New York is among the highest-cost states in the nation in terms of health care expenditures. The burden of such costs affects everyone, especially consumers and purchasers. There is broad consensus that an overhaul of fee-for-service payment systems is needed to drive meaningful reductions in health care costs. Fee-for-service arrangements encourage more care rather than better care. Moreover, such payments can penalize providers for keeping people healthy, for managing chronic diseases, and for avoiding unnecessary and expensive care.

Changing the status quo and achieving payment reform will require an expanded playing field of stakeholders. NYHealth considers payment reform to be integrally linked to efforts to transform the health care delivery system and control costs. Conference attendees included consumers, providers, insurers, business leaders, policymakers, purchasers, and researchers, and all were able to engage in the issue of how to tackle health care costs that generate collective gains rather than cost shifts.

Alan Weil, Editor-in-Chief of Health Affairs, delivered a keynote address that offered several cautions about payment reform. For example, Weil asserted that “failure to disrupt the power that the highest-cost actors have in the system is a shortcoming of payment reform.” He also argued that the U.S. health care system was not built to manage population health, and therefore questioned whether existing institutions can be successful in adopting new models or systems of care that seek to improve population health. Weil also stated that the shift to pay for value has been oversimplified. Through eliminating the complexities and nuances associated with patient preference, payment reform runs the risk of threatening patient-centered care.

After voicing his concerns about payment reform, Weil described flaws in the current system and proposed five elements that will be necessary to achieve payment reform:

  1. Let the leaders lead;
  2. Acknowledge how easy it is for every interest group to exercise veto power over the vision you hold;
  3. Focus on the process of delivery system improvement as much as you focus on the financial model embodied in the concept of payment reform;
  4. View payment reform in a broader context of goals for spending and quality in the health care system; and
  5. Embrace humility regarding the contribution that payment reform can make to overall goals.


Following the keynote, the first panel discussed the roles for government and private purchasers in payment reform. Doug McKeever, Chief of Health Policy Research at CalPERS, described a variety of strategies to bend the cost curve down, including implementing reference pricing to reduce spending on hip and knee surgeries by setting a specific price for its members. CalPERS saved millions of dollars through reference pricing, but the most important outcome was sending a strong message to providers that it will no longer accept high prices. McKeever also described CalPERS’ integrated health care model in Sacramento, stating, “we were an ACO before ACOs were cool.”

Leah Binder, President and CEO of The Leapfrog Group, described strategies that private sector purchasers can use: employing innovative transparency tools, implementing good benefits design strategies, establishing pay for performance, suggesting employees receive care at designated centers of excellence, using reference pricing, and noting the power of medical tourism as a bargaining tool. In addition, Binder reminded the audience that patient safety is an enormous problem, and that while many medical errors are preventable, these errors both harm patients and cost purchasers substantially.

Rounding out the first panel, Dolores Mitchell, Executive Director of the Commonwealth of Massachusetts Group Insurance Commission (GIC), shared the perspective of GIC, which provides health, life, and other insurance benefits to 425,000 state employees, retirees, and their dependents. She reminded the audience that “patients are people first,” and patients are only able to be consumers sometimes.

The second panel discussed the role for consumers in payment reform. Brian Rosman, Research Director at Health Care For All (HCFA), described how Massachusetts achieved its 2012 landmark legislation, Chapter 224, to improve the quality of care and reduce health care costs. After the conclusion of HCFA’s Affordable Care Today campaign for consumer engagement, HCFA shifted its focus to addressing health care costs and began the Campaign for Better Care. HCFA learned the importance of simplifying messages to engage consumers. Rosman also pointed out that HCFA saw a shift in its partners, as insurers and business groups became allies in the cause.

Troy Oeschsner, Deputy Superintendent, New York State Department of Financial Services, focused on payment reform efforts underway in New York. New York has a public-facing rate review process, in which insurer rate applications and decisions are now publicly available. Oeschsner shared details on the recent passage of Surprise Out-of-Network Billing Reform, which limits consumer liability for emergency room and surprise out-of-network bills. Finally, Oeschsner tied everything together with discussion of the State Health Improvement Plan, which aligns all of the State’s reform efforts with the same goal of transitioning to value-based provider payment.

Michael O’Neil, Senior Vice President of Strategy and Development for The Healthcare Bluebook, shared his organization’s mission to help consumers save money by finding quality care at a fair price. O’Neil highlighted what works well when communicating with consumers: practical, simple, and integrated approaches. He reminded the audience that “we overestimate how much time consumers want to spend shopping for health care,” and therefore must make fair pricing clear and easy for consumers understand.

Download the conference speakers’ PowerPoint presentations below:

Doug McKeever, Chief of Health Policy Research, CalPERS, California

Leah Binder, President and CEO, The Leapfrog Group

Dolores L. Mitchell, Executive Director, Group Insurance Commission, Commonwealth of Massachusetts

Brian Rosman, Research Director, Health Care For All

Troy Oechsner, Deputy Superintendent, New York State Department of Financial Services

Michael O’Neil, Senior Vice President of Strategy and Development, The Healthcare Bluebook


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