While our kids may be checking out of school for summer vacation, we’re still focusing on efforts to educate, share and discuss health care spending topics with all of you. Have a question or topic you’d like us include in the conversation? Drop us a line or tweet using #GoingBelowTheSurface.

Digging Deeper

The health care spending discussion is ever evolving, and everyone seems to have an opinion. It’s time we ask the tough questions about where we should be putting our health care dollars and better educate the public on the power of these decisions. This month, we dig into two studies that emphasize the opportunities to curb unnecessary care and broaden public perception on the larger implications of overutilization.

Tossing Out Wasteful Care

At the bottom of the health care spending pool lies a portion of spending attributed to wasteful care, and these often-forgotten expenditures are adding up — exceeding an estimated $1 trillion annually. A blog in Health Affairs dove into the complex issue, examining several novel approaches that private employers are taking to reduce waste and incentivize high-value care for their employees.

In some cases, large employers have designed their benefits and provider networks to specifically address wasteful care. Walmart, for example, created a Center of Excellence (COE) program structure to ensure appropriate care for certain conditions. For spine surgery, Walmart offers two separate bundled payments — one to determine whether surgery is appropriate and one for the surgery itself. This model generates revenue for the COE while reducing the incentive for unnecessary surgeries. And it’s working to reduce low-value care: To date, its evaluations have found that only 50 percent of patients in the COEs actually needed surgery.

Why It Matters: Health care waste is often viewed as an intractable systemic issue, but some of the most encouraging and thought-provoking experiments in rooting out wasteful care are being conducted by employers, who are uniquely positioned to advocate for lower-cost, higher-quality care. That makes this research worthy of examination.

Public Perspective on Health Care Costs

The ongoing debate over health care costs can elicit varying viewpoints among different stakeholders, but there appears to be a mismatched understanding among consumers specifically. An article in the New England Journal of Medicine examined 14 national opinion polls conducted between 2018-19 to determine how the public perceives causes and potential solutions to rising health care costs put forth by media and policy experts.

The researchers compared research from Gallup, the Pew Research Center and the Kaiser Family Foundation, among others, finding that most Americans believe the U.S. is spending too little on health care and that prices for health care services are unreasonable. Additionally, unlike most experts, consumers do not think overutilization is a concern that affects them.

The article concludes that health care costs are likely to be a key issue in the upcoming presidential election, where candidates supporting an increase in health spending are likely to be more popular than those advocating to reduce it.

Why It Matters: The public’s understanding of health care cost issues has the potential to impact policy decisions, but a singular focus on pricing may, in fact, deter effective solutions. What many consumers may not realize is that the root cause of rising personal health care costs can be attributed to other facets of the system, such as unnecessary care and overall health care spending. Public education efforts around these systemic issues face an uphill battle, but discussions aimed at connecting costs and utilization may be a first step to paint a more holistic picture of health care spending.

What We’re Reading

The best of intentions often have unintended consequences — at least, that’s what two studies this month show us. Efforts to reduce spending on medicine through voluntary financial incentives didn’t turn out as expected, and hospitals might accept lower payments from public payers but make up for the losses in other ways.   

  • An Insurer’s Program to Incentivize Generic Oncology Drugs Did Not Alter Treatment Patterns or Spending on Care
    Yasaitis L, et al. Health Affairs, May 2019.
    A voluntary program to financially incentivize oncology physicians to use generic anticancer medicines showed no significant or meaningful effect on prescribing patterns. The authors note that “while it would be convenient to predict that larger incentives may have had more impact, the pay-for-performance literature does not necessarily support such an assumption and cautions policy makers about the possibility of unintended consequences.”
  • Private Health Plans Pay Hospitals 241% of What Medicare Would Pay 
    RAND Corporation, May 9, 2019.
    A RAND Corporation study examining “U.S. hospital prices covering 25 states shows that in 2017, the prices paid to hospitals for privately insured patients averaged 241% of what Medicare would have paid, with wide variation in prices among states.” The authors suggest that employers have an opportunity to encourage their health plans and hospitals to do contracting differently and to use networks and benefit designs to shift patients toward lower-price hospitals.

Dialogues on Health Care Spending

This month, we were pleased to see a new effort aimed at understanding the drivers of health care investments, with a closer look at the social determinants of health; the kick-off of regional meetings to gain perspectives on health care spending priorities; and continued discussions on the (web)pages of Health Affairs.

  • Drivers of Health: Harvard health economist and New York Times contributor Austin Frakt continues to stay busy with his new role as principal investigator for Harvard Global Health Institute’s Drivers of Health project. The Robert Wood Johnson Foundation-funded program will examine how we can quantify outcomes that investments in the social determinants of health — factors such as education, the environment or nutrition — have on the broader health system. The group will analyze existing evidence and consult with experts to assess what is known about the social determinants of health, identify gaps, and propose new research in the space. Read the Drivers of Health blog and learn more about opportunities to contribute to the project.
  • Regional Leaders Weigh in on Health Spending: Going Below The Surface Forum partner Healthcare Leadership Council hosted two town hall meetings in recent weeks, with one in Raleigh, NC, and a second in Nashville, Tenn. At both meetings, health care stakeholders shared their views about their health spending priorities. Tom Campbell, a journalist and producer of a North Carolina news show, moderated the conversation in Raleigh and summarized what he heard from participants.
  • Considering Health Spending: What can we learn about health spending by studying the state of Delaware? Why don’t consumers go price shopping for health services? Find out the answers to these questions and more by reading the “Considering Health Spending” series in Health Affairs. (Note: the series is funded by the National Pharmaceutical Council and Anthem, Inc.)

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