A value-based payment system could revolutionize health care as we know it

The health care payment system is due for a major overhaul.

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  • Value-based health care focuses on tangible improvements in patient care outcomes.
  • The goal is to reduce the per capita cost while improving treatment.
  • Current fee-for-service payment models focus too much on quantity and not quality of care.

Throughout the century, miraculous advances in medicine and scientific breakthroughs have brought the health care profession to a new zenith of excellency. Incurable diseases have been eradicated and conditions that were once death sentences are now vanquished with a quick pill or surgical fix.

But underneath all this progress lies a vestigial sore weighing down the entire health care industry – the limited health care financial system. While medical care and technology itself has advanced to greater heights, the underlying business and financial functions are lacking.

The mounting costs of a fee-for-service health care payment model and subsequent lack of oversight on the quality of care is becoming too much to handle for both individuals and employers alike.

A recent report from the Health Care Cost Institute found that per-person out of pocket spending has reached an all time high for Americans under the age of 65 who are covered by employer-sponsored insurance.

Data gathered from that same report shows that employer coverage has risen 44% per enrollee between 2007 and 2016. The total cost of spending on employer health care services has ballooned to an annual cost of nearly $700 billion.

What's the underlying issue for this? The problem may be endemic to a fee-for-service payment model.

Time to shift to a value-based payment system

The current state of payment systems in health care takes the form of disjointed and disparate bill of costs that don't take into account whether or not the treatment was valuable. Let's look at a simple example on why this is so.

  • Fee-for-service care - A patient undergoes surgery. They end up getting an infection. On their next visit back to the medical center the patient now bears the cost to treat it.
  • Value-based care - A patient undergoes surgery. They end up getting an infection. On their next visit back to the medical center the hospital bears the cost to treat it.

While this is an overly simplified example, it cuts to the heart of the issue. Health care services and payments need to be held accountable for what value they bring and not what laundry list of treatments they doll out.

Fee-for-service models lower quality of care and are a disservice to patients and employers alike. Michael J. Dowling, president and CEO of Northwell Health, argues that the rising costs are intrinsically tied to lower quality of care. "Value-based care ties reimbursement to quality, not quantity of care. The goal is to incentivize better care and lower costs," he writes in "Health Care Reboot".

Dowling imagines a world where the quality of care is the standard rather than the volume of care.

A lot is at stake here. Business as usual is going to be unsustainable for both hospitals, employers and individuals. For institutions like Northwell Health, clinical outcomes are paramount; health care improvement and high-quality care need to become the norm.

And patients agree. In a quest to figure out just what value-based health care means to patients and physicians, The University of Utah conducted a far-reaching survey. The results showed that patients identified a few key characteristics of high-value health care:

  • Around 62% considered the quality and effectiveness of their care to be the most important factor of high-quality health care.
  • 26% were most concerned with their out-of-pocket costs.

Major companies are already taking note and are springing into action with new plans.

Employer initiatives with value-based health care plans

Are employers doing enough for their employees?

Source: 2017 Willis Towers Watson Best Practices in Health Care Employer Survey; 2017 Willis Towers Watson Global Benefits Trend Survey, United States.

For quite some time, companies tried to cut down on costs using measures like increasing employee expenses and limiting their coverage and access to certain specialists. But now they're realizing that this is not the way to go, and are instead taking a more active role in developing their value-based health plans.

Multinational insurance broker Willis Tower Watson has found that an increasing number of companies are opting to negotiate directly with health care providers to apply value-based payment systems.

According to its survey, in 2017 only 6% of employers were pursuing the aforementioned plans. Twenty-two percent of employers surveyed said they intended to start working directly with providers to change the payment system in 2019.

More promising numbers from the same survey point towards a majority 65% of companies also making this a priority over the next three years.

This rising trend has put forth a lot of new exciting initiatives. On the ground floor, better care is already being seen. One such example is from something called a patient-centered medical home, where a team of medical professionals build a personal relationship with their patient to anticipate their needs and make sure they're cared for in the best manner. This would include screenings based on the patient's age, gender and medical condition.

This approach would be most likely used for patients with high-cost chronic conditions. David Lansky, CEO of the Pacific Business Group on Health, initiated something like this in his company's Intensive Outpatient Care Program.

Lansky explained that his organization:

"...identified 15,000 people with multiple chronic conditions and severe challenges in getting good care, and helped pay for primary care teams that would deliver coordinated care, address social needs, and address mental health needs, all under a prospective payment to the care team."

More and more companies are embracing this new value-based approach. The results are reduced hospitalizations and costs. Walmart's Center of Excellence program has also been leading the charge to cut costs and improve care with an integration of the best care it can provide for its employees.

While this is just the beginning in this new trend, we're already seeing that value-based payment models are incentivizing better care for all.

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Can psychedelics help treat pain?

Forthcoming Phase II trials with ibogaine aim to find out.

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  • Pharmacology professor Richard J Miller is hopeful for the resurgence in clinical studies of psychedelics.
  • Ibogaine, used in France for decades, is making a comeback in potentially helping curb addiction and treat pain.
  • Psychedelics were deemed illegal for political and not medical reasons, an error we are reinvestigating.

With all the hype regarding the potential for psychedelics to help treat anxiety and depression, with the potential to replace or coexist with SSRIs, there are yet more realms hallucinogenic substances could aid in. Whereas psilocybin and MDMA are showing positive results in sufferers of mental pain, a formerly sanctioned drug, ibogaine, is making a comeback in pain management and addiction circles.

As with other psychedelics, ibogaine was swept up in Richard Nixon's crusade against minority and freethinking populations in the late sixties and deemed a Schedule 1 drug in 1971. Yet from 1939 to 1970, ibogaine was used in French psychotherapy under the trade name, Lambarene, writes Northwestern University's Feinberg School of Medicine pharmacology professor Richard J Miller.

As with the entire class of substances, the scheduling of ibogaine was a political, not medical, decision. As Miller recently told me from his office in Chicago,

"The drugs, at the federal level, are Schedule 1 drugs, which means that they have absolutely no medical utility whatsoever and are incredibly dangerous. People think that the reason that they're in that schedule is based on some kind of reasonable science or other understanding of what they do rather than just some complete bullshit, which is what it is."

I reached out to Miller after reading his excellent history on pharmacology, Drugged: The Science and Culture Behind Psychotropic Drugs (the full transcript is here). While he's spent decades clinically studying drugs, the narrative shines when Miller discusses the cultural stories about how and why we seek to alter our consciousness, be it through caffeine or magic mushrooms.

There is no greater substance for the treatment of pain—Miller's clinical speciality—than opiates. Drugs like morphine reduce the amount of the neurotransmitter acetylcholine, causing smaller muscle contractions. The inhibition of these neurotransmitters, combined with opiate receptors in our midbrain implicated in our reward center, help to make us feel better—and get us addicted.

Which is the rub: the greatest pain reliever yet discovered is highly addictive. The novelist Amitav Ghosh wrote an entire trilogy about the political and cultural effects of the opium trade; Thomas de Quincy famously defined a genre when penning a book about his addiction to laudanum. Today, in America, we have our own opium war in the form of fentanyl. The side effects are, as we are collectively experiencing, disastrous.

Just as the mental health industry needs a better solution than SSRIs, which are remarkably effective in the short-term but also deadly over the span of years and decades, physical pain management needs a revolution. The hallucinogenic shrub, Tabernanthe iboga, might provide relief.

Though the cradle of civilization, Africa is relatively void of hallucinogens. One of the strongest utilized comes via the main alkaloid in T. iboga, ibogaine. Iboga communities exist in Gabon, Cameroon, and Zaire, where adherents either eat or drink the yellow root to experience visions in order to, as the Bwiti phrase it, "break open the head."

Iboga made its way to France in 1864, first appearing in the scientific literature two decades later. Ibogaine was extracted in 1901. Howard Lotsof, a heroin addict in New York City, discovered ibogaine in the sixties and self-experimented to curb his addiction. It worked. He persuaded a pharmacologist in Albany to test the substance in morphine-dependent rats, which also "appeared to work," according to Miller. The researchers also noticed positive results getting the rats off of cocaine, alcohol, and nicotine.

The Albany team then worked with a team at the University of Vermont in an attempt to synthesize an ibogaine analog. Even the ceremonial users in Africa knew that the root is toxic; swallow too much and death ensues. The team, searching for a less toxic substance, synthesized 18-methoxycoronaridine (18-MC). Ibogaine has been used in addiction treatment for decades even as it has been predominantly illegal.

After Phase 1 trials the funding was exhausted, though a new organization, MindMed, is currently planning Phase II trials this year. So far, 18-MC does not appear to have the hallucinogenic effects of ibogaine, which might prove important if it is ever developed for widespread addiction treatment or pain management. Ibogaine notably causes cardiovascular problems in some users; 18-MC might also skirt that issue.

This also solves the patent problem. Given the money required in R&D of a new drug—over $1 billion, in some cases—it's challenging for pharmaceutical companies to profit from new drugs. At the same time, as Miller assures me, "they are definitely making money." That much is obvious given the billions of dollars that the Sacklers profited from helping create the opioid epidemic, the very reason we so desperately need a better solution now.

Yet it also begs the question: why are we in so much pain? The reasons are varied: sedentary lifestyles; dramatic income gaps; social media's role promoting the constant yearning for youth; intensely laborious jobs; being overworked and underpaid. If the revolution in pharmacology last century taught us one thing, it's that humans will seek pills to cure problems instead of addressing the root cause. As Miller and I discussed, the distance between physical and emotional pain isn't necessarily as far as believed.

"When you use the word pain, which you just used in a certain way, pain could mean things like somebody's emotional pain to a clinician. However, it's usually much more involved in actual physical pain. That's the kind of thing that people are usually talking about when they're talking about trying to replace opiates for treatment of those kinds of things. On the other hand, there is emotional pain. On the third hand, there is actually a connection between physical pain and emotional pain. We know about how different parts of the brain connect with each other. So there are a lot of levels that you can attack pain."

While it's hard to find a bright side to the opioid epidemic, Miller says one positive is that governmental agencies are taking pain management more seriously. That covers mental and physical pain—there's a reason the FDA has labelled both psilocybin and MDMA as breakthrough therapies. Regardless of the type of pain, and knowing there is a meeting point between the two, psychedelics are showing efficacy in many aspects of treatment. This is a field of research whose time has come.

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Stay in touch with Derek on Twitter and Facebook. His next book is Hero's Dose: The Case For Psychedelics in Ritual and Therapy.

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