The Medicare program, which provides health insurance benefits to more than 50 million people, turns 50 this year. Since its inception in 1965, Medicare has been the primary driver of health policy in the U.S. As Medicare goes, so goes the health care industry.

One of the program's hallmarks, particularly in the past several years, has been the use of financial incentives to improve the quality and safety of patient care while at the same time controlling the cost of care to beneficiaries. Medicare has set the industry agenda for value-based care.

McKesson spoke with a trio of health policy experts about Medicare's legacy, its current and future impact on the business of health care and how it can continue to lead the shift from volume to value. The three experts are Andrew Mellin, M.D., vice president and medical director for population and risk management at McKesson; Jonathan Niloff, M.D., vice president and chief medical officer at McKesson; and Tony Willoughby, vice president and chief pharmacist at Health Mart, a McKesson affiliate.

Five Decades of Medicare

What are some leading examples of how Medicare has pushed the agenda for value-based care?

Niloff: Medicare has driven the adoption of value-based care through the Pioneer and Shared Savings ACO programs. It's now going a step further with its proposed Next Generation ACO program. These ACO programs transfer clinical and financial risk to health care providers, which are incented to provide higher quality care at lower costs.

Willoughby: One example of how Medicare has been a major driver in this area is the Star Ratings program and value-based bonus payments for Medicare Advantage plans. That initiative incents plans to look for and contract with providers across the continuum of care that can help improve the plans' performance on key metrics and drive better outcomes for patients.

How have such value-based Medicare programs changed the behavior of health care providers?

Mellin: The Medicare value-based programs have been the catalyst at most health care provider organizations to re-evaluate their entire care delivery model. They are moving from a business model built solely around driving volume to one that's built around an optimized, patient-centered approach focused on quality, efficiency and value.

Niloff: In response to assuming more risk, health care providers are implementing new population health-based models of care. They're implementing strategies to improve compliance with preventive and chronic care clinical guidelines; they're implementing programs to better coordinate care across the continuum; and they're investing in care management programs that devote more resources to those patients identified as likely to be the sickest and most costly.

Willoughby: From a community pharmacy perspective, we're beginning to see improved coordination of care in which providers are working together and playing their particular role in improving the health of the patient. Other providers are now leveraging the relationship community pharmacists have with their patients' to improve  medication management, especially those with chronic conditions.

How can providers enjoy continued business health during the transition to value-based care being driven by the Medicare program?

Willoughby: During this change, community pharmacies will see a decrease in traditional fee-for-product reimbursements with a slow ramp up in value-based revenue streams. For pharmacies, that means continuing to look for ways to efficiently and effectively fill and dispense medications. At the same time, they must look for effective methods to deliver new patient centric care services. This includes leveraging the patient relationships they've built over the years to influence patient behaviors and improve medication utilization.

Niloff: Providers need to embrace Medicare's alternate payment models and change their delivery model to be consistent with a population health approach. Successful organizations will be those that excel at managing both the total cost of care—by focusing on care coordination across the continuum and practice variation—and their operating costs.

Mellin: The most successful organizations will be the ones that can relentlessly take out costs and inefficiencies out of their systems. They can accomplish that by creating highly reliable, safe and efficient processes, embracing advanced analytical capabilities and empowering all caregivers to practice at the top of their licenses. Once the organizations establish a solid set of competencies in value-based care and population health, they then can strive to quickly move as much of their reimbursement models to value from volume.

How can Medicare finish what it started and sustain the industry-wide shift to value-based care over the next 50 years?

Mellin: Medicare must take an aggressive leadership role in removing waste and unnecessary administrative burdens from its reimbursement system. It must enable providers to rediscover the joy in practicing medicine by allowing them to focus on delivering high-quality and patient-centered care, not simply paperwork and valueless tasks. In-other-words, let's make value-based care about value-based care, not about needlessly documenting that you're doing the right thing.

Willoughby: We are in a world driven by data and systems. That will only increase as we shift from volume to value. These tools are important, but we must spend less time digging and piecing together information so we can maximize the time we have interacting with our patients. That's the real value. Medicare can assist with that goal by enabling us to create a single source of truth or view of a patient.

Niloff: Medicare must evolve and mature its value-based care programs in ways that truly empower providers to be successful with the flexibility to implement the requisite population management processes in the manner that best suits their local environments and without unnecessary restrictions. I hope that Medicare's legacy over the next 50 years will be that it was able to transform itself—along with the rest of the industry—into a program that not only provided better patient outcomes and experiences but that was financially affordable and sustainable. I believe that is possible.

McKesson

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McKesson editorial staff is committed to offering innovative approaches and insights so that our customers can get the most out of the health care solutions they have and identify areas for operational improvement, revenue growth and improved patient satisfaction. If you have a suggestion for a blog topic you’d like to see covered, let us know in the comments.