Global relative value units (GlobalRVUs) allow measurement of unit price and efficiency across physician groups for accountable care organizations (ACOs), shared saving and total cost of care programs, and bundled payment and other capitated arrangements. GlobalRVUs are essentially an extension of Medicare’s resource-based relative value scale (RBRVS) so that every medical service has an RVU. The RVUs are based on Healthcare Common Procedure Coding System (HCPCS), diagnosis-related group (DRG), or National Drug Code (NDC) Pharmacy classifications and are not affected by the contractual allowed amount.
Milliman’s Will Fox offers perspective in this MedInsight blog post where he provides an example for the comparison of delivery systems.
For a more detailed account of Milliman GlobalRVUs download the white paper here.
Elliott S. Fisher, MD, director of Population Health and Policy for the Dartmouth Institute, said research focuses on reducing unnecessary hospital stays.
“This important study from NBGH confirms that communities that are able to care for Medicare patients with fewer hospitalizations are able to do the same for their under-65 population. But to slow the growth of spending, we also need to address the problem of prices.”
Health management programs are not without their critics. Research by the Centers for Medicare & Medicaid Services shows some health management programs don’t live up to their promises of reducing health care expenses.
“As an actuary, I run the formulas of disease management companies on large databases and understand why they can show an ROI increase in their formulas and what the flaws are within those formulas,” said Bruce Pyenson, a principal and consulting actuary with Milliman, a New York-based actuarial and consulting firm.
Pyenson pointed out that Americans are living longer, disability rates are lower and events associated with some chronic conditions are at an all-time low. “Americans are healthier than ever, despite the obesity epidemic,” Pyenson contended.
A new article in Employee Benefit News looks at the notion of employer “pay-or-play” provisions and examines what kinds of employer-sponsored benefits provide a return on investment. There continues to be some question whether certain programs sponsored by employers do in fact return value. Here is an excerpt from the article:
Health management programs are not without their critics. Research by the Centers for Medicare & Medicaid Services shows some health management programs don’t live up to their promises of reducing health care expenses.
“As an actuary, I run the formulas of disease management companies on large databases and understand why they can show an ROI increase in their formulas and what the flaws are within those formulas,” said Bruce Pyenson, a principal and consulting actuary with Milliman, a New York-based actuarial and consulting firm.
Pyenson pointed out that Americans are living longer, disability rates are lower and events associated with some chronic conditions are at an all-time low. “Americans are healthier than ever, despite the obesity epidemic,” Pyenson contended….Pyenson explained that the idea “you spend more money now in order to save more money later is an idea that does not work.”
Health care reform puts the spotlight on “some bad behaviors that employers have gotten into with benefit plans designs. Now is the time to sweep out some of that trash that accumulated over the years in benefits plans,” asserted Pyenson.
For example, employers can save money by dropping disease managementand employee assistance programs, and value-based insurance designs. “It’s been proven that the stuff doesn’t work,” Pyenson said. Employers instead should aim for tighter formularies on prescription drugs benefits and challenge the commissions of brokers and consultants.
According to Pyenson, employers also can earn substantial dollar savings by moving to a limited network, tightening medical management, limiting out-of-network benefits or offering no out-of-network benefits.
For more information, check out this article by Milliman principal Kate Fitch; the article frames questions for those contemplating a move toward VBID.
No system is perfect and there is no single pathway to success. Geographic, financial resource, and population disparities (among others) preclude adoption of a single methodology to achieve “well managed” status universally. Still, we have concluded that a reduction in overall healthcare costs in excess of 25% would be possible if care were delivered under best observed practices.
As we discussed a few weeks ago, this number squares with the waste estimates posited by Peter Orszag. Where are the opportunities for greater improvement?
Our experience with top-performing systems does show opportunities for efficiency improvements in practically all service categories, but especially in facility-based care. With shifts in the types of treatment and places of service under best-observed clinical practices, certain categories would increase accordingly.
NPR interviewed Peter Orszag of the White House Office of Management and Budget this morning. While the entire interview is worth a listen, one quote jumps out:
Estimates suggest that as much as $700 billion a year in health care costs do not improve health outcomes. It occurs because we pay for more care rather than better care. We need to be moving towards a system in which doctors and hospitals have incentives to provide the care that makes you better, rather than the care that just results in more tests and more days in [the] hospital.
Today, the New York Times picked up on an increasingly popular narrative: the cost-driven move to pursue cross-border care (a.k.a. “medical tourism”). Cross-border care has received much attention for its savings potential. For example, from the Times article:
Mr. Schreiner is what’s known in the health care world as a “medical tourist.” No longer covered under his former employer’s insurance and too young to qualify for Medicare, Mr. Schreiner has a private health insurance policy with a steep $10,000 deductible. Not wanting to spend all of that on the $14,000 his operation would have cost stateside, he paid only $3,900 in hospital and doctor’s bills in Costa Rica.
The concept may be compelling, but there are risks. Health consumers are still limited in their ability to compare quality of care in different countries, though sound evidence is emerging. Lisa Beichl, international healthcare expert with the Milliman Care Guidelines, discusses this dynamic in a recent issue of Health Perspectives.
As we mentioned on Monday, the cost-savings potential of prevention and wellness is still uncertain. Milliman Principal Kate Fitch provides some perspective on this.
Wellness is often mentioned as a key component of healthcare reform yet the success of these programs is mixed.
We asked Kate Fitch for perspective based on lessons learned from the private sector.
Q: What wellness programs are most effective? Do some programs work better than others?
Kate Fitch: Program effectiveness goes beyond whether or not it “works.” Wellness programs should be evaluated in terms of both efficacy and value. Providing everyone with a personal trainer, personal nutritionist, and exercise equipment in the home might result in a few great outcomes. But if the cost becomes astronomical, or if the population affected by the program is insignificant, the value of the program comes into question.
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