How Can the COVID-19 Pandemic Enhance Value-Based Health Care Delivery?

August 12, 2020
Matthew Gavidia

Given the constraints prevalent post-COVID-19, Dr Mark Fendrick, director of the University of Michigan Center for Value-Based Insurance Design, stresses that it is now more important than ever for the health care industry to prioritize payment reform, value-based benefit design, and novel policy initiatives.

As the health care industry manages the new normal precipitated by the coronavirus disease 2019 (COVID-19), an upcoming webinar on August 13 at 12:00 PM EDT, titled, “Increasing Access to Necessary Care During the COVID-19 Pandemic & Beyond,” will address how the pandemic has created a rare opportunity to enhance the efficiency of medical expenditures.

One of the speakers, Dr Mark Fendrick, co-editor-in-chief of The American Journal of Managed Care® (AJMC®) and director of the University of Michigan Center for Value-Based Insurance Design, or V-BID, expands on this opportunity in an interview with AJMC® He describes how the initial phases of the pandemic led to a substantial drop in high- and low- value care.

By hitting every pressure point of the health care delivery system, including access, safety, infrastructure, and affordability, Fendrick explains that the restructuring of these aspects and subsequent reallocation of health care dollars can allow for greater investment in value-based care.

“Because we all agree there's enough money in the system, I hope that we will take a look very carefully to make sure we don't do things just so we can make money and improve our financial status, but instead align incentives for all involved, to make sure the money flows into those things that we hope will improve the health of individuals and American population as a whole,” said Fendrick.

Given the constraints prevalent post-COVID-19, Fendrick stresses that it is now more important than ever for the health care industry to prioritize payment reform, value-based benefit design, and novel policy initiatives.

AJMC®: Hello, I'm Matthew Gavidia. Today on the MJH Life Sciences’ Medical World News, The American Journal of Managed Care® is pleased to welcome Dr Mark Fendrick, co-editor-in-chief of The American Journal of Managed Care®, and director of the University of Michigan Center for Value-Based Insurance Design, or V-BID. Can you just introduce yourself and tell us a little bit about your work?

Dr Fendrick: Thanks, Matt! It's a pleasure to be here. It's been an honor to be the co-editor of The American Journal of Managed Care® for over a decade. As you said, I run the Center for Value-Based Insurance Design at the University of Michigan, where our aim is to improve access and affordability to high-value health care, and try to remove that care that doesn't make Americans any healthier.

AJMC®: Can you explain some of the notable effects the COVID-19 pandemic has had on health care delivery and financing?

Dr Fendrick: Well, as most of AJMC® and MJH Life Sciences’ listeners and watchers know, COVID-19 infections has really hit every pressure point of the health care delivery system– access, safety, infrastructure, affordability.

The initial phases of the pandemic led to a drop in high- and low-value care substantially, and we've seen the health care system kind of respond in returning back to what we call a new normal. It's our hope that we will continue to not only provide but increase the use of those services that make Americans healthier, and hopefully prevent the return of those services that we were doing, even though the evidence was weak, because just about everyone agrees there's enough money in the system–it's our hope that we could reallocate those dollars more to those services that we know make people healthier, and less to those that don't.

AJMC®: As a speaker of a webinar this week titled, “Increasing Access to Necessary Care During the COVID-19 Pandemic & Beyond,” you will address reducing low-value care post-pandemic. One major topic to be spoken on in the webinar is how the pandemic has delineated what services deliver little to no clinical benefit. Can you speak on this?

Dr Fendrick: With the retraction of the economy, payers and health plan sponsors will have, I believe, less discretionary funds to spend on valuable services like health care benefits for their employees. I'm worried that in the situation like we have seen in near recessions in the past, that what typically happens is that payers will increase premiums on everyone, or even worse, raise deductibles, these blunt instruments that impact only those who use health care.

I do believe that there is going to be somewhat of a need to become more efficient in our health care dollars. So, while I don't think increasing premiums on everyone is politically feasible, and I really dislike blunt instruments like deductibles that will make it even worse for those people who are already using health care not being able to get the care they need–we felt that the one way that we might be able to preserve if not enhance coverage generosity for those high-value services is to take head on the identification, measurement, and reduction of those hundreds of billions of dollars spent on services that don't make Americans any healthier.

The good news is that we've had the implementation of programs like the Choosing Wisely campaign started by the American Board of Internal Medicine Foundation. We have the US Preventive Services Task Force that designates those services with a D rating that should not be performed, and there have been a number of analyses over a number of years showing that these services continue to be performed, largely because of perverse incentives for both providers and patients.

So, it's our hope through the webinar to align incentives, to pay providers for doing the things that they should be doing, and pay them less for those that they shouldn't. The same holds true with trying to engage patients by making it easier to get the care they should be using and make it harder for the care that they shouldn't. These are, as you know, the basic premises of value-based insurance design.

AJMC®: I know you just alluded to this, but can you discuss how changes in health care delivery and financing precipitated by the pandemic may contribute to enhanced efficiency of medical expenditures in the future?

Dr Fendrick: Well, I tend to be a bit of an optimist like Tigger in the Hundred Acre Wood as opposed to Eeyore. So, we always look for silver linings in this regard–I don't think it should have taken a pandemic for more Americans to understand that even though you have insurance in this country, it doesn't guarantee you get the care you need.

As we've seen these dramatic declines in spending, both on high-value services and low-value services post pandemic, it's my hope that we will inject more resources into providing incentives to patients and providers to get the care they need, and we do have levers that we could pull to reduce low value care.

You could make non-coverage decisions. You could also implement V-Bid in a way where not only do you decrease cost sharing on high value care, you also increase cost sharing on the care that we shouldn't be buying. We call this V-Bid X, which has been strongly endorsed by the Trump administration for implementation in the federal qualified health centers for 2021.

We're hopeful that instead of blunt instruments, that more nuanced approaches will be used as we come out of the pandemic. With some colleagues from Tufts University, I wrote an editorial on this exact topic in the The American Journal of Managed Care®, and we do hope that there will be some silver linings in the pandemic, and ultimately, we will put programs in place that will encourage the use of more efficient spending of health care dollars

AJMC®: For employers and health care purchasers seeking to optimize care for their respective workforce, how can they better leverage the current state of the US health care industry to promote value-based care?

Dr Fendrick: Well, there's kind of a reset going on as we kind of re-emerge from the initial dramatic impacts of coronavirus and the COVID-19 infections that followed. I have listened to purchasers and payers for my entire 30 year career talking about how they didn't have enough money to cover the things that I begged my patients to take.

I think this is one of those times that I actually believe them that unless you're working for Zoom, there are very few industries that are actually better off now than they were at the beginning of 2020. So, we have to be cognizant of not only the lack of funds that payers have, but also understand the very unstable footing of providers and health care systems.

So, again, because we all agree there's enough money in the system, I hope that we will take a look very carefully to make sure we don't do things just so we can make money and improve our financial status, but instead align incentives for all involved, to make sure the money flows into those things that we hope will improve the health of individuals and American population as a whole.

AJMC®: Lastly, do you have any other concluding thoughts?

Dr Fendrick: Well, I think this is a really challenging time and like many situations in health care, we've often emerged better. The tools are there, they've often talked about, and it is my hope that value in general will reign supreme as we talk about the new normal, and it's our hope that value-based insurance design will play a small role in that–in that we can align providers through alternative payment models, we can enhance our technologies and electronic medical records, and importantly, engage patients along the way to make sure that we're all on the same path to improve health, our ultimate goal, but understanding that we need to be fiscally responsible, even more than ever, given the constraints we have post-COVID-19.

AJMC®: To learn more, visit our website at ajmc.com. I’m Matthew Gavidia, thanks for joining us!