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Reducing Health Care Costs While Improving Care



November 9th, 2011
by Chris Fleming

“It is well established now that one can in fact improve the quality of health care and reduce the costs at the same time.”

That statement by Health Affairs Editor-in-Chief Susan Dentzer summarized the message of a recent event sponsored by the journal, the ABIM Foundation, and the California HealthCare Foundation. The briefing was intended to advance ways to restrain the cost of health spending — to provide recommendations to the congressional “super committee” currently seeking ways to cut the federal budget deficit, but also to contribute to the longer term struggle to curb health spending that will continue regardless of what the super committee decides on.

The event focused on three areas offering opportunities to cut health spending while improving care: improving the Medicare coverage process; reducing unnecessary and harmful care; and empowering patients to participate in directing their own care through shared decision making and the use of patient decision aids, particularly in the area of end-of-life treatment.

Dentzer said these savings opportunities “are not new by any means; they have been known about for quite some time. But in the current environment, all of us sponsoring today’s briefing believe they deserve a whole lot more attention from the super committee, and indeed from the whole of Congress and the whole of the policy making apparatus in Washington.” She noted that the proposals discussed have won endorsements from physicians and others who understand that “patients’ interests are not served if they receive health care that is unnecessary, wasteful, and harmful, and that would not in fact even be desired by patients if they understood the benefits and harms of particular interventions. More is not always better in health care, as we know.”

Below are some examples of the recommendations offered at the briefing, as well as some comments on how the Congressional Budget Office might score the various suggestsions. While evidence suggests that all of the ideas discussed could help reduce health care costs, only savings scored by CBO counts toward reducing the federal budget deficit and meeting the super committee’s savings targets. For more, check out the video and speaker materials on our web site.

Improving the Medicare coverage process. Robert Berenson of the Urban Institute and Steve Phurrough of the Center for Medical Technology offered several proposals for improving the Medicare coverage process. For example, Phurrough urged the Centers for Medicare and Medicaid Services to be more vigorous in ensuring compliance with its coverage decisions by providers. He noted that, over the past decade, CMS made a series of decisions concerning which patients should receive implantable cardiac defibrillators (ICDs). Initially, provider compliance was high, running around 90 to 95 percent. However, compliance has since deteriorated to 70 to 75 percent. Berenson offered a back-of-the-envelope calculation that up to $1 billion per year was being spent on implanting ICDs in patients for whom the device was unnecessary and even harmful.

To effectively beef up compliance monitoring and carry out some of the other recommendations offered by Berenson and Phurrough, CMS would likely need more resources. As Berenson pointed out, despite the enormous growth in the agency’s responsibilities, CMS has fewer staff members than it did in 1980. Giving CMS more resources would likely pay off in the long run – for example, researchers have found that CMS anti-fraud expenditures produce returns in the neighborhood of six or seven to one. But since increasing the agency’s budget might be a tough sell in this era of austerity, Berenson endorsed the idea — advanced by former acting CMS administrator Kerry Weems and others — of allowing CMS to tap the Medicare trust fund for anti-fraud and compliance expenditures, with the savings then used to replenish and add to the trust fund.

Berenson and Phurrough also noted that CMS has a clear need for evidence to evaluate technologies that are coming down the pike and promise to be high-use, high-cost items for Medicare. In many cases, the data that CMS needs could be readily obtained as these products are being developed. “There needs to be robust interaction between CMS and the funders of research: particularly NIH [the National Institutes of Health], AHRQ [the Agency for Healthcare Research and Quality], in some cases CDC [the Centers for Disease Control and Prevention], and now PCORI [the Patient-Centered Outcomes Research Institute]. It is interesting that CMS does not have a seat on the governing board of PCORI, when the results of much of the work that PCORI will do may impact the Medicare population,” Phurrough said.

Phurrough and Berenson encouraged Congress to give CMS the authority to use a “least costly alternative” approach to coverage. Under this approach, in the case of therapeutically equivalent drugs or devices, Medicare payment is limited to the price of the least costly of the treatments. CMS has used this approach in the past, but the federal Court of Appeals for the D.C. Circuit recently ruled that the agency had exceeded its authority. Phurough and Berenson said that similar technologies that produce the same outcomes should have similar prices, although they declined to apply this principle to treatments in different technology classes.

Eliminating unnecessary and harmful treatments. In 2010, Howard Brody, director of the Institute for Medical Humanities at the University of Texas Medical Branch at Galveston, challenged all medical specialties to come up with “Top Five Lists.” These lists would consist of
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five diagnostic tests or treatments that are very commonly ordered by members of that specialty, that are among the most expensive services provided, and that have been shown by the currently available evidence not to provide any meaningful benefit to at least some major categories of patients for whom they are commonly ordered. In short, the Top Five list would be a prescription for how, within that specialty, the most money could be saved most quickly without depriving any patient of meaningful medical benefit.

In response to Brody’s call, working groups at the National Physicians Alliance (NPA) produced “Top Five” lists for the primary care fields of internal medicine, family medicine, and pediatrics. At the briefing, Nancy Marioka-Douglas of the NPA and Stanford University Medical School presented the seven items from these lists with relevance to the Medicare population. Among her recommendations:
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  • Physicians should not image the lumbar spine region of patients with lower back pain in the first six weeks unless certain red flags are present;
  • antibiotics should not be prescribed for mild to moderate sinusitis unless symptoms persist more than seven days or worsen after initial improvement;
  • and generic statins should be used when physicians initiate therapy to reduce LDL (“bad”) cholesterol.

How much could be saved by following these recommendations? One study found that the following all of the suggestions in the “Top Five” lists of the three primary care fields could save $6.76 billion annually. This figure includes savings from the treatment of all patients, not just Medicare beneficiaries. However, the bulk of the savings, $5.8 billion, would come from the use of generic statins, a practice that would obviously be highly relevant in the Medicare population. And Morioka-Douglas stressed that her list was only the beginning and that many other unnecessary and harmful treatments should be eliminated, in primary care and in other specialties.

Shared decision making. Lyn Paget of the Foundation for Informed Medical Decision Making detailed the benefits of patient decision aids: “Patients tend to have more accurate perceptions of not only benefits but risk. Their choices tend to be more in line with what’s important to them, and they also participate more in decisions about their care. She added, “When we are exposed to balanced information that is accurate and not biased, we tend to be more conservative in the way we make decisions.” For example, a 2011 Cochrane Review found that the use of decision aids produced significant reductions in major elective surgery, PSA screening, and hormone replacement therapy. A 2008 Lewin Group report found that routine use of patient decision aids and shared decision making in connection with 11 procedures could save Medicare $3.8 billion over 5 years and $9.2 billion over 10 years.

Angelo Volandes of Massachusetts General Hospital and Harvard Medical School focused specifically on shared decision making in end-of-life care. He noted that verbal descriptions often do not effectively convey the reality of dealing with diseases such as advanced dementia and cancer, and he described his research on using videos to help patients understand the realities of these illnesses and their treatment options. For example, researchers showed elderly patients visiting their primary care physicians a two-minute video of a woman with advanced dementia. These patients were then asked what sort of care they would want if they had advanced dementia, as well as a series of true-and-false questions about the disease.

Compared to patients who received a verbal description of advanced dementia, patients shown the video were more likely to choose comfort care only rather more invasive care. What’s more, they were more informed about their choices: They scored almost perfectly on the true and false questions after seeing the video, while patients who had received the verbal description got significant numbers of questions wrong, despite the fact that both groups had scored similarly when tested at the beginning of the study.

Volandes emphasized another crucial result from his study: “95 percent of these patients would recommend the video to other patients That number really should be the focus of policy makers in this room. That’s not providers saying patients want this; that’s patients telling us they want these tools to empower them.”

CBO Scoring

David Auerbach, a RAND policy analyst and CBO veteran, was given the task of “channeling” CBO at the briefing and indicating which ideas would be most likely to be scored as savings by the budget agency.

In the area of improvements in the Medicare coverage process, Auerbach said many of the ideas involving changes in the way CMS and the Department of Health And Human Services operate internally would likely “do a lot” but were unlikely to be scored as savings by CBO. The budget agency would be more likely to score new statutory authorities, such as legislation granting CMS the right to use the “least costly alternative” approach, and “the more specific it is, the more it directs the Secretary and ties the Secretary’s hand and says ‘You should consider this,’ the more likely there would be savings scored.” Indeed, in its 2008 Budget Options volume, CBO scored a savings from a proposal for Medicare to use a least costly alternative approach to covering viscosupplements for osteoarthritis.

Auerbach was optimistic about the potential for scorable savings in eliminating unnecessary and harmful services and in expanding the use of shared decision making. He analogized Morioka-Douglas’ list to the hospital-acquired conditions for which Deficit Reduction Act of 2005 eliminated reimbursement. “There was a mechanism to figure out when they happened, for hospitals to report, and there was a way for Medicare to not pay for them,” Auerbach noted, suggesting a similar framework for legislation eliminating payment for treatments in the “Top Five” lists.

Auerbach added that there would likely be nonscorable but real spillover savings to the private sector from eliminating Medicare coverage for unnecessary treatments, as there had been from eliminating Medicare payment for hospital-acquired conditions: “I remember being in meetings a few years later [after the DRA was passed], where we heard some private insurers saying, ‘We would have loved to do this a long time ago, but we couldn’t, and now that Medicare did, we’re no longer paying for those kinds of things.’”

Auerbach said he and other CBO analysts declined to score savings from the use of decision aides in 2008, but added, “I don’t know if we knew about the Lewin report.” He suggested structuring legislation that would take money away from providers who didn’t show patients the videos developed by Volandes (following an approach to promoting shared decision making outlined in the Commonwealth Fund’s “Bending The Curve” report): “That is something that would be easy for CBO to score … ‘X’ number of providers aren’t going to do it, and there, there’s money saved. And then you get into the real level of savings, what we’ve been talking about today, all the evidence that people choose less costly alternatives.”

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1 Response to “Reducing Health Care Costs While Improving Care”

  1. RobertBurney Says:

    No one wants care that is unnecessary or harmful. The problem lies in who makes that determination. Dr. Berenson decries the increasing use of ICDs but offers no proof that they are harmful or unnecessary. If you are a patient considering such a device, who’s word do you respect: a Washington bureaucrat like Dr. Berenson or a cardiologist who sees patients every day?
    All of these suggestions seek to decrease cost by decreasing care. No one is willing to look at the price we are paying for individual services. How about a little price competition to reduce the unit price for healthcare services. Perhaps CMS should send an RFP for the ten most common/expensive procedures, as they did for durable medical goods. Providers would then learn to provide their services more efficiently, thus reducing the overall cost of healthcare.

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