Outcomes Rocket Podcast_A. Mark Fendrick. MD.mp3: Audio automatically transcribed by Sonix

Outcomes Rocket Podcast_A. Mark Fendrick. MD.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Saul Marquez:
Hey, everyone! Welcome back to the Outcomes Rocket, Saul Marquez here, and today I have the privilege of hosting the outstanding Dr. Mark Fendrick. He is a professor of Public Health and also Medicine at the University of Michigan Medical School. He’s the Editor of the American Journal of Managed Care and also serving as a Director for the Center of Value-Based Insurance Design at the University of Michigan in Ann Arbor. So I’m privileged to have him here with us today. We’re going to have a really fun discussion in his many years of experience in value-based design and managed care. I think everybody’s going to find it really interesting. So, Mark, thank you so much for joining us today.

Dr. A. Mark Fendrick:
Saul, it’s my pleasure to be here.

Saul Marquez:
Yeah, and before we dive into the work that you do and the focus around value-based insurance design, tell us a little bit about your inspiration for the work. You’ve been doing it for a while.

Dr. A. Mark Fendrick:
Yeah. You never want to be remembered as the person who’s been talking about the same thing for 20 years, but I’ve become that person. So as far back as an undergrad, when I was aspiring to be a clinician, I understood that resources and health care are scarce regardless of how much we spend, whether it be one hundred dollars or three-point seven trillion dollars. And I’ve noticed over that 40 years of looking back on that experience is that most of the conversations around how much we spend on health care, percent of GDP, trillions of dollars, as opposed to how well we spend on health care. So the inspiration for me has always been there’s always been enough money in the US health care system, Saul. No one’s arguing that we should spend 20 percent of GDP or five trillion dollars a year. In fact, that’s one of the kinds of positive aspects of moving our work about reallocating health care dollars a little bit better. I’ve been basically relying on the very simple premise of let’s buy more of the good stuff that makes Americans healthier and pay for it by no longer buying those services that are not improving health in our country.

Saul Marquez:
Well said. And it’s interesting when you look at it from that lens and as we think through a lot of the managed care strategies in place, value-based care initiatives which seem to be gaining traction, finally, how would you say the research and the work that you do are helping the health care ecosystem?

Dr. A. Mark Fendrick:
That’s a really good question. And I wish I were fee for service to answer that question, Saul, instead of being capitated being confined to our short period of time. So first off, as a practicing clinician, it’s more exciting than ever in terms of what options we have to make individuals and populations healthier. I call this Star Wars science, and that ties very nicely to Outcomes Rocket. The issue, of course, is that for all the things that you, your listeners and myself would do to be essential in terms of improving health, all of those are underutilized for many, many reasons. And as we sit in the spring of 2021 one, we could also talk about potentially the COVID-19 vaccine. So our inability to have people take up the services that make them healthier Flintstone’s delivery. So we have to Bring Fred Flintstone from the Stone Age to the space age and maybe Outcomes Rocket will help us do that.

Dr. A. Mark Fendrick:
So what we have for the longest time understood that health care costs are growing too quickly in this country. Almost all of the discussions in health care policy is revolving around provider-facing payment reforms, abandoning fee-for-service to some type of alternative payment models. But it’s important to point out that moving from volume-driven to a value-based system requires a change not only in how we pay for care, but how we engage consumers to seek care. So in terms of our contribution for too long a time, my colleague, now at Harvard Medical School and chair of the Medicare Payment Advisory Commission, and I have felt quite strongly that the most common patient strategy in this country, that the consumer cost-sharing through copayments, coinsurance and deductibles are extremely blunt in the fact that Americans pay more out of pocket for all care regardless of their clinical value. So they pay more for the services I beg them to do. They also pay more for the services I would suggest that they not use at all.

Saul Marquez:
Yeah, and so this becomes, I guess, the issue. So on the one hand, we have a focus on how these procedures are getting paid for. And but on the other hand, it’s about how we engage with health care as consumers. And we’ve seen a lot of change and the way that we access care in the way that the large players like Apple, Amazon, Google, now everybody’s trying to consumer rights, health care in a unique way that maybe will be better for everyone. But what do you think we need to be doing, doctor-centric around making sure that we’re paying these higher prices, that we get the actual health care outcomes and value, right?

Dr. A. Mark Fendrick:
It’s quite clear that prices in health care are completely not aligned with the value they create in terms of individual and population health, largely driven by the private sector. We were making headway though, in terms of getting away from blunt instruments and strict fee for service and then, of course came sars-cov-2 or the coronaviruses pandemic where we saw a dramatic reduction in both the highest value services and the lowest value services and providers of all types from major integrated delivery systems to solo practitioners took a huge financial shock. So the good news is low-value care declines as well. And we had this really interesting opportunity as they have fold guy, I think, as you are to solve is that we could turn the COVID crisis into an opportunity. So say we were spending seventy-five percent of our dollars on high-value services. Twenty-five on low in the first quarter of 2020 about a year ago, all of those high and low-value services went to practically zero. This allowed us an opportunity to rethink our spending and hopefully reinvest more money on the high-value services that were underserved and hold providers accountable to keep the low-value services that we shouldn’t be buying in the first place at really low levels. And this could be done pretty much in three ways, many more. But the top three for me is to continue to push hard on existing alternative payment models that face reimbursement on patient-centered outcomes, so increase reimbursements for services that make people healthier and cease payment or reduce it on no low-value care. Second, which I believe Outcomes Rocket is built in the past to leverage the widespread adoption of technologies such as telemedicine, electronic health records, and wearables to make it easier for clinicians to order and for patients to have access to high-value services. And the same holds true for deterring access to low-value care. And the third, which is where I’ve been focusing most of my efforts, is to align patient incentives through cost-sharing and other insurance models such that the value of the underlying service is tied to what the patients pay out of pocket. In other words, the things that you beg your patients to do, please take your insulin, get your colorectal cancer screening, all these disease-modifying approaches. Those should be easy, not hard for clinicians to order and for patients to receive for those services that make up hundreds of billions of dollars of spending each year in the US that doesn’t make Americans healthier and should be reduced and out-of-pocket costs should be higher. This idea of low-value care, Peter, to pay high-value care Paul, fortunate for us, is not only garnered rare bipartisan political support but support among the key health care stakeholders of which listen to the Outcomes Rocket show.

Saul Marquez:
So Mark basically what you’re suggesting is having a system that incentivizes the routine care that is necessary primary care-focused model, much like exists in other countries, very, very much more focused on the primary care and less on specialty care. In such a way, we will have a healthier tomorrow and less costly tomorrow.

Dr. A. Mark Fendrick:
I want to be a little more specific about that Saul because when I talk about high-value services and low-value services, I’m sure there are people out there who ask me the question all the time. What do you mean by that?

Saul Marquez:
I am glad you went there.

Dr. A. Mark Fendrick:
So this is why this has turned out to be so attractive, but also so frustrating and hard to implement. So my three favorite high-value services all add a fourth because of where we are in the pandemic for favorite high-value services, colonoscopy, coronary stent, back surgery, and telemedicine. My four favorite high-value services, my four least favorite services, colonoscopy, coronary stents, back surgery, and telemedicine. So what I mean by that. So when you say primary care, it’s my favorite high-value service. It’s also my low-value service, which is why having clinicians involved to determine a high-value telemedicine visit, a high-value back surgery, a high-value coronary stent, requires training beyond an MBA or an actuarial degree. The same holds true when people say, oh, MRIs are always bad. Well, they are life-saving in some situations. They’re wasteful in others. So it’s very, very important that we get a bit more granular in terms of how we incent both providers and patients to seek out certain care. So as a primary care provider, I don’t want my colleagues to say I’m not all for more direct primary care and investment in primary care. But the other areas that I care a lot about, such as colorectal cancer screening, we need our gastroenterologist insurgents to be incentivized to do those procedures. I want to see increases in lung cancer screening for high-risk smokers. So not only do I want to incent my primary care colleagues to refer my patients, but I want to make it attractive for our radiology colleagues to be able to offer this service, which has proved out to be lifesaving.

Saul Marquez:
Thank you for clarifying. That helps a lot. And so we have a lot of opportunities here in this country to make things more cost-efficient, get better access and focus and those high-value areas care. Talk to us a little bit about your work and maybe around how you’ve seen examples of improved outcomes or better models for health care spending.

Dr. A. Mark Fendrick:
Well, thank you. We have felt for a very long time that if there were any Twitter folks in your listeners, my favorite quotable soundbite is Americans don’t care about health care costs like many of your listeners. They care about what it costs them to care about, what it goes to see their clinician to fill their prescription and to get a diagnostic test. So prices, which you mentioned earlier, are extraordinarily complicated, their very lack of transparency currently despite efforts to make that better. That’s for your sophisticated listeners to figure out. The policies I’ve been working on are taking on the fact that Americans have to pay more and more out of pocket for all services and are particularly focused on deductibles meeting when the year turns over, Americans have to pay oftentimes several thousand dollar family deductibles to be able to access over ninety-five percent of their services before their insurance kicks in, meaning that my patients have to have a bake sale to afford their insulin, to have a kickstarter, to afford a drug that was designed to treat her tumor. So we have worked very, very hard to figure out ways to remove these blunt instruments and create a smarter health care system, which was basically driven by inspiration from my mother, who when I told her about the idea of skin in the game and making people pay more for health care services, she said, I can’t believe you had to spend a million dollars to show that it could make people pay more for something, they’ll buy less of it. And we have shown and many others that as you raise prices to see your doctor, to fill your prescriptions or to get a diagnostic test, people stop buying the things they shouldn’t be buying, which is the whole purpose of cost-sharing. But they also stop buying the things that we know are important to health. And it should come as no surprise to you as it did to my mother, that effects of increased cost-sharing were actually borne most seriously by people who are economically vulnerable and those with chronic conditions. So since there is a lot of talk among Outcomes Rocket listeners about socioeconomic disparities, enhancing equity, we have shown quite strongly that one cost-sharing instrument worsens disparities and implementation of value-based insurance design. That said, cost-sharing the clinical value of the service, not the cost, certainly decreases disparities, which is why it’s hopeful for us that the idea of value-based insurance design, which is one that sets consumer cost-sharing on the clinical benefit of the service, not the price will continue to grow and its impact among patients who have been unable to access the care they need will be demonstrated in terms of enhanced, patient-centered outcomes.

Saul Marquez:
And, you know, fascinating and I think about the trend is troubling. I mean, I think it was a report by Kaiser showing this is basically like a line graph and showed how deductible increases have heavily outweighed worker’s earnings and overall inflation. It’s a challenge. And to your point, we have the saw the intended effect. You make it more expensive, you use less of it. But the stuff that you really need to be using, you’re not using it. So the work that you’re doing is focused on making tweaks around that. So that must use high-value things get used.

Dr. A. Mark Fendrick:
Many of your listeners probably had not heard of Value-Based Insurance before today, but I’m hopeful if they’re either a provider or a health plan or even a user of the health care service, they probably know of our most important policy accomplishment. There was a very small section of the Affordable Care Act that I helped work on Section twenty-seven 13 that mandates that all non grandfathered health plans, which is just about all health plans now 11 years after the ACA was passed, that they have to cover selected preventive services at one hundred percent and pre deductible. So this is now over 80 services. It includes counseling for depression, obesity, smoking cessation, and includes screening for multiple cancers. It includes diagnostic tests for hepatitis, for hyperlipidemia, for HIV. It’s been extraordinarily popular. It’s crossed party lines. And we’re extraordinarily proud that it was this part of the ACA that was amended to make Covid testing and vaccines no cost for Americans. So for those hundreds of millions of Americans who receive their COVID vaccine for nothing, you could thank value-based insurance design in the small section of the ACA to make that happen. So in preventive services we really, really, really hit the mark. However, as you know, 80 percent of health care services in the US across the board and over ninety-seven percent of spending in the Medicare program is not on preventive services, but on the management of diagnosed conditions or chronic conditions that we hope will not progress to an important negative clinical outcome. So whether it be hypertension, whether it be cancer, whether it be mental health issues, whether it be HIV, we have worked not only to extend low-cost sharing for those preventive services, which now all Americans must receive, but we’ve also worked primarily with the private sector and as well now the Medicare program and the TRICARE program to extend this idea of setting cost-sharing limits on high-value services to keep them low.

Dr. A. Mark Fendrick:
We in 2019 had guidance passed by the Department of Treasury encouraging plan sponsors that offer health savings accounts, high deductible health plans, or to cover select chronic disease services on a pre deductible basis. And we were extremely pleased to see the Kaiser Family Foundation employer survey for 2020 show that 50 percent of jumbo employers need some change to their benefit design in their high deductible health plan to make certain services more available, as did 30 percent of small employers suggesting that our little drum from here, the here is the WHO is the Center For Value-Based based Insurance Design is being heard in the fact that unaffordable financial burdens are being lifted. The facts that the typical American has a deductible of a thousand dollars or higher. And the Federal Reserve reported that 40 percent of Americans don’t have four hundred dollars in the bank suggests there’s a rob there coming every January when patients with chronic diseases have to see their clinicians get their main diagnostic tests or most importantly, feel their medications that we know they’re not filling as often as they would if they didn’t have such a high financial burden.

Saul Marquez:
Wow. Well, I think this is fantastic. I mean, you said that hearing my little drum from over here, keep beating it, keep beating it, because this stuff is working. And, you know, I appreciate what you guys are doing. And I know a lot of Americans appreciate what you guys are doing making this routine chronic condition management care pre deductible is a fantastic idea. We definitely need to be shifting toward more preventative care versus just reactive care. Like you share the numbers. They’re just totally lopsided and so a step in the right direction. Even I just finished my second dose of the COVID shot. Yeah, it was free. You know, I didn’t even ask me for my insurance card or anything. So thanks to the work that Dr. Fendrick and his team and colleagues are doing here, we’re starting to see some positive light around how we access these types of services. What would you say, Mark, is one of the biggest setbacks you’ve experienced and a key learning that came out of that in your career? You know, and maybe it’s about this last legislation.

Dr. A. Mark Fendrick:
Thank you for your point. That will raise my blood pressure and heart rate. So I’m not sure if it’s a setback or poignant, but certainly relevant to your listeners so that as I’ve been banging the drum several others to enhance access and affordability and improve equity around high-value health care, it’s really important to point out that the services that I begged my patients to do, the services that are on the IRS list of things that should be deductible, all those things are cost-effective, meaning you have to spend more money to achieve more health, but they are deemed to be high value. So every time we say, oh, cover insulin deductible basis, while people think that a good idea, there is some actuary somewhere saying we’re going to have to pay for that somehow, either raising premiums on everyone, which is a political nonstarter as you know, or continuing to raise out-of-pocket costs on those with chronic diseases by raising deductibles, for instance, which I callu a tax on the sick. So the key learning and what some people call the second coming of Value-Based in terms of that or it has been our need to identify, measure and reduce low-value care to be able to create headroom to cover more generously high-value care. And this rob ow value care Peter to pay for high-value care Paul was the inspiration for a project that Mike Turner and I led called it VbidX, and it’s called the VbidX, because the last administration asked us to create an actuarial neutral Vbid type plan that covered about 20 services, pre deductible and zero cost sharing. Had the expert actuaries tell us how much more those services would be used and how much they would cost the plan sponsor, whether it be a public plan or a private plan. And typically when those incremental costs are either premium are raised or deductibles are in, but instead our exercise was to hold premiums and deductibles constant and instead to raise cost-sharing on specific line items of the summary benefits and coverage, such as population-based vitamin D screening, such as spinal surgeries, which are deemed often to be clinically unnecessary and to raise cost-sharing on certain lines of the summary benefit coverage to be able to make the math work out. And we were very pleased after putting out the template, the big idea in. The summer of 2019 that the federal government put in the video tables almost verbatim in the 2021 final payment rule for federally qualified plans. So there has been a lot of interest for the first time for us to be able to say we can create a VB plan that will not raise your premiums and will not raise the deductibles. So what excites me today, though, is that the momentum by public and private payers to champion the idea to no longer pay for services that are not making Americans any healthier. The good news for me and the bad news for the payers is this is an extraordinary amount of money giving us opportunities to use tools such as the Milliman that inside Healthways calculator to run your claims to see how often people are getting unnecessary EKG and x rays before low-risk surgery. How many of your employees are getting high-cost imaging for non-worrisome musculoskeletal back pain when a physical therapy referral will do better? And again, as I said in the introduction, it’s all about reallocating more than enough money we have already. And the good news is I can’t see that there’s any particular provider around who wouldn’t be better off by doing more colorectal cancer screening and people between the ages of 50 and 70, five were 30 percent of Americans still need screening as opposed to doing colonoscopy. Some people over the age of eighty-five, which is deemed to be dangerous and low value, which can lead to not only incremental expense but real harm in terms of bowel perforation and other side effects that we would really like to avoid.

Saul Marquez:
Now, that is exciting. And just to think about how these dollars are being reallocated is part of the challenge and then also how you operationalize it. In the payment system. But it sounds like you guys are making some good progress.

Dr. A. Mark Fendrick:
You know, you never want to be introduced to Congress as I was as the tortoise in the health care reform race. So we’ve been doing this for a very long period of time. We like to think we don’t have a real dog in the fight as an academic center, which is just trying to help patients first, keep stakeholders focused on why they became clinicians in the first place. I like to tell people I did not go to medical school to learn how to save people money. So I went to medical school to improve individual and population health. And it’s my view that expanded deductible coverage or reducing cost-sharing on high-value services, paying for that increased utilization by the identification measurement and reduction of low-value care will lead to this new era of a clinically driven system where both payment for clinicians and incentives for patients are aligned about health. So of course, my dream Saul is that when a patient come to an agreement at a certain service is going to be beneficial to their health. It’ll be easy, not hard for me to order and get paid for that service. And my patients would not have to face either substantial financial or logistical barriers to be able to get that care. And as I said, slow and steady, 20 years plus for value-based insurance sign. And we’re hopeful that we’ll be able to continue to move forward. So the good point is your listeners will be able to have access to detailed descriptions of the section of the ACA that makes preventive care in the Medicare program and commercial plans, as well as lots of information on low-value care identification reduction and the development of VbidX on the Center for Value-based Insurance Design website, which is www.vbidcenter.org And I’m hopeful that you and I will be able to continue this conversation moving forward. And if there’s anything else that you’d like to touch on, please ask.

Saul Marquez:
Yeah. Now, Mark, this has been fantastic. It’s great to know that these resources that we’ve discussed today around the ACA amendment that does provide these services and to pre deductible no charge rates is fantastic and a step in the right direction. So I thank you for the positivity and the forward movement. It doesn’t happen overnight, thanks to people like you are getting those benefits. And so I want to give you a big thanks for spending time with us today.

Dr. A. Mark Fendrick:
Well, I think to stick with the metaphor, if Outcomes Rocket helps bring us from the Stone Age to the space age regarding health care delivery is extraordinarily time well spent. So I thank you for the invitation. I hope your listeners take a look at our resources and we’ll be able to get behind this movement.

Saul Marquez:
Thank you, Dr. Fendrick.

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