Healthcare Town Hall

The Health Beat blog revisits a study from last year, “Imagining 16 to 12.” Here is an excerpt summarizing the article:

Could we bring our nation’s health care bill down from 17% of GDP to 12%? An intriguing study from Milliman, the independent consulting and actuarial firm, says”yes.” Looking at actuarial data from some of our best and most efficient health care plans, Milliman’s analysts conclude that, in theory, it would be possible to trim our bloated health care system by 25%.

Before you dismiss the idea, consider this: not that long ago, we brought health care inflation down to less than 3% a year for six years running (1994-1999). During that time, the nation’s health care bill remained flat as a percentage of GDP.

And Milliman points out that today, our most efficient , high quality health plans are achieving similar savings by “reducing unnecessary inpatient stays” and “inappropriate imaging.”  The site of service also changes to emphasize lower cost settings—for example, home care instead of nursing-home care, or office-based primary care instead of emergency room care. The authors of the Milliman report acknowledge that 12% is only a “target for what is possible, not a budget.” They are not suggesting that we try to cap health care spending at 12% of GDP.

But the actuarial firm points that that in the not-so-distant past (1991) health cared did consume just 12% of GDP. Now it equals 17% of the economy. Granted, medical technology continues to advance, but have we really made that much progress since the ‘nineties?

Read the full article here.

Cost, Reform 16 to 12, Bruce Pyenson, Kate Fitch, Sara Goldberg

Accountable care organizations (ACOs) must manage toward actuarial targets, which is a key means to attain the end of more efficient care. This process requires both “supply-side” medical management and “demand-side” medical management. Here is an explanation of each:

Supply-side medical management services are what many consider the more challenging side of medical management but they are also what produce the savings. These services are intended to reduce utilization and payment for medically unnecessary services and also ensure that care is delivered in the most appropriate setting, which for an ACO should mean delivered by an ACO-associated provider. Clinical guidelines help evaluate the medical necessity of requested (or, retrospectively, rendered) services…

Demand-side medical management services optimize a population’s health so that demand for services will be lower. In particular, these services can impact ambulatory care sensitive admissions, preference sensitive admissions, readmissions, and ER visits.

For more on managing to actuarial targets, read the recent paper, “Nuts and bolts of ACO financial and operational success.” For more on medically unnecessary services, view this blog post or this paper.

Accountablity, Cost ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch

Accountable care organizations (ACOs) need to properly deploy medical management in pursuit of certain utilization and cost targets. This dynamic is explained as part of a recent briefing paper on the nuts and bolts of ACOs. Here is an excerpt:

ACO’s should focus initial medical management efforts on reducing leakage to hospitals and specialists that are not part of the ACO. This will increase volume to ACO providers and help offset revenue loss due to improved utilization management. Inpatient utilization management is another target for initial medical management efforts particularly since inpatient costs make up approximately 30% of total costs for a commercially insured population and 37% of total Medicare Part A and B spend. Successful ACOs will focus medical management efforts both on avoiding potentially unnecessary admissions and on reducing inpatient hospital leakage (admissions to hospitals not associated with the ACO). Potential reductions in admission vary significantly by admission type, so identifying real opportunities requires analyzing historical data to identify impactable and non-impactable admissions. In particular, ambulatory care sensitive admissions, preference sensitive admissions, and readmissions are considered as impactable (see Definitions). Claims data logic available from the Agency for Healthcare Research and Quality and published reports can help identify benchmark rates for these impactable admissions—and a sense of how many can actually be eliminated.

See the full paper for more detail and for citations.

Accountablity, Reform ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch

Here are some key concepts for anyone who wants to understand accountable care organizations (ACOs):

Ambulatory care sensitive admissions (ACSA) are those for which good outpatient care can potentially prevent the need for hospitalization, or for which early intervention can prevent complications or more severe disease. ACSAs are considered a measure of the quality of ambulatory care delivery in preventing medical complications. High rates of ACSAs might indicate inadequate access to high-quality ambulatory care, including preventive and disease management (DM) services. DM programs focus on individuals with chronic conditions to aggressively monitor and educate patients in self-management of these chronic conditions. ACSAs that involve complications of diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), coronary artery disease (CAD), asthma, and hypertension are admissions that are directly impacted by effective DM/primary care coordination efforts. Based on a Milliman analysis of Medicare claims data, 14% of total admissions are considered ambulatory care sensitive admissions.

Potentially preventable hospital readmissions are an important indicator of quality care and cause unnecessary expense. Preventable readmissions can occur because of inadequate discharge planning, inadequate post-discharge follow-up, or lack of coordination between inpatient and outpatient healthcare teams. Transition of care programs, case management, and disease management services aim to coordinate care at discharge and after; with effective care coordination and oversight, preventable readmissions should be reduced. The rate of preventable readmissions within 30 days has been reported at 11% from a study of all hospital admissions in Florida. The rate of all readmissions reported from a recent Medicare analysis is 19% with the majority reported to be preventable.

Preference sensitive admissions are admissions for elective surgical procedures where the evidence does not suggest greater efficacy between surgical management and medical management for treating particular conditions in some patients. Examples include spinal fusion, joint replacement, hysterectomy, bariatric surgery, cardiac catheterization, percutaneous transluminal coronary angioplasty (PTCA), coronary artery bypass graft (CABG), benign prostate surgery, and others. There is significant variation in the rate of these procedures by region suggesting that local medical opinion and practices have a strong influence on the choices of treatment. There has been a recent focus on the need for patients to be better informed about the treatment options along with consideration for a patient’s personal values and preferences when making medical treatment decisions. This recent trend in patient decision support has been reported to reduce the rate of these procedures. A Milliman analysis identified that, for a commercial population, approximately 16% of non-maternity admits are preference sensitive admissions.

Leakage is defined by services delivered by non-ACO providers that could be delivered by providers associated with the ACO.

For more information, see the recent healthcare reform briefing paper.

Electronic Health Records ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch

The Patient Protection and Affordable Care Act (PPACA) calls for the creation of accountable care organizations (ACOs) as a more cost-effective way of paying for healthcare. In order to succeed, ACOs will have to establish actuarial cost and utilization targets and use medical management to achieve those targets. This process of benchmarking and managing toward targets requires a delicate balance of actuarial and clinical know-how.

A new briefing paper offers a practical guide for approaching this analytic and management imperative. In addition to identifying the steps required, it identifies the medical management priorities for an effective ACO and highlights some of the risks involved.

Accountablity, Reform ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch

The New York Times considers the perception problem facing medical homes. Here is an excerpt:

Call it a P.R. issue, an information disconnect or simply an unfortunate choice of a name, but in all the discussions about patient-centered medical homes, one group of individuals has been conspicuously missing: the patients themselves. And it’s hard not to notice the irony; in a model of care premised on the strength of the patient-doctor relationship, few people other than doctors and experts are even sure what it is or how it affects their care.

Now, as dozens of pilot projects across the country are transforming traditional doctors’ offices into medical homes and putting this theory of practice to the test, one thing has become apparent: even this most promising of reforms is unlikely to take hold without the active involvement of patients.

If patient awareness is the problem, what is the solution? How about medical home scenarios that work. Here’s one: Hypertension.

Medical home hypertension, Kate Fitch, Medical home

The House Oversight and Government Reform Committee yesterday considered a bill to improve detection and treatment of hepatitis C. Here is an excerpt from the testimony of Louisiana congressman Bill Cassidy:

While new HCV infections have declined over the past two decades, there are at least 3 million Americans with chronic HCV. According to the 2009 Milliman Report, Consequences of Hepatitis C Virus: Cost of a Baby Boomer Epidemic of Liver Disease, most of our infected population are baby boomers.

Read more…

Chronic care Bruce Pyenson, Hepatitis C, Kate Fitch

We blogged last week about a new cancer report. That report is now available. Here is an excerpt:

Cancer is an important cost issue for commercial benefit programs. Based on our analysis of Medstat 2007, cancer patients make up 0.68% of a commercially insured population, but account for 10% of the overall healthcare costs. Over the course of a year, a cancer patient receiving chemotherapy (approximately 22% of all cancer patients) incurred, on average, allowed costs of approximately $111,000 a year, almost four times the cost of a cancer patient not receiving chemotherapy. This paper quantifies the medical service utilization and costs of cancer patients receiving chemotherapy, and, in particular, identifies unexplained variation in several utilization and cost measures that indicate opportunities for better quality and cost management…The variation in chemotherapy-related inpatient admissions, ER visits and chemotherapy costs suggest opportunities for improvement, and we modeled the impact of a 10% reduction in national average rates for these key quality outcome metrics. The 10% reduction is significantly less than the regional variation we observed for each of these three categories. The cost reduction per chemotherapy patient would be approximately $3,000 or 2.6% of a patient’s total annual costs.

Our analysis focuses on 10 common cancer types where chemotherapy is a key treatment modality. These 10 cancers account for 65% of cancer patients in a commercial population, and 25% of the 10 cancer population receives chemotherapy in a year. The members receiving chemotherapy and having one of the 10 cancers make up about 0.11% of commercial members but account for about 4% of overall healthcare costs… Some payers are increasing efforts to manage chemotherapy utilization. Although treatment guidelines are well established, standards for treatment outcomes are lacking. This means that measuring adherence to guidelines rather than outcomes could be a useful tool for payers. Few payers require that providers demonstrate adherence to guidelines to receive reimbursement. Establishing best practice benchmarks for particular cost, utilization and quality metrics could improve the ability to monitor and set targets for improving the quality of care delivery for cancer patients receiving chemotherapy.

Electronic Health Records Bruce Pyenson, Cancer, Kate Fitch

A new study commissioned by Innovent Oncology looks at cancer-related utilization. The study, which was announced today, identifies both regional variation as well as ways to improve quality and efficiency in cancer treatment. Here is an excerpt from the press release:

Innovent Oncology commissioned Milliman’s [Kate] Fitch and co-authors in New York to evaluate 10 of the most common cancer types where chemotherapy is a key treatment modality. The utilization and cost metrics examined include: chemotherapy-related hospitalizations; chemotherapy-related emergency room visits; chemotherapy costs; and end-of-life care including hospice enrollment, death in a hospital and chemotherapy administration within 2 to 4 weeks of dying.

The study used a nationally representative claims database of 14 million commercially insured lives. The 10 cancers identified in the study account for 65% of cancer patients in a commercial population and approximately 25% of these cancer patients received chemotherapy treatment during the observation year. The members receiving chemotherapy and having one of the 10 cancers make up about 0.11% of commercial members, but account for about 4% of overall healthcare costs.

Regional variation is identified with respect to the first three metrics listed above. Chemotherapy-related inpatient admissions and emergency room visits show a two-to-three fold regional difference in rates and chemotherapy drug costs range from $17,000 to $27,000. These regional differences suggest opportunities for health plans and plan sponsors to improve quality, thereby reducing cost and utilization.

Proactive end-of-life care provides patients with higher quality care and both patients and payers with additional quality and cost savings opportunities. For chemotherapy patients with the 10 cancers that were identified as dying in an inpatient setting, 24% received chemotherapy within 14 days of dying and 51% received chemotherapy within 30 days of dying.

“This is a comprehensive commercial payer view of cancer patients receiving chemotherapy and various cost drivers,” says Kate Fitch, RN, MEd, Principal and Healthcare Management Consultant with Milliman. “We are very pleased that Innovent Oncology is publishing this report, especially because there is a growing concern over variation and waste in cancer care.”

Read more…

Cancer, Quality of Care Cancer, Kate Fitch, Utilization

We blogged previously about a new diabetes study that is now available in its entirety. The study, “Improved Management Can Help Reduce the Economic Burden of Type 2 Diabetes: A 20-year Actuarial Projection,” indicates that a 50% improvement in diabetes management and control will have immediate and longer-term implications, including:

• A reduction in diabetes-associated deaths by 49,000
• A reduction in diabetes-associated complications by 239,000
• Annual cost reductions of $196 billion (in 2031 dollars)

Read the full study here.

Chronic care Bruce Pyenson, Diabetes, Kate Fitch, Kosuke Iwasaki