Cost effective v. cost saving

Jeff Levin-Scherz nicely demonstrates that cost effective is not the same thing as cost saving, using the example of statins and their decrease in heart disease mortality risk.

Statins are enormously effective drugs that, along with a decrease in cigarette smoking, have been responsible for a huge decrease in the incidence of cardiac death, especially in young men….Simvastatin has been a generic medication for a few years, and atorvastatin (Lipitor) is going generic this coming month. Have we finally reached a point where the use of statins is not merely cost-effective, but is actually cost-saving?

In short, no.

We don’t save money by using even generic statins for primary prevention of heart of vascular disease.   We only gain good health outcomes for a reasonable cost — which doesn’t seem to me to be a bad outcome at all.

We need to learn to ask whether the use of all therapies are worth it, and we also need for the differences between the terms cost effective and cost saving to become more widely known in our culture, and not merely by technical experts. That is part of what it will mean to develop a sustainable health care system–one in which we can look at the benefits and costs rationally, and decide whether what we are doing is worth it.

Update: I had forgotten about this TIE post from Austin ~ 6 weeks back that is relevant.

Improving Medicare Coverage Policy

The Urban Institute and the Robert Wood Johnson Foundation have a new policy brief (summary) on Medicare enhancing the quality and efficiency of the program by improving its coverage policy (what care and services are covered for beneficiaries).

This is in keeping with Medicare’s programmatic “triple aims” they note:

  • improve patients’ experience of care
  • improve population health
  • reduce the rate of increase in per capita costs

Medicare has a mostly passive coverage policy, and the brief notes that much could be done to change this within existing authority. Since its creation, Medicare has been authorized to cover and pay for:

…services that are reasonable and necessary for diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member

In practice, coverage decisions are typically deferred to patients and physicians with regional claims processing contractors approving care; however, these processors are mostly judged on efficiency and speed of processing claims and remitting payment to providers. There are some Medicare-wide coverage decisions made, called National Coverage Determinations (NCD) but these are rare, and inconsistent in the sense that it is often unclear why a NCD is issued in one area but not in another. This leads to:

The coverage process as currently applied does not prevent ineffective, unproven and/or harmful technologies from widespread adoption in Medicare, fails to identify and promote broad use of effective and high-value services…

The brief provides five recommendations to improve this situation:

  • Strengthening the evidence base and putting it to use in coverage policy, including extensive use of so-called “coverage with conditions” that would expand the available evidence-base
  • Increasing the use of comparative effectiveness research
  • Improving consistency in coverage policy
  • Explicitly considering costs in coverage policy
  • Adopting a general strategy of “least costly alternative” pricing/payment/coverage in specific clinical circumstances

I wrote yesterday that we need to make Medicare a more active purchaser of health care, and this brief lays out practical ways to move in that direction. In perhaps the understatement of the year, the authors (all former CMS officials) note the barriers:

Even when CMS has strong, scientific evidence that casts doubt on whether a technology or service effectively improves patient health and well-being, progress has stalled, in part because of a political environment in which evidence-based policy-making meets strong resistance from affected stakeholders


When did the IPAB become so controversial?

Sometime after May 20, 2009, the day that Rep. Paul Ryan (R-WI) introduced The Patients’ Choice Act (PCA) into the 111th Congress (along with co-sponsors Devin Nunes, and Sens. Tom Coburn and Richard Burr). The PCA proposed changing the tax treatment of private health insurance and providing everyone with a refundable tax credit with which to purchase insurance in exchanges. However, it is less widely understood that the PCA also proposed two governmental bodies to broadly apply cost effectiveness research in order to develop guidelines to govern the practice of, and payment for, medical care. The bodies proposed in the PCA had more teeth, including provisions to allow for penalties for physicians who did not follow the guidelines, than does the Independent Payment Advisory Board (IPAB) that was passed as part of the Affordable Care Act.

Rep. Ryan did not include such provisions in his budget plan unveiled earlier this Spring, and he has recently been a vocal critic of the IPAB. For example, on May 11, 2011, he tweeted from @RepPaulRyan the following:

Repeal POTUS rationing board for current seniors, ensure NO CHANGES for those 55+, save Medicare for next generation: and included a link to this video (his comment about repealing the ‘rationing board’ or IPAB is at the 3:58 mark of the video).

Rep. Ryan has undergone quite a change of heart from May 2009 to May 2011. Don’t take my word for it, lets look at the details of the PCA that he co-sponsored in May, 2009.

Title VIII of the PCA created two boards: a Health Services Commission, and a Quality Forum. Following are key portions of the bill text with line numbers removed (but the full section is relatively short pp. 205-216, so you can read the entire section for yourself in just a few minutes):

Purpose, sec. 801 (b), p. 207
(b) PURPOSE.—The purpose of the Commission is to enhance the quality, appropriateness, and effectiveness of health care services, and access to such services, through the establishment of a broad base of scientific research and through the promotion of improvements in clinical practice and in the organization, financing, and delivery of health care services.Duties, sec. 802 (a), p. 207-08
(a) IN GENERAL.—In carrying out section 801(b), the Commissioners shall conduct and support research, demonstration projects, evaluations, training, guideline development, and the dissemination of information, on health care services and on systems for the delivery of such services, including activities with respect to—(1) the effectiveness, efficiency, and quality of health care services; (2) the outcomes of health care services and procedures; (3) clinical practice, including primary care and practice-oriented research; (4) health care technologies, facilities, and equipment; (5) health care costs, productivity, and market forces; (6) health promotion and disease prevention; (7) health statistics and epidemiology; and (8) medical liability.

The Act also proposed, under subtitle B, a sub-unit of the Health Services Commission, a 15 member Forum for Quality and Effectiveness in Health Care.

Membership, sec. 812, p. 210-11
(a) IN GENERAL.—The Office of the Forum for Quality and Effectiveness in Health Care shall be composed of 15 individuals nominated by private sector health care organizations and appointed by the Commission and shall include representation from at least the following: (1) Health insurance industry. (2) Health care provider groups. (3) Non-profit organizations. (4) Rural health organizations.

Duties of the Forum, sec. 813, p. 211-12

(a) ESTABLISHMENT OF FORUM PROGRAM.—The Commissioners, acting through the Director, shall establish a program to be known as the Forum for Quality and Effectiveness in Health Care. For the purpose of promoting transparency in price, quality, appropriateness, and effectiveness of health care, the Director, using the process set forth in section 814, shall arrange for the development and periodic review and updating of standards of quality, performance measures, and medical review criteria through which health care providers and other appropriate entities may assess or review the provision of healthcare and assure the quality of such care.

When Boards will bring about guidelines, p. 213

(e) DATE CERTAIN FOR INITIAL GUIDELINES AND  STANDARDS.—The Commissioners, by not later than January 1, 2012, shall assure the development of an initial set of guidelines, standards, performance measures, and review criteria under subsection (a).

Enforcement Standards, sec. 814, p. 213-214

(b) ENFORCEMENT AUTHORITY.—The Commissioners, in consultation with the Secretary of Health and Human Services, have the authority to make recommendations to the Secretary to enforce compliance of health care providers with the guidelines, standards, performance measures, and review criteria adopted under subsection(a). Such recommendations may include the following, with respect to a health care provider who is not in compliance with such guidelines, standards, measures, and criteria: (1) Exclusion from participation in Federal health care programs (as defined in section 1128B(f) of the Social Security Act (42 U.S.C.1320a–7b(f))).(2) Imposition of a civil money penalty on such provider. [emphasis mine]

I think the policy proposed by Rep. Ryan and his co-sponsors was quite good, as I wrote on July 24, 2009.

The most intriguing aspect of the Act is the creation of a Health Services Commission….A systematic look at the Medicare program (treatment coverage decisions, payment approaches, quality improvement strategies) that was insulated from Congress in a manner similar to the military base-closing commission would be a good first step toward addressing cost inflation in Medicare in a comprehensive and reasoned manner. Lessons learned from Medicare could then be applied more broadly to the health system.

Any such effort will undoubtedly be called rationing by those wanting to kill it, and quality improvement and cost-effectiveness by those arguing for it. Whatever we call it, we must begin to look at inflation in the health care system generally and in Medicare in particular.

Obviously Rep. Ryan can change his mind, and seems to have done so. However, going from proposing what could be thought of as IPAB-on-steroids to deriding the general approach as rationing-that-is-harmful is quite a big change. What happened to change Rep. Ryan’s mind?