Moving beyond health cost targets

A struggle for the soul of the Health Policy Commission

IN LATE MARCH, the board of the Health Policy Commission voted unanimously to leave the 2018 cost growth benchmark for total state health care expenditures at 3.1 percent. This target for per-person growth in health spending was set under our 2012 cost containment law as the predicted growth in the state’s overall economy for 2018 less 0.5 percent.

The Health Policy Commission, if the Legislature concurred, could have recommended raising the target to as much as 3.6 percent per capita growth. But it appears the board agreed with the views coming from many stakeholders who testified before it—that we simply are still spending too much on health care relative to its overall value to our residents.  Some will debate this point. But when policy experts estimate about 30 percent of all health care spending is wasteful, employers find that paying for employee health insurance premium increases thwarts their ability to boost wages, and state government finds that Medicaid and government workers’ health insurance costs are crowding out all other state spending, it is no wonder that the overwhelming majority of  health care stakeholders, with their policy hats on could only urge the commission to keep the growth target at the lowest rate that it could.

Kudos to that broad group of provider, insurer, and consumer stakeholders to agree on that policy point.

Admittedly, however, it is one thing to establish a more aggressive goal. It is quite another to achieve that goal.

That’s why for me the most important part of the March 29 meeting was not the vote to leave the target benchmark at 3.1 percent. Instead, it was the “modest debate” that took place between Chairman Stuart Altman and Commissioner Dr. Don Berwick about the future role and work of the Health Policy Commission.  While the debate was short and the points each of the two men were trying to make were brief and limited, their comments centered on the question of what exactly should be the role of the commission to best assure that we have a shot to make it under the 3.1 percent per capita growth benchmark in 2018.

While I’m sure I will at least slightly overstate (and understate) their positions, here is my read on what appears to be the essence of the difference of opinion between Altman and Berwick, two great names in health care in our country. While agreeing on the overarching goal of reducing the growth in per capita health care spending, they appear to have different views on what the role of government is to get us there, particularly the role of the Health Policy Commission.

For Altman—the health care economist—it is all about the level of the target and its impact on revenues to providers.  Think about a bath tub that fills with water, where the water represents all of the Medicare, Medicaid, and commercial money that is available to pay for care.  In the Altman view of the world, which I would assume stems from being part of 40-plus years of national health care cost control efforts that have primarily failed, he thinks that limiting the total amount of the water (the revenue to pay for care) in the tub is the only way to limit health care spending.  While he may worry about government’s ability to figure out how much water should be in the tub, Altman tends to believe that at the end of the day specifying the maximum level of the water gives us the best shot to affect everyone’s behavior and reduce overall spending. In essence he is someone who says that, once you fill the tub, the doctors and hospitals will find a way to drain it. So there’s no point worrying too much about creating rules about payment systems or the details of how providers do care redesign with an aim of slowing the rate at which water is drawn off.

Altman believes that doctors, hospitals, and pharma will find a way of getting the most money that they can.  While Altman does believe that alternative payment systems (like global payment) can be better than fee-for-service in terms of at least reducing the “total take” that providers will be able to obtain in the short term, his first-hand policy experience likely tells him that whatever payment rules you create, providers will find a way to exploit them to their financial advantage.

Contrast that with Berwick, considered by many to be one of our nation’s leaders on health care quality and improvement, founder of the Institute for Health Improvement, and an academic pediatrician with an interest in how care systems promote health care quality. Berwick tends to the view that professionals can under the right circumstances and incentives work together to figure out how to provide better and safer care.  In so doing, he believes, providing higher quality care will lead to a more efficient system and a reduction in total health care spending. In essence, Berwick believes that you can find ways to slow the rate at which water leaves the tub, utilizing process improvement methodologies to improve the way that care is offered and delivered.  Berwick has a good amount of faith (and apparently a lot more than Altman) that savings can be obtained from the engagement of clinicians and administrators with their patients to invent and test ways to deliver higher value care.  At the March 29 meeting of the Health Policy Commission, he indicated the benchmark could even be set at a target much lower than the overall growth of the economy without causing any harm to patients or communities.

So what is the consequence of these two varying opinions?

From my perspective, a whole lot is at stake. Whichever viewpoint prevails will determine the direction of the Health Policy Commission in carrying out its mission to both reduce the growth in health care spending and advance quality.  There are real choices on the table in terms of how the Health Policy Commission,  and what we should expect from it in directly engaging health care providers on care improvement issues and in recruiting staff who manifest competencies in the area of clinical performance improvement.

An Altman view of the world would more or less keep the Health Policy Commission on its current track of primarily being an “issue spotter” and “reporter” of progress in terms of how our private provider and payer system is doing in terms of controlling overall spending.  It is a more economic/financial and CFO view of the world.   Altman would likely suggest that the commission’s best way to help achieve the more aggressive benchmark would be to continue to focus on “payment issues” such as:  supporting efforts to improve global payment arrangements, making specific suggestions for reducing out-of-network prices,  cheering on those who may be able to find some way to reduce unwarranted price variation among providers, or providing oversight to the creation of Performance Improvement Plans for those providers or insurers who are dinged for being part of contractual arrangements that lead to spending growing faster than the benchmark rate.

But if you ask him whether the Health Policy Commission should try to guide our state’s orthopedic surgeons on how to improve systems of care to advance quality and use less resources (especially after discharge from the hospital) when caring for their hip or knee replacement patients, I predict he would likely say “not our job and not our competency.”

Berwick, I think, would respond differently.

My sense from what he said on March 29 (and knowing him a bit)  is that the agency has more of an affirmative responsibility to help the provider and insurance field reach the target spending level.  Berwick believes the commission can’t simply just call out “the number.”  It has to partner and even become engaged with providers in some care redesign efforts.  I sense that Berwick sees the Health Policy Commission as having a responsibility to go down a more activist road of engagement.

Such a decision would require hiring a good deal more staff members at the commission with competencies in health care quality improvement and even some with clinical backgrounds. It may also set up the possibility of creating greater tension between the commission and some of our provider systems who like to call their own shots on exactly when and in what areas they wish to take on care redesign.   Many of our Massachusetts individual and institutional providers tend to think they are smarter than anyone else, and especially the staff gathered at a government agency.

The net result of any commission efforts to catalyze care redesign could also quite possibly lead over time to lower income growth and demand for specialists, and possibly result in less need for care and resources to flow to institutions.  Thoughtful care redesign efforts could also result in more dollars being allocated to primary care and behavioral health specialists as well as to non-medical community partners.   What makes the commission’s involvement potentially more impactful, is not that there would be more quality improvement taking place in health care organizations.  Rather, it is that the presence and engagement of the commission in working collaboratively on some important  clinical care issues that have significant cost growth concern can increase the probability of success as well as catalyze some longer lasting and impactful changes.

There is certainly room for co-existing Altman and Berwick views of the commission’s role in helping our health care system to become more efficient.  However, as the Berwick view represents a new direction for the commission, it will take an affirmative decision by the board to move in that direction. While the roles and functions of the commission under an Altman view of the world is not going to go away, I think the addition of Berwick’s re-imagined role for the agency that calls on it to competently insert itself into some of the important care redesign challenges which are at the root cause of much of wasteful health care spending is a worthwhile journey.

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
There may be a lot at stake in this Altman-Berwick debate. Stay tuned.

Dr. Paul A. Hattis is an associate professor of public health and community medicine at Tufts University Medical School.