The high cost of low-value healthcare

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May 14, 2018

“Low-value” healthcare services are those that have little or no clinical benefit or whose risk of harm outweighs their potential benefits. These services are unlikely to improve health outcomes while incurring unjustifiable costs.

This isn’t a minor issue. It is estimated that 40% of Medicare beneficiaries receive a low value health service and these services contribute to an estimated $750 billion of wasteful spending each year in the U.S.

The Choosing Wisely campaign created by ABIM Foundation and Consumer Reports in 2014 appeared to be a promising approach but has had surprisingly little impact. Despite the supposed adoption of its goals and listing of some 500 low-value services by numerous medical societies, progress to date has been unimpressive. For example, a 2017 Health Affairs study reported that imaging for low-back pain had only decreased by 4% nearly three years after the campaign was initiated, and that decline in PSA testing, imaging for simple headaches, pre-op chest x-rays, and spinal injections for low back pain were also modest.

Why has there been so little change?

This lack of impact can be attributed, in part, to the following:  the lack of attention paid by medical societies to address the efficacy of frequently-performed services; the difficulty of changing cultural norms for both patients and physicians; and the lack of meaningful incentives to change. Having better data and using VBID approaches to incentivize appropriate usage can help to move the needle.

The provision of low-value services is driven by clinicians who still practice with a fee-for-service mindset and a preconceived patient belief that more care is better. Shifting behavioral patterns of care on both the “demand” (patient) side and “supply” (provider) side begins with education, but a widespread conversion of thinking into action is only achievable with policy support.

For example, those enrolled in higher deductible plans due to expanded coverage under the Affordable Care Act are more likely to avoid seeking care due to upfront, out-of-pocket costs, even those defined as “high-value” or those with proven health benefits proportional to cost. To offset this tendency, VBID can assign lower deductibles to high-value services as a way to motivate patients to seek out follow-up care recommended by primary care physicians.

The impact of intelligent referral management

Better referral management can help to reduce low-value care, provide more coordinated care and allow a health system to retain more patients. Many providers currently recommend but fail to manage specialty, ancillary or pharmaceutical services following an initial visit. As a result, a surprisingly high percentage of patients may fail to get needed diagnostic, medical or specialty care that would help them stay healthy.

Alternatively, they may go to a high-cost provider or seek costly out-of-network care that may have positive outcomes but at a prohibitive cost. The health system ends up losing control, the patient loses out on appropriate care, and the payer ends up overpaying. It’s a losing proposition for all of the participants in this story.

To promote VBID, Philips Wellcentive has added cutting-edge referral management technology to our growing set of value-based care solutions. We recently partnered with Fibroblast to help health systems ensure that each patient is matched with the most appropriate doctor or service while saving money by minimizing out-of-network referrals.

Fibroblast’s  HIPAA-compliant, proprietary web-based technology allows clinicians to focus on delivering high-value care while streamlining the referral process to improve care efficiencies for ACOs and other provider groups. In addition, narrowing the referral network can have care and cost improvements.

More than one VBID model

VBID and referral management technology have shown promise in reducing the utilization of (low-value) services, quality and outcomes. But, there is not a one-size-fits-all approach to for employers to use. VBID models offer various approaches to reduce low-value services, including one or more of the following:

  • Service-based – eliminating or reducing co-payments for certain healthcare services or medications, regardless of user
  • Condition-based – eliminating or reducing co-payments for services or medications for certain diagnoses
  • Condition severity-based – eliminating or reducing co-payments for patients at elevated risk for disease or cost complications that may benefit from disease management program participation.
  • Disease management condition-based – eliminating or reducing co-payments for high risk patients who actively participate in disease and medication management programs

While there is some variation among VBID models, these models share the common goal of providing employers and healthcare organizations with a data-driven approach to identify and treat at-risk patient populations with high-value services. Additional tools such as referral management can enhance the process.

About the author

Paul Taylor

Paul D. Taylor, MD, 
CMO, Philips

Paul D. Taylor is CMO for Philips PHM. Board-certified Internal Medicine physician and entrepreneur with experience developing industry-leading Value-Based Care and Population Health Management solutions and implementing clinical quality improvement programs and systems of care at the physician, physician group, physician organization, and community levels.

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