Improving Transparency in Health Care Costs

07 May 2014
The Institute of Medicine estimates that up to 30 percent of the $2 trillion in annual health care spending in the U.S. is duplicative or unnecessary. This includes spending on unproven treatments, ineffective drugs, and unnecessary hospitalizations that can be a burden to both the patient and the provider. Increasing prices for treatments and overall costs also have troublingly little relationship to good health care outcomes. Improving health care and reducing unnecessary treatments requires objective measurements of quality and costs.
Oregon Health Care Quality Corporation (Q Corp), leader of the Aligning Forces for Quality initiative in Oregon, is at the forefront of improving transparency in the costs of care. The goal is to analyze data about the costs of care to help identify methods for reducing costs and unnecessary care. As an initial step, Q Corp began measuring the costs and utilization of care for lower back pain. A study by Q Corp found that in 2011, Oregonians spent more than $11.5 million on treating lower back pain. With its partners, Q Corp then developed and launched an informational campaign to urge people with lower back pain to stay active and avoid unnecessary treatments.
Q Corp now is working on improving the quality and costs of maternity care, including a goal to reduce the overall rate of Cesarean sections in Oregon by two percent. In fall 2014, the March of Dimes and Q Corp launched the Oregon Perinatal Collaborative Subcommittee on Data for Measurement and Improvement. The subcommittee’s members include policymakers, payers, hospitals, employers, consumers, and public health officials and meets monthly. “We are developing a statewide data center with information about the quality and utilization of maternity care in Oregon,” said Meredith Roberts Tomasi, program director with Q Corp. “Once we have measures and the data center, we can look for payment reform opportunities, which will help improve quality and affordability.”
As an additional development under its cost of care program, Q Corp was chosen by the Network for Regional Healthcare Improvement (NRHI) as one of five communities to develop total cost of care and total resource use reports. This program, called the Healthcare Cost Measurement and Transparency Project, seeks to break new ground by producing health care cost information and benchmarks. This information will allow communities to better understand health care cost variation across their own regions and provider groups, and also make comparisons on cost to other regions across the country. The five different communities have to “make sure they’re comparing apples to apples in terms of cost,” said Roberts Tomasi. It’s a formidable task to ensure that the cost information being compared aligns. This can mean using cost data around four diagnosis codes used in Oregon for a particular illness, rather than the 10 diagnosis codes used for the same illness elsewhere in the country.
The NRHI project seeks to demonstrate whether this type of project can be done, starting with the initial five communities that include Q Corp. The clear answer so far is yes, according to Elizabeth Mitchell, President and CEO of NRHI. “Challenges can be overcome by prioritization and consensus. This project is highlighting the importance of leadership in driving standardization of measures, a forum where agreement can be reached to create benchmarks.”
The Healthcare Cost Measurement and Transparency Project is hoping to identify the drivers of regional health care costs and develop strategies to reduce spending at the community level. The second step is to get physicians involved so the cost saving strategies are understood and adopted in communities. A physician leadership seminar will be held to help facilitate this work.
“This project has a great deal of national significance, and we’re really excited about it,” said Roberts Tomasi. “We’re looking at this project as a way to bring together parties that haven’t worked together in a transparent way, with a goal of improving the quality of care and decreasing costs.”
“This work highlights the importance of Regional Health Improvement Collaboratives (RHICs). They are uniquely positioned with expertise, data access, skill at analytics, and multi-stakeholder relationships in their communities,” said Mitchell. “Q Corp and other Collaboratives are producing data and developing strategies to use the data to identify ways of reducing health care costs.