Going Below The Surface Enewsletter – March 2021
March 17, 2021
Daffodils and crocuses are just starting to poke out of the ground, but health spending research is already in full bloom. This month, we spring into efforts to mitigate low-value care in our health system and consider interventions to curb wasteful spending.
Former Sen. William Frist (R-TN) examined in a Health Affairs blog post how administrative costs such as billing and prior authorizations raise health spending without adding substantial value. Frist suggested several options to trim these costs, including streamlining prior authorizations using existing electronic medical records, improving quality reporting, and creating a centralized clearinghouse to standardize the electronic transmission of billing information. Trimming administrative costs seems like a fairly straightforward approach to tackling wasteful spending. However, more complicated culprits of high health care costs remain.
Researchers from Harvard, Yale and Columbia Universities examined whether privately insured patients would shop around for the best deal when they needed to receive a lower-limb MRI. This type of health care service is considered “highly shoppable” because it’s scheduled in advance, and there is little variation in clinical quality between locations. Yet the research showed patients really didn’t do much actual shopping. The determining factor for patients, according to the study, was not out-of-pocket costs, price or even convenience, but instead, where their physician referred them. Less than one percent of the patients studied used an available price transparency tool to estimate their MRI expenses. Notably, patients in the study bypassed six cheaper and closer clinics to their homes on their way to a higher-priced physician-recommended site.
Why it Matters:
As Frist wrote, cutting out administrative waste, though simple in concept, can be challenging to operationalize. But, in some cases, what causes the “waste” can be less obvious. In the MRI study, patients of physicians in hospital-owned practices were more likely to be referred to a hospital-based imaging center, where MRI prices are 2.3 times higher than in free-standing centers. This study illustrates that low-value care can lurk in less obvious places and all stakeholders have a role in eliminating waste.
We know that low-value care can be stubbornly persistent, even when we implement targeted interventions. A recent publication from the RAND Corporation found that a national campaign to educate clinicians and increase the use of payment revisions to discourage waste had little impact on low-value care spending among fee-for-service Medicare recipients between 2014 to 2018. A separate study conducted by the organization examined whether the use of high-deductible health plans could be a tool to limit wasteful spending. After examining individual-level insurance claims between 2008-2013, the researchers found companies that offered high-deductible plans had a 13.7% reduction in average enrollee spending on low-value outpatient services and a 5.2% reduction in overall outpatient spending.
Why it Matters:
Both interventions attempted to address low-value care differently. Though the findings showed marginal reductions in expenses, the outcomes were nevertheless still important. The research serves as a reminder that progress in addressing low-value care may be slow. Improving the health care ecosystem is complex, with many confounding factors contributing to wasteful spending. However, even small reductions in low-value care can serve as the foundation for larger, evidence-based reform.