Will Ceiling On Growth Of Health Care Costs Hurt Care?

Hospital Good Sam nurses in scrubs.jpg

Developing a plan to curb the runaway cost of health care in Oregon is tough enough. The task becomes thornier if providers and insurers are not allowed to reduce the quality of care in order to control costs. And even more complexity is added if the plan must also meet state directives on reducing inequities in health care. 

Yet these are the challenges facing the Oregon Health Authority and its Sustainable Health Care Cost Growth Target Implementation Committee.

The elaborate cost-cap system being developed by the panel aims to cut the state’s overall annual per-capita increase in health care spending by half, limiting it to 3.4%.

Health care insurance companies and several thousand large and medium-sized Oregon medical entities, from hospitals to primary care practices, will need to meet the caps or face as-yet unspecified consequences. The plan – the enforcement component of which still needs legislative approval – would let insurers or providers exceed the cap if they had valid reasons.

But at its most recent meeting, the committee focused on the possibility that some providers or insurers may try to meet the cap by cutting their spending in ways that would hurt the quality of care. Examples could be a provider cutting evening, weekend or holiday hours, or reducing preventive care, said Michael Bailit, a Massachusetts consultant hired by the Oregon Health Authority to advise the committee.

“Clearly there is at least the potential that both providers and (insurers) could take action to impede access to needed care, to meet the cost growth target,” Bailit told the committee.

Evening or weekend hours “are times when a provider could stint on care,” he said.

Insurers, meanwhile, could cut their costs by restricting or reducing benefits, according to Bailit’s slideshow presentation to the panel.

One way to combat this is for the state to develop quality measures that providers and insurers would have to meet, Bailit told the committee. Bailit suggested such measures could include asking patients how often they were able to see a provider on evenings, weekends of holidays; whether certain preventive care measures, such as cancer screening, were being provided; how readily children and adolescents were getting access to their primary care providers; and how often mental health services were being used.

But one board member said the cost-growth cap system also needs to protect lower-paid medical care workers from bearing the brunt of cost curbs.

“There should be monitoring of the workforce as well,” said committee member Felisa Hagins, policy director for SEIU Local 49, a labor union that represents thousands of clerical, technical, janitorial and other workers at hospitals statewide. “If we’re just cutting wages and benefits for the lowest-paid workers to try to move this (cost growth) needle, or dialing back on staffing which could hurt quality, some sort of monitoring of the working conditions of health care workers” is needed, she said.

Her comment pointed to the crux of the matter: Where exactly are providers and insurers supposed to cut expenses in order to slow the rapid rise in health care spending? 

There’s little agreement among experts. Observers point to insurance bureaucracies, unnecessary medical procedures, high drug costs, high salaries for health care executives and other factors as culprits in the ever-rising cost of health care.

To tackle this issue, the committee asked Oregon Health Authority staff to work with another state panel, the Health Plan Quality Metrics Committee, to firm up a list of quality measures aimed at preventing providers from skimping on services.

The committee also grappled with how the cost-curbing system could improve “equity” for minority or disadvantaged populations, or at least not hurt them.

The state and other groups measure the quality of health care services in Oregon, but few of the measures specifically examine equity, Bailit said. Information on the “race, ethnicity, language and disability status” of patients typically is not collected, or is collected in different ways by different providers, he said. 

Committee member Kevin Ewanchyna, a doctor at the Corvallis-based Samaritan Health Services system, agreed. For providers to improve services to people based on race, ethnicity and disability, that information needs to be in the electronic medical records that providers use, he said.

The group directed staff and Bailit to continue working on the issue.

The committee’s next meeting is Nov. 24.

The panel aims to have a finalized plan in place for the next regular legislative session next year.

You can reach Christian Wihtol at [email protected].


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Most hospitals and some providers do now provide cost reports.  Most also provide outcomes and other reports that bear a relationship to quality.  For instance, reports on readmission rates which are an indicator of outcomes can be useful.  I would lean to using existing reports to initially construct some of the measures as a starting point.

I also would focus on hospitals and higher cost procedures initially - controlling costs related to surgeries can do more than focusing on the lower cost procedures. For instance, look at what a hospital charges for an IV bag - which will often have a few very low cost components but the hospital unbundles the components and charges separately you will see bags that "cost" perhaps $10 billed at $400 to $500.  Control those things. If the goal is to keep overall cost inflation down, start with the most expensive areas first. That will generally protect the lower paid workforce, too.  Asking me about access on an evening or a weekend may be an interesting question and answer exercise - but won't help all that much in cost control and quality.



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