October 8, 2015 | Rosemarie Day

Cost Trends Hearings Details

1. More competition is needed to generate savings, and exchanges are a good place to start

Harvard economist Amitabh Chandra called for more competition, stating that while we have competition among health plans, we lack competition among products. He brought up the idea that when large, self-insured employers ask more of their health plans we will see more competition among products offered by health plans.  And health insurance exchanges (public and private) are a good platform for fostering competition among health insurance products, such as tiered networks. He said that we need to stop going for the “snake oil” – programs that boast savings but won’t make a noticeable dent in the long term – and demand more competition in provider markets and insurance markets that will give us the results we are seeking.

2. 2016 will be the year of transparency

Governor Charlie Baker called for more transparency in the health care system and said that he will push for this in 2016.  Transparency was also emphasized by other speakers during the two-day hearing, including Attorney General Maura Healey.  Consumers are in need of more information about prices and quality ratings of medical procedures among providers so they can make more cost-effective choices. Additionally, once consumers are able to obtain price information concerning their care, they can “vote with their feet” and avoid unwarranted higher prices.

3. Price disparities are expected to persist

Attorney General Maura Healey presented evidence that price variation among provider systems is unexplained by variations in  quality or complexity of services, and that action needs to be taken to address what she called our “dysfunctional market” as health care costs continue to rise. She also pointed out that higher priced providers continue to get the highest patient volume – a trend that must change for Massachusetts to reach their goals of lowering costs.

4. Payment reform, especially bundled payments, can potentially help curb spending

Amitabh Chandra called for more bundled payments (and full risk-based contracting), saying that Massachusetts should continue to experiment with these options and become the first state in the country to successfully use bundled payments to reduce health care costs.  He recommended bundling payments for targeted areas such as cancer treatments.

5. Hospital and health plan consolidation mergers need to be scrutinized

Mergers were a hot topic both days of the hearings. Both academic experts who testified (Amitabh Chandra and Leemore Dafny) made the point that hospital consolidations result in increased prices, according to many studies.  Additionally they said that the Federal Trade Commission contests a negligible amount of acute care hospital mergers. The Federal Trade Commission and other entities need to take a closer look at proposed mergers and find ways to answer the challenging question of whether a merger will in fact offer consumers a higher quality, lower cost product – history has proven otherwise.

6. Varying, and sometimes extreme, prices of drugs and procedures needs to be reined in

Recent press has brought the price of drugs to the forefront of the health care cost conversation. The hearings focused on Sovaldi, as the high price of this drug was unanticipated by everyone.  Panelists had more questions than answers:  How do we shift this dynamic and allow purchasers to prepare to deal with new drugs? And on the biotechnology side, how do you manage paying for a therapy when drug research and development was front-loaded with an enormous amount of money?

7. There is a critical need to understand how and why certain hospitals can operate a high quality, low cost model so that others can replicate this success

Governor Charlie Baker made it clear that we need to figure out how and why certain institutions, like Lowell General Hospital, are successfully serving their community as a high quality, low cost hospital. Governor Baker brought up an interesting hypothesis: the ability for a hospital to perform like Lowell General is due to culture, more than reimbursement incentives. In order to better understand this, the Governor called for groups to take a closer look at Lowell General to determine what aspects can be replicated.

8. Coordinated and collaborative care needs to be used to address mental and behavioral health needs

The demand for adequate mental and behavioral health facilities has come to a breaking point – there aren’t enough facilities to help the people who need it, and our health system isn’t set up to allow those in need to receive the full scope of care needed to help improve their conditions. Speaker of the House Robert DeLeo emphasized the need for coordinated and collaborative care in this area – without it, not only will we continue to experience a huge spend in this area, we are not adequately providing for our neighbors, friends and family members that need these services to survive.

9. Addiction and pain management needs to be addressed through provider education to begin reversing the opioid addiction trend

Governor Charlie Baker discussed the opioid and heroin epidemic Massachusetts is facing – he noted that the health care community needs to understand both the upsides and the downsides of prescription pain medication.  Governor Baker called for more provider education in pain management, to help prevent substance abuse stemming from injury or surgery recovery. (The Baker Administration developed a Task Force to address the opioid crisis in Massachusetts earlier this year.)

10. More data is needed to help meet benchmark goals

And to wrap up, the continued need for reliable, timely data in the health care system was raised by members of every panel that testified at some point during the hearings. One panelist mentioned how difficult it is to find out the costs for certain high risk, costly subgroups, so determining the optimal cost trend for these subgroups is exceptionally hard without more data.