payment model. and transitioning from a fee for service to a value based reimbursement system. this event was hosted by the national institute for healthcare management foundation. it's about two hours. good afternoon. so we'd like to go ahead and get started. i'm nancy chockley. president and ceo of foundation and i'm just dlieded to welcome you all here today. we have an incredible panel of business and policy leaders. they come at the problems from different perspective. but one unifying theme between all of them is their concern for what rising healthcare costs do to americans. and the need to increase value in our healthcare system. so each of them will present their own ideas of how to increase value or how they are increasing value in the healthcare system. a non-profit non-partisan organization. and we believe by bringing people together with different perspectives, we can improve healthcare through evidence and collaboration. we have a wonderful audience today. i recognize some of you out there and we want to bring you in to the conversation. so at the end of the program we've allowed 30 minutes of q and a. if you could fill out the cards in your packet. somebody will be around to pick them up and we'll use them to ask the panelist. we have had a last minute change to the agenda. you may notice bob is not up here. he got injured playing hockey. you have to love that at his age. so he was not able to join us. but mike graciously has offered to cover some of the points that he was going to make. and really the implications of the increasing costs and why they're such a call to action to increase value in our healthcare system. so i'll start first by introducing each panel -- each panelist and sit down. and go on. i'll start with mike cher noou and what distinguishes mike is that not only is he brilliant on the theory and the research but probably more than any other economist he understands how markets work. and he leads much of the healthcare policy work coming out of harvard medical school. but he also sits on harvard's benefits committee where he learns first hand why markets are not always efficient. is that fair to say? so, he also serves on cbo panel of health advisor. is a member of the massachusetts health connecter board of directors and was vice chair of med pack. we have the good fortune of having mike serve on our foundation advisory board. he is one of the pioneers of value based insurance design and the go to researcher for evaluating medicare and private sector accountable care organizations. please join me in welcoming mike to the panel. [ applause ] >> i am thrilled to be here. nikum always does an incredibly good job and nancy's always too nice in her introductions. tremendous to see all of you here. i'll talk broadly about payment reform, benefit design. but because bob was going to talk about the budget i want to start with some comments about the budget. the quiz question -- i'm not sure bob would have had this. what do these decades have in common? the answer is in every one healthcare spending growth exceeded income growth. by varying amounts in the 70s we were 2% faster healthcare spending than income growth. in the 90s which was a considered a very good decade for at least healthcare spending growth. we healthcare spending growth exceeded income by 1.6%. that's a real fundamental challenge. if healthcare is growing much more quickly than national income. so we have had i think one reason why it's great to be here today an ongoing national discussion about what to do in the healthcare sector. and i'm going to largely talk about a broad ideas but i do want to make an important semantic distinction. in many debates when people talk about the challenges we face regarding national health care spending, they're talking about total spending in the country. national health expenditures. other conversations when people are discussing the challenges associated with ridesing health care spending. what they mean is the government is spending too much. those are different issues and there's different solutions for how you're trying to address the total efficiency of the health care system and total health care spending in america relative to a concern about what the government is spending. because i spent time in a number of different settings i'll make a quick comment about medicare's challenge. so in 2015, roughly speaking medicare was 3 and a half, more. % of -- percent of gdb. take that for what you will. if healthcare spending growth continued to exceed income growth by 2% points which is roughly the average. by 2035, we'd be up to 8% gdp. if we're really successful and able to reduce health care spending growth to 1 percentage point faster than income, medicare spending would be a little more than 6.5% of gdp. if we were stunningly successful in health care spending, growth rows at the rate of gdp, medicare would still rise as a share of overall spending and the reason is because we have more medicare beneficiaries. we have fundamentally two problems. the policy solution for which are different. one of them is there has been rising spending per beneficiary historically in the health care system. the second is in medicare, we're struggling with how to finance a growing proportion of the population on medicare. it shouldn't be surprising that if we have more medicare beneficiaries per worker the workers will have to pay more to finance. those beneficiaries. that's not rocket science math. but the implications of how you deal with a growing population are very different than how you deal with rising spending per capita. it's not just a medicare problem. i think there's been some discussion about medicaid. in the state house and dc. and as medicaid spending grows, it crowds out a whole bunch of other things at the state level so there's a huge challenge, not just about how we finance medicare but how we finance medicaid. basically there's other parts of the budget we can think about cutting from. i don't want to go into broad fiscal policy discussions but if you tried to fund health care spending growth through taxes alone, no borrowing, just taxes and you raised everybody's income tax proportionally and health care spending grew at 1 percentage point faster than income, remember the historical rate is 2% faster, tax rates by 2060 would have to rise for the highest income group in the neighborhood of 70%. i'm waiting for the gasp. hello? i don't think taxes will be 70% in 2060. it is true that the power of compounding can make numbers seem enormous if you go far enough. the fact remains. fiscal challenges are real and they create enormous amount of tension in the system. as nancy mentioned, i chair -- i have the honoring of chairing or misfortune, the honor of chairing the benefits committee about what to do with our benefits package and when we look at the numbers, we can see projections of spending growth that put huge pressure on the wages and the salaries of people that work at harvard university. so although we often talk and as i mention about the sort of federal spending or the state spending problem this is also a huge private sector issue. about how we can control spending growth. so what i want to spend the time on is solutions. and i just to be clear i use that word loosely because i'm not going to have a great magic bullet. if that's what you came for. luckily we have other panelists. i'll talk about two broad areas. of solutions. there are others. one is payment reform and the other one is what i call consumer strategies or benefits design, things related to engaging consumers through the different ways but largely through insurance packages. it turns out that one strategy you might use to pay less is to pay less. it scores really well to cbo and you have seen that in recent health reform discussion. where the assumed increase in fees to physicians and hospitals and healthcare facilities are lower than had been in the past. i'll give you a slide about that in a minute. no one that i know or i sit is thrilled about the just pay them less strategy. there's a huge amount of energy around alternative payment models. way of paying differently and the two big types of alternative payment models are episode payments or bundles. and a population based payment model in the federal context that's largely acos. so to give you some idea of this from brookings. we had a system for paying physicians. it was not sustainable. so we have now have a rule called mac ra. which governs the way in which physicians are paid. in it there's a portion called mips which is a pay for value kpoenlt, which is fine. the thing that i think is most important to understand about the macra system is the scheduled fee increases for physicians are essentially flat in nominal terms, not inflation adjusted for decades to come. there's some bonuses and stuff that go in there, but the key thing to understand is by roughly speaking 2042, physician fees is the base level of physician fees are scheduled to rise by a little bit less than 10% in nominal terms. the fed is shooting for 2% inflation. slowly over time there would be a reduction in the real value of the fees to physicians. and through the aca there are similar adjustments for payments to facilities where their fees are scheduled to go up less than their input prices. that's i believe going to be a challenge for the providers system decades to come in the fee for service system. what we have been trying to do is build a somewhat different type of payment model where physicians in the delivery system or broadly can capture some of the efficiency. and by pooling those efficiencies out and allowing the providers system to share in some of the savings, they can perform better financially. than if they're just having the fees eroded by inflation. over 20 or 30 years. that's the theory of how the models should work. in the advantage of the models i was listening to a well known venture capitalist. he said these flexible payment models allow innovators to make changes in ways that is aren't distortded by needing to create revenue. by charging more for very specific services. there's economic appeal to broader payment models. i'll go through what the mode els are. three characteristics. they tend to transfer risk fro viders. that can be go or bad. if the providers create efficiency that risk means they share some of that. they include always a pay for performance component, a value component. and increase i have grown to appreciate the data support. to enable providers to succeed under the models because it is hard when you change a sector business model. often these new models go under the mon kerr of value based payment. you see this all over the place. reconciling, prevention and value. the word value is a very commonly used word now so it begs the question of what do we mean by value? my personal view may be a little contrary is the word value is a little bit of the sugar that makes the medicine go down. what we're really trying to do is to shift some of the responsibility and accountability of providing high quality care to providers and hold them accountable for the financial component shifting risk and we call it value because it sounds much more appealing than risk based models but a lot of what is going on here is not your standard pay for performance model. it is trfrg risk and responsibility down to the delivery system. episode based payments i have a lot of attention. i don't have time to go through an exhaustive literature. although i would love to do that. in general, i think the evidence is clear that they save money. there are examples where they save large amounts of money. on average they save 5ish percent. there's concerns for example that you save money per episode. there could be an increase in volume of episode. we haven't seen a huge impact on quality. you could take that as bad. there haven't been big consistent impacts on quality. there's several concerns with episode based payment. one is that the episode models work well for certain types of conditions. hips, knees, maybe other things. the problems we have in the country a lot deal with complicated interrelated chronic conditions. that are harder to put into episode model and it's uncloer how far you could go in a capturing the total spend of the country or population in episode based frame work. and the second concern we have is the induced use. so let me jump to population based payment model. it used to be called capitation. we don't use that word any more. the basic idea is that the delivery system gets a fixed fee to care for a population of patients over time. al of these they're all built. are built on a fee for service. that's during the year the money is flowing in a fee for service way. the delivery system the organizations that except this accountability are responsible for reconciliation in the end. between what is spent and the total budget. so again i would love to spepd an hour and talk about the evidence that's controversial if you follow twitter. this is like the half the places where i am is arguing this point. i believe the evidence is clear that population baitsed payment model ts reduce spending by a small amount. many people get disappointed and by small amount it differs across populations, the private sector clearly does better and part of the reason why the private sector does better is because there's wide variation of prices in the private sector and in these models, it turns out that the physicians, the organizations that accept this risk, they can shop better and they can save money by directing patients to lower priced settings and providers. it seems clear the results improve over time. and it also seems clear at least in medicare that physician independent physician organizations do better. that's a generalization. i'm an academic. i'm paid to generalize. as as general rule, it seems to be the case if you want to save money by keeping out of the hospital it helps if you're not a hospital. so the other thing that's really important to understand and i don't know why it's so hard to explain it seems that i keep saying this and doesn't sink in. in a shared savings model, the savings gets shared. just so you understand how it works. if you save $100, and less spending. that you're not going to keep the whole $100. you shared it. that's how sharing works. so if you look after a year you're never going too to do as well as had you not shared savings. but understand, the shared savings are the incentive to induce the savings. if you didn't share, you wouldn't have any savings to then share. i think we have to worry about trying to create a healthcare system that's working in 2019. so just to be clear i really want the healthcare system to work. but i'm much more interested in us getting on a path where the healthcare system will work in 2025 and 2030. if we spend all the time trying to get a big win in 2019, we risk abandoning a path that might get us somewhere successful in 2025. so the reason why i have been supportive of the models is not because the evidence suggests huge savings. i must admit if it saves money and improving quality, if you're saving money and improving quality in my book that's a win. it might not be slam dunk. but that's a win. and the reason why we should keep moving on this path is because if we get all the regulations right it enables the delivery system to control their destiny and to capture some of the efficiency which is i think where we're going to want to go. the details matter. we often say aco they succeed or fail. the details are very different. and the other thing that's important to understand is execution matters. it's not simply put it in aco is it gets implemented. how it works how the organizations that are doing this work accomplish their task ends up being really important. don't under estimate the importance of management and execution. my summary. we want a mansion we have a dilapidated house. we know how to build a tiny house. the point remains it's a house and hopefully over time we can put on additions. that's my sort of folksy answer. comparing episode and population based payment. they maybe able to work together. quick summaries. both of them seem to lower spending. the problem with episodes is that they're narrower. if you save 10% on 5% of care, you haven't saved that much money on a population basis. the other models are broader. the concern is that not all geographic areas in the country are yet ready to support population based payment. so for a while we're going to have some mix of these types of models moving on and it is also the case that specialists episode models engage specialists better. the other ones tend to be focused on the organization of primary care providers. should they continue? again i believe they should. in part because macros current law and will be challenging given the fee level. it's going to be hard to put in more money. so my general view is when money gets tight, and i hope my beginning slides convinced you money will be tight. the providers are going to want to control the money. and the overarching theme behind a lot of these new payment models are mechanisms to allow the providers to control the money to capture and share in some of the savings that they create. i'll switch gears to benefit design. understand that one thing about insurance, is the goal is mitigate risk. it shouldn't be surprising the purpose of insurance is insure. sometimes we forget that part. we're balancing risk spreading and incentive. the goal of cost sharing is not to lower premiums. it's relatively easy to have premiums go down if you make the patient pay more at the point of service. that is not a clear win. that is just shifting from a premium to the point of service, which adds risk that does not diminish risk. the other issue is the goal is not tax the sick. if you have high cost sharing plans who pays, the sick people pay. our goal is not to balance or meet the health care challenges that we face by charging all of our employees that have cancer or heart disease or even some wonderful things or have babies, our goal is not to charge young families to support our health care spending. the reason why we have cost sharing. is we're trying to improve the incentive in two particular ways. one of them is we want to reduce excess utilization. and you probably know there's waste in the system. we would like to have less. we would like to encourage price chopping. particularly in the private sector. with a huge variation of price. you would like to use benefit design to encourage the price shopping. so a few options. there's high deductible plans, high copays, high cost insurance plans. essentially models that charge patients more. those tend to be very blunt instruments for a variety of reasons. sick people for example get above the out of pocket max and face no incentive for cost sharing. there's a lot of evidence of hchps that they don't encourage shopping even though we would love to encourage shopping. most of the newer more advanced benefit designs try to target a purpose. either price shopping or reducing overutilization and encourage use of high value system. reference pricing is the basic idea you pick a price if an employee goes to a higher price provider they pay the price out of pocket. that steers them. to the lower priced providers and encourages the higher priced providers to lower their prices. tiered net work is a similar concept. it's for all of your admissions or care. that so both reference pricing and tier net works are about steering pash patients to lower. the value based insurance is the idea of trying to align copays with value. so my colleague would be frustrated with me if i didn't mention that if you look at the care that we get some of the care is high value. and we want people to consumer that care. other care is lower value. and we would rather discourage people from using that care. there's a nuance. the idea behind value based insurance is to align the cost sharing with the value to encourage the high value discourage the low value care. the basic results from the studies is it is thankfully to an economist good news that people respond to cost sharing. financial incentives matter. financial incentives matter. they shift the sight of care. patients in reference move to lower price. not all of them. a relatively small percentage of them but there is movement associated with that. to give you some idea. there's large savings in a reference pricing model. on narrow amount of care. hips or knees. in a tiered model one study suggests a 5% savings on a population basis. it is also clear that higher cost sharing reduces use. high deductible plans have 5 to 14% savings on use. the results depend on exactly what you have done. how much emphasis on encouraging use of high value services and discouraging use of low vl services. how you design will determine the financial implications oftd plan. some basic concerns. this is the one that's important. and disturbing to an economist. i was gloating before, but now i'm sheepish. cost sharing does influence patients behavior. patients don't respond the way that clinicians might want them to. they reduce the use of high value care and low value care in the same proportion. they reduce their use of high value pharmaceuticals. there's a number of for treating diabetes, heart disease a whole slew of things. charge people more for those they actually use less of the high value things. they're not that good at discriminating. that's one of the motivations for value based insurance. you can use the cost sharing it -- i don't want to use the word manipulate. it allows you to set up a benefit design to align with what you want patients to do. there's another concern with the benefit designs that you're transferring risk. remember the purpose of insurance is to mitigate risk. if you charge people a lot you're undoing that. and of course one thing we have been worried about is disparity. if you charge people out of the pocket you have to worry that's going to impact some populations more than others. and so a consumer oriented strategy always have to grapple with the disparity concern particularly given that people aren't always the best decision makers in terms of care they should get. a few final thoughts. keep it simple. it is really easy to come up with dramatically complex nuance solutions where people have to choose among different providers and services and benefit design. or complicated regulations about how they'll do things. quality measurement system in the country i'm a big fan of quality measurement. it has become a big complex entity. that creates cost throughout the system. you'll see this if you spend any time talking to anybody that's a had anything to do with mips. there's concern about that. i think it's a guiding principle we should do our best to keep the system simple. to avoid this sort of crushing administrative distraction. and the last point is maybe the most important, don't be so impatient. if you came here today and if you go to whatever talk you're going to next week, if you're going hoping this will be some magic solution and if we just get rid of whatever we're doing now and put in this spectacular thing, that's not the way the system will work. by and large my view is that the road to success is always under construction. and we should be happy with small wins and incremental improvement. driving in a direction we think will promote value using incentive to the delivery system. payment reform and patient benefit design and hopefully we'll be able to get to a place that's fiscally sustainable. one way or another we'll control healthcare spending growth. in the end math is going to win. but we have to figure out how to do that in a way that maintains the quality of care for folks, but frankly, we have a health care system design today meet peoples' health care needs and i think we're on a reasonable path and hopefully with continued work we'll keep moving in the right direction. thank you very much. [ applause ] >> mike, thank you. that was terrific. very thorough and actually very clear, too. in a very complicated subject. thank you. now it's my great pleasure to introduce curtis barnett, the president and ceo of arkansas blue cross blue shield. a nonprofit mutual insurance company which is the largest health insurer in the state of arkansas with about 2 million members. and curtis is really a champion for improving the health of his fellow citizens in arkansas. the most vulnerable people, there, the most vulnerable populations and under his leadership the arkansas blue cross blue shield has instituted a number of programs around opioid addiction, health literacy and even food scarcity but he's here to talk about one of his key components to his vision of making health care more accessible and affordable and that's a movement to alternative care models in collaboration with the state and federal governments and they've had a remarkable amount of success in arkansas and it's served as a model for cms and for other states. as you can here today, curtis is pretty passionate about building a better health care system and we're really pleased to have us with him today. thank you, curtis. [ applause ] >> thank you, nancy. i think it's fitting for me to follow michael in our comments today. michael has been a considerable apt of time in my home state. studying the affects of many of the initiatives i'll be talking about this afternoon. when i joined arkansas blue cross blue shield in 1993, i worked with a product called the primary care net work. that was a product we made available to large employers and located in rural parts of the state. these were communities with populations as small as 3,000 to as large as 20,000. the communities that had primary care physician clinics and at least one large employer. sometimes more. and tended to be fortune 500 companies with a plant or mill located in arkansas. these were gate keeper type models so care for the employees and family members were directed to the primary care physician. and those physicians treated those patients as well as coordinated their care and referred them for additional services. the physicians were under financial risk how the plans perform. and one of my main job was to work together on a regular basis with employer leadership and physician leadership to bring them together to manage the programs and we would go through extensive data analysis to do that. you can imagine in 1993 these were mounds of data and reports we would work through. what we were trying to do in the setting is to look at which primary care physicians were performing the best. which are the most effective and efficient hospitals and specialists to refer care to. we were aligned together to manage those healthcare costs because we all had an interest in keeping those jobs and local communities. we were really trying to work towards two objectives. one was to establish the primary care physician as the care coordinator. and identify and reward value. now fast forward 24 years. and while we do not continue to have that particular product in our state, as an industry we continue to work towards those objectives today. it's what consumes us almost day in and day out. i would say that over the 24 years we have seen progress towards the two objective ts. and especially in the last five or six years. some of that i think a big part of that is we have had a new partner involved with us as we pursue the objectives. and that partner has been the public sector. for what i want to do today is give you a look at what public and private collaboration has looked like in arkansas. i want to go over the initiatives. talk about some of the support that's needed to make them work. and then just end by talking about really how all of this work is influenced our view and our approach to driving the healthcare system towards value going forward. the healthcare challenges are in arkansas are not different too different than other rural states especially southern rural states. it's hard to navigate it's fragmented. there's little visibility across the spectrum of care. when you're thinking about quality and cost. healthcare spending is growing it's growing at rates that it's severely straining the public and private payers in the state. and the health status of the tends to be poor. we rank at or near the bottom in a number of key health measures, whether it be obesity, diabetes, prenatal care or smoking. we tend to rank toward the bottom. but by working together, public and private sectors have begun to transform the health care system in the state of arkansas. this is the frame work for how we have been going about that work. it's called the arkansas payment and improvement initiative. two main components to this. the first is a patient centered medical home model that we have been had in place. the pilot with the company going back to 2010 and it ties directly in to the comprehensive primary care initiative sponsored bill the federal government. and then episodes of care component which we put in place in 2012. all of this work was helped tremendously in 2013 when our state received a state innovation model grant from cms. i think it's important the to note that arkansas payment improvement initiative is not just a public private collaboration. it truly is a multi-payer initiative. as you can see, all the major private payers in our state are involved in this program. at some level. and have been supportive. as well as major employer groups. large employers who have a commitment towards value based care. have been partners in this as well. i want to start by talking about our patient centered medical home approach. these are the objectives of the well designed patient center medical home. to achieve these objectives a practice has to go through significant transformation. for example, they must commit to a team approach to care. they must identify their top 10% priority patients. have care plans. use electronic health records, arrange for 24/7 live access to care going forward. so all of these are important activities. they have to under take in order to transform the practices to be patient center medical homes. in return, these practices do receive up front payment. which help fund those transformation activities. in 2010, our company put a stake in the ground. and we said that if we're going to have a sustainable healthcare system going forward. we have to have a strong primary care infrastructure. so we embarked upon what turned out to be a two year pilot program. to see if we could transform primary care physician practices into patient centered medical homes and assist in the process. these are the goals that we sought to achieve. in only two years we saw very good results. we saw hospital readmission rates for those patients who are attributed to patient center medical home go down. emergency room visits and related cost go down as well. we saw the appropriate use of the emergency room actually go up. as well as generic drug prescribing rates. we came away from the pilot with some very significant and valuable lessons learned and probably chief among those is the need for payer alignment when you're pursuing these types of initiatives. even with our market share, we realize very quickly that any one private payer would not represent enough vol youm to get the practices to make the investment that were needed to transform their practice the way they need to be practiced. occur. so we understood that very quickly that without much more volume these tended to be a one off effort and would have a very short shelf life. you can see we have other important lessons learned as well. so, in 2012, we cms opened up the opportunities for markets to apply for the primary care program or cpc, we took our lessons learned, we joined with arkansas medicaid and our state's surgeon general and other health care and political leaders in our state and we made application and we seized that opportunity at that time. you can see in the period from 2012 to 2016 we were one of the seven markets that were selected. one of four that were statewide. we had 6 practices that were selected, 268 providers and five payers participated, including arkansas medicaid and again that was critical to having the patient volumes that were needed because now we not only had the patient volume but we could offer the incentives necessary that would be sufficient enough for these primary care practices to make investments in infrastructure and changes in their clinical decision making and operational processes that were needed to transform their clinics. the volumes were absolutely critical to doing that. over the course of the time period that we participated in c prkts c and what's now a called the classic program, you can see that we did participate throughout that time period. we saw improvements and patient satisfaction and experience of care. during that time period we saw reduction in hospital admission rates by the patients who were part of the patient center medical home program. 15%. which led the country. reduction in emergency room utilization. we saw improvements in qualities in the information that was kept there. and arkansas in 2015 and 2016 did have net savings as a result of this program. we have came away feeling like it was a very much a success. of the experience that we had, in cpc classic program. led us to want to pursue to be part of the c plus program. which went into effect january 1 of 2017. we're a part of that as well. one of 14 regions around the country that have been selected for cpc plus. we have grown our participation across the board. we have 182 practices now part of that. 689 providers and we're up to seven payers who are supporting this initiative. that's important as well because we think this will allow us to have a much greater impact going forward. i want to turn my attention and talk about the episode of care program. we work very closely with arkansas medicaid to basically develop and implement the episode of care program. the purpose of this program was to include. it was to improve quality. and to basically reduce the variation in the types of procedures that were used to treat conditions. and so we feel like it was important movement in the right direction. for each of the episodes a clinical leader is identified. which is called a principal accountable provider. so that individual is identified. there are quality standards that were established. and thresholds established. which laid out the commendable, acceptable and unacceptable cost level for each of those episodes. then we provide regular reporting back to the clinical leads. they can look at the episodes across the entire spectrum of care and look at not only how the quality measures are performing. also the utilization in cost associated with the different episodes. to date we have 22 episodes of care. each of the payers is free to decide which of the episodes they want to implement. based upon the population they serve for arkansas blue cross we have implemented 14 episodes of care. this is an example of how the payment model works for the episode of care program. and you can see that at the end of the performance period, an average cost per episode is calculated for each of the clinical leads. this is usually at the end of the one year period of time. and there are commendable level ts acceptable and unacceptable levels. those who perform and mote the commendable level do qualify for gain sharing. and so that is shared back with those particular clinical leads. those who perform above the unacceptable level. have to share in the cost of that program. a portion of their payment is then recouped as a result of that. since putting the program in place, we have seen what the intended effects were meant to be which is we've seen variation reduced, we've seen quality improved and so we feel like this has been important movement in our state. these are some high level results from a couple of the episodes that we have had in place. probably the longest for the state for our plan. the prenatal quality cost down. and also total knee hip replacement. i want to point out the cost reductions are not adjusted in any way for inflation. if you were to do that assuming cost would be growing year over year. then i think the cost reduction would have an even greater impact. i did mention this earlier. but arkansas was one of the several states selected for state innovation model grant. our state did receive a grant of $42 million to help fund the arkansas payment improvement initiative. the activities that i have been talking about and help develop those episodes. help develop the patient centered medical home process and we think that that partnership was part of this is certainly indicative of how private and public organizations should work together. as you can see we have been having an impact in our state. i don't think i can over emphasize the importance of data and communication when supporting these types of programs. when we implemented these programs we rolled them out. we worked very closely with arkansas medicaid especially on the episodes program and we held 21 public work group meetings in eight locations around our state and we received feedback from over 500 providers, patients and other stakeholders who helped really shape how these new models would look and how they would work. ongoing communication is absolutely critical as well. we have teams each of the payers have team ts who are involved in this on a regular basis. we have weekly, monthly. quarterly meetings. it's not just the payers getting together to work on the program, we're also including in many cases the arkansas hospital association, the arkansas medical society, as well as the practicing physician participating practices as well. what we're doing the sessions we're sharing challenges, we're talking about program changes and as much as anything we're talking about best practices. data is also absolutely critical to the success of the programs. we decided early on that if we were to try to build whole new technology tools from scratch, they would add tremendous cost. arkansas blue cross made available our advance health information net work very early on in the program. so it was already used by 99% of providers in arkansas. so it already had a presence in the offices. we were able to use that as really the way to push information and data out to all the provider practices and especially all the reporting. we think that was critical to keep the providers from having to log into multiple systems and to learn multiple report formats to get them to feel much more comfortable with the program. we provide a variety of dashboards to our participating practices as part of this initiative. there's drill down capabilities that they can see exactly how they are performing and where there are potential areas for improvement. one of the things that we did early on also is we established a dedicated resource center. that providers can contact and also out reach to them to help them understand the reporting. and help them understand how to use that information to help drive practice improvement. i want to end by really going back to my comments at the out set. i feel like we have made in our state very good progress at those objectives i talk about. that is to improvement care coordination into identify and reward value. we think a lot of that progress is really the occurred as a result of the collaboration between the public and private sector. kbi having arkansas medicaid, by working with cms, we've been able to bring together a much bigger impact than we could have before. arkansas blue cross we're convinced that we need to continue to move this market toward value based payment. we think that's critical to having a sustainable healthcare system going forward. and we also believe that all the initiatives that we have worked on that i have spent the last few minutes talking about. aco like models that we were worked with in the state. we feel like all those efforts have really helped lay a foundation that we can continue to pursue this going forward and we're working on the plans today. we also want to continue to collaborate with public programs and i encourage public agencies whether it be state or federal level to continue to view the private payers as partners in innovation. we think that's critical. and finally to leave you with just one other remark. we have seen first hand that by working better together, by combining our patient volumes, by combining our different perspectives, by combining our different areas of expertise, by combining our resources that we can pursue common strategies that can be scaled to address common challenges and we believe that by working better together, that we can have a much greater impact than any one company or any one agency can have working alone. thank you. [ applause ] >> thank you. for your remarks and really for your collaboration and leadership with public sector. and we look forward to getting future updates on how you all are continuing to make progress. so now it's my great pleasure to introduce david anderson. president and ceo of blue cross blue shield of western new york. and blue shield of northeastern new york. dave leads the regions largest health insurance with 1 million members and dave is really a forward thinking entrepreneur and executive. and he's leading a number of innovative efforts to improve the health of new york. including a community out reach campaign to address the opioid epidemic and a unique home based care program with behavioral and social supports. as you'll hear today he's committed to strengthing the primary care to support improved care. better population health and lower health cost. he's led a new payment program to empower primary care providers with flexibility and resources to better manage patients care. please join me in welcoming dave to the podium. [ applause ] >> good afternoon. pleasure to be here. i have enjoyed the comments of our prior speakers and i think the sequence is good. michael is more of a macro level and talking conceptually. i think curtis's comments were specific to arkansas and to those segments and so i wanted to spend a little time today talking about a very specific market based value based initiative that we have brought to that market called best practice. it it's very regionalized and also focussed on the to help primary shortage of primary care. that we have in that area of western new york. so i'll give you context around the population that i'll be talking about. and the area. this is us. headquartered in western new york. we operate in buffalo. western new york is an area that has actually had some shrinkage in population over the past decade. and its population is aging a little bit. so those are factors in the effort that we have made to transform the population. this is where we're located. i'm going to talk specifically about western new york, although we will begin to rollout similar processes in other locations as well. this is the region that we focus on. it's an eight county service area. as i mention it has static population trends. two major hospitals systems. in that area. and controlling about 80% of in patient care. and there's one distinct cancer specialty hospital. roswell park is in that area as well. fairly typical of legacy territories that are hospital driven, they are very doctor centr centric, not patient centric and as we have evolved into more of a patient centric and consumer oriented segment in health care, we have a need to flip that around. we looked at the area and said how can we begin to transform the provider systems and in this specific area to make it patient centric and bring value based contracting to the region. there was a very high degree or concentration of specialists. also not that unusual when you have hospital driven communities. and they were a very much a late adopter to any form of reimbursement other than fee for service. our program is called best practice. and i'll -- it really had two main objectives. one to transform into a value based and provide and realign incentive with the provider system as both michael and cur tis talk about. we have a pretty critical shortage of primary care physicians in western new york and you can see the numbers there. showing our deficit. and they are shrinking all the time. not unusual in a number of communities around the country. because they have not been supported either economically or within their practices. in a way that makes primary care the preferred specialty if you will. in the provider system. as i mention we had an ageing population. and the result of the model the fee for service model calls primary care physicians to be reimbursed and their income levels to be such that they have a general incentive. to move towards specialties. and in a volume based reimbursement model the only way that primary care physicians can progress is to to do more volume. which is exactly the opposite of the incentive we want to provide. so the current relationship is broken. much of this you know and have heard. the responsibility of our system in a fee for service world really falls on the patient. pcp primary care physicians and specialist do not collaborate as well as they should. often electronic medical records and other forms of patient records don't follow as concurrently and accurately as they should. that results in redundant testing and procedures. and there's also a fee for service environment an inability to reward pcps based on performance. essentially they're all reimbursed in the same way. and the result that we have today is our higher cost. lower patient satisfaction scores. very difficult to measure quality scores in that environment. and so we have moved forward towards best practice. this is primary care as we felt it should be. it's not perfect. and we did not want to go from a to z all in one year. that wouldn't be possible. it's a step in the right direction. first of all the pcp coordinates care and would be compensated accordingly. i'll get into that in just a second. if -- to have a pcp assignment doesn't have to be an hmo type plan. where it's chosen. we use a tool to attribute all of our members to certain pcps such that they have a full panel. we focus on the total health which i think should become apparent in minute. not just treating illnesses. the pcp becomes the source of referral. and we provide support. we have changed the provoider support model such that the pcp has concurrent data to share with specialists. the net result of the financial model is reward out comes. we have already seen higher patient satisfaction scores. and we are early this program that i'll display in a second, started january 1. we are already beginning to see primarily because of changes in referral patterns we are beginning to see cost decline. so functionally, and i'll apologize for the granularity. it's important you know functionally what value based contracting can mean. it's not the only model. but it's a terminology that we use a lot. and to bring it right down to a relationship between the health plan, the member and the provider is important to understand. we launched ours in this eight county area on january 1. we started the april before. and began educating the pcs in our region for nine months prior to implementation. we now have 1,000 pcps participating and about 400,000 of the members attributed to the pcps. one of the disadvantages although conceptionally aco arrangements or even patient centered medical home arrangements. one of the downsizes they generally work on smaller population. they're specifically about named population. it might be a segment based that might be very small regional basis or whatever that particular provider group can provide care for. we want a bigger effort than that. we want to transform the membership in an eight county area across the board. one of the things that we have been able to do is we're including medicaid and medicare and we're including our employer population, whether it's self-funded or fully insured. so it has a broader impact across the population. what we have done is created a combination. of fee for service which we have just been saying is a bad thing and i know we have been saying that all morning. but there are aspects where it works. as well as a monthly payment that we refer to as a care management fee. also because michael indicated we don't want to use capitation anymore. so we refer to it as a care management fee. but i have put capitation back into this explanation on purpose because i think it makes the point although it is not capitation in the way most of us remember it. here's generally how it works. what we did is took those 400,000 members. we looked back over a period of time. we started in '14. we have that claims data. on a per member per month basis we created a base rate and said the cost of that population historically on those claims under that traditional model is a certain amount per member per month, that's our base rate. we then used a form of capitation adjustment which has historically been age and gender related. that's nothing new. but what we then did is we used the mckessen risk scoring tool which looks back at -- and then can actually begin to predict what costs will be based on an individual score. and we applied those factors for every one of those members. so for example a primary care physician has 100 of our members. he actually has a risk score that is different for every one of those 100 members based on if they have chronic illness, based if they're very well, based on their age. so they are all different. we then take that population and we look to the providers. we use our heat of scoring methodology, and we create ten guidelines within our reports and we apply those against the factor on a per patient basis. now, we could debate hedis. it's not perfect. however, we find that we've used the 3m system, risk scoring system as well. we found the results of those two analysis to be fairly similar. so we're fairly comfortable that using our hedis scores was an adequate measure of quality. and we also because of our work on medicare advantage, like most health plans we're having to do the hedis scoring methodology and do the code checking as well. so that seemed to make sense and we had reasonable accuracy with that and then on the efficiency model, we used the mckesen risk scoring tool for that because it has a prospective measure to it and we combine those two and that is applied toward every one of those members' risk score. what that creates is an actually capitation to the monthly scare physician which is unique to every one of the patients that is attributed to that pcp. and as i said, there are a number of things particularly in the preventive and wellness areas that we want to have happen and we continue to pay them on fee for service. so that creates the reimbursement model for the primary care physician. we believe everybody wins. i won't read everything on the chart. it's certainly available if you'd like to have it, but one of the things it does is create a baseline level of cash flow for primary care physician to be able to build their practice and to know that they have a certain income level that they attributed to their patients that they can count on. and it create -- and there are factors in that that base level of compensation that then allows the -- because there's revenue there every month for a physician -- it allows them to manage their patients the way they think is best and a good example is under the traditional model of fee for service. in order for them to receive any compensation for a consultation, the patient has to come into the office. it nay not be necessary. this way if they want to use telephonic or videoconferencing to communicate with their patients around conditions that are not as severe, there's actually a piece of that service fee that contemplates that, and they feel they have adequate compensation in order to adjust their practice accordingly. they also have access to cost and quality data that they traditionally had not had. and that cost data is important in the referral pattern process. most times what we have found is the primary care physician making a referral to a specialist at one place or another had no idea of what the cost, quality and efficiency measures were for the specialist they were referring to. now, that's a work in progress, but we are already seeing a difference in the referral patterns against this population from the primary care to the specialist. because that as wellness and health of that population improves for those patients that are attributed to that primary care doctor then he begins to receive more money because of the way that the monthly service fee is calculated. and his reimbursements go up. he's rewarded for the higher health status of his population. so he wants them to go. he wants his patients to go to the most effective, highest quality environments they can, to receive their care. historically, he did not know where that was. the member, they're dedicated to a pcp. generally, we find our members, although choice is always important, want to have a pcp that helps them guide them through the system. the care is not limited to a standard office visit, as we mentioned. it's up to the physician and the patient to determine how that care, primary care would be administered. it's better coordinated. so when they leave their primary care on referral, their records are largely supported, and they're very current. and that allows the member to have shared decision making with their pcp. on our side, on the payer's side, it is aligned with our hedis measures, and affects our risk scoring, can affect our risk scoring for risk adjustment revenue. as well as star ratings. there's a greater focus on population health. and as i mentioned, one of the things we have seen that we have underestimated a little bit, there is a change in referral patterns to more cost effective specialty environments. so it's a major step from fee for service. western new york was very traditional. i arrived there about four and a half years ago. there was essentially no value-based contract in the market at all. so it was a territory that had lagged a little bit. and as i mentioned, we now have 90% of our pcps. and essentially all of our attributed population on the basis of that contract. i mentioned we spent nine months educating in advance. one of the critical things i heard curtis say the same thing, that it is essential in these environments that you change your provider support model. they need data in a different way and in different timing in order to make the right decisions over what they have had in the past. we have added about 25 provider service representatives that do nothing but administer these contracts with those thousand pcps. so outcomes. as mentioned, 90% are working with us now. we were told directly by cms that we were awarded a cpc plus contract as one of the 14 pilots for 2017 specifically because of our best practice program. i had hoped i would have a little runway in this process, but my largest competitor has copied us almost already. and i guess that's a way of saying that we feel we made some of the right decisions. and then after one year, we're not quite done with the year yet. what do we expect to see? we would have a higher degree of cost transparency at the pcp level. that's also helping them make appropriate referrals. we have, as i mentioned, a couple times, a change in the referral patterns as a result. we have a very different level of provider engagement. and our value-based literacy among pcps, which they didn't know even two to three years ago, and we have seen hedis score improvement greater than traditional pay for performance programs. which has helped us in risk adjustment processes as well as our star rating. as far as actual savings, what we're looking at, we're pretty aspirational. we think probably on an overall basis, around 2% in 2017. we don't know that yet. it looks like that's about what we're tracking. and again, i think maybe -- i agree with the comment michael made. that may not seem like a lot. it seems like a lot of work and a transformation of an entire provider system for 2%. but this is a multi-year arrangement. and we think in year one, that would really be excellent. and remember that in a compounding environment, that 2% savings resets the baseline. so as you move that forward, that 2% becomes very significant over time once that baseline continually is reset. so that's best practice. we've -- we'll hopefully have a chance to come back and report towards the beginning of next year after we have a full year in. but hopefully, that was helpful to give you some granularity around how some of these concepts are applied at a market level. thanks for having me. appreciate it. [ applause ] >> so, dave, thank you so much for that granular look at how these contracts really work, and it's very impressive that you already have 90% of your primary care physicians under contract with it. so now we'll hear from avik roy. always interesting. avik is the cofounder and president of the foundation for research on equal opportunity. a nonpartisan, nonprofit think tank that conducts original research on the impact of public policies on americans with incomes or wealth below the u.s. median. so it's a very topical issue that you're addressing in your new foundation. you know, you will know him. he's a leading conservative change agent. he's advised three republican presidential candidates and influences and informs the policy debate in his role as opinion editor at "forbes." he also has experience in medicine and finance as a former medical student and jobs early in his career at bain capital and jpmorgan. we're also honored to have avik as a member of nicm's advisory board, and he's a senior adviser to the bipartisan policy center. he's a fierce advocate for the free market and a very effective advocate for the free market and patient-centered reforms to lower the cost of health services and prescription drugs. we're just delighted to have him here today. thank you, avik. [ applause ] >> thanks, nancy. it's great to be with you all and share the stage with what i thought were really interesting presentations from some very impressive people. as nancy mentioned, our new think tank, the foundation for research on equal opportunity is focused on trying to find ways to achieve the goals and the principles of both progressives and conservatives, to say let's find solutions. let's find reform ideas that can move the needle for the people who have the least economic opportunity in america today. i think all of you understand that prescription drug prices is one area where affordability and health care are particularly impactful to low-income communities, because we all go to the pharmacy. and pay those co-pays when we pick up our prescriptions. so it's an area where, of course, it's not alone in terms of being a place where health care is expensive, as we have heard today, but it's an area where in particular, patients are exposed to those costs. we published in may a white paper called the competition prescription. and the point of this paper was to try to break through the log jam we have had in prescription drug pricing. as you all know, the dynamic we have had for the last several decades has been, well, the democratic side, there's been a lot of concern about high prescription drug prices. advocacy of price controls and variations of price controls to try to regulate the problem. and on the conservative side or the republican side, the view has been, well, we don't like price controls. so we're basically going to change the subject. i think the argument here is to say, actually, the situation we have today where we have such high prices for prescription drugs, it's not the result of a free market. it's the result of specific policy decisions that congress and the fda has made that have allowed prices or incentivized prices to go up the way we have. and the solution to that problem is actually more competition. competition has been the biggest driver of reducing pharmaceutical prices in the united states. so we have successes and failures. and the goal here is to hopefully learn from the successes to address the failures. so you all know this story. the story of the fact that americans pay a lot more for prescription drugs than everybody else. right? so per capita, prescription drug spending in the united states is basically double the rest of the wealthy countries in the world. at $1327 per person in i believe 2014 is what this data comes from. so that's a lot. right? what you might not know is that, you know, it's particularly thematic in the context of the value and volume debate. we're actually the best country in the world at putting people on cheap, low-cost, unbranded generic drugs that cost less to manufacture than a bottle of water. so you know, we talk about the high prices in america. but those high prices are driven in particular by the fraction that's not that 82%. it's the 18%. the 18% of drugs that aren't generics that are branded drugs, and particularly the subset of those are like the patented brand of drugs, that's where the high prices are. the vast majority of prescriptions in the united states are for cheap, unbranded generic drugs. there we're doing well, thanks to one of the farsighted laws this institution has ever passed, the hatch/waxman act of 1984, which did a lot to stimulate the growth in prescribing generic drugs. compared to the european median of 21%, we're actually four times better in terms of making sure that where there's a cheap generic alternative available, people have access to it, they're using it, and the clinical effectiveness of the generics is as good as the old patented competitor. we're doing a great job, actually, at engineering and encouraging competition when a lot of drugs go off patents. the problem is that for the branded drugs, the prices are going up. you'll hear people say, well, you know, growth in pharmaceutical spending is growing by x percent. what often you don't see in those charts or those slides or those tables is that actually, if you just look at branded drugs, the inflation is even higher. right? so in 2012, we're spending $228 billion on branded drugs. in 2016, spending was up 50%, 5-0 percent on branded drugs. spending on generic drugs and this is nominal data, not inflational data. in 2012, unbranded generics were spending $52 billion. and 2016, we were spending $50 billion. so there was actually a real decline, a nominal decline in the dollar value of our spending on generic drugs even though the prescription share of generic drugs were going up. generic prices were going down. that's the untold story about drug spending in america. is that where cheap, generic drugs are available, costs are actually declining. but for those branded patented drugs, costs are skyrocketing. one thing you hear the pharmaceutical industry point out is that, well, you can't just go by those prices you see in the newspaper. the list prices. the list prices aren't actually what we receive in revenue. you have to account for all of the discounts that come out of that list price before it actually gets to the consumer. and they do have a point. but i think it's also overstated to say that the net price that pharmaceutical industry reports is actually the true price that's paid by the consumer. that's not true either. and i try of walk through it here. there's the list price. that's the price that almost nobody pays. but it's the sticker price, you could say. then there are wholesalers and distributors. the three best known are amerisource, cardinal health, and mckesson. they actually buy these drugs in bulk from the pharmaceutical manufacturer and then sell them to pharmacies. and so they take a discount for buying in bulk. and they have calculated that for branded drugs it's on average about 16%. you discount the sticker price by about 16% to get what ims called the invoice price. then to get the net price, you subtract out a few other things. so, for example, what pharmacy benefit managers do, they get rebates from the pharmaceutical administrator to get a more favorable position on a formulary. certain drugs over other drugs. sometimes if you have a lot of cholesterol lowering drugs, some are generic and some are branded. the branded ones have to give rebates to the pbms which are contracted with insurers to incentivize the pbms to stimulate more utilization of the branded drugs when the generic drugs would otherwise take over. yes, that's money coming out of the pharmaceutical industry to get their drugs to consumers. but it's actually a mixed bag in terms of what's happening with consumers. in some cases, they're using a costlier drug, which drives up health insurance premiums. the cost to the consumer actually goes up. another example is co-pay assistance. a lot of pharmaceutical companies will say we know our drug costs several hundred thousand dollars per patient per year but for low-income patients who can't afford that we'll pay their co-pay and deductible so they don't have any out-of-pocket costs. it's a win/win, right? because they get to say that they're, you know, being very charitable to low-income populations, and they get a lot more utilization of their drug. but the higher utilization of a high cost drug means what? spending goes up and premiums go up. so the end result for the consumer is not the net price. the net price is the end result maybe to the pharma company, but the price to the consumer is actually higher than the net price because they're paying for these higher premiums as a result of higher utilization of expensive drugs. i try to illustrate that in this next chart. if we look at the other wealthy countries in the blue there, that's the average pharma spend per capita for them. and then we say, okay, what is it in the united states? and what are the different components? so $899 is the net price, if you add all this up, it's like $1600. that's like the list price, the sticker price. the real impact to consumers is basically this piece plus this piece. it's about $1150. so you know, yes, we should factor in the fact that the price that consumers pay is lower than the sticker price. that should be part of your thinking about high drug prices, but even if you take that into account, we're talking about prices that are more than double the rest of the wealthy economies in the world. so it's still a huge policy problem. so i alluded to in the beginning, why are we in this situation? a lot of people say it's the free market's fault. the free market has lowed the high prices to emerge. if we had more price control, we wouldn't have higher prices. i'm not dismissing the fact if you regulated prices, you could in theory have lower prices than we have. that's true, but it's also true that we don't have a free market for drugs, let alone anything else in health care. and that's also a big driver. in fact, a primary driver of why drug prices are so high in the united states. so here, i have a bunch of bullets on many of the ways in which we through, again, congressional policy and fda policy, have made it easier for drug companies to charge higher prices, because they're insulated from competitive pressure. so the most important is that not only do we not pay for drugs directly for the most part if we have insurance, we don't actually shop for the insurance ourselves. we have third-party payment of drugs and then we have third-party payment for the insurance that pays for the drugs with a third party. there's really ninth party payments for drugs and everything else in health care, and no wonder that patients are divorced from the clinical value and the cost of the drugs that they're using. right? they say, hey, i have insurance. my plan should cover this drug. but they don't always have a real sense of how much that drug costs the system because they're so indirectly exposed to those prices. there's also the fact that there are legal monopolies, constitutionally sanctioned monopolies. if you have a patent, that patent lasts 20 years and ten of those years might actually still be active when the drug gets through the fda approval process. and we don't want to get rid of that, right? we want to reward innovation. we want people to develop innovative drugs and capture an award for that, but that's not a market. when you have a monopoly, it's not exactly a market. there's also the fact that federal health care programs like medicare, like obamacare, and medicaid and v.a., in different ways all basically mandate that drugs be covered. so medicare, basically every drug that's approved by the fda has to be covered by medicare. so guess what. that gives companies, pharmaceutical and biotech companies incentive to charge high prices knowing their drugs have to be paid for by the taxpayer, regardless of what that price actually is. so this is particularly a problem in oncology. in cancer, who gets cancer? mostly old people who get cancer. medicare is the health insurance for old people. so that's why oncology drugs in particular have high prices. in those areas of medicine that primarily affect people below -- in the workforce, pre-elderly individuals, there's a lot more leverage that insurance companies can use to fight that off and say hey, we're not going to reimburse for this or pit you against a generic drug or what have you. in particularly diseases that affect the elderly, that's where the leverage has been the lowest because of the situation where medicare is effectively required to pay for everything. it's true in obamacare too. this is more of a cms regulation, but cms basically issued regulation in the last administration that for every therapeutic class, there has to be one branded drug reimbursed by a plan participating in the obamacare exchanges. what does that mean? that means the companies have leverage to charge higher prices. there's also the fact that there isn't a level playing field for most situations where insurers and drug companies are fighting against each other. right? so the drug company if it's a branded company has monopoly, but the insurers are competing with one another. they're fragmented. there's a monopoly on the other side, and the end result is that the drug company has more leverage to say hey, if you're not going to reimburse for this drug but your other competitors are, you're the bad guy. you're the one not paying for this life-saving drug, and the patients because they're insulated from all the price signals complain to the insurance company, not to the drug company, for charging the high price in the first place. there's also the fact that the cost of r & d has gone up considerably over the last several decades. that, of course, means that venture capitalists, pharma companies, biotech companies try to recoup their costs through higher prices. it's very important to say you hear a lot of people say, well, we have to charge high prices because of the cost of innovation. there's basically no correlation, and the paper that the study is based on, we actually have gone through a lot of this data. there is almost no correlation between the cost of developing a specific drug and the price that the manufacturer of that drug actually charges. that's more driven by market power. if you've got a monopoly situation where you know insurers have to pay for the drug, you're going to charge a high price. if you're developing the tenth cholesterol lowering drug, you don't have a lot of leverage and you might have to charge a lower price. market power, not the cost of innovation, is driving a lot of prices. a great example is the ultra rare disease area. you might have a drug for a disease where the disease only affects about 4,000 people in the u.s., and you're charging $300,000 or $500,000 per patient per year for developing that drug. the cost of developing the drug is quite low because the cost of r & d is directly correlated to the size of the clinical trials you have to do. if you're doing a 40-patient clinical trial, because there's only 400,000 people in the country with that disease, your costs are low. if you're doing a test with 20,000 people for diabetes, the costs are in the billions of dollars for developing the drug. but diabetes drugs can't charge high prices because there's 20 other diabetes drugs out there. so it's really market power, not the cost of innovation, that drives prices. whenever you hear somebody say, well, we have to charge this high price because the cost of innovation, roll your eyes. the fda, and i'm going to highlight this in the next slide, the fda has actually in certain ways created artificial monopolies for drugs that are off patent. the famous example is the martin shkreli drug in the news. that was actually a really old drug that had been off patent for a while, but because of an artificial monopoly the fda helped create, that drug was no longer a monopoly and shkreli could raise the price. there are a number of ways in which the fda regulations have created prices and there should be more competition. biosimilars are a very important emerging area for more competition. as many of you know, but maybe not everyone, there's a difference in fda regulation between small molecules which are pills you could synthesize in a high school chemistry lab, like aspirin, like lipitor, versus monoclonal antibodies and other big proteins which come out of the dna revolution of the last several decades. those larger proteins have to be manufactured much more carefully and much more specialized ways. and they're not so easy to replicate. and as a result, the fda has been much tougher on and has created much higher regulatory barriers for generic competition for those biologic drugs which has meant that the original manufacturers of the original innovative drug have had much longer runways in terms of having their monopolies than they would have had otherwise. we'll get into that more later on as well. there's also a kind of intellectual and cultural bias at the fda and elsewhere against so-called me-to drugs. we have to have innovative drugs not me-too drugs. me-too drugs are bad. that's not true. if you have me-too drugs that are similar in profile and structure to an existing drug, guess what that means? if you have two or three or four drugs competing for that group of patients, prices go down. so it has this bias against me-too drugs because intellectually, we say that's not as innovative, but economically, from a public health standpoint, it's very important to encourage the development of me-too drugs because me-too drugs mean lower prices for every american. let's focus on these three areas in particular. before we get to that, let me talk about one of these ideas, which is orphan drugs. this is an example of where congress has created artificial monopoly. in 1984, congress passed this law called the orphan drug act. basically, in order to stimulate r & d for diseases with less than 200,000 patients in the united states. the idea being that because those markets were relatively small, they had fewer patients, the drug companies and biotech companies didn't have an incentive to develop drugs in those areas. basically what the law did is said okay, even if the molecule you're testing has no patentability, it's an old drug, around 100 years, if you develop it for a disease that's relatively rare, we'll give you seven years of monopoly exclusivity, as if you had a patent. what's happened effectively because of that law, which has a lot of good intent and good policy results behind it, is congress kind of overshot. i shouldn't say kind of, it really overshot. so the end result is what companies can do now, okay, we can develop a drug and study it in this very small patient population that has a particular mutation for lung cancer, and when it runs out, we can study another cancer and get seven years of exclusivity, for a drug that has no patents because it's been around for several decades. so some manufacturers have taken advantage of that legal opportunity, completely legal opportunity, to have long monopolies for drugs far contrary to the intent of the designers of that law. so it's gotten to a point now where orphan drugs are taking over our pharmaceutical stem, as i show in the slide. in 2015, so-called rare diseases are actually a quarter of all pharmaceutical spending in the united states. by 2020, it's going to be a third. $176 billion for diseases that affect or for drugs that try to treat very rare diseases. i'm not saying those aren't important. if you have one of those rare diseases, you really care. but diseases like diabetes and high blood pressure matter too. alzheimer's, right, a disease that affects millions of americans, creates an incentive for drug companies to move away from studying those big disease populations because there's so much more of an economic incentive to study rare diseases. so again, let's focus on some of these areas where public policy has created artificial monopolies and what we can do to change it. we talked about the stacked seven-year monopolies for orphan drugs. there's also something the fda started about ten years ago called the unapproved drugs initiatives where there are a bunch of drugs that have been on the market for long time before the fda actually existed. and because those drugs predated the fda they've been on the market legally for many, many years. so the fda a few years back said you know, we don't like that. we're going to try to get those unapproved drugs off the market. here's how we're going to do it. we're going to encourage manufacturers to do clinical trials for those drugs, and the first one to do kind of a traditional set of clinical trials, we'll give them a monopoly for a period of time in order to reward them for the cost of doing the clinical trial. the end result has been a lot of this martin shkreli type action where okay, a company does those clinical trials. they get a monopoly, and then they jack up the price by 6,000 percent. so again, the fda had certain good intentions. we want to make sure that these drugs that have been around for hundreds of years have a sort of regulatory and safety profile we can certify, but they didn't really think ahead and say okay, we're creating this incentive for exploitative pricing. that's one area where the fda has kind of maybe again, not thought ahead about costs. another area that fda commissioner scott gottlieb has written a lot about in his pre-fda life when he was a colleague of mine at forbes and has talked a lot about in his current role is the issue of generic drugs where there's a delivery, a specialized delivery technology associated with it. so epi-pen is an example. epinephrine, the drug in the epi-pen, has been around for over 100 years. but the injector that the company mylan uses to administer epinephrine, that has a patent around it. so what stymied competition in this area is that if you want to be a generic manufacturer of an epi-pen, you have to prove to the fda that the exact physical kinetics of the way your epinephrine enters the body are the same as mylan's. but you can't do that without running into mylan's intellectual property around their proprietary injector. so the fda has not had the toolbox to say, you know what. it actually doesn't matter if it's exactly the same as epi-pen. we just have to make sure we have the same clinical effect. so the patient who needs the epinephrine injection actually can get treated. right? and so there are things that the fda can do on its own to try to address that. but commissioner gottlieb, again, in his previous work has long argued that really congress, if congress helped create as an amendment to the food, drug, and cosmetic act, a new pathway for those kinds of medicines so that if there was some delivery technology around it, we could create a new pathway to make sure the fda could show that they were clinically equivalent, these two different injectors. even if they weren't physically equivalent. that would do a lot to stimulate competition in this area. another area that you may have heard of is rems, or risk evaluation mitigation strategy. the famous example is actually thalidomide was one of the reasons the fda was created in the first place. it was a drug that was marketed in the '50s for leprosy. it turned out it was causing birth defects in pregnant women. and so it was clear that we have to have an agency that's keeping an eye out for this. so the drug has been around for a very long time. cell gene, a company based in jersey, actually discovered that there was a lot of utility for thalidomide in multiple myeloma a very serious disease. so they did clinical trials to get thalidomide approved for that. and then they had a little bit of exclusivity because they did the trials, but the real monopoly opportunity for celgene was the fda said well, because of this risk of birth defects, we have to have a risk management strategy to make sure this drug doesn't get into pregnant women. cell gene developed that pathway. they patented it so no one could create a generic version because there was a patent around it, and the fda went through a spate of creating more and more of these rems protocols that people could patent and therefore blocking competition. there's, again, a way to standardize maybe rems protocol so they don't have intellectual property around them, which will allow more generic competition. then this last bucket i want to focus on is the biosimilars pies. biosimilars have been accelerated in the marketplace as a result of a kind of a provision within the aca called the biologics price and competition innovation act of 2009. or bpci. that bill tried to create some measures that are like hatch/waxman so biosimilars can get to the market in a more standardized pathway, but the problem is it's not exactly the same. so as i note here, if you have an off-patent drug that's a small molecule like an aspirin and do clinical trials, you can get five years of exclusivity, and then there's generic competition. for reasons that basically have nothing to do with economics or policy but have everything to do with politics and lobbying, that's 12 years for biologics. there's no reason why it should be 12 years for biologics and five years for small molecules. it should be basically the same because if you don't have a patent, there should be the opportunity to actually develop competitive drugs in that area. if you have a patent, fine, have that patent and have that legal constitutional monopoly for an innovative medication. if it's not innovative, there should be a harmonization between a small molecule and a large molecule. another key area, one of the reasons the chart i showed in the beginning about the 82% uptake of generic drugs is because at the pharmacy level, walgreens or duane reade or cvs, can substitute. if your doctor prescribes lipitor, a cholesterol lowering drug that's now off patent, the pharmacist can substitute a generic drug without asking your permission. here's your bottle of atrvastatin. that's one of the key elements of hatch/waxman that's led to higher uptake in this country compared to other countries of generic drugs. the bpci is not as strong on that point. so a lot of states at the behest of local companies have created barriers where you have to ask the doctor's permission or the patient's permission or both or go through a bunch of other hoops before you can get the biosimilar prescription. in that way, competition has been inhibited at the state and local level for biosimilar drugs. so we have alluded to a number of the ideas that we talked about in this paper for how you can actually increase competition in prescription drugs and therefore lower prices. some of the things i haven't highlighted yet that i would encourage you to think about is i mentioned that we have this bias towards me-too drugs. one way in which the bias manifests in fda policy is fda has this thing called fast track designation. if you're on a drug that's truly innovative the fda will give you certain more accelerated review times and an easier process to get through the fda. we could easily have something similar for areas where there isn't enough competition. we could have a fast track for areas where there's a monopoly or one or two drugs for a particular disease area but we really need more because of that public health problem that comes from monopolies and lack of affordability. another thing we could think about is to emulate the success of medicare part d and leveraging generic drugs into medicare part a and b. right now we have basically three different parts of medicare that in which the pay for prescription drugs. part a is for the hospital based drugs. part b is for drugs administered in a physician office, usually iv infusions. and then the retail pharmacy drugs in part d. we could do a lot of things innovate to allow the cost savings to be leveraged throughout those other medicare sections or medicare parts. another area we should think about is maybe creating a safe harbor for insurers to jointly negotiate with the drug company in a particular state for the prices of that prescription drug. so instead of having this unlevel playing field where the drug company has a monopoly and the insurers are fragmented, maybe the insurers could actually jointly negotiate for that drug price and therefore not fear if one insurer doesn't cover it and get beaten over the head, they might have a stronger ability to negotiate and get the prices down. a nice advantage of that approach is it would diminish the incentive for insurer consolidation, which is a big problem we've been dealing with for the last couple of years. at the end of the day, the best solution for making sure that we have a more competitive system with drugs is to make sure that every american or as many americans as possible are choosing the health insurance plan that covers them. that's something the aca accelerated in a certain way. that's something that free market conservatives want to accelerate. the more people are choosing their insurance and we get away from this ninth party insurance, that's going to do the most to stimulate and incentivize lower cost prescription drugs and the utilization of the low cost options we have available today. with that, you have a copy of this paper. the full paper is in the folder, so if you picked one up outside, if you're watching this online or on c-span, you can download the paper from our website, freeopp.org. i look forward to your questions. thanks for your time. [ applause ] >> well, avik, that was terrific. you covered a lot of ground there. and i think all of us learned some new things. so at this time, i would like t i'd like to open up the floor for questions, so if you have a question. please complete your card and the team will be going around gathering them. i'm going to take this opportunity, the fact that we have two ceo's that are major players on their state exchanges to ask with open enrollment coming up next week, we're all wondering what you're expecting and what you're expecting for 2018. we know there's been a tremendous amount of uncertainty particularly around csr's, i was wondering, curtis, would you like to go first and share a few thoughts on what you're expecting? >> thank you, nancy, i think from our perspective, this has been an issue that we've been watching very closely for quite some time. with our agents and brokers, which are critical to working with these individuals, we've been working with them to kind of get an idea of what we will see before the open enrollment period. we're expecting a slight decline as we move toward that. i don't think that will be a surprise to anyone as we move in that direction. one thing we have seen that has surprised us a little bit. all this confusion has bleed over into some of our other customer circuits. as news reports come out about increases in premium rates and our csr is going to be funded or not going to be funded. we're receiving a lot of questions from our senior population, who are going through their own annual enrollment period as well. with questions about how that affects them. we're spending a lot of time in our company, a lot of resources to outreach. not only the individual market, but the senior market and others who may be going through an annual enrollment period to communicate what this does mean to them. >> i would say first of all, in new york, we have a state based exchange. which was developed by the state, which was one of their options, and i think fortunately for many of the members in new york, it's run on a stable basis. however, i would echo a comment about the insteblt that has occurred. our activity is already up substantially, meaning people calling in, people going into our stores asking what's going on, because there isn't a clear delineation of what the cautionary reductions apply to, and the average consumer doesn't understand that level of funding in those programs. they feel that their own coverage is in jeopardy. and they're concerned not only about losing their coverage. our members feel they've come out of the ranks of the uninsured and they made the effort to enrole in health insurance coverage, and know they don't know what it's status is. they don't know what is going to happen to that coverage. whether they're going to lose it, whether it's going to change. that level of instability is it -- i think it's going to cause a number of our members to drop back out of the system. >> that was very interesting. we'll get back on point with the value based payments, and i'm going to start with a question from u.s. news and world report that was submitted ahead of time. what does the future hold for a value based payment if the affordable care act is repealed or overhauled in the future. is there an agreement that the shift to value base payment is needed for cost control? any of the panelists? mike, you want to start? >>. >> as i said, i think that challenge here is. much bigger than what you think is going on. the discussions haven't really centered on this aspect of the affordable care act. i think my expectation is, there's going to be some version of alternative payment models moving forward, not because we have really figured out how to make them work perfectly, we've perfected the regulations but because the challenges are challenging for a variety of ways. i think you're increasingly seeing the private sector continuing to lead in developing models, they both develop different models that work in their markets. there will be a demand from the delivery system to maintain this system. >> the big part of the reason, the reason we have a value based iphone models, if companies and manufacturers deliver higher quality that's not necessarily true in health care, because all the incentives we've put in the direction. i think it's important to understand that value at the end of the day is determined by patience. patience are the ones that determine what's available. the best way to determine if patients get to participate, is to make sure they're controlling the health care dollars. >> i thought michael did a great job answering it. the alternative payment models. it's taken hold in the marketplace, we as private insurers, as we hear from our customers we will continue to move down that path. it's desperately needed. a big part of our responsibility is to provide affordable coverage for health care services. we think moving toward a more value based system is a critical way of getting there. >> i would agree, i think one of our challenges in going-forward with the models, even though they are -- i wouldn't say they're relatively new, in a lot of markets like ours, they're relatively new, is that the definition of value to a health care consumer is changing. and we will be challenged to make sure the model changes with that. >> here's a question getting -- rid of pay for delay. seem to be low hanging fruit. why aren't we seeing any movement on these issues to help with drug pricing. >> i'm actually a skeptic. basically what happens is, you have a branded drug where the patent is about to expire. nobody knows when the drug will go off patent, there's three or four patents that matter, and the dramatic company litigates to try to invalidate some of those patents. because the things are going through the courts, no one knows will the patent expire in 2022 or 2027. we don't know, and no one knows until the judge decides. the branded innovator and the generic competitor settle, they say, you know what, in exchange for us being able to go first and have a certain amount of ex-clusivity. let us launch maybe not in 2022, but in 2025. so not exactly when the last one expires, but sort of in between. >> criticize these -- call these paper delay and say, what's happening here, companies are gaming the system to extend the life of their paths longer than they should be. i don't think that's accurate. both sides are shelving risks. they're averaging out. we'll effectively start having competition 2025. the generic company is saying we're starting -- both sides half win and half lose. it's a settlement. nobody is certain who's going to win in court. they can say, no, i'm not going to settle, i think we're going to be on the market in 2022. that's why these settlements happen, i don't think it's a gaming of the system, the ftc tried to litigate, because they thought it was anti-competitive, they didn't get anywhere, because of the fact these are legitimate settlements. these are things we can do. that one is more of a red herring. >> often, these changes impact the quality of care and use these metrics for pay for performance talking about the underlying measures of quality and when the science gets better -- >> the first one is -- the process answer is, there's a general system. overall, the way i would simplify it as saying measures get vetted through processes like nqf, to figure out what measures they want to have and how they wan the to work. you see an enormous number of private insurers figure out how they're going to be incorporated into a range of contracts. and so i mentioned earlier i was concerned about the administrative costs of all of this, my general sense is, we have a process that is not ideal. and it is important that we maintain some version of that process, and i think where we're going to go now is more streamlining. we are never going to be in a situation where our quality metrics, capture all dimensions of quality, and are updated as timely as you would like because the simple administrative costs become overwhelming. and i think we need to begin to think through, how do we take the basic current framework we have, and simplify it to a meaningful administratively efficient approach. that's going to be a challenge other types of quality measures we're going to go to. i would discourage you from trying to say, we can come up with the exact evidence and we need to get that in front of our contracts as soon as we possibly can. there's so many ways we can complain. updating measures might be lower on the list of things we can do. >> we have so many questions, unless somebody wants to jump in. >> i wanted to emphasize the mission around quality, i think there has been a debate on how quality should be measured and what it is inside of health care for 30 or 40 years. what you need to do in order to take positive steps forward, you have to determine your methodology, and that is probably not going to be identical to the next person. that's okay. i think what we need to do particularly in this value based contracting process of energizing -- of putting quality in that consideration is that it needs to be directional. if we're waiting for it to be perfect, it will never get done, that's why it hasn't gotten done any quicker than it has. at the same time it has to have science behind it, if we're going to wait for some uniform definition and process to determine quality, that is going to be applied in every circumstance, nothing will get done. >> question from the national business group on health. how are the employers engaging in this discussion? >> i'll take that one. i talked a little bit earlier about, with the arkansas payment improvement initiative, we've had strong support from our employer customers, especially the large customers. that's not happened by accident. we spent a lot of time talking about the individual market, but the group market is very, very important to us, it's very important as we move in this direction, we take them into account as we do that. so we made the -- especially the episode of care program, we made that central to our network strategy, before we did that we created opportunities to visit with all of our large employers in particular, we went out there and explained these programs to them, how they worked, and we benefited them, and got their feet on the front end so we can build that into our program design from the beginning. i spent a lot of our time out with our customers. the whole issue of value based payment comes up in those conversations, that's an opportunity for them to share with me as well, we're going to continue down that path as we refine these programs going-forward, we're going to continue to seek the input of our group customers. >> there's a subset i would say a relatively small subset of leading large employers. curtis probably spends a lot of time with boeing that are doing a lot of innovative things. for most employers, it's hard for you to engage directly with the delivery system, because your carrier is between you and the delivery system, most of the employers i'm familiar with that are doing things are focusing on aspects of benefit design, that's a much easier lever for an employer to pull. there are some levers -- it is much more difficult for employers to engage in a payment reform movement. >> do you want to weigh-in. why don't experts talk to us and what we do to try to lower costs, what i respond to them when asked is, you guys have actually been the biggest dri r drivers of health care inflation for the last 70 years it's because this huge tax break that we give to employer based coverage makes workers more sensitive that has led to all the health care inflation. medicare was built on that system as well. actually, employers have an incentive to keep their costs down. they have an incentive not to make their workers mad, michael dealt with this a lot at harvard, where they tried to tweak the benefits. that's maybe not the typical company the same dynamic supply are afraid. one thing that i'm excited about or intrigued by has been president trump's executive order. there's a piece in there about expanding the flexibility of employers to use health reimbursement accounts. i think that would be an interesting tool for putting workers in charge of the health care dollars spent on their behalf. we could see what statutory authority they find them have. >> i agree with much of what he said in his related analysis, i want to point out one thing about competition and health care that relates to the role of employers and a lot of the current policy discussion, as an economist, i'm a relatively free market economist, i'm relatively pro competition, health care is not asparagus, one of the key challenges we face, is this pooling component of health care that doesn't occur for many of the other consumer products we talk about, we are pooling sicker people with healthier people. a part of that involves just managing people in different risk profiles, part of it is systematic profiling of people that don't necessarily want to be pooled with each other, one of the important roles that the employer based system provides is a way of pooling is not inherently risk based. the reason why health care has been challenging, is because if left fully on their own, where consumers have total autonomy to choose the plan that works best for them, they will do that. on the other hand, that leaves other people in a situation where they might not have the same options they had in the past, i don't have any great answers to how to deal with that amount of pooling or whether the aca did too much or too little. that's a debate i will leave for other folks. i do think when you do an analysis of what's going on and think about these types of things in health care, you cannot ever get to somewhere close to the right answer if you are not really cog any send of how the pool is held together or allowed to separate. >> we have a question from the american medical association. one way to bend the cost curve is to shift the focus of american medicine from treatment to prevention. can a specific emphasis be achieved through free market solutions. what is the best approach? >> with all due respect to the ama, prevention is very important for public health, for all the obvious reasons, we all have to die of something. >> so if we're not going to die of cancer, we're going to die of alzheimer's, if we cure alzheimer's, we're going to die of falling down the stairs or something else, we're always going to die. if we're always going to die, there's going to be some extensive care at the end of our lives. while prevention is important for public health, you're probably going to live longer and that's good. you won't have diabetes and other applications. we shouldn't be convinced that's that's going to reduce costs. prevention can increase costs, if every woman in america got a mammogram, the mammogram test costs money, we spend a lot more money on mammograms and we would have some incremental benefit in terms of early detection in breast cancer. the reason why a lot of independent 3w50rds say, no, it's only women of a certain age or certain risk profile is because we want to make sure that the right people are getting those mammograms so we're not massively inflating the costs of all those tests. prevention is good, it has clinical risks and economic risks that we have to take into account. >> of course, mike fin has to also -- >> we have such a great panel here. >> i agree again -- i didn't realize i have two fitness trackers. i'm a big fan of wellness and prevention. the issue is, if you can snap your finger and make everybody healthy, until they were 105 and they died by falling down the stairs. that would probably be a better world than we have now. most of the evidence suggests that most of the prevention programs are cost effective, and i might say add high value, but cost effective is not the same as cost savings. oddly enough, when we promote prevention, we're promoting primary prevention, which is giving healthy people things, the most important would be secondary prevention, where you are trying to find people that have chronic conditions. and things like the aforeheadable care act where there's a prevention exemption for hsa's, that focuses on the primary prevention. the world would be a better place if we expanded the definition of prevention for the purposes of hsa's and other things like that. >> great. >> please address challenges to convince pcps who are caring for patients of multiple pairs to transform to your models. how do you coordinate, how do you get the pcp's to do your best practices when -- while you're a large portion of their business, you're not the only pair you're dealing with? >> we initially thought we would force this issue on our pcp's. as you saw from the report that i gave, we're at well over 90%, so we never had to get to that point. they are willingly adopting. and they are doing so for a variety of reasons, one, they're getting better data which allows them to be more accurate and efficient at the point of service. that they have historically been frustrated with. also, if they show improvement in the health scores of the patients that are attributed to them, they make more money. >> i don't think i mentioned it, for those performing at the top end of those qualities scores, they're reimbursements come up by 10% in 2017, and we will go to 20% next year. >> for those that have looked and evaluated the program, they've been enthusiastic about adopting it, as i said, one of our primary competitors is a close follower, i think it's going to become the standard of reimbursement in the region opinion. >> curtis, certainly you face some of the same challenges in arkansas, one of the ways you dealt with it was with medicaid? >> we did. that was 2010, i talked about earlier. i think the results we experienced were different than than what dave's experienced today. had we done this in the same time frame, we may have seen something different. all those things are important. things that you have to be open minded as a plan, that to solve problems, you have to adapt to your particular market. that's what drove us to the approach we found. we found there was very common perspective, viewpoint that we had, that we shared with other leaders in our state and health care delivery, and also in the government programs as well. we thought that was a great opportunity to collaborate in order to drive what we felt like was a greater opportunity for change. >> there's a couple questions here about med pack and macra. maybe their soon to be or current comments on it. can you address that? >> i'm not on med pack now, so i don't speak for them. in all honesty, when i was, i did not speak for med pack. med pack, i am sure will look very closely at a whole range of things in macra and how it's work i working they have been critical of the mips program. we'll see what they come out with in terms of the recognitions, the easiest thing i would say, is not all the physicians are going to be above average. that key ates a political die nanlic that's going to be hard to move forward over a long period of time with a mips type model. i think they will look at that closely. i want to give a shout out to what a good job they do in that analysis. they really are an unbiased great source of analysis behind these issues. >> here's an interesting question. this is from somebody at a national organization. what are your thoughts on amazon entering the pharma business. what about cvc buying aetna. >> i think based on what we know about amazon's strengths and capability the, i think it's -- and the evidence thus far in terms of the licenses they've applied for, there's more evidence that their first step is going to be on the distribution side not on the pharmacy management side, i would look for them to disrupt the cardinal of health -- first we talked about in my presentati presentation. they bought whole foods, they have these brick and mortar facilities they can use to build their own network of pharmacies. they're a big retail organization. pharmacies are effectively retail organizations. that's another area where their strengths are, i think they're more likely to attack it from the pharmacy side and distribution side i think that's what's driving amazon's efficie efficiency. united having optimum and other big insurers have relationships with pvm's, that's more about that internal market than response to amazon. that's my sense, but others may have a different view. >> anyone else want to comment. >> the aetna cvs issue has not been out for very long. there are many health plans like curtis and my own, that build their own pvm's. there are a lot of health plans that do that, you bring that in house and you operate as an integrated system, cvs and aetna, as purposing as that may sound is essentially ending up in the same spot. it's coming to the same spot from a different direction. and i believe that controlling your pvm services through at-risk health plan type populations, adds stability to the pvm marketplace, i think that's what they're looking for. as far as amazon arriving, i would agree. i think they will start on the distribution side, but realistically, amazon has completely trans formed the consumer model in every business they've touched. i think for us to assume that they might stop at the distribution model in health care, would be naive. they're very aware that the consumer model in health care hasn't been very good. and there's been a lot of dissatisfaction with the actual users of health care services. and i think it's my estimate that they have an intention to change that model. >> great. >> well, with that i think we should wrap it up, and first of all, thank you all so much for joining us today, for this great discussion, i'd like to thank senator widen for sponsoring our event. and i'd also like to thank my terrific team. you guys did a great job in helping out on this event. let's give a final round of applause for our great panelists. there are slides on our website, in a week, there will be a video on our web side. here's what's ahead on c-span3. a hearing looking at women in business. after that, remarks from christopher ray on intelligence beganering tools. >> join us tonight for american history tv in prime time, we look at a discussion on the 70th anniversary of the 1947 hollywood black list hearings. american history tv in prime time begins at 8:00 p.m. eastern here on c-span three. book tv is in prime time with a look at bestsellers. brian kill immediate provides a history of the battle of 1812. gretchen carlson talks about combating sexual harassment in her book. and tana hitsy coats tackles race and power. j.d. vance talks about hillbilly technology. we kick off with 2020 presidential candidate, jong delaney, he was joined by tim ryan, a democrat representing ohio. watch that starting 598:8:00 p. eastern on c-span. thanksgiving day on c-span. here are some of the highlights. the liberty medal ceremony honoring john mccain at the national constitution center in philadelphia. at 1:00 p.m., former secretary of state john kerry receiving a lifetime achievement award in boston. new york times columnist david brooks, and historian ronald white discuss character and the presidency. jonathan ike on the former heavyweight champion of the world, muhammad ali. the middle class and politics. and erick erickson on his book, before you wake. life lessons from from a father to his children. at 9:50 a.m. eastern on the presidency. the life and times of teddy roosevelt. at 11:00 a.m. lectures in history. native americans and trade in southern california. and then from the 2345gsal archives, a look at the first motion picture units world war ii films. thanksgiving day on the c-span networks.

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