Wednesday, September 9, 2009

Will Health Care Reform Restrain Rising Costs of Health Care Technology?

Advocate Blog Guest Blogger: Jack Ginsburg, Director of Policy Analysis and Research

There is much talk these days of bending the curve of rising health care costs. At least half of the growth in medical spending in recent years, according to an analysis by the Kaiser Family Foundation, is attributable to technological change. Others attribute as much as 75% of the increase to technology. The Congressional Budget Office concluded that, "The general consensus among health economists is that the large increase in health care spending over the past several decades was principally the result of the emergence of new medical technologies and services and their adoption and widespread diffusion by the U.S. health care system."

The use of advanced medical imaging such as CT scans, MRIs and PET scans has soared and accounts for much of the increased cost. Imaging technology has been widely dispersed to outpatient centers and physician practices. But greater availability of technology is associated with greater utilization and higher spending. Consequently, Medicare payments for imaging services grew more rapidly than any other type of physician service between 2000 and 2005. Medicare claims for CT scans more than doubled from 1995 to 2005, and claims for MRI procedures more than tripled. Each additional CT unit in a physician's practice has been estimated to add $685,000 in Medicare spending per year, and each MRI unit costs Medicare $550,000 each year.

Unlike consumer products, like personal computers and flat screen TVs for which prices have declined as supply increased, prices of health care services involving expensive technological equipment generally remain high even after use becomes widespread. Costlier new technologies also tend to replace older, less expensive ones. Prices in Europe and Canada for many of the same technological services are far less and utilization is less, but clinical outcomes are similar or better. This is largely because other countries generally are slower to adopt new health care technology and most have more regulated systems that control the use, availability, and prices of health care services.

The United States lacks a coordinated policy on health technology assessment and has little regulation of the diffusion of technology. The economic stimulus package enacted earlier this year provides increased funding for comparative effectiveness research by the Agency for Research and Quality. Further provisions for development and use of comparative effectiveness research also are contained in some of the proposals for health care reform. Current proposals will stimulate research to generate information on relative effectiveness, but how that information will be used is not specified. Hopefully, physicians and patients will use the information in making evidence-based treatment decisions that will reduce inappropriate utilization. However, some fear that insurers and government will use comparative effectiveness data to restrict insurance coverage and deny claims.

In a position paper just published by ACP, the College recommends that a coordinated, independent, and evidence-based assessment process should be created to analyze the costs and clinical benefits of new medical technology. ACP advises that coverage and payment policies of public and private health benefit plans should be based on evidence of clinical and cost effectiveness. ACP maintains that information about the effectiveness and outcomes of technology should be readily available to physicians through the use of electronic health information devices. ACP also advises that physicians and patients should engage in advance planning to help ensure that treatment decisions, including surrogate decision-making, are in accord with the patient's values and wishes. However, ACP warns that medically appropriate care should never be withheld solely because of costs. Further, ACP calls for medical liability reforms that include protecting physicians from patient malpractice claims when they involve patients in decision-making and don't provide services of little benefit.

Previous attempts by the federal government to control the use of health care technology included a national health planning program during the 1970s. It required certificate of need (CON) approval for new health care facilities and major capital expenditures. The national program was eliminated during the Reagan Administration, but many state and regional planning agencies still remain. The Office of Technology Assessment (OTA) was another federal agency established in the 1970s to advise Congress about the effectiveness of new technology. It was discontinued in 1995. The National Center for Health Care Technology, established in 1978, also had a broad mandate to conduct and promote research on health care technology but it too was discontinued. ACP calls for new research to evaluate the effectiveness of CON programs and to identify characteristics that are most effective (and that would be acceptable to the public) for reducing unnecessary capacity.

The benefits of technological innovation in health care are numerous and some have been miraculous. Indisputable benefits include improvements in treatments, better health outcomes, more accurate and less invasive diagnostic procedures, and reduced pain and suffering for patients. Some technological innovations improve efficiency and can reduce costs. But are all technological innovations worthwhile? Restricting adoption of technology risks impeding advances in medical science and improvements in patient care. A centralized process for determining allocation of health care resources also raises the specter of rationing in which technological services would have limited availability and patients would have prolonged waits for care.

To really bend the curve of health care costs, we will need to carefully evaluate new technologies and adopt and use them wisely. The challenge will be to balance the financial imperative to curb rapidly increasing costs without stifling innovation.

Question for today:

What steps, if any, should be taken to reduce the health care costs of technology or to assure that health care resources are better allocated in accord with health care needs?


Steve Lucas said...

There needs to be an effort to break the for profit financial relationship between doctors and testing. As noted, as equipment is made available testing goes up along with the associated cost to the system.

On one extreme we have a 24 doctor low income practice in Akron, Ohio opening it's lab to other doctors in the community serving low income and cash patients. Their lab charges run 10% of the local hospitals.

Then we have the other extreme as highlighted in a number of articles in the Akron Beacon Journal culminating on Aug. 2, 2009. Dr. Robert Kent is putting together a doctor owned hospital with 200 doctors all investing a minimum of $10,000. The goal as stated by Dr. Kent is "We want to be that convenient, high-end hospital that can take care of all their basic needs."

To achieve this goal they have taken over an underused hospital in an effort to circumvent any changes in the law that will not allow them to build their new facility in an upper income area. One of the changes made was to convert the unused maternity area into an outpatient surgery center, with private recovery rooms, perfect for cosmetic services.

While grand statements have been made about there being no conflicts of interest and no self referrals, one does not have to look far to see the financial incentives in these activities.

We need to break the financial ties that bind doctors to the overuse of technology and testing.

Steve Lucas

Rich Neubauer MD said...

I've followed your blog closely and with great interest since inception but have held back from comment for the most part given the roles I've played in ACP as a member of the Board of Regents and as current Chair of the Health and Public Policy Committee. As we come to the end game however, I think that is no longer appropriate.

My opinion is that we have come to a point as a society where there is no choice but to bend the cost curse, as the current vernacular goes. That is not to say that there are not questions, many questions, about how painful the process will be. Also, how unattractive physicians in general may appear if they behave as members of trade organizations rather than professionals. Finally, whether our political leaders will fully realize how important it is that in the process of bending the cost curve, they also need to rebuild the crumbling primary care system that has suffered greatly in the current dysfunctional payment system that has in itself contributed to inappropriate valuations and perverse incentives that pervade our current delivery system.

I've watched as the debate has degenerated into more and more separate self interest groups grinding their heels into the sand to protect their individual situation. The slogan "keep the government out of my medicare" at first made no sense to me, but I think I now understand that it is really a cute way of saying, "I've got mine, and even if it isn't perfect, keep your hands off it because things can only go downhill if it is messed with".

In many ways, those who work in the health care system have adapted to a dysfunctional system, and those who access the system have likewise adapted to the dysfunction. They are reluctant to give up the devil they know for a future they fear. And then there are the 40-50 million uninsured who we relegate to third world status.

I've come to the conclusion that we need to make a societal decision on moral grounds to cover everyone - only then can we proceed to work on decreasing costs. As a country that spends twice as much as other countries per capita on health care, and does not rank high on results, we can clearly cover everyone as long as we change how we spend the money. Only when everyone has skin in the game (everyone is covered, basic benefits are defined, all coverage is subjected to a highly regulated environment) will we as a society be able to get really serious about bending the cost curve. It will take adjustments by those in health care jobs and our citizenry in general.