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This Week in Health Care Reform: August 17th, 2018

An in-depth examination of medical costs across one state shows wild price variability; CMS announces new rules allowing for drug price negotiations in a Medicare program; Medicaid expansion is shown to increase access to medications for patients with diabetes; and, the debate continues over the direction of consumer-driven health care.

Week in Review

Minnesota Price Check: Using a statewide database of health care claims, researchers from the Minnesota Department of Health discovered significant price variability for four common inpatient surgical procedures.  In fact, those costs were found to vary as much as six times – at the same hospital.  Prices also varied widely among different locations.  In speaking to the results of the study, Stefan Gildemeister, the state’s health care economist, stated that the variations were the product of a market that’s not working as well as it should.  “There is a lack of transparency and pricing for services,” he went on to say, “that is not closely tied to actual health care costs.”  And, while patients in Minnesota would no doubt be interested in knowing where to bargain shop for the best prices, it turns out that the participating hospitals’ price for cooperating in the exercise was secrecy.

Step Therapy in MA: Last week, the Centers for Medicare & Medicaid Services (CMS) announced that beginning in 2019, it will be allowing Medicare Advantage (MA) plans to steer patients to the most preferred drug therapy before moving them to other therapies if necessary.  Known as step therapy, the new rule is limited to certain physician-administered drugs in Medicare Part B and represents CMS’ latest effort to curb rising drug costs.  Higher end projections from CMS place potential savings at 15-20 percent of the $12 billion annual spend by MA plans on Part B drugs.  However, experts caution that it’s unlikely to reduce overall drug spending, as the impact will be limited to certain classes of drugs.

Medicaid Expansion:
As policymakers continue to debate over whether or not to expand the Medicaid program, for at least one category of patients, there’s no question as to the benefits of that expansion.  In a new study published by Health Affairs, a roughly 40 percent increase in the number of prescriptions filled for diabetes drugs was observed in the 30 states that expanded eligibility in their Medicaid programs in 2014 and 2015, compared with prior years.  No notable increase was seen in the states that failed to expand their programs.  Given that more than 114 million American adults have diabetes or prediabetes, it’s hard to overstate the net positives that result from increasing access to the kinds of treatments that not only prevent diabetic complications, but improve public health and save public money, as well.

Consumer Education:
Consumer-driven health care assumes that by arming patients with relevant data, they’ll make better informed decisions when it comes to their interactions with the health care system.  While research has shown this to be the case, it turns out that that’s really only partly true, as a more comprehensive analysis of the available research shows that while people do in fact cut back on wasteful health care when they have to spend more on it, they also cut back on necessary care, too.  This has given rise to the growing movement to encourage people to shop for health care.  The challenge there being, patients more often than not are at the mercy of providers in knowing what exactly they’re supposed to be shopping for in the first place.  This, researchers point out, has to do with the weight that consumers appear to place on the advice of their doctors.  So, it ultimately becomes a question of how do we find our way to a more consumer-driven approach if the key to achieving those savings lies in influencing providers’ recommendations, while also respecting their professional experience and the inherent variability in their patients’ needs?  Experts believe that the solution requires a two-step approach: 1) continuing the ongoing shift towards paying for value rather than volume; and, 2) focusing on improving clinical decision support.      

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