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The Tradeoffs Behind Value-Based Care | Harvard Professor Dr. Meredith Rosenthal
31 Plays7 days ago
Today’s guest is Dr. Meredith Rosenthal, the C. Boyden Gray Professor of Health Economics and Policy at the Harvard T.H. Chan School of Public Health, where her work focuses on the behavioral economics and incentives behind value-based care.
In this episode, we discuss why healthcare is filled with tradeoffs, from how doctors are paid to how hospitals are held accountable for quality and outcomes. Dr. Rosenthal breaks down the difference between fee-for-service and value-based payment, and why designing better incentives is much harder than simply rewarding “better care.” We also explore the behavioral economics behind healthcare decision-making, including how payment models can affect providers, patients, equity, and access. Finally, we talk about the future of value-based care, the limits of measuring quality, and whether payment reform can help address America’s healthcare affordability crisis.
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Transcript
Introduction to the Healthcare Theory Podcast
00:00:00
Speaker
Welcome to the Healthcare Theory Podcast. I'm your host, Nikhil Reddy, and every week we interview the entrepreneurs and thought leaders behind the future of healthcare care to see what's gone wrong with our system and how we can fix it.
Dr. Meredith Rosenthal on Healthcare Economics
00:00:15
Speaker
Today's guest in the healthcare care theory is Dr. Meredith Rosenthal, the C. Boyden Gray Professor of Health Economics and Policy at the Harvard Chan School of Public Health, where she also chairs the Department of Health Policy and Management.
00:00:27
Speaker
And her research in healthcare care is super interesting, blending behavioral economics and healthcare to answer, how do we design incentives so our healthcare system delivers better care, not just more care.
00:00:40
Speaker
And so in today's episode, we discuss her work on payment reform, benefit design, provider incentives, and how we can use the concept of nudges and economics to improve affordability and value in healthcare. Her work has been foundational across healthcare care economics and, especially at Harvard Today, sits at how we think about policy and healthcare care
Journey into Health Economics
00:01:00
Speaker
delivery. Hi Meredith, thank you so much for coming on to Healthcare Theory. We're super excited to have you. Thanks Nikhil, really glad to join you today. Of course. Yeah, and I'm really excited to get into this, but I want to start off with your background a little bit.
00:01:12
Speaker
I mean, you've had a long tenure teaching health policy at Harvard specifically, and I was curious. I mean, when you look back and when you first started, healthcare care looks pretty different and in some ways still similar to how it does today. So what drove your interest in health policy and health economics at the time?
00:01:27
Speaker
And what are the key questions that you've been trying to answer that's kept you in this field for so many years? Yeah, this is um my 28th year here on the faculty, hard to believe.
00:01:39
Speaker
and And in a lot of ways, ah the more things change, the more they stay the same.
Economic Challenges in Healthcare
00:01:45
Speaker
I think when I was your age and just kind of getting into this area, ah people would say things like,
00:01:53
Speaker
healthcare spending can't continue to grow at the rate it's been growing. It's just unsustainable. And I think empirically um ah they would have been wrong. so So, we continue to struggle with the same sets of challenges that were really ah clear and present when I started my career.
00:02:15
Speaker
ah um Maybe like you, i um discovered economics as an undergraduate and it ah It really spoke to me in terms of the way of thinking about the world, ah particularly the the inherent set of trade offs we face in any kind of decision that you make. So I knew that economics was my tool of choice, but I hadn't really thought ah that much about health policy until ah after I graduated and I was out in the world and I did some volunteer work and i i you know, began to think about how economics could really improve access to care and affordability of healthcare. And then I discovered that health economics was a field. And ah so that's, you know, really how I got into it. It was, ah I love economics and the
00:03:12
Speaker
the problems and the opportunities to make people's lives better really speaks to me in terms of being able to work in public health for my entire career. And I guess that has me wondering why
Decision-Making in Health Economics
00:03:25
Speaker
economics? I mean, when I think when a lot or at least when a lot of people think of economics, they think stock market, macro economy, the Fed, everything like that. But obviously, for most economists, as we know, it's a little bit more of a study of decision making and incentives.
00:03:38
Speaker
So it almost feels like psychology at the time. So I know a lot of your work has been in behavioral economics. Can you speak to that? I mean, why economics? What kind of lens are you putting on when you're trying to understand these different mechanisms in healthcare? care Yeah. does that look like? You know, um i think a lot of people here, when I teach doctors, they think economics is all about money.
00:03:59
Speaker
But of course, it has very little to do with money. moneyies Yeah, I'd say it's more finance. Exactly. And um and i i haven't ventured much and into the finance and macro side of things. I'm very much a micro economist. And as you say, the thing that interests me is how people make decisions and also of putting that in a framework of really understanding um ah behavior and the trade-offs that people make.
Market Failures and Value-Based Care
00:04:30
Speaker
and
00:04:30
Speaker
And I think one of the things that I like so much about health economics is that it's really the economics of market failure. And ah so it's, you know, it's complicated and always, ah Often you have unexpected intuition, both from theory and from empirical results. And so that's the other great thing about health economics is it's very messy and and that makes it ah interesting. Yeah, I guess economics wouldn't be as fun in a field that's more clear cut. But I think within health care, you see so many economic failures across from how insurance is is designed and delivered to multiple areas, including consolidation, But I know one area that you spend a lot of time is value-based care and especially value-based payments.
00:05:19
Speaker
And think we're hearing a little bit that term more and more often, especially as different practices and large economic governments try to align themselves with cheaper care delivery. Oftentimes, it's a little bit to distinguish what that word might imply. So I'd love to hear from you. I mean, when value-based care was originally thought of, like, why was it so important? And what were the events you're looking at there?
00:05:40
Speaker
Yeah, I think you'll get you'll get a different origin story from different people, and we don't probably don't need to resolve that. But as as I've been working on value-based care, really ah my interest ah evolved out of the Institute of Medicine, now the National Academy of Medicine. report on ah on the healthcare care quality crisis in the American healthcare care system. The report came out in 2001, I think, and it was called Crossing the Quality Chasm.
Payment Systems and Quality Incentives
00:06:10
Speaker
And one of the things that it identified as a source of um of the quality problem in the US delivery system was the fact that we don't reward providers for improving quality, that in particular, fee for service and other kind of volume based payment systems and pay the same amount for really good quality care and really poor quality care.
00:06:36
Speaker
And when that report came out, it really had a huge impact both in the private and public sectors. And since then there's been a lot of innovation and efforts to spread payment systems that capture value and not just volume.
00:06:55
Speaker
And so just to be clear, that's sort of how I think about value-based payment. Lots of people will talk about value-based care, which is more thinking about this from the delivery system perspective. How do we organize care so that we focus on delivering value and not just not just volume? So they're they're kind of symmetric. One is the payment incentives and the other is the the technology of delivering care that is responsive to those incentives. And so often in the field, you'll hear people talking about value based care as both of those things. I'll try to distinguish most of what I've focused on really has been on the payment side ah and and trying to understand how that affects the quality of care in terms of processes, but also outcomes.
00:07:47
Speaker
Yeah, I think that they often do get conflated. Even myself, it seems like value-based care is probably a larger bucket, but I guess in some ways it's almost two different categories. um Value-based payments, you have various incentives. You guys try to incentivize behavior and providers and physicians use.
00:08:03
Speaker
same Same with patients, but... What are the main financial levers here then? i mean, ah first of all, why is this even necessary? And what are the main financial levers that we have that, I mean, doctors spend 10 years in school, they're quite smart. Why do you need to create incentives for them to reorient the way they deliver or use care?
00:08:21
Speaker
um what What ends up being the mechanisms that you're looking at?
Improving Healthcare Quality through Incentives
00:08:25
Speaker
Well, let me just answer the first part. ah And um i I think economists in general, and I certainly among them, make no assumptions that doctors are not trying to deliver high quality care, that both that they have ah those skills, but also that their intrinsic motivation is to help people. um Absolutely.
00:08:50
Speaker
ah And ah the delivery system is more complicated than just one person's um ah desire to do the right thing at all times. And I think this is one of the big messages of crossing the quality chasm. that what gets in the way of high quality care is often a systems issue. And so, you know, if the incentives don't encourage investment in the kinds of systems that make it easier to deliver high quality care, then than we won't really be in a position to make that happen. Even if doctors want it to happen, if it really takes an investment in some kind of decision support or ah a staffing model that makes sure that patients get what they need, ah then um we really need incentives in place because it's a firm's decision about what services to deliver, how to deliver them. And so that's, that's I would say, the high level answer of why incentives matter. And also just going back to economics, everything's about trade-offs. um Doctors and other clinicians, they have finite time. and ah and so incentives help figure out
00:10:10
Speaker
um how to optimize that time. um So ah what's involved in value-based payment? Well, mostly value-based payment systems have two things. One, ah they deliver some incentives to reduce unnecessary spending.
00:10:29
Speaker
And usually that's in the form of some kind of global budget. It could be a global budget that um ah is has some some risk sharing around the edges. So, um you know, I'll pay you some rewards for having some cost savings relative to the targeted amount, but also you may have some penalties if you have cost overruns relative to the targeted amount. so That's the kind of cost control piece of it because of course value is both about the resources you use, but then also the outcomes you get.
00:11:05
Speaker
And so the outcomes get incorporated in the form of quality measures that are often tied to the extent to which providers can get some of the shared savings that they may have generated and also ah potentially avoiding having to pay penalties for any cost overruns.
00:11:25
Speaker
And so it's it's that combination of cost control and quality improvement that makes for value-based payment. Of course, there are a million different flavors ah and and just exactly how you design it, of course, will have an important effect on whether and how providers will respond.
00:11:45
Speaker
Yeah, there' i mean there's so many different types also, which makes it interesting. You have ACOs, capitation, paying for performance, and a lot of different mechanisms. But overall, from my perspective, it seems like the key thesis is that if you incentivize providers to meet a certain budget, ideally, they'll try to stay below.
00:12:03
Speaker
which Which sounds great at first, but I know back when this first came out, there was lot of hesitation, maybe some pushback too. so was wondering if could speak to the debates at this when value-based payments and the initial papers on this first was trying to reach the general academic consensus.
Value-Based Payments: Challenges and Trade-offs
00:12:19
Speaker
What did that look like? What were both sides? And what was really the conversation around value-based payments? Yeah. Yeah, um again, i think it's going to be important to think about value based payment in terms of trade offs and not compare value based payment to the perfect, but the alternative. So, so ah you know, given that we start from a place where mostly you were paying physicians for visits, we're paying hospitals for hospital admissions. um this quantity-based system, that has its own set of trade-offs, right? It does doesn't reward quality, and in some cases, it rewards the opposite. So if you get paid as much for a readmission as you did for an original admission, then the incentives to make sure patients don't come back to the hospital are are kind of missing. So recognizing that fee-for-service has its downsides, it encourages more volumes, which sometimes could be low value or could be the
00:13:24
Speaker
really worse than low value. So ah ah the problem with value-based payment, of course, there are many there are many kinds of problems, some of which there are solutions to, but but one inherent problem is um We don't have great measures of quality, which is not to say that we can't come up with a measure for functional status after joint replacement, or we can certainly match
00:13:58
Speaker
measure things like mortality after after a heart attack or um another kind of very high risk hospital admission. um The measurement challenge is really figuring out, well, how much did the hospital or physician contribute to that outcome?
00:14:15
Speaker
Because there are so many different factors that explain why some patients do better than others. And if you can't measure the provider's effort, um Then you have two problems. one you're not actually rewarding what you're trying to reward. And that could mean that you know the physicians and hospitals will say, i don't i don't want this contract because it's basically like paying me via lottery ticket. There's a lot of risk.
00:14:44
Speaker
and I don't have enough control to actually optimize. ah It also could be that um there might be factors like income um or neighborhood that are really good predictors of the outcomes. And if the payer isn't accounting for those things, then the hospitals and physicians might think, well, you know, I'm getting I'm getting penalized because my patients who are low income are more likely to get come back to the hospital with a complication. That's that is something I care about. i want to do something about, but I actually don't have control over their living situation.
00:15:23
Speaker
And so i think those accountability problems are a big part of what the concerns that people have over value based care. And, you know, i think I think the other challenge is that not all health care providers have the data and the personnel to help them identify what kinds of actions they could take. ah to improve the outcomes that they're being held accountable for. And so again, that just makes, that creates a disconnect between um the goals of the payment and what people can actually do.
00:16:03
Speaker
i think those are, those are really sort of the the big concerns. um You know, the other concern, going back to where I talked about intrinsic motivation, some people worry that if we put all of these rewards into the payment fund formula, that that will dampen intrinsic motivation. It's like if you're going you're going to pay me for these specific outcomes, my um my sense of commitment to the professional standards may be less because I feel like it's it's become transactional.
00:16:37
Speaker
And and and then, of course, people can be worried that there will be some providers out there who care more about the rewards than about their patients, and they will withhold care that actually could have been helpful.
00:16:51
Speaker
ah So the those are all concerns. the um The empirical evidence on those harms is is it's not very complete and it's partly that it's very hard to study. I think what we do know about value based payment is that there are lots of ways to make it, um, so very ineffective, um, not necessarily harming patients in the way that I was just listing.
00:17:19
Speaker
Um, but just to really get very little impact or only to get impact on paper that doesn't really help patients. Yeah, it is interesting.
00:17:31
Speaker
i can imagine if your provider and there was no value-based payment system, no incentives at all, your best incentive, the reason you became a physician at the end of the day is to deliver the best care you can.
00:17:42
Speaker
But there is also a set of financial incentives. At the end of the you're running a business, you're running overhead. So it's easy to just check the boxes on KPIs and that's something you want to avoid.
00:17:52
Speaker
So I have a question. I mean, how do we get enough data to understand what is inefficient and efficient care because if you're a provider or a health system, that level of data varies from my perspective. I know, for example, there's a large there's a story in our example where Medicare hospitals in low-income areas, there's a readmission penalty that was much higher if you're in a low-income area, which would mean that low-income areas are disproportionately hurt because the readmittance happens better more often.
00:18:18
Speaker
So I was curious about this. I mean, at some points you want data at the system level, the insurance and providers
Role of Data and Equity in Healthcare
00:18:24
Speaker
want that data too. But what does that problem look like in terms of building better incentives in terms of where is data really a ah advantage tailwind or some structural barrier here in terms of like how care is being utilized?
00:18:37
Speaker
Yeah, it's it's it's not a simple problem because it sort of has ah a couple sides to it. So, ah you know, if we observe, which we do that safety at hospitals have higher rates of readmissions, all things equal. ah that um that's both a real problem ah ah and ah not necessarily one that where a penalty is the right solution to it. And and so, you know, I was on ah um a National Academy of Medicine panel that
00:19:14
Speaker
did some work on this at the request of Congress. and And, you know, we recognize that we don't want to say, well, you know, the the fact that these safety net hospitals have higher readmissions is due to the fact that many of their patients have unstable housing or other other financial insecurities that makes it make it harder for them to recover at home safely.
00:19:41
Speaker
ah And so we don't want to just say don't pay attention to those differences, um because ah actually maybe there is something that that someone can do to improve those outcomes. what What's not clear is if it's the hospital's responsibility to deal with what are ah fundamentally um problems in other social services and social supports.
00:20:07
Speaker
And so that's ah a real dilemma that a lot of people have struggled with. I think ultimately what Medicare decided to do in those instances was to try to take some account of the differences in patients' statuses so that um it wasn't necessarily the case that safety net hospitals would be penalized. And so um so they used some measure of um of um income, in effect, ah to adjust those performance standards. But ah but they're they're there's a debate about what's the right way to do that. So that's that's a real challenge. And i think ah you raise what I think is fundamentally a bigger issue is who should be accountable accountable for what set of factors that affect people's health outcomes.
00:20:56
Speaker
um In the last decade, there's been some attention to trying to reward health systems and hospitals for addressing patients' health-related social needs like nutrition. um ah But at the same time, it's not totally clear that we want hospitals to be in the business of ah of being in charge of population nutrition, ah that it's not clear that they're the best ones to do that. And so while
00:21:31
Speaker
It seems important to recognize that those factors may be even more important than the medicines that get prescribed in certain kinds of health outcomes. I'm not and i'm not sure that accountability at the health system level is the right level. And so that's part of it. So you know ideally, in a value based payment system, you would you would think carefully. about what we want the providers to be accountable for and what we don't want them to be accountable for.
00:22:03
Speaker
and i think sometimes we've gotten a little aspirational by, you know, saying, okay, you solve the housing crisis ah in order that, you know, your patients who are chronically ah returning to the emergency department because of housing insecurity, and that you can solve that, that what looks like a healthcare problem, but is really a bigger social problem.
00:22:27
Speaker
Yeah, and I think there was, there's an interesting study by rand that said that providers are more likely to take on financial risk under value-based care. I mean, it poses a real issue for them.
00:22:38
Speaker
And in my perspective, that causes them to merge with larger and larger practices. Eventually, you see vertical integration against more providers. in the larger health systems. And again, they become even harder to hold accountable.
00:22:50
Speaker
So how do we ensure a system? Of course, we don't have a clear answer on this, but how do we ensure a system that provides some level of accountability without putting a burden on them? Like where are some areas a doctor should be held accountable?
00:23:03
Speaker
Where should it create incentives? And where do you think we should leave it kind of up to their discretion without, of course... building too much on them. I can imagine it's more trade-offs and stuff like that, but I, you kind of want to have a balancing act here a little bit.
00:23:16
Speaker
Yeah. Trade-offs, trade-offs. You know, I w I would say, um, the, the, General thinking on what providers should be accountable for really starts with what's under their control. And often that means it's more about using best practices than it is about getting the best outcomes.
00:23:41
Speaker
um like This has problems too, but um if, for example, we really care about blood pressure, um hypertension is incredibly important for health outcomes and it is one of the things that if we could um get more people sort of out of poor control into good control and hypertension, it prevents um ah a lot of bad things from happening. So we could focus on blood pressure by saying, um you know, everyone should get their blood pressure measured twice a year.
00:24:13
Speaker
ah And everyone whose blood pressure is outside of that range should um be started on a medication. And if that doesn't work, they should get a second medication.
00:24:25
Speaker
So you can think of it in terms of the guidelines for what, what a clinician should do with blood pressure. ah And you could you could sort of measure um a change in blood pressure from baseline because some people may start you know really high and maybe you don't want to measure control for everyone because it's just not reasonable to ask in a year. And so those are the kinds of questions that you could come up with to try to get something that's a little bit more like accountability.
00:24:57
Speaker
um ah But people will argue and they're they're not wrong that actually um those things kind of stifle innovation. what What if there's a better way? to help patients get their blood pressure under control. And it's a combination of of, you know, nutrition and physical exercise and medications, and you can't measure and pay for all of those pieces. So instead, you should just say, ah you know, we'll reward you for ah some percentage improvement or some level of control. And so I think there are real trade offs in those those kinds of issues. The more you're rewarding the outcomes, the more you have the problem that we talked about before, where my patients are different than yours and my patients can't afford those medications and your patients can. And so it looks like you're a better doctor, but really you just have ah a different set of resource constraints.
00:25:55
Speaker
So there's no right answer to these questions. People have debated them for a really long time. Mostly we do we do end up and in the pay for performance part of ACOs, but standalone pay for performance, it mostly focuses on process measures, meaning um Did you give patients the right medicine? Did you do the test? That kind of thing because of challenges with outcomes. But there are there are some some people out there and some of them are physicians feel strongly that you really should be rewarding the outcomes and not the not the process.
00:26:31
Speaker
Yeah, that makes sense. I guess I think I could see awarding the outcomes allows people to take a risk. But of course, there's also still a situation in there. I can imagine when you have this constant set of trade-offs, there's no perfect solution in healthcare. care And as you mentioned earlier, we're starting we're starting with market failure. So we can't just fix this with a snap of the finger. yeah And we've been talking about it inefficiency or efficiency for quite a while in this episode. But you've also talked about health equity a little bit in your past work and lectures.
00:27:01
Speaker
Where do you see that in relation to value-based payments and value-based care today? What does that situation look like? I mean, have you seen a viable path for value-based payments to increase healthcare care equity and to what extent?
00:27:12
Speaker
Because I think there definitely seems to be a viable framework in order to improve that, but it doesn't seem like it's sufficient for that improvement. Where do you really see that question? Right. I think that's um a piece of that is in the same category of this is a bigger problem.
00:27:28
Speaker
ah and Certainly, a lot of payers and policymakers have felt like it's important to build in equity alongside other aspects of value-based payment. and I think in part that goes goes back to you're probably familiar with an incentive design. um if there are 10 things your agent could be focusing on and you put two of them in your payment algorithm, that means the other eight are going to get less weight.
00:28:01
Speaker
And so I think that's kind of the logic of we should do something about health equity, because if we're only focused on, you know, good outcomes in blood pressure control, we know that that actually could make equity worse. And so um that so it's kind of a balancing question.
00:28:22
Speaker
You know, I think it's interesting. Medicaid ACOs are an interesting laboratory for some of the health equity questions i mentioned, you know, in Medicare, there has been some consideration of trying to make sure value based payment doesn't worsen equity issues in Medicaid. There's been a bit more attention to actually trying to increase attention to health equity.
00:28:47
Speaker
But it's really challenging for a whole set of measurement issues I won't get into now. But there's, you know, equity is about a difference. And so it really depends on how you measure that difference. and you don't actually want people to make things more equitable by making the group that's better off, worse off. So ah yeah it's Like trade offs. Everything is you got to be careful what you wish wish for and and exactly how you set it up. But we you know, in some of the some of the conversations that we've had in state Medicaid agencies, one of the things that's kind of interesting is that some safety net providers really think that moving more towards global payment, um whether that's truly global, like all of your health care costs, or even just for professional services like the doctor services you get, if those are paid in a lump sum,
00:29:43
Speaker
ah Often that can give more resources to the people who get less in a fee for service world. And that's just because low income people, people with who have other kinds of structural barriers to access. um whether it has to do with the neighborhood they live in or the kind of insurance they have, um those folks just get less care. And if we're distributing resources based on how many visits someone has, then naturally they're going to be
00:30:15
Speaker
a lot more resources go to wealthier people. they're just there They can pay the co-pays, they're more likely to go to the doctor, to have the kinds of jobs that let them um go see a doctor during the day versus um a lot of the the groups where um both health outcomes and healthcare care access are are worse.
00:30:36
Speaker
And so just having prepayment episodes or global budgets can actually help us move resources into into safety net um areas. And so that's kind of interesting. And then, you know, we have community health centers, safety net hospitals that Many of them traditionally um have already have programs that are more holistic um and take account of those um those social risk factors that we talked about before.
00:31:07
Speaker
Community health centers, they they often have a food pantry or a farmer's market program. They often have other kinds of social supports.
00:31:19
Speaker
And so, you know, to the extent that we are just moving away from fee for service to towards prepaid care that can put resources in the safety net and those providers can use them in a way that helps reduce disparities. I think that's the most interesting thing that I've seen that I learned from talking to some folks in community health centers, the because it's really hard to improve health equity ah by measuring these disparities and trying to get providers to reduce them.
00:31:55
Speaker
that That measurement challenge is pretty is pretty big, but thinking more structurally about it seems more promising to me. Yeah, and I think we've had, mean, in this podcast, we've already set out a couple of goals for value-based care. You want to improve efficiency, you want to improve equity.
00:32:11
Speaker
But of course, there's some issues is that some things you want to incentivize, some things you don't, and every provider is different. There's so many nuances and data issues. So... It seems like a little bit of a weird middle ground where I still have some fee-for-service and that remains a somewhat dominant provider payment arrangement and in America.
Mixed Payment Landscapes
00:32:31
Speaker
And then the value-based payment system has added some complexity instead of incentives to hopefully reorient this fee as much as we can.
00:32:38
Speaker
But how would you describe the current landscape of, in practice, empirically, what does our payment situation look like? Would you agree with what the characterization is? Is it mostly fee-for-service with some value-based care and payments on top?
00:32:51
Speaker
Yeah, i think I think that's right. i think fee for service still um is the dog and value based payment is the tail. So um um there there are lots of providers that have ah you know a bit of value based payment. and ah But for the most part, that it is not like full risk and it's also not all their patients. and So are our challenge in adopting value-based payment, um I think,
00:33:28
Speaker
especially, there are all the challenges we've talked about before, but we have such a complex health system and a fragmented financing system. So we have many, many, many payers and they're all doing different things.
00:33:43
Speaker
ah and ah And we also have, um you know, on the public side, Medicaid has been much more, we're doing this and everyone's doing it, but in Medicare, almost everything is voluntary. and There have been a few payment reforms, value-based payment reforms that have been mandatory, but they're mostly voluntary.
00:34:08
Speaker
And so again, um you get, partial take up, but even more so in a voluntary system, ah you have to design a payment model that providers are willing to accept because otherwise they won't accept it.
00:34:24
Speaker
And then so most of the Medicare voluntary ACO models, there're they're pretty weak and the stronger ones just don't have that much take up.
00:34:36
Speaker
So that's ah that's a huge challenge. i We're kind of, as you said, we're kind of stuck at this you know low part of the diffusion curve. And i think if we really wanted value-based payment to work seriously, we'd have to do more mandatory reforms.
00:34:56
Speaker
But of course, ah understandably, people say, well, you haven't really proved that value-based payment works. And that's in part because it's complicated and in part because it's been adopted in this very partial way.
00:35:11
Speaker
ah So it's it's a it's a bit of a struggle to get buy-in for a bigger push on value-based payment. I don't know i don't know whether we'll see that later.
00:35:24
Speaker
for for the most part, the current administration, it has, you know, embraced value-based payment. i think one thing you can say about value-based payment, value-based care, it's bipartisan. um no one's against it. I mean, certainly there are some subspecialists, especially who are not crazy about it, but politically ah it's It's gets favorable reviews, ah but ah but we we just really haven't seen the kind of policies i think would be required to really know if it could work in practice.
00:36:00
Speaker
Yeah, I think we're just still a little bit far away. It would be great to see maybe in the next 10 or so years if someone can get a really interesting study that studies value-based payments and care in isolation. But I think, as you know, it's extraordinarily hard to do.
00:36:13
Speaker
It seems like it's a chicken-and-the-egg scenario. You can't have value-based care without us proving it that you actually need it. So that's a little bit difficult, and I think a new i don't think a new administration or would really want to take a huge bet on it given what happened with the ACA and the rollouts there. But I think we're, I'd love to hear, i mean, where do you see the U.S. healthcare system going in terms of how we're going to utilize value-based payments in the future? What do you hope to see in terms of what's being utilized and where do you think what do you think is the reality of the situation?
00:36:45
Speaker
I guess at the federal level, things haven't really picked up since the late 2010s, but what are you expecting or hoping for?
00:36:52
Speaker
Yeah, i'm you know I'm honestly not sure what to expect. i mean, we as as you know, um we have a pretty serious affordability crisis in health care right now.
00:37:05
Speaker
And if um if we only think about affordability as kind of a patient problem ah where, well, you know, um We need to either lower the out-of-pocket cost of health care to make it more affordable, which would drive up the total cost of health care, or we need to raise out-of-pocket costs to lower the total. that We're kind of stuck in that and a no-win situation, which ah which I think is hence the appeal of ah moving over to the supply side and trying to figure out how to put the incentives for cost control
00:37:43
Speaker
with ah you know appropriate emphasis on quality and outcomes in as value-based payment has. ah ah that it it feels to me like there has to be a payment reform solution to our affordability crisis. The only other solution is um is a really a regulatory one, ah you know ah regulating prices in particular.
00:38:09
Speaker
ah and And that seems ah politically even more challenging than um trying to develop and implement, spread a value-based payment model that actually has some teeth.
00:38:26
Speaker
um So more global payment, more downside. And and certainly the, you know, the CMMI in 2025 and 26 seems to be saying that they they agree they want to move towards more downside risk.
00:38:40
Speaker
ah But i i don't I don't know if the political will is there to to do that. So i would say value based payment really needs to be um less complex. Right now we have 100 different models um and it needs to ah needs to have and of higher powered incentives associated with it.
00:39:05
Speaker
um ah But of course, the you know the questions around consolidation that you raised, i think there's there are different views on whether payment is really driving that consolidation.
00:39:19
Speaker
But whether it is or it isn't, it's happening. ah and ah And so there there are a lot of important questions about how consolidation affects um what we can do with value-based payment and who will ultimately benefit from it.
00:39:37
Speaker
Yeah, it's interesting you raised a question on consolidation. I feel like it would have been a lot easier to have a single payer system. But I mean, that ship has sailed like almost 75 years ago. So it's unfortunate. I mean, like we're in the system we are today.
00:39:51
Speaker
We're working with what we can. And I'd love to hear for the last question. um Of course, what um mean what are the questions that you yourself at Harvard are trying to answer over the next 10 years? like What are you studying?
00:40:03
Speaker
What do you hope to answer with your research and in the future? What do you have to
Dr. Rosenthal's Current Research and Closing Remarks
00:40:06
Speaker
look out for? Yeah, i'm'm I've been interested in consolidation and ah and i remain interested in ah on the on the patient side in um how employers and insurers are trying to use benefit design to make it easier for patients to choose more efficient, high quality care. So it's little behavioral economics, but mostly kind of standard economics, just Thinking about cost sharing as a tool for helping patients navigate the health system and ah avoid low value care, avoid um care that is more expensive than alternatives without demonstrated benefits. So I'm still interested ah
00:40:56
Speaker
Notwithstanding my comments about if we only use patients as a tool for cost control, we're kind of stuck. I do still think there are places where um aligning patient incentives with what's best um to to drive competition based on value still has some promise.
00:41:14
Speaker
um I also continue to be interested in um ACOs in the Medicaid context. again, where I think they have some unique opportunities ah We're really right resource constrained in Medicaid.
00:41:30
Speaker
and And I think some Medicaid ACOs ah can do really innovative things. We're looking at one in Colorado that is um sort of structured its model to try to better integrate behavioral health and primary care. And and that is ah ah seems like a really interesting focus ah and is a little bit more little bit less focused just on the you know the process measures and more on the ah structure. so um
00:42:03
Speaker
I'm also still looking at episode models in Medicare with some colleagues out at Northwestern, and um there are some some new efforts there. it's One thing that I think is interesting is trying to focus value based payment on specialists as opposed to just I mean, a the ACO model really has its foundation in primary care, ah which seems totally appropriate, but there has been concern and question about whether specialists are just off doing their same fee-for-service thing, um you know, while the system is trying to leverage primary care to control the total. ah Not addressing the fee-for-service incentives in the subspecialty side of things ah seems like a lost opportunity there. So I'm interested in those models too.
00:42:50
Speaker
Of course, yeah, I think to some extent, people expect value-based payments to fix everything, or they criticize value-based payments for not fixing everything. And I think we can find some way for it to continue it continually approve it improve the system.
00:43:04
Speaker
I'm curious to see how you can find other ways to thread the needle and hopefully push healthcare payments and healthcare care utilization forward. I'm definitely curious to see where research goes in the future. it's It's interesting to me and a wildly complicated space. So just really appreciate the time today, Meredith and Dr. Rosenthal for coming on the podcast.
00:43:22
Speaker
um It's a very complicated question and what value-based parents really is. So thanks again for kind of breaking it down as best as you could. and My pleasure. Thank you.
00:43:34
Speaker
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00:43:40
Speaker
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00:43:46
Speaker
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00:43:58
Speaker
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