This July, we took a deep dive into payment models for curative therapies, implications of President Trump’s executive order and even more health spending issues, in addition to grill time, beach time, and sending-red-rockets-aloft time. Have a question or topic you’d like us include in the conversation? Drop us a line or tweet using #GoingBelowTheSurface.

Digging Deeper

The future of medicine has been very much front-of-mind in the public discourse, but it may be that we’re focusing on the wrong cost drivers. This month, we saw new evidence that breakthrough therapies are unlikely to be ruinous to the health care system, but that a massive overhaul of the health insurance system – via some sort of single-payer system – could have ironic and unintended consequences. 

A Need for Precision Financing Methods for Precision Medicines

By the year 2030, researchers from MIT’s New Drug Development ParadIGmS (NEWDIGS) program projected that there will be around 30 to 60 curative gene and cell therapies on the market, according to an estimate published in this month’s issue of Value in Health. About half of these treatments are expected to be in B-cell (CD-19) lymphomas and leukemias. These life-altering therapies would potentially treat around 350,000 patients.

Yet many people are worried about the cost implications of these types of treatments, as high upfront reimbursement for these products could exceed what the health care system can manage, hence the need for new approaches to pay for these life-saving, single-dose treatments. In outlining new approaches, the researchers found that the number of patients treated by such curative therapies should be considered against the projected prices and total treatment costs of many of these new therapies.

Why It Matters: The NEWDIGS estimate provides an antidote for fears that the coming era of high-cost, high-value cures will swamp the health care system. Estimating a high of 60 therapies approved, treating around 50,000 patients a year, the short-term impact on the health system would be negligible: even seven-figure treatments would account for less than 1% of future health spending. That doesn’t diminish the need for experimentation and new financing approaches; it only puts the impact in perspective.

Could A Single-Payer System Lead to an Increase in High-Cost, Low-Value Care?

In the current debate over “Medicare-for-All” and single-payer proposals, the price of health care services repeatedly dominates the conversation. A recent JAMA Viewpoint looks at the benefits and implications of reducing commercial prices of medicines to the level of Medicare prices in the United States.

On the surface, this would appear to reduce the total cost of health care. But “health services” implies that hospitals and physicians would need to reduce the cost of their services as well, and the assumption that they would not react as their commercial prices are reduced is likely unrealistic. Data has shown that physicians and hospitals can respond to price reductions in ways that ultimately can lead to an increase in low-value care. For example, physicians have previously responded to lower fees for a given service by increasing the volume of services delivered, often referred to as an “income effect.”

Why It Matters: Medicare-for-All could lead to significant cost reductions on the patient side. However, if cost-sharing is eliminated for all health care services in a way that is agnostic to value, it may lead to an increase in low-value care. For single-payer models to work – benefiting patients and reducing health costs – the program needs backing from physician and hospital communities, which have yet to broadly support these proposals thus far.

What We’re Reading

One theme that emerged this month is the impact of consumer decision-making on costs, including a unique look at ways of creating incentives for patients and a perspective on whether regular check-ups offer patients any particular benefit.

  • Reverse Reference Pricing: Rewarding Patients for Reducing Medicare Costs
    Sood N, Whaley CM. Health Affairs, June 2019.
    Using a reference pricing program for three common outpatient surgical services implemented by the California Public Employees’ System (CalPERS) as a case study, this article considers the challenges in trying to encourage consumers to comparison shop for health care services. The authors explore the potential cost benefits of using a “reverse reference price” approach that rewards beneficiaries for choosing a less costly, quality provider instead of penalizing them for using a higher cost provider.
  • Debating Whether Checkups Are Time Wasted or Time Misused
    Rubin R. JAMA, June 2019.
    There’s “high-certainty evidence” suggesting that annual health check-ups are unlikely to benefit patients and might lead to unnecessary tests and treatments. Instead of abandoning check-ups altogether, it might be time to redefine them and use check-ups to develop and maintain a long-term plan for a patient’s good health.

Dialogues on Health Care Spending

One of the most critical elements of any effort to understand health spending more fully are places where different stakeholders can come together to define areas of agreement – and chasms yet to be crossed – and that effort continued apace in both conference rooms and in the pages of Health Affairs.

  • Event — Health Spending: Moving From Theory to Action: You are invited to join Health Affairs and the National Pharmaceutical Council on September 11 in Washington, DC, for an important event, “Health Spending: Moving From Theory to Action.” The event will address the pressures presented by soaring health costs on individuals, employers, and government; strategies among payers and others to promote cost effective care; and efforts currently underway to bring costs under control. Register online today!
  • Hosting an Important Conversation on Health Spending: The Healthcare Leadership Council, a Going Below The Surface Forum partner, held a town hall meeting last month in Nashville, Tenn. Key stakeholders from across the health care sector discussed ways to best prioritize and spend our health care dollars.
  • Having Challenging Conversations: The Alliance of Community Health Plans, a Going Below The Surface Forum partner, shared a blog post that calls on “everyone in the industry to take on the challenge of making health care more affordable. Align the incentives, wipe out the waste, rely on the evidence and engage in the difficult conversations.”
  • Reducing Costs for Patients With Chronic Conditions: Inside the Beltway, there’s been a lot of buzz around a recent Executive Order to allow health savings account-eligible high-deductible health plans to cover treatments for chronic conditions prior to meeting the plan deductible. According to the Center for Value-Based Insurance Design, this approach could provide cost-savings not only for patients, but for our health care system overall.
  • Considering Health Spending: Looking for some additional summer reading? Check out the ongoing “Considering Health Spending” series in Health Affairs, full of lively debates about “how much the nation spends on health care, what we get for our money, and how we might change the spending trajectory.” (Note: The series is funded by the National Pharmaceutical Council and Anthem, Inc.)

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