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Discussion MR. WARDEN: Thank you all for your presentations. I think this provides the audience with a snapshot of the various aspects that the re- port addresses. As we do that, I think what you see is that the combina- tion of these projects involves large numbers of communities. They get broad geographic coverage. They are urban and rural. They include com- munities on the cutting edge, and they include communities just barely starting to address the problems that they face locally in their health care delivery system. The report also emphasizes the importance of learning collaboratives and building upon what is learned, spreading that information to other communities, and building upon the idea that there will be ongoing evalu- ation throughout the process in each one of these areas. You probably are curious about what we didn't select as demonstra- tion projects. There was a lot of advocacy for many different areas. I think the two projects that generated the most advocacy were trying to find out what the hospital of the future might look like and how we could take that and apply the recommendations about how to cross the quality chasm. The conclusion was that the report contained enough information to give a hospital that was determined to do something about it a pretty good road map as to what might be done. The second area that generated a lot of discussion was related to the area of pharmaceutical and drug benefits. We talked a lot about that and decided not to explore the issue for many reasons, not the least of which was that it probably would not add to the discussion, particularly in an 21

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22 FOSTERING RAPID ADVANCES IN HEALTH CARE environment where there are two or three different approaches being pro- posed. We think that if we were to implement a combination of these demon- stration projects in a combination of sites, we would begin to see some transformation of the health care delivery system by the year 2005. By 2010, we could really look forward to some broader health system change. In trying to respond to the secretary, the committee realized that we really hoped the projects we came up with would be related enough to each other to have an impact on health care reform. Second, we hoped this would be an approach different from what had been taken previously and that it was building from the ground up. Health is a local matter and we wanted to take advantage of that. Third, we believe these five areas we selected, if done right, could really make a difference. I want to thank lanes Corrigan, who is the director of the project and of the Board on Health Care Services; Ann Greiner, who assisted her, who serves as deputy director of the Board on Health Care Services; and Sherri Erickson, a research associate, who worked on this project. They were terrific staff, doing a great job of driving the committee to get its work done and putting important ideas and information before us so we could do our work. I also have to say that Susanne Stoiber and Harvey Fineberg also played an important role from the very beginning in helping us complete the project. So, we want to thank you as well. So, with that, we will open the floor to questions and comments and hope we can have a healthy discussion for a half an hour or so. PARTICIPANT: Did you develop a budget for these projects or come up with plans to fund them? PANELIST: I think the committee's view from the beginning was that these projects are not budget-neutral and they are going to require public and private partnerships in order to ensure funding. We obviously look forward to the opportunity to talk with Secretary Thompson about his thoughts concerning this. We also, obviously, look forward to seeing what kind of reaction we get from the states. I think we are all very much aware that the state bud- gets are in no better shape and are in fact, perhaps worse than the fed- eral budgets. But at the same time, we felt we didn't have enough time to develop budgets for the projects. We felt that we needed to get these ideas out there and as they evolved we would try to pursue the budget issues further.

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DISCUSSION 23 DR. ROPER: The point I would add in further response is that the size of the budget, of course, depends on which states choose to partici- pate. Some are bigger than others. If these are statewide demonstrations, the scale matters as to the cost. Furthermore, the cost to be incurred in these kinds of demonstrations is much less than what one would assume might be part of a major, whole- system, whole country kind of change. Clearly, we are not going to go there, given the budget situation we are under. We believe that more mod- est demonstrations in some states makes more sense. As Gail was saying, time will tell whether this is a sellable notion. Fifteen years or so ago, when I was at the Health Care Financing Admin- istration, I remember the staff coming forward one day with the sugges- tion that we undertake a series of demonstration projects, comprising ideas that could possibly be done to advance the health policy agenda. For a set of complicated reasons, that idea didn't go anywhere. But I have often thought that if we had moved on some of those ideas 15 years ago, we would have learned some things. These are the ideas that we are trying to put forward now. PARTICIPANT: You have commented on the ways in which these various proposals reinforce one another as a comprehensive way of as- sessing innovation for health across the country. I am wondering whether the committee thought about whether there is an advantage to a single state considering adoption of a whole array of proposals, to what the op- timal distribution of adoptions would be from the point of view of learn- ing most effectively, and what will work for the country? MR. WARDEN: Before the other panelists join in, I am going to ask Karen to start on this question because she has probably thought about some of these issues more than any of the rest of us. DR. DAVIS: I certainly thought there was an advantage in encourag- ing a state to do more than one kind of demonstration, but not an array. On the other hand, we want a lot of diversity across the country in dem- onstrations. So, we recommended that these demonstrations be run as learning collaboratives. For example, in the chronic care area, we thought that everyone doing a demonstration could come together regularly to share experiences and learn from each other. States that are funded to do demonstration projects around insurance issues would be brought to- gether with experts and information. They would systematically share experiences and learn from each other. But beyond the array of demonstrations, all of them would come to- gether to benefit from their experience. So, whether the demonstrations

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24 FOSTERING RAPID ADVANCES IN HEALTH CARE are all in a single state across these different issues or whether one state feels like the most they could take on, for example, would be the liability issue, everybody is up to date on what has been learned on all of the demonstrations and each demonstration feeds into the other. DR. CARSON: The three demonstrations that obviously fit together are the acute care, the chronic care, and the ITC the information technol- ogy. You can go even broader than that, but it seems to me that acute care or the primary care or specialty care information certainly would mesh. You could certainly add liability from the other side, as well. DR. SAGE: lust talking brass tacks, a lot of it comes down to treating liability as something that is integral to health systems reform. I think that changes the politics a bit. I think once you bring those issues to the front and center and you don't allow the traditional political debate to happen, at least you have a glimmer of hope for some significant events. Now, I want to be very clear that this set of proposals is not aligned with any of the existing stakeholders. It is compatible with various pro- posals that are out there. But it is neither the AMA's wish list nor the American Trial Lawyers Association's wish list. Both sides would find something to object to in it and the political debate would again have to be more inclusive. With respect to the states that would undertake this, it would be done at the state legislative level. We were quite clear after extended discussion within the committee that this should not be something that requires con- gressional action. Of course, states that undertake this would probably not be the states that have state constitutional prohibitions on drastic changes to the rights to sue and to the right to the court. But that still leaves a number of states for whom this would be an option, domestic politics aside. In terms of domestic politics, there are aspects of these proposals that certainly could be seen as threatening, but there are a lot of aspects that are not particularly threatening. I would expect that in most states, the vast majority of medical malpractice cases on the plaintiff side are under- taken by a fairly small number of lawyers who are repeat players and experts. They tend to be quite good at what they do and I trust that they wouldn't find themselves without a livelihood as a result of any of this. So, call me an optimist, but I think they would come to the table. DR. DAVIS: In fact, the thought is that it might propagate to other states over that period and that the goal would be to have some results available in 18 months. This would give us time to test the feasibility of

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DISCUSSION 25 this and begin to get some sense of take-up rates under different types of design. Obviously, we would hope to look longer term at the difference these demonstrations make in care, continuity of care, perhaps even finding offsetting savings, which is something you never get credit for in any pro- posal. So, there are certainly many things to be learned over time. The thinking behind the 10-year commitment is that no state is going to want to do this if they feel that the federal government is giving them a financial incentive to start but may leave them holding the bag and hav- ing to roll back the program. So, in fact, that presumption is that there would be federal financial support indefinitely. As you learn from these different models being tried, you would roll them out in other states and move to a system of permanent support from the federal government, but using state flexibility to design different models that work in different states for covering people. So, these demonstration projects are not viewed as something that begin and end and are not viewed as something you have to wait 10 years before more states are brought in or the projects are extended more broadly. I don't think we saw it as a competition between tax credits and pub- lic program expansions but more as way to find out which one works best, leaves people more satisfied, is most cost-effective, and improves care the best. You know, I hope there wasn't too much in the fine print. It said tax credits, Medicaid, CHIP expansions, or a combination. I wouldn't be sur- prised if a lot of the proposals that would come in from the states would see a combination. Certainly, that has been our experience with states like Minnesota that have designed different kinds of programs for different kinds of populations. So, with very-low-income families, the children are on CHIP. They may want to expand CHIP to bring parents in if they haven't done that already, but some states may also want to look to tax credits to buy people into employer coverage for people who have access to it but can't afford their share of the premium. We talked about tax credits that could buy people into state employee plans or state purchasing pools, which may work for small businesses. So, some states may want to try those strategies, but it wasn't really viewed as a competition. It was really designed to give states flexibility in coming forward with ideas that would be a pragmatic way of leaning more to- ward private coverage and use of the tax system. My guess is a fair num- ber would have a combination of approaches.

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26 FOSTERING RAPID ADVANCES IN HEALTH CARE PANELIST: Rick Curtis was an advisor to the committee and is more like a member of the committee. Do you want to make any observations, Rick, about this issue? MR. CURTIS: Well, consistent with what Karen said, my sense is that one possible outcome of this is a system of intergovernmental finance that allows, facilitates, and encourages states to cover all residents. So that while what comes out of the experience may not be the federal govern- ment deciding, "We are going to have Medicaid up to a hundred percent on a noncategorical basis and not shift beyond that and tax credits for this subpopulation," but rather an arrangement where federal funds are made available if and only if the state gets its residents covered in a combination of ways. I don't think the committee ever expressly had this discussion, but I think that is how a number of us viewed it. PANELIST: There was some discussion as to whether or not stan- dards alone shouldn't be the major emphasis, because everything else rests upon interoperability and the sort of seamless integration require- ments that allow you do anything on a state or regional level. As long as those standards fail to exist, you are dealing with whatever you manage to do within your organization or institution, often by handcrafting the interfaces between systems, which does not help when it comes to trying to pull data across a city or a region. There has been ongoing discussion about what role the government might play in helping to facilitate the agreement on such standards. There are many activities already going on in the private sector in this regard, but the convening, the credibility, and the kind of blessing of the activity may well be enhanced by increased government involvement. There are words in here implying that if we are going to do as much with the infra- structure as is suggested here, there must simultaneously be an effort to address some of these key issues regarding standard setting. Now, it turns out that things aren't quite as bad as you sometimes hear. People have been talking about standards all the time, but there are emerging standards being adopted in many areas having to do with interoperability by the various vendors that are out there in the health care information systems world. So, the biggest issues often are being ad- dressed at the level of vocabulary in terminology, which is an area where we do not yet have good comprehensive solutions and where I think there is clearly an opportunity for a federal role in convening and providing credibility to that process. The government has been doing things, with DHHS, the National Li- brary of Medicine, and AHRQ all involved. So, there is reason to be hope-

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DISCUSSION 27 ful that there will be momentum in that reaction. Making this report focus solely on that did not seem necessary or appropriate. I think it was important for us to reemphasize how important it is, for example, that NCVHS continue its activities in this area. With the new National Health Information Infrastructure activities that are being coor- dinated out of DHHS, we also see this as a key element in a National Health Information Infrastructure and, therefore, accentuating the federal role in trying to get the right parties to the table with the right kind of consensus development effort. But there is much that can be done with what we have currently in the way of standards for many kinds of activities. Anybody who writes a proposal is going to have to propose which interoperability standards, at least for their project, they are going to use. This will help us to see some promulgation of the standards within cities and states if they are going to respond to these kinds of infrastructure requirements. The vocabulary issue is the toughest nut to crack. It will be interesting to see what kind of solutions are proposed, because these demonstrations will be required to figure out how they are going to deal with data stan- dards issues that are a natural part of trying to bridge disparate systems in different hospitals and private practices and county health depart- ments, all of which have different vendors with different standards cur- rently in their systems. PARTICIPANT: I have a question for Professor Sage. I am interpret- ing your comment about those older forms that are outdated. If I am right in that assumption, could you explain to me why they are outdated and why they aren't appropriate now? This is the same old story. Why are they not a good idea? DR. SAGE: Well, actually it's not the same old story, and let me give you some evidence for why it is not the same old story. My favorite ex- ample actually comes from long-term care. The DHHS report on malpractice shows that over roughly a six-year period ending last year, average nursing home liability cost per bed rose approximately one hundredfold. That is shocking. Liability cost rose even higher in some states like Florida. So, then the question becomes, "why"? The answer to that question depends much more on health system change than it does on endogenous aspects of the liability system, which tend to be the targets of reforms, such as MICRA. What has happened in nursing homes is that if you go back about eight years, you will find that when they went to carriers, they paid a "hospitality rate," which said nothing about their welcoming nature. It simply reflected the fact that they were being paid the same rate that ho-

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28 FOSTERING RAPID ADVANCES IN HEALTH CARE tels paid. In other words, they were not being treated as health care pro- viders. How do you explain this? If you go back to the early 1980s and the adoption of Medicare PPS for hospitals, you find that the population of nursing homes (note the vo- cabulary change from nursing home to skilled nursing facility over these same two decades) has gone from a really residential population of very old people staying for a very long period of time, receiving almost noth- ing in the way of technologically sophisticated care, having nice long- term relationships with their care providers, and, frankly, being almost no liability risk. The transformations in health care system in terms of what hospitals do, what nursing facilities are expected to provide, and the people who undergo these services have changed really dramatically in the interven- ing decades. Give these 10 years for the washout of the health care system changes to be reflected in the actual dominant population in nursing homes and combine that with the seven or more years on average it takes for tort claims to get processed so that they are actuarially reflected in the liability insurer's charge. I think you will conclude, as I do, that what you really see in the nursing home industry is the result of the transformation of the health care system and not something that is simply a legal system problem. That is my best illustration. I mention it mainly because I don't think people have heard it before. We could get into the usual discussion about the inadequacies of the tort system, which come, of course, from many directions, including the fact that the tort system does not properly pro- vide incentives for physicians to do better but, in addition, provides occa- sionally excessive compensation to injured patients while failing to com- pensate huge numbers of injured patients. That mismatch, I think, is something that even the proponents of MICRA type reforms will cite. I just draw somewhat different conclusions from theirs. And these are all persona opinions. PARTICIPANT: What about dental health? DR. DAVIS: We supported an evidence-based package of services and explicitly included mental health, preventive services, and develop- mental screening and treatment. I don't recall that we had a discussion of oral health services. MR. WARDEN: I want to thank all of you for being here this evening. This report was just released this afternoon. We are going to have an op- portunity to discuss it with Secretary Thompson and a number of his staff

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DISCUSSION 29 on Sunday and Monday. I am sure that we will begin to see some reaction to the report. We are pleased that you had the first shot of some discus- sion. DR. FINEBERG: I will conclude by saying I think we all know that the problems are immense and bit by bit, inch by inch, we may get to the solution. I would like to thank everyone for being here tonight.