The ACP Advocate Blog
by Bob Doherty
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?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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