4 ways to cut spending on inappropriate health care

Unnecessary health care services represents 27.5 percent of the exorbitant costs of health care—$750 billion is spent annually on unnecessary or inefficient care. For employers looking to bring their health care spending into check, bringing these numbers down is a good place to start.

A recent webinar presented by Catalyst for Payment Reform tackled the issue of inappropriate care and strategies major employers are successfully using to combat the issue–and save money.

“This is a problem that’s not going to go away on its own,” noted Catalyst’s Suzanne Delbanco. “There’s a lot we need to put into place in terms of structure, process and even the right incentives.”

Related: 20 conditions top U.S. health care spending

Inappropriate care covers a variety of services, from unnecessary tests and surgeries to over-prescribing antibiotics to painkillers. One of the main problems, however, is that there’s no definite line that separates “appropriate” from “inappropriate” care–there’s a grey area that might be deemed appropriate in one case but not another. “Studying appropriateness is challenging: it refers to any individual patient, not the population,” Bob Berenson of the Urban Institute told the audience. “One needs a lot of clinical detail that isn’t available from administrative data such as claims.”

Berenson pointed to a long list of causes perpetuating the prevalence of inappropriate care, including fee-for-service payment models, defensive medical practices, cultural practices and even consumer marketing. Then, there’s the disconnect between the consumer and the entity ultimately responsible for paying the bill: “When somebody else is paying, both the doctor and patient may be less concerned about the cost,” Berenson said.

All of this points to a greater need for accountability on the part of providers, education on the part of consumers, greater price transparency and financial incentives. There are a variety of ways to approach these issues, and representatives from Walmart, Google, AT&T and Washington State Health Care Authority all shared ways their organizations are tackling inappropriate care.

1. Walmart sends employees to Centers of Excellence

One way to minimize spending on unnecessary or inappropriate care is to start with a provider that has a reputation of high value to begin with.

“We’re serving about a million plan participants on our health plan,” Lisa Woods, senior director health care benefits for Walmart said. “We talk a significant amount about appropriateness of care. For us, diagnosis has to be right and treatment plan has to be right.”

Walmart has created its own proprietary tool to identify what it considers Centers of Excellence based on a long list of factors. When an employee needs to have a procedure done, they’re encouraged to use a facility that meets the criteria. There’s a financial incentive, of course: If they opt for care at a COE, it will be 100 percent covered, but if they opt for their own provider, they have to pay a share.

“We have seen where associates who were told in their home community that they needed surgery and traveled to a COE, more than 50 percent were told they did not need surgery,” Woods said. “Making sure we get the diagnosis right is absolutely critical.”

2. Google’s focus on redirecting low-value services

While Walmart focused on high-dollar surgeries, Google is trying a strategy that is more in line with its company demographics—most are younger and healthy—and its own tech-savvy resources.

After realizing that its employees were averaging 10 office-visit claims each—compared to Anthem’s average of 6 for other companies—the company launched an initiative to encourage its employees to take advantage of higher-value but under-utilized programs like telemedicine, said Rob Paczkowski, calculating that redirecting 50 percent of visits could result in an 8 percent savings.

But how to get employees to change their behavior? The company changed how it communicated with employees about services, including allowing the health care vendors to message employees directly, sending out more-targeted communications, and, notably, using its own Google Assistant and Google Home hardware to help employees find care and answer questions.

“What we’ve been able to do, just in this 12 month period, is redirect 10,000 visits for a savings of $1.4 million,” Paczkowski said.

3. AT&T brings in expert second opinions

With misdiagnoses playing such a significant factor in health care waste, encouraging consumers to get a second opinion just seems like a no-brainer. Given the complexity of the health care system already, however, such a task is daunting and confusing for many consumers. That’s why AT&T decided to create a program that would make the process easier and ensure the second opinion was coming from a reputable expert.

Through the program, members are able to reach out privately to request an expert second opinion, granting access to his or her relevant medical information for a team to review. “Once all the data is gathered, the expert can start the review and provide a written report,” explained Cynthia Almanza, noting the process takes two to four weeks, depending on the complexity of the case.” From there, you can take the review and share it with your local physician and determine what is the best course of action.”

Since launching earlier this year, the program has provided 200 second opinions; diagnoses were revised in 30 percent of cases, and treatment plans adjusted in 70 percent. Notably, the most common second-opinions were related to back and spine issues, and the service saw the highest utilization among 55-64 age group, Almanza said.

4. Washington State Health Care Authority’s shared decision-making program

While health care spending is a significant aspect of business for the other companies represented in the webinar, for Washington State Health Care Authority, it is their business. It purchases health care on behalf of more than 2 million Washington residents representing Medicaid recipients, public employees and educational workers.

One strategy it has had success with in reducing health care waste is shared decision-making, which associate medical director Emily Transue explained is “a process in which clinicians and patients work together to make decisions and select tests, treatments and care plans based on clinical evidence.”

The collaborative approach not only reduces overutilization of health services but can also correct for under-utilization, Transue noted. “If you give patients the opportunity to really think about what’s worth it them and understand what they’re getting into, they will make appropriate choices.”

It sounds like a simple approach, but it requires a lot of rethinking and rewiring on the part of the provider. “If you walk into a group of physicians and ask if they do SDM, they all raise their hands, but you have to really delve into what it is before the light bulb goes off and they say, actually I haven’t really been doing that,” Transue said.

They worked with providers at three sites to implement a SDM approach for OB care for its public employees. They worked with providers to educate them in the principles of SDM and adjust their workflows accordingly, resulting in better, more-informed health care decisions for the patients involved.