A New Era of Physician Accountability

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Doctor PhotoWith the implementation over the next few years of the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act, including the gradual build-out of ‘Physician Compare‘, a consumer website lauched by the Affordable Care Act, we are entering a new era of physician accountability. 

MACRA is a quality measurement and payment system for physicians who treat Medicare patients. Beginning in 2019, physician payment will be much more tightly tied to quality and performance measures.

With the attention to the inefficiencies of physician payment, MACRA may trigger a “disruptive innovation” in health care. In group practices large and small, and individually, physicians will have the incentive to address the failings that vex our health care system. As a reminder, these include:

  • A 25 percent to 30 percent rate of unnecessary, inappropriate, or excessive care;
  • All too common misdiagnosis and medical errors;
  • Care whose “value”—results for the money paid—is suboptimal;
  • High and escalating prices, the highest paid physicians in the world, and an unsustainable cost growth trend; and,
  • The most expensive health care system in the world even as it yields poorer overall results compared to other developed nations that spend less.

Doctors clearly are not to blame for the totality of these failures. But since roughly the year 2000, consensus has grown that no gains can be made in tackling the above problems without changing the drivers of physician behavior. They are the main actors in the system; they deliver the care and order it. In doing so, they generate the majority of costs. Increasingly, they also run health care systems and hospitals.

Many avenues to changing physician behavior exist: regulation and oversight; education and training; professional standards and rewards; peer pressure and review; community standards; the threat of malpractice; performance/quality measurement; financial incentives; and competition.

This post reflects on the last three of those avenues — performance/quality measurement, financial incentives, and competition.

Performance And Quality Measurement

Assessing physician performance as a way to drive quality improvement and consumer choice is coming under newly intense scrutiny. Measurement was supposed to become easier, better, and more meaningful with the development of electronic health records. That hasn’t happened. So the field remains largely dependent on direct reporting and claims data.

At the same time, the number of measures has proliferated; it’s now well over a 1,000. And the application of these measures via Medicare, insurers, health systems, and payers has been chaotically executed. Some experts advocate a 50 percent reduction in the number of measures.

Physicians and their staffs are now spending an unacceptable amount of time dealing with the reporting of quality measures — 15 hours per physician per week at a cost of just over $40,000 per doctor per year.

It is also suggested by experts that this time commitment and level of scrutiny has deepened physician dissatisfaction and burnout, with the majority of doctors in a 2014 survey expressing negative feelings about their profession and its future.

But despite physicians’ grumbling, new attempts to rate doctors are actually proliferating, as consumers’ interest in and engagement with this information grows. Millions of people are now rating their doctors online and media organizations, such as Consumers Checkbook, are using Medicare data and other data to probe physicians’ quality of care, and issue consumer-friendly report cards. Here too, though, methodology and results have stirred up controversy.

Financial Incentives

Into this contentious environment comes MACRA. It mandates financial incentives starting at 4 percent of Medicare reimbursement, as bonus or penalty, in 2019 and rising to 9 percent in 2022 for physicians who choose to enroll in what the Centers for Medicare and Medicaid Services (CMS) has dubbed the Merit-based Incentive Payment System, or MIPS. 

Doctors in MIPS must report performance measures to CMS. They’ll then be graded on four factors: quality-of-care (30 percent); resource use (30 percent); meaningful use of electronic health records (25 percent); and clinical practice improvement activities (15 percent). Quality-of-care metrics must include patient experience.

Alternatively, doctors can become part of an Alternative Payment System, such as an Accountable Care Organization.

Although the American Medical Association and other physician organizations helped design and generally support the new payment scheme, they disagree with many of the proposed details. These were aired in a plethora of comments to CMS in late 2015.


Basing payment on performance is one way to change physician behavior. Another way is to foster competition based on those same measures of performance and quality. That happens at the insurance plan and payer level but it can also happen at the consumer level. Doctors are already vying for network inclusion, for example, and group practices are being scrutinized by everyone. Indeed, it’s likely that under MACRA virtually every physician will be profiled based on their quality of care, resource use, patient experience, use of data and technology, etc.

Looking Ahead

First, physicians have a legitimate distaste that the burden of measurement today is excessive. It’s time to overhaul a dysfunctional measurement scheme and strive, where we can, to let doctors focus on being doctors. For too long, the lack of physician accountability let our health system function at low levels of performance and poor value.

Second, there’s reason to be optimistic: The science of measurement is improving, as is the art of public reporting. And, by all accounts, CMS is committed to creating a much better payment incentive system under MACRA, and to making Physician Compare a meaningful site.

Third, financial incentives work. By 2022 or so, the majority of doctors will either have 30 percent to 50 percent of their income tied to performance (with government plus private-sector payment initiatives) or be salaried in an integrated system. That’s perhaps the right direction.

Fourth, consumer choice in a robust marketplace must be part of the solution. It works in other areas of our economy; indeed, it’s the foundation of our economy. As consumers face rising premiums and higher out-of-pocket spending, they deserve no less than to be armed with clear comparative information on health plans, providers, treatment options, and costs.

High Prescription Drug Spending – The New Normal?

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drug_prices_1024x620Lately it seems as if specialty drugs are everywhere. While it used to be that only a small number of patients were treated using these expensive medications, manufacturers are increasingly developing specialty products to treat conditions that affect a much larger population over a longer period of time. 

One example is PCSK9 inhibitors, a new type of cholesterol-lowering drug that costs more than $14,000 per year. Although this product is currently indicated for those with familial hypercholesterolemia and certain patients with heart disease, the patient population is expected to eventually expand to possibly 15 million people. 

These high cost projections have understandably raised alarms and unfortunately, there is no indication that we can expect a market correction soon.

The time has come to stop viewing drug products with remarkably high prices as isolated incidents. Instead, we should acknowledge that we are moving into a troubling “new normal” of dramatic and persistent escalations in prescription drug prices and spending — and we should consider a remedy.

The Rise Of Specialty Drugs

One of the primary drivers of this “new normal” is specialty drugs. Because of their extremely high costs, specialty drugs account for a disproportionate share of overall drug spending and have a corresponding effect on spending growth. 

Specialty drugs often experience substantial price growth every year they are on the market. Such price increases raise the cost of therapy. The average annual cost of therapy for widely used specialty prescription drugs used on a chronic basis exceeds $53,000. This amount is higher than the median U.S. household income and almost three and a half times higher than the average Social Security retirement benefit.

Lack Of Meaningful Price Competition For Biologics

Another factor contributing to our “new normal” of high prescription drug prices and spending is the lack of meaningful competition for expensive biologic drugs. Congress gave the Food and Drug Administration (FDA) the authority to approve follow-on biologics, or biosimilars, as part of the Affordable Care Act. 

According to the National Conference of State Legislatures, at least 31 states have considered legislation that would establish standards for biosimilar substitution in the past two years. The bills’ provisions vary from state to state, but typically require (1) patient consent for the substitution; (2) the pharmacist to notify the prescriber of the switch; and (3) the pharmacist and prescriber to maintain written records of the switch for several years. These requirements would likely be burdensome on patients and providers, leading FDA to raise concerns about their effects on access to biosimilars.

It remains unclear whether the U.S. health care system is even ready for biosimilars. A QuanticaMD survey of nearly 300 primary care physicians and specialists found that, although they believe biosimilars will bring value to health care, they might be reluctant to prescribe them. Further, patient awareness of biosimilars remains low.

The Research Pipeline Is Full Of Expensive Products

Another factor that will continue to drive a “new normal” of high prescription drug spending is drug manufacturers’ increased focus on products that can command high prices. In 2010, specialty drug approvals exceeded traditional drug approvals for the first time and have continued to do so. In 2014, 27 of the 51 drugs approved by FDA were specialty drugs.

Orphan drugs—a subset of specialty drugs used to treat diseases that affect fewer than 200,000 people—seem to be particularly attractive to manufacturers. Such drugs typically come with high price tags due to their smaller patient populations, costing an average of $137,000 per year. Sixty-one orphan drugs were launched in the last five years, compared with 31 between 2005 and 2009. The population sizes for orphan drugs are also growing smaller, which will likely drive prices even higher. Of the 18 orphan drugs launched in 2014, half were for diseases afflicting fewer than 10,000 patients.

Getting Away From ‘What The Market Will Bear’

Another factor pushing us towards a “new normal” of high prescription drug prices and spending is the appetite (or lack thereof) for change. For example, there is broad consensus that prescription drug prices should be linked to their value. However, there is much less agreement on how this idea should be implemented. For now, drug manufacturers are free to set prices based on “what the market will bear.”

There has been some progress. For example, the Institute for Clinical and Economic Review (ICER) developed a conceptual framework to guide value assessments for medical services, including prescription drugs. They concluded there was value in these therapies but also raised concerns about whether their effects will translate into lower incidents of heart attack and stroke. Further, ICER concluded that a discount of 67 percent off the drugs’ list price would better represent their overall benefit. ICER’s assessment is still in draft form and it remains unclear whether the report will have any effect. Nevertheless, such work is a step in the right direction.

Some insurers and pharmaceutical benefit managers are also exploring pay-for-performance deals. For example, Harvard Pilgrim recently announced it would provide exclusive formulary access to one of the PCSK9 inhibitors approved by FDA in exchange for a price discount as well as additional rebates if the drug is unable to achieve certain performance targets  While new to the U.S. system, other countries have been entering into pay-for-performance agreements for several years.

Where Do We Go From Here?

Unfortunately, we can no longer rely on less expensive generic drugs to moderate prescription drug spending. The substantial savings from a large number of recent patent expirations for popular traditional drugs—also known as the patent cliff—peaked in 2012 and is slowly subsiding. Further, with generic dispensing rates reaching 90 percent, the health care system may be close to maximizing the savings associated with generic drugs.

Spending increases driven by high and growing drug prices will eventually affect all Americans in some way. Higher prescription drug spending is usually passed along to everyone with health coverage in the form of increased health care premiums, deductibles, and other forms of cost sharing. Prescription drug spending growth also increases costs for taxpayer-funded health programs like Medicare and Medicaid; this translates to higher taxes, cuts to public programs, or both.

More importantly, an increasing number of Americans will be unable to afford the prescription drugs that they need, which will lead to poorer health outcomes and higher health care costs in the future.

A number of steps can help address these trends. These include:

Increase Transparency

Before FDA approval, manufacturers should be required to disclose information on the estimated pricing for their product and a corresponding rationale for that price. This will help reduce uncertainty and vulnerability for the government, employers, and insurers, which often do not learn a new drug’s price until it comes on the market. In addition, manufacturers should be required to report on subsequent price increases over a specific threshold, or when a drug’s price increases multiple times during a year.

Increase Competition

An important first step toward increasing competition would be to decrease the market exclusivity period for biologics from 12 years to no more than seven years. In addition, policymakers should ensure that only truly innovative products receive additional market exclusivity.

Too often, manufacturers extend the monopoly protections for their products by introducing a “new” version that is essentially the same as the original drug. Extended release formulations or combination therapies are common examples. Policymakers should take steps to limit such tactics, commonly known as “evergreening,” and reward only true innovation with additional exclusivity protections.

Increase Information On Treatment Value

Patients, providers, and payers want usable information about the safety and effectiveness of prescription drugs. This requires much larger investments in research, particularly as more treatments enter the market with price tags in the tens of thousands of dollars. At least part of this research could come from existing sources.

For example, drug manufacturers could be required to conduct comparisons of their products with existing treatment regimens much like they do for other countries. Once such information is more widely available, it will become easier to develop payment arrangements that encourage the use of high value treatments in the public sector and the private sector.

The United States is entering a “new normal” in which high prescription drug spending is the rule, not the exception. It is up to policymakers and voters to decide whether this shift—and the inevitable trade-offs that will accompany it—is worth the price.


Independence – What Older People Want

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Senior MenWe already have an idea of what older people want. A study from the National Conference of State Legislatures and AARP, plus other studies, confirm that the vast majority of us want to live in our homes and communities as we age. And, if possible, avoid dependence on others and institutionalization. 

Meeting this deeply personal goal requires that we design and provide good care in our hospitals and clinics, and expand that care beyond traditional boundaries. It requires the involvement of both health care and community-based service providers; a skilled paid workforce; and a well-supported, family-based “care force.” It also, of course, requires the correct blend of policies and funding.

This is an increasingly urgent concern. A person turns sixty-five every eight seconds, and according to Census numbers, the population of people age eighty-five and older, which doubled in the past thirty years, is projected to almost triple to more than 14 million people by 2040.

One obstacle we face is that our country spends almost twice as much on health care as on social services. To enable more older people to get the care and the outcomes they seek, we must find ways to balance our investment between these types of services, work together across sectors, and use our resources in forward-looking ways.

A good framework for this approach can be found in the work of the Institute of Medicine’s Forum on Aging, Disability, and Independence. A collaboration of the National Academies of Sciences, Engineering, and Medicine, the forum provides a critically needed and neutral venue to bring together aging and disability stakeholders from around the country, accelerate the transfer of research to practice and policy, and identify levers of change.

Supporting this type of transition and building the coalitions to carry it out are, in many ways, the essential role of philanthropy. The John A. Hartford Foundation, is committed to promoting better care for older people. To help more of us remain independent, they are supporting research and evidence-based programs in two broad areas: integrating community-based services with traditional health care and providing more coordinated care focused on older people’s own goals.

Supporting family and community resources…

Our health care system has been developed to perform life-saving and critically needed interventions and procedures, such as stents, transplants, radiation, and chemotherapy. But such high-tech care, while important, is often not well matched with the wants and needs of older adults, particularly those who require help with their personal care and daily activities.

A much more common need for older people and their families is coping with multiple chronic conditions and the complications they can bring. Clinics and hospitals need to be better designed to support this chronic care, but the vast majority of care actually takes place in our homes and communities. To remain at home and successfully manage one’s chronic conditions, many more older adults need excellent long-term services and supports—such as transportation, mobility aids, housing modifications, and accessible home care. Without these, they struggle.

Their caregivers need help, as well, and the Institute of Medicine’s Study on Family Caregiving for Older Adults, which was released in the spring of 2016 with funding from the John A. Hartford Foundation and fourteen other sponsors, should create a blueprint for how we can best support the family and friends who provide unpaid care worth an estimated $470 billion annually. 

The Affordable Care Act and the new emphasis on value-based payment to accountable care organizations are changing incentives and placing a new focus on the importance of social services and supports for patients and caregivers alike. But how do we best structure and provide these services?

The John A. Hartford Foundation, is supporting work in California by the Partners in Care Foundation, and in Massachusetts by Elder Services of Merrimack Valley and Hebrew SeniorLife, to create more integrated care systems that link community-based, social service agencies to the health care sector.

They are also working with the federal Administration for Community Living, the SCAN Foundation, and the Tufts Health Plan Foundation to help representatives of the aging services network in eleven communities build their business acumen so they can work more effectively with health care providers, fill in service gaps, and meet the needs of older adults.

Reshaping care delivery, promoting teams…

Good care must be team care, and good teams don’t just happen. The foundation has a long-standing commitment to improving team care—for example, it has supported a Geriatric Interdisciplinary Team Training program at several universities and team-based practice models in clinic, hospital, and long-term care settings.

Meeting the whole range of health and social needs of frail older adults in each of these settings requires care coordination, reliable communication among team members (who may be in other practices or specialties or outside of the formal health system), and technology that promises to facilitate and monitor care.

The Mobile Acute Care Team (MACT) model is a good example. MACT is a hospital-at-home approach for older adults, where a team of nurses, physicians, social workers, and allied health care professionals provide acute-level care through home visits and monitoring. Studies have found that this approach lowers costs by nearly one-third and reduces infections and other complications. It is highly rated by patients and caregivers alike. Initially developed at Johns Hopkins University with support from the John A. Hartford Foundation, MACT is now being tested at Mount Sinai Medical Center in New York City with a substantial amount of funding from the federal Center for Medicare and Medicaid Innovation.

Making these kinds of services widely available will require significant changes in how care is delivered, and that is not easy. But with older adults becoming an ever-larger part of our population and our health care system continuing to experience rapid change because of market and policy forces, the focus must be on delivering care that people actually want. By working together, services and supports can be provided that meet people where they are and honor their goals. That’s a definition of better care.