NYHealth Hosts: “Payment Reform from a Payer’s Perspective: A Conversation with Mark Wagar”

Mr. Wagar is currently president of Heritage Medical Systems, which helps providers and payers manage care and services. Previously, he served for six years as president and CEO of Empire BlueCross BlueShield—the largest health insurer in New York State. A health care veteran, Mr. Wagar acknowledged his unique perspective from having stood on both sides of the aisle, with a combination of payer and provider experience in both the for-profit and nonprofit sectors.

There is broad consensus that the fee-for-service (FFS) payment system commonly used today needs to be overhauled. FFS arrangements encourage a volume-driven health care system rather than a value-driven system. Moreover, such payments can penalize providers for keeping people healthy, for managing chronic diseases, and for avoiding unnecessary and expensive care. Despite agreement among the health care industry that the overhaul of FFS is necessary, there is no one easy solution to make this transition. To address this complex subject, Mr. Wagar described his own on-the-ground experience with new reimbursement models, leading a discussion of how the different industry players must work together to get better value for the dollars spent on health care.

Mr. Wagar opened the discussion by stating: “The system is not broken—it’s obsolete.” While Mr. Wagar offered his criticisms of the current system, he also provided constructive feedback on changing the payment system, including: the need for investment in data; the importance of accepting risk (such as in the form of accountable care organizations); and the need for prices to be set to reality.

Attendees included health care insurers, providers, consumers, researchers, and funders. Mr. Wagar encouraged his audience to think about the abstract elements of payment reform, but also offered some more concrete, immediate ways that different stakeholders can begin to tackle wider systemic changes. For example, if physicians took more leadership and plans offered more choices for patients and providers, we could drive the system in a different direction. Mr. Wagar concluded the discussion by reminding the audience that the patients are waiting—and they deserve better from the health care system.