It’s our second edition of Going Below the Surface, where each month we’re digging deep on how well we are spending our health care dollars in the United States. This month, we’re probing difficult topics such as spending on end of life care, considering budget thresholds and financing curative therapies. We encourage you to share, subscribe and follow us between issues using #GoingBelowTheSurface.

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Digging Deeper on the Research

Spending on End of Life Care

This idea that too much money is spent on patients who are at the end of their life is considered conventional wisdom in health policy. But as with so much in health care, that’s a simplistic notion, as two nuanced peer-reviewed studies in the past few weeks demonstrated.

Science published a study June 29 that found 95 percent of Medicare spending is actually for patients who were expected to survive one year or longer. Furthermore, the analysis–which tracked nearly 6 million patients–found that of the patients who were considered likely to die within one year, nearly half lived longer. These findings suggest that we should limit our focus to figuring out how to optimize care for sick patients, irrespective of their prognosis.

Adding another layer of complexity to the topic is an article from the July issue of Health Affairs that found substantial variation in end of life spending for cancer patients across geographies. Noteworthy was the finding that geographic variation in spending during the last 30 days of a cancer patient’s life is largely driven by physicians’ beliefs (e.g., attitudes about hospice or whether they felt knowledgeable or comfortable treating dying patients) and the availability of health care services within different hospital referral regions, not patient preferences.

Why It Matters: The evidence identifies areas to explore. Rather than predicting who will die soon, perhaps the focus should be more generally on the very sick patients and what care is high value and what is not.  Why do physicians’ beliefs have an outsized impact on spending at the end of a cancer patient’s life? How can we train physicians to be more comfortable in these end of life interactions or provide more education about hospice care? Read more here from NPC Chief Science Officer Robert W. Dubois, MD, PhD, on confronting misconceptions in end of life spending.

Why We Need to “Go Below The Surface” to Consider Medicare and Medicaid Spending

The number of Americans who are 65 years of age or older and their use of health care services are continuing to increase: inflation-adjusted Medicare spending is expected to increase by 5.33 percent annually between 2016 and 2026, with nearly half of the growth due to increases in the number of beneficiaries, according to Centers for Medicare and Medicaid Services’ projections. Similar trends are expected in Medicaid.

In a recent New England Journal of Medicine article, researchers examine four potential solutions:

  1. increase costs to discourage the use of health care services
  2. enhance long-term care management and preventive services with the goal of avoiding more expensive services
  3. rely on private health plans to help reduce utilization
  4. change incentives for providers who are part of alternative payment models, such as accountable care organizations.

As the researchers discuss, all of these solutions have serious downsides. Increasing costs would end up reducing access to care and exacerbate health disparities. Encouraging the use of preventive services might be cost effective but not cost saving. Relying on private health plans has had mixed results but requires government efficiency. And while recent evidence suggests that alternative payment models can reduce spending, effects are generally small.

Why It Matters: Potential or immediate solutions might not be politically feasible or would have serious downsides. That’s why it’s important now more than ever to have a dialogue about health spending and dig deeper into the kinds of creative solutions that could work.

What We’re Reading in the Journals:

New studies are showing us that health care spending is continuing to increase—is there a limit to how much we can or should spend? Some organizations and countries have set budget thresholds, requiring them to take creative approaches or make trade-offs about how they spend their limited resources. This month, we’re highlighting journal articles that take a deeper look at health spending and the challenges in making difficult choices.

  • Health Sector Trend Report, Altarum Center for Value in Health Care, June 2018, Altarum website.
    Altarum’s latest health sector report indicates that the rate of growth in US health spending increased to 4.8 percent in the first quarter of 2018, up from 4.6 percent during the same period last year. Health care prices are still increasing, while both health care utilization and insurance coverage rates fell.
  • Balancing Affordability And Access: Lessons From New Cholesterol-Lowering Drugs. Doshi JA, Puckett JT, Parmacek MS, Rader DJ, June 5, 2018, Health Affairs Blog.
    What can we learn about balancing budget affordability and appropriate access by studying the launch of cholesterol-lowering medicines known as PCSK9 inhibitors? In particular, one-size-fits-all and highly burdensome prior authorization requirements “are likely to stand in the way of value-based care and allow high-risk patients to fall through the cracks.” Payers and biopharmaceutical manufacturers need to develop more innovative payment agreements in advance of a medicine’s launch.
  • Surveying the Cost Effectiveness of the 20 Procedures with the Largest Public Health Services Waiting Lists in Ireland: Implications for Ireland’s Cost-Effectiveness Threshold. Chen TC, Wanniarachige D, Murphy S, Lockhart K, O’Mahony J, June 11, 2018, Value in Health.
    In Ireland, there are long lists of patients who are waiting to receive cost-effective treatments, because the country has an explicit cost-effectiveness threshold for what treatments will be covered. The upshot? Resources may be misallocated and treatments may be delayed or skipped, creating new costs elsewhere.
  • Are Payers Ready To Address The Financial Challenges Associated With Gene Therapy? Ciarametaro M, Long G, Johnson M, Kirson N, Dubois RW, June 28, 2018, Health Affairs Blog.
    While gene therapies hold the promise of substantial benefits, “some patients will face barriers accessing them due to the nature of the clinical intervention, the characteristics of the US insurance system, and the interaction between the two.” The article explores these tensions in our health care system via online market research with payers and highlights a few proposals to address these concerns.

Dialogues on Health Care Spending

Health care spending conversations are taking place across the country at events, online and around water coolers. We’ve flagged a few conversations for your attention and hope that you’ll also engage with the discussion online via #GoingBelowTheSurface.

About Going Below the Surface

The Going Below the Surface initiative was launched by the National Pharmaceutical Council in 2018 to broaden and improve the conversation around how health care resources are used in the United States. The initiative is aimed at better understanding the roots of the nation’s health spending and investments by promoting a discussion that is firmly based in health policy and systems research. Our goal is to provide clarity on how best to optimize health care spending so that patients receive the right care while simultaneously providing the right incentives to sustain next-generation innovation to improve patient well-being and health system efficiencies. To view the Going Below the Surface partners, visit www.goingbelowthesurface.org.

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