Colorado Medical Society

http://www.cms.org/articles/report-states-must-act-to-reduce-cost-of-health-care/

Cracking the code on health care costs

Wednesday, January 01, 2014 11:13 AM

Report: States must act to reduce cost of health care

Kate Alfano, CMS contributing writer

The Miller Center at the University of Virginia has unveiled a new report, “Cracking the Code on Health Care Costs,” which challenges states to take action to reduce health care costs. The report represents two years of work by the bipartisan State Health Care Cost Containment Commission, co-chaired by Bill Ritter Jr., former Colorado governor, and Mike Leavitt, former Utah governor and secretary of the U.S. Department of Health and Human Services. Its membership also included other leaders from government, insurance plans, hospitals, physician groups and consumer advocates.

It is well known that health care access, quality and cost have been the focus of the nation’s public policy discussion for the past two decades. The authors contend that the next few years will prove especially crucial with the implementation of the Affordable Care Act. They wrote that health care reform is still in its infancy and that “we must go through a period of accelerated state experimentation” to determine what works.

“States need to lead this effort, because they have most of the policy levers and because reform must be tailored to the unique culture and health care market in each state,” wrote Raymond Scheppach, project director. “The federal government can support the states, but the leadership needs to start with governors, legislators, and other health care stakeholders and be adopted at the grass-roots level, where health care is delivered by individual clinics, hospitals, and physicians across the state.”

The “policy levers” the authors said states can use to influence costs include government-sponsored health care programs and health insurance exchanges; state laws governing insurance, scope of practice, provider rates and medical malpractice; state laws promoting transparency of price and quality; policies guiding schools and public health; and the power of the governor to engage stakeholders in public policy issues.

The commission’s ultimate goal is to replace the current fee-for-service system with comprehensive, coordinated care using payment models that encourage cost control and quality gains. The federal government can take a supportive role by encouraging the use of accountable care organizations in Medicare and reviewing and modifying regulations to strengthen states as they strive for higher-quality, cost-effective care. In turn, states can achieve meaningful reforms and create incentives with the support of payers, providers, insurers and consumers, the authors wrote.

They present the following seven recommendations for states.

  1. Create an alliance of stakeholders – government, purchasers, the medical community and others – to transform the health care system.
  2. Define and collect data to fully understand the state’s health care spending, quality-tracking process and health care infrastructure.
  3. Establish statewide baselines and goals for health care spending, quality and other measures.
  4. Use existing health care spending programs – such as Medicaid, the state employee health program and health insurance exchanges – to accelerate the trend toward coordinated, risk-based care.
  5. Encourage consumer selection of high-value care based on cost and quality data by increasing transparency, and promote market competition.
  6. Reform health care regulations to promote system efficiency. This includes streamlining state requirements and mandates, modifying the medical malpractice policies that have substantial direct and indirect costs to the system, and supporting policies to expand the scope of practice of non-physicians and allow them to bill independently.
  7. Help promote better population health and personal responsibility in health care.

“The strategies proposed in this report largely rely on transparency, purchasing power, payer and provider cooperation, persuasion, and ‘soft’ regulatory pressure to spur the transition to more efficient, quality care.” And while reform will take time, the commission urges states to act now to ensure they enjoy future benefits to individuals, families, businesses and governments, and avoid economic catastrophe.