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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 services.

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 degree.

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 about it.

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 IOM reports.

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


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