Bringing Value to Health Care

J Clin Pathways. 2024;10(3):48-53. doi:10.25270/jcp.2024.05.02

In early 2023, a group of health care professionals with diverse backgrounds met in Aspen, Colorado, and shared their perspectives on how to improve health care to deliver consistent high-quality care and outcomes, reduce unnecessary costs, and make care more affordable and accessible.

The health care expenditure clock in the US consumes on average $12 billion each day, with $4.3 trillion expended at year end, which is 19.7% of our gross domestic product (GDP). It is widely accepted that 10%-20% of this expenditure does not improve health care outcomes,1 yet there remains no consensus on how to prevent “wasting” $1.075 trillion and how to put that 5% of our nation’s GDP to better use.

Health care payment methodology—particularly fee for service (FFS), which pays for care in individual units of service—has resulted in fragmented, disconnected units of care and costs that are unsustainable. The data shared under the FFS meth­odology is limited to only the care rendered by a specific provider, leaving providers to care for their patients without the benefit of understanding what other care those patients may be receiving to improve outcomes and reduce total cost of care.

This white paper shares discussions from the Healthcare Innovations Summit on how to enable and scale value-based care in the US.

Barriers

The health care system is so important to the well-being of the US citizenry that clear rules (laws) and methods of transactions (contracts) must be in place for the system to thrive. At the summit, a legal discussion led by Epstein Becker Green, a national law firm with a primary focus on health care and life sciences, outlined the barriers to in­novation in the health care system. According to the presentation, the existing guard­rails, particularly FFS payment methodology, have led to inefficient, disjointed care and have unintentionally limited creativity and innovation in the health care system.

Laws, along with payer rules and requirements, while well-intended, have had a significant braking function on provid­ers seeking to organize to enhance health care delivery value. Many health care laws and rules can limit value creation2 and work against free market incentives that drive the remainder of our economy.

Opportunities and Path Forward

Regulators and payers understand the mechanics needed to scale value-based care delivery, and they are beginning to modify some of the rules regarding organizing and contracting between private providers, public entities, and government as long as: (1) the care is tied to improved clinical outcomes, (2) there is an assumption of risk by health care providers, and (3) the total cost of care is lower.

Nested care models are being developed where total cost of care is cascaded into components where specialists lead the care. Low variance (cost) conditions are now being bundled for comprehensive payment, whereas high variance conditions are attributed to global population payment models. Much more needs to be done to bridge primary care and disease prevention with specialty care and care management.

The door is opening for specialists to organize and create objective, peer-approved outcome measures to serve as bench­marks to be maintained or improved while cost efficiency is driven into the system. This ensures that necessary care is de­livered to achieve the desired/best achievable outcome without perverse financial incentive.

Barriers

The Center for Medicare and Medicaid Innovation (CMMI) medical leadership provided an overview of their value efforts, including the five pillars driving their changes. These include accountable care, health equity, innovation, affordability, and system transformation. The Centers for Medicare & Medicaid Services’ (CMS’s) accountable care organization Realizing Equi­ty, Access, and Community Health model seeks to incorporate these pillars and to integrate primary care with specialty care.

The challenge remains to better define disease-specific cost as a component of total cost of care. Significant cost volatility is not fully addressed by risk adjusters, and most current value-based care models focus on primary care and prevention of dis­ease. According to the CMMI leaders who attended the summit, data sharing related to specialist performance throughout the longitudinal experience of the patient is planned and will guide referrals. Also, consistent and optimal outcomes along with total cost of care reduction will be the key drivers of value-based care enactment for specialists. Specialty physician acceptance of risk and the ability of CMMI to assess total cost of care in an accurate risk-adjusted fashion were discussed as significant barriers.

Opportunities and Path Forward

Episodes of care/bundled payment models have the potential to improve care outcomes and lower the total cost of care.3 If variation of care (unnecessary care) can be defined to be controlled, then bundle-based reimbursement can grow and thrive.4 For example, “shadow bundles” allow data on specialist performance to be shared with primary care doctors to improve overall care and costs of care and ensure patients receive com­prehensive care.5 The need to move from voluntary models to standard models was also discussed.

Barriers

Innovation needs investment. To provide investment capital, investors need risks to be clearly defined, not ambiguous. More­over, differing value-based care reimbursement between payers complicates the effectiveness of investment return pro formas. When risks are clearly defined, investment will follow, as it has occurred in chronic renal disease in nephrology. Capital also follows alignment of incentives. It is critical to create functional partnerships so that stakeholders across the health care continu­um will be aligned on goals/outcomes and work together.

Opportunities and Path Forward

The interoperability of data and artificial intelligence is rapidly changing the data-access landscape. While not yet available to provide true real-time clinical decision support at the point of care, it’s removing some of the unpredictability and risk feared by capital investors. Multiple examples exist in the market of large investment, including VillageMD and Summit Health, CVS, Optum, and others. Capital is moving in this direction but also waiting for a breakout in innovation.

Barriers

Several regional insurance providers shared their thoughts on barriers and opportunities to scaling value-based care in the US. The discussion brought to light one of the fundamental problems in moving from FFS to value: All payers share the same International Statistical Classification of Diseases, Tenth Revi­sion (ICD-10) codes, so definitions of disease and current pro­cedural terminology (CPT) codes for billing are the same for all payers. However, payers do not define value consistently, which makes it difficult for providers to practically enable con­sistent value-based care models. Moreover, ICD-10 codes and diagnosis-related groups (DRGs) are inadequate methods for risk-adjusting patients when determining the appropriateness and extent of reimbursement.6

Specialists are not always enthusiastic about engaging with payers about participating in innovative value-based care models because specialists have done well in FFS, and when they move to value, they typically lose money in the short run. Plans in which payment infrastructures are based around FFS have lim­ited ability to support the requisite data models for value-based care. Specialists are often equally unable to capture and provide the necessary data to effect value-based care to meet payer needs.

Another issue raised at the summit was that payers do not have the bandwidth to create new innovative models for each individual specialty. Rapid innovation in each specialty with new and more expensive drugs, devices, and procedures limit the ability to develop large-scale, specialty-care, value-based programs. Payers want primary care physicians to be the “quar­terback of the care” and desire to manage specialty cost in this manner. The problem with this approach is that not all care can be managed by primary care. Patients will suffer in situations where precision-based specialty care is required if left only to primary care doctors.

Attendees also brought up dual attribution concerns re­garding shared savings. For instance, payers questioned how to avoid paying twice (to primary and specialist) for the same care/outcome and called for more detailed and actionable data to address such issues. Finally, the equity, affordability, and incorporation of social determinants of health were cited as ad­ditional challenges that have a direct impact on how providers and patients can get the most consistently optimal outcomes.

Opportunities and Path Forward

Specialty aggregators such as Outcomes Matter Innovations, a company working to accelerate the transition to value-based care among specialists, work with specialists in ophthalmol­ogy, oncology, and rheumatology and enable payers to engage the specialists in value-based care programs while identifying adverse cost of care variance to reduce it. Other programs in the market that are CMMI sponsored include Comprehensive Kidney Care Contracting Options, which allows nephrologists to delay the need for dialysis and promote kidney transplant; bundled payments for orthopedic procedures; in-home intra­venous immunoglobulin administration; and the Oncology Care Model to avoid adverse expenses. Commercial plan ex­amples of working with external vendors to enable value-based care for multiple plans include SonarMD in gastroenterology and CardioOne in cardiology.

Summit attendees noted that the harmonization of value-based care programs across independent payers by aggregators who bridge the programs for specialists and create standardized user interfaces regardless of program specifics is essential to ef­fectively accelerate the transition to value-based specialty care.

Barriers

Andrew von Eschenbach, MD, former commissioner of the US Food and Drug Administration (FDA), provided his views on the FDA’s processes and how they affect value-based care pro­grams. He first noted that regardless of value-based care, regu­lators must remain available early on to guide and accelerate the process of discovery, development, and delivery. He stated that the disparity of views between specialty clinicians who fo­cus mostly on patient in-office activity (acute care) and payers who largely focus on what happens to patients after they leave the doctor’s office (population health) is a bridge that needs to be built so that the entire patient’s care journey can become a seamless, integrated process.

Opportunities and Path Forward

The speaker also posited a provocative concept, suggesting that the health care industry should take a page from the computer industry playbook to create an integrated, interoperable health care system. Specifically, the patient’s journey from the physi­cian’s office, through diagnostic studies, treatment at the hos­pital (when utilized), and in-home care should be tracked and reported to health care providers, payers, and patients them­selves, regardless of which electronic health care system/record the entity uses. When a health care “event” occurs (a new phys­ical finding on exam, new laboratory abnormality, unexpected hospital admission, home monitoring of blood pressure, etc), regardless of location, the entire system is notified and updated (integrated and interoperable).

In addition to better continuity of care and more timely fol­low-up when needed, wasteful repeat testing can be avoided. The greater goal is to identify and drive out unnecessary vari­ance in health care diagnostics and therapeutics to avoid wasted expenditures and, in many circumstances, less than ideal qual­ity clinical outcomes.

Barriers

With the passing of the new Inflation Reduction Act and the health care payer industry wanting to move to value, how do the life science and pharmaceutical industries continue to innovate? For every successful pharmaceutical/biotechnol­ogy company there are 5-10 times more startups and small-to-midsize companies that are struggling to survive and fac­ing uncertain futures without ongoing venture funding.7 It is here, with these startups, that much of the innovation in health care is occurring.

A representative from the chimeric antigen receptor (CAR) T-cell (a type of cancer immunotherapy) industry noted that the industry created a new DRG for CAR T-cell therapy. This “global based payment method” resulted in a new health care ecosystem with global access in over 20 countries. DRG-based reimbursement and ICD-10 codes are an antiquated method of risk adjusting patients to determine the appropriateness and extent of reimbursement. Similar systems of codification ex­ist in other countries to attempt to match a patient phenotype with proper care and payment. CAR T-cell therapy was a great example of how the current codification system was inadequate globally. As such, a novel carve-out “global rate” was created to accommodate the acquisition cost of CAR T and the ex­pense of toxicity management. Despite this, only two out of ten people who should receive CAR T-cell therapies actually receive it, so more needs to be done.

Next, attendees heard from an earlier-stage company that has developed two clinical-stage stem cell–based tissue-engi­neered products (one autologous bone, the other allogeneic cartilage). Their unique challenges in developing a bone re­placement autograft were discussed. As noted previously, close cooperation with the FDA during development and early con­versations with payers and hospital systems was called out as necessary by attendees.

Finally, the field of genomics is transforming clinical medi­cine and will soon play a major role in value-based care delivery, particularly in oncology. Simply stated, you cannot treat a dis­ease effectively if you do not know what is causing it. A lead­ing genomics company discussed their challenges. For example, genomic tests capable of identifying actionable mutations be­came commercially available but were not paid for initially, even though effective targeting of the mutations with small molecules were more effective than chemotherapy and cost less.

Opportunities and Path Forward

Clearly, there needs to be an industry-wide effort inclusive of regulators, drug/biologics developers, clinicians, and payers to address these challenges in order to move to value-based care and continue to support innovation. Central to all the discussions at the summit was that stakeholders should not focus on unit-based pricing but should instead focus on the agent’s effect on total cost of care. It was suggested that if you need to spend $10 000 more than the current standard to save $100 000 in total cost of care, who would not sign up for that so long as the expected quality clinical outcome is maintained, or, even better, improved?

Barrier

Robin L. Smith, MD, MBA, director of the Cura Foundation, reviewed global health care spending that reached $9 trillion US dollars in 2020, representing 10.8% of the global GDP. Health systems globally are all seeking to create value, know­ing that 20%-30% of global health care spending is thought to be wasteful.8

Opportunities and Path Forward

All countries are looking to deliver high-quality, low-cost health care. The focus should be on technology-enabled popu­lation value in addition to individual value. A new proposed value definition, which is broader than health plans’ definition of covered benefits, is required to achieve personal and societal well-being.

Barriers

Two leaders in the field of health care information technology, Oracle and COTA, shared their views and discussed value at the Aspen Summit. Oracle is an established cloud-based business support model, and COTA is a physician-created health care technology and data company whose real-world data was used by life science companies to obtain biologics license application FDA approval. Both companies identified lack of data interop­erability and access to usable information at the point of care to direct care as the core barrier to moving toward value.

The leaders also discussed physician and nursing burnout due to documentation complexity and burden. In addition, consumer-driven information access is further complicating provider decision-making because the information is often in­complete or inaccurate. There are multiple data points, many of which are not in structured fields, making real-time data ac­quisition and reporting problematic. In addition, financial risk models based on incomplete data sets leave clinicians and hospi­tal executives loath to take risk.

Opportunities and Path Forward

Oracle’s cloud-based approaches are beginning to create an interoperability platform to synthesize, support, and enable single verified, accurate longitudinal patient records. COTA has created a COTA Nodal Address (CNA), which is a digi­tal bar code for patients that defines their disease, all relevant prognostic variables, and where they are in their disease his­tory. In assigning a CNA to a patient, COTA has been able to group patients with the same CNA and assess for quality of outcome and total cost of care based on therapeutic interven­tion.9 In partnering with payers and providers, the path of care that creates the most value can be highlighted to the provider to take part in a value-based care program.

Barriers

In each community, hospitals are expected to provide 24/7 access to emergency care for all manner of illness and injury, hotel-quality service for inpatient stays, and the right care to obtain the expected quality clinical outcome regardless of in­surance. A business model to meet this demand rarely exceeds a 5% operating margin, and in parts of the country where the cost of living is higher, it is even more challenging. When you introduce the uncertainty of revenue that specialty value-based care models bring to the table, most hospital chief financial of­ficers are cautious and pessimistic.

Currently, most value-based programs focus on primary care with limited attribution to or integration with specialists. In limited situations, specialty care has been carved out into episodes of care and bundled payments (eg, total joint replace­ment), but broader application to more chronic conditions has been limited. When bundles were aggregated to a more general service rather than around a specific condition, the efforts fell apart because of lack of quality outcomes and disgruntled pro­viders.10 Furthermore, outcome measures were not accurately tied to disease severity.

Opportunities and Path Forward

Moving patients from inpatient to outpatient wherever possible will begin a trend enabling hospitals to rightsize their fixed cost and platform. Considering lost earnings before interest, taxes, and amortization for hospitals in value-based care programs re­mains essential so they can continue to provide the 24/7 care expected of them. The shared savings between providers, hos­pitals, and payers is essential to maintain the business integrity and sustainability of each party.

Barriers

Eight physicians, in addition to the physician moderator, took part in the Aspen Summit. Their specialties included rheu­matology, ophthalmology, pulmonology, oncology, plastic surgery, neurosurgery, information data science, and prima­ry care. All the specialists expressed the importance of their engagement in the development of value-based care models from the beginning and that they must have major input on setting the quality metrics if they are to participate.

Andre Goy, MD, an oncologist at John Theurer Cancer Center, noted that in cancer medicine only 1 in 7 patients re­ceive the care that would result in the best available outcome.11 Electronic medical record content is doubling every 75 days, but the information contained within does little to support de­cisions for value-based care. Dr Goy expressed concern on how to introduce value-based care decision-making when caring for their usual 30-patient clinic, going from room to room visiting patients with different forms and stages of cancer, doing disease status and toxicity assessments, and deciding on therapy choic­es for the patient to consider while addressing their emotional needs. “So, it is no longer decision-making for lung cancer fol­lowed by colon cancer. Now it is CMS followed by Aetna, then Blue Cross, all with different value-based care plans [with] dif­ferent rules and different risk profiles,” Dr Goy said.

Andrew Ip, MD, MS, an information data science physician at John Theurer Cancer Center, stated that for patients to re­main in the center of care, support tools at the point of care are required. Providers are continually challenged by the avalanche of new information relevant to the diseases they treat. They also have an ever-growing administrative burden placed on them by changing documentation and billing rules, which will now increase due to value-based care models that require phy­sician assumption of financial risk. In addition, neurosurgeon Patrick A. Roth, MD, from New Jersey Brain and Spine, noted that attaching payment to the level of documentation and not the severity of illness and the outcome achieved is a mistake.

Finally, Dan Varga, MD, a primary care provider from Hackensack Meridian Health who serves as a president of a physician enterprise overseeing 7500 providers (primary and specialty), said FFS is so remunerative that value-based care is not readily achievable. Aggregated lives in volume are a prereq­uisite for specialty care engaged in value.

Opportunities and Path Forward

Molecular diagnostics were highlighted and shown to lead to better care outcomes at a lower total cost of care when applied appropriately and when the recommended therapy is approved and paid for by payers. Furthermore, clinical and cost outcome transparency must become the norm to make all providers bet­ter, instead of being used to punish a given provider.

A significant discussion ensued about making patients part of their own care and responsible in part for their outcomes. The use of patient-reporting tools and in-home care support tools to remind patients to take their medication, go for a fol­low-up test, and be engaged in their care were all reviewed.

In summary, self-imposed problems have tied the health care industry into knots with no clear path to untie them. We cannot change laws restricting innovation if we ask patients and physi­cians to reduce total cost of care without proper support and appropriate incentives for clinicians and other care providers to ensure achievement of the highest quality clinical outcomes. Data interoperability and security is required to support the transition to value-based care. Point of care decision support will also be essential if adequately risk adjusted to be relevant.

Finally, a new spirit of cooperation is needed. At the Aspen Summit each participant shared a perspective that was colored by the lenses through which they see reality. Everyone’s perspective was critical, starting with the physician going room to room in their busy clinic; to the lawyers trying to make rules and laws that protect and don’t hinder value-based care; to the hospital ad­ministrator trying to maintain service and quality in an economi­cally viable way; to the payer trying to maintain access, quality, and affordability of insurance; to life science professionals trying to streamline discovery and regulatory approval to continue to attract risk capital; to government restricted by rules and laws trying to do the public good; and, last but not least, the patient who just wants to get better and get back to their lives and fam­ily, and to do so with dignity and economic security.

Every one of us has a reason why we should want to make the current system better. Tearing down the barriers and re­placing them with innovative and effective alternatives is needed and can be achieved if we continue to talk to and not past each other, as was accomplished at the Aspen Summit and, hopefully, going forward.

1. Legal/Regulatory: Broaden safe harbors for multiple constituents (hospitals, physicians, businesses) to partner in value-based care contracts that maintain and improve relevant clinical outcomes and reduce total cost of care.

2. Payers (Government and Commercial): Standardize and periodically update disease-specific risk-adjustment coding (to supplement CPT, ICD-10, etc) for providers to participate in value-based care using the same relevant coding regardless of payer. Standardize and simplify the preapproval process and documentation requirements for payment to providers.

3. Technology: Create more robust interoperability of electronic health records and other data pools to measure and report on clinical outcomes and total cost of care.

4. Physicians/Vendors: Work together to create market-based solutions to provide real-time decision support at the point of care to ensure state-of-the-art diagnostics and therapeutics are delivered in the context of value-based care contracts.

5. Patients: Work to bring them into the discussion about solutions.

Authors: 

 Andrew Pecora, MD¹; Lili Brillstein, MPH¹; Maher Albitar, MD²; Nasim Asfar, MD, MBA, SFHM³; Joel Brill, MD⁴; Jeffrey R. Curtis, MD, MS, MPH5,⁶; Andrew von Eschenbach, MD^7,8; Deborah Goss, MD⁹; Andre Goy, MD¹⁰; Max Holfert¹¹; Andrew Ip, MD, MS¹⁰; Allen Karp¹; Mark Lutes¹²; Steven Madreperla, MD, PhD¹³; Patrick A. Roth, MD¹⁴; Miruna Sasu¹⁵; Robert Shelley¹⁶; Robin L. Smith, MD, MBA¹⁷; Nina Tandon, PhD, MBA¹⁸; Dan Varga, MD¹⁹; Richard Winters, MD²⁰

Affiliations: 

¹Outcomes Matter Innovations, Jersey City, NJ; ²Genomic Testing Cooperative, Irvine, CA; ³Oracle, Austin, TX; ⁴EBG Advisors, Washington, DC; ⁵BendCare, Boca Raton, FL; ⁶Illumination Health, Hoover, AL; ⁷US Food and Drug Administration, Silver Spring, MD; ⁸National Cancer Institute, Bethesda, MD; ⁹Hackensack Sleep & Pulmonary Center, LLC, Hackensack, NJ; ¹⁰John Theurer Cancer Center, Hackensack, NJ; ¹¹Regence (Cambia Health Solutions), Portland, OR; ¹²Epstein Becker Green, Washington, DC; ¹³PRISM Vision Group, New Providence, NJ; ¹⁴New Jersey Brain and Spine, Hackensack, NJ; ¹⁵COTA, Inc, New York, NY; ¹⁶Kite Pharma, Santa Monica, CA; ¹⁷BRM Holdings, New York, NY; ¹⁸EpiBone, Inc, Brooklyn, NY; ¹⁹Hackensack Meridian Health, Hackensack, NJ; ²⁰Coen Winters Plastic Surgery, Maywood, NJ

Address correspondence to: 

 Andrew Pecora, MD

Outcomes Matter Innovations, LLC

30 Montgomery St, Suite 1350

Jersey City, NJ 07760

Email: daniella.galbo@omimanagement.com

Disclosures: 

 A.P. reported serving as CEO for Outcomes Matter Innovations. L.B. reported being a contracted advisor for Outcomes Matter Innovations; and an editorial board member for the Journal of Clinical Pathways. N.A. reported being an employee of Oracle and owning Oracle stock. A.G. reported being an employee of Regional Cancer Care Associates and ONC Capital; being a partner at Hackensack Meridian Health Network; being a paid speaker for Michael J. Hennessey Associates, Inc, and Physicians Education Resource, LLC; being a paid advisory board member for Kite, Janssen Biotech, and Pharmacyclics, LLC; being a scientific advisory board member for Alloplex, Bristol Myers Squibb, Vincerx, and Steering; owning COTA, Alloplex, Resilience, and Genomic Testing Cooperative stock; receiving research grants from Acerta, AstraZeneca, Bristol Myers Squibb, Celgene, Genentech, Infinity Pharmaceuticals, Janssen, and Janssen Global Service; and serving on the board of directors for COTA, Resilience, and Genomic Testing Cooperative.

A.K. reported serving as lead director for Outcomes Mat­ter Innovations. M.S. reported being an employee of COTA, Inc. R.S. reported being an employee of Kite Pharma. R.L.S. reported being an employee of BRM Holdings. N.T. reported being an employee of EpiBone, Inc. M.A., J.B., J.R.C., A.v.E., D.G., M.H., A.I., M.L., S.M., P.A.R., D.V., and R.W. report­ed no financial or other conflicts of interest.