A new report out from the American Health Policy Institute and Leavitt Partners further quantifies what we already know: a handful of employees are responsible for the bulk of employers’ health care spending. The new report documented that among 26 large employers, 1.2 percent of employees are high cost claimants who comprise 31 percent of total health care spending. Interestingly enough, the report was released on the heels of news yet again that high deductible health plans continue to be more popular than ever as a strategy for employers to control costs, with employee cost sharing expected to rise yet again this year.
And yet high deductible health plans may do more to bend the cost trend for healthy employees by reducing spending on items like pharmaceuticals and lab testing but not on inpatient care.
The least heathy employees quickly blow through their deductible, and their health issues are so acute and their bills so large, they don’t shop around for care. So what is a large employer or any purchaser concerned about these high cost claimants to do?
Consumerism in how we typically think of the concept doesn’t seem to be working. For example, according to McKinsey,most healthcare consumers are not doing their homework – they aren’t researching costs or their choice of providers. And even for the handful that do use price transparency tools, new research shows this doesn’t result in savings. It’s not that patients with serious health conditions don’t want to understand their condition, the latest evidence-based treatment options, who are the best physicians, and treatment costs. It’s just that they need assistance curating and interpreting this complex information.
Fortunately, as the recent report explains, there are other strategies that can work. The report highlights data mining, enhanced participation, wellness programs, care management, and biometric screening as some examples of strategies that can work. But to truly understand how we can address the costs associated with the most expensive patients, we need to start by understanding the leading cost drivers in health care for these patients. What causes spending to skyrocket? What are the opportunities to intervene to bend the cost curve? When we dig into the research on drivers of health care spending, it quickly becomes apparent there are several opportunities for “intervention.”
The first intervention is making sure high cost patients have the right diagnosis to begin with. Misdiagnosis is more common than medical errors, resulting in an incredible amount of wasteful spending. One in 20 patients will be misdiagnosed, almost 12 million Americans each year. Other researchers quantify the human cost of diagnostic errors at between 40,000 and 80,000 deaths per year.
One obvious strategy to address this is the use of second opinion services, which are growing in popularity among large employers; according to Towers Watson, one quarter of employers plan to tie reimbursement to second opinion services by 2018. Such services are very valuable for confirming if a diagnosis is correct for complex, life altering conditions or confirming if the proper tests have been completed or recommended treatment plans are correct.
Once the patient has a correct diagnosis, the next opportunity presents itself: taking a pause to discuss treatment options given the patient’s diagnosis and their personal situation. During this step, patients need to understand the best-evidence treatment options, and articulate their personal values and preferences.Unfortunately in medicine today that is so often not the case. For example, new research out from Duke University found that the vast majority of the time, patients’ preferences did not influence they type of prostate cancer treatment they received.
Sometimes just a discussion about options is an opportunity for a patient to select a less invasive procedure. For example, as the American Health Care Policy Institute/Leavitt Partners report points out, through its Surgical Decision Initiative, Honeywell compelled employees to weigh their options before having one of five common high cost surgeries. In many cases, the most appropriate, highest quality care for a condition like lower back pain is not surgery. Honeywell realized savings of $5.6 million over the past five years, according to an independent actuary as a result of the program, and are now in the process of expanding it.
After discussing treatment options with the patient, the third opportunity for an intervention arises. If the patient wants to move forward with the more invasive procedure or surgery, getting them to a high quality provider is the next step. Purchasers have a growing awareness that provider quality matters.
Extensive research around price variation has shown that the best providers don’t cost the most and often the most expensive providers have worse outcomes. Top-quality physicians may cost less over the course of treatment than their peers because they are more efficient; for example, they conduct fewer unnecessary tests and redundant imaging.
So, what makes for a top quality physician? One key metric for a high quality physician is their experience and volume in performing certain procedures. In one large study reviewing the relationship of surgery volume and experience to physician performance outcomes, there was strong finding that increased experience and case volume is associated with lower mortality and reduced hospitalizations. Experience matters. A lot.
As a final intervention point, we need to make sure the patient and their family/caregiver are getting the longitudinal support they need to cope. This is a way to ensure the patient gets access to the skills and resources available to them ranging from mental health and medication management to claims advocacy, benefit plan information, and access to caregiver and patient communities. Studies show patients with these social supports have better outcomes. For example, many readers will be familiar with Boeing’s use of the Intensive Outpatient Care Program to improve outcomes and reduce costs associated with medically complex patients. By using care managers to provide care coordination and also to arrange social supports, Boeing reduced spending on these patients by 20 percent.
For the past two decades, discussion about consumerism, skin in the game, and high deductible plans has been all the rage. And this strategy does have its place, encouraging employees who are mostly healthy make prudent care decisions. But we have spent very little airspace discussing what to do about the highest cost employees, how to manage their costs and get them the care and ongoing support that they need. That is now changing for the better and its time we had an in depth conversation about what real care management means. It is a monumental opportunity to contain costs while giving patients what they actually need.
Cindi A. Slater M.D. is the Chief Medical Officer of ConsumerMedical