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10 Transparency of Cost and Performance
Pages 335-358

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From page 335...
... on health plans' quality transparency and Aetna's Aexcel initiative on transparency of providers' clinical quality and cost efficiency, attempts to bridge the gaps in information asymmetry have accelerated. Transparency -- of the costs, prices, quality, and effectiveness of medical services and products -- has been identified as a key tool to lower costs and improve outcomes (Fung et al., 2008; Mongan et al., 2008; Shea et al., 2007)
From page 336...
... In a system where consumers feel little impact from variations in pricing because of insurance coverage, for instance, Ginsburg states that the impact of price transparency is significantly mitigated, barring fundamental change to the healthcare market. However, he suggests that quality transparency provides a better tool for engaging providers and informing consumer choices.
From page 337...
... Describing transparency as a major enabler of the value agenda, she outlines a set of policy initiatives to complement the transparency agenda that will optimize quality improvements and address costs. TRANSPARENCY IN THE COST OF CARE John Santa, M.D., M.P.H.
From page 338...
... As costs increase, market proponents should insist that consumers have access to comparative information, the price and cost of the products or services compared, and an analysis of the possible scenarios relevant to their purchasing decision. Multiple third parties are involved in the American healthcare system that influences the purchasing process.
From page 339...
... The Agenda Ahead A serious commitment to transparency means that we will strive to provide consumers with a comprehensive price and cost analysis, including effectiveness, adverse events, administration, and the impact of individual preferences related to convenience and access. Comprehensive price transparency may seem difficult to do but multiple innovations suggest otherwise.
From page 340...
... However, neither comparative effectiveness research nor price transparency alone provide sufficient information to optimize healthcare resource allocation. The only way to systematically reduce costs without reducing health -- at the societal or population level -- is to reallocate healthcare resources from healthcare services that are less cost-effective to those that are more cost-effective.
From page 341...
... If one were to base decisions concerning the allocation of healthcare resources -- even partially -- on cost-effectiveness, any and all cost drivers could be targeted. Of course, this would depend on the availability of data to inform decision making, but there are numerous examples where rigorously conducted CEA has already been used to support the adoption of cost-effective healthcare services and/or to influence guidelines concerning their use.
From page 342...
... In addition to the formal CEAs cited above, recent efforts by the Institute for Clinical and Economic Review of the Massachusetts General Hospital Institute for Technology Assessment provides an example of how information on the comparative value of healthcare services can be used to influence coverage and reimbursement policy. The institute's approach is to combine comprehensive review of the medical literature, targeted formal CEA, and input from an expert review group composed of relevant stakeholders to provide an assessment of the comparative effectiveness and value of specific healthcare services.
From page 343...
... In the longer term, given sufficient attention to addressing the challenges in the preceding paragraph, virtually all healthcare resource allocation decisions could be guided by CEA. Even if factors other than the ICERs of specific healthcare services were allowed to influence coverage and reimbursement policy, such an approach has the potential to curtail spending growth or reduce costs without reducing the health of the population.
From page 344...
... Price Transparency: A Limited Approach Consumer responsiveness to price requires price data that are meaningful to them. For example, when consumers need to have a problem addressed, they have more interest in what the episode of care will cost them than in the prices of individual services that make up the episode.
From page 345...
... This is a major shortcoming of government price transparency initiatives, which do not reflect what insured patients will have to pay. Insurers have the potential to play a valuable intermediary function, since they can present information to their enrollees that reflects not only the benefit structure of their plan but prices that the insurer has negotiated with providers (for care delivered by network providers)
From page 346...
... Quality Transparency: The Harder Hitting Strategy Transparency initiatives focused on quality transparency may in fact be more successful in the nearer term than the price transparency just discussed. Unlike price transparency, where there are formidable obstacles to price data affecting consumer choice, data on quality of providers has a much clearer path to consumer decision making.
From page 347...
... Tufts University School of Medicine Spending on hospital care consumes roughly $700 billion each year in the United States, approximately 32 percent of the national healthcare budget, and it is increasing 7 percent annually, nearly twice the overall rate of inflation (Hartman et al., 2009)
From page 348...
... Second is the change pathway. The release of performance data catalyzes improvement efforts at hospitals by appealing to the professionalism of physicians and nurses and the desire of senior hospital leaders to preserve or enhance the hospital's reputation and market share.
From page 349...
... . In a study which sought to determine the effects of the New York State Cardiac Surgery Reporting System, Peterson reported that 30-day mortality following coronary bypass surgery declined 33 percent between 1987 and 1992, while over the same time period national mortality rates declined by only 19 percent (Peterson et al., 1998)
From page 350...
... Extrapolating from the benefits of the New York State Cardiac Surgery Reporting System, and relying on data from the Medicare Payment Advisory Commission, Centers for Disease Control and Prevention (CDC) , and the Agency for Healthcare Research and Quality on the costs and preventability of these complications, transparency could in theory result in as
From page 351...
... and the 9.6 percent reduction in healthcare-associated infection rates in Pennsylvania between 2006 and 2007 in the setting of public reporting (Pennsylvania Health Care Cost Containment Council, 2009)
From page 352...
... We will need to broaden and strengthen readmission, complication, and healthcare-associated infection reporting requirements, necessitating an investment in measure development and risk adjustment methodologies, improvements in documentation and coding, standardization of reporting, and tighter linkage to payment. Further, given that awareness and trust of public reporting sites is still low, those leading reporting initiatives must make an even greater effort to engage patients in using performance data -- through advertising, better Web design, and the incorporation of social networking features into the Web sites.
From page 353...
... Finally, many health plans have been ambivalent about their role in quality. It is fair to say that transparency has had little to no effect on health insurance cost trends and the overall performance of plans for several reasons.
From page 354...
... Transparency is a major enabler of the value agenda, but it needs to be accompanied by other reforms in order to optimize quality improvement and address costs. A value agenda must motivate significant action among health plans, hospitals, and other institutional providers, physicians, and consumers.
From page 355...
... 2007. Does price transparency improve market efficiency?
From page 356...
... Informed medical decisions. http://www.informedmedical decisions.org/ (accessed July 31, 2009)
From page 357...
... National Committee for Quality Assurance. Pennsylvania Health Care Cost Containment Council.
From page 358...
... Health Affairs (Millwood)


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