Major Academic Journal Reports: MRI Costs Down 19% with Healthcare Price-Transparency

The August 2014 issue of Health Affairs contains an article by Wu, Sylwestrazk, Shah and DeVries entitled, “Price Transparency For MRIs Increased Use Of Less Costly Providers and Triggered  Provider Competition.”

The article is excellent.

It describes a program by AIM Specialty Health (a subsidiary of Wellpoint) to provide members with comparative price information about MRIs and CT scans as part of a pre-certification process.  The results from 2010 to 2012 showed:

  • MRI prices decreased by $220 per scan (18.7%)
  • Use of more expensive hospital-based scanners decreased from 53% to 45%

And interestingly…

  • MRI prices decreased by $57 per test in the control group (no price-transparency intervention) because competition created among healthcare facilities as a result of the greater exposure of prices in the local marketplace caused high-priced facilities (usually hospitals) to agree to lower negotiated rates with insurers.

This academic study provides great confirmation of what Compass sees with our employer clients and their cost results as well.

Also interestingly, the article points out keys to success—which Compass has found to be true in our experience as well:

  • Use Price-Transparency for test and procedures that are not emergent or urgent to allow time for choice (at least of a couple days).  Examples include sleep studies, PET scans, nuclear cardiac testing, arthroscopic orthopedic surgery and joint replacement (i.e. hip and knee replacements).
  • Provide information to members that is specifically relevant to their location—i.e. close to home, work or the original facility they were referred to
  • Provide quality information in conjunction with cost information so that members have the confidence to know that they are receiving equal or even better care at a lower price.  Otherwise, people may assume ‘You get what you pay for’—i.e. the higher-priced facilities have higher quality, which is not necessarily the case in healthcare.

To learn how Compass assists employers and employees in lower their imaging costs, click on the 2-min video below:

Mayo Clinic: Example Vision for Other Providers

The April 2014 issue of Mayo Clinic Proceedings has an article by the Mayo Clinic CEO, John H. Noseworthy, MD, entitled, “What Is Ahead for Mayo Clinic?”.

In the article, Dr. Noseworthy outlines the Mayo Clinic’s strategic vision.  Given that the Mayo Clinic is one of the top healthcare providers in the nation, their vision may be a good model for other providers to follow.  Think of Mayo’s vision as a ‘best practice’ in ‘Provider Strategy.’

The article starts off with the underlying principle at Mayo that guides their vision.  It is simple:  The Patient Comes First.  By the way, this is what I was taught on day one of medical school and what was ingrained in me in my subsequent 7 years of training.

Dr. Noseworthy then outlines three central pillars of the Mayo strategic vision:

1) Deliver Knowledge to Address Fragmented Care

What does this mean?  As most people in employee benefits and healthcare recognize, healthcare is very uncoordinated among participants, leading to poor healthcare quality and high cost.  In the face of Health Reform and payment reforms in Medicare, many hospital systems are consolidating vertically—by buying physician practices—and horizontally—by merging with other hospital systems.

Mayo’s strategy is different.  Rather than merging and consolidating, the Mayo Clinic sounds like it is ‘licensing’ its expertise in care management, care pathways, best practices, clinical order sets, etc. to other hospital systems through what it is calling the Mayo Clinic Care Network (MCCN).

2) Create Value to Address Uneven Quality in Healthcare

The Mayo Clinic recognizes that the delivery of care as a ‘system’ is broken and manifests itself as ‘uneven quality’ and ‘excessive healthcare spending.’

In response, the Mayo Clinic has created an ‘Institute’ if you will to study this broken healthcare system called the Center for the Science of Health Care Delivery.  In addition to ‘studying’ the broken system, the Mayo Clinic has partnered with United Healthcare’s healthcare services arm—Optum—to create ‘Optum Labs.’  Optum Labs will allow the Mayo Clinic and UHC to study quality and cost-effectiveness and begin to apply their learnings to the 85 million UHC members.

3) Fund Excellence

The Mayo Clinic will continue to perform clinical research, but will have additional research priorities in the areas of (1) individualized medicine, (2) regenerative medicine and (3) healthcare delivery (i.e. the Center for the Science of Health Care Delivery described above).  What Dr. Noseworthy writes next regarding ‘funding excellence’ is intriguing:

“…we much move toward a system that funds the right behavior.  Mayo Clinic strongly advocates for health care payment reform… Data on desired outcomes and cost metrics can and should be readily available so that patients [healthcare consumers], families, and payers can make informed decisions about where to seek care.”

Bravo, Dr. Noseworthy.  Well put.

Now, I will pose to you the following question:  What if you as an employee benefits professional could apply this strategic vision to your employee population?

In essence, you and Dr. Noseworthy have similar jobs: taking care of the health of a population with a limited budget (i.e. in a cost-effective manner).

Your underlying principle is the same as Mayo’s:  The Employee/Member comes first.

Your strategic vision—a kin to Mayo’s—could be as follows:

1) Apply best practices in care coordination and clinical pathways for your employees.

2) Analyze the data of your employee population’s health—claims data, health risk assessment data, biometric screening data—and apply insights from that data in targeted programs (e.g. gaps-in-care, prevention, musculoskeletal programs, metabolic syndrome, etc.)

3) Change the way you pay providers to ‘Fund Excellence.’  That could take the more extreme form of direct contracting between employers and providers for guaranteed, bundled-payments for major elective procedures like joint replacements (a la what Walmart does) or you could ‘reward’ those providers that are already practicing high quality, coordinated, cost-effective care with more volume—i.e. steering more of your employees to these providers over other providers.

This is really an exciting time to be in employee benefits and to be a healthcare provider.  I think Dr. Noseworthy’s and Mayo’s vision is spot on and can serve as a template for employers as well.

To learn how Compass helps employers and employees navigate the healthcare system to find high quality, cost-effective, high value care, click on the 5-min video below:

Generic Medications Have Better Outcomes than Brand

The October 1st, 2014 issue of Internal Medicine News has a great summary of a study published in the September 15th, 2014 issue of Annals of Internal Medicine entitled, “Patient Adherence Tops with Generic Statins.”

The study compared outcomes for patients taking a generic cholesterol-lowering statin medication to those patients taking a brand name statin medication.  The researchers found that there was an 8% reduction in cardiovascular ‘events’—defined as hospitalization for heart attack, stroke or all-cause mortality—for those taking generic medication as compared with those taking brand name medication.

The researchers ascribe this difference in outcome to the fact that those taking the generic medication were 77% compliant, compared with those who were taking the band name medication who were only 71% compliant.  The actual term they used was ‘adherent.’  Adherence is the new word for Compliance.

So this study is a big deal.  It is essentially saying that ‘in the real world’ where the cost of a medication matters and medications that are lower cost are more likely to be taken, lower cost medications for high cholesterol have better outcomes.

In this case, saving money did not compromise healthcare quality, it actually INCREASED healthcare quality.

This is an important lesson for population health managers—i.e. VPs of HR, Directors of Compensation and Benefits and Employee Benefits Consultants.

To learn how Compass helps employers and employees lower healthcare costs while INCREASING healthcare quality, click on the 5-min video below:

Employer-Based ACOs: Are They Possible?

Accountable Care Organizations (ACOs) are very much in the healthcare news and the medical literature.  Traditionally, these ACOs are centered around providers—either hospital systems or physician groups… and logically so.

The problem is, they are having a hard time getting off the ground.  The magazine Medical Economics reported that of the 114 Pioneer ACO programs, only 54 saved money.  Of the 54 that saved money, only 29 saved enough money to receive bonus payments.  Additionally, collectively, these ACOs only saved $126 million.  $126 million divided by 54 ACOs = $2.3M per ACO.  This a rounding error in terms of the overall cost of care that these provider groups deliver. (Click HERE to read the article)

Why such poor results?  As the Medical Economics article quotes, “The business incentive for a hospital usually is to have heads in beds, and if you’re an ACO, you’re trying to keep people out of the hospital and healthy.  It could take down the whole organization if your hospital beds are empty, so it’s a complicated transition for a hospital.”  This quote is from Margaret O’Kane, President of the National Committee for Quality Assurance (NCQA).

At the end of the day, hospitals are not incentivized to keep people healthy and in fact, they do better if more people are sick—‘Heads in beds.’  The incentives are not appropriately aligned.

In my opinion, the right way for an ACO to be organized is for the entity that is correctly incentivized to be driving the priorities and ‘calling the shots.’  This assumes that the goal is lower cost and higher quality.  If that is the assumed goal, then the individual patient and the payer (i.e. the employer or government—not the insurance carrier, they are an intermediary) should be driving the priorities and ‘calling the shots.’

So what would an employer ‘calling the shots’ look like?  Let me start by stating what it would NOT look like—it would not be micromanagement of care decisions by providers (i.e. the disease management and managed care model of the 1990s that did not work).  That is not what I am advocating.

However, it would look like a combination of:

(1)   Individual Accountability—i.e. Consumerism—on the part of patients (nothing is more powerful than a market of individual consumers, e.g. the low cost, clean, safe, 40,000+ choices at a grocery store).

(2)   Process Improvement—i.e. ‘a Check-List’ of evidence-based practices that needs to be followed by consumers and providers.  The US Preventive Services Task Force is a good starting place for a check list for preventive care.  Pilots use a check-list before every flight—healthcare should use checklists too.

(3)   Pathways—i.e. direction of employees to providers that are already providing high quality, cost-effective care—i.e. reward those providers that are already doing a great job with more patient volume, rather than trying to micromanage all providers.  This ‘steerage’ is often manifested as a ‘high-performance network’ or ‘narrow network.’

Compass sets-up employer-level ACOs and the results have been just awesome.  There is so much waste and poor quality in healthcare that the savings and the quality improvement just ‘pour out of the system’ when the ACO structure is put in place and the incentives are aligned.

Click on the 5-min video below to learn about Compass’ ‘Check-list’ program for closure of gaps-in-care called Health Prompt:

JAMA says “A Great Deal of Additional Work is Needed”

There is a fantastic editorial in the October 15, 2014 issue of the Journal of the American Medical Association (JAMA) entitled, “ What Makes a Good Quality Measure?” 

Drs Elizabeth McGlynn and John Adams from the Kaiser Permanente Center for Effectiveness and Safety Research wrote an editorial associated with two original research articles also in the same issue.  The two research articles are on the correlation between quality measures and healthcare outcomes.  The first article found that there was no correlation between obstetric quality measures related to labor and delivery and the health outcomes of the mom or the baby.  The second article found that there was not a consistent correlation between quality measures for skilled nursing facilities and outcomes as measured by readmissions to the hospital and death.

In short, better performance on the quality metric did not translate into a better outcome.  Worse performance on the quality metric did not translate into a worse outcome.

In other words, maybe the quality metric was not relevant.

This is an important point that Drs. McGlynn and Adams discuss in their piece.  In this day where terms like ‘quality’ are thrown around left and right, what does the word really mean.  The answer is potentially… not much.

The authors then lay out a framework for correlating a ‘quality measure’ with outcomes.  They write, (1) is the quality measure even related to the outcome, (2) is the magnitude of the relationship even relevant and (3) is the outcome significantly impacted (similar to #2, but has some nuanced differences).

The authors conclude their editorial with the capstone sentence, “Both reports make it clear that a great deal of additional work is needed to achieve the quality measures necessary for a more complete characterization of system performance and potential improvement opportunities.”

Bravo to them for being honest and saying, in effect, “We don’t know.”  Keep in mind this editorial is coming from Kaiser and has passed the review board of one of the most well respected medical journals in the world.

What does this mean for employee benefits professionals and healthcare consumers:

  • Any claims or data related to ‘quality metrics’ needs to be taken with a grain of salt.
  • The quest for ‘quality metrics’ is still a warranted one.  Just because we have not reached the mountain top, does not mean we as a profession should stop trying.

To see how Compass helps employers and employees in this world of healthcare uncertainty, click on the 5-min video below?

Massachusetts Study: Narrow Network = Increased PCP Utilization, Lower Total Cost

The October 10th, 2014 issue of the magazine Medical Economics contains an article entitled, “Study: Narrow networks lead to rise in primary care appointments.”

The article reports on the results of the Massachusetts state employee health plan, which were published first by the National Bureau of Economic Research.

In summary, Massachusetts offered its state employees a 3 month premium ‘holiday’ for their health insurance if they switched to a narrow network.

The results for 2009 – 2012 were then examined:

  • Overall healthcare costs went down by 4.2%
  • Individual savings on healthcare was 36%
  • PCP utilization and spending increased
  • Emergency department utilization decreased
  • There was no evidence of use of lower quality providers or worse outcomes for those with chronic conditions

Interestingly, these results were the opposite of what the researchers were expecting.

What are the implications for employee benefits professionals for employer-sponsored health plans?

  1. Increased PCP utilization and spending can result in lower overall spending.  This fact has been known in the past, but the Massachusetts experience further solidifies it.
  2. Premium Differential—i.e. a lower premium for those that exhibit a certain behavior (using a narrow network in this case)—is an effective means of driving employee engagement and lowering costs.
  3. Steerage to a ‘smaller list’ of providers in a narrow network is one mechanism that can be used to increase PCP utilization.  The Massachusetts study found that the distance employees needed to travel for specialists was farther than for PCPs, indicating that ‘location-bias’ (aka a more convenient doctor is more likely to be seen over a more inconvenient doctor) can drive some behavior change.

If you are managing the health of an employee population, (1) Primary Care, (2) Premium Differentials, and (3) Narrow Networks offer a combined strategy that has proven to lower costs while not adversely affecting quality.

Compass also believes in these three approaches and uses them with our employer clients.  The piece I would add is that Compass uses our Health ProTM healthcare concierge and technology to give employees tools and support to more easily navigate a still fragmented healthcare system.  That Health ProTM ‘glue’ that holds the process together has been a key to our clients’ success.

Click on the 5-min video below to learn how the Compass Health ProTM works:

Johns Hopkins Study: Hospital Gives Price-Transparency to Doctors—Costs Go Down

A press release from Johns Hopkins Medicine in April of 2013 describes a study done by research physicians, led by Dr. Leonard Feldman, where The Johns Hopkins Hospital actually provided the prices of tests to physicians at the time they ordered them.

The rest of the study was conducted as follows:

  • 62 blood tests were identified
  • 1/2 of the tests had prices displayed to physicians and 1/2 did not
  • Ordering practices were then reviewed for the next 6 months

The study found that costs went down by 9% for those tests where the prices were listed and went up by 6% where the prices were not listed.

The researchers found that doctors substituted lower cost tests—for example, they ordered a Basic Metabolic Panel instead of a Comprehensive Metabolic Panel.  I can tell you from personal experience, Comprehensive Metabolic panels seem to be WAY over ordered.  Doctors also ordered fewer tests—for example, Complete Blood Counts with a differential were simply ordered less often.  Again, in my opinion, differentials are also WAY over ordered.

There were no financial implications or incentives for the doctors to order lower cost tests.  The doctors were just shown the comparative pricing data.  It is reasonable to think that the physicians did not think about compromising the quality of patient care in an effort to lower costs.

I did my residency training in Internal Medicine at Johns Hopkins and from my experience there, if they thought the study was going to lower the quality of care, they would not have done it.  I am also biased though because I know Dr. Feldman and Dr. David Thiemann (cardiologist also involved in the study)—they are both great doctors and superb individuals.

Click here to read the full press release on the study.

What does this mean for the employee benefits professional and healthcare consumers?

  • Find providers that are innovating in the direction of improved patient VALUE like Johns Hopkins and steer employees to those providers.  If you are a large employer, I am sure the local hospital administrators would be happy to meet with you to describe their efforts – or – lack of efforts.
  • If you are a healthcare consumer, beware of too many blood draws.  Always ask the doctor what blood tests he or she is ordering and if they are really necessary.  Many blood tests are ordered out of habit—not for a good clinical reason.

To learn how Compass helps employers and employees navigate the complex healthcare system, click on the short video below:

JAMA Study Finds Medical Homes Did Not Work

In a follow up to my blog last Friday on the growth of patient-centered medical homes (PCMH), there was an excellent study in last February’s Journal of the American Medical Association (JAMA) entitled, “Association Between Participation in a Multipayer Medical Home Intervention and Changes in Quality, Utilization, and Costs of Care.” 

The study by Dr. Mark Friedberg et al evaluated a pilot medical home program in Southeastern Pennsylvania for three years.  To quote the article, “medical home initiatives have encouraged primary care practices to invest in patient registries, enhanced access options, and other structural capabilities in exchange for enhanced payments—often as per-patient per-month fees for comprehensive care services.” There were 32 physician practices that became National Committee for Quality Assurance (NCQA) designated medical homes.  These practices cared for about 64,000 patients that were studies.  These practices and patients were compared to a control group of 29 primary care practices that did not become medical homes.  These control practices cared for about 56,000 patients.  Primary care physicians in the PCMH practices received an additional $92,000 for their efforts to create a PCMH.

The Results:

Only 1 out of 11 quality measures was better in the PCMH—diabetic nephropathy screening (83% vs 72% in the control group).  The other 10 quality measures—related to diabetes care, high cholesterol, asthma and cancer screening—were the same in both groups.

Additionally, hospitalizations, ER visits, ambulatory care services and total costs were NO DIFFERENT between the two groups.

The goal of PCMHs is to improve outcomes and lower costs—so in short, in this pilot program—it did not work.

These results fly in the face of my blog last Friday which reported on the 4-fold increase in PCMH programs across the country.

The next question is… WHY?  Why did the PCMH not work?  Why are they expanding if this study found that they don’t work?

The answer may lie in the incentives.  The PCMHs in the study were paid to achieve NCQA designation and that was it.  They were not paid based on outcomes.  They were not paid on improving quality as measured by specific metrics.  They were not paid on lowering costs.  As a result—for example—not a single PCMH in the pilot expanded its hours of operation into the evening or weekend, a step that may help reduce ER visits because the primary care physician is available.

Other PCMH programs specifically pay physicians based on outcomes and/or quality and/or cost reduction.  Maybe these other practices are expanding their hours.  Hence the reason for the expansion of PCMHs by 4X—the overall idea is a good one and the incentives just have to be structured right.

Again, I have to quote Charlie Munger from Berkshire Hathaway… “Incentives are Superpowers.”  You get what you incentivize.  If you incentivize NCQA designation, then you get NCQA designation.

Perhaps, if we want improved quality and lowered costs, we need to specifically create incentive programs that measure and reward these things.

To learn how Compass helps employers lowers costs and improve quality by helping their employees navigate the healthcare system, click on the 5-min video below:

NY Times Reports: Consumers Challenged by OOP Costs

There was a great article from this past Saturday’s New York Times by Abby Goodnough and Robert Pear entitled, “Unable to Meet the Deductible or the Doctor.”

As one would expect, many people who are of modest or moderate incomes who are on a high-deductible insurance plan from an exchange are having a hard time paying for the out-of-pocket costs associated with their plans.  Many people are price-sensitive when it comes to insurance premiums, so in an effort to keep their premiums low, they chose plans with higher deductibles and out-of-pocket costs.  Additionally, people chose plans that have narrower networks—also because these plans tend to have lower premiums.

That’s the trade-off:

Lower Premiums = Higher Out-of-Pocket Costs and/or Narrower Networks

Higher Premiums = Lower Out-of-Pocket Costs and/or Broader Networks

Stats from the article include:

Average individual deductible for a Bronze Plan on an Exchange: $5,081

Average individual deductible for a Silver Plan on an Exchanged: $2,907 (Silver plans were the most popular option)

The limits on Out-of-Pocket Costs for individuals is $6,350 and for a family is $12,700.

The article then has an excellent quote from one of the people interviewed by the reporters:

“Medical care costs too much and health insurance as it stands doesn’t address this.  What have we become?”

Well put.  My opinion on this topic is that medical care will start to cost less when providers begin to compete on price—only then will prices come down.  Providers will only begin to compete on price when healthcare consumers demand that they do.  Healthcare consumers will only demand that providers compete on price when they have to pay some or all of the price themselves.

In the meantime, negotiating for a reduced bill or applying for a provider’s charity care program may provide some options.  The changes in American healthcare have only begun and we have a long way to go.

To learn how Compass helps employers and employees navigate the complex healthcare system, click on the short video below:


Patient-Centered Medical Homes Quadruple in Last 4 Years

There is a very good article in the October 2014 issue of Health Affairs entitled, “Patient-Centered Medical Home Initiatives Expanded in 2009-13: Providers, Patients, And Payment Incentives Increased.” 

“…patient-centered medical homes typically use multidisciplinary teams and advanced tools such as enhanced information technology, chronic disease registries, and online patient portals to proactively manage the full spectrum of patients’ needs. These primary care practices also feature an explicit focus on managing care transitions, often using dedicated care managers, and they frequently integrate behavioral health care into primary care.”

Sounds pretty good.  It gets better.  The authors also state:

“[The patient-centered medical home] is based on the fundamental tenets of primary care, including comprehensive care for the majority of health problems; long-term, person-focused care; serving as the first contact for new issues; and coordinated care.”

Awesome–sign me up!

The authors conducted a survey of patient-centered medical homes nationally and found the following:

  • The number of these programs increased from 26 to 114 from 2009 to 2013.
  • The number of patients cared for by these programs increased from 5M to 21M in the same time period.
  • In a review of the literature, outcomes on cost and quality are mixed—indicating that (as expected) the patient-centered medical home is not a ‘silver bullet’ in healthcare, but still has implications for providing higher-quality, lower-cost care.
  • Payment models for these programs were largely fee-for-service with some additional payments based on (1) pay-for-performance, (2) a fixed per-member-per-month dollar amount (on average $4 PMPM) or (3) a shared-savings model (i.e. if the overall cost of care for a panel of patients was lower than a ‘control group’ of patients, then the doctors would be paid a portion of the cost savings).

My own commentary on this article is that there may be higher-quality and lower-cost care the more the doctor reimbursement is based on pay-for-performance and shared-savings.  The fact that the majority of reimbursement is still in the form of fee-for-service may be ‘getting in the way.’

After all, you get what you pay for.

If you pay for service (i.e. fee-for-service), you get service.

If you pay for performance, you get performance.

If you pay for savings, you get savings.

As Charlie Munger, Vice Chairman of Berkshire Hathaway says, “Incentives are Superpowers.”

However, these comments are supposition on my part, so it will be interesting to see what future studies show.

What does this mean for employee benefits professionals and healthcare consumers?

  • Patient-centered medical homes have mixed results, but regardless they are growing.
  • If you want to incorporate them as part of your employee benefits strategy, they are now more available to steer plan members to.  However, they still are only involved with <10% of the US population—so there may not be one near you and your employees.
  • If I could sum it up in two words, I would write, “It’s early.”

To learn how Compass helps employers and employees with Primary Care Physicians, click on the 5-min video below: