US healthcare spend is at $3.5 trillion today, and is projected to hit $5.7 trillion by 2026. That is growth of 5-6% a year, and means healthcare will continue to increase its share of overall US GDP[1]. Lawmakers and citizens alike recognize the urgency of finding a sustainable way to contain costs. At the same time, as a society we’re also committed to maintaining (if not improving) patient outcomes and the quality of care while doing so.
People often associate the issue of healthcare cost reduction with where we should be spending LESS (e.g., drugs, hospital stays). However, it is equally pressing to identify where we should do MORE – i.e., where we should invest in education and prevention up-front to reap benefits later.
More is Less
One powerful example is the Colonoscopy – the dreaded hours of, ahem, “preparation”, followed by a short procedure that leads to a 91% five-year survival rate when it catches early-stage cancer, compared to 49% when not caught early enough[2].
About 145,000 Americans are diagnosed with colorectal cancer each year, and of those, approximately 50,000 will die because of the disease[3]. With appropriate screenings in place, up to 45,000 of these deaths could potentially have been prevented. Sadly, only 50-60% of Americans 50 years and older complete their screenings as recommended by clinical guidelines.
The Math of Prevention
45,000 deaths a year are an avoidable tragedy for families across the US. Colonoscopies arealso an example of where doing MORE of something would help solve the US system’s cost problem. A colonoscopy under Medicare is reimbursed at around $200-$300, and would save at a minimum $40,000-50,000 in treatment costs[4] for the majority of the 145,000 Americans a year who are diagnosed with the disease. Using very conservative math, if the roughly 25 million Medicare-eligible Americans currently overdue for a test (many of whom have never been screened at all) were to become compliant with their screenings, it would save about $6 billion a year (in perpetuity).
Getting timely colonoscopies for more Americans could save $6 billion a year in treatment costs.
Primary Care as Quarterback
How do we get to 100% colonoscopy completion? Currently, the US system is asking Primary Care Physicians (PCPs) to lead the improvement of Quality, Cost and Outcomes. In many ways, PCPs are a natural owner: they bind together the disjointed elements of the healthcare system, and are often the key trusted adviser for patients making medical decisions.
Multiple programs already are using PCP-led models to improve performance on measures such as colonoscopies. For example, the Centers for Medicare & Medicaid Services (CMS) reinforced this concept in their ACO (“Accountable Care Organization”) model, which began in 2012. In the ACO model, groups of PCPs are assigned as responsible for a set of Medicare patients’ cost and quality over a number of years. The ACO model has grown explosively since 2012, and in 2018 nearly 600 ACO pods of providers manage as many as 10 million Medicare lives. In the ACO model, payouts to these provider groups are determined in part by performance on Quality measures such as colonoscopies.
Another example of PCP-driven care is the Medicare Advantage “Star” program[5]. The program pays bonuses to the private insurers administering Medicare benefits based on performance on a variety of Quality measures for the insured patients. More than half of these points are assigned based on clinical process and outcomes. Insurers focus intensely on these ratings, since top performers receive large bonuses, but also since they are publicly advertised and significantly affect enrollment of new patients. Though some plans attempt to affect clinical process themselves (e.g., by calling enrollees directly or mailing them pamphlets), the PCP is the best-equipped to affect patient behavior. Patients don’t look to insurers for healthcare guidance – they don’t even trust them more than they would any random healthcare website[6]. Insurers by and large realize this, and those that excel in the Star program, like Humana, advertise their successful partnership with PCPs[7].
The good news is that both programs, Medicare ACO and Medicare Advantage, tend to outperform the overall US screening rate (in 2016, ACO: 62.9%; MA: 74.4%, vs 50-60% for the US overall). Furthermore, even within MA plans, the more MA is “penetrated” within a county (i.e., the percent of Medicare patients who are covered by private Medicare plans), the better compliance of MA patients with colonoscopies in that county[8].
Programs with financial incentives for improving screenings like Medicare Advantage and Medicare ACO both outperform the US average.
Private Medicare Leading the Way
Only 2 in 5 of Medicare-eligible Americans are part of the ACO program or enrolled in a Medicare Advantage plan (and the performance even in those programs is still far short of the 100% goal), and therefore there is still a big gap to preventing 45,000 avoidable deaths a year. Expansion of these value-based contracts will help, and MA is expected to grow as a share of the Medicare-eligible from its current rate of about 35% to as high as 50% by 2025[9],[10].
However, not every insurer is equipped to successfully engage providers to succeed at metrics such as prevention. Of the roughly 400 MA plans that had a summary Star score in 2018, fewer than 150 received any bonus for high Quality scores.
Insurance companies miss out on these bonuses primarily because they are not properly equipped to engage providers. Engaging PCPs to take part in such initiatives requires a mix of direct education, data exchange, and tangible incentives. These skills are far removed from the core business of being an insurer (enrolling members, processing claims). For this reason, insurers will often partner with a third-party vendor, but even then, it’s a skill-intensive process and many vendors fail to build real engagement. As one example, often the information and incentives are handed to a central administrator at a provider group, but then aren’t shared with the individual physicians and staff. However, it is the individual providers who have to change, so they must have a clear understanding of how what they’re doing impacts patient care and personal rewards. Without this understanding, they are likely to stick with the status quo and any new initiative will fail.
Path to Transformation
Recently, a group of PCPs signed on to a value-based care contract that kicked off in 2015. The contract included immediate payments for PCPs and their staff for completing activities that contribute to better quality, leveraging a simple data tool to identify and track these activities at the point of service (go here for more).
The results: this group overall moved their Star rating from <3 to 4 within 18 months, with the best performing groups achieving 95%+ completion on colorectal cancer screenings for their patients. The practices getting these 95%+ rates were truly awe-inspiring. Staff members would review the data tool at the start of each day, so that doctors and nurses would know if a patient was due for a screening before they walked in the exam room. Then, the providers would invest the extra minutes required to explain to patients how important these screenings are, and to address any concerns about safety or discomfort. On the patient’s way out, the office would pick up the phone with the patient sitting right next to them and help schedule their exam (significantly more effective than hoping the patient will remember to do so once they get home).
On the patient’s way out, the office would pick up the phone with the patient sitting right next to them and help schedule their exam.
This type of transformation is readily attainable for insurers that are willing to invest in supporting and rewarding providers, and selecting partners who are skilled at the “hand-to-hand combat” that makes these initiatives stick. One of the major barriers is that the PCP-insurer relationship has historically been adversarial. However, new contracting models can align financial incentives to bridge the gap and allow both groups to do their part in advancing patient care.
System-Wide Impact
Returning to the overall question of how to address US medical costs, $6 billion saved through colonoscopies is only 1-2% of the current $4 trillion US healthcare budget. But as one might expect, there are another dozen or so such PCP-led initiatives—among them, mammographies, fall risk screenings, transitional care management and ER follow-up programs—all of which demonstrate a similarly compelling 10-to-1 (or more) ratio of cost impact compared to the money spent on prevention.
Eventually, the US healthcare debate will likely need to tackle the more difficult question of where we can spend LESS, but for now we should focus on the obvious near-term initiatives with a proven ROI. To get there, the US needs to build a system where insurers and providers become true partners, and in which providers are rewarded for taking on the additional work it takes to significantly move costs and outcomes.
[1] Reuters
[2] American Cancer Society
[3] American Society for Gastrointestinal Endoscopy
[4] Wong et al., 2016
[5] Medicare Advantage is the privatized version of Medicare, where an insurer (like United or Aetna) is given a fixed amount of money to pay medical claims for a Medicare-eligible patient.
[6] http://www.newsweek.com/doctors-not-insurance-companies-should-take-medical-decisions-650872
[7] https://www.humana.com/about/public-policy/humana-improves-healthcare/strengthening-system/accountable-care-incentives
[8] Source: CMS Public Use File (PUF) datasets on MA Stars Program, Enrollment data
[9] LEK Consulting
[10] Importantly, I should acknowledge that from the patient’s perspective, MA plans do have drawbacks. Traditional Medicare (i.e., with benefits administered directly by the government), allows seniors to visit any doctor they choose, whereas MA plans have requirements such as PCP referrals to see a Specialist.
With that said, the way MA has been growing, the market may be deciding that privatization is the way to go. Indeed, a big driver of enrollment in MA is that insurers are able to use the savings from prevention, narrow networks, and cost management to offer much lower out-of-pocket costs and better benefits than seniors would receive under normal Medicare.