Gail R. Wilensky

Cost-effectiveness information: yes, it's important, but keep it separate, please!

In this issue, the American College of Physicians (ACP) makes a series of compelling statements and recommendations about the need for better information on comparative effectiveness if the United States is to make more effective and efficient use of its limited health care resources (1). The term limited seems incongruous when applied to a country that is currently spending

The Policies And Politics Of Creating A Comparative Clinical Effectiveness Research Center

2 trillion on health care, yet I believe that as much as we spend now, we would spend more if resources were not in some way constrained. The ACP agrees with other commentators that the United States needs to invest substantially in a national entity that would generate information on clinical comparative effectiveness and that the scope of this new entity should include the relative clinical effectiveness and safety of any 2 or more medical services, drugs, devices, therapies, or procedures used to treat the same condition. The ACP goes beyond others by recommending that the scope should include cost-effectiveness. It concludes that the United States spends too little on developing comparative effectiveness data; that it fails to coordinate or prioritize the production of comparative effectiveness information; and that its failure to use information on cost-effectiveness affects the ability of payers, physicians, and patients to make effective, informed choices that optimize the value received for health care dollars spent. These conclusions frustrate me. Although I firmly support them, I adamantly oppose the ACPs recommendation that the new entity should prioritize, sponsor, and produce cost-effectiveness information in addition to comparative clinical effectiveness information. Like the ACP, I support the use of cost-effectiveness information as an element in decision making by physicians, patients, and payers for developing smarter strategies of reimbursement. Unlike the ACP, I think it is vitally important to keep comparative clinical effectiveness analysis and cost-effectiveness analysis separate from each other. As I have argued elsewhere (2, 3), the use of cost-effectiveness information is more politically contentious and its modeling more technically controversial than comparative clinical effectiveness. For these reasons, I believe that payers should do cost-effectiveness analyses, not a national entity devoted to the development of comparative clinical effectiveness data. I believe that the ACP only partly understands the history of failed attempts to use cost-effectiveness information and substantially overestimates the likelihood that assigning these 2 functions to 1 national program would be successful and sustainable. Because clinical effectiveness is the most basic and costly step in learning how to spend smarter, it should proceed first and in as politically protected a manner as possible. Dont Confuse Widespread Interest with Acceptance or Support The ACP claims that the development and use of comparative clinical information has uniform support. I believe that a substantial constituency, including the Congressional Budget Office, the Medicare Payment Advisory Commission, and members of Congress from both parties, understand the need for better information on comparative clinical effectiveness. However, that support is certainly not uniform, and the development of a properly funded entity devoted to comparative clinical effectiveness information is anything but certain. Until this idea becomes law, it remains just a beautiful but fragile and vulnerable concept. Even then, the sustainability of such a center will only become clear after it survives the first comparative clinical effectiveness information that contradicts conventional wisdom or endangers the latest therapy du jour. I am encouraged that some leaders in industry have been reasonably supportive of a new center on comparative clinical effectiveness. The larger pharmaceutical companies have been the most supportive, as long as legislation recognizes the importance of transparency and timeliness in such a center. Smaller pharmaceutical and biotech companies and many of the device companieswhich have traditionally relied on smaller, incremental innovations in their productsare much more concerned that such a center might adversely affect their financial futures. Many patient advocates are equally concerned that better knowledge of comparative clinical effectiveness might impede their constituencies access to innovative products. How Best to Generate and Use Cost-Effectiveness Information? To reiterate, I am not arguing against the importance of cost-effectiveness information. Cost-effectiveness information should be an important consideration in setting reimbursement rates by public and private payers. If an intervention doesnt do more, why should a payer pay more for it? If it does do more, asking how much more and for what additional price becomes relevant. Payers will have to make difficult decisions, and different payers may make different decisions. Whether Medicare will be granted the right to use cost-effectiveness information in setting reimbursement rates is unclear, although the history in this regard is not promising. The first attempt happened when I was the administrator of the Health Care Financing Administration (now the Centers for Medicare & Medicaid Services). The proposed rule was never released from the Office of the Secretary of Health and Human Services because of concern about potential future misuse of this authority. Before the rule could have become final, it would have been necessary to specify and resolve, with the various affected constituencies, decisions about what costs to count, which discount rate to use, from whose perspective, and all of the other controversial issues discussed in the ACP position paper. Whether these difficult issues could have been resolved is unknowable, but it is important to understand that no right answers to these issues have been foundjust different perspectives and positions that various groups have taken. My difference with the ACP is not about the importance of doing cost-effectiveness analysis. I do differ by saying that payers, not a national clinical comparativeness program, should do cost-effectiveness analysesand act on them. The resources required to do cost-effectiveness analyses should not be a stumbling block. Comparative clinical effectiveness information may require randomized clinical trials or new evidence development, which may be costly and time-consuming to produce, but cost-effectiveness analyses are relatively straightforward and inexpensive. Congress could allocate to the Centers for Medicare & Medicaid Services a small portion of the funds that it allocates to pay for the production of comparative clinical effectiveness information, so that the agency could do more cost-effectiveness analyses. The more serious problem would be winning the right for public payers, such as Medicare, to use cost-effectiveness. Private payers can use this type of information now but rarely do so. It also seems reasonable to me for private payers to pay for their own cost-effectiveness analyses. What Next? Having such physician groups as the ACP join the other constituencies pressing for the development of a comparative clinical effectiveness center is vitally important, and I hope they will be strong advocates as legislation reaches the floor of Congress. Payersespecially private payerswould dearly love for such a center to do cost-effectiveness analysis because they could then share the onus of implementing the results of difficult, contentious, unpopular studies with a reputable national entity. Their desire is understandable; however, from a long-range perspective, the wiser course is to leave cost-effectiveness analysis out of the scope of work of a national comparative clinical effectiveness program.

Accountable Care Organizations and Antitrust Restructuring the Health Care Market

As part of the early efforts of the Obama administration to begin health care reform,

Developing A Viable Alternative To Medicare’s Physician Payment Strategy

1.1 billion for comparative effectiveness research was included in the stimulus bill. Although this amount can be considered as an initial down payment, difficult issues such as where to place an ongoing effort, the role of such research in informing clinical decision making or reducing health care spending, and the governance to ensure full involvement by stakeholders have not yet been resolved. Legislation proposed over the past two years offers some insights into the options available going forward.

Health insurance coverage of the working poor

ON OCTOBER 20, 2011, THE CENTERS FOR MEDIcare & Medicaid Services (CMS) released the final rules for accountable care organizations (ACOs), a highly publicized initiative of the Affordable Care Act. Accountable care organizations are part of the Medicare Shared Savings Program, which is charged with improving quality of care for Medicare patients. The CMS provided incentives for ACOs to deliver high-quality care at reduced rates of spending by providing a more coordinated team approach to health care delivery. On the same day, the Federal Trade Commission and Department of Justice provided guidelines addressing antitrust issues involving the formation of ACOs. The concern is that ACOs can result in a reduced number of competitors in health care markets, which could potentially increase prices and have negative consequences for consumers and purchasers of care. The Federal Trade Commission and Department of Justice guidelines require that ACOs meet the Medicare Shared Savings Program’s clinical integration requirements and suggest potentially anticompetitive actions to avoid. In crafting the Medicare Shared Savings Program, the CMS, the Federal Trade Commission, and the Department of Justice are seeking balance between integration efficiencies and market power. Physician leaders and policy makers will need to consider 5 major issues in the creation of ACOs. These include the following: market definition and power, efficiency and quality metrics, physician and hospital exclusivity, publicprivate cost shifting, and monitoring.

Alternative Units of Payment for Physician Services : An Overview of the Issues

Since 1992 Medicare has reimbursed physicians on a fee-for-service basis that weights physician services according to the effort and expense of providing those services and converts the weights to dollars using a conversion factor. In 1997 Congress replaced an existing spending constraint with the Sustainable Growth Rate (SGR) to reduce reimbursements if overall physician spending exceeded the growth in the economy. Congress, however, has routinely overridden the SGR because of concerns that reduced payments to physicians would limit patients access to care. Under continued pressure to override scheduled fee reductions or eliminate the SGR altogether, Congress is now considering legislation that would reimburse physicians to improve quality and lower costs-two things that the current system does not do. This article reviews several promising models, including patient-centered medical homes, accountable care organizations, and various payment bundling pilots, that could offer lessons for a larger reform of physician payment. Pilot projects that focus exclusively on alternative ways to reimburse physicians apart from payments to hospitals, such as payments for episodes of care, are also needed. Most promising, Congress is now showing bipartisan, bicameral interest in revising how Medicare reimburses physicians.

Methodological Issues in Health Surveys An Evaluation of Procedures Used in the National Medical Care Expenditure Survey

This study examines the working poor, and their pattern of health insurance coverage. The data indicate that in 1977 almost 22% of the working poor lack health insurance throughout the year. Moreover, children of the working poor were almost twice as likely as children of the poor nonemployed to be without coverage. The implications of the Omnibus Budget Reconciliation Act of 1981 (OBRA) which restricted the working poors eligibility for Medicaid are discussed. It is argued that being employed, in itself, does not guarantee poor people access to medical care and may, in fact, serve to restrict it.

Improving and Refining the Affordable Care Act

*Vice-President of the Division of Health Affairs, Project HOPE, Millwood, Va. †Associate Professor of Health Economics, Department of Health Administration, Medical College of Virginia, Virginia Commonwealth University, Richmond, Va. The three preceding papers have reviewed evidence about various physician payment options and have discussed the trade-offs among them. This paper will summarize these papers in the context of a discussion of four major units of payment: procedure, case, episode, and per capita.

The Implications of Regional Variations in Medicare—What Does It Mean for Medicare?

The National Medical Care Expenditure Survey (NMCES) is one of the most comprehen sive health surveys ever conducted by the federal government. NMCES used a series of procedures designed to increase the quality and accuracy of the data. Since many of these procedures are expensive and time-consuming, often survey researchers must choose between alternative bias reducing strategies. This article presentsfindingsfrom a series of methodological studies conducted to evaluate issues such as response bias, organizational effects, the effect of improved response rates, and the usefulness of surveys of medical providers and health insurers to supplement the data collected in a household health survey. The results of these investigations should prove useful in the design of future surveys.

The Future of the ACA and Health Care Policy in the United States

Neither Republicans nor Democrats have spent much time, at least not in public, discussing changes to the Affordable Care Act (ACA) that could refine or improve the legislation. Republicans have mostly focused on strategies to repeal the ACA, which, even with their control of the House and Senate, appears highly unlikely because they could not muster the 67 votes needed to override a presidential veto. Democrats, while privately acknowledging there are changes that could improve the legislation, have publicly devoted most of their energies to defending the ACA. The history of complex legislation is that it usually produces follow-on legislation that refines or modifies the original legislation because of unintended consequences or unanticipated political pushback following the bill’s implementation. Several rounds of such legislation followed the Balanced Budget Act, for example.1,2 Although it could be argued that major portions of the ACA were not implemented until 2014 so that not having introduced modifying or corrective legislation by mid-2015 is not unusual, it is clear that the acrimonious and partisan passage of the legislation has made corrective legislation in the near term highly unlikely, although the overwhelming passage of the sustainable growth rate reform by both houses of congress in the spring suggests that corrective legislation is not impossible.3 However, sustainable growth rate reform appears to be a special case, reflecting the strong interest of Congress to dispose of what had become a festering annoyance, and was able to happen only because Congress ignored the most contentious aspect of the legislation—funding its cost. The only comparable situation would have been the need to replace the current system of subsidies in the federal exchanges had the Supreme Court ruled against the government. Even that would have been as likely to result in a bill that continued the current system of subsidies until after the 2016 election.