A funny thing is happening at the intersection of culture and health and spilling over into politics and policy — a vigorous demand for transparency in health care.
Various forces are driving this demand. Even amid the current “slowdown” in national health expenditures—spending and premiums experienced record low growth in 2013—household costs have continued to grow two to three times faster than real incomes. Looking forward, health spending as a share of GDP will grow more rapidly over the next ten years than it did in either of the preceding two decades.
Growing Costs For Consumers And Businesses
Last year, says the consulting firm Milliman, combined insurance and out-of-pocket spending in an average employer health plan for the typical family of four totaled $23,215 — up from “just” $9,435 in 2002. For those newly insured or with new coverage on the Affordable Care Act’s health insurance exchanges, a typical Silver plan deductible is running about $3,000. That means that families still need tools that will help them shop for high-quality, affordable health care services.
So even as policy makers crow that health costs are growing at their slowest rate in years, consumers and businesses are saying that affordability of health coverage is the number-one challenge they face.
Health Plan Strategies Encouraging Consumer Choice
Health plans have responded with insurance designs that incentivize consumers to use high-value in-network providers — a strategy that is helping to create awareness and price sensitivity among the “silent majority” of relatively healthy consumers. Many plans, meanwhile, have adopted “narrow networks” that directly exclude low-value providers.
Significantly, both strategies depend on consumer choice. A backlash has emerged against narrow networks as a rationing tool. The trade-off between unfettered access and cost is a real one, no doubt, but the evidence has not shown access to care has been harmed. The development and wider use of provider cost and performance measures along with consumer information on the composition and performance of health plan networks will help on both fronts, access and costs.
Improving Health IT And Growing Demand For Information From Tech-Savvy Millennials
Converging developments may soon allow much more intense monitoring and management of the factors that drive health costs. After decades of languishing at the back of the pack in terms of information-technology adoption, the health sector is investing heavily in a new infrastructure of secure health records and communication systems. Clinical routines are changing to accommodate both the input and uses of data. Advances in big-data analytics are dramatically expanding our capacity to process data in ways that generate actionable, real-time insights with respect to both the efficacy of cures and efficiency of care delivery.
At the same time, the rapid-fire adoption in the private sector of consumer-directed and value-based health plan designs is fueling demand for reliable measures of provider cost and quality. Participation in health exchanges, likewise, is increasing consumer demand for more and better information on health plans.
Consumers have less information on health provider cost and quality than they do on the cost and quality of televisions or hotel services. Then consider that prices within local markets can vary by as much as 700 percent, and the need for tools is plain. According to Don Berwick, the former Administrator of the Centers for Medicare and Medicaid Services (CMS), the lack of transparency and competitive pricing was responsible for between $84 billion and $174 billion in wasteful spending last year.
Millennials, comfortable with any device, app, or data point, simply don’t understand and can barely accept that information on price, quality, and safety is not readily available in health. At the same time, culturally, Americans are more accepting of the use of their data than they were just five years ago. (The Health Insurance Portability and Accountability Act [HIPAA], which authorized many current privacy and security standards, was enacted almost two decades ago, before smart phones and tablets.) Less understood is how that data can be used to power tools that promote informed decisions.
Bipartisan Interest In Transparency
Politically, both Democrats and Republicans see value in transparency. Republicans want markets to work. Democrats want to level the real and perceived imbalances in the playing field. Both parties seem to want an empowered consumer. As bigger fights loom over health reform—think repeal versus tweak—some in both parties want to identify and work on real problems that are adversely impacting their constituents.
Genesis Of The Clear Choices Campaign
About 18 months ago, a dedicated—and unlikely—group of activists and advocates recognized these trends and committed to the prospect that, at last, technology and data had placed actionable transparency within reach. We are patients, consumers, businesses, insurers, life science companies, academics, and health care providers — a classic case of strange bedfellows. Our group includes AARP, the National Association of Manufacturers, the National Consumers League, Aetna, the U.S. Public Interest Research Group, and Novo Nordisk, among others. And we did an odd thing — we started working together. It was ad hoc at first, and some were more active than others. Over those 18 months, we produced a number of policy approaches and creative solutions. We ramped up our sales team and advocated for these solutions with Congress and the Administration. And we realized that we worked pretty well together.
With a new Congress and expanded interest and new tools from the Obama administration, a campaign representing the consumer side of the ledger—the people and organizations who pay for health care and care about its quality and safety—was born. We believe our campaign will successfully intermediate among customer-side stakeholders on a range of reconcilable issues, including network transparency on the ACA exchanges, more and better comparison shopping tools, and health care data sharing.
We have been coordinating efforts all year and recently launched publicly with the goal of advancing solutions that empower consumers to make better health choices, leading to a more robust, more competitive and less costly health care system.
So what is our agenda? We believe there should be:
- Better tools for consumers and employers to make informed decisions.
- More data in the hands of more experts to power consumer tools.
- More competitive markets where consumers can use comparative tools.
Transparency—on price, quality, safety, and coverage options—can help reduce health costs and improve outcomes by empowering consumers to make better choices. Unfortunately, current federal and state efforts are not effectively leveraging the latest technology and available data to achieve these goals. We believe our agenda will rectify this — and vastly improve health care in America.
Better Tools For Consumers And Employers To Make Informed Decisions
Our members support providing up-front information on plan choices and health care providers, including information on prices, quality, and safety. States have thus far taken the lead, but Medicare is a big program with some big hooks to drive price transparency. For example, the program already provides information on provider and health plan quality. Last year, it released charge data and claims data aggregated to the individual physician or group. But no one pays charges, and the claims data was issued without context.
Information should be accurate, meaningful, and usable to help consumers and employers make better decisions about their health care providers, including price, quality, safety, and outcomes. Rather than just dumping data on consumers, Congress and the Administration should require and use measures that meet these criteria.
Better information about coverage options on health insurance exchanges is also important to making markets work well. Why shouldn’t marketplace exchanges provide accurate information to consumers about their coverage options? The only reason to avoid providing such information is to undermine the ACA markets, which conservatives argue are already fatally flawed.
Efforts to improve transparency on federal and state-based health insurance exchanges should include:
- Requiring information be made available in advance of an enrollment decision.
- Searchable on-line formularies and information on the formulary exceptions process.
- Provider network status and directory.
- Summary of benefits and coverage.
- Whether a plan is an HSA-eligible product.
CMS is diligently working on out-of-pocket cost calculators, and that’s welcome. Most health plans already provide these for their enrollees.
More (And Better) Data In The Hands Of More Experts To Power Consumer Tools
Recently, Congress passed landmark legislation moving Medicare physician payment to a more value-based system. Section 8 of the bill revises the Qualified Entity (QE) program by broadening non-governmental access to claims data collected under the Medicare program. Depending on whether the Department of Health and Human Services (HHS) decides to release Medicaid and the Children’s Health Insurance Program (CHIP) data, the bill could double the trove of claims data accessible to QEs.
The public’s interest in data transparency has grown apace with our exploding technical capability to glean operational insights from multiple, very large data sets. In medicine, such analyses can be used to identify best practices with respect to clinical procedures and health system organization — and create accountability and competition at the individual provider level.
Sellers and buyers of medical goods and services both stand to gain from such insights under the framework established in the bill. For example, providers can receive a performance bonus of as much as 9 percent based on improvements against a benchmark. Under the bill, QEs will assist providers in understanding individual performance gaps — and thereby provide insights into improvement strategies and, ultimately, higher payments.
More should be done. For example, the Sustainable Growth Rate (SGR) reforms only permit the sharing of public data for the express purpose of improving quality, not efficiency. Yet affordability is itself a powerful barrier to improvements in population health. We ought to expand the uses of data to address the affordability challenge. Arresting cost growth should be a primary, not a tertiary, focus of federal health data policy, because improvements in clinical science alone will not bring down medical costs.
The SGR reforms will target payments to high-value providers. Value is defined as quality over efficiency and depends greatly on the quality of the measures used. Today, quality measurement at the institution and medical-group levels combined with robust provider feedback has yielded improvement. But the current measure sets used for the Patient Quality Reporting System, Meaningful Use, and Accountable Care Organizations are misaligned and focus more on process than outcomes. That creates excessive burdens on providers and only limited value for taxpayers. Among several commonly used measurement sets—NCQA, HEDIS, NQF Endorsed Measures, ACO measures, and the AMA PCPI measures—fewer than 10 percent of metrics address overuse or appropriate use, while many are underuse measures. Reforms designed to highlight outcomes, overuse, and total cost-of-care could yield significant savings.
Furthermore, to ensure that these measures can more accurately reflect performance at the individual clinician level, it will be critical to address challenges related to insufficient number of comparable cases, socioeconomic variations, and data reliability. HHS needs to implement the SGR law carefully as Congress has directed the Department to prioritize the measures, place a high priority on developing measures of overuse or misuse, and weight clinical and patient-reported outcomes measures more heavily than process measures — while still including all three — in federal incentive programs.
More Competitive Markets Where Consumers Can Use Comparative Tools
At the same time, disclosing prices should promote market competition, not new price controls that distort markets. Data is critical to the development of comparison-shopping tools. But the use of such tools is constrained by anticompetitive clauses embedded in price contracts between providers and insurers. The terms of such contracts are confidential. That limits authoritative research on their prevalence and market effects.
In 2009, however, the Massachusetts Attorney General subpoenaed price contracts and subsequently documented a range of questionable practices such as “anti-steering,” “anti-tiering,” “guaranteed inclusion,” and “product participation parity” clauses. Anti-steering clauses, for example, prevent plans from using shopping tools or value-based insurance designs to steer policyholders to less expensive providers.
In its 2011 Accountable Care Organization guidelines, the Federal Trade Commission (FTC) identified several such practices, but merely advised providers seeking to combine clinical efforts “to avoid” them prior to merging. Notably, FTC’s enforcement powers do not extend beyond approving or disapproving mergers.
Where contracting practices that suppress price-sensitivity or competition in markets harm consumer welfare, the government should intervene to prevent bad actors from tipping the scales. For example, the State of California has outlawed “gag clauses” that forbid health plans from listing negotiated prices in consumer-facing comparison-shopping tools. Clear Choices is exploring best practices and solutions in this area.
Where We Go From Here
While health prices in the United States are excessive by many measures, underlying health costs are amenable to management with more and better data and tools. Data analytics can both advance our common understanding of clinical science and permit the development of precise, timely measures of provider performance. Such performance measures are particularly important for specialists, who manage patients with the most complex and expensive needs.
Federal data policy currently inhibits data sharing — and may be harming public health by doing so. These opportunity costs are rising in tandem with the growing power of analytics and the growing collateral effects of health cost growth on the economy, public budgets, and households.
By educating stakeholders, policy makers, and the public on the sometimes intermediate nature of transparency policy, the Clear Choices Campaign seeks to build a long-term constituency for customer-driven market reforms.
We are excited about the challenges that lie ahead because we believe they can be managed and transformed into opportunities. As the demand for transparency increases, advocates and policy makers must supply solutions that help consumers make clear health choices.