By ANDY ORAM
Behind many of the economic and political tensions of our time lurks the growing burden of health care costs. Does that claim sound inflated? Consider: when the public complains of stagnating wages, we can put our finger on health care costs as the monster that gobbles up employee compensation. When economists fret over the future burden of Social Security and Medicare (a cry echoed across the world as populations age), we have to recognize the scourge of increased health care costs. Most of the current debates over the Affordable Care Act–a recurring issue during the presidential campaign–touch explicity or implicity on health care costs.
The upward curve in costs became less of a run-away trend during the recession. Although the ACA might take a bit of the credit, most observers attribute the softening of the cost rises to belt-tightening by patients, and perhaps also to lower inflation. Inexorably, though, costs do rise. Small businesses and people on individual plans suffer most–a burden for which the ACA is not responsible, but that it brought to public attention–and the rest of us are bedeviled by rising premiums and deductibles as well. A study found spending increases across the board in 2015 by individual households, businesses, and governments alike. A number of people give up on health insurance because it’s still too expensive and does not end up covering their needs.
Insurers are suffering too, which is why even major companies such as Blue Cross and UnitedHealth are abandoning some markets.
Where Does the Initiative Lie?
Once we establish health care costs as a primary contemporary issue, we have to look at who is in a position to fix the problem. Going back before the ACA to the bipartisan HITECH act of 2009–and forward to the 1915 MACRA law and this year’s 21st Century Cures Act–the government claims it can play a role. Many people expect insurers, including government payers, to lead reform through pay-for-value policies (also known as accountable care, bundled payments, or risk sharing) and through quality ratings. Many even expect the patients to rise up and demand change–a shift of responsiblity that I have called a scam.
I believe the impact of governments and payers will be very limited. Responsibility comes back to the doctors and the institutions that employ them to create more efficient health care systems. Fee-for-value remains a critical element, and we should work on the potential represented by quality ratings, but these are crude instruments and will not replace a concerted effort by clinicians. New technologies can support the way forward, but only in the context of sincere organizational and cultural change. Tasks include:
Creating a coordinated team approach, which includes the patient. This task includes the long-resisted goal of integrating records, along with handling transitions adeptly.
Reaching out beyond the clinic’s walls to address barriers prevent patients from achieving health in their living environments.
Seeking creative solutions that don’t depend on tests and interventions that a low probability of working, and that seek alternatives to expensive or dangerous treatments such as opioids. Incorporating analytics intelligently could produce better outcomes at lower costs.
Moving records out of the clinic to the patient, which will solve many data exchange problems as well as wiping out the epidemics of duplicate records and wrong patient identification.
Note that I haven’t mentioned the great passion of clinical consultants, patient engagement. That’s because I consider campaigns to engage patients a distraction from health care reform–specifically, a distraction from giving the patient power over her care and integrating her into the clinical team. A few of the goals cited by many engagement specialists are useful, but in general their campaign isn’t succeeding. In the measured language of the respected Chilmark Research firm, “patient portals suck.” At worst, patient engagement perpetuates the destructive notion that patients can force systems to change.
Coordinated care, which is key to preventing errors and relapses in our fragmented health care system, is still seriously hampered. Consider these reports:
A survey found that health care providers share patient information just a little more than half the time. In the survey, 60 percent of patients said their primary doctor’s office had access to their hospital or emergency room records without the need to bring those records to the office. Yet just 49 percent of patients said their doctors are able to share information about their health, and know their history prior to an appointment.
In January of 2016, a majority of Accountable Care Organizations (ACOs) reported interoperability as their major barrier. Considering that coordinated care is the fundamental premise of the ACO, this revealed an embarrassing gap between aspirations and achievements.
The Centers for Disease Control report that “only 38.2% of all doctor offices sent patient information electronically to other organizations and only 38.3% electronically received such information….The number of doctor offices and group practices that have integrated their automated medical records systems with other electronic healthcare information networks, databases and portals is even less at 31%.”
Another recent report found that only 43% of doctors ask elderly patients about treatments they’re getting from other providers.
EHR vendors are still poor at data sharing with EHRs from other vendors.
An ONC data brief, although it claimed to see progress in exchanging data during 2014 and 2015, pointed to technical barriers holding back the effective use of data.
Lack of interoperability will also hold back the much-heralded “precision medicine” initiative.
Luckily, the field is starting to make progress. The open FHIR standard, which the HL7 standards committee adopted in response to government and industry pressure, could lead to widespread interoperability. Certain more limited efforts, such as the CommonWell Health Alliance, may also overcome the resistance of vendors and providers to data exchange.
The limitations of risk sharing
Risk sharing is a great policy, and has managed to pick off some low-hanging fruit, such as an early experiment in cost sharing by Blue Cross Blue Shield of Massachusetts. The Medicare focus on hospital readmissions (the famous 30-day rule) has led to a small but important reduction in those readmissions. But we’ll hit bumps in the road as accountable care moves forward.
As mentioned earlier, ACOs have suffered the same difficulties as other health care centers when trying to share data. In August, Forbes reported that ACOs aren’t ready for prime time, although employers are trying to adopt useful accountability practices. ACOs also need to use more analytics–and we need larger and more detailed data sets to support those analytics.
Analytics are also needed to improve quality measures. I laid out some problems with measuring quality in an earlier article. This past October, the Office of the National Coordinator today recognized that quality ratings are inadequate and tried to introduce more transparency into the system.
The Centers for Medicare & Medicaid Services keeps adding new quality measures, such as on complications during treatment and rehab and long-term care facilities. These look valuable, but keep institutions on a treadmill of continually increasing measures and reporting requirements. A CMS survey in June found that eCQM quality data is hard for hospitals to collect.
I question whether doctors and hospitals are capable of creating chain of events required to make accountable care work, as assumed by Medicare’s new rules for covering cardiac care and hop fractures.
Health care is eerily similar to education in many of its traits, as well as the challenges it faces. One such challenge is quality measurement. An excellent critique of testing in the field of education appears in Cathy O’Neil’s popular and well-written book, Weapons of Math Destruction. Quality measurement is a good idea in theory, but requires clear links between the things being measured and the ultimate goal of the organization (in education, a well-adjusted and inquisitive child; in health care, a good life). O’Neil points out what goes wrong when quality measures are seriously flawed. I’m afraid that our measurements in health care are still inadequate.
Quality measures in health care, like educational testing, also create perverse incentives, such as denying care to avoid risky procedures, even when patients could benefit, or simply refusing very sick patients.
Another limitation of payment incentives is the time lag that chronic disease introduces between medical interventions and results. The ACA brought some 20 million new people into the health care system, a prospect initially welcomed by clinicians and insurers alike. (The American Medical Association and American Hospital Association still want these benefits maintained.) But many of these people came with untreated conditions, including multiple chronic conditions known charmingly in the field as “comorbidities.” The needs of these people far exceeded what anybody expected. And it turns out that young people are not so “invincible” as they have been made out to be–in particular, many suffer from untreated mental illness.
Finally, there’s no guarantee that improved outcomes will be accompanied by lower costs.
Even were the medical field prepared with all the tasks I listed at the beginning of this article, years would pass before we could reap the cost benefits of treating chronic illness. As currently constituted, the clinicians are ill-equipped to help people with chronic illnesses on top of social and economic deficits.
Thus, the carrots and sticks held out by payers and governments don’t hit their marks with enough accuracy to change organizational and cultural inertia. It will have to be the clinical settings themselves that take the lead.
What other options do we have in reform efforts?
Outside of the risk-sharing efforts, most efforts to reduce health care costs come down to reducing the use of health care. One can see this in many forms across the industry and its regulators, such as:
Increases in deductibles and co-pays.
Suggestions that insurers be permitted to offer low-quality insurance plans with important gaps (including Republican suggestions to enable sales across state lines), leaving patients uncovered at the most vulnerable moments in their lives.
Refusals by payers to cover expensive drugs, often justified by blurring the important distinctions between similar drugs that have different costs.
This trend is risky in itself. Patients who are discouraged from seeking health care get sicker and end up more expensive to treat when they finally get desperate enough to go to the doctor. Health is worsening in the United States among all except the highest income bracket.
Already, one third of US adults forego necessary health care (although the percentage has improved recently). Even given the ACA’s expansion of insurance and provision of free preventative services, half of the patients using the ACA’s exchanges forego care. The problem is high deductibles. Turning Medicare into a subsidy program, a regularly aired policy proposal, would accentuate this trend.
Eliminating the “individual mandate” that encourages healthy people to buy insurance would make the problem worse, as many observers point out. Many people currently buying insurance will drop it, then pick up insurance again or merely flood the emergency rooms when they have a serious, costly illness.
Cost cutting also tends to involve the elimination of patient choice in providers, especially on the health exchanges set up by the ACA, and even in seemingly creative approaches such as direct contracting between an employer and a health care provider. Many health care reformers don’t seem to notice that the policy of restricting patient choice runs head on against one of their shibboleths, which is that patients will reduce costs when given responsibility for choosing their providers.
Before bringing this article to a close, I should acknowledge that many other factors complicate health care costs.
The most important way we could improve health would be to improve environmental factors, which are mostly tied to income and the discrimination against certain populations. But improving the patient’s life situation is a huge task. Clinicians need to identify the factors they can reasonably address. Even when crippled (almost literally) by social, emotional, and financial constraints, patients can make better use of the health care system when key strategic needs are met, such as transportation to clinical visits and logistical support from case managers.
Drug prices involve many facets. Although medication costs creep up for many reasons, most drugs with spectacular costs are aimed at small populations who previously had inadequate treatments or no hope of treatment at all. Suppressing the use of these drugs–or imposing price caps that reduce the pharma companies’ incentives to develop these drugs–is just another form of cutting costs by cutting care. Ideally, pharma companies would reduce the costs of drug development, which a Forbes article lists as four billion dollars on average per medication, with a high of eleven billion. New technologies may streamline drug trials. So far, a survey by Validic (a company that connects medical and fitness devices to health apps and records) found that pharma companies made very limited use of digital data, focusing on medication adherence during trials and detecting early problems with those trials. So there is room for a more sophisticated use of data and devices.
Another consideration is industry consolidation, such as the purchase of rural practices and individual physician practices by larger health care institutions. This again puts the onus on the clinical institution itself to control costs, rather than simply exploiting a monopoly or oligopoly.
The complexity of billing certainly adds significantly to health care costs, especially since the industry keeps finding new ways to add intermediaries. Still, value-based reimbursement and all the measurement it entails will be complex too.
I return, then, to my thesis that the main solution to health care costs lies in clinicians attacking the tasks mentioned at the beginning of the article. Coordinate care, address environmental factors, look for creative solutions, and give the patients their records. Although poor external regulations and payment systems have reinforced toxic organizational cultures, the reform must come from within.