Life Science Compliance Update

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April 12, 2018

How Can We Increase Value and Monitor / Lower Costs?

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Health Affairs and the National Pharmaceutical Council held a briefing focused on efforts to increase value and monitor costs on February 1, 2018. Alan Weil, JD, editor of Health Affairs highlighted the importance of continuing to publicly speak about the issue and look for solutions. "As hard as it is to talk about health costs and as hard as it is to do something and to reach consensus, the consequences of not doing so are really profound," he said.

National health spending reached $3.3 trillion in 2016, a 4.3% growth rate compared to a 5.8% growth rate in 2015. In response to the growing costs of healthcare, the American Board of Internal Medicine (ABIM) started an initiative, “Choosing Wisely,” in 2012, in an attempt to address low-value care by identifying unnecessary interventions early. Results from the Choosing Wisely campaign, however, have been lackluster. Recent research on the effectiveness of the effort suggests only a 3-5% reduction in the use of the low-value services surveyed.

Corinna Sorenson, PhD, MPH, is currently at Duke University researching possible barriers to reducing low-value care, including abstract challenges (i.e., cultural attitudes, lack of political will) and more obvious challenges (i.e., complications inherent in the fee-for-service system). Sorenson and her team are delving into scientific literature and interviewing thought leaders in the world to come to some conclusions.

Another intervention – hospital value-based purchasing (VBP) arrangements – has not shown a substantial impact, either, unfortunately. Ashish Jha, MD, MPH, of the Harvard T.H. Chan School of Public Health, notes that mortality rates have been falling since before VBP and that “basically nothing has happened.”

Other well-intended efforts have fallen flat to say the least, and may even have had some unintended consequences. The Hospital Readmissions Reduction Program, an initiative introduced by the Affordable Care Act (ACA) has been somewhat successful in reducing unnecessary admissions; however, Jha noted that it is possible the reductions may not be due to the program, but instead due to changes in coding. Jha also noted (morbidly) that other research shows that mortality rates increased when readmission rates decreased.

Positive Approaches

As for other value-based approaches, Jha suggested that accountable care organizations, whose numbers have grown -- from about 220 in 2013 to 561 in 2018 -- may represent one bright spot in the healthcare system. ACOs should include financial incentives on the patient side that dovetail with incentives on the provider side.

According to Katherine Baicker, PhD, "If we have both of these together [patient and provider incentives] ... then we can get higher value care that may not be cheaper. I'm perfectly fine spending as much money as we are on healthcare, if we were getting more health for it."

Jha also highlighted bundled payments, noting that most well-designed studies on such bundles show a 2%-3% reduction in costs. Most of the savings are due to reducing post-acute care costs, he said.

Conclusions

Insurance plans should be mindful of the impact of cost-sharing because, as Baicker notes, "There is ample evidence that when patients have to pay more for care, they consume less of it.” This can, however, result in patients not paying for lower-value care and skimping on necessary services and treatments. Financial incentives on both sides of the equation may be the key to increasing value while monitoring increasing healthcare costs.

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