Going Below The Surface E-newsletter: February 2020
February 18, 2020
Roses are red,
violets are blue.
We dig deeper on health spending
each month just for you.
This month, we explore the growing popularity of transparency regulation and social investments when it comes to lowering health spending. First, we unpack some of the unforeseen consequences of provider transparency rules and challenge the impact these efforts have on our entire spending ecosystem. We also highlight the need to ensure that programs that address social determinants of health are supported by evidence and lead to desired outcomes.
In an effort to empower consumers and lower health spending, last year, the Centers for Medicaid and Medicare Services (CMS) released a transparency rule mandating that hospitals publicly post payer negotiated rates for 70 “shoppable services.” The hypothesis? If consumers have clear cost information, they will choose the best-priced services among hospitals.
To evaluate this concept, researchers from the Health Care Cost Institute (HCCI) examined the selected services from CMS. They concluded that “shoppable” health care accounted for only 12% of 2017 medical spending. “Although the amount of total health care spending that is shoppable is not trivial,” they write, “our findings point out the potential limitations of consumer-focused initiatives.”
But the issue with transparency rules is not just that the potential benefits are narrow; there may be unintended consequences as well. In a second article, HCCI pointed out the growing concern that transparency regulations could lead to low-priced providers raising their prices to meet the benchmarks of more expensive health systems. Researchers tested how hypothetical public price changes in the market would affect overall spending. The outcomes for each potential pricing scenario were mixed, implying that the impact of this transparency effort has on lower costs for patients is unknown.
Why It Matters: There is broad consensus that opaque hospital pricing is a problem, making it hard for consumers – among others – to understand where their health dollars flow. On the surface, many people think that transparency will help consumers make better decisions about health care spending and potentially drive down costs. But the evidence continues to mount that transparency efforts are – at best – only one component of a solution that will require a broader approach.
Digging deeper, we find that transparency has its downsides. The HCCI analysis illustrates that transparency can fundamentally alter the market forces in ways that are not necessarily consistent, predictable or beneficial to patients. In fact, health care is not as “shoppable” as one would think, and transparency could actually lead to rising prices in certain instances.
Spending on social determinants of health (SDOH) is a growing area of focus among hospitals and health systems. According to a recent Health Affairs article, between 2017-2019, health systems spent approximately $2.5 billion on SDOH programming. This large investment, which included employment assistance, food security and affordable housing initiatives, was spent from only one sector of the health system – hospitals and health systems.
The majority of efforts to implement SDOH are often referral or screening programs as opposed to efforts that directly address SDOH. This complicates our ability to accurately measure direct SDOH program outcomes. Furthermore, individual initiative results are mixed, emphasizing the need to ensure new approaches are evidenced-based.
Why it Matters: Health care stakeholders are increasingly turning to investments in SDOH as a way to tackle long-term spending, and the research illustrates the importance of continuing to analyze SDOH efforts closely. On the surface, this large investment in SDOH seems sound, yet when we go below the surface, we discover there is a lack of evidence proving that these dollars will be productive. As we learned with the Camden Coalition, investments of this caliber must be backed by evidence to ensure we are not wasting valuable health dollars.
While we came across many journal articles that posed good questions and made us think more deeply about health spending, we didn’t have room to include them all. But we hope you’ll check out two from JAMA and one from the New England Journal of Medicine that examine drug pricing, personalized medicine and health system reforms.
A number of Going Below The Surface (GBTS) partners and other organizations have been hosting meetings, developing studies or participating in webinars on health spending topics. Have an event or study to share? Drop us a line or tweet using #GoingBelowTheSurface.