Hearing of the Senate Finance Committee - Aligning Incentives: The Case For Delivery System Reform

Statement

SEN. CHUCK GRASSLEY (R-IA): Thank you, Chairman Baucus. I thank our witnesses for their time that they put into this. We can all agree that any discussion of health care reform must include an examination of our health care delivery system. We have all heard that our health care delivery system has much room for improvement. We can discuss about rising costs. We can discuss about little or no access for millions of people. We can discuss about the need for improving quality. But if we don't examine the shortcomings in how the system actually delivers health care to people, we would be missing an essential part, and maybe some people would say the most important part of the picture.

For example, patients don't receive the recommended care often enough. And they too often receive unnecessary care. This, of course, is a failure of how our care is delivered. Furthermore, for people that have coverage, volumes of health care services are provided in our system. This is quite evident by the amount we spend on health care. But that doesn't necessarily mean that patients are receiving high quality or showing improved outcomes. That too is the result of how our system of health care delivery system is organized.

When we look at the way health care is delivered in the United States, it explains quite a bit. Words commonly used to describe how our health care is delivered in America include words like "silo" or "fragmented" for description. You also hear phrases like "lack of coordination," "lack of accountability." I've said it before; we should not be calling our health care delivery system a "system" in the first place.

But the system doesn't act this way just on its own. The way that we pay for health care drives the manner in which it is provided. This is a key point; most of the problems with how health care is delivered today are the result of the payment system. Look at Medicare. The way Medicare pays many providers provides incentives for quantity rather than the quality of health care. So we get a lot of quantity but with quality suffering.

Here is another example. We all talk about how we need better coordinated care. But, there are no incentives in the payment system for providers to coordinate a patient's care with other providers. Since each type of Medicare provider is paid pursuant to a separate payment system, these payment silos result in fragmented delivery.

Another example how the financial incentives affect our system, it's very disturbing the reports showing the dwindling percentage of medical students who plan to become primary care physicians, perhaps as few as two percent of current medical students, according to a new study in the Journal of AMA. Lack of sufficient financial incentives for primary care are a significant factor in this whole decline.

Financial relationships between health care providers and industry are another example of how financial incentives in our system affect delivery. There have been alarming reports of inappropriate financial relationships between pharmaceutical and medical device manufacturers and physicians. Some industry-physician relationships do play a legitimate role in the development and dissemination of information on drugs and devices, particularly new ones.

However, there are many questionable practices that result in inappropriate financial relationships between industry and physicians. And very few of these physician-industry relationships are transparent. They are hidden in the system. These inappropriate financial relationships can provide incentives for physicians to provide inappropriate health care.

In health care, like with most other things, you get way you pay for. If we want to make the system work better, then we must change the way health care delivery is financed. We have to change the financial incentives in the system until they are aligned with better care. We need incentives that will make our health care delivery system, in fact, a real system. These incentives should reward high quality and efficient care instead of simply more services and some of questionable value.

These incentives should promote greater emphasis on primary care so that patients have better access to a provider who can coordinate care. These incentives should encourage providers like doctors and hospitals to work together to coordinate the care of patients as they transition from one setting to another. These incentives should make all providers involved in the care of a patient accountable across the entire episode of care. And they should encourage physicians to involve the patient in his or her own care.

The Medicare Payment Advisory Commission, MedPAC, as we know it, recently made a number of recommendations to Congress on the system. Many of these reforms are currently being tested in both the public and private sector. And of course, we ought to look forward to learning more about these reforms and even doing it today at today's hearing. I would also like to hear about the successes and challenges of those innovators who are testing reforms. And I would especially like to learn more about what Congress could do to foster their development.

We also look forward to hearing about drug and device industry and physician financial relationships and implications that these relationships have on the health care delivery system. So I believe then that public disclosure is the best safeguard against inappropriate financial relationships between drug and device industry and physicians. That why I proposed the Physician's Payment Sunshine Act. So I am especially interested in the hearing more about these relationships, what effect their public disclosure might have on health care delivery.

Before closing, I would also like to place a number of documents into the record that relate to the practice of medicine and medical research.

SEN. GRASSLEY: Dr. Campbell, you noted currently no relation, or no national database of relationships between industry and physicians, no sunshine on these relationships and publicly available data on industry relationships. So what are the risks caused by this lack of transparency, and what effect does it have on health care delivery?

SEN. GRASSLEY: Well, what effect it would have on the health care delivery system because of the lack of transparency.

SEN. GRASSLEY: Let's go to Dr. Miller and Dr. Berenson, following on a little bit what Senator Baucus has already talked about, because everybody seems to be talking about Medical Home being an answer to everything.

What I want to know is how do we know it isn't just the latest fad, much as gatekeepers were 10 years ago who were supposed to be doing the same thing?

SEN. GRASSLEY: Dr. Miller, a short answer to this question. We have many areas appearing that Medicare has led the private sector on delivery system changes. For example, the private sector stopped paying for never events and some hospital-acquired infections only after Medicare. Does Medicare have to take the lead in the delivery system reform?

Source