How Health Consumers Think About Cost and Quality

Nick Vailas

Posted 4/24/12 on Healthcare Transparency Now

Recent focus groups conducted as part of a study funded by a federal agency reported the following:

  • People are loathe to make cost and resource use a consideration in choosing health care providers and treatments, even when they are in high deductible plans
  • People will assume higher cost = higher quality if only given cost data
  • People assume more tests and treatments are better, unless information is framed explicitly in terms of potential harms and risks
  • People are interested, for the most part, on what it costs them to get care
  • There are some measures that people think could be very useful that are“cost” measures that they can see are also “quality “ measures
  • Example: costs/level of “avoidable complications”

Much of the data currently available will not respond to what consumers care about: (1) It doesn’t address their costs, (2) It doesn’t take into considerations variations in insurance design that affect what different individuals pay and (3) It cannot be clearly linked to quality measures.

It has been my experience that lower cost providers tend to be high quality providers.  The explanation for this is that providers that end to do high volume services of a particular kind tend to have greater efficiencies.

The price variability among healthcare providers is extreme and what patients are paying for their services in many cases is not a reflection of what it costs to deliver the services.  Thus pricing is all over the place.  Often time’s people will go and seek services based on a doctor’s recommendation and patients are given the information and share it with their doctor.  This will often influence the doctor as to where patients should receive their services.

There is no doubt that price transparency in services will change purchasing behavior of physicians and patients in seeking alternatives.

Source:  Engaging consumers with a high value healthcare system, by Shoshana Sofaer (2011)

Cappers vs.Skinners in the Struggle To Control Costs

Jaan Sidorov

Posted 4/25/12 on The Disease Management Care Blog

The Disease Management Care Blog agrees that if you want a peek at a potential future scenario for health care reform, look at what has happened in Massachusetts since 2006. That’s when the Bay State passed a law that, just like its cousin the Affordable Care Act (ACA), emphasized insurance reforms that included exchanges, subsidies and changes in Medicaid eligibility.

According to this recent New England Journal of Medicine article, the reforms resulted in both good and bad news. The good news is that 98% of Massachusetts’ citizens have insurance coverage; the bad news is that health care now consumes a whopping 54% of the state’s total budget.

In response, the state is now pursuing cost reforms. As the DMCB understands it, Massachusetts is banking on the principle of “global payment” to incent health care providers to work within a budget. If it works out, the providers will embrace “value” by delivering needed services and cutting waste. If it doesn’t work out, the providers could end up putting savings before patients by withholding medical care.

Continue reading “Cappers vs.Skinners in the Struggle To Control Costs”

How Much Does It Cost To Have An Appendectomy?

Kenneth Lin

Posted 4/24/12 on Common Sense Family Doctor

A few years ago, a good friend of mine who holds bachelor’s and law degrees from Ivy League schools lost his job and became one of the estimated 50 million medically uninsured persons in the U.S. Over the course of several days, he developed increasingly severe abdominal pain, fever, and vomiting. Though reluctant to seek medical attention, he finally was persuaded to visit his local hospital’s emergency department, where he was diagnosed with acute appendicitis. Despite his critical condition and the need for immediate surgery, he refused treatment until the hospital’s billing department gave him an estimate of how much an emergency appendectomy would cost. Then, as he was being prepared for the operating room, he somehow managed to bargain with the surgeon to reduce his customary fees.
Continue reading “How Much Does It Cost To Have An Appendectomy?”

Flaws in Cancer Screening

Tom Emerick

Posted 4/24/12 on Cracking Health Costs

Lisa M. Schwartz, MD and Steven Woloshin, MD wrote a good article published in the New York Times called “Endless Screenings Don’t Bring Everlasting Health.” Click here to read the full story.

Many Americans have high expectations for avoiding cancer with the right regimen of tests.  After all isn’t that what our wellness programs teach us? Isn’t that what we hear trumpeted in the popular media? Getting such screenings on a regular basis just makes good sense, no?

Continue reading “Flaws in Cancer Screening”

The Supreme Court and the Mathless Health Care Reform Debate

Eugene Steuerle

Posted 4/10/12 on The Government We Deserve

Regardless of how the Supreme Court decides the constitutionality of the individual mandate, the health care debate is now reignited. If the mandate is sustained, the Accountable Care Act enacted under President Obama still has too many kinks to remain unaltered. If it’s thrown out, a return to the unsustainable system with growing numbers of uninsured is not a solution. Yet no fix is possible as long as elected officials dodge the basic arithmetic of health care.

As for the individual mandate, ignore the constitutional briefs for the moment. Ignore also how a mandate helps address problems that arise if insurance companies must offer coverage regardless of prior conditions and people otherwise are tempted to wait until they are sick to buy it. Instead, let’s see how a mandate fits it into the broader arithmetic of paying for health care.

Continue reading “The Supreme Court and the Mathless Health Care Reform Debate”

Great News! Medicare Tightening Up At Last

Tom Emerick

Posted 4/3/12 on Cracking Health Costs

Good news on the Medicare front.  In a few states (FL, CA, MI, TX, NY, LA, IL) they are at last tightening up on unnecessary surgical procedures, according to a news story in Forbes.  Hurray!

According to the story, “In 2012 CMS will perform an audit before paying for several big ticket cardiology and orthopedic procedures in certain key states.”  All I can say is, at last.

This is huge news.  If Medicare takes this seriously, and gets the results it should get, it will be a great step forward in advancing evidence-based medicine in the public sector.  Further, it will pave the way for employer-sponsored plans to be more aggressive in dealing with over-surgery.  Readers of Cracking Health Costs know that I’ve been tough on Medicare for looking the other way over unnecessary surgery for decades.  May the day come when I can take it all back.

Predictably surgeons are unhappy.  Most surgeons have had no accountability to anyone for getting diagnoses right or doing surgery only when truly necessary.  They will vigorously resist such accountability.  However, such accountability is the norm in most industrialized nations.  That lack of accountability here is one of the main reasons why we spend so much more on health care than our peer nations but get worse and worse results.  Accountability needs to be the norm here too.

Plus Wall Street doesn’t like the idea either.  “Reaction to the report on Wall Street was immediate.  Hospital and medical device stocks plunged after the report was issued on Friday….”  Hmm.  My theory is Medtronic’s stock price is inversely related to America’s economic health.

This is a good test to follow as it is a battle between evidence-based medicine and profit-driven medicine. To see the full article, click here.

Pay Some Doctors More to Save Money

Paul Levy

Posted 3/26/12 on Not Running a Hospital

One of the strange things about health care in America is the manner in which decisions are made about how different kinds of doctors should get paid for their services.  It turns out that the system is controlled in a way most consumers would find unbelievable. As noted by the Wall Street Journal:

 

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

Continue reading “Pay Some Doctors More to Save Money”