Except for the pollen and allergies that plague quite a few of us, spring blossoms are a welcome sight. What else is blossoming? Studies about how to best use initial health spending data from 2020 to inform our approaches to care moving forward, along with efforts to use Medicare Advantage plans to eliminate low-value care and ways to create savings through accountable care organizations.

Digging Deeper

Is There a Real Advantage in Medicare Advantage?

Medicare makes efforts to cut back on low-value care, but despite the best of intentions, sometimes the attempts fail to make a significant impact on reducing this wasteful spending. In a study published in JAMA, researchers compared low-value care rates in traditional fee-for-service Medicare with Medicare Advantage (MA) plans between 2006-2015. In theory, the MA plans should have lower rates of wasteful spending because they are financially structured to drive costs down through capitated payments to providers, prior authorizations and by reducing unnecessary care while promoting more efficient primary care. But the incentives to drive costs down may not be helping to reduce low-value care. After sifting through nearly a decade of data, the authors found low-value care was similarly prevalent in fee-for-service and MA plans, suggesting that simply putting patients in managed care plans does not automatically reduce low-value care.

Why it Matters:
The researchers suggested several explanations for their findings, including the fact that providers in some MA plans do not offer incentives to clinicians to reduce low-value care and, in fact, many still pay providers by volume. Additionally, the authors point out that MA plans may not be strongly motivated to reduce low-value services, in part because the potential for cost savings are often modest. This research is a reminder that we continually need to be evaluating data about low-value care and looking even harder to develop incentives and payment models that will move care toward the kind that makes a true impact on patients and overall health spending.

How to Make Sense of 2020’s Health Spending Decline 

In 2020, health care spending declined dramatically as patients delayed care because of the pandemic. As we emerge from this public health crisis, authors at Altarum explored our changing patterns of health spending, acknowledging the challenge of knowing which spending reductions are temporary and which represent long-term declines. Notably, in the last five months, health spending is growing at a level similar to what it was before the pandemic, though the Altarum authors did conclude that some deferred care will never be delivered. Health spending also experienced above-average price growth, suggesting that spending is rising not because patients are needing more services, but that the cost of care is going up.

Why it Matters:
How do we make sense of all this spending data? The Altarum authors did not analyze whether there were specific harms or benefits associated with the lower spending. As we have previously discussed, some of the decline of health spending in 2020 could have serious impacts on patient outcomes with delayed diagnostic testing and treatments for chronic diseases like cancer. But can we also parse through these figures to find examples of where care that was delayed was actually unnecessary or low value? As our health system and economy recover from the COVID-19 and spending levels return to pre-pandemic norms, we must keep looking with a critical eye to identify areas where spending might be truly wasteful.

Medicare Sees Health Savings Via ACOs

In this special feature, Going Below The Surface Forum partner the National Association of ACOs shares a new analysis of how accountable care organizations (ACOs) have been living up to their promise of lowering the cost of health care while providing high-quality care for patients. Since their creation under the Affordable Care Act, ACOs have saved Medicare $8.5 billion and $2.5 billion after accounting for shared savings payments, shared loss payments, and discounts to the Centers for Medicare and Medicaid Services.

 

What We’re Reading

Cutler D. Building Health Care Better Means Reining In Costs. March 9, 2021, JAMA.

  • Harvard researcher David Cutler examined three areas the Biden administration should tackle to rein in health care expenditures. These include reducing administrative costs, cutting back on low-value care and curbing “excessively high prices” across health care services and drugs in the United States compared to other countries. Cutler argued the administration should pour as many resources into reducing unnecessary care as it has in fighting COVID-19 in order to promote “widespread economic prosperity.”

 

Kennedy K, et al. The Insanity of U.S. Health Care Pricing: An Early Look at Hospital Price Transparency Data, April 1, 2021, Health Care Cost Institute

  • The Health Care Cost Institute examined hospital price transparency data findings from San Francisco-based health system Sutter Health, finding huge variations in costs between insurers for the same procedures. The authors unpacked why the purpose of transparency regulation is less focused on influencing patient decision making, and more important for employers as they navigate prices across various payers to make coverage decisions.

 

Shafrin J, et al. For which diseases do broader value elements matter most? An evaluation across 20 ICER evidence reports. March 30, 2021. Journal of Managed Care & Specialty Pharmacy

  • When examining various disease areas, are some value elements more important than others? In a study published in the Journal of Managed Care & Specialty Pharmacy, researchers evaluated various value assessments from the Institute for Clinical and Economic Review and found value elements varied across different disease spaces including sickle cell disease, retinal diseases and diabetes. Though not always feasible, they highlight the importance of including a broad range value elements when measuring treatments for various diseases.

Dialogues on Health Spending

GBTS Forum partners are leading the way in conversations about health care spending, with a number of webinars and events planned during the next few weeks. Check out the listings below for opportunities to take part in the dialogue:

April:

May:

June: