In the second installment of our three-part podcast deep dive into A Path Forward, Dirk McMahon, President and Chief Operating Officer at UnitedHealth Group and Heather Cianfrocco, CEO at Optum Rx, discuss ways to make the health system more affordable for consumers, employers and governments.
UnitedHealth Group is committed to a future where every person has access to high-quality, affordable health care and a modern, high-performing health system that reduces disparities, improves outcomes and lessens the burden of disease.
This is the second episode in a three-part deep dive into A Path Forward, UnitedHealth Group's policy solutions that offer a refreshed perspective for how to modernize the health system to:
The second episode of our three-part series features Dirk McMahon, President and Chief Operating Officer at UnitedHealth Group and Heather Cianfrocco, CEO at Optum Rx, discussing ways to make the health system more affordable for consumers, employers and governments.
Click here for more information on A Path Forward.
Evan Sweeney00:06
Hello and welcome to UnitedHealth Group's three-part series on health care policy, where we're taking a deep dive into a path forward. It's a set of policy solutions released by UnitedHealth Group that offer refreshed perspective for how to modernize the health system to achieve universal coverage, make health care affordable by accelerating value-based care and reforming prescription drug pricing and transform the healthcare experience by focusing on equity and addressing disparities, you can download the full document www.uhg.com/apathfoward.
Today we're talking about an issue many Americans think about on a daily basis: the cost of health care.
About half of adults in America say they have difficulty affording health care costs and one in 10 have delayed or forgone medical care due to cost. The ability to afford a doctor's visit or prescription refill can have a tremendous downstream effect on people's health, adding further stress to the health system. Some progress has been made to help make health care more affordable, but much more can be done.
Here to talk about those policy solutions is Dirk McMahon, president and chief operating officer at UnitedHealth Group and Heather Cianfrocco, CEO of Optum Rx.
Dirk… Heather… Welcome to the podcast.
Heather Cianfrocco
Thank you.
Dirk McMhahon
Thank you.
Evan Sweeney
Great to have you both. Let's start with what I mentioned in the intro here. Public opinion polls consistently show that affordability is a top issue for Americans. How does that inspire and or help drive the work that you do every day?
Dirk McMahon 01:44
Yeah, well, I do stay up awake at night worrying about what's gonna happen with health care costs, for sure. And we spend a lot of time figuring out how to make the health care dollar go further, especially in light of the inflationary pressures that are out there today, you know, you think about it, a consumer shouldn't have to decide whether they go to the doctor or buy groceries, you know, that's just not a tenable, tenable situation. You know, in the long run, healthcare could cost more if people don't get, get what they need taken care of in the short term. So, this is definitely at the top of our minds. And I could give you 100 different ways that we're working on to reduce health care costs, but let me just focus on three. One is value-based care. The other is prescription drugs, and the last one is minimizing waste. So, our teams are really focused on transitioning to value-based care, what that specifically means is paying for value verse and providing the incentives that enable value-based care, rather than just fee for service. That's a really important concept. And then a big part of health care is also site of service, you know, as you as you think back, it's really important for someone to know that, you know, when their kid has a strep throat, that they go to an urgent care rather than going to an emergency room, you know, if you look across the industry $32 billion a year is spent on avoidable ER visits. That's a major problem, you know, given consumers information on things like tests, diagnostic tests, you know, if you look at tests, like MRIs done in hospital outpatient centers, you know, they're hundreds of dollars more than if you're doing an imaging center. So, it's really in a nutshell, making sure that people have the tools they need to make good decisions. It's really about making sure providers also have the tools they need to make good decisions. That's what we're all about.
Heather Cianfrocco 03:35
Yeah, you're right, Dirk, and I think you mentioned the right care, the right decisions in the right place at the right time. You know, those are based on information, right to having the right information so that our consumers can make informed decisions about how to pick those right sites of care. But it's also about integrating the system, making sure that we eliminate that waste by integrating the pieces of the system that might feel fragmented today. You know, Evan, you asked, you know, what is it that really inspires our work? You know, when I think about it is, you know, we do several different things. One is we work really hard to inform policy, and make sure our policy is sound, you know, and based on the experiences we have in in addressing the fragmentation health system, and then we want to work to do our part, you know, bringing new solutions, and opportunities to really drive affordability. You know, we're really proud of the fact that from the time a drug is developed, to the time it gets into the hands of our consumers and our patients. Our job is to surround them with the clinical supports they need, you know, to make sure that we're driving not just quality and value but also affordability. And no one is doing more than our enterprise to try to lower the costs, improve the outcomes and deliver a better pharmacy experience. So, our job is to make sure all clinicians and those clinicians we partner with have the right tools to make the right decisions. And one of the things I'll just leave you with that we're really proud of, and it's an example where we're doing our part to UnitedHealthcare working through Optum Rx platform, recently announced it would have been Nik co pays on five lifesaving drugs, including insulin for eligible members. You know, eliminating out of pocket costs, expenses for these critical medications is gonna go a long way to really reduce the burden of medical costs across the board. You know, when we feel it's our it's our obligation to do that. So, we're really proud to do our part to eliminate expense for highly utilized and lifesaving drugs like insulin for our UnitedHealthcare members.
Evan Sweeney05:26
Yeah, okay, so you've both mentioned a number of things here. I want to focus on one in particular and that’s value-based care. So, anyone who's been around the industry, as you both have, knows that term. But, Dirk, maybe you can peel that back a little bit more and explain what it is and why we have seen increasing interest around it.
Dirk McMahon 05:44
Yeah, great question, Evan. So, you, you sit back, and you look at value-based care. And I think of it in its purest form as a term called capitation. Whereby the provider has risk for basically one, the financial outcome to the health outcome, and three, the overall experience of the particular patient. And so why I liked that so much, and why everybody's talking about it is because it really aligns incentives. And so basically, there's not a situation where someone's trying to do a certain number of visits, what they're trying to do is provide that particular care for patients, and meaning that they have responsibility for the whole person. Really, it's the beauty and why everybody's running to it is because it aligns incentives in the health system.
Evan Sweeney06:32
So where have you seen this works successfully?
Dirk McMahon 06:36
Really, I think the best place the most clear example is Medicare Advantage. And for example, Optum care takes full risk on over 3 million lives today. And as you look, what that does is really, what the AMA members see is 23% better or fewer inpatient stays than Medicare fee for service, we see higher rates of preventative screenings, and we see 33% Less emergency room visits. All that translates into savings for the Medicare beneficiaries. You know, Medicare Advantage, beneficiaries spent 40%, less on out of pockets than fee for service. And what that really does is it puts 2000 bucks per year roughly in the pockets of consumers. And you wonder why Medicare Advantage has a 93% satisfaction rate? The primary read is because all of those good economics and good health outcomes start to evolve, when you see these value-based arrangements, and specifically, fully capitated arrangements come to fruition. So really, it's it's about care for the whole person. It's about alignment incentives in the system, and who's the big winner at the end? It's really the Medicare Advantage beneficiary.
Evan Sweeney07:46
So what needs to happen to sort of broaden and deepen that adoption of value-based care?
Dirk McMahon 07:52
Well, you know, we here really spend a lot of time setting up the infrastructure. You know, as you transfer risk to a provider, I've said in various venues, it's not just sort of the paper based exercise providers have to have the systems and infrastructure to be able to manage that risk. And so things like EMR workflow tools, things like patient portals, things like utilization management system, all now have to be resident within the providers infrastructure. So step one is making sure that a provider is ready to take these risks and ready to take on this responsibility. And again, we've spent a lot of time within Optum, making sure that's the case. But it's also more than just execution. There's some policy issues around standing in, in Medicare Advantage, pretty pretty well structured to do that. But in some states, there's restrictions in place that make capitated arrangements between providers and self-funded plans challenging. And we should really take a good hard look at those barriers to increase the number of commercial enrolled, roll these that can be served under value-based arrangements. And
Heather Cianfrocco 08:55
then I guess I would just add, you know, I think that's really well, said Dirk. And when we come back to prescription drugs, you know, we know that 80% of Americans say drug costs are too high. And it leaves nearly three and 10 aren't taking their medications as prescribed due to costs. But we actually see that value-based arrangements for drugs are even less common than what Dirk is describing for medical care. And I think the tools aren't as advanced. And so I think there's a really big opportunity here, where prescription drugs are one of the most utilized benefits, and people are looking for more to fill it with more affordability, we've got to do more here. And so I think, especially when you see the expensive drugs come to market, you know, that's a real opportunity for us to really integrate pharmacy and pharmaceuticals into the value-based arrangements. So again, how do we think about that? I guess I would say let's start with policy. And then let's start with what we're doing. The current regulations do make that challenging in the commercial markets, and I think there's opportunity to really reform there at the state and the federal level. But we also need independent third parties that really help us determine the value of a particular drug and a therapy over time, and that's going to require additional tools, some of the ones that you know, dark mentioned that prescribers will have in their, you know, in their practices to really drive and understand utilization practices and help them look at disease management over time, including the use of therapies, medications and therapies.
Evan Sweeney10:14
Yeah, I want to build on that point around quality a little bit more. You've now both mentioned this, but but one opportunity to lower healthcare costs, and really drive more value is the ability to shift patient care to providers that offer a higher value and more cost efficient side of service. So I guess my question is, in a system as fragmented and complex as healthcare, what's the best way to do that Dirk?
Dirk McMahon 10:40
Yeah, I think there's many places and many sites of services have evolved of late which have really benefited the ability for people to go to effective and efficient sites of service. So let me start off the most obvious one is telehealth. Do you sit back before the pandemic 1% of the visits for telehealth now it's double digit, right? Which is really important. And I think, as we're sort of on the back end of the pandemic, you know, everybody wants to talk about Yeah, of course, during the pandemic telehealth was the Savior. But I think there's opportunities beyond that. Now, I was thinking about example, when I was young parent, my son had my son had asthma, right? I would have loved to be able to hold them up in the middle of night and say, Hey, this kid's breathing hard. Do I need to take him into the ER? Or is he okay? I mean, that's a, that's a major improvement in terms of the parents today versus what I was, you know, 30 years ago. I would also say that, you know, you look at something like behavioral, and half the visits today, or nearly half the visits are all virtual, a big, you know, I talk to employers all the time, and one of the biggest issues that had, you know, still continues to, but to a lesser extent, is just behavioral access. So, access has really been facilitated by virtue of what's happened in, in telehealth. And with respect to behavioral health. I would also say there's, the home has become an increasingly area of preference where, ultimately, we're able to deliver care, I think about our best example is our house calls program, where basically, our house calls nurses go out, and they take health inventories, and they set up a situation where people get their gaps in care closed. That's a really important part. And you know, what we find with our house calls is that 83% of our members had a follow up visit with a doctor in 90 days after a house calls visit. And what we also see is a 14% reduction in emissions. So we see a lot of these telehealth behavioral health house calls, the sites of service have really changed a lot. And you know, one of the things which we continue to advocate for is really updating Medicare's payment structure to allow the patient their doctor to choose the most most appropriate care setting, that really, if you think about it, save the system, we've estimated $270 billion over 10 years. So making sure that that sort of gets in place. From a policy perspective, it's really important.
Evan Sweeney12:58
Whether you've already described us in detail, but for many people, the impact of medical costs is felt primarily at that pharmacy counter. Recently, Congress passed legislation that will cap out of pocket drug costs for Medicare beneficiaries at $2,000. But what are we doing as a business to really help lower the cost of prescription drugs and what more can be done to help consumers feel that impact?
Heather Cianfrocco 13:23
What are the things I'm probably most excited about is we're really pushing for more information, transparency, and just real, direct affordability for our patients and our members at the place that matters most. And that's at the pharmacy counter. So we've we've got a new tool, and it basically secures the lowest cost we can get for generic drug, under the members benefit, and how we do that as we regularly engage cash pricing market, and we compare it to the best pricing in the benefit, the lowest price wins, and our member gets it. And so the best price we can get, we can pass along to our clients members. The tool also provides a solution for drugs that aren't even covered under the benefit. So even you know, so that means that our members can actually get access to the best cash pricing for non covered drugs, generating kind of a direct to consumer discount for those commonly prescribed over the counter medicine supplements and other drugs. So this is our way of saying look, we're going to bring the convenience and the experience and the best affordability we can get across the system with our scale to our members and we're going to make it easy. And it just it just adjudicates real time automatically for our members.
Evan Sweeney14:32
Yeah. So you know, we've talked about a lot of solutions here. I want to take it up maybe one level, what do you view as the most critical aspect of making healthcare more affordable? In the long term? Dirk, I'll start with you and then I'd love to hear from you other
Dirk McMahon 14:51
well, you know, I think it's to start off with I came I came into the industry about 20 years ago and back then, you know, part D HSAs were nascent, they were later, they were really at their very beginning. And I also think back to those days, and roughly, the per capita cost of health care was about $5,000 annually. And now it's up to over $12,000. So, you know, really affordability in the system is going to require a lot of transformations. And some of the solutions we discussed, aren't really, you know, aren't easy. But at the core, it's really better alignment. I think, you know, between advancement of value-based care, and intense collaboration, integration between payers and providers, I think we can move the ball down the field a lot in terms of affordability, and not only affordability, but a better consumer experience, which is really important.
Heather Cianfrocco 15:41
Dirk, I, you said it, you know, it's collaboration, I see that we have an obligation and I see it in three areas, we have an obligation to inform sound policy, to advance products and services that we think actually helped drive the principles that we're talking about today, and that we're talking about an a path forward. But also we have an obligation to partner across the system, to bridge to integrate, you know, take those pieces where it's fragmented and connect them and we're not gonna be able to do that alone. So I think it's, you know, whether we're talking about the medical care, or prescription drugs, it's a willingness to be bold bridge, and do advanced solutions that really help lower costs for consumers at the pharmacy counter. But also, you know, we talked about this and giving consumers information, the best information, and prescriber so that they can make the decisions and decide the best side of care whether it's the doctor's office, the hospital, the home setting, and to get the best service that they need today and eliminate the waste. It was Dirk said these aren't easy problems to solve. It's gonna take partnerships, partnerships, with government, with drug manufacturers, with providers with health systems, many others to ensure these policies have an impact, and that we all do our part. So I think we're committed to doing our part and you're gonna see us we're very restless about that.
Evan Sweeney16:53
Well, listen, I think we've, we've covered a tremendous amount of ground here. Thank you both for joining. Thank you both for your expertise. I really appreciate the conversation.
17:02
Heather Cianfrocco
Thank you, Evan. Appreciate it.
Dirk McMahon
Thanks, Evan.
Evan Sweeney17:06
That's it for our second episode on UnitedHealth Group's policy solutions to modernize the health system. To learn more, download a path forward at www.uhg.com/a path forward. And join us for the next episode for a conversation on how to improve the healthcare experience and advance health equity. Thanks for listening and have a great rest of your week.