 Well, of the Department of Health and Human Services, and we're going to be talking about payment transformation in the American healthcare system away from a fee-for-service model and towards a pay-for-performance model. So what I'd like to start out doing here is, here you describe what's wrong with the current system, the fee-for-service, and why pay-for-performance is the direction you're trying to move the U.S. healthcare system toward. So in terms of the problem and the issue, right now in terms of the U.S. healthcare system, we have a system where we do not have an engaged, empowered, and educated consumer at the center of the system, and therefore we have a disconnect in terms of payments and value and how most markets actually work. And so part of the reason that we have that is because people pay for transactions, not the outcome. And so, and the other thing is we don't have transparency into that payment. So when people, many people as they get, there's a document that many in the U.S. get that's called Explanation of Benefits, and it's a piece of paper, and most people just file it. And so when one is getting healthcare, one doesn't have a connection to what is the product that I am receiving, and its quality and affordability, and what I'm going to pay. And so by changing the way we pay in the U.S., so right now we pay for volume. So the incentives in the system are incentives for doctors and providers to have volume. So if you come in, it's probably just as good as not as I will run the tests, you know, in terms of because that is how I'm paid, instead of being paid for your actual health. And so my interest in prevention, my interest in making sure that you have a limited number of tests, all those things, the economic incentives don't align with what many physicians wanted to do to practice anyway. So in trying to move from a situation where you pay for volume, transaction, to value, we will get those interests more aligned. And it's an important part of a suite of change that we hope can occur in the healthcare system. So the idea is to pay for the outcomes that consumers receive. So this is something I have a little trouble getting my head around. I think about another service industry, the restaurant industry. If I walk into a restaurant and order a cheeseburger at the end of my meal, whether I'm still hungry or whether I like the cheeseburger or not, I still have to pay for the cheeseburger that I bought. So how does a movement towards a pay for performance model fit with that kind of framework in which you do, in most other service industries, you do pay for what you consume? Here is the difference. When you ordered that cheeseburger, you knew what it cost. And so you were making a choice, actually, of the cheeseburger. Now the other issue of quality, whether you chose to look it up on any number of apps, you could have looked up and seen the quality. So price you can get from the menu. The other element of quality, even in restaurants now, is how many stars does it receive. We have great visibility. And so that's the part that we need to work on. And that's why actually, while the transformation in payment is extremely important, there are two other pieces that are very important to a transformation in the U.S. system. The second two pieces, so payment reform, a necessary but not sufficient condition. The two other elements that we believe are necessary and that we're working very hard to achieve are the elements of changing the way we deliver care. And it's basically how it is delivered. And what does that mean? That means more coordinated care or integrated care. So often, when you have care, the communication between providers is quite limited. And so there are things that could make your care better in terms of knowing if you're a diabetic and you're being seen for other things, knowing the other physician, even though it's a specialized something, if you have a break or something like that, that kind of information can be helpful to higher quality care. The other thing is prevention and wellness, which we don't focus on a tremendous amount in the system and need to. The third element in addition to pay and changing the way we actually deliver is information. And this gets to a little bit of the point about the cheeseburger and knowing is it a good one or not. And that's about the information and transparency in the system and providing information. One of the important parts of the Affordable Care Act that many people have not focused on is the push for transparency. And so the information that we now, even with Medicare and others, in terms of you can actually determine what physicians across the country were paid the most by Medicare. You can determine payment on drugs. What are the drugs that we pay the most for in Medicare? And getting that kind of transparency in the system. Also in the space of information, for you the individual consumer, electronic health records are very important. And now in the US, most hospitals, physicians actually do the record. But the interoperability and the use of those records for you a consumer, can you just push a button and have your entire record so that you can look at it and know? And if you had surgery X years ago, don't remember, could you just look and see? Or are you anything? You would have it. And also for your provider. And you see how this improves quality and affordability in a simple example. If you go to a clinic and you get referred to a hospital for some other service, often they'll repeat the tests. And that's because if you had an electronic health record, they would know you did the test. They would actually have the results immediately and that would be both quality and affordability. So a year ago, you set out ambitious goals for moving towards alternative payment systems. Describe the goals you set out and how are you doing? How close are you to reaching them? So for the first time in Medicare and in the US health system, we actually set a goal and said that we will move Medicare payments by 2016, by the end of 2016, 30% of those Medicare payments will be shifting to value versus volume. And by 2018, it will be 50%. I said the 2018 first, but then there was a question because obviously I will not be here in 2018. So we needed to set an interim goal for the end of this administration. You were already around 20%, I believe, when you set the goals? Yes, yes. And so I think we believe we are going to meet those goals and excited to do that. And important, it was important. So you'll be at 30% by the end of the year? Yes, yes, we will reach our goal. And the goal was important for two reasons. One, it was the transformation of us and us as a payer, because HHS is obviously a large payer in the system with Medicare. And so that was important because we're shifting those payments. And what that means in terms of providers knowing and understanding that a large part of their payments are going to shift this way. It was also about leading and indicating. And in this transformation, one of the things I think is important for HHS is figure out the places where you're supposed to lead. Figure out the places where we're in the way and get out of the way. And then figure out the places where our role as a convener and bringing folks together or supporting others' efforts, where they're leading, is the role we should play. And this was a place where it was both about what we were doing but also the signaling to the market. And so when we did this now, we know that others, whether they're insurance companies or the state of New York and its Medicaid payments, are committing to these kinds of goals. So let's talk a little bit about accountable care organization, which I believe are at the center of these efforts. How do they work and how are they working? So accountable care organizations are, what we're doing is we have an innovation fund that was created out of the Affordable Care Act. And it is money to support innovation and transformation in the US healthcare system. And so one of the things we're doing is funding accountable care organizations. And these are organizations that come together and try and shift that payment to a more value based payment. And so rewarded for delivering care at a cheaper price with same quality. So the accountable care organizations have two levers. One is quality, because one of the things, and this was also a condition of the statute, is you want to either maintain or have better quality. And then you want to see prices and costs go down. So those are the standards you're trying to meet. And in what we've seen, we have seen on most quality measures, we've actually seen improvement, no decline. And then in terms of the money that's being saved in these organizations, what we've seen in the hundreds of millions, about $400 million, as we've started through, it is the idea that you take the upside and the downside risk. And so these accountable care organizations right now, as we design them and the payments, you get part of the savings, that's what happens. You join and the government gets part of the savings and the accountable care organization gets part of the savings by maintaining quality but becoming more effective and efficient as they do it. And they usually do this by paying not in a fee for service manner. And are you finding that hospitals and providers want to be a part of these organizations? We've written some stories about some hospitals dropping out of them, because they don't like the new restrictions that they're facing, the command and control element that they face. Well, what we've found is a number that have stayed in and are in. And now as we have evolved and iterated, so one of the things that we have done is taken feedback. Feedback from those who've dropped out, feedback from those who are in and revised how we're doing them. And the demand in terms of what is basically the next round and the next iteration, we see more coming in in terms of the demand and their desire to do it. The other place where we are changing payment, the accountable care organization is one tool. Another tool is bundled payments. And bundled payments are the idea that you pay for what we call an episode of care. And to be very specific, we had experimented with this and had voluntary work in bundled payments for the knee and the hip. Because it is a defined episode and you can generally define quality, which is one of our biggest challenges. And so you can define it a little better. And so what we do is we pay for the 90 day episode. So that's from the point when you go in for your surgery to the point of which you have gone through most of your physical therapy. And so it is a bundled payment because the payment is for the entire hip replacement. So the anesthesiologist isn't paid that fee for that service. You have bundled the payment so it is one. And hips and knees in the US are a place where there was great variance in price and quality. And so it is a place where we believe by and we're doing a mandatory bundle. And so it is a demonstration and we have a set number of places in the country that will be doing these mandatory bundles. Should a provider in Flint, Michigan get the same payment for a hip replacement that a provider in midtown Manhattan get? The answer is, and it's interesting that you would mention Flint today. I think you know HHS has just now taken on the responsibility of the water issues in terms of working with the state in Flint. But the issue of that, actually the answer to that is probably no. But what that, it's because we have regional markets in the US. And so one of the things about the US market that is complex is that every market, it's state regulated. All of insurance is state regulated and there are markets. And so it should be based on what the costs are in that region. And so the question of what providers costs are in a region actually does vary, and so you won't have, and that needs to be set in ways that are aligned with the region. And when we do the accountable care organizations in the savings, it is done in a regional basis. So you align with provider competition. There are places where prices are higher because there are fewer competitors or for other reasons in terms of labor market. So I want to come back for a second to accountable care organizations. He says you got feedback from those who dropped out and those who stayed in. What kind of feedback did you get, particularly from those who dropped out and how are you responding to that? In terms of those who dropped out, some of that feedback I think had to do with the question of speed of change. And so an institution or a group of physicians or others ability to change quickly. And so the question of the speed with which we were requiring change. And so we've changed some of those things. You've slowed it down a little bit. In certain places, in certain ways. And especially the movement towards people are learning and get the upside benefit. And then over a little more time, they'll get the downside. So in a situation where you didn't create more efficiency or you didn't do other things, there would be financial ramifications. And that's evolving over time. It's also how you set the issue you were just talking about. The question of setting the price point to make the determinations. How you do that from a regional basis and also how you do it with players who were already accelerating. So if you were a player who actually was really cost efficient, your ability to achieve more cost efficiency may be more limited. And how is it considered that you're already a cost efficient player in your marketplace? And this is where the regional. And so those things and as we have gone through the process and that is a part of doing the demonstrations, iterating, and doing it quickly. And that's one of the things that I think is extremely important as we're working through this transformation is listening to the consumer and the consumer and those that are our clients as we do it. Does this approach get the consumer closer to being involved in the decision making? How does it get the consumer any closer than the old fee for service model? So in most accountable care organizations, they do integrated care. So in Montefiore up in the New York area have visited the hospitals and the kinds of things that it means when you have that integrated care. Let's say there I was taking my eight year old in for their regular wellness visit and for some reason they thought that the child might need to see someone in the behavioral health space. Well, because they know that they're being paid for the wellness, not for the transaction. They actually have on site and actually even now in a number of our clinics, our federal health clinics, you have a mental health professional. And that warm handoff occurs there. Because often in that kind of setting, in terms of how it interacts with the consumer and improves things for the consumer, if you are a parent, if you're a dad and you come in and I give you a prescription and you need to call a psychiatrist or a behavioral health professional and make an appointment to go see about your child, the likelihood that that actually happens and that it's easy and simple for you, you work. So you're gonna have to take another day off, you're gonna have to make another appointment, you're gonna have to call and get the appointments. And so that integrated care that occurs in these accountable care organizations is a part of what's happening. The other thing that we see in the providers that are making transformation, even in small practices, one of the things that they do is, they actually have people who interact with the patient on a more regular basis. The calls that many of us get for reminders for appointments now, it goes a step beyond that in terms of they are the people who say you're a cancer patient. And so you have to do a number of different chemo, radiology. And so you're working with different players and there's care coordination. There's actually an individual who's making sure, maybe we could get your appointments back to back so you don't have more than a half day off work. And so those are the kinds of things that make a difference to the consumer. I want to give the audience an opportunity to throw questions out here. A few, yes, let's start right there. I've got a question surrounding health savings accounts. And given the fact, relative to your initial comments about information, it brings the consumer directly into the cycle of information about the cost and value of healthcare goes in services and the government from what I'm reading is considering elimination of it. Can you address that? So health savings accounts do exist in a number of places, in a number of firms, in terms of tools that they offer for their employees to use them. And so people do use them and use them in varying ways. And part of a health savings account, part of it is the tax benefit that occurs in terms of it's not taxable in most places, but it doesn't resolve necessarily the hamburger problem. And so while a tool, one of the most fundamental problems is the connection between what am I getting and what am I paying for? The paying part, they're getting directly because of that, that's my point. But the cost in terms of as a provider, one of the difficult things in our system is when you go in, if I asked everyone in this room who's obviously interested in this issue, obviously, recently educated, and I asked you, what is your annual wellness visit cost? And no, and actually if I even just didn't ask you that, and if you're an American, if I asked you, can you tell me you're deductible, you're premiums, and you're co-pays? The lack, you don't have that knowledge, but it can't connect to anything because you don't know what that hip replacement costs. And so it's that connection that I think we think is extremely important. Health Savings Accounts are a part of informing people about what they're spending, but it doesn't do the other half of the equation. And what about this question about, I think you were asking what is, what's the prospects for health savings, are you looking at diminishing the role? Is that- That part, but I think maybe I'm not phrasing it correctly. If you look at the way most people access health care today- This will be the last question because- Okay, I'm sorry. So let's follow with that question and I just want to give other people a chance to talk about it. 80% of people are accessing care through companies, not purchasing plans on their own. They're paying a co-pay, generally, which is a fraction of the true cost of what they're shielded from. By having a health savings account, they're paying 100% of the bill up front. So they're learning about the true cost of a hip replacement, of an office visit, of a wellness visit. Without that vehicle, you're shielding people from the true cost of goods and services. It's interesting because when people need to know it, that is in certain examples, but one of the things we found in the marketplace, and I should remind everyone that the marketplace is open until January 31st. So if any of you know people that are uninsured, it is important to get it done before that day. But in the marketplace, what we actually see, so returning consumers, and last year, I said we'd end the year around 91 in terms of consumers, 9.1 million in the marketplace, of those consumers, 60% came in and shopped. And so in one sense, the marketplace consumer is a more advanced consumer, because they are concerned about exactly the issues that you are talking about. And so one of the things is facilitating an ability to do that. And last year, each year we do our surveys, we listen to the consumer. It was clear the consumer's ability to understand premiums, deductibles, and co-pays in their interaction was a challenging thing for everyone. So we have created a tool that is called an out-of-pocket estimator. And the amount that those tools are used for the consumer who is in and actually asking the questions that you're talking about. Does it help people if they're forced and they're forced to pay in that way? It is a tool, but I'm not sure that's the only problem and issue that we're working on, but to your point, we actually agree that people thinking about it is extremely important and they have to in the marketplace when they're coming in and getting individual care. They have not been forced to with employers. My question is about the debate going on in the United States about healthcare right now in the campaign. And there's been a portrayal that single payer proposals are in tension with the ACA or potential proposals. And your predecessor had said that, I think to NPR, that the ACA was designed to prevent single payer. I'm just curious from your perspective whether proposals for single payer in general are automatically in tension with provisions that are in the ACA or can they coexist or are they mutually exclusive? So with regard to where we are and what the Affordable Care Act created, it created a marketplace that has both government payment as well as market payment. And that's the system that we are in and that's the system that I think we're working hard to maximize for everyone. When you think about the system in the US in terms of this issue of payer and who is paying, because that's what this gets to, the truth is, is that we use a market and we use employer-based care and then we use other, but I think we also need to recognize, which is an important part that I think many people, many times we don't recognize, everyone in the United States is supported by the government in their healthcare if they have it in any form, in some form, most likely. There are a few people in the marketplace who aren't because they don't get the subsidies. But if you're, let's do it at the older end, if you're in Medicare, obviously you're being subsidized by the government. Let's just say you're an employer-based care. Well, the tax benefits are a huge subsidy that the American taxpayer is giving you for that care. Let's say you're in Medicare, Medicaid. Medicaid is being subsidized by the government and in the marketplace, 8 out of 10 folks in the marketplace have subsidies. And so this question, the system is, we have a system that is a dual system. Can states choose to do things within this system? Sure, but they have to meet pretty high standards. So that's probably the one answer. But overall, right now we are in a system that has a market and a system that has direct pay by the government. And that's a system we're working hard to make work. And what we want to do is work to make the system in front of us work. Because we've seen it reduce the uninsured by 45%. 17.6 million people are uninsured. We've seen progress on affordability and quality, but not as much as we'd like, which is why we're focused on the topic we are today. You mentioned employer-based tax benefit. Would our system be more efficient without that? I believe that it is, as we saw in the most recent conversations around the excise tax, I believe it is a part of the system. And it is a part of the current system in terms of how employer benefits are provided. Your question is related to that, the earlier question about HSAs. And I believe it is a part of the system. I think the question is how it works. And that was a part of the debate around the excise tax that I think got lost is what you want to do is keep that benefit, but make sure that that benefit is not doing two things. Driving up cost because it's a simple, because of the incentives in that tax benefit or putting downward pressure on wage. And so a tool, but you want to make sure that the tool hasn't shifted beyond its main function. So I want to talk a little bit about the spending and the spending curve. It had been declining after the passage of ACA in the wake of the recession, but some of the latest numbers produced by Medicare actuaries suggest that spending is going up, US health care spending is going up. What's the path that you say? So in terms of the spending issue, when you've insured and you're taking care of 17.6 million more people, one would expect what we want to keep our eye on is per capita cost. Having said that, overall trend is lower than the trend before the ACA, even when you've added 17.6 million folks. And so the per capita spend has been pretty consistent. We had an up year in the last year. I think we know a lot of that in terms of the contributions of high cost drugs, as well as, interestingly, in the Medicare space, the flu last year actually contributed. We actually had a very bad season of the flu. But I think the basic trends are below what they were before the passage of the ACA, even when you include for all of those people coming in. When you look at price, so you can look at per capita, you can look at this lots of different ways. But per capita is generally one of the best ways to look at it. The other is price. And in terms of price growth, we've had the lowest price growth in five decades in the nation. So one of the things that's a struggle for us in honesty is because we are comparing to what a historic numbers and people don't tend to focus on that. And when there is any increase, that is what is focused on. But we want to keep working. And that's why, as I said, we want to transform the system, because we believe that downward pressure on cost and upward pressure on quality is essential. Do we have any more questions here? I think this will be about the last question. We're a little short on time. I might be short. I have to apologize for a pedestrian question. Every year as a CEO, we have to look and figure out what kind of health care plan we're going to buy and provide for our 3,500 employees. And I get confused at that juncture. I get confused when we take my 13-year-old to the doctor and try to figure out what I got to pay and who to argue with. And everyone's saying they got the right answer. It doesn't match. And I'm still stuck on this hamburger question. I don't understand what would be different for me as a father, for me as a CEO trying to purchase a plan. The difference between paying for transactions and paying for value. What would I pay on the basis of in value? If I'm healthier, if my hip replacement went better, if my costs went down, if you could walk me through that, that'd be helpful. Because I'm confused by a lot of things. So there are actually, I think, two different parts of this that are there's the actual payment and there's the actual service. And so I think there are two places where we need improvement. So when you take your child in for whatever service that you've taken your child in for, let's just say it's something in terms of the testing and understanding what your child has and that sort of thing. The way you get and use that information, is talk about like the child and the service first. Having that information, I actually lived in a system where the electronic health workers actually worked reasonably well and my family was all in one system. And it was things like I went in, I got the flu. I went in and the nurse who happened to be a nun looked at the thing and she said, you had time to get your children vaccinated, you didn't get yourself vaccinated. You know, can you explain that? But her ability as a provider and then my ability to actually always have the information for my children or we've moved three times. We've moved three times since 2011. My ability every time to have the vaccination record for my children to go to the new school is like what it takes to get it is like incredible. I mean, and you know, even doesn't matter. You know, you have to get it, you get it printed out. It has to be faxed, faxed. You know, and how this works. And so that's that care part of it. With regard to what will be different for you in pricing, in terms of what you pay, hopefully it will be simple because you will pay less. And the reason that you will pay less is because when we aren't paying for service after service. So you come in and you come in and we look at you and you have an exam and I realize that, you know, there are tests you don't need. Instead of just giving you the test just to check, just to see that if I know I have a set amount of money to take care of you, I'm going to do the steps. As a physician, I'm gonna take the steps that I believe are right for you. And they'd be different than the steps for you because I know your history is a history of heart disease. Maybe you've told me that. And I can see that in the electronic health record so I don't have to ask you again when you come in. And so that drives down price. When we get to the point where we are not just doing, every transaction is what gets paid for. And that's how it translates. And hopefully in terms of what you see, what you're gonna see hopefully is downward pressure on price. And quality improvements because you don't get as many tests or the other example with whether it's records or the information you get. How do you see that different from the old HMO capitation model? I'm getting the hook from several people in the back. So I'm gonna let, if you all wanna talk about this afterwards, then that's great. But I think we have to give up the room. Is that what I'm hearing from you? Okay, we're a couple minutes over. But if you wanna keep talking about it, I'd encourage you to talk about it. Thank you very much. Thanks, Shawn. I appreciate it. Thank you. Thank you.