Tag Archives: High Value Care

Health Care Is an Investment, and the U.S. Should Start Treating It Like One

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https://hbr.org/2018/04/health-care-is-an-investment-and-the-u-s-should-start-treating-it-like-one

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We invest billions of dollars each year in medicines, new technologies, doctors, and hospitals — all with the goal of improving health, arguably our most prized commodity. Yet, investments in the U.S. health care system woefully underperform relative to those made in health care in other countries. For instance, the U.S. spends nearly 7–10% more of its national income on health care than other similar countries and yet life expectancy at birth remains, on average, two to three years lower.

To be sure, many factors influence health outcomes and the investments the health care system makes are only one input. But a large reason why investments in health care underperform is because we invest so much in services that are clearly low-value — i.e., offer little or no clinical benefit relative to the cost — and likely many more where the returns are gray. Investing limited health care dollars into low-value services crowds out our ability to spend on high-value services. So if we want to see better outcomes, we need to start to think like investors.

Examples of significant investments in low-value care services abound in the U.S. health care system, ranging from expensive imaging for benign medical conditions to routine pre-operative testing before low-risk surgeries like cataract surgery. Some research estimates that 42% of Medicare beneficiaries receive some form of low-value care.

Many factors contribute to our failure to disinvest from low-value services and invest more heavily in high-value services. For one thing, physicians, insurers, and patients often have limited data on the relative value of different health care services. There is an abundance of high-quality comparative effectiveness data for pharmaceuticals, largely because of the drug approval process, but there’s less data on the value of other expensive investments into health, such as doctor visits and hospitalizations. Put differently, there is no equivalent of the Food and Drug Administration for a large chunk of the health care sector, which means evidence on value in these sectors takes long to produce, in part because nobody requires that evidence to be generated. Furthermore, even when we have good evidence that a treatment or service is highly valuable, we frequently underuse it. Many medications for chronic conditions such as heart disease, e.g., statins, are routinely underused.

Physicians and businesses also generate income from performing low-value services. They may even be able to order these services themselves, effectively generating their own business. (For example, a cardiologist who performs and reads nuclear stress tests, which are frequently low value, has the ability to order these studies for his or her patient.) So reducing investments in low-value care services means spending less on doctors, hospitals, and other health care technologies. But, like pharmaceuticals, each of these entities is represented by powerful lobbyists (such as physician and hospital organizations), who will strongly oppose any steps to reduce payments.

Patients also frequently lack the information and ability to evaluate whether or not low value studies should be performed, and to hold their physicians accountable for choosing to provide low-value care. This issue is further complicated by the fact that labeling care as low-value is context dependent — advancing imaging for back pain is often not useful but sometimes it is. And moreover, some physicians may order unnecessary low-value testing because of the perceived threat of liability. Despite significant efforts to make physicians and patients aware of low-value services, we’ve observed little improvement in reigning in use.

Overinvesting in low-value services by physicians, payers, and patients leads to the underinvestment in high-value services. But affordability and timing is another critical issue that stymies investment in high-value care. Many high-value treatments take several years to yield significant health benefits. Because patients regularly change insurers, any individual insurer has less incentive to commit to investing in an expensive, high-value treatment if the return on investment could end up accruing to a competitor. Short-term budget constraints among both public and private insurers, and the fact that re-allocating resources away from low value services takes time, further limit investments in high-value services.

Consider, for example, the debate around the pricing of new Hepatitis C Virus (HCV) therapies. HCV is a chronic infectious disease that affects 3 million or more Americans. If untreated, HCV can cause liver dysfunction, liver failure, cirrhosis, and ultimately death. Until recently, the only available treatments for HCV were complex, multi-drug regimens with severe side effects and only modest efficacy. In the last half decade, however, several new HCV treatments have been developed with cure rates exceeding 90%. These new treatments typically cost $40,000-$50,000 per treatment course, but they have been shown to be cost effective over the long-term, as they can help patients avoid terminal liver disease, which is extremely expensive to treat, and reduce morbidity and mortality due to progressive liver disease.

Many physicians, experts in public health, and, of course, representatives of the pharmaceutical companies which produce these new treatments contend that these drugs should be made available to all patients with HCV who could benefit from them. But both private and public payers have raised objections over the price of these therapies, in large part because the population of patients who require treatment is so large. Payers contendthat they simply cannot afford to cover the cost of these drugs for all patients who are eligible for them and still provide coverage for other health care services that patients use. And state Medicaid agencies and small insurers frequently assert that short-term budget constraints prevent them from paying for costly, high value therapies like those for HCV.

In cases like this, it may be instructive to think about the circumstances through the lens of a portfolio manager who is choosing how to allocate investments. When given the opportunity to invest in an expensive asset, with high potential for significant future returns on investment, an investment manager would not pass it over due to lack of funds, because this capital could likely be acquired at a cost below the asset’s expected return. The manager would reduce holdings in investments with lower expected returns and re-allocate these funds into more promising investments. If the investment were valuable enough, the manager might even find ways to raise additional capital to invest in this asset.

In health care, this means at least two things: (1) wrestling with the factors that continue to promote use of low-value services (like lack of information and financial incentives for patients, and inappropriately structured financial incentives for physicians) and (2) recognizing that high-value investments often require large financial outlays today that ultimately reap future benefits.

Aside from reducing the use of low-value services, one potential solution is to identify and develop sources of long-term financing for high-value services. Mortgages exist to spread the costs of a home or a car out over a longer period of time, thereby allowing people to buy a product that they otherwise could not afford. Similar approaches could be used to help finance high-value health care investments that otherwise would be unaffordable.

For both public and private insurers, a long-term view should be feasible. State governments already rely heavily on capital markets to finance infrastructure investments and it’s quite possible that the returns on these investments fall below high-value health care investments like HCV drugs. Private insurers could also access private capital markets and design contracts with other insurers that allow them to partake in some of the long-term benefit of early high-value care when individuals switch between plans. For instance, an insurer that covers HCV therapy for an individual could, in theory, be compensated by future insurers, even Medicare, that treat that patient and benefit from that patient already being cured of HCV.

Ultimately, reducing investments in low-value care will require coordinated action from many actors. Patients and providers need more robust and up-to-date information on the value of different services. Insurers must look hard at the services they cover and discourage utilization of low-value services and encourage use of high-value services, even those that are high cost. Innovators developing new drugs, devices, and procedures should look beyond profits alone and incorporate the need to add value into their investments. And policymakers must create incentives for all of the above to consider value when making decisions about how to invest their health care dollars.

These actions are important because not only does underinvesting in high-value services make them less accessible, it may also make them less available in the future. Many expensive high-value treatments — like HCV therapies, new cancer treatments, and gene therapies — are the product of extensive research and development, which are undertaken because the expected returns are thought to exceed the known costs. A failure to reduce investments in low-value care and reinvest these resources in high-value therapies will reduce incentives to develop future therapies that can deliver significant value to patients.

 

 

 

Professionalism And Choosing Wisely

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http://www.healthaffairs.org/do/10.1377/hblog20171024.907844/full/

The US health care system is plagued by the use of services that provide little clinical benefit. Estimates of expenditures on overuse of medical services range from 10–30 percent of total health care spending. These estimates are typically based on analyses of the geographic variation in patterns of care. For example, researchers at the Dartmouth Institute focused on differences in care use between high-spending and low-spending regions with no corresponding reductions in quality or outcomes. An analysis by the Network for Excellence in Health Innovation (formerly known as the New England Healthcare Institute) identified significant geographic variation in the rates of both surgical and non-surgical services such as coronary artery bypass grafting, back surgery, cholecystectomy, hip replacements, diagnostic testing, and hospital admission.

This variance-based approach to estimating overuse has been very useful at highlighting the problem of inefficiency in the health care system but has done little to direct initiatives designed to reduce unnecessary tests and procedures. The aggregate approach does not help clinicians or managers identify exactly how they should change their practice patterns. As a result, it has been hard to reduce overuse. Identifying the significant overuse of medical services in the health care system is only the first step; now we need to develop evidence-based solutions to reduce unnecessary services and improve efficiency.

The History Of Choosing Wisely

The Choosing Wisely initiative, announced in 2012 by the ABIM Foundation and Consumer Reports, was designed to spark conversations among physicians, patients, payers, and purchasers about the overuse of tests and procedures, and to support physician efforts to help patients make smart and effective care choices. Specialty societies identified specific services that were unnecessary in specific situations. With more than 80 participating specialty societies, Choosing Wisely has identified more than 500 commonly overused tests and procedures and published recommendations for their proper use. For example, the American College of Emergency Physicians recommends avoiding computed tomography (CT) scans in low-risk patients with minor head injury.

The Choosing Wisely campaign began in an environment when efforts to reform health care were polarized by discussions of “rationing” and “death panels.” The initiative focused on quality, safety, and doing no harm to counter suspicions of dual agency and cost reductions motivated by profit; this allowed both the public and clinicians to begin to see reducing unnecessary care as in the best interest of the patient.

Choosing Wisely appealed to the professionalism of physicians and other clinicians as articulated in the Physician Charter on Medical Professionalism, which included a commitment to manage health care resources. The campaign was conducted in a way that respected the autonomy of physicians, relying on and enhancing their professional pride and sense of mastery, instead of functioning as yet another quality initiative imposed from above. Specialty societies took a leadership role in partnership with a wide swath of consumer and patient groups, helping physicians and patients accept the message of “more is not always better.”

Through Choosing Wisely, physicians were socialized toward a new norm in the culture of medicine against low-value care, which was reflected in the medical literature. From 2014 to 2015, the number of articles on overuse nearly doubled. The adage that “culture eats strategy every day” became a guiding light. Manya Gupta, MD, from Rush University Medical Center, summed it up as, “Once culture change starts, improvements become expected.”

The unexpected nature of societies taking the lead on this issue, potentially in conflict with their members’ economic self-interest, helped make the campaign stick. Similarly, the simplicity, concreteness, and credibility of the recommendations allowed them to be deployed in a variety of settings at a variety of levels in the organization.

Implementation has been accelerated through the support of the Robert Wood Johnson Foundation (RWJF), which has provided two grants to support putting the Choosing Wisely recommendations into practice.

Choosing Wisely In Action

The front line empowerment fostered by Choosing Wisely was evident when the University of Vermont Medical Center asked faculty and residents to submit ideas for high-value care projects targeting tests and treatments that could be performed less frequently. Interventions on seven projects were completed. Key reported outcomes included:

  1. a 72 percent reduction in the use of blood urea nitrogen and creatinine lab testing in patients with end-stage renal disease who were on hemodialysis and hospitalized;
  2. a 90 percent reduction in dual-energy x-ray absorptiometry (DEXA) screening on women ages 65 and older without clinical risk factors for osteoporosis; and
  3. a 71 percent reduction in the use of portable chest x-rays in mechanically ventilated patients who were not intubated that day and did not have a procedure performed.

Vanderbilt University Medical Center drove cultural change through a “challenge” to all house staff and residents aimed at reducing unnecessary daily lab orders. After educational sessions, teams were sent weekly emails on tracking use in a friendly monthly competition. This resident-originated focus and intervention resulted in significant reported decreases of daily blood counts and basic metabolic panels.

Crystal Run Healthcare, a multispecialty practice with 350 clinicians, also sponsored a contest designed to advance Choosing Wisely recommendations. Eric Barbanel, MD, a practicing physician at the clinic, was the champion for the winning project, which focused on four recommendations from the American Academy of Family Physicians. The interventions included peer education, clinical decision support, and data feedback. Decreases in annual electrocardiograms (EKGs), magnetic resonance imagings (MRIs) for low back pain, and DEXA screening were reported.

The campaign has also relied on regional health collaboratives to help drive local public awareness of the issue of overuse. Two grantees supported by RWJF, HealthInsight Utah and Maine Quality Counts, have used town hall meetings to engage in conversations with patients and the broader public about Choosing Wisely.

The Choosing Wisely campaign has focused first on adaptive change—on “why” there is concern about overuse by clinicians and patients, and on developing a consensus set of common values and purposes. The campaign has emphasized evidence about benefits and harms and the pursuit of enhancing quality, safety, and doing no harm. The aim has been to win both the hearts and minds of physicians so that they would be more engaged in improvement efforts, something often missing in efforts to change behaviors in clinical practice. The rapid introduction of purely technical solutions (that is, clinical decision support through electronic medical records) often alienates clinicians who don’t know the values and motivation behind the need for such solutions.

Remaining Challenges

Choosing Wisely has had some success in raising awareness of overuse and incorporating recommendations into practice. But results from national studies have been mixed, highlighting the need for further formal evaluation of the initiative’s impact.

More importantly, other strategies needed to complement Choosing Wisely must be jumpstarted. Specifically, more needs to be done to address some of the other underlying drivers of overuse in the health care system, notably perverse payment incentives; eliminating unnecessary services will be challenging as long as providers face financial incentives to provide more care and patients have no incentives to avoid care. Choosing Wisely is an attempt to change attitudes and mindset, but changing attitudes is hard when incentives are misaligned.

Payment reform can play a role in changing physician behavior by minimizing rewards for doing unnecessary tests and procedures. In fact, some evidence suggests population payment has disproportionately reduced use of potentially unnecessary tests and procedures. But it is not always easy to design payment reform such that the incentives are fully experienced at the point of care. Moreover, although evidence suggests these payment models lower spending without sacrificing quality, the effects have generally been modest and surely more could be done. And reinforcement works both ways: Just as payment reform can make the task of changing attitudes through Choosing Wisely easier, winning hearts and minds can amplify the effectiveness of any payment reform strategy.

Benefit design can also help reduce use of potentially unnecessary services by increasing patient out-of-pocket spending for those services. However, higher out-of-pocket spending can be a significant financial burden on patients, and in many cases they are not well suited to make nuanced decisions about care. Most evidence suggests that when faced with higher cost sharing, patients reduce use of appropriate and inappropriate care in similar proportions. Value-based insurance design (VBID)—which aims to increase cost-sharing for less effective treatments and decrease cost sharing for more effective treatments—can help encourage patients to specifically reduce overuse of low-value care. However, VBID is not a panacea and must be implemented in a way that avoids adverse selection and excessive complexity. Engaging clinicians in explaining and implementing benefit design changes will be necessary to help patients better navigate the choices they will confront.

Even if Americans were not grappling with high health care spending, avoiding potentially unnecessary services would be important. But with fiscal pressures driving changes by private and public purchasers that often have deleterious consequences, eliminating potentially unnecessary services—and thus delivering cost savings while increasing quality—is more important than ever. Choosing Wisely exemplifies efforts of the professional societies to engage on the issue; by appealing to the professionalism of physicians and other clinicians, it can provide the foundation for promoting delivery of appropriate care.

Professionalism as a force to improve quality has an opportunity to show its value along with the technical approaches and the environmental changes needed (for example, payment reform). The design of Choosing Wisely, which included few rules, much autonomy for engagement and design, and little central control, produced an activated professionalism. Appealing to the intrinsic motivations of physicians offers an underused path to achieve widely shared policy goals such as reducing the cost of our health care system while enhancing its quality. Professionalism can also appeal to patients and give them confidence in their physicians’ counsel that unnecessary care truly is unnecessary. Given the activity that has been unleashed in health systems and clinical practices throughout the United States, professionalism should not be overlooked as part of our broad health care transformation strategy.

Outcomes-Based Pharmaceutical Contracts: An Answer to High U.S. Drug Spending?

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http://www.commonwealthfund.org/publications/issue-briefs/2017/sep/outcomes-based-contracts-high-drug-spending

Abstract

  • Issue: Brand-name prescription drug prices are increasing in the United States, putting pressure on payers and patients. Some manufacturers have responded by offering outcomes-based contracts, in which rebate levels are tied to a specified outcome in the target population.
  • Goal: To assess the expected benefits and limitations of outcomes-based pharmaceutical contracts in the U.S., including their potential impact on prescription drug spending.
  • Methods: Semistructured interviews with payers, manufacturers, and policy experts.
  • Key Findings: Pharmaceutical manufacturers and some private payers are increasingly interested in outcomes-based contracts for high-cost brand-name drugs. But the power of these contracts to curb spending is questionable, largely because their applicability is restricted to a small subset of drugs and meaningful metrics to evaluate their impact are limited. There is no evidence that these contracts have resulted in less spending or better quality.
  • Conclusions: Outcomes-based contracts are intended to shift pharmaceutical spending toward more effective drugs, but their impact is unclear. Voluntary testing and rigorous evaluation of such contracts in the Medicare and Medicaid programs could increase understanding of this new model.

Background

In an era of rising health care spending and constrained budgets, U.S. policymakers and payers have tried to shift providers’ financial incentives from those that pay for greater volume of care to those that pay for high-value care. This move from volume to value is in its early stages, with most payment still based on old fee-for-service models.1

However, fueling the move to value-based purchasing are provisions in legislation such as the Affordable Care Act of 2010 and the Medicare Access and CHIP Reauthorization Act of 2015. These provisions encourage providers to participate in risk-bearing arrangements and institute programs that base Medicare reimbursement on patient clinical outcomes measures, such as hospital readmission rates. Private payers have initiated similar performance-based incentive programs and risk-sharing arrangements for hospitals and physicians.

In this vein, some pharmaceutical manufacturers and private payers are seeking to apply an outcomes-based pricing model to the prescription drug market. Prices for brand-name drugs have risen far above increases in the consumer price index.2 According to a Kaiser Health Tracking Poll, 77 percent of Americans consider prescription drug costs to be unreasonable.3 Prescription drug spending is mostly driven by high-price, brand-name drugs, which account for about 12 percent of prescriptions but 72 percent of total drug spending.4

One response to these high prices has been increased interest in outcomes-based contracts, which tie rebates and discounts for expensive pharmaceutical products to the outcomes observed in the patients who receive them. Outcomes-based contracts are touted as possible ways for purchasers — such as insurers and health care systems — to improve value. That is because under such contracts, purchasers pay more for a drug when it works and less when it does not. However, whether such arrangements can achieve this goal remains controversial.

To gain insight into the benefits and limitations of outcomes-based pharmaceutical contracts, we interviewed pharmaceutical economics experts and individuals involved in developing these contracts, including those affiliated with pharmaceutical benefits managers and health plans. In this issue brief, we review the main themes that emerged from these data and evaluate whether these arrangements can help improve the value of pharmaceutical spending.