Diagnostics of the Future: Tests Payers Need from Our Industry
an interview with Ken Schaecher, MD, Health Science Center, University of Utah
Background and introduction
The University of Utah Health Plans (U of U Health Plans)1 is a program launched in 1998 as a strategic initiative of University of Utah Health. U of U Health Plans is committed to improving the member experience, quality of care, health of populations, and reducing the cost of care – the pillars of precision medicine. U of U Health Plans serves members in the Mountain West specializing in the health plan administration of medical, mental health and pharmacy benefits for fully insured and self-funded employer groups, individuals and families, as well as Medicare and Medicaid.
Kenneth L. Schaecher, MD, FACP, CPC is a member of the clinical leadership team at U of U Health Plans; he is the Associate Chief Medical Officer, and an attending Physician of Internal Medicine at the Granger Medical Clinic in Salt Lake City, UT. Ken is a strong advocate of value-based care with a focus on outcomes as goals of the practice of precision medicine. He has written on value-based care and has presented his views at many meetings. We had a few questions for Ken on these topics and he agreed to address these questions for the Journal.
“The way to solve the conundrum of meeting individual needs with a population focus is through high quality evidence that demonstrates the value of a service as it relates to both clinical outcomes and cost eﬀectiveness compared to existing approaches for the same conditions.”
Q1. U of U Health Plans states its mission as improving the member experience, quality of care, health of populations, and reducing the cost of care, all critical to the success of precision medicine.Could you please briefly discuss your role in fulfilling the mission of U of U Health Plans?
A. As Associate CMO, a large part of my responsibilities center around oversight of medical and some pharmacy utilization management, policy development and quality improvement initiative. As a clinician and a health plan administrator, I, like others in roles like mine, hold a unique position of understanding the implications of coverage decisions on our member populations. We strive to balance access to services perceived to have clinical value with our fiduciary responsibility to manage health care costs for the population we serve. In my capacity in developing coverage policies, analyzing evidence on clinical utility of services and cost effectiveness becomes a linchpin in fulfilling our mission. Through these processes, we create more affordable healthcare for individuals.
We believe that medicine will become more precise. However, medicine today is generally based on a “one-size-fits-all” practice, and where targeted therapies are possible, it is impractical to scale.
The goal of expanding precision medicine is to provide the right treatment at the right time for every patient. Tailoring treatment starts with a highly-specific diagnosis without unwarranted variation. Based on data integrated from existing sources, adding genomics and radiomics enables a holistic understanding of the individual. These unique characteristics steer the personalization of treatment. A precise understanding of a patient’s condition is the most effective approach to deliver outcomes favorable to all stakeholders.
Q2. You wrote a very concise and informative review some time ago on the “Impact of the Affordable Care Act on Cancer Care: A Payer’s Perspective Value.”2 An important point you raise in the article is the need for both affordability and accessibility. How can health care plans in general offer affordable access to its members?
A. In my opinion the way to solve the conundrum of meeting individual needs with a population focus is through high quality evidence that demonstrates the value of a service as it relates to both clinical outcomes and cost effectiveness compared to existing approaches for the same conditions.
Q. The ACA was enacted some time ago, and revisions have been legislated since then. How has affordability and accessibility changed over that period?
A. The professed intent of those who crafted the ACA was, as you correctly note, to bring access and high-quality healthcare to the millions of Americans who did not have such access. Unfortunately, in the many compromises necessary to pass the ACA legislation the affordable aspect of the Affordable Care Act was lost as access became the focal point with a plan to improve affordability on a macro level later. Continuous attempts to rescind or eliminate the ACA, in whole or part, have gotten in the way of the many revisions necessary to achieve affordability without heavy subsidies (if that is even possible in today’s highly divisive political climate). Access has definitively improved in the years since implementation of the ACA, and in many ways the population is healthier with a higher quality of life. The time to improve access is being eroded incrementally; what the future hold is hard to predict.
Q3. In the recent past, you cited quality and value as critical for the administration of precision medicine care – and rightly so! In this regard:
What metrics should health plans bear in mind for planning and execution?
A. Precision Medicine care should be based on several relatively simple principles/metrics. All need be present. At U of U Health Plans, we address whether precision directed care improves the health of a population/individual in a clinically meaningful manner and whether implementation of precision medicine-based care reduces the total cost of care in a timeframe meaningful to those who pay for healthcare.
One can imagine metrics based on a macro-level (e.g., managed costs at the hospital and patient population) and another for treating individual patients in the office or in a hospital bed. How would you advise health care plans to manage the balance between the macro- and individual patient level for cost and quality?
A. I believe the optimal method to address the challenges for both the larger population and the individual is total cost of care (TCOC) for a condition over a defined (and pertinent) period of time relevant to the disease condition and the plan. If cost effectiveness/value is demonstrated for an individual, it should also be demonstrable for that population affected by the condition and do its part to lower TCOC for everyone.
Q4. For many patients, affordable access to precision medicine depends on reimbursement and the education of practitioners that is, not just on the availability of a novel medicine but also that healthcare providers understand the cost-benefit trade-offs for a patient. To these points:
What have you seen as effective strategies for drug and diagnostics developers to file for coverage for reimbursement?
A. Sadly, most efforts for filing are ineffective as services being brought forward in many instances lack the necessary rigor to demonstrate meaningful improvement in health outcomes or a reduction in the total cost of care, at least initially. Those who invest in those two key principles up front are generally more effective in achieving positive reimbursement determinations. Health plans by their nature
“Value-based payment programs or value-based contracting rely on a few simple principles. The service being contracted must have real value in the first place. Secondly, the endpoints must be ‘hard’ endpoints that most typically can be easily measured through claims data. Thirdly, the measurement period needs to be relevant and timely to the plan … [and] Lastly, the financial potential for lowering cost must be real and significant. The ‘juice needs to be worth the squeeze!’ ”
tend to be conservative in their approach to coverage. In general, “new” technologies are always perceived to add cost and not reduce the cost to care. By not reducing the affordability, access to high quality health care is potentially reduced as well.
“Implementation of a “precision medicine” strategy [at a systems level] must lead to results in clinically meaningful improvements in the health outcomes of the impacted population and should be calculated to lower the total cost of care through reduced health resource use.”
Have you seen effective programs to educate doctors, payers, regulators on the value of precision medicine (e.g., while precision medicines may potentially be more expensive, the effectiveness is significantly better than existing standards of care)?
A. More often than not I see programs put together by precision medicine vendors intended to obfuscate the value of a product, focusing more on ‘soft’ endpoints such as ‘convenience’ or ‘liking’ with no cost implications to the patient or the plan considered. These efforts are typically employed to generate an emotional response at the individual level to create demand. In a few instances, vendors of precision medicine services create a broad package of educational materials that effectively educate all the components of the health care delivery system to employ the technology appropriately.
Q5. Given the importance of population health care management, what two or three guidelines do you see as critical for value-based payment programs (like U of U Health Plans) to establish sustainable affordable access?
A. Value-based payment programs or value- based contracting rely on a few simple principles. The service being contracted must have real value in the first place. Secondly, the endpoints must be ‘hard’ endpoints that most typically can be easily measured through claims data. Thirdly, the measurement period needs to be relevant and timely to the plan. It cannot be some endpoint 5-10 years down the line in most instances except perhaps if the financial opportunity is very high. Lastly, the financial potential for lowering cost must be real and significant. The ‘juice needs to be worth the squeeze!” Otherwise, this is merely an academic exercise that creates administrative burden and costs with no benefit to the health plan.
Q6. Much of the health care system is geared to covering conditions that affect relatively larger percentages of the public. What would you recommend to policy makers to incentivize developing value-based care for smaller segments of the population? Or even for rare diseases?
A. Whether the population impacted by the condition is large or small, the principles remain the same – demonstrate clinically meaningful improvement in health outcomes and lower the total cost of care. Typically, with smaller segments of the population or rare diseases, the total cost of care for the individual remains high; thus, there could be an opportunity for value- based contracting if the same principles noted above are being followed.
Q7. Precision medicine can be viewed too narrowly as a value proposition for diagnostics and drug companies that target unmet needs for stratified populations. Could you comment on precision medicine as a paradigm that extends to running a hospital or healthcare system? How would this approach affect the practice of medicine?
A. Similar to the difference between healthcare delivered at the individual level and population health, precision medicine can be looked at in broad or narrow terms. That is, “precision medicine” can be embraced at the system level, or can be segmented into smaller pieces such as diagnostics, therapeutics, etc. Regardless of the level at which one views precision medicine, it is paramount that the core principles need to be considered. Implementation of a “precision medicine” strategy [at a systems level] must lead to results in clinically meaningful improvements in the health outcomes of the impacted population and should be calculated to lower the total cost of care through reduced health resource use.
Q8. Any final comments or thoughts you would like to share?
A. At the end of the day, adoption of precision medicine technologies gets down to the quality of the peer-reviewed published literature that documents clinically meaningful improvement in health outcomes AND demonstrates the lowering of the total cost of care, both of which lead to improve the affordability of health care to the population. The recipe for success is relatively simple, and if properly implemented can result in win-win-win situations for precision medicine technology vendors, patients and payers.
Dr. Schaecher has been active in managed care for over 20 years initially involved in utilization management, credentialing, formulary management and appeals for several managed care organizations in the late 1990’s. Employed by Intermountain Healthcare/SelectHealth from 1998 until 2017 and subsequently by University of Utah Health Plans his responsibilities have included quality improvement, medical policy development/implementation, new technology assessment, assisted with benefit design, fee schedule development, fraud/waste/abuse, medical coding and auditing, provider relations liaison and value-based programs. Throughout this time he has worked closely with pharmacy services at both plans in developing the plan formulary and has been active in the Pharmacy and Therapeutics committee at the Plan and system level working to align formularies so as to reduce administrative complexity and cost yet assuring appropriate patient access to important therapies. Prior to joining SelectHealth, Dr. Schaecher was Chief of Staff at Pioneer Valley Hospital and President of Granger Medical Clinic, the largest independent multispecialty clinic in the Salt Lake Valley. He is past President of the Salt Lake County Medical Society and is the past Chairman of the State of Utah Physician Licensing Board. Dr. Schaecher is board certified in internal medicine and received his medical training at the University of South Dakota and the University of Utah. He has been a certified professional coder since 2012.
- The University of Utah Health Plans, https://uhealthplan.utah.edu/.
- Impact of the Affordable Care Act on Cancer Care: A Payer’s Perspective, http://www.jons-online.com/special-issues-and-supplements/2015/conquering-the-cancer-care-continuum/conquering-the-cancer-care-continuum-series-three-fourth-issue?view=article&artid=1831:impact-of-the-affordable-care-act-on-cancer-care-a-payer-s-perspective.
Further Browsing and Background
Reimbursement Remains a Barrier to Digital Health Adoption,
November 30, 2019, Kayt Sukel, https://www.managedhealthcareexecutive.com/reimbursement/reimbursement-remains-barrier-digital-health-adoption
Online interview with Kenneth Schaecher, November 12, 2019,
Impact of the Affordable Care Act on Cancer Care: A Payer’s
Perspective, Conquering the Cancer Care Continuum – Series Three: Fourth Issue, Kenneth L. Schaecher, MD, FACP, CPC, http://www.jons-online.com/special-issues-and-supplements/2015/conquering-the-cancer-care-continuum/conquering-the-cancer-care-continuum-series-three-fourth-issue/1831-impact-of-the-affordable-care-act-on-cancer-care-a-payer-s-perspective