Technology, Prevention to Cut Healthcare Costs


January 2, 2014

In 2014, expect a flurry of changes to continue to bend the health care cost curve down, accelerated by the Affordable Care Act, experts say.

Even die-hard believers in the connection between the economy and how people spend on medical expenses are saying this may be the year that proves them wrong, as providers and insurers rush to make changes to keep profit margins high in light of changes in how they're billed. They'll be led by improved technology that helps them see how to improve quality; preventive programs that have proven they can save millions in long-term costs; and an acknowledgment that consumers hold the purse strings.

"There is a considerable level of consensus based on several recent studies about how to keep costs down," said David Blumenthal, president of The Commonwealth Fund, whose report on recent research was released Wednesday in the New England Journal of Medicine.

His research highlighted several areas that have seen progress?both before the health care law was enacted and because of the law?but that still have further to go:

  • Moving from a fee-for-service payment system toward risk-sharing or team-health pay systems, such as in accountable care organizations.
  • Improving information technology, better coordinating care for the most expensive patients and improving primary care services.
  • Teaching people to choose care based on quality and lower costs.
  • Reducing administrative costs, such as by standardizing billing and claims forms.

Already, he said, costs have slowed, though it has been hard to determine how much of that has been because of the recession and how much was due to changes in how care is provided. But there does seem to be almost universal agreement that, with those four changes, costs will continue to slow.

"I think it's fair to say that if this is a trend and if this is an enduring trend, it began a little before the recession, continued through the recession, and seems to have accelerated after the recession," he said, adding that the acceleration occurred at the same time some of the provisions of the health law were going into place. "So it's not a matter of whether the law began it, but whether it accelerates it and it continues."

Some of those changes, he said, are "psychological," because they send a message to providers that they must make changes or they will lose money in the future. The law supports accountable care organizations and rewards them for not duplicating tests or performing unnecessary procedures, and for preventing medication errors.

It includes penalties for hospitals for readmitting Medicare patients for preventable issues, such as infections or problems gained because no one followed up on their care after they were released. It provides grants for providers who participate in Medicare to build up their electronic medical record system.

It requires standardization of many forms. And it demands that insurers lay out their costs and benefits in an apples-to-apples way so that consumers understand what they're paying for, and, more importantly, what out-of-pocket costs they're expected to cover themselves.

"I have always believed that our overall wealth is the predictor of what we spend," Blumenthal said. "That pattern is no longer as clear as it was before."

In fact, he thinks the nation's providers need to be moving faster. There are only 500 accountable care organizations, and he said there should be more. Medicare foots about 30% to 40% of the total health care bill, so the federal government alone won't force the change. And most insurance in the private sector "is still classic fee-for-service."

States could be the ones to further the change, he said, because they can provide anti-trust protections to insurers so that they don't base their marketing on negotiating low rates with providers so they can offer employers lower premiums. This has meant much higher prices for the uninsured and underinsured. And states could implement changes in payment plans in Medicaid plans, further pushing change, he said.

Throughout 2014, experts say, research will continue in the form of big data analysis aided by provisions in the health care law that boost electronic health records.

Within hospitals and provider groups, doctors will be able to see what works and what doesn't; they'll better be able to make sure quality care is delivered because they'll receive electronic alerts when it is not; and they'll be able to gain outside expertise quickly through electronic means.

"I think the Affordable Care Act certainly accelerated and facilitated those conversations," said Rainu Kaushal, chair of the Department of Healthcare Policy and Research at Weill Cornell Medical College.

That doesn't mean the research won't bring some surprises:

Rich Duszak, a researcher for the Harvey L. Neiman Health Policy Institute, released a study in the American Journal of Roentgenology showing that the costs of MRIs were going down, defying the conventional wisdom that MRIs are a good place to cut costs, he said.

But that may be for two reasons: Policies reducing payments designed to cut costs may have, in fact, already worked.

Or fewer providers are asking for them, either deeming them unnecessary or cutting down on test duplications.

"Clearly there's been a huge emphasis on bending the cost curve," he said. "But in any policy discussions, we need to be looking at what things look like now compared to what they looked like five years ago, because this is a very dynamic process."

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