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Remarks by Barry M. Straube, M.D.
Town Hall Meeting at the AHRQ 2007 Annual Meeting
September 28, 2007
Dr. Carolyn Clancy:
We're here this morning to talk about value-driven health care and, specifically, the
Chartered Value Exchanges, so I'd like to introduce you to my colleague, Barry Straube.
He's the Chief Medical Officer for the Centers for Medicare & Medicaid Services, or CMS.
That means he carries a very, very big stick, because they have a very big dog in the fight
of getting to better value in health care.
Before Barry came to CMS, here nationally, he was a Regional Chief Medical Officer
in the San Francisco area, and I can never remember the number of the region, but that's
where he was based. And before that, he has a great deal of experience in working with
managed care organizations in the area of assessing and improving quality of care. He's
a nephrologist by training. I happen to think of him as a partner, co-conspirator, and
a terrific colleague to have. Dr. Straube.
Dr. Barry Straube:
Thanks very much, Carolyn, and thanks for the PowerPoint® here. Good morning to all
of you. I want to thank Carolyn for asking me to be up on the stage with her here as
we wait for Secretary Leavitt to arrive. What I wanted to, and before I get started,
I wanted to say that working with Carolyn and her entire team at AHRQ is just an
absolute pleasure. I think the complementarity of having CMS with its functions,
which I'm going to talk to you about for a few minutes, with the talent that AHRQ
brings on the more scientific side—we get more involved with payment and
actual day-to-day operational quality improvement and such, but we need Carolyn and
her team to kind of help us set priorities with helping us with the evidence base that
we use in quality improvement and a whole host of other functions. I think that AHRQ
has come so far over the years, first under Dr. Eisenberg, that Carolyn has stepped
into huge shoes and done a fantastic job. So, I want to thank Carolyn for all her support.
So, as co-conspirators, we actually, I think we're already thinking ahead, in conjunction
with a lot of people who are in this room working through various quality alliances with
the QIO Program and other venues that we all participate in. And what I wanted to do to
kind of tee things up for Secretary Leavitt is to tell you a little bit about how at CMS
what some of the imperatives were driving us to get prepared for what he's going to reiterate
this morning and then make some announcements about the next phase of developing the
health care initiative coming from HHS.
So let me just go back a bit and show you what we're doing at CMS, and I think
you'll see how it fits in just perfectly. First of all, for those of you who may not
be fully familiar, the Centers for Medicare & Medicaid Services is the largest
agency of any of the Department of Health and Human Services, and it does provide
health benefits for over 80 million Americans currently and growing. You know us
because of our three main programs, Medicare, Medicaid, and State Children's Health
Insurance Programs, and we spend now over $700 billion dollars annually on
these programs alone.
I put our functions into three buckets. The first one, which most people know us for,
is health care benefits administration. So, we pay the bills. We're the largest health
care payer in the world, and people think of HCFA now as CMS, because that's its
primary function. And indeed, that was its primary function; it was started in 1965, but
it has, of course, broadened significantly both in terms of membership and scope of the
total number of benefits, as well as the expenditures. But we do a whole host of other
things, even under the benefits administration. We established payment methodologies
for providers. There's lots of debate right now, particularly the physician payments,
occurring on the Hill.
We conduct a whole bunch of research that relates to financing, but it also
increasingly is related to treatment in management of disease and illness as we go
forward. We have to oversee our contractors who pay the bills and do other functions
for us, and we have to pay attention to fraud and abuse, a not insignificant problem.
But in addition to that basic function most people are familiar with, I'd like to
propose to you that we have a number of other functions that have evolved into what we
call ourselves as a public health agency. And the second bucket is beneficiary-focused
activities or, if you are in the commercial world, member-focused activities, where we
educate beneficiaries about benefits they're entitled to under our free programs. But we
also, increasingly, are educating them about health education, health needs, and how they
need to play a role in seeking care and in making decisions about their care.
In doing so, we are increasingly involved, as you'll hear with the Health Care
Data for Choice and with public reporting and quality and cost information, so
that beneficiaries and other consumers and employers and other payers can make
the so-called value judgment.
We're clearly involved with advocacy issues—we're clearly involved with
preventive services more and more, the program having started with no preventive
services when Congress first voted it in, but now with an expanded set of preventive
But the biggest thing that we've changed, I think, over the years, is the
quality-focused activities. And, although people may relate to us, the first two
bullets I have here, the CLIA Program, which oversees laboratory testing, and the
bigger program, which is our Survey and Certification Program, which oversees the
survey and certification process from all the facilities that are listed here. We
have a whole host of other quality-related activities, including writing group
regulations, national regulations for conditions of participation, and setting
certain benchmarks for quality care. Making national coverage decisions and developing
the evidence for care, and I've listed a whole bunch of other activities here.
Multiple-demonstration projects, not the least of this, increasingly focused on
paper performance and value-driven health care.
So, why are we doing all of this, above and beyond what our major charge in paying
the bills is? Well, this is why on the left-hand side you'll see the blue bars worth
of total years health care expenditures, up to $2.1 trillion now, and the yellow line
shows you growth as a percentage of GDP—we're up to 15 percent GDP in expenditures.
This slide shows the percentage of health care that's being paid on the top, in the gray,
by state and local sources; in the middle, the yellow, by Federal sources; and in the
bottom, the purple, in the commercial private sector. And as you can see, a big jump
in the yellow, Federal expenditures, in 1965 when Medicare and Medicaid came into being,
but, increasingly, a larger chunk of total health care expenditures. And as the baby
boomers age, and as we continue to have problems with low-income and uninsured, we're
going to, regardless of the debate on the Hill, in Washington, see, at least for the time
being, a growing increase in Federal expenditures.
This shows the growth of Medicare beneficiaries, state increase growth. The purple
of the traditional over-65 that most people think of, but notice there's the yellow
here—we have others under Medicare, mainly with the disabled and the end-stage
renal disease population. And, as you can see here, that population's growing, and
we have other concerns that we have to focus on for them.
I put this slide up, because there's an ever-changing patient population that we
all encounter no matter what the segment of the health care sector we're working on.
And we have to adapt the health care processes and our quality-improvement initiatives
to meet the changes in that population.
This slide shows, again, we spend about 15 percent on the left-hand bar of our
GDP on health care, and this in contrast to other developed nations. It's been, in
some cases, 50 percent as much as we do. And in spite of that, when you look at
quality indicators, the outcomes that these other nations achieve are usually as
good as, and often better than, the United States. So we're spending far more money
as a percentage in GDP to other countries and yet getting less bang for the buck.
That's the McGlynn Study on this slide. On the left-hand side you'll see that only 55
percent of the time when patients go to physician offices do they get the care that
national consensus guidelines would suggest they ought to, and across the rest of the
slides you'll see other disease states with—in some cases with pneumonia and hip
fracture, only 1 out of 4 patients is getting the care that they should in conjunction
with national guidelines.
This shows the variation in health care expenditures. Gross variation, the dark
red part of the slide, the highest expenditures for Medicare beneficiaries in the
hospital per year, averaging about $3,500 the light areas, the lightest color about
$1,500 dollars per year, and why should this be in the United States? Why should we
have so much variation in expenses? If you look closely, it does not relate to
cost-of-living because you'll see a number of irregularities, very low cost-of-living
in various parts of the country. So, it has more to do with practice-pattern
variations and nonconformance with guidelines in evidenced-based medicine to a certain
Contrast that with this slide, it's not in color, but the dark areas here are the
worst performers in a hospital setting and quality of care indicators, and the lighter
is the best performance. And although it doesn't follow up one-to-one, you can see that
there is some overlap. The highest expenditure areas on the prior slide often match up
with the worst outcomes of care. And they are, in fact, increasing pieces of evidence
that suggest a disconnect or an inverse relationship possibly between the cost of care
and quality outcomes.
So, in summary, we think our challenge at CMS, and also at AHRQ and all of the
Federal agencies under HHS, is that we spend more per capita on health care than any
other country in the world. In spite of these expenditures, U.S. health care is often
inferior to other nations and often doesn't meet expected evidence-based guidelines.
There's significant variations in both the quality and cost associated with care
across the nation, and there is increasing evidence that there may be an inverse
relationship between the quality that we achieve and the cost that we put in to it.
CMS is responsible for the health care of a growing number of persons, as are we all,
and we, in partnership and collaboration with other leaders, should take the leadership
in trying to address these issues.
So, how are we doing this? Well, first of all, Mark McClellan kind of set us on the
course of thinking of CMS as a public health agency where we're trying to use the
financial leverage and also the regulatory and other influence we have to work with
other stakeholders, and it has to be in collaboration. It cannot be HHS, CMS, AHRQ
unilaterally makes things better in this country. We have to work together. And
we're increasingly focusing on a number of terms that you see here: quality, value,
efficiency, and at some point, we will have to address the cost effectiveness issue.
We're driven by Congress and employers saying that we put more money into the system,
but we're seeing costs rise far quicker than we're seeing quality indicators improve.
So, they're saying to us even more we have to address this problem and do something
So, at CMS, we, about two years ago, we put into place the CMS Quality Roadmap.
Our vision is "The right care for every person, every time." The IOM aims
that we all adhere to and strive for, I've listed here. And we have five strategies
that I think you'll find complement with what the Secretary will be talking about
and what Carolyn will be talking about in our Chartered Value Exchange approach.
Our first strategy—we work with partnerships to achieve specific quality goals.
The second strategy, very, very important, we believe—we have to publish quality
and cost measurements information as a basis for supporting more effective
quality-improvement efforts. But strategy three is also critical, and you'll see that
in the Secretary's cornerstones, that we have to pay in a way that expresses our
commitment to improving quality. We pay in the Medicare program, particularly, for
quantity, not for quality. And in fact, the more you do, the more we pay, and in some
cases the worse you do, and the more you do, the more we pay. And yet, good, efficient,
high-quality providers are not rewarded for that care.
So, we have to inform our
payment systems and Medicare and Medicaid and SCHIP, let alone in the commercial
sector, to reward quality and efficiency. The fourth strategy is we have to assist
practitioners in knowing how to make their care more effective and less costly, and
we believe that health information technology adoption is the way to do that. And then
lastly, an underrated, but still certainly a part of our armamentarium at CMS, is to
bring effective new treatments that can use our national coverage decision process to
both bring new treatments that will hopefully reduce costs ultimately, but also to bring
new evidence to bear so that people will know how to use the technologies and treatments
to their best advantage.
We have a whole series of venues that we're working in here. I put this up, not
just to catalog what we're working in in terms of trying to improve quality and
efficiency, but to say that we have to, as a high priority, start thinking about
care coordination between these various silos and these various segments of care.
Carolyn and I and others in this room participated in a number of care-coordination
international meetings over the last several months. I think this year we'd like
to see something that we all need to focus on increasingly.
We work through alliances. You're all familiar with many of those. I won't spend much
time. But, what I did want to lead into is, one part of the Chartered Value Exchange,
the process that Carolyn will be discussing more and the Secretary will comment on, is
one major piece of it that I think we have in place at CMS, and that's our quality
improvement organization program.
The QIO program has come under a lot of scrutiny in the last several years, and
this culminated when I came back. We did an internal review working with QIOs and we
also, of course, received the Institute of Medicine report, which was focused on
maximizing potential, not doing away with, but making even better the QIO program. And
there were a whole host of recommendations made in the IOM report. We discovered
those and then some with our internal review.
We've also had some advice from Senator Grassley and the Senate Finance Committee,
a number of other venues on the Hill, and even The Washington Post,
Wall Street Journal,and the New York Times have gotten involved, too.
But we and our excellent QIO leadership and the staff at the QIOs have taken this to heart,
and we're in the process of making major changes and improvements in the program, so that
we can not only continue the good work that that program has done for years, but make it
a sentinel program in advancing health care and quality improvement across the nation.
Our next scope of work will start a little under a year from now and, although we
have not completed the clearance process, so don't quote me too much on all of these,
it does appear that our proposed themes will focus on prevention, on patient safety,
on care coordination—we're going to call this patient pathways with a goal of
reducing readmissions to the hospital and avoidable hospitalizations—and
beneficiary protection in terms of the compliant and grievance process and looking
out for beneficiaries.
There are some cross-cutting priorities. We take the Secretary's priorities; for the
first time, we've put that into the QIO program's scope of work, and the ones I wanted
to stress that will lead in, and I'll give up the stage here to Carolyn, are first of
all, value-driven health care. We believe QIO's have a major role among other people,
many people, everybody in this room, to play in value-driven health care. And you'll
see, I think, when the Secretary describes things later, how the QIO's would logically
fit into this.
We also believe that the HIT adoption in use for system redesign is a major part,
will be pervasive through the QIO's scope of work. We've chosen at CMS to put a special
focus, starting now and going forward, on health disparities. We think this is the
forgotten report for the Institute of Medicine, the unequal treatment report that
came out, about 4 or 5 years ago, that doesn't get as much play as some of the other
We're going to be looking at prioritizing where we attack problems in the country,
by looking at variation across the country and trying to pick out those areas with the
greatest need and those areas that have the biggest problems, at least to some extent.
We're going to try to make the program more efficient and certainly focus on
greater efficiency in health care, and we also have to focus on accountability of
ourselves, of the QIOs, and all of us, as we go forward, that we're spending money on
quality improvement to the best advantage, and can show that the money we're spending
actually is leading to quality outcomes with some degree of rigorousness.
So I'm going to end there. That's a very, very rapid overview of what's going on
at CMS, what's driving us to do the programs we're doing right now. And I think, again, as
you'll see, as Carolyn talks, and when the Secretary gets here, that this is perfectly
in alignment of where we're going with value-driven health care.
So, thank you very much, and thanks for your help.
Current as of July 2008