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What’s Behind our Health Price Curtain?

Healthcare Cost CurtainWhy don’t we know the true cost of the ever-increasing healthcare that we’re required to pay? Who’s responsible? In 2014, we decided to ask the key payer themselves – Iowa employers.

It’s no secret – health plan deductibles continue to increase annually, thanks largely to consumer-driven health plans (CDHPs). Through CDHPs, employees and their family members now share a greater burden of health costs, a trend that we have been tracking for the last 16 years in Iowa.

Similar to the CBS game show, Let’s Make a Deal, where game contestants have opportunities to choose between prizes of unknown value (usually found behind curtains or large panels painted to look like boxes), patients are being asked to find their best ‘deal’ throughout the complex healthcare marketplace that is laden with curtains not meant to be opened. In healthcare, not even Carol Merrill, the iconic model for this popular game show, can navigate patients into making informed choices.

With ever-increasing financial exposure to healthcare costs, most insurance and healthcare experts agree that price transparency will become even more important to patients as they spend additional money on their own care. This makes sense.

Partly due to the Affordable Care Act, payment for healthcare services is morphing from fee-for-service arrangements (the more services provided, the more we pay for those services) to bundled payments or value-based arrangements that often includes added risk for those providing care.

Accountable Care Organizations (ACOs) are increasingly becoming more common around the country, and in Iowa. ACOs are payment and care delivery models that attempt to tie provider reimbursements to quality metrics for a given population of patients. The ACO is an organization of healthcare providers who agree to be held accountable to patients and third-party payers for the appropriateness and efficiency of delivering high-value care at reasonable costs. Since the passage of the ACA in 2010, a great deal of change continues to evolve in the healthcare and insurance industries.

For patients to make the most appropriate and efficient choices for themselves and family members, easily understandable cost and quality metrics are critical pieces to this healthcare puzzle. But can this really happen? Choosing between healthcare providers (comparison shopping) for any given procedure is very confusing and almost impossible. Outcomes are variable because different therapeutic procedures have dissimilar outcomes for dissimilar populations of patients. On top of that, we have inadequate information about the cost of these procedures, making our healthcare ‘markets’ nothing more than a price tag-less shopping adventure. In fact, according to the Healthcare Incentives Improvement Institute, only two states received an ‘A’ grade in quality, while 48 states receive ‘little to no transparency,’ by receiving ‘D’ or ‘F’ grades.  Iowa received an ‘F’ grade for both quality and price transparency information.

It was within this context that we asked Iowa employers this past summer a very simple question:

Who is responsible for lack of healthcare cost transparency in Iowa – hospitals/physicians or health insurance companies?

The response appears to be a justifiably confused tug-of-war battle.

Using a 10-point scale, with 10 being ‘Very Responsible,’ Iowa employers gave hospitals and physicians an overall score of 8.0. Employers obviously believe that our healthcare providers are a big reason that we do not have transparent costs. However, employers scored health insurers only an eyelash less, at 7.9. In short, employers believe that BOTH parties are responsible for lack of price transparency.

The results are found below. Due to the scale of this graph, it may appear that health providers have a much greater responsibility, but in reality, the scores are virtually identical to one another.

Lack of Price Transparency

Health providers and insurance companies’ scores are statistically similar.

What can we learn from this? The price transparency problem is perceived to have not one, but two, responsible parties. However, finger pointing is futile and counterproductive, and certainly not the purpose of this survey question or blog. Instead, new approaches must emerge that reflect true costs that are ultimately linked to quality of care.

For value to be determined, meaningful price and quality metrics are needed. One without the other will only leave us scratching our heads about which curtain to choose.

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The Pursuit of Health Information – and Trust

Trusting a Partnership for Health InformationWhen making workplace health-plan decisions, what type of healthcare information is desired by Iowa employers? Do employers know about web-based resources on Iowa hospitals? Who do employers trust to be their primary source for health-related data?

We asked a series of important questions in our 2013 Study. And, you might be surprised by the results.

As you might imagine, the needs and desires can vary greatly based on employer size. Using a 6-point scale, with 6 being ‘most important,’ Iowa employers responded that ‘Cost’ information was most important to have (4.9 score), with the largest of employers (1000+ employees) scoring this a 5.7. ‘Comparing Physicians’ followed next with an overall score of 4.5, while ‘Health Status/Wellness’ and ‘Comparing Hospitals’ both scored 4.4. Healthcare ‘Use’ finished with an overall score of 4.3.

Importance of Health Information to Iowa Employers

As found in the chart below, Iowa employers are unfamiliar with existing web-based resources on Iowa hospitals. Larger employers appear to be more aware of these web resources, but only a very small number of employers reported being ‘Very Aware’ of this on-line information. In case you are curious, some of this information might be found on the Iowa Hospital Association and Iowa Healthcare Collaborative websites. As mentioned earlier, ‘cost’ information appears to be most desired, followed by comparing physicians and hospitals, presumably on quality-related metrics.

Knowledge of Web-based Data on Iowa Hospitals

When employers responded to how optimistic they are on the effectiveness of ‘Medical Homes’ and ‘Chronic Disease Management Programs,’ employers with over 1000 employees were at least twice as likely to be optimistic (43 percent) than smaller employers with under 250 employees. Overall, only 21 percent felt optimistic about these initiatives being effective to improve workforce health. Another 30 percent were not that optimistic and responded that such initiatives will make ‘No Difference.’ Half of all employers indicated that they would need to have more information on both programs before making judgments as to the effectiveness of health improvement.

Primary Care Initiatives in Iowa

So, if organizations desire critical information to make future decisions on workforce health, it begs the question who they desire to be the primary source of this information. This question elicits some very interesting results.

Overall, 27 percent of Iowa employers desire insurance companies to be the primary source of health information. Yet interestingly, the largest employers with 1000+ employees were less likely to desire insurance carriers to be the primary source – only 18 percent voiced their interest. Only three percent of organizations desired the government to be the primary source of health information, which speaks volumes about their lack of appetite for a single-payer system.

Primary Source of Health Data

The preponderance of organizations (two-thirds) voiced their desire for ‘Health Providers’ (hospitals and physicians) to be the primary source of health information to help manage their costs. More questions will need to be asked of organizations in the future as to ‘why’ they desire health providers to be the primary source, but my initial take is simply they appear to trust this source more than other sources.

The healthcare provider community may take some comfort in knowing that a majority of employers view them as a trusted resource. With this trust, however, comes the responsibility to validate and enhance it by providing a greater array of transparent information on costs and delivering higher-quality outcomes. From our 2014 Study, we know that employers expect to receive reasonable costs, consistent quality of care and safe care that is appropriately delivered to patients.

This type of feedback for insurance companies is most assuredly humbling. Yet, it should also re-awaken the pursuit of new initiatives to make inroads on gaining a trust-related partnership with their clients. The silver lining for both health providers and insurance companies reveals lots of room for improvement – and immense opportunities. But opportunities can only happen if relentlessly – and thoughtfully – pursued.

Trust is the currency of commerce. In our healthcare world, we can always use more of it.

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Voices on Hospitals: Transparency in Medical Outcomes

Time To ImproveIn my mind, the Holy Grail of healthcare is having information on each provider’s medical outcomes – in other words, having transparent outcomes.

How many of us desire to use a doctor or hospital who demonstrates marginal or poor outcomes? No one, I’m quite sure. Yet we have little, if any, verified qualitative information that consistently benchmarks one provider with another provider for the same medical procedure within any geographical area. This is actually a great gig for those medical providers who underperform the services they are handsomely paid to deliver to patients.

Needless to say, this MUST change — and it cannot happen soon enough.

In healthcare, we know that recommended care is delivered about 55 percent of the time, yet our costs continue to rise despite the poor outcomes delivered. Why does this happen? Because the medical ‘establishment’ is much louder (and active) in Washington D.C. than the majority of us who innocently assume that others have our best interest in mind.

Since a majority of healthcare providers fail to track outcomes or cost by medical condition, it’s imperative that a systematic measurement process is established to improve healthcare outcomes. During those times when measurement does occur, they’re typically easier process measurements that determine levels of compliance with practice guidelines. Unfortunately, these measurements may not adequately address the quality metrics needed to advance “value” in healthcare. Performing these measurements serve nothing more than a mirage of what we REALLY desire to have – improved medical outcomes.

Indicator #10: Transparency in Medical Outcomes

The jig is up. Iowa employers have sounded off about how they view hospitals regarding transparency in medical outcomes. Statewide, Iowa hospitals received an anemic score of 6.1, or a grade of ‘C-minus’ for their efforts on being transparent with their outcomes. When segmented into five regions using size-weighted scores, four regions ‘fail’ while only the northwest region received a ‘high-D’ grade.

Polk County hospitals, graded by 144 employers, received a score of 4.3 (failing), while Johnson County (home of Iowa City) received a 5.8 score, or ‘high-D’ grade. A few other notable counties with large populations include Linn County (5.6) and Dubuque County (4.8), grades of ‘D’ and ‘F’ respectively.

Regional - Transparency in Medical Outcomes Map-Master

According to Michael E. Porter and Thomas H. Lee, M.D. of Harvard, “The only true measures of quality are the outcomes that matter to patients. And when those outcomes are collected and reported publicly, providers face tremendous pressure – and strong incentives – to improve and to adopt best practices, with resulting improvements in outcomes.”

Iowa employers have found their voice, now it is time to raise it to unprecedented decibels.

In next week’s blog, we’ll review how Iowa employers graded hospitals on our final two performance indicators: ‘Cost Transparency’ and ‘Keeping Cost Reasonable.’

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