Session Four: Value-Based Insurance and Healthcare Quality

A common theme discussed throughout many of the sessions on the second day of the 2019 9th Annual U.S.-China Health Summit was a need for value-based insurance and healthcare quality. While there is no doubt that China has taken great steps and advancements in terms of providing nearly universal healthcare, both China and the U.S. share common issues of increasing healthcare costs and inconsistent quality of care. To discuss this concept of value-based insurance and healthcare quality, six experts from various healthcare fields were invited to share their insight and knowledge, including: Dr. James Frank Wharam, Dr. Shaoping Deng, Dr. Fendrick, Dr. Michael Sherman, Dr. Yong Xu, and Mr. David Khougazian.

In a review of the U.S. perspectives on value-based healthcare, Dr. James Wharam, Dr. Fendrick, Dr. Michael Sherman, and Mr. David Khougazian provided their expertise from perspectives of clinical and health insurance claims data analysis; clinician payment and consumer engagement initiatives; health services; and specialty care in an emerging market, respectively. Dr. Wharam is an Associate Professor and General Internist at Harvard Medical School and Harvard Pilgrim Health Care Institute. He additionally serves as director of the Division of Health Policy and Insurance Research in the Department of Population Medicine (DPM) and site director of DPM’s Harvard Medical School General Internal Medicine fellowship. Dr. Fendrick actually conceptualized and coined the term Value-Based Insurance design (V-BID) and currently directs the V-BID Center at the University of Michigan. His research evaluates the impacts of clinician payment and consumer engagement on access to and quality of care, and healthcare costs. He is additionally an elected member of the National Academy of Medicine and serves on the Medicare Coverage Advisory Committee. Mr. Khougazian is the Global Head for Sanofi Genzyme China & Emerging Markets and drives Sanofi Genzyme Specialty Care operations in China and Emerging Markets. He is also the grand architect of Sanofi’s Partnerships for Health and previously served as the CEO of Sanofi Pasteur MSD, the leading vaccines company in Europe.

At the beginning of the session, speaker and moderator, Dr. Wharam, introduced and voiced the concern over a big problem in the realm of healthcare: the cost of healthcare is high and rising, and yet the quality is not always outstanding. It is a situation in which payers spend a lot for care that is not always of high value and the challenge of determining how to attack the problem of poor-quality and low-value care. Dr. Wharam’s own presentation highlighted presented evidence-based analysis to make definitive this area of need, specifically in the context of how high out-of-pocket (OOP) payments affect access and utilization of care. Specifically, he looked at a common U.S.-China issue of increasing chronic diseases, and more specifically diabetes prevalence. His analysis demonstrated that high OOP costs affect the health of low-income individuals more severely than high-income individuals due to delayed care resulting in visits with more severe complications. While these results themselves are not surprising, it does present a potential policy opportunity. A value-based insurance design (V-BID) appears to be effective, specifically in low-income patients, and therefore the high-income patients who are unaffected may not actually needed. Dr. Wharam then suggests that in the case of tight resource allocations, as is frequently the case, policymakers could consider providing V-BID via a population-tailored health insurance design by preferentially given to low-income or other vulnerable populations.

Dr. Fendrick followed Dr. Wharam’s introduction to the problem with and potential solution for U.S. commercial health insurance and expanded on the role of precision medicine and its potential impact on improving health. He called attention to the chasm between what healthcare practitioners are capable of doing and what care is actually provided. He is referring to the underutilization of high-value care, and the lag of high-quality health care delivery comparative to the rapid pace of scientific innovation. China has already begun to embrace precision therapy, and Dr. Fendrick pushed that precision therapy is exactly the method by which to achieve high-quality healthcare. However, this does raise the concern of affordability, to which Dr. Fendrick responded that following a V-BID framework, there is sufficient money, just a more efficient way to spend it. Potential solutions he proposed includes: reduction of financial and non-financial barriers to enhance access to evidence-based services; increase access to services like telehealth; increase supplemental benefits for transportation; discourage use o low-value care; and an alignment of clinician and consumer incentives. Additionally, while it will be a challenge for the U.S. to shift its framework to one of V-BID, Dr. Fendrick wished strongly for China to learn from the U.S. mistakes they continue to develop their healthcare system.

In a similar vein, Dr. Sherman continued the discussion on value-based payments via an aligning of incentives for all aspects of care delivery. Particularly from a health services perspective, while Dr. Sherman concurred that patients should not need to carry the responsibility of concerning themselves about healthcare costs, but rather focus on improving their health, he did also point to the fact that as innovation costs increase, so do healthcare costs. However, he then returned to the point of value-based care and proposed a solution of looking to drugs as a subject of cost saving initiatives. Dr. Sherman delineated several key reasons for this: unit cost increases for drugs that are not new to the market; there is a lack of transparency around pricing; there is poor planning; other comparable developed countries pay less; and finally cost is frequently dictated by pressure from employers and other stakeholders. He suggested that there is plenty of room in the area of drugs in healthcare to negotiate for a more V-BID, shifting away from a “pay for pill” mindset and toward one of “pay for value/efficacy.”