Why Understanding Value Is Central to True Health Care Reform

While health care reform has become synonymous with the Affordable Care Act and this summer’s battle royale on Capitol Hill, true reform of our health care system needs to reach beyond debates over individual mandates, Obamacare, Medicaid expansion and other questions of health insurance design. It needs to address health care spending.

The U.S. health care spending problem is the ubiquitous elephant in the room, making steady appearances in presidential tweets, nightly newscasts and most certainly on our bank statements. Spending on health care is increasing at its fastest clip in 10 years, with health care expenditures growing by 5.8 percent or $3.2 trillion dollars in 2015. The Centers for Medicare and Medicaid Services projects similar spending growth through 2025.

Given the daunting dollar signs, an easy trap for policymakers, as well as for anyone in the health care industry, is simply to focus on cutting spending. But to preserve and improve the standard of care, it’s important to focus not on how much to cut but instead on where we should be spending our limited resources.

The true problem is that dollars are poured into a system without any clear understanding of how worthwhile one dollar spent is, relative to another. The remedy lies in making spending and coverage decisions based on the value – not just the price tag – of health care treatments and services.

Value-based spending is a simple notion that amounts to prioritizing spending on services where the benefits outweigh cost – spend less on recognized areas of low-value care, like unnecessary tests and procedures, and more on high-value areas like vaccines.

Implementing value-based spending in practice, however, is more complicated because health care system stakeholders each have disparate, and sometimes conflicting, definitions of value.

Self-insured employers are likely to value care that allows patients to remain in the workforce, for example, whereas an insurer like Medicare may be more concerned about reducing hospital readmissions. For patients, the value of treatment is more personal – driven by side effects and how quickly they can get back to their daily lives.

Several medical societies and research organizations – the American Society of Clinical Oncology and the Institute for Clinical and Economic Review, for example – have developed value assessment frameworks, yet because these frameworks have different objectives and intended audiences, they have different results – which simply provide ammunition for the various sides of the debate.

Value assessments need to address the reality of diverse perspectives, evolving evidence bases, and differing needs on the part of decision-makers. They must be dynamic to adapt to new evidence and treatment advances, and flexible enough to be patient-centered, yet meet the needs of physicians, payers and health systems.

Fortunately, patient groups, researchers and payers are beginning to come together to define value. Last week, health plan representatives, leading researchers and patient groups gathered at the National Press Club to discuss better approaches to measuring value in treatments and services, as well as value-based reimbursement strategies.

Meanwhile, here at the Innovation and Value Initiative, we’re using feedback from the event and from other stakeholders across the health care ecosystem to build open, consensus-driven tools that will eventually help patients, providers, payers and health care systems all individually measure value in treatments and services.

It will take a consensus approach from stakeholders across the health care industry to tackle spending in a way that rewards value rather than volume. Time to get started.

Mark Linthicum is the director of scientific communications for the Innovation and Value Initiative, a collaboration between patient advocacy organizations, payers, providers and life sciences companies dedicated to improving the way value is measured and rewarded in the health care system.

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