Mayo Clinic Health Policy Center: National Health Care Experts Say Payment Reform Must Focus on Improving Health, Minimizing Waste

Friday, June 22, 2007

HANOVER, N.H. — The medical payment system must be restructured to reward value, coordinated care and patient involvement in decision-making, according to more than 45 health care policy experts gathered Tuesday at Dartmouth College for a policy forum on payment reform. The forum — co-hosted by John Wennberg, M.D., MPH, director of the Center for the Evaluative Clinical Sciences at Dartmouth — is part of the Mayo Clinic Health Policy Center's long-term, nationwide initiative to shape a vision for the future of health care by uniting many voices into one.

"Many people remark, 'Health care costs are out of control; we would like to get what we pay for,'" says Robert Smoldt, co-host of the forum and executive director, Mayo Clinic Health Policy Center. "If providers are paid based on the value they deliver to patients, then they will be motivated to increase quality and decrease costs."

Participants agreed that the United States is not providing the highest quality care possible for the money spent, and noted several problems with the current payment system that must be addressed:

- Financial penalties and disincentives for providing certain kinds of care (lower-cost services, "cognitive" care, preventive care) and incentives to offer other kinds of care (invasive treatment, use of technology).

- A huge amount of money is being spent on end-of-life care that doesn't extend the lives of patients and may even shorten them.

- Poorly coordinated care is widespread and has a significant impact on outcomes and costs.

- .Patients are poorly informed about health care choices and the evidence basis of medicine.

"Doctors are not very good diagnosticians of patients' preference," says Dr. Wennberg, whose research has shown that patients choose less invasive, less expensive treatments when they are more involved in making care decisions. "Informed patient care needs to become the standard of practice when there is a choice of treatments."

During the meeting, participants representing many sectors — providers, health plans, employers, patient advocacy and academia — evaluated several innovative ways to pay for care. (participants listed below.) There was little support for the current Medicare pay-for-performance model. The group felt that the following three payment approaches — which aren't mutually exclusive — would have promise for increasing effectiveness and reducing costs of care:

1. Certification of Shared Decision Making for Major Surgery — Medical centers would be compensated for establishing a formal program in which patients actively participate in making treatment decisions. All candidates for elective surgery would be offered the program. Medical centers with high-quality patient decision scores would receive a bonus payment.

2. Chronic Condition Coordination Payment — For care of patients with chronic conditions, a "medical home" would be identified and paid a single periodic, prospectively defined "care management payment" to cover all of the care management, preventive care and minor acute care episodes associated with that chronic condition. The amount would be adjusted for the severity/risk of the patient. Major acute episodes and long-term care associated with the chronic condition would be paid separately.

3. Mini Capitations — Payments to hospitals and to physicians managing the hospital care for major acute episodes would be bundled together into a single payment. One lump sum payment for both physicians and the hospital would require the two groups to work together to integrate services for patients.

The Dartmouth participants advocated the following principles to guide the design of these new payment systems:

- Develop appropriate results-driven outcome measures around medical conditions over the full care cycle.

- Create a payment system that provides incentives for colleagues (physicians, hospitals) to coordinate care for patients, improve care and support informed patient decision-making.

- Pay providers based on value, considering the needs and preferences of patients, measurable outcomes, safety and service compared to the cost over time.

- Payment systems should be designed to provide patients with no less than the care they need and no more than fully informed, cost-conscious patients would want.

- For more information about the Mayo Clinic Health Policy Center and its initiatives, visit www.mayoclinic.org/healthpolicycenter. For more information about the Center for the Evaluative Clinical Sciences at Dartmouth, go to Dartmouth.edu~/cecs.

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Mayo Clinic Health Policy Forum Participant List — June 18-19, 2007

Joseph Antos, Ph.D. Wilson H. Taylor Scholar in Health Care and Retirement Policy American Enterprise Institute

David Barrett, M.D. President and CEO Lahey Clinic

George Bennett Chairman and CEO Health Dialog

David Bronson, M.D. Chairman, Primary Care Medicine Institute Cleveland Clinic

Emily Burgo Juvenile Diabetes Research Foundation

John Butterly, M.D. Executive Medical Director Dartmouth-Hitchcock Medical Center

Michael Cascone, Jr. Chairman Emeritus Blue Cross Blue Shield of Florida

Denis Cortese, M.D. President and CEO Mayo Clinic

Helen Darling President National Business Group on Health

Susan Dentzer Moderator

Linda Dillman Executive Vice President, Risk Management, Benefits and Sustainability Wal-Mart Stores, Inc.

David Druker, M.D., President and CEO, Palo Alto Medical Foundation

Donald Fisher, Ph.D. , President and CEO, AMGA

Elliott Fisher, M.D., MPH, Professor of Medicine and Community and Family Medicine , Dartmouth Medical School

Nancy Formella, President, Mary Hitchcock Memorial Hospital and the Dartmouth-Hitchcock Alliance

Jerome Grossman, M.D., Director Harvard/Kennedy School Health Care Delivery Policy Program Harvard University

Bruce Hamory, M.D., Executive Vice President, Geisinger Health System

John Iglehart, Founding Editor, Health Affairs

Charles Inlander, President, People's Medical Society

Brent James, M.D., Executive Director, Institute for Health Care Delivery Research, Intermountain Healthcare

Clarion Johnson, M.D., Global Medical Director, Medicine and Occupational Health Department, Exxon Mobil

Mark Kelley, M.D., Executive Vice President, Henry Ford Health System

Alfred Knight, M.D, President and Chief Executive Officer, Scott and White

Steve Lampkin,, Vice-President, Benefits Administration, , Wal-Mart Stores, Inc.

Sanne Magnan, M.D., Ph.D., President, Institute for Clinical Systems Improvement

Michael Manganiello, Principal , Whyte Hirschboeck Dudek Government Affairs

Robert Mecklenburg, M.D. , Chief, Department of Medicine, Virginia Mason Medical Center

Andrew Mekelburg, Vice President, Federal Government Relations, Verizon Communications, Inc.

Michael Morrow, Senior Vice President, Business Development and Network Management, Minnesota Blue Cross Blue Shield

Albert Mulley, M.D., Medical Practices Evaluation Center, Massachusetts General Hospital

Rob Nesse, M.D., President and Chief Executive Officer, Franciscan Skemp Healthcare

Norman Payson, M.D., Chairman of the Board, Concentra, Inc.

Patrick Quinlan, M.D., Chief Executive Officer, Ochsner Health System

Joe Quinn, Director, State Health Care Policy, Wal-Mart Stores, Inc.

Mary Richards, Director of Government Relations, Parkinson's Action Network

John Rother, Group Executive Officer of Policy and Strategy, AARP

Gordon Russell, Sequoia Capital

Katherine Schneider, M.D. , Chief Medical Officer, Integrated Resources for the Middlesex Area, LLC, Middlesex Health Systems

Robert Smoldt, Executive Director, Mayo Clinic Health Policy Center

Andrea Sodano, Director of Health IT, Wal-Mart Stores, Inc.

Charles Sorenson Jr. M.D., Executive Vice President and Chief Operating Officer, Intermountain Healthcare

James Weinstein, D.O., Chairman, Department of Orthopaedic Surgery, Dartmouth-Hitchcock Medical Center

Shirley Weis, Chief Administrative Officer, Mayo Clinic

John Wennberg, M.D., MPH, Director, Center for the Evaluative Clinical Sciences, Dartmouth Medical School

Arthur Williams, Ph.D., Chair, Health Sciences Research, Mayo Clinic

Charles Weller, Founder and CEO, Next Generation HealthCare Solutions, LLC

Nicholas Wolter, M.D., Chief Executive Officer, Billings Clinic

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