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Washington Health Alliance Responds to Senate Call for Ways to Address Rising Health Care Costs

March 7, 2019

Via Email

The Honorable Lamar Alexander
455 Dirksen Senate Office Building
Washington, DC 20510

Dear Senator Alexander,

Thank you for the opportunity to provide recommendations to help reduce waste in our health care system. The Washington Health Alliance (Alliance) is pleased to respond to your call to action as we have spent far too long as a country watching health care costs skyrocket out of control without taking action on the question, “What can we do to stop it?” We are encouraged that you are asking for practical solutions to this complicated challenge.

As you may recall, as the Executive Director of the Washington Health Alliance, I testified before the Senate Committee on Health, Education, Labor, and Pensions (HELP) last September. The Alliance is a nonprofit organization in Washington state that has been laser-focused on the question of value in health care since 2005. We run a voluntary All-Payer Claims Database that collects data from 35 submitters, including Medicaid, commercial, and self-funded insurers representing over 4 million lives in our state.

As I previously testified, the Alliance brings together key stakeholders in our health care marketplace to work together—employers, union trusts, consumers, providers and insurance plans, representing a broad span of private organizations and government agencies—to drive change. More than 185 member organizations power the Alliance and we believe that everyone should have a voice at the table because that is how we are going to find solutions that work.

You asked for very pointed recommendations in priority order.

  1. Tackle the elimination of waste in health care by developing policies and payment schemes that discourage the use of low-value services and align incentives around high-value health care.

We are not surprised by Dr. Brent James’ assertion during the HELP Committee hearings last fall, that somewhere between 30 and 50 percent of all health care spending in the United States is unnecessary. Certainly our data confirm that Washington state is on this spectrum. When I spoke to you in September, I discussed the results of our First, Do No Harm report, documenting the specific types of services that are considered the most wasteful, from a small subset of health care services described by medical societies through the Choosing Wisely initiative as likely overused. In December 2018, we ran the numbers again, and results were very similar.

In our second report issued in December 2018, we looked at health care utilization and spending from July 1, 2016 to June 30, 2017. The report included 4,357,768 covered lives; 2,227,570 commercially-insured and 2,130,198 Medicaid insured individuals—more than half of our state’s population. To say that we found waste is an understatement. Of the 48 common treatments, tests and procedures identified as being overused by the national Choosing Wisely campaign, we found that of the 2,034,761 individuals who received services, just over 50 percent, 1,020,081 received low-value services, at an estimated cost of $341 million.

Of the ten most wasteful treatments in our analysis, there were three that have received attention in our state. The first is low value cardiac screening done annually among low-risk individuals.  In our study, we found that close to 180,000 individuals were given this screening at an estimated cost of $62 million. The second area of low-value care of note was imaging for eye disease in individuals without signs or symptoms of having significant eye disease. In this case, we found that about 95,000 individuals received this service at an estimated cost of $40 million. And the third low-value area is pre-operative lab studies prior to low-risk procedures for generally healthy individuals. In this case, we found that approximately 110,000 individuals had unnecessary lab work at an estimated cost of $74 million. Click on the link below to see the results for all ten areas of low-value care, with a comparison between the two time periods.

Calculating Health Care Waste Over Time

We believe the education of providers and consumers is a critical component to help address the issue of waste in health care. Unless consumers ask the question “Do I really need this treatment?” and providers ask “Is this care evidence-based and will it help this individual?”, we will continue to have unchecked treatments that cause us to waste valuable health care dollars. Patients put their trust in doctors and other caregivers. Doctors and patients must be encouraged to talk openly to one another about the appropriateness of health care and the cost of care prior to the service being rendered.

  1. Support and fund the efforts of Regional Health Improvement Collaboratives working to make health care information on cost, quality, and patient experience more transparent.

The balancing act to drive mutual accountability among diverse stakeholders demands effective relationships, candor, trust, and tenacity. It requires a clear understanding and an ability to demonstrate how involvement in the collective benefits each individual stakeholder group and, ultimately, the patient. And finally, it requires a neutral, objective third-party facilitator that has a “table” big enough to include all and a reputation that engenders trust when discussions are strained.

The Alliance fulfills this role in the state of Washington and we are not alone in our efforts. We are one of many Regional Health Improvement Collaboratives (RHICs) across the nation, all working towards the common goals of better health, better care, and lower costs. The Network for Regional Health Improvement (NRHI) represents more than 30 RHICs and state-affiliated partners hard at work in 32 states, including 14 states represented by senators on the HELP committee. Although each NRHI member does things a little differently due to differences in local demographics and market forces, skills and expertise, we are all deeply committed to the fact that the health care system is broken, that a multi-stakeholder approach is essential to affecting change, and that solutions must be data-driven.

Managing stakeholder accountability requires a careful balance—creating a vision for collaboration as well as bringing tension to bear so all organizations stay engaged to accomplish goals that support patients. Rather than starting from scratch, Congress should leverage existing networks that already have the trust and support of local stakeholders and who are already working to make care improvements. RHICs play an important role in working to implement transparency tools that are supported across a broad and diverse group of health care stakeholders. I would encourage you to support this model of collaboration in order to effect appropriate and sustainable change in the health care system and look at mechanisms to increase federal funding for these activities.

  1. Support federal measures to improve price transparency.

Health care is the only industry where the patient has no idea what they are going to pay until after the service is provided. At the supermarket, for example, a consumer can look on the shelf and see the range of options for peanut butter. Choices abound: crunchy; smooth; no salt; organic; non-GMO, with chocolate; with jelly; and more. But for some consumers, the most important factor is the price. And that is what is noticeably lacking in the current health care system. This must change.

The Alliance understands the importance of price variation and has taken critical steps to improve transparency. We analyzed the price of 171 common inpatient treatments for a one-year period (2016). Starting next week, Washington consumers will be able go to the Alliance’s Community Checkup website and not only see median prices for inpatient treatments across the state, but also see the variation that exists within facilities. When patients see the median price for a procedure and compare it to double, triple, or quadruple the cost at another facility, it will not only encourage them to make more informed choices, it will also encourage facilities to be more competitive, and purchasers to negotiate better prices in the benefit plans they design.

We are encouraged by the Centers for Medicare & Medicaid Services rule that went into effect on January 1, 2019 for hospitals to post prices online. Congress should encourage additional action to ensure that the information hospitals post is as intelligible and easy to understand by the public as possible—we find this not to be the case at the present time. We believe that public awareness of price variation is a critical component of reducing waste in the health care system and recommend that the Senate HELP committee consider more ways to increase price transparency across the nation.

I am heartened by your courage, Senator, in asking the nation to respond to this critical question, as we can no longer look past the magnitude of the problem. I hope that my comments provide you with some practical suggestions, but moreover, should the Alliance be of service in your efforts in any way, please do not hesitate to contact me.

Sincerely,

Nancy A. Giunto
Executive Director

Published: March 8, 2019

About Washington Health Alliance

The Washington Health Alliance is a place where stakeholders work collaboratively to transform Washington state’s health care system for the better. The Alliance brings together organizations that share a commitment to drive change in our health care system by offering a forum for critical conversation and aligned efforts by stakeholders: purchasers, providers, health plans, consumers and other health care partners. The Alliance believes strongly in transparency and offers trusted and credible reporting of progress on measures of health care quality and value. The Alliance is a nonpartisan 501(c)(3) nonprofit with more than 185 member organizations. A cornerstone of the Alliance's work is the Community Checkup, a report to the public comparing the performance of medical groups, hospitals and health plans and offering a community-level view on important measures of health care quality (www.wacommunitycheckup.org).

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