Value shopping

A comparison shopper, working on behalf of major employers, struggled to find prices she could trust as she scoured health insurers' websites this spring for the cost of procedures, laboratory tests and office visits.

“It's not easy to get in a way that makes sense, in a way that is accurate,” says Amanda Goltz, a senior manager for the Pacific Business Group on Health, a healthcare buyer coalition that includes Boeing Co., General Electric Co. and Target Corp. “Nobody has the secret sauce,” says Goltz, a comparison shopper in the coalition's latest test of the marketplace.

But it's more than she could find a year ago, she says.

Efforts to measure and publicize quality measures are not new to hospitals, as underscored by this month's release of hospital safety grades by the Leapfrog Group, another coalition of healthcare buyers.

Now insurers, employers and patients are pushing for more information, not just about quality but cost. Without it, say experts, consumers cannot identify the best value for their healthcare dollar.

That push for cost information has gained momentum under pressure to curb the steady upward march of U.S. healthcare spending. Hospital executives say that squeeze on spending will spur greater competition on price and quality under new models of payment. And more than half (53%) of 1,787 respondents to an exclusive Modern Healthcare poll conducted by MX.com, said payers have already started to reimburse providers for value instead of the volume of care provided. Another 10% expected the shift would occur in less than a year.

Indeed, businesses eager to slow employees' healthcare cost growth say they are increasingly likely to build benefits around lower-cost providers or arm workers with price information, one survey shows. As patients' out-of-pocket costs grow, such information could prove to be a powerful incentive.

One major U.S. insurer, UnitedHealth Group, this month launched a website that allows members to compare doctors' and hospitals' contracted rates for more than 100 common procedures. Members receive information on the total cost and out-of-pocket costs for multiple treatment alternatives.

Meanwhile, the National Quality Forum endorsed its first measures of healthcare resource use earlier this year. Federal officials consider endorsement by the NQF a necessary step toward adopting measures for widespread use. The not-for-profit organization, based in Washington, is working under a four-year federal contract for quality and efficiency measure development.

So far, the group has approved eight measures of cost and resource use, selected for the strength of their scientific support, importance.

Dr. J. Thomas Rosenthal, chief medical officer of the UCLA Hospital System and co-chairman of the NQF resource and cost measure selection committee, says measures were also selected for how clearly they could be understood and used by the public, not just healthcare experts.

Consumers will face increasing pressure to comparison-shop for the best value, but they lack easy access to information on price that could help with informed decisions, Goltz says.

Quality data has been more readily available to consumers than cost data, she says.

Employers continue to drive benefit changes that require households to take on more of the financial burden of medical care.

Among roughly 500 employers surveyed by the National Business Group on Health and Towers Watson this spring, workers' healthcare costs increased 40% over five years. Meanwhile, employers' costs during the same period climbed more slowly at 34%. Modern Healthcare's 2011 Healthcare Purchasing Power Survey, which looks at health spending by major U.S. employers, found workers continue to see benefits that shift more of the financial responsibility for healthcare to households.

Consumers are left with less to spend on rent or major purchases such as cars or college, says Helen Darling, president and CEO of the NBGH. “It's eating away at the family standard of living and what people have to live on.”

Employers are pushing for more price information for consumers and seeking ways to encourage workers to be more price-sensitive.

Nearly one-third of the employers surveyed by the NBGH and Towers Watson said plans to give workers healthcare service unit price information were under consideration for 2013. And 19% of employers said they planned to offer different levels of coverage, or tiers, based on the value or cost of services in 2013. That's compared with 15% that already are doing so this year.

Health plans commonly tier coverage for pharmaceuticals, Darling says, with more coverage for generics and less for brand-name medications. Now health plans have started to tier physician coverage to encourage patients to visit primary-care doctors instead of specialists when possible. The same is true for unnecessary emergency room visits, she says.

The trend toward more price-sensitive health benefits is expected to accelerate.

Darling says she also expects more employers to adopt plans that offer patients a lump sum of money for treatment and more price information about treatment options. Households will be left to make the choice how best to spend their money—and will be required to foot the bill when treatment costs exceed their benefit.

“We don't see much of that yet,” she says. “We think we'll see more of that.”

Yet information for consumers is “more available than it used to be, but it's not available enough,” Darling says.

Goltz of the Pacific Business Group on Health agrees.

The California not-for-profit released a scorecard of health plan consumer price information based on research by comparison shoppers. Some health plans lacked tools to compare physician prices, and shoppers found that others had a limited list of conditions for which prices were available. And only 1 of 6 major insurers provided relative prices for various treatment options.

For example, health plans could provide prices for alternatives to a costly—and often unnecessary—MRI for back pain, Goltz says.

Without such options, consumers risk the “greased chute of medical intervention,” she says.

The marketplace isn't the only arena where efforts are under way to get a better handle on how to identify high-value healthcare.

The Healthcare Financial Management Association, a professional development association of the industry's actuaries, accountants, treasury and finance professionals, launched an effort with 17 hospitals and health systems last year to help the industry respond to the heightened interest from payers about providers who can deliver on cost as well as quality.

“Hospitals and health systems may well want to initiate the process of developing meaningful quality and cost of care metrics instead of waiting to have such metrics imposed on them through government regulation or employer and health plan demands,” according to the HFMA's inaugural value report, Value in Health Care: Current State and Future Directions.

Metrics will help providers predict future financial results and could help win business for those providers “able to speak clearly and convincingly to patients and other purchasers” on cost and quality data, according to report. And metrics developed by providers could be influential as national standards develop.

James Landman, director of thought leadership initiatives for the HFMA, says the association supports measures that capture costs for an entire episode of care rather than metrics limited to the cost of a procedure or test. That's because a high-quality procedure may be more expensive but could prevent future complications that would drive further health spending.

“That's where the difficulties lie in finding a good cost metric,” he says.

The association is expected to release its latest report on healthcare value this month. Its inaugural report identified four critical capabilities for adapting to payment based on value—or efficiency and quality—rather than payment tied to volume: people and culture; quality and financial data analysis; performance improvement to reduce variability; and contract and risk management, which could include managing risk from contracts with independent providers under accountable care arrangements.

The NQF's eight endorsed measures are building blocks for future measures of value, says Helen Burstin, senior vice president for performance measures for the foundation. Two of its measures capture the cost of care provided for an episode of care—for pneumonia and hip or knee replacement. Four more NQF measures capture resource use during the course of a year for conditions such as diabetes, asthma, cardiovascular disorders and chronic obstructive pulmonary disease.

Two remaining measures capture population-based resource use and cost. HealthPartners, a Bloomington, Minn.-based health system with three hospitals and a health plan, developed that pair of measures.

The Twin Cities health system's decade-long experience with the cost measures has more recently led to an initiative to reduce high-technology imaging and plans for behavioral health clinics to alleviate emergency room use.

HealthPartners, using its resource metrics, found use of high-technology imaging in one corner of its market was about 8% higher than anywhere else in 2005. Yet the analysis found similar quality across the marketplace. Susan Knudson, vice president of health informatics for HealthPartners, says the results revealed a subculture of imaging practice patterns.

Dr. Pat Courneya, medical director for delivery systems at HealthPartners' health plan and assistant medical director for the system's medical group, says the analysis prompted the system to adopt a clinical support tool, part of its electronic health-record system, that reduced imaging use in the high-volume area and across the entire market without changes to its publicly reported quality metrics.

The system developed a decision support tool for MRI and CT scans in 2006. HealthPartners also convinced insurers to drop the prior authorization protocol for imaging, Courneya says.

Within a year, imaging use declined in the errant quadrant, curbing expenses by $8 million, according to the health systems.

Imaging use also flattened across the entire market, where utilization had been growing 14% per year earlier in the decade, eliminating an estimated 75,000 unnecessary scans, according to the system. Less than 5% of the system's imaging orders do not adhere to best-practice guidelines for the use of imaging services compared with 15% to 20% previously. Annual savings total an estimated $20 million, according to HealthPartners.

The health system also conducted an analysis of ER use after looking at cost measures for that care and found a lack of local mental and behavioral healthcare was contributing to the ER traffic, Knudson says. That prompted the system to begin planning to expand team-based mental-health services in a bid to reduce unnecessary ER visits.

Knudson says cost measures provide a valuable tool that points to areas for clinical investigation. “You can't improve what you don't measure,” she says.

UCLA's Rosenthal agreed. “If we don't have measurement of resource uses as a companion to the quality uses we're never going to have the full value proposition.”

Rosenthal says he hopes to see developers refine the NQF-endorsed measures as well as create new cost metrics. “We clearly don't have the whole kettle of fish,” he said.

He says he was “disappointed but not surprised” that no hospital-specific cost measures were submitted for NQF review, though he believes such metrics would be valuable.

“There is no standard way of measuring hospital costs,” he says, but many hope to target hospital costs to slow health spending. “They're a big part of the bill to society.”

TAKEAWAY: Providers face growing demand for information not only about quality but cost as insurers, employers and patients seek greater value in their healthcare.