Improving Value in Health Care: Challenges and Potential Strategies Arnold M Epstein October 24, 2008 Congressional Health Care Reform Education Project

Access The Persisting Challenges Quality Cost

National Health Expenditures and Their Share of Gross Domestic Product, Source: Centers for Medicare and Medicaid Services, Kaiser Family Foundation Dollars in Billions 5.2% 9.1% 13.7% 13.6% 13.8% 15.3% 15.9% 16.0%

On Main Street Affordability is the Issue Premiums increased 8.5% annually in the last 4 years Premiums increased 8.5% annually in the last 4 years Individual coverage costs $4,700; family coverage costs $12,680 Individual coverage costs $4,700; family coverage costs $12,680 Increasing costs show no signs of abating Increasing costs show no signs of abating Polls show that affordability is the number one health care issue for likely voters Polls show that affordability is the number one health care issue for likely voters

Access The Persisting Challenges Quality Cost

“There is abundant evidence that serious and extensive quality problems exist throughout American medicine.” Institute of Medicine

Opportunities to Improve Quality are Ubiquitous Only 28-36% of elderly receive pneumococcal vaccines when they should. Only 28-36% of elderly receive pneumococcal vaccines when they should. Only 41-54% of hypertensives have their blood pressure controlled. Only 41-54% of hypertensives have their blood pressure controlled. Failure to provide proven therapies for AMI results in 18,000 preventable deaths annually. Failure to provide proven therapies for AMI results in 18,000 preventable deaths annually.

Medical Error is the 8 th Leading Cause of Death Source: To Err is Human: Building a Safer Health System, Institute of Medicine, November ,000 43,458 42,497 16,516 Medical Errors Motor Vehicle Accidents Breast Cancer AIDS

Disparities in Care by Race, Ethnicity and Social Class Abound

Per Capita Medicare Expenditures Vary Nearly Two-fold Across States Source: Dartmouth Atlas

Per Capita Medicare Spending and Overall Quality of Care (24 Indicators) Source: Baicker and Chandra, Health Affairs, 2004

Options to Achieve Higher Value- Reducing Costs and Raising Quality Primary Prevention Primary Prevention Disease Management Disease Management Public Reporting Public Reporting Managed Care Managed Care Payment Reform (eg P4P) Payment Reform (eg P4P) Consumerism Consumerism Information Technology Information Technology Comparative Effectiveness Comparative Effectiveness

Options to Lower Cost or Raise Quality Primary Prevention Primary Prevention Delays illness, unlikely to save costs Delays illness, unlikely to save costs Disease Management Disease Management CBO report: increased quality, no impact on cost CBO report: increased quality, no impact on cost Public Reporting Public Reporting Modest impact on quality, not much on cost Modest impact on quality, not much on cost

Strategies to Lower Cost or Raise Quality Managed Care Managed Care Some potential, enrollment is a concern Some potential, enrollment is a concern Payment Reform (eg P4P, medical home) Payment Reform (eg P4P, medical home) P4P has modest impact on quality, growing focus on “efficiency”; medical home broadly piloted P4P has modest impact on quality, growing focus on “efficiency”; medical home broadly piloted Consumerism Consumerism Some impact Some impact threats to access, and 10% of patients account for 70% of the costs threats to access, and 10% of patients account for 70% of the costs

What is Health Information Technology? Health IT includes a diverse set of technologies for transmitting and managing health information. Health IT includes a diverse set of technologies for transmitting and managing health information. Electronic health records are the lynchpin of HIT Electronic health records are the lynchpin of HIT Core functions Core functions Health information and data ( e.g. problem and med lists), Health information and data ( e.g. problem and med lists), Results management (lab and imaging results) Results management (lab and imaging results) Order entry and support Order entry and support Decision support Decision support Other Functions Other Functions Patient support, reporting and population management, electronic communication Patient support, reporting and population management, electronic communication

The Promise of HIT Chadhry et al reviewed 257 studies (2006) Chadhry et al reviewed 257 studies (2006) Multi- function EHRs increased adherence to guidelines, reduce medication errors, and decreased use of care Multi- function EHRs increased adherence to guidelines, reduce medication errors, and decreased use of care Key studies were from 4 institutions that pioneered IT and developed their own EHRs Key studies were from 4 institutions that pioneered IT and developed their own EHRs Data on cost of care were limited Data on cost of care were limited RAND corporation estimated that a 90% rate of adoption of EHRs in hospitals and physician offices would save net $531B over 15 years RAND corporation estimated that a 90% rate of adoption of EHRs in hospitals and physician offices would save net $531B over 15 years

The Challenges to HIT Source: DeRoches et al N Engl J Med, 2008

What is Comparative Effectiveness? Comparative effectiveness analysis evaluates the clinical effectiveness of drugs, surgical procedures, devices, and dxic tests versus the alternatives. Comparative effectiveness analysis evaluates the clinical effectiveness of drugs, surgical procedures, devices, and dxic tests versus the alternatives. Comparative Effectiveness will address shortfalls in the current system Comparative Effectiveness will address shortfalls in the current system Comparisons among competing alternatives Comparisons among competing alternatives Evaluation of long term efficacy and adverse effects Evaluation of long term efficacy and adverse effects Review of diagnostic and surgical procedures, Review of diagnostic and surgical procedures,

The Promise of Comparative Effectiveness Comparative effectiveness information has the potential to rationalize our use of services and promote care of higher value and quality Comparative effectiveness information has the potential to rationalize our use of services and promote care of higher value and quality MedPAC has proposed that Congress create a comparative-effectiveness entity MedPAC has proposed that Congress create a comparative-effectiveness entity Independent with public and private funding Independent with public and private funding Examine comparative-effectiveness over time Examine comparative-effectiveness over time Disseminate information to its constituents Disseminate information to its constituents No role in recommending coverage No role in recommending coverage

The Challenges to Comparative Effectiveness Prodigious undertaking Prodigious undertaking Many unanswered questions:- design of the board, placement, level of funding, primary versus secondary data collection Many unanswered questions:- design of the board, placement, level of funding, primary versus secondary data collection Will costs be considered, and if so what levels of cost effectiveness will be unacceptable Will costs be considered, and if so what levels of cost effectiveness will be unacceptable How will judgments be translated into clinical policy and utilization review? Will CMS change current policy to cover any “reasonable and necessary” treatment How will judgments be translated into clinical policy and utilization review? Will CMS change current policy to cover any “reasonable and necessary” treatment