[Joint House and Senate Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 109-680
THE NEXT GENERATION OF HEALTH INFORMATION TOOLS FOR CONSUMERS
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 10, 2006
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Jim Saxton, New Jersey, Chairman Robert F. Bennett, Utah, Vice
Paul Ryan, Wisconsin Chairman
Phil English, Pennsylvania Sam Brownback, Kansas
Ron Paul, Texas John Sununu, New Hampshire
Kevin Brady, Texas Jim DeMint, South Carolina
Thaddeus G. McCotter, Michigan Jeff Sessions, Alabama
Carolyn B. Maloney, New York John Cornyn, Texas
Maurice D. Hinchey, New York Jack Reed, Rhode Island
Loretta Sanchez, California Edward M. Kennedy, Massachusetts
Elijah Cummings, Maryland Paul S. Sarbanes, Maryland
Jeff Bingaman, New Mexico
Christopher J. Frenze, Executive Director
Chad Stone, Minority Staff Director
C O N T E N T S
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Opening Statement of Members
Hon. Robert F. Bennett, Vice Chairman, a U.S. Senator from Utah.. 1
Hon. Carolyn B. Maloney, a U.S. Representative from New York..... 3
Witnesses
Statement of Carolyn M. Clancy, M.D., Director, Agency for
Healthcare Research and Quality, Rockville, Maryland........... 4
Statement of Arnold Milstein, MD, MPH, Medical Director, Pacific
Business Group on Health; Worldwide Partner, Mercer Human
Resource Consulting, San Francisco, California................. 6
Statement of Michael D. Parkinson, M.D., MPH, Executive Vice
President and Chief Health and Medical Officer, Lumenos,
Alexandria, Virginia........................................... 8
Statement of Paul Ginsburg, Ph.D., President, Center for Studying
Health System Change, Washington, DC........................... 9
Statement of Walton J. Francis, MA, MPA, MPP, Author and
Independent Consultant, Fairfax, Virginia...................... 23
Statement of Donald W. Kemper, MPH, Chairman and CEO, Healthwise,
Inc., Boise, Idaho............................................. 25
Statement of Douglas G. Cave, Ph.D., MPH, President, Cave
Consulting Group, Foster City, California...................... 26
Submissions for the Record
Prepared statement of Senator Robert F. Bennett, Vice Chairman... 34
Prepared statement of Representative Carolyn B. Maloney.......... 36
Prepared statement of Carolyn M. Clancy, M.D., Director, Agency
for Healthcare Research and Quality, Rockville, Maryland....... 38
Prepared statement of Arnold Milstein, MD, MPH, Medical Director,
Pacific Business Group on Health; Worldwide Partner, Mercer
Human Resource Consulting, San Francisco, California........... 45
Prepared statement of Michael D. Parkinson, M.D., MPH, Executive
Vice President and Chief Health and Medical Officer, Lumenos,
Alexandria, Virginia........................................... 62
Prepared statement of Paul Ginsburg, Ph.D., President, Center for
Studying Health System Change, Washington, DC.................. 67
Prepared statement of Walton J. Francis, MA, MPA, MPP, Author and
Independent Consultant, Fairfax, Virginia...................... 72
Prepared statement of Donald W. Kemper, MPH, Chairman and CEO,
Healthwise, Inc., Boise, Idaho................................. 81
Prepared statement of Douglas G. Cave, Ph.D., MPH, President,
Cave Consulting Group, Foster City, California................. 96
THE NEXT GENERATION OF HEALTH INFORMATION TOOLS FOR CONSUMERS
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WEDNESDAY, MAY 10, 2006
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The Committee met at 10 a.m., in room 106 of the Dirksen
Senate Office Building, the Honorable Robert F. Bennett (Vice
Chairman of the Committee) presiding.
Senators present: Senator Bennett.
Representatives present: Representatives Maloney, Sanchez,
and Cummings.
Staff members present: Tom Miller, Jeff Schlagenhauf,
Colleen Healy, Katie Jones, Daniel Dowler, Chad Stone, and John
McInerney.
OPENING STATEMENT OF HON. ROBERT F. BENNETT,
VICE CHAIRMAN, A U.S. SENATOR FROM UTAH
Chairman Bennett. The Committee will come to order. We're
expecting some Members of the House to join us fairly quickly,
but we will move ahead in respect to the witnesses and their
willingness to be with us and to share their expertise.
We welcome you all to this hearing on the next generation
of health information tools for consumers. We need to provide
health care consumers, employee plan sponsors, doctors,
hospital administrators, and health care program administrators
with better information to improve their choices and
decisionmaking.
I sit on the Banking Committee where we're always using the
word transparency, and talking about the importance of
transparency in capital markets. Well, we need transparency in
health care choices. I remember the time, which I hope is past
now, when policymakers would say: Customers are not intelligent
enough to make decisions with health care. They are at the
mercy of providers, because they don't have the education, the
background, the understanding of science that can allow them to
make intelligent decisions. So they simply take whatever the
provider or the payment administrator decides is the best
decision.
We're in ``Health Care Week'' in the Senate right now,
discussing health care issues. This is a logical time to
examine the current and future state of health information.
That's essential to improve our current health care
arrangements, whether we're talking about consumer-driven
health plans or health savings accounts, traditional employer-
sponsored plans, Medicare, Medicaid, charitable care, or
concierge care; cash payment at the moment of service. Whatever
it is, we need better information; more transparency, to use
the capital market's word, with respect to our health care
choices.
We need information about price, quality and value of
health care options as well as support tools to assist and
improve decisionmaking all across the board. We may differ in
how much information we wish to or can absorb, but something
more than what we currently have is available is better for
just about all of us.
Now, neither stronger financial incentives to consumers nor
top-down efforts to re-engineer health care delivery will by
themselves be able to change the future trends without better
information.
We've witnessed the transformative power of better
information in other parts of the economy. Information
technology is king in such mundane areas as retailing. Health
care need not continue to be a lagging exception with respect
to the importance of information technology.
So today's hearing will go into this area, and we have two
panels, of whom we're very proud and to whom we're very
grateful.
Our first panel of witnesses includes Dr. Carolyn Clancy,
who directs the Agency for Healthcare Research and Quality, and
they're at the forefront of coordinating public and private
efforts to improve the data measurement, aggregation, and
reporting activities that can produce more valuable and
actionable consumer health information.
Then we have Dr. Arnold Milstein, who is the medical
director of the Pacific Business Group on Health and the U.S.
Health Care Thought Leader at Mercer Health & Benefits.
He heads performance measurement activities for both the
Leapfrog Group and the Consumer-Purchaser Disclosure Project
and is a MedPAC Commissioner.
I like somebody with a scientific background who embraces
the name of the Leapfrog Group. It shows a little bit of
flexibility.
Dr. Michael Parkinson is executive vice president and chief
health and medical officer for Lumenos, one of the country's
leading providers of consumer-driven health care. And the
company's goal is to improve consumers' health outcomes and
achieve long-term cost efficiency for employers that sponsor
health plans.
Paul Ginsburg is an economist and president of the Center
for Studying Health System Change. HSC's main research tool is
the Community Tracking Study, which consists of national
surveys of households and physicians in 60 nationally
representative communities across the country and site visits
to 12 of these communities.
So that will be our first panel. I'll introduce the members
of our second panel when we're through with the first panel,
but we express gratitude for you all for your willingness to
come share your insights here. Now we've been joined by Mrs.
Maloney from the House, and we're happy to have her for
whatever opening statement she might wish to make.
[The prepared statement of Senator Robert F. Bennett
appears in the Submissions for the Record on page 34.]
OPENING STATEMENT OF HON. CAROLYN B. MALONEY,
A U.S. REPRESENTATIVE FROM NEW YORK
Representative Maloney. I thank the Senator for calling
this hearing; thank you so much, Senator Bennett, and I want to
thank you for holding this hearing on health information tools
for consumers, and I want to welcome our panels of experts and
thank them all for testifying today.
I think the Joint Economic Committee has an important role
to play in looking at ways that markets for all kinds of goods
and services can serve consumers, and health care is certainly
a market that Americans would like to see work better. They
would like to be sure that they can get affordable health
insurance and high quality medical care. I think we would all
agree that more and better health care information is good for
everyone and is part of the solution to improving the
performance of the health care market.
But I would also like to strike a cautionary note. A large
fraction of medical expenses are accounted for by a small
percentage of people, and many of those expenses are incurred
in situations that are largely divorced from normal economizing
behavior. So I worry that the benefits from better information,
while real, are often oversold. Better information and
increased transparency may help people make some routine
medical decisions more wisely, but they are not likely to
significantly affect the overall costs of health care or make
much of a dent in the number of people without health
insurance.
I also think we have to be sensitive to privacy issues when
we talk about making vastly more information available. Those
pushing hardest for greater information appear to be those who
are particularly enamored of the ``consumer-driven'' approach
to health care with its emphasis on high-deductible health
insurance and tax-sheltered health savings accounts.
The President's push for consumer-driven health care would
shift more costs onto individuals, while creating additional
tax incentives for high-deductible insurance and HSAs that
ordinary families will have little opportunity to use. High
deductible plans don't reduce costs or cover the uninsured, but
they do have a tendency to discourage people from using health
care services.
Consumer-driven health plans rely on consumers to obtain
reliable information on treatment choices, quality, and charges
by providers. But the concept of ``empowering'' consumers to
make cost-conscious choices about their health care decisions
is misleading, because purchasing health care is not like
buying a car or a washing machine. You simply don't have a lot
of time to shop for a doctor when your appendix bursts. Health
care needs are often unanticipated, and patients rely on their
doctors' expertise to guide their medical decisions.
Finally, for years we have heard that our information
technology systems are inadequate, and that patients die
because of mistakes that could have been corrected if we had
better technology and record keeping. Clearly government and
the private sector have a responsibility to close the
information gaps that are affecting the health of or having a
life or death impact on Americans.
I look very much forward to the testimony, as always, and
to your comments, Senator. Thank you.
[The prepared statement of Representative Carolyn B.
Maloney appears in the Submissions for the Record on page 36.]
Chairman Bennett. Thank you very much.
Dr. Clancy, we'll begin with you.
STATEMENT OF CAROLYN M. CLANCY, M.D., DIRECTOR,
AGENCY FOR HEALTHCARE RESEARCH AND QUALITY,
ROCKVILLE, MARYLAND
Dr. Clancy. Good morning, Mr. Chairman, Representative
Maloney. I ask that my written statement be entered into the
official record.
Chairman Bennett. Without objection.
Dr. Clancy. Mr. Chairman, before I deliver my prepared
remarks, I'd like to ask you and Representative Maloney, as
well as my fellow witnesses and members of the audience, to
raise their hands if you've looked for information about health
or health care quality on the Internet, in the library, or from
any other source.
[Show of hands.]
And to keep your hands up if the information was what you
needed.
[No hands.]
I usually begin speeches by posing those two questions to
the audience, and unfailingly, the number of people who look
for information vastly exceeds the number who find what they
need. This has to change, and I commend you, Mr. Chairman, for
recognizing the significance of engaging consumers in their
health care, and for holding this hearing.
I don't think I can overemphasize Secretary Leavitt's and
HHS's commitment to ensuring that all Americans can easily
obtain understandable information about the quality and price
of health care. To realize this vision, Secretary Leavitt has
articulated four strategies for achieving this goal: Promoting
quality transparency, promoting price transparency,
facilitating the greater use of health information technology,
and transforming health care so its incentives support a
consumer-oriented or patient-focused healthcare system.
My written testimony goes into great detail in how the
Agency for Healthcare Research and Quality, working in
partnership with the public and private sectors, is working on
those strategies.
Consumers make two types of decisions. The first that we're
calling marketplace decisions, for example, involves selecting
a health plan, a clinician, a hospital, or a long-term care
facility.
The second are decisions that patients and their caregivers
must make among alternative treatments in the management of
clinical conditions. Both types of decisions require unbiased,
reliable, and science-based information that's user-friendly
and readily accessible. AHRQ has a long track record of
providing information to consumers and other purchasers, and
I'd like to highlight three lessons that we've learned in our
efforts.
The first lesson is that informed choice only occurs when
consumers can assess the value of a health care good or
service, and consumers can only assess value when they have
information on both price and quality.
Research has demonstrated that the highest quality
providers are often not the most expensive. Therefore,
consumers and purchasers need to have both types of information
to make an informed choice.
I'd like to also note that there are other elements in
consumer choice. We all know that we make decisions based on
other factors such as personal preferences, tolerance for risk
or uncertainty, unique circumstances, and the assessment of
acceptable trade-offs. However, it's important to have a
foundation of objective scientific facts for all decisions.
The second lesson is that transparency is critical for
enhancing consumer choice and improving competitiveness.
Research sponsored by my Agency clearly demonstrates that where
the message comes from makes a profound difference. If you
think about what many people do when they make a major purchase
like a car or appliance, they turn to a source like Consumer
Reports, which is a trusted source of unbiased information that
reviews the quality and value of a product based upon
independent testing.
We need to create a similar, unbiased, trusted source of
information for health care services. This is particularly
important now as consumers need to make more decisions about
their health and health care, and they grow increasingly
skeptical of the vast and growing array of information
available to them on the Internet and other sources.
The final lesson is that we simply can't assume that
providing information is enough. In that well known movie, The
Field of Dreams, the refrain was, ``If you build it, they will
come.'' That's not true for health care information.
Assuming that consumers and patients will come and get the
information isn't enough. We must ensure that information is
available when and where consumers need it, and we also need to
help make them aware that information can help them get better
health care and play a more active role in their health and
health care.
The best information for consumer choices needs to be
linked with decisions under patients' control. For example,
elective admissions to the hospital, questions they should ask,
and other steps that they can take to improve a health care
encounter.
In a strange way, the problem we're facing is not a lack of
information. As the title of this hearing suggests, Mr.
Chairman, the need is for information that is pulled together
so that alternatives can easily be compared, easily understood,
and easily acted upon.
And finally, we need to make sure that that information is
easily understandable. Our research has shown that some 90
million adults have lower than average reading skills, or low
health literacy, and are less likely than other Americans to
get potentially life-saving screening tests such as mammograms
and pap smears, flu and pneumonia vaccines, and to take their
children for well child care visits.
The bottom line is, we can't possibly get to better value
in health care without the full engagement and participation of
consumers. They need to play an active role in their own health
and health care, and make informed choices about providers and
treatments.
Thank you for your attention, and I'd be happy to answer
any questions.
[The prepared statement of Dr. Clancy appears in the
Submissions for the Record on page 38.]
Chairman Bennett. Dr. Milstein.
STATEMENT OF ARNOLD MILSTEIN, M.D., MPH, MEDICAL
DIRECTOR, PACIFIC BUSINESS GROUP ON HEALTH; WORLDWIDE PARTNER,
MERCER HUMAN RESOURCE CONSULTING, SAN FRANCISCO, CA
Dr. Milstein. Last fall's National Academy of Sciences
report on the U.S. health care system estimated that 30 to 40
percent of health care spending is what they described as
waste. Many of the large employers and labor unions with which
I work believe that estimate may be low.
Much of this waste could be eliminated by enabling the
identification and reward of physicians who demonstrate more
affordable patterns of resource use and favorable quality. Over
the past 10 years, methods have been developed to measure, for
individual physicians in most medical specialties, both average
total cost of health care resource use per treatment, which
I'll refer to as relative affordability, and quality of care.
Though criticized by some as imprecise, pioneering
employers, labor unions and insurers that have used these
methods have lowered their per capita spending by 2 to 17
percentage points compared to other regional payers without
lowering quality of care scores.
Any payer can generate these measures from health insurance
claims data, via off-the-shelf software. Measurements
demonstrate that at all levels of measured quality, physicians
in the same specialty and in the same community vary up to
2 in their average total cost of resources used per
treatment, as demonstrated via the chart on the easel.
Chairman Bennett. Let me give you a little extra time, and
ask you to walk through the easel. I have seen it close up, but
I think the people in the audience probably don't get it from
just having you refer to it in that fashion.
So can you take a few minutes to walk through that?
Dr. Milstein. Certainly, Mr. Chairman.
Chairman Bennett. We'll put it back on your clock.
Dr. Milstein. Thank you.
On the easel is an exhibit that was commissioned jointly by
the Boeing Company and the Machinists Union, who are working
collaboratively to manage health care costs and quality in the
markets in which Boeing has many workers.
This is a study that they commissioned that was implemented
by Regence Blue Shield in the Puget Sound area.
In essence, this displays physician performance on two
dimensions. The vertical dimension is the quality of care
dimension.
Chairman Bennett. So everything above the line is good.
Dr. Milstein. Right, above the dark line is defined as
upper half quality of care, meaning relatively high rate of
compliance with evidence-based scientific guidelines for health
care. The horizontal axis is analogous to miles per gallon
consumption of health insurance fuel. And the way it's laid out
is, as you move from left to right, there is less total
spending per episode of treatment.
Chairman Bennett. So if you're on the left side of the
line, you're cheaper?
Dr. Milstein. Your fees may or may not be cheaper, but the
total amount of health insurance fuel burned per treatment is
less. It is not counting just physician fees.
Chairman Bennett. So I want to be above the line for
quality and to the left of the line for price?
Dr. Milstein. You want to be to the right of the line for
total resources expended. The far left side is the equivalent
of burning 10 miles per gallon of health insurance fuel, and
the right side of the line is 30 miles per gallon of health
insurance fuel.
Chairman Bennett. OK, so I want to be on the right side of
the line, and as high as possible.
Dr. Milstein. Yes, in the Northeast quadrant.
Chairman Bennett. The Northeast quadrant.
And all of the little dots clustered around the cross are
all of the doctors in Seattle?
Dr. Milstein. Like most health insurers, Regence Blue
Shield, even though it is the largest insurer in that region,
only had enough data to characterize the performance of about
40 percent of the doctors. It's a 40 percent sample of doctors.
Chairman Bennett. You've got a 40 percent sample, and
you've got as many doctors in each quadrant.
Dr. Milstein. Yes.
Chairman Bennett. So you've got doctors that are giving you
high quality and good value for your money in the Northeast
quadrant----
Dr. Milstein. Correct.
Chairman Bennett [continuing.] And just as many who are
giving you low quality but high price in the Southwest
quadrant.
Dr. Milstein. Correct.
Chairman Bennett. And as far as the individual is concerned
or the employer is concerned, without this information a doctor
is a doctor is a doctor.
Dr. Milstein. Correct. And I would also say from the
perspective of physicians, a doctor is a doctor is a doctor.
The physicians themselves, before this profile, did not have
any information telling them where they stood in their
community of peers.
Chairman Bennett. OK. Thank you. I appreciate your walking
through that, because I think this is a stunning piece of
research that informs what we're talking about at the hearing.
Now you can go back, and let's put another three, three and
a half minutes back on Dr. Milstein's clock, because I'm the
one who burned up his time with that. But thank you for making
that figure clear for us.
Dr. Milstein. Thank you, Mr. Chairman.
Most private payers lack a sufficient volume of claims data
to make valid comparisons for even half of a region's
physicians, as I mentioned was the case in this particular
example in Seattle.
Medicare could remove this barrier. The key is adding a new
permitted routine use of the 100 percent Medicare claims data
file. Such a routine use would enable requestors to access a
beneficiary-anonymized form of the data file, specifically for
the purpose of producing physician performance measures by
combining claims data pertaining to multiple beneficiaries.
Americans already have relative affordability, or what some
people would refer to as ``total cost of ownership'' measures
for appliances and for automobiles. But not for physicians,
whose patterns of resource use consume a much greater share of
American income.
If routinely paired with quality of care measures, such
physician relative affordability measures would comprise a new
navigational system by which patients, physicians, and health
benefits sponsors can lower health care spending growth rates
for all payers, including Medicare, while improving quality of
care.
Physician performance measures can be used to inform
physicians, to engage consumers, to set payment policy or to
set consumer cost-sharing. They can also send a pivotal
upstream signal to new biomedical technology developers, that
innovations will be judged not only on their unit price and
clinical effectiveness, but also on their contribution to
lowering total health care spending growth.
Thank you for the opportunity to describe how Medicare can
speed the private sector's removal of large, but currently
invisible inefficiencies in American health care delivery, and
foster the emergence of a better, faster and leaner American
health care system.
[The prepared statement of Dr. Milstein appears in the
Submissions for the Record on page 45.]
Chairman Bennett. Thank you very much.
Dr. Parkinson.
STATEMENT OF MICHAEL D. PARKINSON, M.D., MPH, EXECUTIVE VICE
PRESIDENT AND CHIEF HEALTH AND MEDICAL OFFICER, LUMENOS,
ALEXANDRIA, VIRGINIA
Dr. Parkinson. Good morning, Mr. Chairman, Mrs. Maloney.
I want to thank you for the opportunity to testify today.
My name is Mike Parkinson, I'm Chief Health and Medical Officer
for Lumenos, a pioneer in consumer-driven health care and a
subsidiary of WellPoint.
My comments today are based on nearly 5 years of experience
with self-insured employers, and direct feedback from consumers
and patients enrolled in our consumer-driven plans.
At Lumenos, we created an integrated and incentivized
health improvement strategy, targeted at the major drivers of
excessive health care costs, with a particular emphasis on
those with chronic illness. In fact, 25 percent of our
employers are full replacement clients, meaning that they only
offer HRAs or HSAs account-based programs to their employees.
In general, consumers and employers are highly satisfied
with the current information, tools and supports that Lumenos
provides. Year over year, both employers and consumers are
seeking more specific and actionable information about the cost
and quality of medical services.
To Carolyn's point, however, reinforcement of why the
information is important, how to access it, how to engage to
better manage one's care; for example, health coaching, and how
to use it in concert with one's physicians are likely more
important than the availability, or in some cases, the
specificity and accuracy of the data itself.
Quality efforts to date have concentrated on plan and
provider administrative data rather than on consumer and
patient knowledge, competencies and decisionmaking arising from
better information and a partnering patient-physician
relationship.
Defining generic and disease-specific qualities associated
with effective and efficient medical services, and creating
standardized patient surveys would be of great value in
increasing the engagement of patients and improving the
marketplace of patient-relevant information for provider
choice.
Providing cost data will become progressively more
granular, and transparent pricing by plans, providers, and
facilities will increase. The release of fee schedules for
selected Medicare services and the institution of transparency
requirements for Federal health and benefits programs will
impact both the direction and pace of cost transparency.
Consumer-driven care will accelerate clinical and business
practice innovation. The provider community is showing evidence
of welcoming such innovation, and in some instances is calling
for wholesale reform of delivery and financing models.
Translating and publicizing the health and cost advantages
of patient-centric innovations will accelerate their adoption.
Consumers and patients will increasingly understand the
quality and safety value of health information technology.
Deployment of information technology could become a key
provider, market differentiator, and quality cost metric.
Acceleration of national technology standards for information
and interoperability is urgently needed to promote widespread
dissemination and decreased price.
As consumer information on quality and cost of services
becomes more transparent, cost shifting, inexplainable cost
differentials, and inefficient clinical and business practices,
will become more apparent. Health policy and societal
questions, which have been known and discussed for years, will
become much more visible to all stakeholders and hard decisions
will likely have to be made about the appropriate role of the
private market sector versus the government funded public
sector in financing and delivering of health care.
Thank you very much, and I look forward to your comments
and questions in the follow up.
[The prepared statement of Dr. Parkinson appears in the
Submissions for the Record on page 62.]
Chairman Bennett. Thank you, sir.
Dr. Ginsburg.
STATEMENT OF PAUL GINSBURG, Ph.D., PRESIDENT, CENTER FOR
STUDYING HEALTH SYSTEM CHANGE, WASHINGTON, DC
Dr. Ginsburg. Mr. Chairman, Representative Maloney, and
Members of the Committee, thank you for the invitation to
testify at this hearing.
My organization, the Center for Studying Health System
Change, is an independent, nonpartisan health policy research
organization, funded principally by the Robert Wood Johnson
Foundation, and affiliated with Mathematica Policy Research.
Its mission is to provide policymakers with objective and
timely research on developments in health care financing and
delivery and their impacts on people.
My statement makes four key points: First, engaging
consumers to be more aware of cost and quality issues in health
care has the potential to increase the value of health care.
And by value, I mean a superior combination of cost and
quality, not only for the individual patients who use this
information, but for the U.S. population as a whole.
I believe the greatest opportunities involve incentives for
consumers to choose higher value providers, which in turn will
motivate providers to increase value. Unfortunately, some are
overselling the potential for progress in this area.
As Representative Maloney pointed out, many services are
too complex or urgent for effective shopping by consumers.
Those patients responsible for the bulk of health care spending
in any given year are often beyond the reach of patient
financial incentives in typical consumer-driven benefit
structures.
Realizing the potential in this direction will require a
long-term investment that collects and translates meaningful
consumer price and quality information, and the development of
innovative benefit structures that can improve on large
deductibles.
Even if the potential is reached, however, empowered
consumers alone are not the hoped-for silver bullet to solve
the health care cost crisis facing this country.
I want to point out that health plans will play a key role
in consumer shopping for price and quality. The health plan has
long been a powerful asset for both enrollees and purchasers;
they negotiate substantial discounts with providers, and as
benefit structures change to put more emphasis on price and
quality comparisons, insurers will compete on innovation and
tools to increase plan value to consumers.
Insurers basically have the potential to employ their
formidable data and analysis resources to translate complex
information on price and quality into something that's more
usable by consumers. But without the support of insurers, there
are practical limitations on the ability and willingness of
consumers to become savvy health care shoppers.
We've studied the consumer experience in self-pay markets,
and find that the experience has been romanticized by some
advocates of consumerism in health care. Of the markets we've
looked at, price shopping exists only for Lasix services, and
there's little information on quality in any of these markets
other than word of mouth recommendations.
Finally, I'd like to discuss the role of government. I
believe the greatest opportunity for government in promoting
consumer choice is in the areas of information on provider
quality and the funding of research on medical effectiveness. I
believe there's less potential in providing price information
directly to consumers.
I'm very optimistic about the potential of Medicare's
voluntary program for hospital quality reporting to contribute
valuable information for consumer choice, and to motivate
hospitals to improve their quality.
As Dr. Milstein has recommended, I believe that making
Medicare Part B claims files available to insurers can
substantially increase their ability to provide information and
incentives to enrollees that favors physicians who are higher
quality and more efficient.
The Agency for Healthcare Research and Quality has
developed an excellent reputation for funding effectiveness
research, but funding for these activities has been extremely
limited, especially in contrast with what the Federal
Government currently spends on biomedical research overall.
I look forward to answering your questions.
[The prepared statement of Dr. Ginsburg appears in the
Submissions for the Record on page 67.]
Chairman Bennett. Thank you very much.
Thank you all. I think we're going to have a worthwhile
discussion here; and my pattern is to try to get you talking to
each other, rather than individually talking to us, because I
think we can have some good interaction here.
I do have some questions, as I'm sure the other Members of
the Committee will have other questions.
Dr. Clancy, you emphasized price and quality. Dr. Ginsburg,
you were a little less excited about the price thing, and the
main benefit would come from understanding quality.
Could you briefly either resolve that, or----
Dr. Ginsburg. Well, sure. I think that price is equally
important to quality. My point was that as far as what the
government can do, I thought that the government has the
potential to do more important things in the area of
information on quality than it does in the area of information
on price.
I believe that insurers are in a very good position, with a
lot of information on price, to really analyze that and
translate it for their enrollees into simpler decisions.
Chairman Bennett. OK. Yes, Dr. Clancy.
Dr. Clancy. I would agree. Right now, though, if you think
about it, almost all individuals who get health insurance
through their employer, including the Federal Government, are
facing increasing out-of-pocket costs. And those incentives are
really clear.
What to do with those incentives is far less clear. So for
example, a vast majority of Americans now face tiered pharmacy
benefit arrangements, and yet it's very difficult to find out
information on when it's worth it to buy a brand name drug as
opposed to using a generic. And of course the throw-away line
is, ``Well, ask your doctor.''
And the sad part of it is that we've begun to make some
small dents in giving doctors the kind of information so that
they could help patients with comparative choices, but we've
got a long way to go.
Chairman Bennett. Yes. Well, one underlying theme here is
the complexity of these decisions, and so ask your doctor, ask
your pharmacist, whatever; and the point was made by you, Dr.
Ginsburg, that the most expensive people--there are a few
people that take most of the money. We know that the 80/20 rule
applies here; 80 percent of the money goes to 20 percent of the
patients.
My own experience, and it's entirely anecdotal, but I'd
like to get your response to it, is that the use of this kind
of information is generational. When I get told I have a
problem, I go to a doctor. And if I want a second opinion, I go
to a second doctor.
We've recently had, within our family, a fairly serious
medical situation arise for our daughter, who instantly went to
the Internet. She wanted to get the information herself. And
she was not nearly as willing to listen to a doctor. Now her
doctor told her, ``Yes, you have this situation.'' First thing
she did was go on the Internet and find out as much about it as
possible.
I have a daughter-in-law who, with one of our grandchildren
was told, ``This child has this problem.'' The first thing she
did was go to the Internet. The next thing she did was argue
with the doctor, based on the information, and found another
doctor who had a different point of view, and she very much
took charge of this whole situation based on her inclination
that there's information available to her.
And frankly, in my generation, that simply would never have
occurred to me. And when something came up with respect to my
health, and I talked about it within the family, the kids all
went on the Internet and they started giving me advice and
counsel.
Now I think we have a common theme here, in going back to
Dr. Clancy. It would be very, very valuable if we had, quote, a
``Consumer Reports'' close quote, for medical information,
because I have now discovered, when I go on the Internet, I can
get whatever I want, depending on my prejudice. I can get an
Internet report that tells me that eating dark chocolate is
going to be really good for me, and good for my health. And the
Internet told me that taking 4,000 milligrams of Vitamin E
would increase my chances of getting a heart attack, where Dr.
Isold, the Capital physician, had prescribed 400--not 4,000,
400.
And I went back to Dr. Isold and he says, ``Yeah, that's
the way medicine is. And we're now saying 200. But at the time
that I told you 400, everybody was agreeing with 400, and now
we're saying 200.''
My colleague, Senator Hatch, says I should be taking 1,000,
and I'm going to make that decision increasingly in this kind
of world, whether the medical establishment wants me to or not.
So we're talking about not only transparency and
availability, but we're talking about ultimately the kind of
thing that Dr. Milstein has put here, where you have some
reliable measure, statistical.
Now I want to know, if I'm Seattle, one of those dots on
that chart is the doctor that I represent; I want to know where
he is on the chart, or she. And I'm assuming the doctor wants
to know. That the doctor will say, ``Oh, boy, I'm above the
line, but I'm way over to the left. I don't want to change my
quality, but I've got to figure out better ways to deal with
the price.''
And as you pointed out, the insurer wants to know. And the
insurer then comes in and says, ``Here we are.'' I find it
fascinating, Dr. Milstein, that your study was co-sponsored by
Boeing the employer, and the union, both sides of the
management-labor divide wanted to know this. Because the
statistic that has come out that something from 30 to 40
percent of our health care dollar is being wasted is a
staggering wake-up call for all of us.
If we as politicians could somehow take 30 percent out of
the cost of Medicare, we would all be huge heroes, and we would
solve the Nation's deficit problem overnight. We could build
all the bridges to nowhere we wanted to build on the savings
that would come out of that. And that's why I'm so fascinated
by the information that you're giving us here, and I thank you
all.
Mrs. Maloney.
Representative Maloney. Thank you, Mr. Chairman. I think
your panelist really raised an important point, how the
Internet has really changed how we view health care, and every
consumer is on it, checking what their doctor has to say and
comparing diagnosis and treatments with other doctors. I think
it's a whole new phenomenon that is going to really change the
way medicine takes place.
I recall once a doctor told me I needed an operation, and I
went on the Internet and read all this and determined I did not
need it. So I think a lot of people--and then later, the entire
medical establishment came and supported the decision that I
had made in that particular case.
So I think we're really in a changing way now, with the
Internet there.
Dr. Ginsburg, you testified earlier that one of your key
messages is that giving consumers better information can
provide benefits to the patients themselves, and certainly to
the U.S. population as a whole; but that we shouldn't, to use
your words, ``exaggerate the extent of the savings.''
Can you elaborate on that point?
Dr. Ginsburg. Yes. Well, even I can take off from Senator
Bennett's discussion about, you know consumers are more
involved in health care decisions, and it is a generational
thing. It's not universal. You know, if you look at survey
data, you still see lots of people not accessing health care
information, but it's one thing to get involved in a decision
about whether to have surgery, or whether to pursue the
alternative treatments, but it's another to get involved in
every detail.
So that even if the consumer is more involved in that
decision, let's say the consumer decides to do surgery, data
like Dr. Milstein has presented shows that physicians vary
greatly in the efficiency; and if his data were actually about
a particular condition, a surgical treatment for a condition, I
suspect that he could show that physicians vary greatly in the
resources and the quality that they provide, when they're
pursuing this outcome.
So I've always thought that if we are going to engage
consumers, that probably the most important decision on price
and quality that consumers make is the decision about which
provider to go with. Because even if they're making the choice
about surgery versus something else, there are all these
follow-through decisions which really are pretty much left to
the physician. So that's critical.
Representative Maloney. What if we moved more in the
direction of consumer-driven health care with high deductible
insurance policies and more responsibility placed on the
consumer.
What is the evidence that we could achieve significant cost
savings by giving consumers incentives to be savvy health care
shoppers?
Again, Dr. Ginsburg, do you have any comment on that?
Dr. Ginsburg. Yes. I think there are some studies coming
out now on some of the early experiences with consumer-driven
health care. Many of them are not strong methodologically, but
I think it's clear that there are savings.
And the issue is, if we generalize this to a broader
population, how much are we going to get? And considering the
fact that over a long period of time, spending per capita on
health care rises at two and a half percentage points a year
more rapidly than the growth of income or GDP per capita.
You really wonder if small changes would be too much as far
as addressing this long-term trend.
Representative Maloney. And I'd like to ask each member of
the panel the following question: To what extent are the
benefits of the kinds of information tools you're talking about
dependent on what kind of health care system we have? Are they
as valuable within the existing system of health insurance as
they would be if we moved to a system of much higher
deductibles and made consumers more directly responsible for
how much they spend on health care?
Any comments from anyone?
Dr. Milstein. I think the information availability that has
been supported across-the-board by the panel would improve
performance under any vision of the American health care
system, whether it were continuation of what we have or
movement to high deductible. I think giving the customer
information on quality and what someone referred to as ``all-
in'' cost, not just what the doctor is charging, would
favorably impact almost any vision of American health care or
American health insurance.
Representative Maloney. Well, that is a common theme of
this hearing, that more information is a good thing. So my
question is, who is opposed to the kinds of ideas we've heard
today? Is it a matter of entrenched special interest? Or are
there legitimate concerns that need to be taken into account in
deciding what information should be released and in what form.
Everyone agrees, on the panel, that more information is a
good thing.
Dr. Milstein. I can't speak for them, but I have a sense
that providers are not too enthusiastic about having a lot of
information on their performance very accessible to the public.
And I think there's the overall issue of doing things that
improve information on price and quality that are really
useful, rather than just look useful. But then I suspect that
if we're talking about major changes in information on
providers, that they're not going to be that happy about it,
and that's where the opposition might come from.
Representative Maloney. So the opposition is that providers
do not want to display what their fees are. Is that what it is,
Dr. Milstein?
Dr. Milstein. When I was clinically active, I would not
have enthusiastically embraced any facet of my performance
being publicly released. Whether it's my prices, the relative
economy with which I use health insurance resources or my
quality of care. If I felt it was coming my way, I would have
insisted that it be postponed until it was better perfected,
and as far forward in the future as possible.
I don't think this attitude is unique among physicians. If
you look at the revolution in restaurant hygiene in Los
Angeles, when the Department of Health first proposed posting a
gigantic A, B, or C on the front door of every restaurant in
Los Angeles based on restaurant hygiene, the restaurant owners
universally and strongly opposed it.
But it had a very favorable impact on restaurant hygiene
scores in Los Angeles. The car manufacturers, when J.D. Power
first started out, were strongly opposed to their performance
being systematically evaluated and publicly released.
Representative Maloney. Well, you then raised the question
of privacy. And maybe we need to pay more attention to that and
talk more about it. For example, making information about
patient outcomes more widely available. Obviously you've always
heard the story, ``The operation was a great success, but the
patient died.'' Making the outcomes more available to the
public. Are there any comments on that and the privacy concerns
involved?
Dr. Clancy. This is a core part of the work, Representative
Maloney, and we can do that without violating privacy; and are
working very hard with the Department and also with research
contractors who have access to very large databases and who
have been doing this for a while, to make sure that this can be
done in such a way that people's personal information is not
betrayed.
You asked a moment ago about more and more information work
in our current health care system. I wanted to make two
comments there. One is that if the picture that Dr. Milstein
drew were suddenly available and you knew about physician price
and quality, a real practical issue in today's health care
system is: You need to know if they will take your insurance
and if they had openings in their panel size, and so forth.
Actually, that turns out to be a non-trivial kind of challenge.
The other observation I would make is I don't think it's
more and more information. It's information that's organized in
a way that's useful and comprehensible, so that people can
understand ``What this means for me.'' Then I think we'll see
the value of that.
Right now consumers in many, many plans have incentives to
get better information. What they don't actually have is
information that is lined up to help them make the right kinds
of decisions, and I think we've got to get both of those
together.
And I don't think there's information on patient outcomes
out there. There's some information on patient outcomes, from
work that we support. We are now, thanks to the support from
the Congress, actually putting out information on very common
problems confronting the Medicare, Medicaid, and SCHIP
populations. The first two reports are out, and they don't say
you should do this or that; they say here's the best science we
have, and we will update these reports as more science becomes
available.
So the first report was on what clinicians call GERD;
that's gastroesophageal reflux disease; the rest of us would
call heartburn. It focused on whether pills, and which kinds of
pills, or surgery are better, and under what circumstances. The
second report looked at the use of specific types of tests for
women who've been found to have a suspicious growth on a
mammogram; asking the question, could you avoid the need for a
biopsy? The short answer today is No. But there will be more
and more reports like this coming out over the coming year.
Representative Maloney. But I mean in shopping patient
outcomes, if you were looking for doctors who do, I don't know
heart surgery.
Dr. Clancy. Several states do this. And there's been much
debate about. Is it done fairly? But there's been accumulated
experience that makes this work.
Some of the demonstrations that CMS is now sponsoring have
shown that they can collect very good information on outcomes
for patients with hip and knee replacements, very common
procedures for the Medicare population. And other types of
surgeries actually can be done. And I think consumers really
would value this information.
Representative Maloney. Thank you. My time is up.
Chairman Bennett. Representative Sanchez. I hope you're
over your jet lag.
Representative Sanchez. Yes, of course, Mr. Chairman.
Good morning, and I'm sorry that I arrived late. I had some
other pending business in the House.
Dr. Milstein--and I didn't get to hear all of your
presentation, so I'm sorry about that. Dr. Milstein, when you
said provider, and you were talking specifically about, I think
the physician experience, would you also say that the
proprietor might be a medical group or the hospital, or the
pharmaceutical company trying to sell its drugs, or the health
care plan that one is under?
Dr. Milstein. Yes.
Representative Sanchez. So do you think they all have an
interest in not really disclosing what the price of their
product is?
Dr. Milstein. Yes, I think it's a universal human and
organizational trait. If somebody were to ask me, ``Would I
like my performance evaluation at work published on the
Internet,'' I would say, no.'' It's universal and cuts across
all those provider categories that you described.
Representative Sanchez. I heard my colleagues talk about
getting on the Internet or people getting on the Internet. A
lot of people think that they get on the Internet and they do
this, but we know from surveying and understanding people's
time, that there's a lot of information out there, but the
reality is not as many people really get on the Internet unless
it's, maybe I'm going to die of cancer; if I got the notice
today I was going to die of cancer, maybe I would get on the
Internet and try to find out everything.
But for a large part, we tend to really go with the flow
and do what our health care plan tells us to do, or our doctor
or second opinion, and that's probably as far as we go. So do
you think that if we had something like a consumer report on
the Internet that people would begin to use that for something
other than ``my life is really at stake? ''
Dr. Milstein. I think that, as expressed by some of the
other panelists, some people would use it, and it would
largely, but not be totally generationally-driven. That said, I
don't think the Internet is only method by which we can avail
consumers of performance information.
Again, I think the Los Angeles restaurant example is a
wonderful example.
Representative Sanchez. So you think when I visit a
hospital, I should see an A, B, or C on the door of the
emergency room?
Dr. Milstein. I personally would support it being not only
on the door of the emergency room, but also on the front door
of every department within the hospital, so that
interdepartmental variation within a hospital would be known to
any customer before, on nonemergency basis, they made a
decision to be treated in that hospital department.
Representative Sanchez. People have talked about using the
Internet. You know, as a minority, and I represent a very
diverse population, including one of the populations that deal
almost exclusively in their own language, for example the
Vietnamese community, which I represent the largest Vietnamese
community outside of Vietnam in the world, for example.
Especially in the older generation, very driven by their
language.
Lack of Internet availability, especially to lower income
arenas, and lack of it in languages where--I mean, everything's
complicated. I get confused looking at some of these things.
If we were to look more at doing some sort of a rating
system, would you say--how would you say that we could push it
out to, in particular culturally and language different arenas
and also low socioeconomic arenas. How would you say that we
might be able to do that? Would you suggest that we would
translate it into other languages in specific areas?
And I'm asking everybody, I guess. Maybe we can start with
Dr. Clancy and go down the list.
And I say this because it's my personal opinion that very,
very rich people probably do a lot of information gathering,
and probably spend money--the price is really not an object for
them, so they'll go to Switzerland if they think they can get
the lifesaving treatment; and the very low end seem to have a
lot of these major dollars that we're spending in our system.
It's almost like the middle gets squeezed, and you don't access
this much health care.
Dr. Clancy. I wanted to comment on something Dr. Milstein
just said to you and then get to the very, very important
question you asked.
Right now the information that is reported on quality of
care at the level of hospitals and in some cases for physician
groups, and so forth, is not all that useful for individual
consumers. However, it has had a very important impact on the
providers, and I don't think that we can overlook that.
We still need to learn a lot about making it more useful to
consumers to guide their choices.
Representative Sanchez. On the providers in the sense that
maybe a provider won't be able to get into certain hospitals
because the hospitals can see what the providers are doing?
Dr. Clancy. To be very specific, for the past several
years, nursing homes are required to report publicly on
performance, and the hospitals can volunteer. And if they don't
volunteer, they don't get their payment update, so it turns out
that they all volunteer.
In our annual report on health care quality, we have seen
much more significant improvements in quality in nursing home
care and in hospital care than in many other aspects of health
care. And there are a lot of studies that support that kind of
observation as well.
Representative Sanchez. When people are watching, we tend
to be nicer.
Dr. Clancy. Yes, right. The schools, name your domain.
So Dr. Milstein's right, most providers don't line up for
the opportunity, but it does actually have very positive
impacts.
Regarding the question about how to reach multiple
populations, the overarching principle needs to be that good
information, that will help you get better health and health
care, has to be impossible to avoid. That will require
translation; in some cases it's actually going to require a
human interface to help people navigate.
I think the longest standing experience in the Federal
Government for treatment decisions is at the Cancer Institute.
And they have a fabulous Web site for people who are very
comfortable doing that. They also have humans that you can call
and help you navigate, and many of the people that you
referenced that we would expect to have difficulty also have
children and grandchildren, as the Chairman referenced, who can
sometimes play a very valuable role there.
So when I speak to clinicians who practice in underserved
settings, what they tell me is that drawing on family resources
and so forth, they're starting to see that kind of divide
narrow; which I think ultimately is a very good thing for
health care.
Representative Sanchez. Thank you.
Dr. Milstein. Two comments. First, in most families and
most social units, not everybody that even subscribes to
Consumer Reports reads it. They often rely on one person who's
the conscientious or more experienced one in the family who
reads it and then describes it to everybody else. That's the
way it is in my family.
On your question about diverse populations, one of the
examples I put forward in my testimony was the Culinary Workers
Union Health Benefits fund in Las Vegas. I think that directly
addresses the population group that you referenced. It is a
population with average wages probably in the range of $10 an
hour. More than half of the population does not speak English
as a first language.
And they were among the early heroes of the physician
performance evaluation movement. They used measurements of
physician performance to encourage their members to move to the
better rated physicians. And as you can see in the materials
that I provided, the percentage rise the fund's health
insurance cost in the subsequent year was substantially less
than any others in the Las Vegas area.
What I didn't reference in my testimony, is that quality of
care scores either improved or remained stable. So it was a
very favorable outcome; in fact, an outcome so favorable that
the Hotels and the Culinary Workers Union, savoring
unexpectedly large savings that resulted, delivered a
voluntary, out of contract, 55 cent per hour raise for the
workers, in addition to a better return for hotel shareholders.
It was a major victory for both management and labor.
Dr. Parkinson. Ms. Sanchez, you hit the nail on the head. I
look at behavior change, with proven behavior change models.
And really, at the end of the day, we're talking about
individual, family, community, employer and national behavior
change if we're going to get this right. And just going to a
better doctor ain't going to get it.
I referenced the Ken Thorpe study in my paper; Ken Thorpe
is an economist at Emory, who said that 62 percent of the
entire rise in health care costs over the last 5 years are due
to personal health behaviors that we have chosen to treat
medically with the latest, greatest direct-to-consumer
advertised drug or technology, in multiple languages, I'm sure.
The thing that I like about the movement now is that
information is just an enabler; it does not change behavior
unless you have two other things present: First, incentives or
``Why should I care?'' It's always been the employee's money;
they just never saw it as such. It came out of their paycheck.
And second, information makes the incentive of ``my own money''
actionable.
There is a dissociation between the choices I make about my
health risk factors; do I smoke, do I move, and do I eat right?
And my awareness of the diseases those risk factors drive:
cancer, diabetes, etc. For example, 9 out of 10 diabetics are
lifestyle-related, they don't genetically have a bad pancreas.
So we have got to get the incentives right at the macro
level and build new infrastructure to support them. ``Cash and
Counseling'' the Medicaid project is a wonderful demonstration.
Medicaid disabled populations, given a choice using a
culturally-sensitive counselor who helps explain to that
Medicaid disabled person what their options are for service and
equipment, for activities of daily living, actually make better
choices for themselves than the usual government purchasing
practice (standard Medicaid) at lower cost.
Not everybody is going to go to the Web for information;
it's just one source. You've got to have phone contacts. You
probably have to do what was done in China; it's called the
barefoot doctor. Who's the trusted agent in every community
that's a health resource? How do we train those people to do
better? What's the role of the health plan in the future to
help partner with those people, to extend empowered consumerism
and improved health behaviors without having to engage the
medical system. So while we're very proud of our Web site, you
really have to build whole new infrastructure linking
information to people for assistance. And it's got to live in
an incentivized environment. A lot of the good information that
Dr. Clancy referenced has been around for quite a long time in
health care. But it's not been acted upon, because we're
missing the incentives and the infrastructure to make it
understandable and actionable.
We try to look at the whole system and say, across the
continuum of care, from health promotion, risk reduction, acute
care, chronic care, surgical decision support, inpatient
hospital care, and then end of life care in hospice; do we
provide the consumer-patient with the incentives,
infrastructure, and information to make a better decision?
And I think the good work that Carolyn Clancy's agency is
doing is going to get much more sophisticated, so that that
patient achieves better outcomes at lower costs.
Anecdotes are powerful. An 85-year-old women sitting next
to me at a Lumenos consumer dinner in Dallas asked, ``Are you
Dr. Mike? Because I'm in a Lumenos plan.'' She said, ``I love
your plan. All the information you've got about prices of
drugs. But you know what I really want? I'd love to be able to
talk to somebody like me who has a husband who just had that
tube put in his heart.''
I said, ``You mean a stent? '' She said, ``Yes. He was so
depressed. He was so angry. He was on six medications. I was
lost.'' Now that's a new value proposition for a health plan.
Better engagement by patients and their families has been shown
to drive down unnecessary worry, depression, utilization, and
costs. So we have a huge opportunity here.
Information is part of equation, but patient centricity,
new infrastructure, new types of culture-sensitive health
coaches are whole new things we've got to create. I think it's
exciting, but we can do it.
Dr. Ginsburg. I just have two quick points, and I think
these are consistent with what some of the other panelists have
said.
I think a key thing is that many people need agents to help
them sort through this information, rather than go and get the
raw, original information. And whether it's a union, an
employer or a health plan, there are agents to massage this
data.
Dr. Milstein's example in Las Vegas really shows how the
union was a key player in massaging this data to communicate to
the workers which are the high value physicians to go to.
And the other point I want to make is that I think people,
you don't need to get 100 percent of patients or the consumers
using this information, making good decisions, to get some real
movement on the part of the providers to improve their quality,
to improve their value. You may only need 10 percent, and
that's actually an optimistic thing that--you know, we tend to
think about the gains that the individual gets by making this,
going to this provider versus that provider, how much they
save, whether the quality was better.
But for society, I think the big potential is where the
providers that aren't the best see that they're losing patients
and see that in public domains their scores aren't as good as
others, and they are motivated to improve what they do; and
this really improves care for everybody.
Representative Sanchez. May I ask one more question, Mr.
Chairman?
You know, when I did go on the net or when I've had friends
go on the net, I mean, anybody can put anything on the net. And
most people don't know what they're talking about, especially
when it comes to medicine. Yet people read, you know they read
and they see.
So the worry is, how do you make sure people are looking at
the right thing? And I also include in this, for example, these
commercials by the drug companies, where they've got some drug
they're promoting today, and the guy is flying over the wheat
fields--I don't know what the drug does, but god, I want to get
that. And I know that they must be going into the physician and
saying, ``Well, I saw this thing and it's going to make me fly
over the wheat fields.''
Information is powerful, but it can also be very
detrimental. So what are the safeguards we have to think about
as we look at this information issue?
Dr. Parkinson. If I may, this is one of my favorite topics.
I oftentimes say I learn more about health care and the
business of health care from Dorothy Hamill than I ever learned
from medical school professors. Dorothy trained a whole
generation of people to ask for a drug that by and large they
probably didn't need; and now lo and behold we've got some
safety issues.
We built something called the Department of Defense
Pharmacoeconomic Center that still lives in San Antonio, Texas
to judge one drug against another, because we couldn't afford
all the drugs that were coming out of the pipeline being
advertised directly to consumers. And we concluded, back in '97
or '98, I forget the year, that this drug, Vioxx, was not much
better than Naprosyn.
But as long as the decision to see a drug or not was
imposed upon people, by saying ``You can't have it'' or
``You've got to go through a rheumatology referral on a five-
tiered formulary to get it'' it was a seen as a takeaway or bad
medicine.
Rather, what if we provided access to the information, gave
it to the consumer, to support evidence-based guidelines to the
doctors, and said, ``Here's the information and full cost of
your choice. Here are your options. Talk with your doctor. And
oh, by the way, can we talk a little bit about weight loss,
perhaps, a little bit more physical activity, which likely
impact the need for drug as well?''
So the role I think of all of us here is to appropriately
counter-detail what I call the health care industry that
creates and markets new technologies, with comparative,
accurate value-added information.
For example, the University of Oregon just compared the
effectiveness and costs of drugs for 10 leading classes of
pharmaceuticals. You can access that information through
Consumer Reports.
If we're going to ``ride the rails'' of consumerism, then
we need health information technology standards and some
trusted source of comparison out there. And right now you're
paying for that; all the health plans do it themselves; they
largely have some different methodologies. Often one hears
complaints about a health plan saying, ``This is
investigational'' based on their internal analysis. ``What do
you mean it's investigational? It's licensed by the FDA,'' the
consumer or physician complains.
An authoritative, neutral analysis is needed to assert the
consumer better. If I'm going to be the advocate of the
consumer, and the employers who entrust me with their health,
I've got to have good information to say, ``You know what? Ms.
Sanchez deserves the best information to make an informed
choice'' and in large part, it's not there today.
Representative Sanchez. Dr. Clancy, you had a----
Dr. Clancy. I think the information that you're talking
about has to come from a trusted source. What's very
interesting is that cancer patients, for example, learn to get
very skeptical and good at evaluating whether what they're
seeing on the Web or hearing about from others has a funny
smell to it, and they know to ask the right questions. If it's
coming from a dot-com they know that there might be a profit
motive and all that kind of thing.
But ultimately, we need a trusted source that lets people
know that the information is based on science, or it's based on
belief. The information can be all over the Web and in many
other places but it must be very clear to either individuals or
their agents, what this is based on, what's the source. And
what is the potential conflict of interest.
Representative Sanchez. Anybody else?
OK, thank you, Mr. Chairman, for indulging me with the
time.
Chairman Bennett. Thank you very much.
Thank you to the panel. I think it's been a very useful
discussion, and we've gotten a lot of good information out of
it.
I just leave you with this one last thought. I was giving
speeches when I was first elected to the Senate that were
absolutely brilliant with respect to health care, and always
well-received. And then a woman came up to me and said, ``I
really enjoyed your speech, but of course you understand you
don't have the slightest idea what you're talking about.''
And I said, ``OK, help me understand.'' And I think this
kind of runs through where you are. She said, ``The problem
with the poor is not money. The problem with the poor is not
access. The problem with the poor is that they can't navigate
the system.''
She said, ``You walk into the Salt Lake clinic and you know
which desk to go to, which questions to ask, and which
procedures to fill out.'' She said, ``I deal with the homeless,
I deal with the poor. They walk into a medical facility of that
kind and they're totally baffled. And they walk out.''
And if you're going to make health care truly accessible to
them, you have to have a navigator that will take them through
and help them understand; and Dr. Parkinson, your navigator
would talk to them about their lifestyle and their habits, and
try to get them to do healthier things.
Dr. Ginsburg, I think you're right, there is no silver
bullet here. But the common theme that runs through her
comments to me and your comments here today is: The more people
know, the better off they're going to be. And the more they
know, the more empowered they will be to take control of their
own lives and their own health care situations.
So it's been a very valuable panel, and I thank you all for
your willingness to contribute to it.
We'll now move to the second panel. The Committee will take
a 3-minute recess as the second panel assembles itself.
[Recess.]
Chairman Bennett. The Committee will come to order. And we
welcome the members of our second panel. Douglas Cave of Cave
Consulting Group, I have him listed, I assume--he stepped out
for a minute. Donald Kemper of Healthwise, and Walton Francis,
a longtime primary author of CHECKBOOK's Guide to Health Plans
for the Federal Employee.
We appreciate your being here. Let me discuss--let's see.
Mr. Francis, you've been a pioneer in looking at systematic
comparison of health insurance plans, and we appreciate your
being here. And Mr. Kemper, you're chairman and CEO of
Healthwise, founding chair of the Center for Information
Therapy, Board of Directors. And you've put forward the idea
that offering every patient the right information prescription
is part of the process of care. And we appreciate your
pioneering effort there. Mr. Cave, President of Cave Consulting
Group, you've worked with large employer group coalitions and
health insurers to develop a consumer-driven health care model.
So we appreciate the three of you, and we'll hear from you
in that order, starting with Mr. Francis.
STATEMENT OF WALTON J. FRANCIS, MA, MPA, MPP, AUTHOR AND
INDEPENDENT CONSULTANT, FAIRFAX, VIRGINIA
Mr. Francis. Thank you very much, Mr. Chairman.
I'm going to hit just a few highlights from my testimony,
if I may, and try to relate them to some of the dialog that's
already heard in this hearing, because some of the points are
so important.
First, it's essential to understand when we talk about
customer information, it's not just that Joe Blow, a consumer,
is going to use that information; it includes the ability of
his friends, his family to use it; it includes the provider as
a trusted intermediary to use it. When I'm thinking of getting
a surgical procedure and I consult my primary care physician
about where might I go, I want him to have a copy of that chart
we've talked about so much, before he picks or suggests a
couple of specialists----
Chairman Bennett. With a name for every dot.
Mr. Francis. Right. And of course we all benefit when the
market has changed and quality is enhanced and prices reduced,
we all get the benefit of competitive markets, even if we're
not the most savvy shopper personally.
So what's at stake here is huge. And it doesn't have to be
something that we can predict with great precision as to how
the information will turn out to be valuable to us all; it's
just without it being available, it can't be valuable.
Another general point. There are many barriers in the
system, and I cover this by type of--I'm not going to go
through all the types of consumer information; they're in my
testimony. But there was some earlier discussion of providers
resist providing information. Yes, they do. And they all have
incentives not to have their performance known to others.
But that doesn't mean we can't overcome those barriers, and
there are a variety of ways to do it. And indeed, ultimately
the role of government may be to play a part in that process.
Though an awful lot of it does not require the government.
When I started CHECKBOOK's Guide, the government had
nothing to do with it. As a different example, I'm today
involved in the Medicare Part D drug benefit in a variety of
ways, one of which is, I was a minor contributor to and I'm a
heavy user of the Plan Finder tool on the Web, that Medicare
has provided that helps people pick the best deal drug plan.
Millions of people have used this tool already. Millions of
people who would have been hopelessly confused had they tried
to do this by hand, have found themselves guided to the least
costly health plans for their needs. You know, it's hard work
to do something like that, but it can be done and we've got
proven results from several insurance comparison systems.
There is also an angle here: We have an immediate need by
approximately 50 million Americans, not just the few million in
high deductible health plans, but the 45 million uninsured who
have faced the highest deductible of all, to get better price
information. I take some mild disagreement with Dr. Ginsburg's
earlier comments that price information alone or price
information wasn't as high a priority, maybe, as the total
value package. And I certainly endorse the package that gives
information on outcomes as well as price and cost.
But the reality is, people find it extremely difficult to
shop, and there are lots of less costly providers out there and
lots of less costly treatments.
When I was preparing this testimony, I got one of the plan
Web sites--and that's a huge breakthrough recently, the plans
themselves sponsoring Web sites with consumer information,
unfortunately for their members, not for those 50 million
people I'm talking about. And for the first time in many years
of seeking I was able to find out what having a baby costs in
America. I assure you this information is not freely available
today on the World Wide Web. If you Google search for maternity
and cost, you will not find out what it costs to have a baby.
But if you go to the Aetna Web site, if you're an Aetna member,
you'll find that, on average, it costs $7700. That includes the
price of the hospital, the obstetrician, the drugs and so on.
That's important information. There's also some low-hanging
fruit out there, and I'll conclude with this one example:
Medicare pays virtually all health care providers in America.
Now the Medicare rates are somewhat artificial in their methods
of derivation, but the fact is they are used by health
insurance companies and others in setting their rates; and
furthermore, the fact that Doc Sawbones or Hospital X accepts
the Medicare rate is potent information, if I'm a consumer.
What we need to do is get the Medicare payment rate
information, which is free and available, out there in consumer
friendly forms so that people can actually go to Doc Sawbones
and say, ``Well, if you're giving the rest of your consumers
this cheap rate, why can't I get it?''
This has been a particular issue in the area of hospital
costs. There was a notorious case at Yale University Hospital
in New Haven where poor persons were being charged triply or
quadruply over what preferred provider consumers and clients
were being charged. There is also the California hospital rate
experience. The law in California that forces hospitals to
publish their charges has been an eye opener in terms of the
incredible disjuncture between what the privileged people, who
are using preferred providers through health plan pay, and what
the 45 or 50 million people who face really high deductibles
have to pay.
That concludes what I have to say. I'll be glad to answer
any questions you have.
[The prepared statement of Mr. Francis appears in the
Submissions for the Recored on page 72.]
Chairman Bennett. Thank you very much. I will say I do
remember our first born child cost $500. It was very neatly
divided; $250 for the hospital and $250 for the OB-GYN. Things
have changed a little.
Mr. Kemper.
STATEMENT OF DONALD W. KEMPER, MPH, CHAIRMAN AND CEO,
HEALTHWISE, INC., BOISE, IDAHO
Mr. Kemper. I know. My first son was born in a military
hospital and it cost us $16, but you get what you pay for.
I'm pleased to be here, Mr. Chairman, Ms. Sanchez. My
message is pretty simple; it's just that the greatest untapped
resource in health care is the consumer, and that we have to
find a better way to inform and engage people in their own
care.
The message is a little less on helping people become great
shoppers as it is on helping people become great decisionmakers
and great managers of their own care. It is aligned with what
your daughter and daughter-in-law have done in their families,
what you've done, and what Mrs. Maloney had done for her own
surgical decision.
More technology alone is not the answer; cost-shifting
alone is not the answer. Greater transparency is not the
complete answer. The answer really involves helping people do
more for themselves. More to avoid illness in the first place,
or to avoid medical errors. More to avoid unnecessary care, and
more to ensure that they get the care that will really make a
difference to them and their families.
For 31 years, as CEO of Healthwise, I've relentlessly
pursued ways to improve the consumer's role in health care. In
the 1970s I helped to start the medical self-care movement in
this country. In the 1980s, I was at the beginning of the
national wellness movement. In the 1990s, I helped to make sure
good consumer health information got put on the Internet.
And today my organization, not-for-profit Healthwise,
provides information for most of the major health Web sites on
the net. We have about 70 million patient visits, if you will,
per year to our information.
Each of these efforts has made a difference, a big
difference; but they've not been enough. The recommendation I'm
making today I think is far better than all the rest. And, it
is a simple message: Let's prescribe information to every
patient. Prescribe information to every patient at every moment
in care. Simple idea.
Today, patients are left in the dark much of the time. Our
doctors have neither the tools nor the time to help us learn
what we can do for ourselves. Plus when we do get the
information, we forget about half to four-fifths of it
instantly, and what we remember by the time we get home is
about half wrong.
We need to find a better way to communicate with the
patient. Mr. Chairman, imagine a world in which your doctor
prescribed to you the information you needed to make decisions
about health care. Imagine that the information about your care
was considered to be an essential part of your care, and
imagine that your doctor could prescribe decision aids and
action plans that would actually help you improve your health.
What you're imagining we call ``information therapy'' and
this is how it works. It starts with information triggers
already known about your diagnosis, or the treatments that
you've received or the tests that have been ordered for you.
These triggers can predict your moment in care--where you are
in that diagnosis. When we know your moment in care, we can
pretty well predict the questions you might have and the
decisions you'll be facing.
Then, it's a relatively simple process to prescribe
information that will help you answer those questions and help
support your decisions.
Group Health Cooperative in Seattle is already today giving
information therapy prescriptions to every patient. Kaiser, the
VA, the DoD, all have information therapy initiatives started.
Information therapy is coming, but an enlightened Federal
policy could help get it here a lot faster. In my written
testimony I've laid out 10 ways that Congress could accelerate
this movement toward information prescriptions.
In the time I have, I'd just like to focus on one area, and
that is what we could do in Medicare. I think that we can start
by making sure that Medicare.gov includes good consumer health
information, so people can get it. Next I'd say that we have
the information to prescribe to each Medicare patient a good
prevention guide that is personalized to their comorbidities
and to their sex, age, and interests.
And then finally, for every Medicare member who is
diagnosed with a chronic disease, we can prescribe a self-
management plan that can help improve their health.
The consumer is the greatest untapped resource in health
care, and information therapy is the way to tap it. Thank you.
[The prepared statement of Mr. Kemper appears in the
Submissions for the Record on page 81.]
Chairman Bennett. Thank you very much.
Dr. Cave.
STATEMENT OF DOUGLAS G. CAVE, Ph.D., MPH, PRESIDENT, CAVE
CONSULTING GROUP, FOSTER CITY, CALIFORNIA
Dr. Cave. CC Group is a company that's focused on improving
efficiency and effectiveness in the health care system. We work
with some of the largest health plans in the country, in the
areas of consumer health care transparency, and pay for
performance programs.
Most health plans recognize the need to produce more
detailed consumer health information. Today, many are in the
process of developing a program that provides physician level
efficiency and effectiveness information. The employer benefit
consulting community and large employers have been very vocal
to health plans about the urgent need to present this type of
health information to consumers.
Most health plans are attempting to meet this strong market
demand, but each health plan is going about it in their own
unique way. To date, the most commonly offered comparisons have
been limited to unique procedures, diagnostic tests, and
prescription drugs. With respect to these services, the
information has been on a unit price basis, and that's
important. We've been talking about price a lot.
Where we believe we need to go is that the information
needs to be presented on a longitudinal episode of care bases,
where we're not only taking into account for medical condition
treatment the price, but the volume and the intensity of
service.
There are several main reasons, though, why health plans
have elected to start their consumerism efforts with only unit
prices. One of these reasons is that health plans generally do
not have enough claims experience data to measure enough
network physicians to have an entirely successful physician
performance program; and we heard this from the first panel as
well.
The question becomes, how do health plans obtain enough
claims data to accurately and reliably rate the performance of
most physicians. One answer is that CMS provide access to the
full Medicare claims data base. Initial testing shows that CMS
data bases, the full data bases, will be able to measure the
performance of 80 percent of all practicing physicians in all
geographic regions.
This percent of physicians measured is more than enough to
provide consumers with meaningful physician-level performance
information. However, it is important to recognize that even in
using the full CMS claims data bases, many of the measured
physicians will have a low volume of assigned episodes of care.
We have to keep in mind that there's the law of low episode
numbers, because when we develop and implement methodologies to
accurately measure physician performance, we have to do it
accurately.
There are several methodologies being used in the market
that do provide accurate and reliable physician performance
data. But, on the other hand, there are a good number of
methodologies that are being employed, where you'll obtain a
physician efficiency score, and you will obtain a physician
effectiveness score; but the scores will not be accurate or
reliable.
I provide three examples in my written testimony of studies
that illustrate the lack of agreement and reliability within
and between these measurement systems.
Let me close by pointing out that there is an important
opportunity for Congress to assist in promoting consumer health
information. Congress could assist health plans with obtaining
access to the full CMS Medicare dataset, as long as the access
continues to protect Medicare beneficiary privacy under HIPAA
and the Privacy Act. Thank you.
[The prepared statement of Dr. Cave appears in the
Submissions for the Record on page 96.]
Chairman Bennett. Thank you very much.
I'm interested, Dr. Cave, in your emphasis on the number of
procedures performed. At a previous hearing or examination of
this kind of issue some years ago, I remember someone saying a
heart bypass operation at a high volume facility like the Mayo
Clinic or some equally well-known place where they do a lot of
them costs $30,000. A similar operation at a rural hospital
where they do very few of them costs $80,000. The $30,000
operation is substantially better than the $80,000 operation.
Now this is a fact of life in the manufacturing world. I've
spent more of my life as a businessman in the manufacturing
world. One of the rules of thumb is that every time you double
your output, you lower your real cost by 20 percent, just on
the experience. So the first car that they produce is $10
million; the second one is $8 million. The fourth one is $4
million and so on, and by the time they've produced 5 million
Tauruses or whatever car it is we're talking about, they have
seen their manufacturing costs come down 20 percent every time
the number doubles.
And I think what you're saying here is that a similar sort
of effect occurs in medicine; the more they do it, the better
they get, the more they learn. And the cost comes down.
Now am I up in the night on this, or have I picked up on
something that is genuine?
Dr. Cave. I think that there's a lot of evidence that says
volume is very associated with quality, particularly for higher
cost procedures.
Another key component part of that statement, or an
ancillary component part, is that with the Medicare claims data
can examine the practice patterns of 80 percent of all the
physicians.
Now in respect to higher-cost procedures, the prevalence
rate tends to be low, and you need many episodes of care to
examine appropriate practice patterns. Asthma is a good one,
where you can have enough episodes to measure enough physicians
to really rank their efficiency and effectiveness very well.
Going back to your main point that volume is associated
with quality, yes absolutely, volume generally is related to a
reduction in cost and increased quality. That's been proven by
some studies.
Chairman Bennett. That implies a systemic change in that we
ought to be moving toward high volume operations in particular
procedures. In other words, here's a hospital which does
nothing but heart transplants.
Dr. Cave. That argument has been made, yes.
Chairman Bennett. OK. Now we get resistance to it, and I
don't want to get into that too much. But let's go down that
line in terms of the subject of this hearing, which is consumer
information.
Do you anticipate a Web site or a 1-800 number or whatever
that would tell people ``This particular facility has the
highest volume of doing the procedure that you're looking at,
and is probably worth the travel costs and the motel
expenses''--we want to discuss the whole cost here, not just
the unit cost, as you say--but you should consider, even if you
live in rural Utah, that it's worth your money to travel to
Minneapolis or wherever it might be, even including your travel
costs and your motel room and all of the rest of it, because
this is a high volume circumstance where the price will come
down, the quality will go up, and this is customer information
in a perfect world. Do you see that kind of thing happening?
Dr. Cave. Yes, as a matter of fact today on the inpatient
facility and outpatient facility side, there has been a strong
emphasis by at least three organizations to publish that type
of information, and the health plans actually will contract
with those organizations to present that information on their
Web site.
And you can now find the volume of most procedures by
hospital, because consumers are pretty savvy to that point
already. It is available right now. That information you're
talking about is out there, on the hospital side.
It's the physician side we want to try to move toward also.
Chairman Bennett. The physician side, OK.
Mr. Francis, do you have those kinds of data in your guide?
Mr. Francis. Mr. Chairman, I do something slightly
differently, but in effect I'm doing that. What I do is show
people--I'm rating insurance plans, and the primary function of
an insurance plan is to pay your bills; and you want to
minimize the cost of your out-of-pocket and your premium. And I
rate health insurance plans against each other in terms of how
hard they hit your wallet. That's exactly what I do.
We also do have quality information about insurance plans,
but there's sort of an inherited limited ability--if the
insurance plan pays its claims on time, and that's kind of an
awful lot--there's not a lot more to be said about that plan,
usually; though there are other kinds of differences that
matter, and we do have consumer satisfaction data, for example,
and we use it. If I could just pick up on two points that have
been made:
First, there is a fair amount of institutional performance
data out there for hospitals; CHECKBOOK, for example, publishes
hospital death rates--the ultimate outcome measure, for all
Medicare participating hospitals. And there are bits and
pieces. You mentioned heart transplants; there's a Web site at
HHS that actually rates every heart transplant center in
America with quality adjustments; and yes, it often makes
sense, in terms of lifesaving, not to use your next door
transplant center.
Chairman Bennett. I misspoke. If I said transplant, I meant
bypass. You don't get a transplant for $30,000.
Mr. Francis. No.
Chairman Bennett. I meant bypass surgery.
OK, go ahead.
Mr. Francis. Several witnesses have mentioned the question
of using Medicare data, the claims data; and they're absolutely
right, that it's a gold mine of information. The problem that
faces HHS right now is that under the privacy act, as it's been
interpreted by one court, releasing data on the performance of
individual physicians would violate their privacy, OK?
It's not a patient privacy issue, it's a physician privacy
issue. And it may take--I don't know where the lawyers at HHS
are on this, I'm not one of the parties to that issue, but this
may be an area where the Congress may have to help the
Department do what I'm sure it would like to do.
Chairman Bennett. Yes. We talked in the first panel, and
you made reference to it, about people who are resisting. And
we heard the story about the restaurants in Los Angeles and the
A, B, C, and I think as soon as that went up, every restaurant
became an A very quickly. Because who wants to eat in a
restaurant where the sanitary condition is C? Whether they
wanted to or not, they made the investment to bring themselves
up to an A.
You take me back to two experiences of my own business
life. I was a Washington representative--fancy word for
lobbyist--for a retailer back in the 1960s, and one of the main
issues that was prominent among retailing--we were a dry goods
retailer; I worked for J.C. Penney--so we just observed this.
But one of the prominent issues among grocery retailers was
labeling, nutritional labeling, and unit cost. And they fought
it as hard as they could.
And I would say to my fellow lobbyists in the quiet of our
conversations, ``Why are you against this? This is good for the
consumer, and ``Well, it's going to cost money and we're going
to have to''--I said, ``Look, that's unsustainable as a public
posture for you to say you don't want to tell your consumer how
much sugar, how much protein, how much whatever is in this
particular product. Or you don't want to tell them how much it
costs per ounce, lest they would figure out that Brand A is
cheaper than Brand B. You don't want to do this.''
And they would look at me and say, ``You're right, we're
very uncomfortable up there on the Hill, fighting against
this.'' And now everybody does it, and somehow the grocery
market world didn't come to an end when they started putting
nutrition labels on food and unit costs on their various items.
Their consumers got happier and their sales continued going on,
and the costs were easily contained.
And I think that's a demonstration of what could happen to
providers if we say we're going to start putting names on those
dots. Well, I don't want my name on a dot that's down in the
Southwest quadrant, I'd better change my practice or whatever,
so that pretty soon we're all where we ought to be.
Representative Sanchez, do you have questions, comments for
this panel?
Representative Sanchez. No.
Chairman Bennett. In the spirit of these hearings, do you
have anything you want to say to each other? Again, I like to
get the panels going back and forth, and we had some back and
forth in the first panel. Do either of you, any of you, have a
comment you'd like to make to the other in the testimony that's
been presented here?
Mr. Kemper. Yes, sir.
Related to the issue of getting a quality score for your
doctor, one of the facts of life is, not everybody can go to
the best doctor. I think what Carolyn Clancy was saying is that
the real benefit of these scoring systems is that it makes
everybody want to move toward, at least to the center and maybe
beyond. It's kind of Lake Woebegone, where we'd all be above
average, if we could be.
The issue though for the consumer is, that they can make
their doctor a better doctor. Medical mistakes are going to
happen, but they don't have to happen to you if you're really
tuned in to what your care is about.
One of the challenges is that most of us already have our
doctors, and what we want to do is to work with that doctor so
that we get the best possible care for the problems that we
have. We can do that if we have the right information and if we
develop that partnering relationship with the doctor. I think
the doctors are ready for that.
Chairman Bennett. Any other comment?
Dr. Cave. Yes. I think there's really a two-pronged
approach that's going on. First, the health plans aren't
sitting back and letting medical consumerism drive their role,
and giving up. They're actually in the process, many of them,
of developing or have developed what are called high
performance networks. It's those physicians that Dr. Milstein
was talking about in the upper right hand quadrant.
But these identified physicians are not all perfect there,
either. And there's still the ability to improve the
performance from the efficiency and effectiveness side; and
that's where the health plans are really looking for the
consumer to help out.
It's not that they're depending on the consumer to do 100
percent of the shopping themselves, the health plans are trying
to continually improve their performance. But, there aren't
enough physicians if health plans only contracted with the top
10 percent for physicians.
So even with tiered networks and high performance networks,
where a high performance network is based on evaluating
physicians price and the volume of services, and then also
quality or effectiveness. Not all physicians are perfect.
Medical consumerism will help to improve the performance.
But we still need to have the consumer to drive that
enhancement as well.
Chairman Bennett. OK, thank you. You trigger another
memory. At Intermountain Health Care, which is a major provider
in my State, they were looking at the question of infection
following operations. And at the time, the national standard--
we're talking about information here--was 2 percent. If you had
less than 2 percent of operations that developed an infection
after, you were acceptable as the national standard.
And they decided to try to find out if they could do better
than that. And so they tried a number of things; trial and
error, back to the old days, foundation of medicine, ``Try this
and see if they get cured.''
And they discovered, if I have it right, if they gave the
antibiotic used to prevent infection within a certain time
period after the operation----
Mr. Kemper. Before, I believe.
Chairman Bennett. Before the operation, OK. Just by
changing the timing, they dropped the infection rate at their
hospitals to .02 percent, and then made that standard
throughout their whole organization.
Well, they were talking to me about that when we were
having a discussion about health care. I as a consumer, if I
now were to go to GW, or Georgetown, I want to know if they
were following that particular protocol. Now undoubtedly they
are; that got out in the world, you picked it up, you're saying
they're not.
Mr. Kemper. Increasingly they are, but your chances are
still iffy.
Chairman Bennett. OK. And this is one case where as a
consumer, I could say, I could have an impact on what's going
to happen.
Mr. Kemper. Mr. Chairman, what I'd like to do is to
prescribe information to everybody scheduled for surgery to
know that, so they could talk with their doctor about it in
advance of the surgery.
Chairman Bennett. OK, that's where you're coming from, and
I think that's a wise thing to say.
Mr. Francis. If I may, Mr. Chairman, just to answer that,
right now something like this is being done, though not
anywhere near this personalized way, which in many cases may be
far and away the most effective. I'm not denigrating that idea
at all. But the pay-for-performance data on hospitals that Dr.
Clancy mentioned earlier, that's posted on the CMS Web site,
and is already influencing hospital behavior, happens to be
largely composed of measures of things hospitals should do that
they often don't do, like giving people an aspirin upon
admission for a heart attack; and we're seeing already
substantial changes in hospital behavior.
As a prudent consumer, back to your point about that, I
wouldn't go in a hospital without taking a look at that Web
site first.
Chairman Bennett. OK. Thank you very much. We appreciate
your contributions. The Committee is adjourned.
[Whereupon, at 11:45 a.m., Wednesday, May 10, 2006, the
hearing was adjourned.]
Submissions for the Record
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Mr. Chairman, thank you for inviting me to join you for this
important hearing on ``Arming Health Care Consumers with Better
Information and Incentives.'' Ensuring that consumers have the
information and tools they need to make the health care choices that
are right for them is a high priority of this Administration and,
especially, of the Department of Health and Human Services (HHS). HHS
is committed to ensuring that Americans can easily obtain
understandable information about the quality and price of health care.
To realize this vision, Secretary Leavitt has articulated four
objectives: promote quality transparency, promote price transparency,
facilitate the greater use of health information technology, and
transform health care so its incentives support a consumer-oriented--or
patient focused--health care system.
The Agency for Healthcare Research and Quality (AHRQ), which I
direct, is a science partner or the Centers for Medicare & Medicaid
Services (CMS) and other HHS agencies to advance these objectives. As a
science partner, our job is to assure that Department priorities are
based on valid, unbiased, credible science. As consumers seek to play a
more active role in decisions about their health and health care, there
are multiple opportunities for providing them with customized,
scientific information. My comments today will focus on consumer
information intended to help consumers make market and treatment
decisions.
ahrq's experience working with consumers: three lessons
I want to begin my testimony by emphasizing three lessons from our
work with consumers. First, informed choice only occurs when consumers
can assess the ``value'' of a health care good or service, and
consumers can only assess value when they have both price and quality
information. In fact, Secretary Leavitt has made Health Care Value
Incentives a HHS Priority.
He has stressed transparency for information on both quality and
price because both are essential to good decisionmaking. I should also
note that while this factual information informs consumer choice, only
the consumer can make the most appropriate decisions after weighing
this objective information against his or her preferences, tolerance
for risk or uncertainty, unique circumstances, and assessment of
acceptable tradeoffs.
Second, transparency is critical for enhancing consumer choice and
improving competitiveness. My agency's research on consumer choice
demonstrates that where the message comes from makes a profound
difference. The increased availability of information on health and
health care means that consumers are increasingly skeptical of the
impartiality of the information they receive. As my colleague CMS
Administrator Mark McClellan has stated, such transparency is just as
critical for physicians. Measurement is at the heart of public
reporting and potential value-based purchasing initiatives, but
physicians and other providers need to know that these measures are
valid, appropriate, and widely accepted.
Finally, we must not assume that we can approach consumer choice as
a ``Field of Dreams.'' To paraphrase the movie's tagline, we cannot
assume that by providing consumers with more information that they will
necessarily use it. For many health care consumers, the problem is not
a lack of information. It is, Mr. Chairman, as your hearing title
suggests, a need for better information: information that is pulled
together so that alternatives can be easily compared, easily
understood, and easily acted upon. Unfortunately, it is not easy or
simple to develop or present information in these ways. But I am
delighted to report we are making progress.
Providing Consumers with Better Information
Mr. Chairman, my testimony is organized around the two broad types
of decisions that consumers make. The first are marketplace decisions,
in which consumers or purchasers need to select a health plan, a
clinician, a hospital, or a long-term care facility. The second are
decisions that patients and their caregivers must make among
alternative treatments and the management of their conditions. It also
includes the types of benefit design decisions that health plans and
purchasers make so that their benefit packages support health care that
works. For both types of consumer decisions, we need good evidence on
what works and effective strategies to ensure that this information is
available and that it can be used or implemented.
MARKETPLACE DECISIONS
Some of the most basic and important marketplace decisions are:
Which health plan that my employer offers is right for me? How do I
know which primary care physicians, specialists, or health care
facilities provide quality care? If my father needs a cardiac bypass
procedure, how do I know which surgeon and which hospital are the best?
For developing information for these types of decisions, the
Consumer Reports approach to evaluating alternative goods or services
is a helpful practical model. We take on faith with Consumer Reports
what we are now struggling with in health care: that the measures
address the most relevant factors, that the measures are applied fairly
and consistently, and that the results are portrayed in ways that are
valid and easily understood.
Measuring the Right Things Well. Mr. Chairman, I will address
public reporting and valuebased purchasing in a moment. But since
neither can succeed unless we measure the right things well, I want to
provide three examples of the types of measures that AHRQ develops and
validates. AHRQ is a leader in this area. Many of the reporting and
value-based purchasing experiments across the country are relying, at
least in part, on our work.
Over a decade ago, AHRQ responded to concerns that there was often
a ``disconnect'' between the satisfaction surveys developed and
released by health plans and the experience of enrollees. Our response
was not to develop a government-administered survey but to create a
tool that would ensure a valid assessment of enrollees' experience with
their health plans and make it available for use by public and private
sector plans and purchasers. By consumer experience of care, I mean
such issues as whether patients received the right care, how quickly,
were they treated with respect, whether their caregivers communicated
with them in ways that they could understand, and whether they were
invited to participate in decisionmaking regarding their care.
AHRQ developed the Consumer Assessment of Health Providers and
Systems--or CAHPS--survey, and it is now accepted as the industry
standard. Today, over 123 million Americans, including Federal
employees and military dependents, can use CAHPS data to make decisions
about their health plans. Mr. Chairman, you and your staff have access
to CAHPS data to make decisions about your Federal Employees Health
Benefits Program coverage. AHRQ does not collect CAHPS data but
provides technical assistance on how to communicate the findings.
As the health plan survey evolved into the industry standard, CMS
and others urged us to provide similar tools for the industry to use in
other areas. We have now developed, tested, and validated survey
instruments for assessing children with special health care needs,
behavioral health, and learning more about why Medicare beneficiaries
disenroll from managed care plans. Over the next 18 months we will
complete development of survey instruments that will address additional
settings, populations, and types of services. As with our prior work,
these will not be AHRQ-conducted surveys; these survey instruments will
be in the public domain for use by others. These include hospitals,
Medicare prescription drug plans, in-center hemodialysis, clinicians
and group practices, Preferred Provider Organizations, and recognizing
that some nursing home residents are cognitively impaired, we are
developing both a survey for residents and their families. CMS recently
asked us to work with them on development of a survey for home health
care services.
To assist hospitals in their clinical quality improvement
initiatives, AHRQ also developed four sets of Quality Indicators.
Inpatient Quality Indicators examine mortality, utilization, and volume
for leading conditions and procedures. Patient Safety Indicators
identify post-operative complications and iatrogenic (physician-caused)
harms. Pediatric Quality Indicators are focused on those 17 years old
and younger. For systems, which include hospitals and primary care
practices, Prevention Quality Indicators measure ambulatory care
sensitive conditions, i.e., conditions for which a patient should
rarely need to be admitted to the hospital if the primary care system
is working properly. In the last 3 years we have seen an increasing
trend by States and others to use the Quality Indicators for public
reporting, and at least one CMS demonstration project is using them to
test whether the quality of inpatient care for Medicare beneficiaries
improves when financial incentives are provided.
AHRQ has also launched an exciting project to develop and validate
efficiency measures. Nearly every report promoting public reporting
calls for the addition of efficiency measures, but there are few, if
any, efficiency measures for which there is widespread support. This is
a high priority for purchasers, but providers have expressed concerns.
The provider community believes that efficiency measures should
support, and not undermine, our shared goal of encouraging appropriate
high quality care. AHRQ agrees. For example, primary care practices
should have incentives to help those patients who have one or more
chronic illnesses learn to effectively manage their condition(s) in an
efficient manner, in order to avoid risks to patient health, and large
costs from avoidable emergency room visits, hospitalizations, or
complications. Appropriately constructed measures need to take such
issues into account in determining efficiency.
We already are consulting all of the interested parties and leading
experts and reviewing existing knowledge regarding efficiency measures.
We expect to complete development and evaluation of efficiency measures
by the end of this year. This will be an important addition to public
and private sector initiatives because it will enable them to do what
they cannot do now: compare the efficiency of their practice or their
facility with the competition.
Public Reporting. A number of public reporting initiatives are
drawing on our work. Of the States that have public reporting of health
quality information, at least 8 States are using one or more sets of
Quality Indicators that my agency developed. The states are: Colorado,
Florida, Massachusetts, New York, Oregon, Texas, New York, and Utah.
To provide actual examples of reports of quality information
created by a number of organizations, AHRQ will soon make available on
our Web site, www.TalkingQuality.gov, a Report Card Compendium, a
directory of over 200 sources of comparative information on the quality
of health plans and providers. This directory provides in a single
location an easily searchable data base of report examples, which will
allow report developers to explore and assess different approaches to
formatting information, displaying data, and explaining why quality
information is important to consumers and other purchasers. Since it
also provides (with their permission) information on the organization
and individuals who developed each report, the Compendium will allow
users to locate and network with one another concerning new strategies
and ideas for report development. This is critical because information
relating to how these reports cards were developed, how they were
disseminated and used, and how they were received is rarely published.
The Report Card Compendium includes reports on health plans, hospitals,
medical groups/clinics, individual physicians, managed behavioral
health organizations, nursing homes, home health agencies, and dialysis
facilities.
I am delighted to report that the health care industry and health
professional societies have stepped up to the plate to help develop
public reporting initiatives. The Ambulatory Care Quality Alliance
(AQA) is a consortium of private sector groups that I chair. Eighteen
months ago, the American Academy of Family Physicians, the American
College of Physicians, and America's Health Insurance Plans asked AHRQ
to serve as a neutral convener for this collaborative effort to
determine how to promote uniformity in quality measurement and
reporting in outpatient settings across public and private payers.
Substantial physician leadership in AQA now includes the American
Medical Association and many major medical societies.
In addition to enthusiasm for identifying common measures to
promote uniformity and facilitate improvement efforts, physicians are
interested in their validity and use. Specifically, physicians want
assurances: that measures are based on the best science and will be
updated as the science changes; that we will address unanticipated
consequences such as reports that discourage physicians from seeing the
most difficult patients; and that any incentives will be fair and
equitable. Not surprisingly, physicians are more willing to trust
measures that are developed by neutral scientific parties.
AHRQ and CMS are also active participants and partners in the
Hospital Quality Alliance, a public-private partnership that is
committed to developing and making available standardized measures of
hospital quality. Over the last 3 years, the Alliance has built a
system of quality reporting for hospitals. The result is the HHS Web
site, Hospital Compare (www.hospitalcompare.hhs.gov ), which provides
easily accessible comparative quality information. We are very pleased
that the Hospital Quality Alliance will use the Hospital CAHPS survey,
which we have developed for CMS to provide information on consumers'
experiences with their hospital care. The survey is now being field
tested. We are especially pleased that the Alliance has publicly stated
that HCAHPS, ``represents a quantum leap toward the goal of consumer-
directed health care decisionmaking.''
Value-Based Purchasing. Value-based purchasing is the concept of
rewarding providers based upon their quality and efficiency. There are,
of course, financial incentives inherent in all payment systems, so the
issue is not incentives versus no incentives. As Secretary Leavitt
points out, the challenge is that existing incentives are often poorly
aligned; all too often they do not support our goals of improving
efficiency and promoting quality.
AHRQ is working with CMS, the Blue Cross plans, the RWJ Rewarding
Quality Initiative, and others to provide technical assistance and to
assist in the evaluation of the value-based purchasing experiments now
underway. Some of these experiments, such as the CMS Premier quality
incentive demonstration, are using our Quality Indicators as part of
their measure sets.
As interest began to grow in value-based purchasing initiatives,
AHRQ undertook a synthesis of the existing literature. While the
evidence was not conclusive when we released our report last year, the
gaps in evidence are beginning to fill in. The evidence shows that
measurable improvements have been seen in large-scale tests that reward
increased use of preventive screenings and other processes that improve
quality and safety. We developed Pay for Performance: A Decision Guide
for Purchasers to Consider, which we released last week. These efforts
underscore the importance of understanding how value-based purchasing
programs are designed, so that all participants understand the rules.
TREATMENT DECISIONS
Let me now turn to treatment decisions.
Understanding What Works and For Whom. As I noted, one of AHRQ's
basic activities is to understand what treatments and interventions
work and do not work. There are three reasons why AHRQ's work is
critical in assessing health care's state-of-the-art. First, with our
increasing investment in basic and biomedical research, there has been
an exponential increase in the number of scientific findings, and a
similar increase in the proportion of clinical decisions where there
are two or more treatment options. This makes it increasingly difficult
for physicians to keep abreast of the literature and put the latest
findings into perspective. Second, research shows that that there is a
17-year time lag between discovery and when most Americans benefit from
that discovery. AHRQ and other HHS agencies are committed to reducing
that time lag. Finally, academia rewards original research, not
synthesis of existing knowledge. So synthesis of our exploding
knowledge base is the exception, rather than the rule.
Section 1013 of the Medicare Modernization Act (MMA) significantly
expanded AHRQ's ability to develop state-of-the-art evidence syntheses
for the conditions and interventions of significance for Medicare,
Medicaid, and State Children's Health Insurance Programs. To respond to
the MMA mandate, we established the Effective Health Care Program to
provide current, unbiased evidence about the comparative effectiveness
of different health care interventions. Where the Effective Health Care
Program breaks new ground is how we undertake these syntheses: the
process is transparent, they will be routinely updated as warranted by
new discoveries, and consumer-friendly versions will be produced of
every finding.
Our initial report compared the effectiveness of treatments for
gastroesophageal reflux disease (GERD). This report is a good example
of the opportunities for greater patient involvement in decisionmaking.
The report found that patients who had surgery to treat GERD did so in
the hope that they would no longer require ongoing medication. Yet
despite the costs and risks, nearly two-thirds needed to continue
taking medication. For patients receiving pharmaceutical therapy, there
was a large difference in the cost, but not in the effectiveness, of
the different classes of medications.
This information is already being used by purchasers to improve the
quality of their health benefit plans. For example, the National
Business Group on Health, in its work supporting the National Committee
on Evidence-Based Benefit Design, has summarized the information for
purchasers and identified benefit design options for health benefits
managers.
Translating Knowledge Effectively. Communicating information to
patients and consumers about medical decisionmaking can be daunting.
The subject matter is often complex; statistical odds or risks of
developing a disease or complication are extremely difficult to
communicate; and the end result, all too often, is misunderstanding. It
can often be difficult to reach consumers who are ``health illiterate''
or who have reached a saturation point with health care information.
A member of our National Advisory Council, Judy Hibbard, a
professor in the University of Oregon's Department of Planning, Public
Policy, and Management, is an expert in the field of patient and
consumer communication. We have relied on her insights in developing
many of our products. She has identified three major factors that
affect whether a consumer uses this type of information:
Consumers need to understand the importance of the
information to their lives. The information must be understandable,
salient, and framed in ways that consumers can easily grasp.
Consumers often need specific skills to understand and use
the information. For example, health literacy and the ability to
understand numerical information like the odds of developing a disease
or complication are important.
Finally, motivation of consumers to use the information is
critical. In fact, a high level of motivation can compensate for a low
level of these skills.
We have come to appreciate that the task is not merely translating
a document into a specific reading level. What is required is a better
understanding of the audience for the information: what will make
specific health messages meaningful to those who need to act upon them.
We also need to make the action steps concrete.
We are beginning to address these challenges. We are structuring
the recommendations of the U.S. Preventive Services Task Force, which
AHRQ sponsors, so they can be used digitally. By the end of the year,
we will have a web-based interactive program where an individual can
type in his or her age, sex, or other relevant information and
understand more clearly what services the Task Force recommends they
receive, and how often.
Interestingly, the issue of clarifying action steps extends to
clinicians. As decision support systems--whether in Personal Digital
Assistants or desktop computers--become more pervasive, we are
discovering that these programs do not easily accommodate findings that
are framed in terms of factors that physicians need to consider. The
information must be reformatted to provide specific action steps that
match the demographics of the patient being treated.
In the short term, we are restructuring our recent findings so that
they can be more easily incorporated into decision support systems. In
the long term, it is clearly more efficient to incorporate this focus
into our work from the outset. So we have begun to change our process
for developing evidence syntheses so that the results can readily be
used by patients interactively on the Web or by caregivers in decision
support systems. Our first prototype is an interactive data base of
articles on the costs and benefits of health IT; we will now apply this
approach to the work of the U.S. Preventive Services Task Force. Over
the next 3 years, we expect this approach will become an integral part
of all of our synthesis work. This should make an important
contribution to reducing the 17-year time lag between discovery and
widespread adoption.
Patients with Chronic Illness. A substantial proportion of health
care expenditures are focused on caring for individuals with multiple
chronic illnesses. Judy Hibbard is also helping us to think through the
challenge of motivating chronically ill patients to take an active role
in the management of their care. While most health plans have developed
or incorporated disease management strategies into their programs, this
is only the first step in what is a much longer process. We sometimes
forget the often overwhelming myriad of decisions and actions that a
chronic care patient must take. Combined with the difficulties of
navigating a highly complex delivery system, it is not surprising that
few patients actually try. When you consider that fewer than 50 percent
of patients actually quit smoking after a heart attack--an event that
should motivate even the most intransigent smoker--it seems less
surprising that it can be difficult to motivate chronic care patients
to take an active role in managing their care and their lifestyle. AHRQ
will increasingly focus attention on how we can effectively engage
patients with chronic illnesses in their care.
CONCLUSION
Mr. Chairman, in closing, I believe that we are making significant
progress toward our shared goal of enhancing patient choice. The
industry deserves great credit for creating the Hospital Quality
Alliance and Ambulatory Care Quality Alliance to advance public
reporting. Similarly, the leadership of Dr. Mark McClellan and his team
at CMS has played a critical role in the progress we have made to date.
As I noted during my opening remarks, we need to keep our eye on
the ball: ensuring that all of us--as consumers and taxpayers--are
getting real value for our health care dollars. Second, we need to
recognize that all of these efforts succeed or fail based on the
transparency of the process. The more transparent we make measuring the
right thing well, the more likely that health care providers and
consumers will accept the results. Third, we need to be realistic about
the challenges of getting consumers to use this information in making
health care decisions. This will not occur magically. We need to focus
on how to best engage consumers more effectively in their health care
decisions.
My closing observation is that we must not overlook the significant
response of the provider community to public reporting already. Health
care systems are increasingly looking at how they can redesign their
systems and processes for quality and value. We are supporting or
providing technical assistance for a number of exciting projects
intended to help build the evidence base for how systems can improve.
For example, we are providing support to a public system's effort to
apply the automotive concept of ``lean'' processes to health care,
another project to more effectively measure waste, and a large
collaborative effort to reduce avoidable injuries, in a first step
toward developing ``fail safe'' hospitals. As we explore public
reporting and value-based purchasing, interest in redesign for
efficiency, quality, effectiveness, and safety will only increase.
By serving as a ``science partner'' for these efforts, we will
ensure that the lessons learned from these cutting edge initiatives
will be rapidly shared throughout the health care industry. In fact, we
will launch a web-based Innovations Clearinghouse later this year to
serve as a platform for rapid dissemination. We also hope to make
additional contributions through the types of system redesign projects
I just mentioned, our continuing work in patient safety, and our
support for the Administration's broader health IT agenda.
Mr. Chairman, this concludes my prepared statement. I will be
delighted to answer questions.
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Prepared Statement of Michael D. Parkinson, M.D., MPH, Executive Vice
President and Chief Health and Medical Officer, Lumenos, Inc.,
Alexandria, Virginia
Mr. Chairman and members of the Committee, thank you for the
opportunity to testify today regarding health care information for
consumers. My name is Michael D. Parkinson, and I am Executive Vice
President and Chief Health and Medical Officer for Lumenos, a pioneer
in consumer-driven health care and a subsidiary of WellPoint, the
largest publicly traded commercial health benefits company in terms of
membership in the United States. I have long been concerned about the
health, productivity and economic impact of health care costs on
employers and on our nation in general, and am honored to share my
thoughts with the Committee today.
PERSPECTIVE
My comments reflect my experience as a physician, former leader in
the Air Force and Military Health System and as the head of our health
improvement and clinical strategy at Lumenos. My clinical training and
practice experience is in primary care and preventive medicine/public
health. My comments are based on Lumenos experience with self-insured
employers (generally 200 employees or more) and direct feedback from
consumers and patients enrolled in either Health Reimbursement
Arrangement (HRA) or Health Savings Account (HSA) plan designs.
I believe, and an increasing body of evidence supports, that
consumer-driven health care, both in its current form and as it rapidly
evolves and grows, has great potential to improve the health of
patients and consumers, the effectiveness of medical care and the
efficiency of the health care system. However, better consumer
engagement, more patient-centered care, greater ownership of resources
expended on healthcare and improved quality/cost information will have
predictable consequences on the health care system. These consequences
and system deficiencies should be anticipated and addressed.
ADDRESSING THE TRUE DRIVERS OF EXCESSIVE HEALTH CARE COSTS
A properly designed consumer-driven health care program assists and
supports the consumer/patient to understand and address the primary
drivers of poor health and excessive medical costs, which are personal
health behaviors and ineffective and inefficient health care. The
flexibility of account-based benefit designs to promote, educate,
incentivize and financially reward improved health behaviors,
preventive care and evidence-based medical practices is unique. A
recent study by leading health care economist Ken Thorpe concluded that
63 percent of the rise in real U.S. per capita health spending is due
to the increasing prevalence of health risk factors which are medically
treated rather than prevented or improved through health promotion and
disease prevention strategies.\1\
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\1\ KE Thorpe, ``The Rise in health care spending and what to do
about it'' Health Affairs, Nov/Dec 2005.
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The inherent ``rollover'' of funds in account-based designs from
year-to-year reinforces improved health behaviors, appropriate self-
care and better care management for chronic conditions. Prevention and
evidence-based care particularly for those with chronic disease are
clearly prioritized and financially rewarded. Both our HRA and HSA
plans cover evidence-based preventive services at 100 percent without
copays or deductibles. In addition, 60 percent of Lumenos employers
cover tobacco cessation and 30 percent cover weight management as
preventive care services at 100 percent.
Consumer-driven models have the power to incent three major actions
by all individuals and patients that improve health, medical care and
outcomes. Specifically, each of us needs to understand our health
status (our risk factors and current medical conditions), agree to
participate in a program or activity (risk reduction program or
``disease management'') if we have significant risk factors or chronic
disease and understand and master our care, in partnership with our
physician to optimize outcomes and care.
At Lumenos, we created an integrated and incentivized health
improvement strategy, targeted at major drivers of excessive health
care costs, which meets the needs of the full range of health risk and
users, with a particular emphasis on those with chronic disease and
high utilization.
INFORMATION, TOOLS AND SUPPORT SERVICES AVAILABLE TODAY
Lumenos and its partners provide a comprehensive array of
information, tools and personal support services for consumers to
understand and better engage in their health and health care decisions.
We have found that web-based information is an important enabler of
better decisionmaking, but not the sole or most important factor in
assisting consumers and patients. The organization, timing, linkage,
ability to access at the point-of-decision and content delivery method
are important as well.
Communication is required to reinforce the use of the health,
clinical, and quality and cost information. Ideally this communication
would occur initially and repeatedly throughout the year using multiple
modalities. In both formal surveys and in face-to-face focus groups
with hundreds of Lumenos consumers, members are surprised and
appreciative of the wealth of organized information and support
available to them. We have found that consumers are seeking more
accurate and actionable information over time. Of interest, the
consensus answer to the open-ended question, ``What could Lumenos do
better for you?'' is to create a means to connect with other patients
with similar medical conditions or with consumers with shared health
interests.
In general, consumers and employers are highly satisfied with the
current information, tools and support that Lumenos provides. Year-
over-year, both employers and consumers are seeking more specific and
actionable information about the cost, quality (and necessity) of
medical services. Communication and reinforcement of why information is
important, how to access it, how to engage to better manage one's care
(e.g., health coaching) and how to use it in concert with one's
physician are likely more important than the availability, or in some
cases, the specificity and accuracy of the data itself.
HOW IT'S WORKING FOR EMPLOYERS AND HEALTH SYSTEMS
In general, Lumenos' experience for both employers who adopt
``account-based plans'' as a full replacement strategy and for those
who offer them on an optional basis reflects the findings of the
McKinsey study.\2\ Increases in preventive care, decreases in the cost
of prescription drugs, and decreases in outpatient and ER visits lead
to significant employer health care cost trend mitigation relative to
other benefit designs. Particularly when accompanied by financial
incentives, patients with chronic illness become engaged either through
health risk assessments or direct self-referral to a health coach.
Unlike the McKinsey study, which showed low satisfaction with the
information and support provided to consumers, Lumenos has consistently
experienced high satisfaction with both information/support/
communications and re-enrollment.
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\2\ McKinsey & Company, ``Consumer-directed health plan report--
early evidence is promising'' acessed at www.mckinsey.com/
clientservice/payorprovider/Health-Plan-Report.pdf. 2005
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One of my personal goals, and a major reason for the American
Medical Association's support for Health Savings Accounts and consumer-
driven care in general, is to better support patient-physician
relationships. Consumer-driven models have two inherent value
propositions for providers: improved clinical care and outcomes through
the better informed and engaged patients and reduced administrative
burdens relative to ``traditional'' care.
In addition to providing care, health systems and hospitals are
also employers purchasing and providing health care services for their
own employees. These employees often have among the highest risk-
adjusted health care costs of any industry. Lumenos has suggested, and
some leading health systems who are now full replacement clients agree,
that consumer-driven health care has great potential not only to
appropriately mitigate excessive health care costs, but also to
catalyze clinical and business practice innovation.
Employers, as well as a growing number of health care systems, are
adopting consumer-driven health plans on either an optional or full
replacement basis. Health care cost mitigation, increases in preventive
care and in engagement by those with chronic disease can be accompanied
by high enrollee and employer satisfaction when information, tools and
support are designed, implemented, communicated and reinforced.
IMPROVING APPROPRIATE CONSUMER AND PHYSICIAN DECISION MAKING
There is a growing awareness and tailoring of information, tools
and support to address the preference and price sensitivities of
medical care. If the health of individuals, the care of physicians and
the performance of the health care system are to improve, then the
behavior of each entity needs to be better understood and addressed
using approaches which predispose, enable and reinforce desired
outcomes. The creation of a ``health care marketplace'' with improved
information on cost and quality will impact health care decisions and
players differentially and will likely occur incrementally, which, in
my opinion, is desirable. At Lumenos, we have deliberately built an
incremental approach to quality and information collection and
dissemination.
A health care typology that has been useful in shaping our
information and support strategy includes health risk factor
identification, maintenance and reduction, clinical preventive
services, acute/episodic care, chronic disease management, surgical
decision support, emergency/catastrophic care and end of life needs.
Similarly health care can be parsed by care that is proven clinically
effective, care that is preference-sensitive and care that has shown to
be ``supply sensitive'' (e.g., wide variations in practice typically
associated with oversupply of providers or facilities relative to other
geographic areas). Provider-specific issues that relate to care and
business practices can also be evaluated and impacted through a
consumer-driven ``prism'' as noted previously.
Making the right thing to do clinically also be the easy thing to
do will require realignment of thinking, infrastructure and incentives
among the consumer/patient, provider and ``the system.'' Better
information and tools for quality and costs should be informed by a
more specific understanding of how patients use or could use such
information and support across the spectrum of the different health
care needs and in different geographic and economically over- or
undersupplied provider markets.
WHAT'S MISSING: STANDARDIZED CONSUMER-FOCUSED TOOLS AND INFORMATION FOR
ENGAGEMENT
Patients with serious medical conditions or chronic illness want to
know whether other patients with the same condition understand their
disease, are able to improve the likelihood of a favorable outcome and
are they treated humanely in the process. Currently available
information is not adequate to answer this question. Furthermore, the
medical literature supports that knowledge, outcomes and even more
judicious use of resources are more likely to be acquired in the
context of a healthy physician patient relationship with shared
decisionmaking.
New performance indicators of quality around consumer acquisition
of competencies by physicians, medical groups or health systems could
complement existing, administrative (claims-based) measures of quality
and efficiency. For example, the disease specific, evidence-based
guidelines developed by the Institute of Medicine would be useful for
consumers if translated into language designed for lay people. What for
example, does the newly diagnosed colon cancer patient need to know, do
and act upon in concert with her physician? What knowledge,
competencies and proposed actions are appropriate for a patient with
diabetes in patient terms, which reflects the evidence-based guidelines
promoted to patients and measured by accreditation and other quality
efforts?
A standardized, generic patient satisfaction questionnaire, or
``ambulatory HCAPS'', that includes the major elements of an effective
shared decisionmaking relationship (i.e., ``Does your physician offer
and discuss options, share the pros and cons, consider your
preferences, etc.'') would also be very useful to consumers. Aggregated
standardized survey information on the physician's practice style would
be most valuable to consumers to help them determine which provider or
group is likely to improve their engagement, care skills and health
outcomes.
Quality efforts to date have concentrated on plan and provider
measurements from administrative data rather than on consumer and
patient knowledge, competencies and decisionmaking arising from
information access and a partnering, shared-decision making patient-
physician relationship. Efforts to define both generic and
diseasespecific qualities associated with high quality, high value and
safe medical practices which can then result in standardized patient
surveys could be of great value in increasing the effective engagement
of patients, and over time, improving the ``marketplace'' of patient-
relevant quality information for provider choice.
WHAT WE NEED TO DO BETTER: QUALITY AND COST INFORMATION
Consumers spending ``their own money'' for healthcare are asking
for more information, access and convenience. Providing estimated
expenses for episodes of care will become progressively more granular
and transparent pricing by providers and facilities will increase.
Making sure that quality is measured consistently will be important in
order for consumers to compare ``value'' as they do currently for
prescription drugs. The anticipated Federal release of physician and
hospital reimbursement for selected Medicare services and the
requirement for transparency prices of a core set of services in order
to bid on Federal employee health benefits programs will undoubtedly
impact the direction and pace of the provider and payor's approach to
cost transparency.
A promising approach is the NCQA Physician Recognition program,
which allows physicians to volunteer and be reviewed for compliance
with evidence-based guidelines for diabetes and heart disease.
Additional recognition is awarded for implementing an electronic
medical record or system for tracking and improving evidence-based care
and patient outcomes. Lumenos displays this information today to help
inform patients about those physicians interested in and evaluated for
these chronic conditions.
ACCELERATING INNOVATION IN CARE DELIVERY AND FINANCING
Consumers, patients and health systems deploying consumer-driven
care for their own employees and physicians are likely to embrace
value-added innovations and avoid lower value services or practices.
For example, group visits for chronic disease management, reimburseable
e-visits for established patient-physician relationships, and behavior
change and disease management programs have traditionally not been
demanded by consumers/patients or built by physicians or health
systems. Consumers paying ``with their own money'' and employers,
trying to maximize the productivity of their work force, are more
likely to see value in new ways to connect with providers and health
information outside the too often ineffective, rushed, brief face-to-
face physician visit. The major health care systems that Lumenos serves
are building these capabilities largely in response to the consumer-
driven market both internally, for their own employees, and externally,
for the patients and employers they serve. Some hospitals are now
providing enhanced information to inform patients about their actual
out-of-pocket costs and/or total price of selected procedures and
treatments (e.g., OB, outpatient surgery, gastroenterology services,
rehab, etc.).
Primary care providers, already concerned with declining
reimbursements for primary care and chronic disease management, are now
seeing the rapid expansion of acute care clinics in retail and drug
stores with transparent, all-inclusive, reasonable pricing for acute or
routine conditions. Chronic disease patients who are looking for
consistent, compassionate, evidence-based service and expertise may be
an important lever to help drive the reinvigoration of comprehensive,
longitudinal primary care and the creation of an ``advanced medical
home.'' \3\ Surgical hospitals and new centers or systems for
specialized chronic disease management may also arise and be welcomed
and sought by more engaged consumers.
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\3\ American College of Physicians Position Paper, ``Reform of the
dysfunctional healthcare payment and delivery system.'' Accessed at
http://www.acponline.org/college/pressroom/as06/dysfunctional-
payment.pdf. 2006.
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Consumer-driven care will likely accelerate clinical and business
practice innovation as patients better understand their options and
seek greater assistance, convenience and value for their time and
money. The provider community is showing evidence of welcoming such
innovation and, in some instances, is calling for wholesale reform of
current clinical, delivery and financial models. Publicizing the value
of these innovations and translating them into meaningful health and
cost advantages will further accelerate their dissemination and
adoption.
ACCELERATION OF HEALTH INFORMATION TECHNOLOGY
Consumers are generally not aware of the health or cost impact of
seeing a physician or being admitted to a hospital or facility that
does not deploy state-of-the-art health information technology.
Consumer and patient focused messages need to be developed and
disseminated to create market demand for the safer, more effective and
efficient care that electronic/personal health and medical records,
electronic prescribing and hospital physician order entry can provide.
Creating a marketplace with accurate information about the health
information technology status of providers is important and evolving.
However, health information and interoperability standards are needed
urgently to facilitate both rapid adoption and lower price points for
providers, particularly those in smaller practices, to acquire needed
technology.
Consumers and patients will increasingly come to understand the
safety, health and cost value of health information technology from
their providers. This could become a key market differentiator and
``quality/cost metric'' in the near term. Acceleration of technology
standards for information and interoperability is critical and urgently
needed to promote widespread dissemination and decrease price.
MAJOR HEALTH CARE ISSUES TO BE ANTICIPATED AND POTENTIALLY ADDRESSED
There are numerous major healthcare issues, needs and practices
that will be highlighted and catalyzed by the growth of consumer-driven
health plans, consumerism and greater transparency in cost and quality.
(1) Need for improved, standardized assessment of therapies and
technologies. Currently the military, VA, health plans, foundations and
consumer groups all attempt to assess the health and economic marginal
value of new treatments and procedures without any consistent
methodology and with inefficient use of resources;
(2) Malpractice reform to decrease unnecessary, defensive medical
services;
3) Shifted and hidden costs for graduate medical education. Who
should pay for the education of a qualified health professional
workforce?;
(4) A discussion of an optimal mix of market-based versus public
sector functions of health care; and
(5) Statutory and regulatory reforms to foster an appropriate
health care marketplace. Michael Porter's recent characterization of a
health care marketplace and what would be needed to create one is a
useful framework for what consumers, providers and payors all should
consider, describe and work toward.\4\
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\4\ M Porter, ``Fixing competition in US health care,'' Harvard
Business Review, June 2004.
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As consumer information on quality and costs of services becomes
more transparent, cost-shifting, unexplainable cost differentials and
inefficient clinical and business practices will become more apparent.
Health policy and societal questions which have been known and
discussed for years will become more visible to all stakeholders and
hard decisions will likely have to be made about the appropriate role
of the private, market sector and public sector in financing and
delivering health care.
[GRAPHIC] [TIFF OMITTED] T9936.023
Mr. Chairman, Mr. Vice Chairman and members of the Committee, thank
you for the invitation to testify about the next generation of consumer
health information tools. My name is Paul B. Ginsburg, and I am an
economist and president of the Center for Studying Health System Change
(HSC). HSC is an independent, nonpartisan health policy research
organization funded principally by The Robert Wood Johnson Foundation
and affiliated with Mathematica Policy Research.
HSC's main research tool is the Community Tracking Study, which
consists of national surveys of households and physicians in 60
nationally representatives communities across the country and intensive
site visits to 12 of these communities. We also monitor secondary data
and general health system trends. Our goal is to provide Members of
Congress and other policymakers with objective and timely research on
developments in health care markets and their impacts on people. Our
various research and communication activities may be found on our Web
site at www.hschange.org.
My testimony today will make three points:
Engaging consumers to be more aware of cost and quality
issues in health care has the potential to increase the value of health
care not only for individual patients but also for the U.S. population
as a whole. But some are overselling the magnitude of this potential.
And achieving this potential will require investment in collecting and
translating meaningful consumer price and quality information and
encouraging innovative benefit structures. And even if this potential
is reached, it will not be the hoped-for silver bullet that solves the
health care cost crisis in this country.
For most consumers who are insured, their health plan has
long been their most powerful asset in shopping for lower prices, and
insurers have the potential to become even more effective agents as
they develop more sophisticated benefit structures and information
tools to support consumers in choosing effective treatments from
higher-quality, lowercost providers.
There are practical limitations on the ability and
willingness of consumers to become savvy health care shoppers. Markets
for self-pay health services, such as LASIK, are often cited as a model
for consumer engagement, but our research indicates that consumers'
experiences with self-pay markets have been romanticized and do not
offer much encouragement as a roadmap for effective health care
shopping without either a large role for insurers or regulation.
The current policy interest in price and quality transparency is
essentially the second stage of the evolution of consumer-driven health
care. The first stage was financial incentives for consumers in the
form of greater cost sharing--high deductibles and coinsurance. Tax-
sheltered savings accounts--health savings accounts (HSAs) and health
reimbursement arrangements (HRAs)--may be useful tools to make
increased cost sharing more palatable to consumers, but they do not
reinforce consumer incentives to economize on health care--they
actually temper them.
Now industry and policymakers are focusing on the tools needed by
consumers to make informed decisions on reducing the costs of their
care or ascertaining the quality of care. As insurers compete
vigorously to sell consumer-driven products, they seek to differentiate
their products on the basis of the tools offered to consumers to
compare price and quality across providers. Policy makers are
interested in exploring government's role in fostering greater
costconsciousness and a more favorable environment for consumers to
make informed choices about health care services.
Traditionally, health insurance has either removed or sharply
diluted consumer incentives to consider price in choosing a provider or
treatment strategy. It is difficult for consumers to get price and
quality information from providers--traditionally they have shown
little interest in competing for patients on this basis. Likewise,
there is little information available to help patients examine the
effectiveness of treatment alternatives. Lack of quality information
understandably makes consumers reluctant to choose a provider solely on
the basis of a lower price. It is one thing to realize after the fact
that you chose a poor-quality provider when price is not an issue but
another to have that result from choosing on the basis of price.
Similarly, lack of information on effectiveness of treatment
alternatives makes consumers more reluctant to consider price in the
choice of treatment. Consumer difficulties in weighing alternative
treatment approaches reflects not only difficulties in accessing what
is known about medical effectiveness but also a failure of government
to make adequate investments in effectiveness research. Even with
better information on price, quality and effectiveness of different
treatments, there are strong indications that many consumers are unable
and/or unwilling to seek health information from sources other than
their physicians.\1\
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\1\ An HSC study documented how few consumers seek health
information, especially those with low education levels. See Tu, Ha,
and J. Lee Hargraves, Issue Brief No. 61, Seeking Health Care
Information: Most Consumers Still on the Sidelines, Center for Studying
Health System Change, Washington, DC (2003).
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Unfortunately, much of the recent policy discussion about price and
quality transparency downplays the complexity of decisions about
medical care and the dependence of consumers on physicians for guidance
about what services are appropriate. It also ignores the role of
managed care plans as agents for consumers (and purchasers of health
insurance, such as employers) in shopping for lower prices.
POTENTIAL FOR EFFECTIVE PRICE SHOPPING
If you define effective shopping as obtaining better value for
money spent, then consumers do have the potential to be more effective
shoppers for health care services. There are direct and indirect
benefits of choosing providers that offer better value. The direct
benefits are simply the cost savings, for example, of choosing the
lower-cost of two providers of comparable quality.
But the indirect benefits are potentially more important. If enough
consumers become active in comparing price and quality, this will lead
to market pressure on providers to improve their performance on both
cost and quality dimensions. Providers that measure up poorly on the
value dimension will lose market share and will be motivated to revamp
their operations to remain viable. Our market economy offers many
examples of competitors responding to loss of market share by making
difficult changes and regaining their edge, and examples are starting
to appear in health care as well. The gains from providers improving
their operations will accrue broadly to the health care system.
But we need to be realistic about the magnitudes of potential gains
from more effective shopping by consumers. For one thing, a large
portion of medical care may be beyond the reach of patient financial
incentives. Most patients who are hospitalized will not be subject to
the financial incentives of either a consumer-driven health plan or a
more traditional plan with extensive patient cost sharing. They will
have exceeded their annual deductible and often the maximum on out-of-
pocket spending. Recall that in any year, 10 percent of people account
for 70 percent of health spending, and most of them will not be subject
to financial incentives to economize.
When services are covered by health insurance, the value of price
information to consumers depends a great deal on the type of benefit
structure. For example, if the consumer has to pay $15 for a physician
visit or $100 per day in the hospital, then information on the price
for these services is not relevant. If the consumer pays 20 percent of
the bill, price information is more relevant, but still the consumer
gets only 20 percent of any savings from using lower-priced providers.
And the savings to the consumer end once limits on out-of-pocket
spending are reached.
In addition to those with the largest expenses not being subject to
financial incentives, much care does not lend itself to effective
shopping. Many patients' health care needs are too urgent to price shop
or compare quality. Some illnesses are so complex that significant
diagnostic resources are needed before determining treatment
alternatives. By this time, the patient is unlikely to consider
shopping for a different provider. We need to build on the fact that
even under scenarios in which consumers play a much more active role in
their care than is the norm today, that for those who are sickest, who
account for the lion's share of health care spending, physicians will
be playing a major role in directing their care. So choosing a
physician--or a medical practice--may well be the most important
consumer choice.
The significant role that physicians play in patients' treatment
choices means that advocates of consumerism should focus on the
importance of choosing a physician before the onset of major medical
problems. Some of these constraints could be addressed by consumers'
committing themselves, either formally or informally, to providers.
Many consumers have chosen a primary care physician as their initial
point of contact for medical problems that may arise. Patients served
by a multi-specialty group practice informally commit themselves to
this group of specialists--and the hospitals that they practice in--as
well. So shopping has been done in advance and can be applied to new
medical problems that require urgent care. This is a key concept behind
the high-performance networks that are being developed by some large
insurers.
When consumers choose treatment strategies, the absence of neutral
financial incentives for providers is a serious problem. The most
typical situation today is one where the provider gets paid on a fee-
for-service basis, so the incentive is to recommend more services,
especially those that have higher unit profitability. Increasingly,
physicians have an ownership interest in services, such as imaging,
beyond their usual professional services, creating an additional
conflict between physicians' interests and those of their patients.
INSURER ROLE
Much of the policy discussion about price transparency has
neglected the important role that insurers play as agents for consumers
and purchasers of health insurance in obtaining favorable prices from
providers. Even though managed care plans have lost clout in
negotiating with providers in recent years, they still obtain sharply
discounted prices from contracted providers. Indeed, in my own
experience as a consumer, I often find that the discounts obtained for
the preferred provider organization (PPO) network for routine
physician, laboratory and imaging services are worth more to me than
the payments by the insurer.
Insurers are in a strong position to further support their
enrollees who have significant financial incentives, especially those
in consumer-driven products. Insurers have the ability to analyze
complex data and present it to consumers in more understandable ways.
For example, they can analyze data on costs and quality of care in a
specialty and then offer their enrollees a simple incentive to choose
providers in the high-performance network. Insurers also have the
potential to innovate in benefit design to further support effective
shopping by consumers, such as increasing cost sharing for services
that are more discretionary and reducing cost sharing for services that
research shows are highly effective.
Insurers certainly are motivated to support effective price
shopping by their enrollees. Employers who are moving cautiously to
offer consumer-driven plans want to choose products that offer useful
tools to inform enrollees about provider price and quality. When
enrollees become more sensitive to price differences among providers,
this increases health plan bargaining power with providers. Negotiating
lower rates further improves a health plan's competitive position. One
thing that insurers could do that they are not doing today is to assist
enrollees in making choices between network providers and those outside
of the network by providing data on likely out-of-pocket costs for
using non-network providers.
Some health plans are now experimenting with ways to communicate to
their enrollees the fact that certain hospitals have particularly high
or low negotiated fees, without violating their agreements to hospitals
and their desire to maintain the confidentiality of their price
negotiations.\2\ For example, Blue Cross of California, which tends to
rely heavily on coinsurance in its benefit structures, has been posting
ratings of the costliness of hospitals for PPO enrollees. It follows
the approach of Zagat guides to restaurants, where ``$'' is assigned to
the lowest cost hospitals and ``$$$$'' is assigned to the highest cost
hospitals. This approach not only maintains the confidentiality of
contracts with hospitals, but it also engages the formidable actuarial
resources of the plan to simplify complex and voluminous hospital data
for consumers. Humana Inc. has presented hospital price information to
some of its Milwaukee enrollees that maintains confidentiality by using
ranges and combining hospital costs with physician costs. I expect that
insurers will come up with more innovative ways to present price
information to enrollees.
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\2\ In testimony before the U.S. House of Representatives,
Committee on Energy and Commerce, Subcommittee on Health, on March 15,
2006, I explain how publication of price agreements between hospitals
and insurers is likely to result in higher prices for hospital care.
The testimony can be accessed at http://energycommerce.house.gov/108/
Hearings/03152006hearing1813/Ginsburg2770.htm.
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SELF-PAY MARKETS
Many have pointed to markets for medical services that are not
covered by insurance to show the potential of consumer price shopping.
Since these services are not medically necessary--the basis for their
not being covered by insurance--they should be prime candidates for
more effective consumer price shopping. HSC has studied markets for
LASIK, in-vitro fertilization (IVF), dental crowns and cosmetic surgery
by interviewing providers, consultants and regulators in these fields.
Our findings are not as encouraging as one hears from advocates of
consumerism.
LASIK has the greatest potential for effective price shopping
because it is elective, non-urgent, and consumers can get somewhat
useful price information over the telephone. Prices have indeed fallen
over time. But consumer protection problems have tarnished this market,
with both the Federal Trade Commission and some state attorneys general
intervening to curb deceptive advertising and poorly communicated
bundling practices. Many of us have seen LASIK advertisements for
prices of $299 per eye, but in fact only a tiny proportion of consumers
seeking the LASIK procedure meet the clinical qualifications for those
prices. Indeed, only 3 percent of LASIK procedures cost less than
$1,000 per eye, and the average price is about $2,000.
For the other procedures that we studied, we found little evidence
of consumer price shopping.
For dental crowns and IVF services, many consumers are unwilling to
shop because they perceive an urgent need for the procedure, and other
consumers are discouraged from shopping by the time and expense of
visiting multiple providers to get estimates. In cosmetic surgery, a
limited amount of shopping does occur, facilitated by free screening
exams offered by some surgeons. However, quality rather than price is
the key concern to most consumers in this market; in the absence of
reliable quality information, most consumers rely on word-of-mouth
recommendation as a proxy for quality, instead of shopping on price.
ROLE OF GOVERNMENT
Governments can support consumers in their efforts to shop more
effectively for price and quality in health care by providing
information on providers' prices and quality. The greatest
opportunities may lie in the areas of information on provider quality
and the funding of research on medical effectiveness.
Medicare's voluntary program for hospital quality reporting has
succeeded in obtaining participation by almost all hospitals and likely
will grow in sophistication over time. HSC's recent community site
visits found that quality reporting to Medicare and the Joint
Commission on the Accreditation of Healthcare Organizations (JCAHO)
have stimulated hospitals to place a much higher priority on quality
improvement. Hospital respondents envision a day when consumers and
insurers will use publicly reported information to choose hospitals or
for payment. An untapped resource is the Medicare Part B claims files.
The Business Roundtable recently called for making this data available
to insurers--with protections for patient confidentiality. This would
permit greater statistical power for insurer assessments of physician
efficiency and quality and would support their role as agents for
consumers.
Most accept the Federal role in funding research on medical
effectiveness as a classic ``public good'' activity. The Agency for
Healthcare Research and Quality has developed an excellent reputation
in carrying out this role. But the funding for these activities has
been extremely limited, especially in contrast with what the Federal
Government spends on biomedical research overall.
I believe that government provision of price information to
consumers has less potential. For those with health insurance, health
plans are better positioned to tell people what they really want to
know--patients' out-of-pocket costs for different services. Efforts by
some states to provide hospital price information have been limited by
the complexity of the information--the difficulty of translating it
into what it will cost an individual for what they need. And few who
are uninsured have the wherewithal to pay for a hospital stay, even if
they choose a less expensive hospital.
CONCLUSION
The need for consumers to compare prices and quality of providers
and treatment alternatives is increasing and has the potential to
improve the value equation in health care. But we need to be realistic
about the magnitude of the potential for improvement from making
consumers more effective shoppers for health care. Whatever the gains
from increased shopping activity, rising health care costs will,
nevertheless, price more consumers out of the market for health
insurance and burden governments struggling to pay for health care from
a revenue base that is not growing as fast as their financing
commitment.
__________
Prepared Statement of Walton Francis, MA, MPA, MPP, Author and
Independent Consultant
THE PRICE OF EVERYTHING AND THE VALUE OF NOTHING
I am pleased to be able to provide this Committee with my diagnosis
as to where we are and where we need to go in providing information on
the price and value of health care to consumers. I think that improving
``transparency'' (how about just plain ``access''?) to price and value
information on health care is the most important budgetary and economic
issue facing America. It is vital to Medicare reform, and to avoid the
train wreck of impending insolvency of that program, but more broadly
vital to reducing the unsustainable and crippling problem that rising
health care costs impose on all Americans in all income classes,
whether they pay by taxes, premiums, cost sharing, or going ``naked''
without insurance.
During the many years that I have authored the annual CHECKBOOK's
Guide to Health Plans for Federal Employees, I have watched in
amazement the inability of either the market-driven Federal Employee
Health Benefits Program (FEHBP) or the legislatively and
bureaucratically micro-managed Medicare program to halt the seemingly
inexorable rise in health care costs, year after year, at a rate higher
than either inflation or per capita income. This doesn't mean that
these programs are failures at cost control. Quite the contrary, they
have in their quite different ways achieved cost containment results
worth many billions of dollars annually. But what they are able to
accomplish in the dysfunctional American healthcare ``market'' (sic)
has been palliative, not curative.
If there is one point on which virtually all health care economists
agree it is that the fundamental cause of the rise and level of health
care spending is the prevalence of health care insurance that is not
pure insurance, but instead prepaid, first-dollar health care. Even
with modest copayments, most health care for most Americans is
virtually free. Some call the resulting waste ``moral hazard.'' Others
simply call it the results of demand and supply curves intersecting
where the price to the consumer is set by payers near zero. Whatever
one terms it, the result is immense waste. Shifting some insurance
policies to a consumer-driven model with high deductibles and hence
restoring some semblance of fiscal discipline is an important reform.
But it is less than half the needed reform. And the bigger half is
simply better price and value information for consumers.
Lady Windermere, in Oscar Wilde's play, said ``a cynic knows the
price of everything and the value of nothing.'' Through no choice of
their own, American consumers have been forced to become and remain
something worse than cynics, allowed to know neither the price nor the
value of health care. The essential problem is that without price and
quality signals, or incentives to use them, consumers have no way to
compare either treatments or providers and to impose market discipline
to reward efficiency and drive down prices and costs.
The presence of intermediary ``middleman'' insurance organizations
both complicates and presents opportunities for reform. Those
organizations have a strong incentive to control costs at least as well
as their competitors, and they have price and outcome data. But they
have to attract broad provider panels, and pay more, to compete in a
world where customers do not directly obtain the savings from narrower
provider panels and other economies. The 1990s rebellion over heavy-
handed ``gatekeeper'' HMO requirements, that reversed the trend to HMO
insurance and led to the vast rise in PPO insurance, illustrates the
potency of the problem. In the final analysis, insurers are in a market
where deep pocket payers--employers and taxpayers--routinely pay the
going rate, however high that is, to maintain the status quo. Something
has to change.
Meanwhile, there are roughly 45 million uninsured (most voluntarily
so), and another 5 million or so who face significant cost sharing. In
total some 50 million people have to cope with a market that provides
virtually no functional price signals as to how to save money by
choosing lower cost treatments or providers, and only weak quality
signals.
In assessing this data chasm, its possible bridging remedies, and
their possible outcomes, it is useful to draw sharp distinctions among
various categories of information. Consider a consumer with a diagnosis
that will involve high costs, such as childbirth, breast cancer, severe
carpal tunnel syndrome, or prostate cancer. Suppose this consumer has
no health insurance but an option to join or change plans in open
season. Such a consumer would need need six categories of consumer
information. Together with his or her own preferences, such information
would enable an informed choice among options. Far more importantly, if
all consumers had such information this would drive the health care
market over time to more effective and efficient outcomes. The six
categories are:
(1) Alternative courses of treatment,
(2) Likely outcomes of those alternative treatments,
(3) Monetary and other costs of such treatments on average,
(4) Costs of using particular providers,
(5) Quality and outcomes using particular providers, and
(6) Estimates of which health insurance plan is the best buy,
taking into account both premiums and out-of-pocket costs, for the next
plan year.
Today, I will cover briefly the current availability of consumer
information on each of these topics, recent progress and efforts under
way, problems and opportunities in filling gaps, and long run
consequences of filling those gaps. I will try to illustrate some of my
findings and conclusions with examples using the diseases or conditions
mentioned above, and a few other situations.
Current availability of Consumer Information. Consumer information
across these six types today ranges from scarce to nonexistent to
abundant but flawed.
There are innumerable books, articles, and learned opinions on (1)
alternative courses of treatment. For example, for a woman expecting no
complications of maternity, using a midwife represents a huge saving
compared to hospital delivery. There is abundant information on the
very low risks of delivery, and a slim but not insubstantial body of
literature on the slightly larger risks of using midwives. For a woman
with breast cancer, there is abundant literature on the various
mastectomy and lumpectomy alternatives, taking account of different
stages of disease progression. For prostate cancer, there are four
major treatment modalities, one of which is benign neglect (old age
will usually kill the patient faster than this cancer). For carpal
tunnel syndrome, there are several inexpensive treatment options with
expensive surgery the only effective option in many severe cases.
While medical science is constantly advancing, and there are huge
gaps in information, to say nothing of diseases for which there are not
yet any effective treatments (e.g., Alzheimer's disease), it is fair to
say that consumers and their advisors (notably physicians) do not lack
access to whatever information exists. One could fill libraries with
medical advice literature, on or off the Internet, in books, articles,
and snippets from disease-specific Web sites, and more.
The Internet has greatly advanced low-cost access to this
information by consumers, through sources such as Medline, trusted Web
sites such as WebMD, and forums for patient groups.
The Healthline Web site (www.healthline.com), of which you are
hearing something today, is itself proof that treatment information is
there--Healthline specializes in sifting through the vast Internet
resources to find the best information. But even without the Internet,
the information is available. Books and journals are available in
public libraries and bookstores throughout America.
Likewise, there is abundant information on (2) likely outcomes of
alternative treatments. This information deals not only with
straightforward measures such as survival rates, but also with
qualitative outcomes important to patients. Many women (though a small
minority) positively prefer the experience of childbirth at home with a
midwife. Breast cancer alternatives differ hugely in preservation of
women's perceived attractiveness and potential complications. Prostate
cancer treatments differ in major ways not only as to prognosis but
also as to such complications as incontinence and impotence.
Access to treatment outcome information is almost as widely
available at low cost as information on treatment options. There is far
less outcome information, but consumers have access to whatever is
known, in print or on the Web.
There is also a recurring problem with respect to outcome
information, a problem that grows progressively worse as we move from
overall outcomes to provider specific outcomes. Data that are not risk-
adjusted or case-mix adjusted can be very misleading. Breast and
prostate cancer outcomes depend on the stage of progression of the
disease, the condition of the patient, and other variables. For
example, in both of these cancers the age of the patient has a huge
effect on whether or not drastic surgery is indicated.
Information on the (3) average monetary costs of treating diseases
or conditions is, in sharp contrast, almost nonexistent for consumers.
I have repeatedly used Internet search engines to try to find, for
example, the cost of an appendectomy or childbirth. Google and other
search engines will find thousands of ``hits'' when terms such as
``cost childbirth'' are entered, but the links found are invariably dry
holes. A relative of mine recently had surgery for carpal tunnel
syndrome. I ran a Google search on ``carpal tunnel surgery cost'' and
obtained a half million hits. After skimming a few hundred of them I
found none that provided any data whatsoever about price or cost, and
gave up.
A major development in the last several years has been the
provision of treatment costs on the Web sites of some major insurance
firms. These include Aetna and Tufts, for example. Consumer-driven
health plans such as Lumenos (see www.lumenos.com for a useful
demonstration) also provide such information, as you are hearing today.
These information sources are tightly restricted to plan members, and
hence unavailable to virtually all of the 50 million Americans who need
such information for obvious financial reasons, and another 240 million
insured Americans who might wish to impose lower costs on their fellow
insureds, even though they save little or nothing. There are also some
far small firms that are beginning to provide such data, though often
restricted to enrollees (see, for example, www.healthia.com and
www.healthmarkets.com).
A recent Business Week article (February 20, 2006) praised Aetna
for the best consumer information on its Web site of three major
insurance firms compared. I haven't reviewed all of these or other
sources, but I certainly agree that Aetna is developing a fine set of
information for its enrollees. However, the reality is that the Aetna
Web site only covers about 60 conditions, albeit with different levels
of severity for most of them.
Of the several conditions I have previously mentioned, the Aetna
Web site divulges that the estimated cost of an uncomplicated
pregnancy, with either vaginal or cesarean delivery, is approximately
$7,700 ($3,600 for the hospital, $2,600 for the physician, $100 for
prescription drugs, and $1,400 for tests.) You are reading this
estimate today in a breakthrough public disclosure. Just try to find
such an estimate in any other document. You can find many Web sites
that sell maternity insurance, but none of them estimate the cost
without insurance. In preparing this testimony I ran a Google search on
``maternity cost'' that found almost 9 million hits and no discernable
information on price or cost. Alas, Aetna provides no cost estimates
for breast or prostate cancer (or for that matter, for any other
cancer) or for appendectomy or carpal tunnel surgery, and no estimates
for alternative treatment modalities, such as nurse midwives.
In other words, even for Aetna enrollees, the information is
profoundly limited. For the rest of us even this limited information is
simply unavailable. And this is the state of the market! In sum, so far
as I can determine consumers today cannot find reliable information on
the costs of major medical conditions and their treatments from any
publicly available free resource.
Nor do consumers have ready access to information on the costs of
most individual procedures. Aetna provides some such information to its
enrollees, but only for about three dozen of them. These are among the
most common (e.g., ``office consultation for moderate to severe
problems'' with a specialist, or ``new patient office visit for
moderate problems'' with a generalist), but there are approximately
10,000 ambulatory procedures and the listed procedures are but a drop
in that bucket. No surgical procedures are listed.
Turning to (4) information on the costs of using particular
providers, information is even sparser. Perhaps the greatest innovation
of the Aetna information for its enrollees is the provider-specific
charge information available on its Cincinnati Web site. Assuming,
illustratively, that Aetna has thirty percent of the Cincinnati market,
and that this market comprises one million individuals, approximately
one tenth of 1 percent of Americans have access to information on
provider-specific prices. Even adding in Tufts and Lumenos and a few
other firms, as a practical matter information on the charges of
specific providers is essentially unavailable to the public today.
There are a few seeming exceptions, such as California hospital
charges, but as a practical matter that information is unusable by
consumers (see the Anderson testimony referenced below).
Contrast this with the situation for medical procedures not
ordinarily covered by insurance. Lasik is the fashionable example, but
there are many others. See www.beyourbest.com for price quotes on
breast augmentation ($3,000), liposuction ($2,000), and many other
plastic surgery procedures at ``guaranteed lowest prices.'' Where
consumers pay, price matters. Contrast medical procedures with other
major purchases, such as automobiles or airline tickets or any of the
thousands of goods sold on e-Bay or through department stores. Not only
is price information routinely available, there are many services
specializing in enabling consumers to quickly compare prices before
making a choice (e.g., Orbitz and Travelocity, among many, many others
for airline, hotel, and rental care prices). Imagine using Healthline
not only to obtain treatment information, but also for price and cost
information.
This is not a trivial gap for the approximately 50 million American
consumers who shop for health care with no insurance or with insurance
gaps. As notoriously shown by the recent California requirement that
hospitals make their charges available to consumers, charges to
uninsured individuals are typically double, triple, or quadruple the
charges to clients of major insurers (a description of the utter
irrationality of hospital charges as they have developed over time, and
a good deal of sensible advice on price transparency issues can be
found in the testimony of Gerard Anderson of Johns Hopkins University
before the House Energy and Commerce Committee in March of this year at
http://energycommerce.house.gov/108/Hearings/03152006hearing1813/
Anderson2771.htm).
The availability of information on the (5) outcomes of using
particular providers is actually far greater. In one of its most
important actions for consumers ever taken, the Centers for Medicare
and Medicaid Services (then HCFA) made available about 20 years ago
data on hospital mortality and adverse outcome rates for all Medicare-
participating hospitals (i.e., virtually all hospitals), both overall
and for a dozen or so major types of procedures. Originally CMS
published these data. In the last decade it has simply made them
available as data files. At least two organizations, Washington
Consumers CHECKBOOK and HealthGrades, continue to use those files to
make risk-adjusted data available, for sale (e.g. Consumers' Guide by
Hospitals, by the editors of Consumers' CHECKBOOK Magazine, 2002, also
available online and updated at www.checkbook.org). While these data
are not free, they are available to all American consumers.
While the risk of an adverse outcome is certainly the single most
important measure of hospital quality, there are many others. CHECKBOOK
surveys physicians to see which hospitals they rate highly. In effect,
experts are used to rate other experts.
More recently, CMS has led a major reform effort to initiate the
collection of data from Medicare-participating hospitals on a set of
quality measures that focus on the most common hospital procedures, and
those shown by research to be among those most prone to failure. For
example, the failure to provide Aspirin to patients admitted with a
heart attack is a major and not uncommon quality failure. As another
example, this initiative also addresses one of the most vital steps
owed to all patients: whether they are given discharge instructions
when they leave the hospital. With collaborative partners, most notably
the Hospital Quality Alliance and the Agency for Health Care Research
and Quality (AHRQ), CMS now makes available a wide range of performance
measures (see http://www.hospitalcompare.hhs.gov/). These measures are
also used in ``Pay for Performance,'' a major initiative now set in
statute that conditions up to 2 percent of a hospital's payment from
Medicare on it performance on measures of quality in comparison to
other hospitals. Expansion of Pay for Performance in traditional
Medicare is arguably as, if not more, important to future restraint on
the growth of health care spending than the addition of Medicare
Advantage plans as alternatives to traditional Medicare.
Early reports show that this collaborative but competitive system
has had major effects in upgrading the quality of hospital performance.
The consumer information is not just static, read by some consumers and
ignored by most, but a spur to improved performance by hospitals that
cannot afford, literally and figuratively, to be regarded as inferior.
CMS also now publishes on the Web comparative data on the quality
of performance of other providers, such as Nursing Homes and Home
Health Agencies.
There are more specialized efforts that indicate both the potential
and the problems of developing outcome/quality measures for providers.
For many years the United Network for Organ Sharing (UNOS) has devoted
substantial resources to developing measures of patient and organ
survival, by institution, that would not only allow consumers to
compare outcomes and quality, but also provide them risk--or case mix--
adjusted data that would account for the differences among hospitals in
the severity of patients that they serve. In the world of transplants,
sufficient expertise and consensus has been developed to allow a robust
system of comparing provider outcomes for each type of transplant
(www.srtr.org). Any transplant candidate can compare the performance of
every transplant center in the United States before deciding where to
``list'' for a transplant.
But there are few if any other complex medical procedures for which
comparable data are publicly available today. One notable bright spot
is the Pennsylvania Health Care Cost Containment Council, with quality
information on a number of procedures including provider-specific data
on coronary bypass surgery (http://www.phc4.org/default.htm).
The big gap in quality-related outcome data has been in the
performance of individual physicians and physician groups. While CMS
and AHRQ are diligently working to develop outcome-related measures of
ambulatory quality through the Ambulatory Care Quality Alliance (AQA)
(see www.ahrq.gov/qual/aqastart.htm), the only widely available quality
measures today use such crude measures as board certification or
disciplinary actions, or what is arguably the best measure of all:
ratings by other physicians. For example, CHECKBOOK publishes what is
essentially a national system of physician ratings, by specialty, in
Consumers' Guide to Top Doctors (2002, updated on the Web at
www.checkbook.org). The Washingtonian magazine, and other publications,
also use surveys to rate physicians in particular metropolitan areas.
In summary, quantitative measurement of quality and outcomes for
ambulatory care providers generally, and physicians in particular,
remains a work in early stages of progress. Performance of several
other major types of providers, such as hospitals, is further advanced.
But progress is certain to be slow, expensive, and complex.
I have for almost three decades provided consumer information on
(6) comparing health plans, in my annual CHECKBOOK's Guide to Health
Plans for Federal Employees. My Guide provides information to
approximately 8 million Federal employees and retirees on which of the
health plans they can join provide the best value. In essence, this is
simply a matter of comparing the total costs of consumers of enrolling
in plan A versus plan B, assuming that each plan pays the promised
proportion of medical bills incurred. The Guide performs this
calculation, and shows every year that family enrollees who select the
best deals available can save (a) a thousand dollars a year or more by
choosing an HMO, and which HMOs provide such savings and how much
savings, or (b) a thousand dollars a year or more by choosing the lower
cost PPO or FFS plans, and which ones provide these savings and how
much. These dollar savings estimates take account of both premiums (a
``for sure'' expense) and expected out-of-pocket costs at various
spending levels.
The Guide also rates plans on several quality measures. In the
early years, I focused on ``quit rates'' as a measure of service.
Office of Personnel Management data on disenrollment rates grew
increasingly unreliable over the years, and I had to abandon this
measure (which, incidentally, required complex statistical adjustments
using multivariate regression analysis.)
In more recent years we have included customer survey data on
satisfaction with plans. Unfortunately, such data as currently
published suffer from two inherent defects: (1) only a relatively few
plan enrollees face life- and wallet-threatening events, and hence the
most severe cases get negligible weight in overall ratings that count
all consumer equally, and (2) elderly enrollees on average rate health
plans far more highly than younger enrollees. As a result of these
defects, and the failure of national accrediting organizations to
address them by appropriate statistical techniques, customer
satisfaction data as published today are extremely weak as measures of
plan quality.
Another major approach to health plan comparison has been pioneered
by CMS. For prescription drug expenses, which for most people are
stable from year to year. CMS has developed a ``Plan finder'' tool (see
plan comparison at www.Medicare.gov) that shows how much each
participating Medicare prescription drug plan costs enrollees for the
drugs they use today. Like the Guide, this tool takes into account both
premium and out-of-pocket costs. Unlike the Guide, the approach is
``current usage'' specific rather than actuarial. In essence, it
assumes that drug costs will usually not change, while the Guide
assumes that future hospital, medical, and drug costs are only
partially predictable, and always subject to random events. Both
approaches have substantial strengths, and both approaches have saved
millions of enrollees a great deal of money by steering them to plans
that are better buys.
The CHECKBOOK Guide is available for a fee; the Medicare Plan
finder at no charge. Historically, the Guide was sold in paperback to
individual employees and retirees. However, at present the majority of
Federal agencies provide ``free'' copies to all employees.
Unfortunately, most agencies do not broadcast the availability of the
Guide effectively, and lose the very substantial savings they could
realize if a larger fraction of employees realized how much they could
save and chose plans with lower employer as well as employee premiums.
For both Medicare and the FEHBP, data are available showing that
even with a minority of consumers using plan comparison information,
consumer choices among plans to select better buys save billions of
dollars to both enrollees and payers.
Unfortunately, plan comparison tools such as these have only
limited applicability. The vast majority of Americans do not have
available a wide range of plans. Federal employees and retirees
typically have about 15 or 20 plans to choose from. Medicare
beneficiaries typically have about 40 or 50 plans to choose from. Most
workers are provided at most two or three plans by their employers,
such as one HMO, one PPO, and one fee-for-service plan. Since one of
these three plan types is usually strongly preferred for reasons other
than cost, the effective range of choice is usually one plan.
As a result, until or unless most Americans are given a broader
range of insurance plan choices, powerful plan comparison decision
tools such as these are of limited help in improving the health care
market.
Problems and Opportunities in Filling Gaps. As the analysis above
suggests, the availability of consumer information varies significantly
by category.
Arguably, the most important gaps to fill are (a) data on provider
payments or prices by procedure or condition or both, (b) the same
information on a provider specific basis, e.g. ``what this doctor would
charge compared to that doctor,'' and (c) data on ambulatory care
provider quality and effectiveness.
Are the consumers there to use the information? Most consumers have
no incentive to seek information on costs, and to reduce costs by
shopping, in a world of first dollar coverage. Nonetheless, with
approximately 50 million people having a vital interest in keeping
their costs low, it is clear that there are plenty of willing consumers
of price information, if there were not other barriers to its
dissemination. All 290 million consumers have a substantial interest in
quality and effectiveness information.
``Consumer-driven'' health care through high deductible plans and
Health Savings Accounts adds to this potential demand, and brings a
substantial number of higher utilizers (sicker and older) and well-
educated consumers to the missing market for price information. But
growth in consumer-driven plan enrollment is neither necessary nor
sufficient given the substantial numbers of consumers who need such
information already. What is needed is rapid rather than glacial
movements by the insurers, both public and private, who have the data
on payments and outcomes.
Overall payment and price data are simultaneously easy and
difficult to provide. Every insurer in American knows what it pays each
physician in its network. The data could be made available on the Web
virtually overnight.
However, what each insurer pays is a trade secret. If competitors
learn the payment rates, they could offer slightly better rates to
attract preferred providers, or bargain harder with providers, or both.
Providers know what they charge patients (usually different rates
depending on which insurer is involved). However, they have an equally
grave problem. It is not in their interest to make it widely known that
they have settled for price X from payer A and price Y from payer B.
Payers can use this information to ratchet down rates. A major firm,
Subimo, today makes a great deal of its revenues from the sale of price
data to insurance companies and, to a far lesser degree, to consumers
(www.subimo.com). While Subimo and others could prosper from a
different business model (imagine free price information with revenue
from advertisements paid by low cost providers), there may be legal and
other impediments to such a transformation.
The one player with no self-interest barrier to wider discloser of
payment information is HHS. HHS provider payment systems are calculated
using statutorily mandated formulas and procedures, and within
specified geographic areas are ``one size fits all.'' However, HHS
faces a potential barrier in disseminating physician (but not hospital)
payment information by the contractual agreements, long since struck,
that commit it to using proprietary medical procedure codes that have
been copyrighted by the American Medical Association (AMA). The AMA
position, enforced by a willingness to impose major legal costs by
suing alleged violators, is that ``Common Procedural Treatment'' (CPT)
codes can only be used with AMA permission. Such AMA permission is
never given to anyone who would publish procedure prices for broad
consumer use. This posture is largely rationalized by the traditional
ethical strictures against price competition in medical care. Other
motives can be inferred.
In a case decided almost a decade ago, the AMA position was upheld
against a private publisher by the Ninth Circuit Court of Appeals
(Practice Management Information Corporation v. American Medical
Association, 121 F.3d 516 as amended at 1333 F 3d 1140). The Supreme
Court denied cert.
HHS could practicably publish consumer-friendly versions of its
physician, outpatient, and inpatient payment schedules. These schedules
are currently online, but require fairly substantial computer expertise
to download and translate into understandable units, such as ``What
does it cost in dollars in my area and nearby?'' Therefore, as a
practical matter they are currently unavailable to consumers.
Unfortunately, it is possible that the physician procedures would have
to be recoded and presented in terms of ICD-9 or ICD-10 codes
(alternatives to CPT) to meet legal concerns. This in turn raises
issues about which codes would be used in practice and hospital
management and billing systems, and some very expensive changes. I
think that these issues could probably be decoupled, and the public
information provided without depending on future code system decisions,
but the job may be harder than I predict. One option might be to
publish information coded under all three systems simultaneously, which
would work for most procedures, but would require a good deal of work.
Procedure payment amounts are arguably not as useful as estimates
of the costs of treating a disease or condition, but these serve
different purposes. A consumer seeking to save money could seek a low
cost obstetrician and low cost hospital as separate decisions,
constrained only by physician privileges. Moreover, in the case of
hospitals the CMS reimbursement system is primarily based on condition
(``Diagnosis Related Group'') and hence avoids most of the problems
posed by itemized charge systems. The bargaining mode for a woman
seeking a good price for maternity care should be ``Let's start with
the Medicare payment that you already accept.''
Providing disease and condition-specific cost information taking
into account all types of provider and service is harder, since it
requires an additional step. However, it is possible to search any
major public or private insurer's payment records to find one or
several common clusters of services. Presumably, this is what Aetna did
to create its estimate of maternity costs.
In either case, what might otherwise be a gargantuan problem is
greatly simplified by starting with relatively limited numbers of
procedures and disease. The most common 100 physician, 100 outpatient,
and 100 inpatient procedures, and the 100 most common diseases or
conditions, would be a relatively easy starting point.
This in essence is what Aetna, Lumenos, and some other insurers are
doing. The problem is that they are providing the information only to
their own customers, who represent only a small share of those facing
strong incentives to use price information. By definition, none of the
uninsured has access to information limited to those enrolled in a
company's insurance plans.
Provider-specific price, charge, or payment rates are arguably both
the most needed and most difficult information to provide. However,
they are quite likely to emerge over time as a by-product of shopper
behavior using system-wide rates. Competition begets competition and
there is no reason why we could not expect to see in the future
advertisements such as ``Use Doctor A and Hospital B for your pregnancy
and delivery and get the bargain rate of $6,300, 20 percent off and
$1,400 less than the average cost of maternity care.''
But we need not await that development. A consumer with access to
Medicare payment rates, knowing that the great majority of providers
accept these rates for Medicare patients, wields a potentially mighty
club. ``Hospital B (or Doctor A), why shouldn't you give me the same
deal you give most of your other patients? If you won't I can try one
of your competitors.'' So far bargaining tactics have met with limited
success, but consumer efforts have barely begun, and the Medicare
payment rates are a vital tool for future bargaining.
Meanwhile, Aetna, Tufts, and others are experimenting with
providing provider-specific payment rates to their enrollees. Armed
with three pieces of information--average rate for a procedure in the
network, average rate outside the network, and the precise rate charged
by Doctor A and Hospital B--enrollees are given the vital information
they need to decide whether, and how hard, to shop further around.
Data on provider quality and effectiveness is the most difficult
challenge by far. Without these data consumers cannot complete the
``value'' equation.
HHS, primarily through AHRQ and CMS, is devoting immense
intellectual capital with its alliance partners to creating such
information. There are valuable systems already in place for some
dimensions of hospital and nursing home quality. Other and more
ambitious efforts are underway through the Hospital Quality Alliance
and the Ambulatory Care Quality Alliance. I am sure that Dr. Carolyn
Clancy is addressing those in her testimony today in great detail. Dr.
Mark McClellan, the CMS Administrator, has testified several times on
these issues before other Committees of the Congress.
One of the biggest problems in developing such measures is that
without case-mix adjustment they may often mislead. The best surgeon
may take the hardest cases and wind up with success rates lower than
those of the average surgeon. Statistical validity also requires a
significant sample size (rarely fewer than 25 or more cases) and many
procedures are not performed in high volume by most physicians. There
are also substantial issues in developing actual quality measures,
especially for procedures that do not usually lead to simple outcomes.
For these and other reasons, efforts to create quality and
effectiveness information that will be genuinely useful to consumers
must be measured in years, and will indeed never be complete.
Luckily, we already have a good deal of information on both
ambulatory and inpatient quality. It resides in the heads of physicians
and other health professionals, who observe their peers directly and
through their informal information networks. It is made available to
consumers through direct advice from their own physicians on questions
such as ``Which specialists would you recommend as the next step for me
to take, and how would you compare them?'' It is also available through
publications such as CHECKBOOK's Consumers' Guide to Top Doctors, which
surveys physicians themselves as to whom they would recommend most
highly in other specialties.
Health plans make decisions on which physicians and other providers
to enlist as preferred providers, based on both willingness to accept
the insurer's payment rates and appraisals of performance. These
appraisals may be crude and simple, or may reflect statistical analysis
of insurance records over time, but in either case serve as an
important check to weed out poor performers. Thus, simply using
preferred providers is an easy quality (as well as financial) rule for
consumers. (Unfortunately, some of the very best physicians often opt
out of such panels over payment levels--a problem that would lessen
over time if plans would be more flexible in paying more for higher
quality, which in turn requires new quality measures.)
There also remains the possibility of using insurer data to provide
more information. For example, simply knowing the volume of a certain
procedure performed is often immensely valuable to the consumer because
for a large number of procedures research has shown that high volume
correlates strongly with quality. Such information is readily available
in Medicare files. For many procedures (though a small proportion of
the universe of procedures) the information could be reasonably used
with minimal statistical refinement. According to recent press reports
(Robert Pear, in the New York Times, April 10, 2006), employers are now
pushing HHS to disclose these and other Medicare data on physician
performance. Unfortunately, it appears that HHS feels constrained by a
1979 court case that interpreted the Federal Privacy Act as preventing
the release of records identifying individual physicians. However, that
case dealt with an entirely different situation that could not arise
under current Medicare payment procedures. It is also arguably
irrelevant given that the Congress has since 1979 mandated a wide range
of quality measurement and improvement efforts by CMS. CMS now has a
legal duty to use information on provider quality, and without public
access to that information, the performance of CMS itself cannot be
evaluated. Under the Freedom of Information Act, an evaluative purpose
arguably trumps the Privacy Act. Moreover, the 1979 decision was a
District Court decision, never affirmed by higher courts. The outcome
of further legal analysis, or court action, remains to be seen.
Consequences of Filling These Gaps. Some analysts denigrate the
value of making price, payment, and quality, information available to
consumers. They argue, for example, that most medical care costs are
spent on high-cost cases that are fully insured, and that as a result
market forces will be greatly attenuated. These pessimists may be
right. Even if they are right these reforms should be made, however,
simply because some 50 million Americans will get substantial benefit.
But the pessimists are most likely wrong. Market forces, if
unleashed, will drive behaviors of consumers and providers, and
insurers, in ways that we simply cannot predict. It is not just a
matter of a minority of consumers haggling and bargaining with a
minority of providers:
Some providers may seek the opportunity of using market
information to position themselves as cheaper and better (``I am Doc
Sawbones and I score 99 percent on the official government quality
measure and charge only three-fourths of the average payment rate.'').
The invention of lower--rather than higher-cost technology
may be spurred. Why pay for the $20,000 pacemaker from your health
saving account or on your credit card when there is a $10,000 model
available that has fewer features but is more reliable?
New forms of low cost health care organization may arise
(we may need to look no further than the health care centers that
Walmart is installing).
Medicare is already moving in a significant way to ``Pay
for Performance'' for hospitals rather than ``one price fits all.''
This has revolutionary implications if it can be expanded to more
Medicare payments, to other insurers, and to additional measures of
hospital outcomes. Few conceivable payment systems are more lunatic
than those so widely used today by Medicare, Medicaid, and most private
insurers, that in effect pay more for less effective service.
Quality and outcome measures are particularly important
for insurance reform. Consumers can select providers based on
reputation. Third party payers need more objective, measurable
information.
Consumer advice on dealing with health problems would be
able to include comparative information integrated in ways that steer
consumers to high value courses of treatment, and help them control
costs.
If price information becomes widely available as a point
of comparison, providers may elect to bundle services at a discount.
Providers may simply be forced, by the existence of lower
cost competitors, to accept lower payments. We see this already in the
growing numbers of American patients going to India or the Caribbean to
obtain high quality care at a fraction of the price in the United
States. What happens to overall spending when consumers see that high
quality alternatives are available at half or less the going rate?
All these potential effects loom larger because of the
unsustainable growth rate of health care spending in America. We need
not dwell on the impending Medicare insolvency data (estimated as 2018
for the hospital trust fund in the just-released Trustees report) to
consider that the average cost of a family health insurance policy
providing first dollar coverage is today approaching $10,000, and that
the average cost of a Medicare beneficiary for hospital care, medical
care, and drugs already exceeds $10,000, and will within a few years
exceed the cost of the average Social Security benefit.
At the same time, the Dartmouth experts estimate that one-third of
Medicare spending is wasted on unnecessary care (E.S. Fisher et al,
``The Implications of Regional Variations in Medicare Spending,''
Annals of Internal Medicine, February 18 2003, http://www.annals.org/
cgi/content/full/138/4/273).
We cannot predict how rapidly or how far direct market forces using
price and quality information will operate to reduce the growth in
health care costs or improve health outcomes. But we cannot afford not
to try. The other alternatives such as direct rationing, triple-digit
premium increases (in contrast to the double-digit increases we see
today), or draconian tax increases, are unpalatable in the extreme.
It certainly appears that the current Administration ``gets it.''
Drs. McClellan and Clancy have worked tirelessly and effectively for
years on these issues. The White House has opined forcefully. HHS
Secretary Leavitt recently assembled hundreds of executives of his
Department to issue his top priorities for the next 3 years, and No. 1
on the list was ``Health Care Value Incentives'' aimed at restraining
the growth of health care costs ``because consumers [should] know the
comparative costs and quality of their health care.'' However, I do not
think that this is a partisan issue. In the usual disjuncture between
public policy reforms and subsequent outcomes, it is likely that the
next Administration, of whichever party, will not only endorse, but get
much of the credit for the reforms begun in the first years of the 21st
century.
As a concluding comment, there are a number of bills pending in the
Congress that deal with these issues in one fashion or another. Former
Speaker Gingrich has mentioned the possibility of ``right to know''
legislation that would require doctors and hospitals to post prices.
(For hospitals, that would stimulate immediate change because hospital
charges generally bear little or no relation to either their costs or
what insurers pay them.) Congressman Shadegg is sponsoring a bill that
would enable health insurance to be sold across state lines, and make
other reforms that would open up consumer-driven insurance to millions
of consumers, including many of the currently uninsured who are
prohibited by State law from buying the insurance plans available to
most Americans. There is a companion Senate bill. And both the Ways and
Means and Senate Finance Committees are considering pay for performance
legislation. I have not studied these bills and have no specific
recommendations on details of legislation at this time. However, in the
light of the substantial legal difficulties that HHS faces in releasing
payment and performance information in a form that would either be
directly useful to consumers or be useful after analysis by expert
researchers, I suggest that if any bill nears enactment it include
provisions that will help in overcoming any legal barriers.
Disclaimer: I have affiliations with three organizations mentioned
in this testimony, Washington Consumers CHECKBOOK, the Centers for
Medicare and Medicaid Services, and the United Network for Organ
Sharing. Nothing in my testimony represents the views of any of these
organizations, or relies in any way on information that these
organizations do not provide to the public at large.
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