it in this very small Patient Population that has a particular muitation for lung cancer, and when it runs out, we can study another cancer and get seven years of exclusivity, for a drug that has no patents because its been around for several decades. So some manufacturers have taken advantage of that legal opportunity, completely legal opportunity, to have long monopolies for drugs far contrary to the intent of the designers of that law. So its gotten to a point now where orphan drugs are taking over our pharmaceutical stem, as i show in the slide. In 2015, socalled Rare Diseases are actually a quarter of all pharmaceutical spending in the United States. By 2020, its going to be a third. 176 billion for diseases that affect or for drugs that try to treat very Rare Diseases. Im not saying those arent important. If you have one of those Rare Diseases, you really care. But diseases like diabetes and high Blood Pressure matter too. Alzheimers, right, a disease that affects millions of americans, creates an incentive for Drug Companies to move away from studying those big disease populations because theres so much more of an economic incentive to study Rare Diseases. So again, lets focus on some of these areas where Public Policy has created artificial monopolies and what we can do to change it. We talked about the stacked sevenyear monopolies for orphan drugs. Theres also something the fda started about ten years ago called the unapproved drugs initiatives where there are a bunch of drugs that have been on the market for long time before the fda actually existed. And because those drugs predated the fda theyve been on the market legally for many, many years. So the fda a few years back said you know, we dont like that. Were going to try to get those unapproved drugs off the market. Heres how were going to do it. Were going to encourage manufacturers to do Clinical Trials for those drugs, and the first one to do kind of a traditional set of Clinical Trials, well give them a monopoly for a period of time in order to reward them for the cost of doing the clinical trial. The end result has been a lot of this Martin Shkreli type action where okay, a company does those Clinical Trials. They get a monopoly, and then they jack up the price by 6,000 percent. So again, the fda had certain good intentions. We want to make sure that these drugs that have been around for hundreds of years have a sort of regulatory and safety profile we can certify, but they didnt really think ahead and say okay, were creating this incentive for exploitative pricing. Thats one area where the fda has kind of maybe again, not thought ahead about costs. Another area that fda commissioner Scott Gottlieb has written a lot about in his prefda life when he was a colleague of mine at forbes and has talked a lot about in his current role is the issue of generic drugs where theres a delivery, a specialized Delivery Technology associated with it. So epipen is an example. Epinephrine, the drug in the epipen, has been around for over 100 years. But the injector that the Company Mylan uses to administer epinephrine, that has a patent around it. So what stymied competition in this area is that if you want to be a generic manufacturer of an epipen, you have to prove to the fda that the exact physical kinetics of the way your epinephrine enters the body are the same as mylans. But you cant do that without running into mylans intellectual property around their proprietary injector. So the fda has not had the toolbox to say, you know what. It actually doesnt matter if its exactly the same as epipen. We just have to make sure we have the same clinical effect. So the patient who needs the epinephrine injection actually can get treated. Right . And so there are things that the fda can do on its own to try to address that. But commissioner gottlieb, again, in his previous work has long argued that really congress, if Congress Helped create as an amendment to the food, drug, and cosmetic act, a new pathway for those kinds of medicines so that if there was some Delivery Technology around it, we could create a new pathway to make sure the fda could show that they were clinically equivalent, these two different injectors. Even if they werent physically equivalent. That would do a lot to stimulate competition in this area. Another area that you may have heard of is rems, or risk evaluation mitigation strategy. The famous example is actually thalidomide was one of the reasons the fda was created in the first place. It was a drug that was marketed in the 50s for leprosy. It turned out it was causing birth defects in pregnant women. And so it was clear that we have to have an agency thats keeping an eye out for this. So the drug has been around for a very long time. Cell gene, a Company Based in jersey, actually discovered that there was a lot of utility for thalidomide in multiple myeloma a very serious disease. So they did Clinical Trials to get thalidomide approved for that. And then they had a little bit of exclusivity because they did the trials, but the real monopoly opportunity for celgene was the fda said well, because of this risk of birth defects, we have to have a Risk Management strategy to make sure this drug doesnt get into pregnant women. Cell gene developed that pathway. They patented it so no one could create a generic version because there was a patent around it, and the fda went through a spate of creating more and more of these rems protocols that people could patent and therefore blocking competition. Theres, again, a way to standardize maybe rems protocol so they dont have intellectual property around them, which will allow more generic competition. Then this last bucket i want to focus on is the biosimilars pies. Biosimilars have been accelerated in the marketplace as a result of a kind of a provision within the aca called the biologics price and competition innovation act of 2009. Or bpci. That bill tried to create some measures that are like hatch waxman so biosimilars can get to the market in a more standardized pathway, but the problem is its not exactly the same. So as i note here, if you have an offpatent drug thats a small molecule like an aspirin and do Clinical Trials, you can get five years of exclusivity, and then theres generic competition. For reasons that basically have nothing to do with economics or policy but have everything to do with politics and lobbying, thats 12 years for biologics. Theres no reason why it should be 12 years for biologics and five years for small molecules. It should be basically the same because if you dont have a patent, there should be the opportunity to actually develop competitive drugs in that area. If you have a patent, fine, have that patent and have that legal constitutional monopoly for an innovative medication. If its not innovative, there should be a harmonization between a small molecule and a large molecule. Another key area, one of the reasons the chart i showed in the beginning about the 82 uptake of generic drugs is because at the pharmacy level, walgreens or duane reade or cvs, can substitute. If your doctor prescribes lipitor, a cholesterol lowering drug thats now off patent, the pharmacist can substitute a generic drug without asking your permission. Heres your bottle of atrvastatin. Thats one of the key elements of hatch waxman thats led to higher uptake in this country compared to other countries of generic drugs. The bpci is not as strong on that point. So a lot of states at the behest of local companies have created barriers where you have to ask the doctors permission or the patients permission or both or go through a bunch of other hoops before you can get the biosimilar prescription. In that way, competition has been inhibited at the state and local level for biosimilar drugs. So we have alluded to a number of the ideas that we talked about in this paper for how you can actually increase competition in Prescription Drugs and therefore lower prices. Some of the things i havent highlighted yet that i would encourage you to think about is i mentioned that we have this bias towards metoo drugs. One way in which the bias manifests in fda policy is fda has this thing called fast track designation. If youre on a drug thats truly innovative the fda will give you certain more accelerated review times and an easier process to get through the fda. We could easily have something similar for areas where alsont enough competition. We could have a fast track for areas where theres a monopoly or one or two drugs for a particular disease area but we really need more because of that Public Health problem that comes from monopolies and lack of affordability. Another thing we could think about is to emulate the success of Medicare Part d and leveraging generic drugs into Medicare Part a and b. Right now we have basically three different parts of medicare that in which the pay for Prescription Drugs. Part a is for the hospital based drugs. Part b is for drugs administered in a physician office, usually iv infusions. And then the Retail Pharmacy drugs in part d. We could do a lot of things innovate to allow the cost savings to be leveraged throughout those other medicare sections or Medicare Parts. Another area we should think about is maybe creating a safe harbor for insurers to jointly negotiate with the drug company in a particular state for the prices of that Prescription Drug. So instead of having this unlevel Playing Field where the drug company has a monopoly and the insurers are fragmented, maybe the insurers could actually jointly negotiate for that drug price and therefore not fear if one insurer doesnt cover it and get beaten over the head, they might have a stronger ability to negotiate and get the prices down. A nice advantage of that approach is it would diminish the incentive for insurer consolidation, which is a big problem weve been dealing with for the last couple of years. At the end of the day, the best solution for making sure that we have a more competitive system with drugs is to make sure that every american or as Many Americans as possible are choosing the Health Insurance plan that covers them. Thats something the aca accelerated in a certain way. Thats something that free market conservatives want to accelerate. The more people are choosing their insurance and we get away from this ninth party insurance, thats going to do the most to stimulate and incentivize lower cost Prescription Drugs and the utilization of the low cost options we have available today. With that, you have a copy of this paper. The full paper is in the folder, so if you picked one up outside, if youre watching this online or on cspan, you can download the paper from our website, freeopp. Org. I look forward to your questions. Thanks for your time. [ applause ] well, avik, that was terrific. You covered a lot of ground there. And i think all of us learned some new things. So at this time, i would like to open up the floor for questions. So if you have a question, please complete your card and the team will be going around gathering them. Im going to take this opportunity, the fact that we have two ceos that are Major Players on their state exchanges, to ask with open enrollment coming up next week, were all wondering what youre expecting and what youre expecting for 2018. We know theres been a tremendous amount of uncertainty, particularly around csrs. Curtis, would you like to go first and share a few thoughts on what youre expecting . Thank you, nancy. And i think from our perspective, this has been an issue, obviously, that we have been watching very closely for quite some time. And as we stay close to the market and we do that through feedback we get through our call center, we have Retail Stores throughout our state where we interact with those in the individual market on a regular basis, and also with our agents and brokers, which are very critical to working with these individuals. You know, weve been working with them to try to get an idea of what we might see with the open Enrollment Period. I think as we go into that, all of the confusion, all of the things that have occurred over the last several weeks, were expecting a slight decline as we move toward that. I dont think that should be a surprise to anyone as we move in that direction. I think one thing that we have seen that maybe has surprised us a little bit is all this confusion has bled over into some of our other customer segments. And thats principally been our Senior Market. So as news reports come out about increases in premium rates and are csrs going to be funded or are they not going to be funded, weerg receiving a lot of questions from the senior population who are going through their own Enrollment Period with questions about how that affects them. Were spending a lot of time at our company, a lot of resources to outreach to the individual market but especially the Senior Market and others who might be going through an annual Enrollment Period to communicate to them exactly what this does mean to them. Dave . I would say first of all, in new york, we have a statebased exchange which was developed by the state, which was one of their options. And i think fortunately for many of the members in new york, it has run on a fairly stable basis. However, i would echo curtiss comment about the instability that has occurred. We our activity is already up substantially, meaning people calling in, people going into our stores, asking whats going on. Because there isnt a clear delineation of what the cost sharing reductions apply to and the average consumer doesnt understand that level of funding in those programs, so they feel that their own coverage is in jeopardy. And theyre concerned, not only about losing their coverage but i think that the our members feel like they have done their part. They came out of the uninsured, the ranks of the uninsured and made the effort to enroll in Health Insurance coverage, and now they dont know what its status is. And they dont know what is going to happen to that coverage, whether theyre going to lose it, whether its going to be changed, how its going to be funded Going Forward. And that level of instability is i think its going to cause a number of our members drop back out of the system. Great. Great. Well, that was very interesting. Well get back on point with the valuebased payments. And im going to start with a question from u. S. News and world report that was submitted ahead of time. What does the future hold for value based payment if the Affordable Care act is repealed or overhauled in the future . Is there an agreement that a shift to a value based payment is needed for cost control . Any of the panelists . Mike, you want to start . Maybe from med pac. Well, as i said, i think that the challenge here is much bigger than what you might think is going on in the Affordable Care act, and frankly, the discussions around the Affordable Care act havent really centered on this aspect of the Affordable Care act. I think my expectation is that theres going to be some version of alternative payment models moving forward, not because we really have figured out how to make them work perfectly or have perfected the regulations, although theres a lot of work going on in that area, but because the alternatives are very challenging for people in a variety of ways. So i expect that many well, many of the models going on arent directly related to aspects of the Affordable Care act, and theres a lot going on in the private sector, and youre increasingly seeing the private sector continue to lead in developing models. The one thing you might not have realized in listening to curtis and dave talk is they both developed different models that worked in their markets, and i think that level of flexibility you see in the private sector is such that there will be a demand from the Delivery System to maintain this type of momentum. One thing i might add is that a big part of the reason we havent had a valuebased Health Care Model to begin with is because of 70 years of federal policy that has created incentives to go in the opposite direction. The reason we have a valuebased iphone model and a valuebased car model and a valuebased Everything Else model is because the consumers directly benefit if companies and manufacturers deliver highervalue, lowercost, higherquality more reliable products. Thats not necessarily true in health care because of all the incentives we have put in the other direction. Really, when we talk about value, i think its very important to understand that value at the end of the day is determined by patients. Patients should be the ones, not experts, who determine whats valuable and the best way to ensure that patients get to participate in that conversation, what value is, is to make sure theyre controlling the Health Care Dollars that are spent on their behalf. Curtis or dave, you want to weigh in . I would add, i thought michael did a great job answering it. I think the alternative payment models or value, moving toward valuebased care, i think its here to stay. I think its taken hold in the marketplace. I think we as private insurers, as we hear from our customers, i think the expectation is we will continue to move down that path. Its desperately needed, a big part of our responsibility to our customers is to provide affordable coverage for health care services, and we think moving toward a more valuebased system is a critical way of getting there. Dave . I would agree. I think that one of our challenges in Going Forward with the models, even though they are i wouldnt say theyre relatively new, but i think in a lot of markets like ours, theyre relatively new, is that the definition of value to a Health Care Consumer is changing. And we will be challenged to make sure that the model changes with that. Great. Heres a question from cms. And avik, its right up your alley. Getting rid of pay for delay and patent laws that allow for evergreening seem to be lowhanging fruit to help lower drug prices. Why arent we seeing any movement on these issues to help with drug pricing . Im actually a skeptic on the socalled pay for delay issue. For those of you who dont know what that is, basically what happens is you have a branded drug where the patent is about to expire, but nobody knows when the drug will go off patent because there are three or four patents that matter, and the Generic Company litigates under hatch waxman to try to invalidate some of the patents. Because those are going through the court, nobody knows will the drug expire, will it go off patent in 2022 or 2027 . We dont know, and no one knows until the judge decides. And so what often happens in those cases is the branded innovator and the generic competitor settle. And they say, you know what, in exchange for us being able to go first and have a certain amount of exclusivity as being the exclusive competitor instead of having ten other generics on the market, let us launch maybe not in 2022, but in 2025. So not exactly when the last one expires but sort of in between. So some have criticized these, again, called pay for delay and say whats happening here is Branded Companies are gaming the system to extend the life of their patents longer than they should be. I dont think thats accurate. Whats happened in these cases is that both sides are basically shedding risk. Theyre kind of averaging out. So the Pharma Company is saying okay, instead of going off patent in 2027, well effectively start having competition in 2025, and the Generic Company is saying instead of getting to start in 2022, were starting in 2025. So both sides half win and half lose. Its a settlement. The reason these settlements happen is nobody is certain whos going to win in court. If you know youre going to win in court, if the Generic Company has a really strong case, they can say no, im not going to settle because i think were going to be in the market in 2022, go to hell, you know, pfizer. So thats why these settlements happen. I dont think its a gaming of the system. In fact, the ftc a few years ago tried to litigate because they thought it was anticompetitive and they didnt get anywhere because of the fact that these were legitimate settlements in my view. I think there are a lot of things we can do to encourage competition. I think that one is more of a red herring. Anyone else want to comment or shall i move on . Okay. Heres a question from hrsa. Oftentimes clinical quality measures change because the science underlying them change. How do the changes impact how we assess the quality of care and use these metrics for pay for performance . So talking about the underlying measures of quality and how when the science gets better the metrics change. So i think theres two parts to that answer. The first one is sort of the process answer is theres a general system, it actually works differently in different companies, but overall, what i would simplify it as saying is measures get developmented through processes like mqf to figure out what measures they want to have and how they want to work, and then you see an enormous number of private insurers, cms and others, figure out how those measures are going to be incorporated into a range of contracts. And so i mentioned earlier that i was concerned about the administrative costs of all of this. My general sense is we have a process that is not ideal, and its in many ways administratively burdensome, but its important we maintain some version of the process, and i think where were going to go now is more streamlining. Were never going to be in a situation where our Quality Metrics capture all dimensions of quality and are updated as timely as you would like, because the simple administrative costs of being able to gather the data and implement them become overwhelming. I think we need to begin to think through how do we take the basic current framework we have and simplify it to a meaningful and administratively efficient approach. And thats going to be a challenge, i think there will be other areas like patient imported outcomes and other types of quality measures were going to go to, but i would discourage you from trying to say we could come up with the exact best scientific evidence, and we need to get that in front of our contracts, you know, as soon as we absolutely possibly can. Theres so many ways we can complain about the quality of the Measurement System now that i think that might be an updating all the measures might be lower on my list of things we should do. All right. Im going to move on because we have so many questions. Unless somebody wants to jump in. Dave, did you want to jump in . Well, i wanted to emphasize the mission around quality. I think there has been a debate on how quality should be measured and what it is inside of health care for 30 or 40 years. What you need to do in order to take positive steps forward is you have to determine your methodology and definition of quality. And that is probably not going to be identical to the next person. And i agree with michael. But thats okay. I think what we need to do, particularly in this valuebased contracting process of putting quality in that consideration, is that it needs to be directional. If were waiting for it to be perfect, it will never get done. Thats why it hasnt gotten done any quicker than it has. At the same time, it has to have Science Behind it. But if were going to wait for some uniform definition and process to determine quality that is going to be applied in every circumstance, nothing will get done. Great. All right, question from the National Business group on health. How are the employers engaging in this discussion . Maybe curtis. Ill take that one. And you know, i talked a bit earlier with the Arkansas Payment Improvement Initiative, and we have had strong support from our employer customers. And thats not happened by accident. You know, we spent a lot of time talking about the individual market, but the group market is very, very important to us. And its very important that as we move in this direction, we take them into account as we do that. So we made, especially the episode of care program, we made that central to our network strategy. It became part of our network reimbursement. Before we did that, we created opportunities to visit with all of our large employers in particular, and we went out there and explained these programs to them, how they worked and how it would benefit them and got their feedback on the front end so we could build it into our Program Design from the very beginning. I spent a lot of my time out with our customers. Invariably, the whole issue of valuebased payment comes up in those conversations. Thats an opportunity for them to share with me as well, and were going to continue down that path as we refine these programs Going Forward, were going to continue to seek the input of our group customers. Great. Ill speak briefly sort of from the perspective of harvard and what i know more broadly. Theres this subset, i would say a relatively small subset of leading large employers, curtis probably spends a lot of time with walmart, for example. Theres boeing, theres caterpillar, a bunch of others you can name, that are doing a range of innovative things, sometimes in the space of payment reform. For most employers, its very hard for you to engage directly with the Delivery System because your carrier insurer is between you and the Delivery System. So most of the employers that im familiar with that are doing things are focusing on aspects of benefit design because thats a much, much easier lever for an employer to pull. There are some, i think, hopeful movements forward, things like the Health Transformation alliance where large employers are trying to come together in ways to push the system forward, but i think by and large its much more difficult for employers to engage in a payment Reform Movement than it is to adopt novel benefits. Did you want to weigh in too . Yeah, you know, i often get asked by particularly large employers, you know, were the ones who they say, were the ones who have the most to gain from Lower Health Care costs so why doesnt washington, why dont experts talk to us and learn from what we do to try to lower costs . And what i often respond to them when asked is, you guys have actually been the biggest drivers of Health Care Inflation for the last 70 years. Its because, again, the huge tax break we give to employerbased coverage that makes workers insensitive to the price and value of the care and coverage theyre consuming that has led to all the Health Care Inflation. Medicare was built on that system as well. And actually, yes, employers do have an incentive to keep their Health Care Costs down. But they also have an incentive not to make their workers mad by tweaking too much their health benefits. Michael dealt with this a lot at harvard where they tried to tweak the benefits to make them more Cost Effective and the faculty went absolutely nuts and complained. Right . Thats maybe not the typical company, because its the harvard faculty, but you know, the same dynamics apply everywhere. A lot of these large employers are afraid to do a lot of things that all of us at the table would be costeffective and appropriate ways to refine your Health Insurance coverage. One thing that im excited about or intrigued by in the last couple weeks has been president trumps executive order which of course has been the subject of a lot of noise and commentary. Theres a piece in there about expanding the flexibility of employers to use Health Reimbursement accounts, which are kind of like hsas, not exactly the same, but that could be a really interesting tool for putting workers and thereby patients more in charge of the Health Care Dollars spent on their behalf. We could see depending on what Statutory Authority they find they have, a lot of innovation in Health Care Delivery that comes out of those moves. Great. I agree with much of what avik said about the role of employers and his related analysis. I do want to point out one thing about competition in health care that does relate to the role of employers in a lot of the current policy discussion. Again, as an economist, im a relatively free market economist. Im relatively pro competition in the grand scheme of things. But health care is not asparagus, and one of the key challenges we face is this pooling component of health care that doesnt occur for many of the other Consumer Products that we talk about. Were pooling sicker people with healthier people, older people with younger people, and a part of that involves just managing people in different risk profiles, and part of it is systematic pooling of people that, you know, dont necessarily want to be pooled with each other. And one of the important roles the employerbased system provides is a way of pooling that is not inherently risk based, and the reason health care has been so challenging is because if left fully on their own where consumers have total autonomy to choose the plan that works best for them, they will do that, which again, chalk one up for economists, but on the other hand, that leaves other people in a situation where they might not have the same options they had in the past. And i dont have any great answers to how to deal with that amount of pooling or whether the aca did too much or too little. Thats a debate i will leave for other folks, but i do think when you do an analysis of whats going on and think about these kinds of things in health care, you cannot ever get to somewhere close to the right answer if you arent really cognizant of how the pool is held together or allowed to separate. Great. All right. Weve got a question from the american medical association. One way to bend the cost curve is to shift the focus of american medicine from treatment to prevention. Can a sufficient emphasis on primary prevention and preventative medicine be achieved through Free Market Solutions . What is the best approach . I would, with all due respect to the ama, i would dispute the premise of the question. Prevention is very important for Public Health for all the obvious reasons, but weve all got to die of something. So if were not going to die of cancer, were going to die of alzheimers. If we cure alzheimers, were going to die from falling down the stairs or something else. Were always going to die. I think. If were always going to die, theres always going to be some expensive care at the end of our lives. So while prevention is very important for Public Health, obviously, if you diet and exercise and dont eat a lot of barbecue like i do in austin, youre probably going to live longer and thats good, and you wont have diabetes and all those other complications and those are all things we should try to achieve from a Public Health standpoint, but we shouldnt be convinced that thats going to reduce costs. A lot of times actually prevention can increase cost. If every woman in america got a mammogram, the mammogram test costs money. Wed spend a lot more money on mammograms and wed have some incremental benefit in terms of Early Detection of breast cancer. But the reason why a lot of independent xwoorboards and med boards say well, no, its only women of a certain age and risk profile should have mammograms is because we want to make sure the right people are getting those mammograms so were not massively inflating the costs of running all those tests. Right . So prevention is good, but prevention is not an unalloyed good. It has clinical risks and it has Economic Risks that we also have to take into account. And mike then has to also you have such a great handle here. Ill try to be quick. No, no, i love it. I agree again with avik. I have two fitness trackers. Im a big fan of wellness and prevention. That just says ocd. But the issue is if you could snap your finger and make everybody healthy until they were 105 and then they died by falling down the stairs, that would be probably a better world than we have more. The problem is most of the evidence suggests most prevention programs actually are very Cost Effective. And i might say at high value. Cost effective is not the same as cost saving. And oddly enough, when we promote prevention, were often promoting primary prevention, which is giving Healthy People things and the most important type of prevention would be secondary prevention, where you are trying to find people who have chronic conditions, diabetes, and prevent exacerbations or bad things happening, and in things like the Affordable Care act where theres an exemption, that focus only on the primary prevention, the world would be a better place if we expanded the idea of prevention to allow secondary prevention, treatment of chronic conditions to be treated as prevention for the purposes of hsas and other types of things like that. Great. Dave, this is a question for you from todd at one of the federal agencies. Please address challenges for pcps caring for patients and multiple payers to transform to your models. How do you get the pcps to do your best practices when why youre large portion of their business youre not the only payer that they are dealing with. Well, its interesting. We initially thought that we would force this issue on our pcps because we wouldnt know we did not know if they would adopt on their own. As you saw from the report that i gave were at well over 90 . We never had to get to that point. Doing so for a variety of reasons but one they are Getting Better data that allows them to be more accurate and efficient at the point of service that they historically have been frustrated with. Also, if they show improvement in the quality scores and the Health Scores of the patients that are attributed to them they have the opportunity to make more money. Theyre actually i dont think i mentioned it, but on the for those performing at the top end of those quality scores, those pcps. Their reimbursements can go up by 10 in 2017, and we will go to 20 next year. Its a pretty significant difference. So there is for those that are that have looked and evaluated the program theyve been very enthusiastic about adopting it. And as i said, one of our primary competitors is a very close follower. So i think its going to become the standard of reimbursement in the region where it operates. Curtis, do you want to weigh in too . Certainly you face some of the same challenges in arkansas, though one of the ways you dealt with it obviously was combining with medicaid. We did. That was 2010. When i talked about earlier when we started our pilot and the results we experienced probably a bit different then than what daves experienced today. Now, had we done this in the same time frame as what david and his plan have done, we may have seen something a little bit different. But we think just as we talked about earlier, local markets, local care, the dynamics, all those things are important. And we think that you have to be openminded as a plan that in order to solve problems and offer up the best solutions youve got to really adopt to your particular market. And thats really what drove us to the approach we found. We found there was a very common perspective, very common viewpoint that we had that we shared with other leaders in our state in Health Care Delivery and also in the Government Programs as well. We thought that was a great opportunity to collaborate in order to drive what we felt like was an opportunity for greater change. Mike, theres a couple of questions here about medpac and macra. Maybe there are soon to be or current comments on it. Can you address that as a former vice chair of it . Im not on medpac now and so i do not speak for them. In all honesty, when i was on medpac i did not speak for medpac. I believe that ill just say it very broadly and go on. Medpac im sure will look clo closely at a whole range of things in macra and how its working. They have been critical of aspects of the mips program for a bunch of reasons, i think. Well see what they come out with in terms of the recommendations. The easiest thing i would say about mips is not all physicians about mips is not all physicians are going to be above average. Captions Copyright National cable satellite corp. 2008 captioning performed by vitac