Blog

People have talked about provider networks, and how visiting some in-network facilities can lead to surprise out-of-network charges. Much less common has been insurance companies trying to limit where patients can get their medications. Kaiser Health News reported on Blue Shield of California's proposal to do just that.

People have talked about provider networks, and how visiting some in-network facilities can lead to surprise out-of-network charges. Much less common has been insurance companies trying to limit where patients can get their medications. Kaiser Health News reported on Blue Shield of California's proposal to do just that.

The recent dramatic rise in drug prices has featured in the news. As insurers try to contain costs for their members, it makes sense for them to address the cost of medications. Preferred pharmacy networks, however, seem like an inefficient way of doing so. Preferred networks impose some non-financial costs. For example, patients might need to go further to a pharmacy or, as noted in the article, might be required to sever a personal relationship with a pharmacist in order to obtain in-network pricing. Reference pricing, coupled with an easily searchable online database of prices, seems like it would be a more effective approach. The insurer can publish the amount that it it willing to pay for each medication, along with prices from pharmacies. Patients can then choose to go to pharmacies that offer the medications for less, or they can choose to pay the difference for convenience, relationship, or any other priority. This approach has the advantage of applying competitive market pressure on each individual medication, which is far more granular than each pharmacy business relationship. Reference pricing has had some positive results when applied to procedures; there seems to be little reason that it wouldn't also be effective in the realm of medications.

Dr. Duzak wrote an informative blog post about the relative value unit (RVU), a concept developed to figure out how to reimburse physicians for their work. Dr. Duzak points out that RVU does not consider quality or patient experience, so physicians have a financial incentive to maximize the number of procedures done, rather than efficiency or health outcomes for the patient. The author also references one of the long-standing controversies of the RVU-based system (known as Resource Based Relative Value Scale, or RBRVS): how much specialists get paid for their work relative to how much primary care doctors get paid. Overall, the post is both readable and informative about the problems with the RBRVS that doctors in the US work with. The author suggests some values that should be incorporated into a new version of the system, but is light on the details of how good metrics could be developed for those values.

Dr. Duzak wrote an informative blog post about the relative value unit (RVU), a concept developed to figure out how to reimburse physicians for their work. Dr. Duzak points out that RVU does not consider quality or patient experience, so physicians have a financial incentive to maximize the number of procedures done, rather than efficiency or health outcomes for the patient. The author also references one of the long-standing controversies of the RVU-based system (known as Resource Based Relative Value Scale, or RBRVS): how much specialists get paid for their work relative to how much primary care doctors get paid. Overall, the post is both readable and informative about the problems with the RBRVS that doctors in the US work with. The author suggests some values that should be incorporated into a new version of the system, but is light on the details of how good metrics could be developed for those values.

People are starting to see the problems with relying predominately on RBRVS, in that paying doctors for number of procedures done means more procedures done, not necessarily better health. Risk-adjusted health outcomes are much harder to measure, but could transform the delivery of health care.

The Atlantic published a lengthy article examining the issue of over-treatment and the use of ineffective procedures. The piece cited research by Dr.

The Atlantic published a lengthy article examining the issue of over-treatment and the use of ineffective procedures. The piece cited research by Dr. David Brown that found that "stents for stable patients prevent zero heart attacks and extend the lives of patients a grand total of not at all." Interestingly, the article also cites another study asking cardiologists why they would send a patient to get a stent even if the cardiologists knew of data that suggested that such a procedure would not be helpful for that particular patient. Some responded that they wanted to avoid potential legal action while others wanted to relieve patient anxiety. Some simply did not believe the data given how much intuitive sense the procedure seems to make. The article also discusses how certain medications may improve certain measurements typically associated with better health outcomes (e.g. lowering blood pressure in hypertensive patients), but not actually improve health outcomes.

Medicine is complex, science is complex, and health policy is complex. Throwing financial incentives in the mix (e.g. pay-for-procedure) can make things even more complex.

A recently published study found that patients cared for by accountable care organizations (ACOs) on average cost less in post-acute care than patients who were treated by non ACO-providers. The study looked at providers who participated in the Medicare Shared Savings Program, which rewards participating providers whose patients' care cost less. The hope is that if providers can benefit from cost savings, overall treatment costs will become less expensive. Providers might be able to achieve this by paying closer attention to their patients' health or by spending more time educating their patients. Some provider clinics go as far as hiring additional staff to help their patients avoid costly hospital re-admissions; they expect that the cost of the additional staff will be more than covered by the financial rewards from the overall savings.

A recently published study found that patients cared for by accountable care organizations (ACOs) on average cost less in post-acute care than patients who were treated by non ACO-providers. The study looked at providers who participated in the Medicare Shared Savings Program, which rewards participating providers whose patients' care cost less. The hope is that if providers can benefit from cost savings, overall treatment costs will become less expensive. Providers might be able to achieve this by paying closer attention to their patients' health or by spending more time educating their patients. Some provider clinics go as far as hiring additional staff to help their patients avoid costly hospital re-admissions; they expect that the cost of the additional staff will be more than covered by the financial rewards from the overall savings.

This seems like a promising result and explains the recent trend towards expecting providers to accept more risk for their patient care. With a new administration in place, it remains to be seen if this trend will continue or if CMS will take a different direction.

When consumers select an insurance plan, provider networks can be an extremely component of that choice. Among other questions, consumers may want to know "does my long-time doctor accept this particular insurance plan?" or "if I choose this plan, will I be able to find a specialist who is available to treat my condition?" To the extent that health insurance plans are differentiated from one another on factors other than price, provider networks are an important component of that differentiation. Therefore, misrepresentation of provider networks can be compared to false advertising. California Healthline reported that the director of the California Department of Managed Health Care found that 36 out of 40 insurers that were reviewed may be fined for submitting inaccurate provider network data.

When consumers select an insurance plan, provider networks can be an extremely component of that choice. Among other questions, consumers may want to know "does my long-time doctor accept this particular insurance plan?" or "if I choose this plan, will I be able to find a specialist who is available to treat my condition?" To the extent that health insurance plans are differentiated from one another on factors other than price, provider networks are an important component of that differentiation. Therefore, misrepresentation of provider networks can be compared to false advertising. California Healthline reported that the director of the California Department of Managed Health Care found that 36 out of 40 insurers that were reviewed may be fined for submitting inaccurate provider network data.

Interestingly, insurers submit two lists to the state of California: one for evaluating patient access, and one for a year-end tally. The article seems to imply that the first list often exceeded the second list (by 45% for primary care doctors for one insurer, and by 50% for specialists for seven insurers). If true, those discrepancies are material and significantly affect how attractive a particular plan is. I'm glad that someone in government is trying to hold insurers accountable for the provider networks that they publish.