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Focus on value may help contain health care costs


CHICAGO — As health care costs continue to soar, key health industry stakeholders, including employers, must change the way health services are paid for to focus on quality of care while discouraging waste and overuse, said John Rother, president and CEO of the Washington-based National Coalition on Health Care.

“Health care inflation is again significantly above general inflation, and we are back to a crisis in terms of keeping health care affordable,” Mr. Rother said.

Fragmented health care, misaligned health care incentives, an aging population, growth in the number of people with health insurance, and the widespread prevalence of “lifestyle diseases,” around smoking, lack of exercise and poor diet, are all driving up health care spending, he said.

U.S. spending on health care hit $3.0 trillion in 2014, or $9,523 per person, according to the U.S. Centers for Medicare and Medicaid Services.

And employer-sponsored health premiums for individual coverage grew 60% from 2003 to 2013, to an average of $5,571 from $3,481, according to the Commonwealth Fund.

But, “There is a way forward that does not include paying more and does not include more restrictive benefits, and that is focusing on waste and overuse,” Mr. Rother said Thursday at the Midwest Business Group on Health's 36th annual conference in Chicago.

“It's based on changing incentives and aligning financial incentives across the entire system” of health care providers, payers and patients, and “promoting higher-value care and, on the other end of it, discouraging low-value care. To me, that's the only way forward that's going to be socially acceptable,” he said.

Now, U.S. health care is largely based on a system of paying a fee for a service, not on the quality of that service.

Accountable care organizations, patient-centered medical homes and bundled payments are examples of shifting incentives to focus on high-value care.

But employers can do more within their own health benefit design, Mr. Rother said.

“Employers do control often control the benefit design, and so making high value services or screening and prevention essentially free, and then perhaps focusing cost-sharing on those services that are of questionable value” are key strategies to save costs, he said in an interview following his presentation.

“You are trying to change behavior, so it's not just a set of scheduled benefits that applies across the board, but it's the recognition that some elements of health care are much higher value than others, and that the benefit should recognize that.”

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