Bill Pierce is a senior vice president in APCO Worldwide’s Washington, D.C., office. He specializes in advising health care clients; his work includes policy development, issue advocacy, message development, crisis communication and media relations.

At the opening session of the Microsoft^*Connected Health Conference, held this week in Chicago, former Tennessee Governor Phil Bredesen, current Virginia Secretary of Health and Human Services Bill Hazel and former HHS Secretary Mike Leavitt engaged in a discussion about the direction of health care reform. The session was moderated by Peter Neupert, corporate vice president of Microsoft Health Solutions Group.

Early in the session, Gov. Bredesen responded to Neupert’s question about how we get to a value-based purchasing system by stating, “We’re not going to see a change until we throw out the fee-for-service system.” Leavitt was even blunter. He called fee-for-service the “enemy” and went on to predict that in “five to eight years” fee-for-service will be a “substantially diminished” model of reimbursement. Leavitt pegged the growing consensus to abandon fee-for-service to economics, claiming, “Economics will drive it, not legislation or policy changes in Washington.”

The discussion quickly moved to Medicaid as the locus for change and in doing so reflected some of the debate going on in Washington. Secretary Hazel gave a hint at what Virginia is up to or at least wants to try. “We see the federal [reform] plan as fundamentally flawed since it is built on access only. The difficulty [in making it work] is that payment structures are too rigid.” He called for a “delink(ing)” of the federal payment structure, referring to Medicaid and its fee-for-service structure. He said Virginia was focusing on creating patient-centered solutions such as extending care coordination and care management models as well as medical home models.

Bredesen’s big push was for putting quality at the center of change, and he was more willing than Leavitt and Hazel to let the federal government define quality. We “need to be willing to write down what quality is. The feds can do this,” he said. “When Boeing builds a plane, we don’t let every welder, etc., do their job as they see fit. We make standards. Medicine needs the same.” Like the others, he then linked it back to economics, stating, “The reason health care costs so much is because we’ve taken out the economic tension. No one cares or knows how much [things] cost. We need to bring this back into the system, which quality can do.”

Hazel agreed. The “missing ingredient is a robust approach to quality in health care. We need to get serious about defining quality. If we can do this, we can tie a new payment system to it. The danger is we can go too far down the road of cost and not enough about quality.”

For anyone who has been around a while, this discussion should sound familiar. As we continue to discuss health care, a ghost is lurking about. And that ghost is managed care. Portrayed as the savior of rising health care costs in the mid-1980s, HMOs flourished and costs were held in check. However, this fact crashed headlong into another fact, which is that Americans don’t like to be told what to do, and HMOs did just that. So Democrats, seeing a political opportunity, framed managed care as denying Americans choice and in the process denying them care. Employers and health care companies eventually abandoned the model for the more loosely managed Preferred Provider Organization. The dominance of HMOs shrunk. However, prices rose. And while it was publically claimed, it was never actually shown that HMOs produced lower quality of care. In fact, many experts believed they delivered better care.

And that brings us to today. One of the most talked-about new ideas is the Accountable Care Organization (ACO) and its cousins — community health networks and medical homes. All share a common DNA of capitated care or a bundled payment, which reminds most of managed care. Though there is one difference and that reflects the new emphasis on quality, which in these new delivery models means paying based on improved outcomes. Most of the changes being discussed around Medicaid involve a return to managed care.

So the question is; have we learned any lessons from the HMO wars? It sounds like this panel thinks we did. While these new arrangements all “manage care,” quality now leads with cost control a bi-product of improved quality. The new models also better align participants so they are no longer at odds with one another as they once were.

What is unknown is how the public will react. If they react poorly, will the delivery of our health care become another political football? Can we afford that happening again?

* APCO client