Action Needed Now to Control Costs of Chronic Illness Care

Barry Straube, M.D., chief medical officer at the Centers for Medicare and Medicaid Services (CMS), said Medicare, for example, is structured to reward health care clinicians for the volume of care they provide, not the outcomes of that care.

“You get to do more, regardless of outcomes,” he said.

Only long-term studies can identify the most cost-effective ways to diagnose and test patients, track effective medication use, and identify the best settings in which to treat different types of patients, he said.

“We need to figure out how we can return the payment system to where it is no longer driven by what patients can most afford” and focus instead on what treatment settings and interventions represent the best level of care, straube said.

Sam Nussbaum, M.D., executive vice president and chief medical officer of WellPoint inc., one of the country's largest insurance companies, said that the huge growth expected in the number of older patients with chronic diseases in the coming decades has increased the pressure to study long-term care to control costs. CMS estimates the number of Medicare beneficiaries who will require long-term care will climb from fewer than 45 million now to more than 76 million in 2030.

Nussbaum noted, for example, that studies have found that dementia patients in Medicare and in private insurance programs have huge variations in costs for similar care. He cited research that found that up to 30 percent of funding in additional medical care fails to result in positive health outcomes.

The need for cost controls on care of the chronically ill in both public and private health care systems, the researchers agreed, has been illustrated by repeated studies. For example, a June 2005 study by the Center for American Progress, a liberal nonpartisan group, found that the top 10 percent most expensive non-institutionalized Medicaid beneficiaries account for nearly three-fourths, or 72 percent, of Medicaid spending. This and other research suggested to Nussbaum that potentially large cost savings might be realized by better managing the care of these high-cost beneficiaries.

An increased use of health information technology could reduce both medical errors and costs, Straube said. More controversial ways to control long-term costs, he added, are to publicize treatment price and outcome data to the public and initiate pay-for-performance programs for physicians.

He touted an ongoing federal transparency initiative and the goal of the Department of Health and Human services (HHS) to provide price-comparison standards. One of the earliest efforts by HHS in this area was the posting of comparisons of Medicaid prices for the most common elective medical procedures, such as hip and knee replacements, on the HHS Web site in June. Six HHS pilot sites will collect and publicize price information for treatments in specific areas of the country, and HHS plans to expand the program to 60 sites.

Another initiative aims to increase the applicability of pay-for-performance measures by following Medicare beneficiaries assigned to group practices, which is likely to provide more useful data in this area than following patients assigned to a solo practitioner.

Although Straube highlighted President George Bush's recent executive order mandating that federal agencies share information on quality and cost of medical care and provide incentives for the public to choose“ high-quality” providers, no lasting changes are possible without public and private information-sharing partnerships, he said.

Nussbaum noted the increasing efforts of private and public health care systems to identify costs and enlist the public in controlling prices. He cited the recent Aetna price-comparison program that displays what the company's reimbursement is for each participating physician. The program does not address differences in care, which the company leaves up to an online system that allows patients to rank their own physicians.

A growing number of initiatives in the public and private sectors also provide financial incentives for those with chronic illnesses to help control costs by encouraging them to participate in patient education programs, Nussbaum said.

More information on the Capitol Hill briefing is posted at<www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1877>.▪