Business Group Head Urges Cost Reductions To Effect Change in Health Care Delivery

Bloomberg Government
January 10, 2013

Slowing the rise in health care costs is not enough to effect change—costs need to be reduced, the head of an organization representing large companies that sponsor employee health insurance said at a health care delivery reform conference Jan. 10.

“We can and must reduce costs. It's not nearly enough to say ‘bend the curve,’” said Helen Darling, president and chief executive officer of the National Business Group on Health (NBGH). She spoke at a roundtable forum sponsored by NEHI, a health care policy research institute based in Cambridge, Mass., and formerly known as the New England Healthcare Institute.

“That's like saying, instead of gaining five pounds a year when I'm 20 pounds overweight, I should actually only gain three pounds a year, and I'll be somehow healthy,” Darling said. Employers are “very, very frustrated” by the problem of spiraling health care cost increases, she said.

“From an employer's perspective, there are no savings if you don't spend as much on something as you were going to spend,” Darling said. “We call it ‘cost avoidance,'”

ACA Cost Will Come From Wages

The “hundreds of billions of dollars” that will be required to pay for the Affordable Care Act will “come from wages, and it's going to come from jobs, and it's going to come from extra hours” that workers may have been able to work, Darling said.

Employers' annual cost to cover the approximately 160 million Americans who have employer-sponsored health insurance averages more than $20,000 for a family of four, Darling said. Household income averages about $50,000, which is 7 percent lower than in 2000, she said. “Our standard of living has shrunk, and our health care costs have continued to climb,” she said, adding that the situation is “unsustainable.”

The NBGH has to serve as “a constant, and unfortunately sometimes unpleasant counterweight to advocates who advocate for particular things they want,” Darling said. She was critical of the U.S. Preventive Services Task Force, which makes recommendations for preventive care that is mandated to be covered under ACA without charging any out-of-pocket costs to enrollees.

“Who wouldn't like 20 visits free for counseling for their weight,” even if the patient only needs to lose a small amount of weight? Darling said. “We also are having mandated tests and screenings for which there's no evidence they have a value.”

Stop Paying for Mistakes

“We shouldn't feel sorry for somebody who's being paid to do something that shouldn't be done. We shouldn't be sorry for somebody that stops being paid for mistakes,” Darling said. “In the corporate sector that wouldn't happen,” she said, comparing the situation to trying to charge customers for mistakes.

“But I hear this all the time: Pay us more because you're saving money. They're not saving money,” she said, noting costs are going up between 5 percent and 10 percent annually.

Joseph Antos, a health care and retirement policy expert at the American Enterprise Institute, a free market-oriented think tank, noted that attempts to scale back mammogram guidelines based on scientific evidence were immediately withdrawn due to public backlash.

“The public needs education,” Antos said. “Simply issuing an edict gets you into trouble, and the political system can't abide by it,” he said. The government should not attempt to “micromanage the system,” he said, adding that it should give health care providers “an opportunity to find better ways of doing things, but don't tell them what to do.”

More Than $700 Billion a Year Wasted

NEHI President Wendy Everett said there is more than $700 billion a year in wasteful spending in the U.S. health care system. Health care industry officials outlined new delivery models that are reducing cost increases, and NEHI Jan. 10 released a report of case interviews on cost containment titled Striving for High Value Health Care: Lessons Learned Across the Country.

William Shrank, director of the Rapid-Cycle Evaluation Group at the Center for Medicare and Medicaid Innovation (CMMI) at the Centers for Medicare & Medicaid Services, said his organization is trying to address a wide range of goals associated with making the health care system more efficient, such as reducing preventable hospital readmissions.

“Our plan and our mandate is not to try to figure out a specific strategy to … reduce the cost of care for each and every specific kind of area of waste,” Shrank said. “Our job is a singular and broad but direct one—to realign the incentives in the health care system to create a business context so that the marketplace creates strategies and structures and approaches and delivery system reform to fix these problems,” he said.

The chief problem of the fee-for-service-based U.S. health care system is that it rewards the volume of services performed rather than quality of outcomes, which leads to expensive care, Shrank said.

How to Pay for Care

ACA appropriated “a large sum of money” to CMMI to develop, implement, and test new payment models, Shrank said. “Our leverage is how we pay for care. We're not creating new programs. We're creating new ways of paying for care.”

If CMMI can demonstrate that new payment models reduce the cost of care without adversely affecting quality or improve quality without increasing cost, and the results are certified by an actuary, the secretary of health and human services can implement the programs nationally through rulemaking without having to go through the lawmaking process, Shrank said. That would give CMMI the opportunity to rapidly test, evaluate, and bring innovative programs to scale, he said.

He cited as an example accountable care organizations (ACOs) being implemented in the Medicare program under ACA. In ACOs, a health system is responsible for the total cost and health of the population it serves and is rewarded by receiving shared savings if care is delivered less expensively and with greater quality.

On Jan. 10 HHS announced 106 new ACOs covering some 4 million Medicare beneficiaries, bringing the total number of ACOs formed since ACA passage in 2010 to more than 250.

For More Information

Striving for High Value Health Care: Lessons Learned Across the Country is at http://www.nehi.net/bendthecurve/sup/documents/Striving_for_Value_National_Case_Studies.pdf

Reprinted with permission from Bloomberg Government.

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