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.

Digging Deeper

Sniffing Out 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.

Chipping Away at Low Value Care, One Study at a Time

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.

What We’re Reading

  • Whaley CM, et al. An Employer-Provider Direct Payment Program Is Associated With Lower Episode Costs, March 2021, Health Affairs
    In this Health Affairs study, researchers investigated the impact of bundled payments on orthopedic and surgical procedures in commercially insured populations, finding a dramatic decline in episode prices for three of the procedures. Reducing health care costs is a win across the board, but it is particularly critical for employers, who saw 85% of the savings in this study.
  • Chernew ME, Pany MJ. Regulation of Health Care Prices: The Case for Backstop Price Caps in Commercial Health Care Markets. March 2, 2021, JAMA
    In a JAMA Viewpoint article, Harvard researchers consider an incremental approach to address rising health care prices. They proposed implementing backstop price caps for hospitals, which can help control costs and even strengthen competition among health systems. The authors concluded, “caps on the highest prices and price growth could act as a backstop to curb the most egregious market failures without significantly constraining pro-competitive reforms.”

 Dialogues on Health Spending

  • Public-Private Sector Partnerships: Health care policy experts gathered for a panel discussion at the AcademyHealth 2021 Datapalooza and National Health Policy Conference in February to discuss key questions regarding government funding for research, vaccine pricing, incentives and innovation. Read our takeaways from the panel.
  • GBTS and HLC Host National Strategy Meeting: Going Below The Surface (GBTS) and the Healthcare Leadership Council hosted a national strategy meeting of key leaders to share best practices on how to curb health spending in their communities. Interest in sharing resources and initiating dialogue about the issue has not waned, despite other priorities resulting from the pandemic. Be sure to check out the resources posted on the GBTS website.
  • Spring Meetings: GBTS Forum partner organizations are hosting meetings this spring, offering opportunities to connect with fellow health care stakeholders. The National Comprehensive Cancer Network Annual Conference is kicking off today, March 18-20; the NAACOS Spring 2021 Conference is April 20-30; the AMGA Annual Conference is taking place on April 20-22 and the Pharmacy Quality Alliance’s 2021 Annual Meeting will be held on May 11-13.