Both Patients and Hospitals Tend to Avoid Care that Costs More – One Health Plan in MA is Trying to Address This

Despite evidence that cervical cancer is most effectively treated with brachytherapy (a form of radiation), Medicare reimbursement for a less effective treatment, external beam radiation, is higher, according to an article in Healthcare Finance News. Additionally, the delivery costs of brachytherapy in hospitals is greater than for external beam radiation.

The lower cost of delivery combined with higher Medicare reimbursement means external beam radiation is four times more profitable than brachytherapy for a hospital – despite being the less effective treatment.

The study by Kristine Bauer-Nilsen, University of Virginia School of Medicine, et al., published in Radiation Oncology, evaluated the delivery costs, using time-driven activity-based costing, and reimbursement for definitive radiation therapy for locally advanced cervical cancer.

Brachytherapy for locally advanced cervical cancer “ends up costing hospitals money because it takes 80-plus percent more physician personnel time to administer brachytherapy than it does to deliver the increasingly popular external beam radiation,” the article says. Even though it costs more for hospitals to  provide brachytherapy than it does to provide external-beam radiation, the reimbursement doesn’t reflect the difference. Which in turn means, “the comparatively poor reimbursement rates may mean some hospitals simply don’t offer brachytherapy or commit physician time to it” as Jeff Lagasse, the author of the Healthcare Finance News piece succinctly concludes.

Businesses naturally do the things that pay them more. This study highlights how reimbursement has to change before health providers will change. “Value based care,” envisioned by policymakers mean the system as a whole only pays for health interventions that are valuable. But what is of value to the system is different than what is of value to a health care business, for example, a hospital or physician group.

Similarly, what a patient values, might be different from every other entity in the health care system. Just as financial incentives may drive hospitals’ choice of therapies, they also affect patients’ decision making when it comes to managing chronic conditions. Now, a health plan in Massachusetts is aiming to remove the financial incentives that lead patients to avoid needed care. In order to incentivize patients to “manage their conditions optimally and proactively,” Neighborhood Health Plan (NHP) is waiving out-of-pocket costs for chronic conditions.

The new comprehensive benefit design, called Care Complement, eliminates copays for 11 common prescription medications that treat conditions like high cholesterol, diabetes, high blood pressure, heart disease, and depression. The program also waives cost sharing associated with cardiac rehabilitation therapy and screenings to prevent diabetes complications, according to a recent AHIP (America’s Health Insurance Plans) blog.

“With certain chronic conditions, such as diabetes, there are often many recommended services to fully control the condition and reduce the risk of complications,” Dr. Anton Dodek, chief medical officer at NHP, says in the blog. “For diabetes, these recommendations include an annual routine eye exam, diabetic education, and nutritional counseling. Each of these office visits typically require a co-payment from the member, and can create a barrier to receiving care.”

The program also offers “affordable alternatives to opioids for chronic pain.” For example, it waives cost-sharing for medication-assisted therapies (MAT), as well as expenses for recovery coaches. And it gives physicians the resources needed to “help determine if their patients would benefit from alternative pain management treatments, such as physical therapy/occupational therapy sessions, chiropractic visits, and acupuncture visits.”

“By eliminating cost sharing, we hope that members will be encouraged to work with their doctors to manage their conditions optimally and proactively, which will result in healthier outcomes in the long run,” Dr. Dodek says.

Neighborhood Health Plan’s approach is exactly the kind of approach that we need more of; by adjusting financial incentives for patients to choose the most “valued” care for their chronic conditions, this plan is moving beyond looking at short-term costs, and instead is looking at the big picture. By helping patients with what they value – lower costs and higher quality – the health plan is likely to improve health outcomes in the long term.

Value based payment is harder than it looks. These examples shed light on what doesn’t work, and what does. Policymakers need to both copy success, and halt failure if they want to bend the cost curve.