Reimbursement

Can Price Transparency in Health Care Really Lower Costs?

By M2|2019-08-21T14:53:39+00:00August 20th, 2019|Health care spending, Health Care Trends, Hospitals, Insurance, Out-of-pocket spending, Physician-patient communication, Providers, Reimbursement, Uncategorized|

Can Price Transparency in Health Care Really Lower Costs?

Telling patients what they will pay for their health care services is a key stepping stone to more efficient use of health care dollars. Consumers, employers, payers, and the system as a whole would likely benefit if the true cost to the patient were made available before a patient receives a health care service or product.

Several states already have laws on the books requiring health care providers to make at least some price information available on at least some procedures. Some states also run centralized databases where different payers report what they get paid for different services. Additionally, the federal government requires hospitals to post a list of standard charges on the internet.

The Trump Administration wants providers to further expand the price and quality information to consumers, and issued an Executive Order (EO) on Improving Price and Quality Transparency in American Healthcare to Put Patients First in late June. The order aims to help consumers make “well-informed decisions” and expand transparency efforts that provide information “which patients can research and compare before making informed choices based on price and quality.”

More specifically, the EO directs the U.S. Department of Health and Human Services (HHS) to require hospitals to publish negotiated rates in a searchable, consumer-friendly format for 300 “shoppable” services.

You Can Shop if You Want To

Consumers are being asked to make more of these decisions on their own, as we’ve described in previous posts. My home state of Colorado has a shopping tool like the one the EO has in mind. It took me less than a minute to get the result below from the Colorado Center for Improving Value in Health Care (CIVHC) for an MRI scan of a leg joint within 15 miles of my ZIP code:

Shop for Health Care Services – MRI Scan, Leg joint (CPT 73721)

Seems pretty obvious that while the closest option, seven miles away, is Centura Health St Anthony Hospital, they would charge me $510 for the scan. If I drive another five miles, I would only have to pay $150 at Denver Health Medical Center.

“Shoppable,” but Perhaps Not “Buyable”

According to the Health Care Cost Institute (HCCI), “For a health care service to be ‘shoppable’, it must be a common health care service that can be researched (“shopped”) in advance; multiple providers of that service must be available in a market (i.e., competition); and sufficient data about the prices and quality of services must be available.” HCCI estimates that approximately half of out-of-pocket spending is spent on “shoppable ambulatory doctor services.”

The problem is, you might be able to research and compare certain services with upgraded information, thus improving your shopping experience, but you might really struggle to buy the service that is lower in cost.

Using the example of lower-limb MRIs, a 2018 study titled Are Health Care Services Shoppable? Evidence from the Consumption of Lower-Limb MRI Scans found that people typically drive by multiple lower-priced providers to get to their final treatment location. Why? Because that is where the patient’s referring provider sends them. The study shows “the influence of referring physicians is dramatically greater than the influence of patient cost-sharing or patients’ home ZIP code fixed effects.”

In particular, “physicians who are vertically integrated with hospitals are more likely to refer patients to hospitals for lower-limb MRI scans.” We’ve written previously about how costs vary dramatically by site of care. That also means patient cost-sharing varies. We are asked to pay more out-of-pocket for a service we could get elsewhere. But that would mean 1) shopping and 2) acting against the advice of a provider. Not impossible tasks, but difficult for sure.

Increased transparency means you can shop for services, but that is only half of the problem. Yes, it is important to have price and quality information. If the problem were a technical one, more information would lead to different decision making. But in fact, changing the way a consumer selects a health care service – even a “shoppable” service – is an adaptive problem. That is, it requires a change in the way people think, prioritize, and behave.

Additional information on quality and price is definitely necessary, but if I drive by two Centura Health facilities with lower cost MRIs to get to the HealthOne facility my referring provider recommended, I would also need some encouragement, at least, to go against my physician’s recommendation.

It looks like we health policy types have more work to do.

Who Should Be Allowed to Help Patients Pay Health Costs?

By M2|2018-06-06T17:07:51+00:00June 6th, 2018|Health care spending, Health Care Trends, Health Reform, Insurance, Medicaid, Medicare, Out-of-pocket spending, Reimbursement, State Health Initiatives, Uncategorized|

Who Should Be Allowed to Help Patients Pay Health Costs?

If you can’t pay your health insurance premium, should you be allowed to have someone else pay it for you? What about your deductible? Your co-insurance or a copayment? These might seem like trick questions, but no. There really are circumstances when a person can’t receive help for health care costs. In the past few years, this has become a hot topic in health policy circles as health care costs continue to rise. At issue is a fundamental question we have considered before: whose health care costs should be managed, those of the healthy or the sick? Is it better to have sick people pay more so that healthy people who buy insurance can keep their premiums low? Or is it better to spread catastrophic health costs across larger pools of people so everyone pays a little in order to avoid ever paying a lot?

Third-party payments: Friend or foe?

When the Affordable Care Act was being debated nearly a decade ago, the American Enterprise Institute correctly pointed out, the entire U.S. health care system “relies on a third-party payment system.” That is, either individuals or employers make payments to insurers who in turn make payments to health care providers, or taxpayer money is used to pay health care providers who care for people covered by Medicaid, Medicare, TriCare or other public programs.

While the big picture debate of how to finance and provide health care services and for whom continues, this blog is focused on a more specific type of third-party payments (TPP). Right now, states and the feds are being asked to weigh in on which third parties should be allowed to pay insurance premiums or healthplan-required cost sharing, for example, a deductible or a health care service or product copayment. The debate at this moment is focused on people with chronic, severe, or expensive health care needs – people who need kidney dialysis, for example. The feds have been trying to work out guardrails since 2013 related to whether a third-party organization can pay for a person’s premiums in the state insurance exchanges. (For a deeper dive, go here). California has also joined the fray and is considering a bill, SB 1156, “Health care service plans: 3rd-party payments,” setting forth who will be allowed to make TPP for health insurance premiums.

Representing the “foe” side is America’s Health Insurance Plans (AHIP). A recent brief titled “How Third-Party Premium Payments Can Harm Consumers and Destabilize Markets” argues that TPPs from “entities steering Medicare and Medicaid eligible beneficiaries into qualified health plans (QHPs) sold through the Affordable Care Act (ACA) marketplaces…can increase the number of older and less healthy individuals in the individual market risk pool, resulting in higher premiums for all consumers and further destabilizing the market.” In support of SB 1156, the California Labor Federation presents a similar point-of-view, arguing that allowing TPPs of premiums for individuals with chronic or severe illnesses “also shifts costs onto commercial plans, driving up health care spending and increasing premiums for Californians already struggling with rising costs.” Who should pay when a person is sick? Is it always the better choice to shift costs to taxpayers by requiring a person who needs dialysis to enroll in Medicaid or Medicare, as AHIP suggests? How should we balance the interests of individuals and employers who want low health care premiums with the needs of patients with high health care costs?

Representing the “friend” side is The Commonwealth Fund in “Assessing the Promise and Risks of Income-Based Third-Party Payment Programs.” Their brief acknowledges the policy debate outlined above regarding TPP programs serving patients with specific health diagnoses, but focuses on TPP programs that address health care costs for a different population, noting, “History suggests that TPP programs can address low-income consumers’ affordability concerns on a large scale.”

Many of the guardrails set forth by The Commonwealth Fund parallel the California bill, including basing eligibility for TPP on income and paying “consumers’ premium shares from the point of enrollment through the end of the coverage year, thus preventing short-term enrollment that ends once a course of treatment is complete.” These guardrails seem to address several of the foe’s concerns. First, basing TPP on income means both the healthy and the sick can gain access to health insurance, which makes it much less likely that premiums rise due to a sicker risk pool. Second, AHIP argues consumers can be harmed “particularly if the third party stops making premium and cost-sharing payments once initial treatment is received, which could result in serious or life-threatening interruptions in access to care.” Requiring entities that provide TPPs to pay for more than just initial treatment addresses the foe’s concern.

I’m an aunt. Can I pay for my nephew’s prescription drug cost sharing?

One of the remaining concerns at the heart of TPP for health insurance premiums or health plan required cost-sharing (such as co-payments) relates to whether the organization making the TPP is motivated by financial gain or is steering patients to specific health care products, services, or providers. Federal law prohibits most TPPs in federal health programs, for example, Medicaid and Medicare, considering the TPPs to be in violation of one or another fraud and abuse law, such as the Anti-Kickback Statute and the Physician Self-Referral Law (Stark law).

While it makes sense that a health care provider should not be allowed to accept bribes, it is much less clear who should be allowed to help patients pay health costs. The way the U.S. health care system works today, if a person is not eligible for government-sponsored health care (for example, through Veterans Affairs, Medicare, or Medicaid) and they cannot pay for individual health care costs, whether premiums or cost-sharing such as copayments or deductibles, the person can usually be denied care. To be clear, AHIP is arguing that private entities, or groups of people, cannot come together and help such an individual make the health plan-required payments. The California bill says, “Any member of the individual’s family” can make a TPP, but then goes on to define “family” only to “include the individual’s spouse, domestic partner, child, parent, grandparent and siblings.”

This begs the question of what should be allowed when it comes to TPPs. What entities should be allowed to pay for patient’s health care costs?

Medical crowdfunding, such GoFundMe campaigns?
Health care sharing ministries?
Contributions gathered voluntarily by employees to help a co-worker with cost-sharing requirements? Or by a congregation to help a fellow churchgoer?
Employer emergency funds?
Family members helping family members, (let’s say Aunts, for example…)

It is quite clear that the alternative to the TPP being made is no payment being made, which certainly would cause an interruption in access to care for the patient who needs it. Like most health policy issues, TPPs can be either friend or foe and a one size fits all policy won’t work. Creating guardrails focused on allowing entities, including those in the list above, help patients pay their medical bills should be paramount.

Rising obesity rates indicate the need for improved insurance coverage of proven effective treatment options, both medical and surgical

By M2|2018-02-21T15:54:35+00:00February 21st, 2018|Health Care Trends, Health Plans, Insurance, Reimbursement, Uncategorized, What do we pay for and why|

Rising obesity rates indicate the need for improved insurance coverage of proven effective treatment options, both medical and surgical

Mortality improvements in the U.S. have declined relative to other wealthy countries, and a new study points to obesity as the culprit.

“Rising levels of body mass index [BMI] have prevented the United States from enjoying the full benefits of factors working to improve mortality,” according to study author Samuel Preston, professor of sociology at the University of Pennsylvania, et al. The study is published in the Proceedings of the National Academy of Sciences, as noted in a recent article in HealthDay.

In addition, according to the article, rising BMI has “reduced the annual rate of improvement in U.S. death rates between 1988 and 2011 by more than half a percentage point—equivalent to a 23% relative reduction in the rate of mortality decline—a large amount by international standards.”

“Heart disease deaths had declined consistently for nearly 40 years,” the article notes. “These declines have slowed or stopped altogether” and “rates of decline in cancer deaths have also slowed,” the article says. “At the same time, rates of obesity have been rising in the United States. From 1976 to 1980, 15 percent of Americans were obese. By 2014, 38 percent of Americans were classified as obese.”

The study’s researchers evaluated how much of the change in the death rate trend could be explained by rising BMI, and found that the increase in BMI reduced life expectancy by 0.9 years, almost 11 months, at age 40, and accounted for 186,000 excess deaths in 2011.

Despite rising obesity rates, another new study finds that many obese patients are not receiving antiobesity medications – and patients who are being prescribed medicines may be getting them because of provider bias. 80 percent are women, although obesity rates are similar for men and women in the U.S.

Fewer than 1 in 50 people in the U.S. eligible for antiobesity medications are receiving them, according to an evaluation of electronic records conducted by University of Colorado endocrinologist David Saxon, MD. Patients above a specific BMI threshold are eligible for weight-loss medication, but only 1.3% had received any prescription from 2009 to 2015, a recent Medscape article notes.

In addition, among patients who had received a prescription, 85% of the prescriptions were for phentermine, as opposed to newer agents. Primary care providers were most likely to prescribe these drugs.

Patients want “more information from their physicians about these medication options but there’s rarely the conversation,” Saxon says in the article. “Patients are probably more interested in them than the 1.3% who are receiving them.”

My friend and colleague, Scott Kahan, MD, is the director of the National Center for Weight and Wellness, and the medical director of Strategies To Overcome and Prevent (STOP) Obesity Alliance at George Washington University. Kahan explains that physicians historically have received little training in obesity management, and may hold misperceptions about obesity medications, including that they are unsafe, ineffective, or not well-studied.

“These misconceptions are likely a legacy of older medications that had lesser requirements for approval and were likely misused,” Kahan says. Another issue is lack of insurance coverage.

Yet another successful obesity treatment option is surgery. Two recent studies published in the Journal of the American Medical Association (JAMA) compared Roux-en-Y gastric bypass (RYGB) and sleeve gastrectomy in morbidly obese patients.

First, researchers at St. Claraspital in Basel, Switzerland, conducted a randomized trial of morbidly obese patients to determine whether there are differences between the two surgical options, in terms of weight loss, changes in comorbidities, increase in quality of life, and adverse events, as noted in an article in The Clinical Advisor. Excess BMI loss was not significantly different at 5 years: 61.1%, with sleeve gastrectomy vs 68.3% with RYGB.

In the second study, researchers in Finland also studied morbidly obese patients to examine the clinical equivalence of the two surgeries. The trial found the estimated mean percentage excess weight loss at 5 years was 49% with sleeve gastrectomy and 57% with RYGB, with no statistically significant difference in quality of life between groups and no treatment-related mortality. At 5 years, the overall morbidity rate was 19% and 26%.

In an accompanying editorial, David Arterburn, MD, MPH, and Anirban Gupta, MD, state that “these and other studies suggest that sleeve gastrectomy and bypass are overall quite similar in terms of their effects on weight and comorbid conditions through 5 years.” They also note that “these procedures may be associated with improved long-term survival compared with usual medical care. Overall, it seems that both procedures are excellent options for surgeons and patients to consider in the treatment of obesity.”

With the slowing gains in life expectancy in the US linked to obesity, patients need their insurance plans to cover effective treatment options. If these options are going to be accessible for patients, insurers will need to have reasonable coverage and reimbursement policies in place; today, with FDA-approved drugs available to treat obesity and promising research showing that the sleeve and bypass surgeries are two excellent options, we need policies that encourage use of both drug and surgical approaches.

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

By M2|2018-01-03T21:04:29+00:00January 3rd, 2018|Health Reform, Innovation, Reimbursement, Uncategorized, What do we pay for and why|

Innovation Series: Gene Therapy

Scientific Breakthroughs: From Gene Therapy to Creative New Approaches to Cancer Surgery, Patients Stand to Benefit Dramatically, But How Will We Pay For This Innovation?

From gene therapy to a “pen” that can detect cancerous tissue in 10 seconds, we live in a time of amazing scientific breakthroughs. Advances in technology and our understanding of the genetic basis of disease are resulting in a range of innovations that hold the promise of improving our approaches to treatment – including things like new treatment options for rare diseases and improving the likelihood of success of something like cancer surgery. As we kick off 2018, I wonder what great new innovations the year will bring?

As just one example of innovation, consider the field of gene therapy: early last year the FDA approved the first gene therapy, Novartis’ Kymriah (tisagenlecleucel)‎, bringing “hope to the 3,100 people under the age of 20 in the United States who are diagnosed each year with acute lymphoblastic leukemia,” as the pharmacy benefit manager (PBM) Express Scripts describes in a recent post on its web site. Kymriah is “customized for each individual, using genetically modified versions of the patient’s own immune cells to target and kill leukemia cells.”

Gene therapies “are administered once, unlike nearly all other medications that are repeatedly taken over time,” Express Scripts notes. “And therein lies the challenge.”

The promise of gene therapy comes with a “dramatically higher price;” for example, Kymriah is priced at $475,000. Not only is this price significantly higher than more traditional types of drugs – it’s also much higher than other specialty drugs, the PBM says.

Paying for these types of breakthroughs will present challenges. “Pharmaceutical companies have a single opportunity per patient to get paid,” and “many gene therapies target extremely rare diseases, so there aren’t many patients to share the cost drug makers require to justify the expense of research, development and commercialization. The result is very high price tags,” Express Scripts says.

“The health care system isn’t set up for this type of economic model. Thus, making these therapies available to patients “requires novel collaboration,” the company says. A “new payment model” is needed, and Express Scripts is working with drug companies, policymakers, patient groups and payers on “innovative approaches to make gene therapies accessible for patients.”

For example, value-based contracting can “ensure that payers and patients aren’t on the hook when a treatment isn’t effective. Consultations involving pharma companies and payers can help set appropriate prices.” And “discussions with policymakers can help set an appropriate regulatory framework.”

“Ultimately…gene therapies will require payment and patient care systems which are as novel as the medications themselves,” Express Scripts says. “Ideas on the table include paying for a treatment over time, establishing insurer risk pools and financing one-time payments. A successful model must address patients who change insurers or employers, and tracking their health outcomes over time to ensure payments aren’t being made if the treatment stops being effective.”

What do all of these new and potentially lifesaving innovations mean for the health care system? As with any innovation that offers new hope for patients, there will likely be high demand, but that will have to be considered in the context of limited resources. We are witnessing significant new innovations and scientific advancement; the usual questions of access and how to pay for it will be dramatically amplified in this modern era, given the unprecedented price tags. Particularly in the case of gene therapy, this may require new types of conversations and collaborations between drug developers, payers and patients, along with new payment approaches.

Chronic Knee Pain: Internet-Delivered Exercise and Pain-Coping Skills Work Well for Patients, But Will Payers Cover It?

By M2|2017-10-09T01:54:34+00:00April 27th, 2017|Chronic pain, Evidence-Based Medicine, Reimbursement, Uncategorized, What do we pay for and why|

Chronic Knee Pain: Internet-Delivered Exercise and Pain-Coping Skills Work Well for Patients, But Will Payers Cover It?

Knee pain has increased in the past 20 years, and researchers have connected this increase to aging and obesity. Perhaps more importantly, the increasing prevalence of knee pain has led to a surge in knee replacements. This highlights the growing need for effective, accessible treatments to manage chronic knee pain on a population level. In light of this need, researchers at the University of Melbourne conducted a study of Internet-delivered exercise and pain-coping skills training.

The study, published in the Annals of Internal Medicine, found that for people with chronic knee pain, Internet-delivered, physiotherapist-prescribed exercise and pain-coping skills training (PCST) provide “clinically meaningful improvements in pain and function that are sustained for at least 6 months.”

The Internet-delivered interventions included seven videoconferencing (Skype) sessions with a physiotherapist for home exercise, a PCST program and educational materials, delivered over a period of three months.

At three months, the intervention group reported “significantly more improvement in pain” compared to the control group, Kim Bennell, Centre for Health, Exercise, and Sports Medicine, University of Melbourne, at al., say.

The intervention group also showed improved physical function versus the control group and improvements were sustained at nine months.

The intervention group also reported high levels of satisfaction, and had high rates of completion; 78% accessed the educational materials, with an average of 6.3 of seven Skype physiotherapy sessions completed, and an average of 6.4 of the eight pain management modules completed.

This study sheds light on an important challenge for the U.S. health care system; chronic knee pain, is “associated with significant disability and decreased quality of life,” as noted in an accompanying editorial by Lisa Mandl, Hospital for Special Surgery/Weill Cornell Medicine.

“With the aging of the U.S. population, the medical community has braced itself for a tsunami of elderly patients with chronic knee pain – a reasonable response to the projection that almost half of U.S. adults will develop osteoarthritis in at least one knee by age 85 years,” she says. In addition, 50% of people with symptomatic knee osteoarthritis are younger than 65.

“These patients will need effective pain therapy for decades,” Mandl says. “Because osteoarthritis currently has no cure, these demographic characteristics guarantee that a large and diverse cohort of patients will be seeking treatment for chronic knee pain well into the foreseeable future. Therefore, there is a clear and pressing need to identify effective, inexpensive, and low-risk strategies to improve pain and decrease disability in these patients.

The results are also interesting given that “existing therapies have many drawbacks,” as noted in this article on the study. For example, current treatments have adverse effects or may be “cost prohibitive,” and “non-pharmacological therapies, such as physiotherapist-directed exercise and pain-coping training, may be difficult to access, especially for those in rural areas.”

“These results are encouraging and show that ‘telemedicine’ is clearly ready for prime time,” the study authors say. “An Internet-based intervention circumvents multiple issues related to access to care, making this an inexpensive and easily scalable option for people living in remote areas or any location with an inadequate supply of health care providers.”

This study is an excellent example of evidence-based medicine; the Internet-delivered intervention is a low-risk approach that is clearly preferable to knee surgery, and one that improves access for patients, particularly those in rural areas. However, the key questions are: Will U.S. insurers pay for it? And will physicians be willing to perform this service?