Why Cost-Saving Strategies Do Not Start with Children

On a daily basis, it is clear that there should be a more thoughtful way to spend health care dollars so that what is purchased has more value.  The graph below illustrates that older and disabled adults utilize more health care dollars (in Medicaid) and as a result are likely to be the initial focus of cost-saving strategies.

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How to Undermine Value Care: Lessons from Pharmaceuticals

A brief commentary (LS Dafny et al. NEJM 2016; 375: 2013-15) helps explain how easy it is to prevent high-value care.  The authors note that one example of encouraging high-value care is to tier drugs in insurance plans.  Insurers can encourage consumers to use drugs that provide high value by providing lower copays (lower tier) and at the same time this allows the insurers some leverage with pharmaceutical manufacturers in negotiating prices of their medications.  Roughly 75% of insurance plans have at least three drug tiers.

The pharmaceutical companies have “counterattacked” by offering “copayment coupons.”  Since insurers still pay ~80% of the costs, even with these coupons, the manufacturers are able to shift spending to higher-priced medications and still make a considerable profit.  The net effect of copayment coupons:

  • “reduce the incentive for drug manufacturers to offer price concessions in exchange for preferred tier placement.”
  • With these coupons, the strategy of charging “insurers the highest price possible while remaining on the formulary” takes hold
  • The number of these “copayment coupons has skyrocketed.” By 2010, approximately half of brand-name drug revenue was derived from drugs with copayment coupons.
  • “We estimate that coupons increase the percentage of prescriptions filled with brand-name formulations by more than 60%.” Among 85 drugs facing generic competition, “between 2007-2010, the 23 drugs with coupons likely was between $700 million to 2.7 billion higher than it would have been” without these coupons.

The authors note that health care providers may ultimately pursue similar pathways to try to get around insurance companies preferred provider panels.  This could occur as insurance companies increasingly try to control costs by demanding steep discounts from providers in exchange for inclusion in more limited networks.

My take: Providing high value care is not the chief concern for private industry. Both the insurance companies and the pharmaceutical companies develop policies and countermoves to further their best interests.

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Jones Bridge Trail

Jones Bridge Trail


Rewarding Restraint vs. Reality

Congratulations to Jeff Lewis, MD.  He has been selected from the Georgia Dept. of Public Health to receive the Maternal & Child Health Treating Children with Special Healthcare Needs Award.  This award will be presented at the Georgia- American Academy of Pediatrics Annual Awards Luncheon at Pediatric on the Perimeter on Friday Oct. 31, 2014 from Noon-1:30 pm.

Previously this blog noted the low usage of bronchiolitis guidelines (If a Guideline Falls in The Woods, and No One Hears It …) More information on this subject and why it is important has been published (J Pediatr 2014; 165: 786-92, ed 655-57).

Why this is important:

  1. Bronchiolitis is one area that has been well-studied and the evidence is strong regarding unnecessary medications and evaluations.
  2. Bronchiolitis is common.  It is the fourth most common reason for hospital care in US children’s hospitals.
  3. Four of five “Choose Wisely” targets in pediatrics focus on bronchiolitis care, including not routinely ordering chest xrays (in uncomplicated cases), avoiding bronchodilators, not using systemic corticosteroids, and not using pulse oximetry when off supplemental oxygen.

However, when one looks at Figure 1 (from the study) -resource utilization over time and Figure 2 – heat map for adjusted use by 42 separate hospitals –it is apparent that only about 5 of the hospitals are successful in at least 3 of 5 areas (albuterol, racemic epinephrine, steroids, chest radiographs, and antibiotics).  The data from these figures is derived from 64,994 hospitalizations that were analyzed.

Median hospital use of nonrecommended tests/treatments:

  • Albuterol 52.4% with range: 3.5% to 81%
  • Racemic epinephrine 20.1% with range: 0.6% to 78.8%
  • Corticosteroids 10.9% with range: 4.1% to 46.6%
  • Chest xray: 54.9% with range 24.1% to 76.6%
  • Antibiotics: 38.4% with range 27.1% to 50.1%

From editorial: “Many of us practice in environments that reward “doing more” as a sign of thoroughness and better clinical care.  Nowhere is this truer than in our acadmeic centers…we need a culture change in our training centers toward role modeling and rewarding restraint in testing and treatment as part of high value care efforts.”

Take-home message: If excessive testing and treatments is rampant for problems like bronchiolitis in which they have been proven to be of low value, what chance is there for restraint in more murky areas?

Related blog post: Trying to make Cents out of Value Care |