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1 A Bipartisan Blueprint for Improving Our Nation’s Health System Performance February 23, 2018 John W. Hickenlooper, Governor, State of Colorado John Kasich, Governor, State of Ohio Bill Walker, Governor, State of Alaska Tom Wolf, Governor, State of Pennsylvania Brian Sandoval, Governor, State of Nevada
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Page 1: A Bipartisan Blueprint for Improving Our Nation’s … · Our Nation’s Health System Performance February 23, ... • Targeted government action is justified and ... A Bipartisan

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ABipartisanBlueprintforImprovingOurNation’sHealthSystemPerformanceFebruary 23, 2018 John W. Hickenlooper, Governor, State of Colorado John Kasich, Governor, State of Ohio Bill Walker, Governor, State of Alaska Tom Wolf, Governor, State of Pennsylvania Brian Sandoval, Governor, State of Nevada

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ABipartisanBlueprintforImprovingOurNation’sHealthSystemPerformance

February23,2018

Governorsacrossthecountryareleadingeffortstotransformtheirhealthcaresystemstoproducebetterhealthoutcomesatalowercosttogovernments,employersandindividuals.Statesplayakeyroleinhealthcaretransformationasmajorpurchasersofhealthcare,aschiefregulatorsandadministrators,andascatalystsforbringingtogetherdiversestakeholdersaroundasharedvisionforimprovingoverallhealthsystemperformance.Governorsunderstandthat,whilesomeissuesmaytemporarilydivideus,onmostissueswecanfindagreementandactforthegoodofourstatesandcountry.Thispaperrepresentsabipartisanapproachforimprovingournation’shealthsystemperformance,includingprinciplesandcorebeliefstoguidereform,aswellasspecificstrategiesthataddressthemosturgentproblemsinthecurrentsysteminwaysthatwebelievewillsustainbroadsupport.

GUIDINGPRINCIPLES• ImproveAffordability:Insurancereformsthatincreaseaccesstoquality,affordablehealthcare

coveragemustbecoupledwithreformsthataddressrisinghealthcarecostsacrossthehealthcaresystem.Insurancereformsshouldbedoneinamannerthatisconsistentwithsoundandsustainablecostcontrolpractices.

• RestoreStabilitytoInsuranceMarkets:Americanswithoutaccesstoemployer-sponsoredcoverageor

governmentplansneedtohaveaccesstoahealthy,stableandcompetitivemarketofinsurersfromwhichtochoose.

• ProvideStateFlexibilityandEncourageInnovation:Statescandevelopinnovativeapproachesthat

havethepotentialtostrengthenhealthinsuranceforallAmericans.Withinstandardsthatprotectthemostvulnerable,statesshouldhaveappropriateflexibilitytoimplementreformsinamannerthatisresponsivetolocalandregionalmarketconditions.

• ImprovetheRegulatoryEnvironment:Astheprincipalregulatorsofinsurance,statesareinthebest

positiontopromotecompetitionwithinstateinsurancemarkets.Federaleffortsshouldprovideappropriatestandardstoprotectconsumerswhilelimitingduplicativeorburdensomeregulationsandprovidingrelieftosmallbusinessownersandindividuals.

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COREBELIEFS• Wecanandmustachievemultiple,complementaryobjectives:protectionforall,accesstohighquality

care,andaffordable,sustainablecostsforconsumersandpayersovertime.Toooften,theseobjectivesareframedasoptionsinoppositiontoeachother:

− WecanensureAmericanshavehighqualityhealthcareorwecanreducecosts.− Wecaneitherbefiscallyresponsibleorbegenerousandhumane.− Wecanfosterindividualaccountabilityorwecansupportpeopleinneed.− Wecanembraceanationalvisionorwecanaddresstheneedsofeachmarket.

Werejectthesefalsechoices.Othersectorsoftheeconomyhavedeliveredgreateroutputatlowercostoverthelast30years.Weshouldexpectthesamehighperformanceandcontinuousimprovementfromourhealthcaresystem.

• Thebeststrategiestoimproveourhealthcaresystemaddressmultipleobjectivessimultaneously,reconcilecompetingpriorities,andholisticallyaddressourpresentandfutureneeds.

• Material,lastingimprovementtoourhealthcaresystemrequiresharnessingprivatesectorinnovationandcompetitiontothebenefitofall.Wheningenuityandcapitalarefocusedonwhatwemostvalue,weseeincredibleinnovationandproductivitygains.Enablingcompetitionrequiresalignmentoftheincentivesofallstakeholderswithwhatwevalue,sufficienttransparency,andappropriateregulation.Inourcurrenthealthcaresystem,providerscompetetoprovidemorecare,notnecessarilybettercare.Thismisalignmentofincentives,whichrewardsvolumeinsteadofvalue,isthemostsignificantroot-causechallengeinoursystemandaddressingitshouldbeourgreatestpriority.

• Targetedgovernmentactionisjustifiedandrequiredwhenmarketforces,alone,willnotachieveourobjectives,suchasprotectingvulnerableindividualswithouttheresourcestoindependentlysecurehealthcare.

• Reformmustaddresstheunderlyingdriversofcostsandcostincreases,includingthecurrentlackofvalue-basedcompetitioninourhealthcaredeliverysystem(e.g.,hospitals,medicalserviceproviders,andpharmaceuticals)andlifestyle-induceddisease.

• Ourexpectationsforourhealthcaresystemshouldbeconsistentnationally.Everycitizenineverypartofthecountrydeservesahighperformingsystem.Weneedasingle,holistic,integratedframeworktoimproveoursystemovertime.

Butwithinanationalframeworkonesizewillnotfitall.Manyaspectsofhealthcare,suchaspopulationcharacteristics,marketstructure,andvarianceinlocalgovernance(e.g.,tribalauthorities),differsignificantlyacrossmarkets.Theexecutionofanationalstrategywillnecessarilyvarybystateandregion.

• Itismorepracticalandlessriskytobuildfromtheelementsofoursystemthatarestable.Forexample,ourprimarycoverageandfinancingmechanisms–employersponsoredinsurance,Medicare,andMedicaid–areimperfectandwouldbenefitfromreform,buttheyarealsowellunderstoodandmuchmorestablethanisoftenbelieved.Thesemechanismsshouldbethefoundationofeffortstoexpandaffordablehealthcarecoverage.

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• Howwedeliverreformisfundamentaltoitspotentialsuccess.Lasting,highimpactreformmustbebipartisan,driventhroughaninclusive,transparentprocess,andnecessarilyinvolvecompromise.Tosustainreform,bothnationalpartiesmustfeelownershipforreformsandtheirsuccess–orfailure–overtime.

STRATEGIESFORIMPROVINGHEALTHSYSTEMPERFORMANCEPayers,providers,andconsumersknowthatwemustreorientourhealthcaresystemonvalue.Toachievethisgoal,wemustalignconsumerandproviderincentives,encouragemorecompetitionandinnovation,reforminsurancemarkets,expandprovenstateMedicaidinnovations,andmodernizethestateandfederalrelationship.

ReorientthesystemonvalueCoverageisimportant,andcoveragereformscanhelpcontaincosts,butournationneedstoconfronttheunderlyingmarketdynamicsthataredrivingunsustainableincreasesinthecostofcare.Withthesupportofthefederalgovernment,statesareresettingthebasicrulesofhealthcarecompetitiontopayprovidersbasedonthequality,notthequantityofcaretheygivepatients.Thisistrueinourstates,whereweareincreasingaccesstocomprehensiveprimarycareandreducingtheincentivesformedicalproviderstooverusemarginalorunnecessaryserviceswithinhighcostepisodesofcare.Reorientingthesystemonvalueneedstobeourgreatestpriority.CongressandtheAdministrationshouldworkwithstatesandmakeaclearcommitmenttovalue-basedhealthcarepurchasing.Keycomponents:• Measurethevaluedeliveredbyallhealthcareprovidersandpayersinawaythatisfair,technically

credible,andrelevanttopatientsandpurchasers;andmakethisinformationbroadlytransparenttoallpolicymakers,consumers,andstakeholders.

• Useinformationandincentivestodriveanevolutionofprimarycare,frombeingreactive,focusedonindividualencounters,andfragmented,toholisticcaredeliveredbycoordinatedteamsofcliniciansempoweredandaccountableforthehealthandcostofpopulationsovertime.

• Useinformationandincentivestoempowerandholdprovidersaccountablefortheend-to-endcostsandoutcomesforepisodesofcare.

• States“leadbyexample”usingMedicaidandstateemployeebenefits(andtoalesserextent,individualandsmallgroupmarkets)asacatalystforchange,toovercomeinertia,andachievecriticalmasstoreorientthesystemonvalueacrosspublicandprivatesectors.

• Federalgovernmentchampionsvalue-basedcareinfederalprograms(e.g.,Medicare,MACRAQualityPaymentProgram,FederalEmployeeBenefits)andthosejointly-administeredwiththestates,alignsprioritiesforvalue-basedpurchasingacrossallfederalagencies,andusesitsregulatorycapacitytosupportorpartnerwithstatesandtheprivatesector.

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AlignconsumerincentivesConsumersplayacriticalroleinthemedicaldecision-makingprocessandmakemultipledecisionsinthepathofcarethatultimatelyimpactthevalueofcaredelivered.Thefederalgovernmentandstatescanworktoalignconsumer-focusedincentivesandencouragethedevelopmentoftoolsthatprovideconsumerswiththeinformationtheyneedtocreatevalueinourhealthcaresystem.Keycomponents:• EnsurethatallAmericanshaveaccesstoappropriate,affordable,highqualitycoverageindependentof

theirhealth,age,gender,employmentstatus,orfinancialsituation.

• Builduponexistingfinancialincentivestoencourageconsumerstosecurecoverageandprepareforpotentialout-of-pocketexpenditures.

• EnsurethateachAmericanfinanciallycontributestotheirhealthcareconsistentwiththeirfinancialcapacity

• Encourageresponsiblechoicesbyempoweringconsumerswithusefulinformationandincentinghealthylifestylesandvalue-consciouscaredeliverydecisions.

• Encouragethecreationofnewtechnologiesandtoolsthatwillallowconsumerstocreatevalue-basedhealthcaredecisions.

EncouragemorecompetitionandinnovationOverthepasttwodecades,therehasbeentremendousconsolidationamonghealthcareproviders.Consolidatedprovidersystemscanresistthekindofcompetitionandinnovationthathascreatedefficienciesandbenefitedconsumersinothersectors.TheFederalandStategovernmentsmustensurethatmarketcompetitionisfocusedondrivingbetterpatientoutcomes,increasingefficiency,anddecreasingcosts.Keycomponents:• Encourageinnovation(includingcost-reducinginnovation)inbusiness,technology,andworkforce

models.

• Directlycombatanti-competitivebehavior,particularlyamonglocalhospitalsystems,pharmacybenefitsmanagers,andpharmaceuticalcompanies.

• Requiregreatersharingofhealthcaredataofalltypesacrossentities.

• Systematicallyreviewandrationalizefederalandstateregulationthatmayinhibitinnovationandcompetition(e.g.,credentialing,clinicaltrials,andprescriptiondrugimportregulations).

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ReforminsurancemarketsMostAmericanscurrentlyhaveaccesstoastablesourceofhealthinsurancecoveragethroughtheiremployer,orfrompublicprograms,likeMedicareandMedicaid.Risingcostsareaconcernthroughoutthesystem,butthevolatilityoftheindividualmarketmoreimmediatelythreatenscoveragefor22millionAmericans.Werecommendbuildingonthestrengthsofthecurrentsystem,andtakingimmediateactiontostabilizetheindividualmarket.Keycomponents:• Encouragemoreconsumerstoparticipateinplansthatareavailabletothemeitherthoughtheir

employerorothermarkets(e.g.,ERISAplansatlargeemployers,smallgroupplans,MedicareAdvantage,individualmarket).

• Ensurelowerincomeconsumershaveaccesstoqualitycoveragebymaximizingallavailableoptions(e.g.,financialassistance,expandingMedicaid),whileavoidingperverseincentives.

• BuildontheAugust30,2017,bipartisangovernor’srecommendationstostrengthenournation’sindividualhealthinsurancemarkets:

− ReinstituteCostSharingReductionPayments,− Maximizecarrierparticipation(e.g.,byexemptingcarrierswhoofferplansinunderservedareas

fromthefederalhealthinsurancetaxinthoseareas),− Maximizeconsumerparticipation(e.g.,byincreasingoutreachtohealthierindividuals,andfixing

thefamilyglitch),− Promoteappropriateenrollment(e.g.,byverifyingspecialenrollmentperiodqualifications).− Stabilizeriskpools(e.g.,viariskadjustments,reinsurance,andrisksharing),and− Reducecostthroughcoverageredesignandpaymentinnovation(e.g.,bygrantingstatesmore

flexibilityinchoosingreferenceplansforessentialhealthbenefits).

ExpandprovenstateMedicaidinnovationsStateshavetakentheleadinpromotingvalueintheirMedicaidsystems.Manystatesareworkingtomoveawayfromvolume-driven,fee-for-servicetovalue-basedpaymentsandcarecoordination.FederalandstategovernmentsshouldrecognizeandreplicatethesuccessfultrackrecordofselectstatestoincreasequalityandlowercostsinstateMedicaidprograms.Keycomponents:

• Defineandscalevalue-basedcareandpaymentmodels(e.g.,integrationofphysicalandbehavioralhealth,comprehensiveprimarycare,episodesofcare).

• Investinstate-basedtransitionstonewvalue-basedmodelsofcarethathavethepotentialtoreducepercapitaMedicaidspendingovertime.

• IncorporatesocialdeterminantsofhealthintoMedicaid.

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• Measureandincenthealthandcriticalsocialoutcomes(e.g.,reducingpoverty,increasingemployment,reducingcriminalrecidivism).

• ManageMedicaidrisk-adjustedcostperperson,overtime,belownationalmedicalinflation.

• Usebestpracticevendormanagementtoextractmeaningfulvaluefromthirdparties(e.g.,managedcarecompanies,ITvendors).

• ProvideasmoothtransitionfromMedicaidtotheindividualmarket(backandforth)whilereducingchurnbetweenthetwo.

ModernizethestateandfederalrelationshipStatescanpursuemanyhealthcarereformswithoutfederalassistance.However,insomecasesstatesareconstrainedbyfederallawandregulationfrombeingtrulyinnovative.WeurgeCongressandfederalagenciestoworkwithstatestoovercometheseconstraints.Keycomponents:• Inpartnershipwithstates,theFederalgovernmentshouldfocusondefiningandprotectingareal

"minimum"standard,or"floor,”forhealthcaresystemsineverystatethatmaintainscoverage,increasesvalue,andprotectsconsumers,whileaffordingstatesbroadindependenceabovethatfloor.

• Federalgovernmenttoprovideleadershipwhereanationalapproachismostefficient(e.g.,regulationofpharmaceuticals,airambulances).

• Fullyaligngovernanceandincentivesinprogramssharedamongstatesandfederalgovernment(e.g.,dual-eligiblemembers).

• Explicitlyrecognizesuccessfulstateinnovationsinvalue-basedcare(e.g.,viatheStateInnovationModelprogram)andsupportotherstatesinreplicatingthosesuccesses(e.g.,resources,expeditedwaivers)whilealigningMedicareasmuchaspossible.

• Streamlineadministrativeprocesses(e.g.,waiverrequests)tobeeasier,faster,moreconsistent,andmorepredictable.

JohnW.Hickenlooper,GovernorStateofColorado

JohnKasich,GovernorStateofOhio

BillWalker,GovernorStateofAlaska

TomWolf,GovernorStateofPennsylvania

BrianSandoval,GovernorStateofNevada