Limited options to manage specialty drug spending.

Spending on specialty drugs--typically high-cost biologic medications to treat complex medical conditions--is growing at a high rate and represents an increasing share of U.S. pharmaceutical spending and overall health spending. Absence of generic substitutes, or even brand-name therapeutic equivalents in many cases, gives drug manufacturers near-monopoly pricing power and makes conventional tools of benefit design and utilization management less effective, according to a new qualitative study from the Center for Studying Health System Change (HSC). Despite the dearth of substitutes, cost pressures have prompted some employers to increase patient cost sharing for specialty drugs. Some believe this is counter-productive, since it can expose patients to large financial obligations and may reduce patient adherence, which in turn may lead to higher costs. Utilization management has focused on prior authorization and quantity limits, rather than step-therapy approaches--where lower-cost options must first be tried--that are prevalent with conventional drugs. Unlike conventional drugs, a substantial share of specialty drugs--typically clinician-administered drugs--are covered under the medical benefit rather than the pharmacy benefit. The challenges of such coverage--high drug mark-ups by physicians, less utilization data, less control for health plans and employers--have led to attempts to integrate medical and pharmacy benefits, but such efforts are still in early development. Health plans are experimenting with a range of innovations to control spending, but the most meaningful, wide-ranging innovations may not be feasible until substitutes, such as biosimilars, become widely available, which for many specialty drugs will not occur for many years.

Surprising decline in consumers seeking health information.

In 2010, 50 percent of American adults sought information about a personal health concern, down from 56 percent in 2007, according to a new national study from the Center for Studying Health System Change (HSC). The likelihood of people seeking information from the Internet and from friends and relatives changed little between 2007 and 2010, but their use of hardcopy books, magazines and newspapers dropped by nearly half to 18 percent. While the reduced tendency to seek health information applied to consumers across nearly all demographic categories, it was most pronounced for older Americans, people with chronic conditions and people with lower-education levels. Across all individual characteristics, education level remained the factor most strongly associated with con­sumers' inclination to seek health information. Consumers who actively researched health concerns widely reported positive impacts: About three in five said the information affected their overall approach to maintaining their health, and a similar proportion said the information helped them to better understand how to treat an illness or condition.

Employer-sponsored health insurance: down but not out.

Rising costs and the lingering fallout from the great recession are altering the calculus of employer approaches to offering health benefits, according to findings from the Center for Studying Health System Change's (HSC) 2010 site visits to 12 nationally representative metropolitan communities. Employers responded to the economic downturn by continuing to shift health care costs to employees, with the trend more pronounced in small, mid-sized and low-wage firms. At the same time, employers and health plans are dissatisfied and frustrated with their inability to influence medical cost trends by controlling utilization or negotiating more-favorable provider contracts. In an alternative attempt to control costs, employers increasingly are turning to wellness programs, although the payoff remains unclear. Employer uncertainty about how national reform will affect their health benefits programs suggests they are likely to continue their current course in the near term. Looking toward 2014 when many reform provisions take effect, employer responses likely will vary across communities, reflecting differences in state approaches to reform implementation, such as insurance exchange design, and local labor market conditions.

Key findings from HSC's 2010 site visits: health care markets weather economic downturn, brace for health reform.

Lingering fallout--loss of jobs and employer coverage--from the great recession slowed demand for health care services but did little to slow aggressive competition by dominant hospital systems for well-insured patients, according to key findings from the Center for Studying Health System Change's (HSC) 2010 site visits to 12 nationally representative metropolitan communities. Hospitals with significant market clout continued to command high payment rate increases from private insurers, and tighter hospital-physician alignment heightened concerns about growing provider market power. High and rising premiums led to increasing employer adoption of consumer-driven health plans and continued increases in patient cost sharing, but the broader movement to educate and engage consumers in care decisions did not keep pace. State and local budget deficits led to some funding cuts for safety net providers, but an influx of federal stimulus funds increased support to community health centers and shored up Medicaid programs, allowing many people who lost private insurance because of job losses to remain covered. Hospitals, physicians and insurers generally viewed health reform coverage expansions favorably, but all worried about protecting revenues as reform requirements phase in.

Workplace clinics: a sign of growing employer interest in wellness.

Interest in workplace clinics has intensified in recent years, with employers moving well beyond traditional niches of occupational health and minor acute care to offering clinics that provide a full range of wellness and primary care services. Employers view workplace clinics as a tool to contain medical costs, boost productivity and enhance companies' reputations as employers of choice. The potential for clinics to transform primary care delivery through the trusted clinician model holds promise, according to experts interviewed for a new qualitative research study from the Center for Studying Health System Change (HSC). Achieving that model is dependent on gaining employee trust in the clinic, as well as the ability to recruit and retain clinicians with the right qualities--a particular challenge in communities with provider shortages. Even when clinic operations are outsourced to vendors, initial employer involvement--including the identification of the appropriate scope and scale of clinic services--and sustained employer attention over time are critical to clinic success. Measuring the impact of clinics is difficult, and credible evidence on return on investment (ROI) varies widely, with very high ROI claims made by some vendors lacking credibility. While well-designed, well-implemented workplace clinics are likely to achieve positive returns over the long term, expecting clinics to be a game changer in bending the overall health care cost curve may be unrealistic.

Impact of health care price transparency on price variation: the New Hampshire experience.

Price variation for medical procedures performed in both hospital outpatient departments and freestanding facilities has not decreased in New Hampshire since the state launched the HealthCost price transparency program in early 2007, according to new research jointly conducted by the New Hampshire Insurance Department and the Center for Studying Health System Change (HSC). New Hampshire stakeholders cited weak provider competition as the key reason for lack of impact. The state's hospital market is geographically segmented in rural areas and has few competitors even in urban areas. In addition, few consumers have strong incentives to shop based on price: Only 5 percent of the state's privately insured residents were enrolled in high-deductible plans in 2007. However, some observers suggested that HealthCost--along with other state price transparency initiatives--has helped to focus employer and policy maker attention on provider price differences and has caused some hospitals to moderate their demands for rate increases.

Designing effective health care quality transparency initiatives.

Among the many health care quality transparency initiatives introduced in recent years, two state-based programs stand out for thoughtful design, implementation and usable, useful data: CalHospitalCompare, a report card for California hospitals, and Massachusetts Health Quality Partners, a report card for Massachusetts primary care physician groups. According to a new Center for Studying Health System Change (HSC) analysis, both programs share key elements that contribute to their effectiveness: engaging and collaborating with the provider community from the outset; paying particular attention to the caliber of the quality data reported; presenting the quality data to consumers in formats that are easy to understand and remember; and providing hospitals and physicians with detailed information on their own performance. Quality transparency initiatives that do not focus sufficiently on these key design and implementation elements are unlikely to influence quality improvement in a meaningful way.

Financial and health burdens of chronic conditions grow.

Almost 72 million working-age Americans--18-64 years old--live with chronic conditions, such as diabetes, asthma or depression. In 2007, almost three in 10, or more than 20 million people with chronic conditions, lived in families with problems paying medical bills--a significant increase from 21 percent in 2003, according to a new national study by the Center for Studying Health System Change (HSC). While problems paying medical bills are especially acute and still rising for uninsured people with chronic conditions (62%), medical-bill problems also are significant and growing among people with private insurance and higher incomes. For the more than 20 million chronically ill adults with medical bill problems in 2007, one in four went without needed medical care, half put off care and more than half went without a prescription medication because of cost concerns.

Word of mouth and physician referrals still drive health care provider choice.

Sponsors of health care price and quality transparency initiatives often identify all consumers as their target audiences, but the true audiences for these programs are much more limited. In 2007, only 11 percent of American adults looked for a new primary care physician, 28 percent needed a new specialist physician and 16 percent underwent a medical procedure at a new facility, according to a new national study by the Center for Studying Health System Change (HSC). Among consumers who found a new provider, few engaged in active shopping or considered price or quality information--especially when choosing specialists or facilities for medical procedures. When selecting new primary care physicians, half of all consumers relied on word-of-mouth recommendations from friends and relatives, but many also used doctor recommendations (38%) and health plan information (35%), and nearly two in five used multiple information sources when choosing a primary care physician. However, when choosing specialists and facilities for medical procedures, most consumers relied exclusively on physician referrals. Use of online provider information was low, ranging from 3 percent for consumers undergoing procedures to 7 percent for consumers choosing new specialists to 11 percent for consumers choosing new primary care physicians

Striking jump in consumers seeking health care information.

In 2007, 56 percent of American adults--more than 122 million people--sought information about a personal health concern, up from 38 percent in 2001, according to a new national study by the Center for Studying Health System Change (HSC). Use of all information sources rose substantially, with the Internet leading the way: Internet information seeking doubled to 32 percent during the six-year period. Consumers across all categories of age, education, income, race/ethnicity and health status increased their information seeking significantly, but education level remained the key factor in explaining how likely people are to seek health information. Although elderly Americans--65 and older--sharply increased their information seeking, they still trail younger Americans by a substantial margin, especially in using Internet information sources. Consumers who actively researched health concerns widely reported positive impacts: More than half said the information changed their overall approach to maintaining their health, and four in five said that the information helped them to better understand how to treat an illness or condition.

State prescription drug price Web sites: how useful to consumers?

To aid consumers in comparing prescription drug costs, many states have launched Web sites to publish drug prices offered by local retail pharmacies. The current push to make retail pharmacy prices accessible to consumers is part of a much broader movement to increase price transparency throughout the health-care sector. Efforts to encourage price-based shopping for hospital and physician services have encountered widespread concerns, both on grounds that prices for complex services are difficult to measure and compare accurately and that quality varies substantially across providers. Experts agree, however, that prescription drugs are much easier to shop for than other, more complex health services. However, extensive gaps in available price information--the result of relying on Medicaid data--seriously hamper the effectiveness of state drug price-comparison Web sites, according to a new study by the Center for Studying Health System Change (HSC). An alternative approach--requiring pharmacies to submit price lists to the states--would improve the usefulness of price information, but pharmacies typically oppose such a mandate. Another limitation of most state Web sites is that price information is restricted to local pharmacies, when online pharmacies, both U.S. and foreign, often sell prescription drugs at substantially lower prices. To further enhance consumer shopping tools, states might consider expanding the types of information provided, including online pharmacy comparison tools, lists of deeply discounted generic drugs offered by discount retailers, and lists of local pharmacies offering price matches.

Exodus of male physicians from primary care drives shift to specialty practice.

An exodus of male physicians from primary care is driving a marked shift in the U.S. physician workforce toward medical-specialty practice, according to a national study by the Center for Studying Health System Change (HSC). Two factors have helped mask the severity of the shift--a growing proportion of female physicians, who disproportionately choose primary care, and continued reliance on international medical graduates (IMGs), who now account for nearly a quarter of all U.S. primary care physicians. Since 1996-97, a 40 percent increase in the female primary care physician supply has helped to offset a 16 percent decline in the male primary care physician supply relative to the U.S. population. At the same time, primary care physicians' incomes have lost ground to both inflation and medical and surgical specialists' incomes. And women in primary care face a 22 percent income gap relative to men, even after accounting for differing characteristics. If real incomes for primary care physicians continue to decline, there is a risk that the migration of male physicians will intensify and that female physicians may begin avoiding primary care--trends that could aggravate a predicted shortage of primary care physicians.

Benefit design innovations: implications for consumer-directed health care.

Current health insurance benefit designs that simply rely on higher, one-size-fits-all patient cost sharing have limited potential to curb rapidly rising costs, but innovations in benefit design can potentially make cost sharing a more effective tool, according to a new study by the Center for Studying Health System Change (HSC). Innovative benefit designs include incentives to encourage healthy behaviors; incentives that vary by service type, patient condition or enrollee income; and incentives to use efficient providers. But most applications of these innovative designs are not widespread, suggesting that any significant cost impact is many years off. Moreover, regulations governing high-deductible, consumer-directed health plans eligible for health savings accounts (HSAs) preclude some promising benefit design innovations and dilute the incentives in others. A movement away from a one-size-fits-all HSA benefit structure toward a more flexible design might broaden the appeal of HSA plans and enable them to incorporate features that promote cost-effective care.

Self-pay markets in health care: consumer Nirvana or caveat emptor?

As consumers face more incentives to make cost-conscious medical care decisions, some policymakers cite self-pay markets as models for consumer shopping. An analysis of the LASIK market revealed limited shopping overall, despite the fact that patients pay the full cost. For other self-pay procedures, consumers shop even less, for reasons ranging from urgency, to costs of obtaining price quotes, to quality concerns that prompt many consumers to rely on word-of-mouth recommendations. Given that consumer shopping is not prevalent in most self-pay markets, we expect the extent of shopping to be even more limited for many services covered by insurance.

Losing ground: physician income, 1995-2003.

Between 1995 and 2003, average physician net income from the practice of medicine declined about 7 percent after adjusting for inflation, according to a national study from the Center for Studying Health System Change (HSC). The decline in physicians' real income stands in sharp contrast to the wage trends for other professionals who saw about a 7 percent increase after adjusting for inflation during the same period. Among different types of physicians, primary care physicians fared the worst with a 10.2 percent decline in real income between 1995 and 2003, while surgeons' real income declined by 8.2 percent. But medical specialists' real income essentially remained unchanged. Physicians reported working slightly fewer hours overall but spent more time on direct patient care. Flat or declining fees from both public and private payers appear to be a major factor underlying declining real incomes for physicians. The downward trend in real incomes since the mid-1990s likely is an important reason for growing physician unwillingness to undertake pro bono work, including charity care and volunteering to serve on hospital committees.

Medicare seniors much less willing to limit physician-hospital choice for lower costs.

Elderly Americans are much less willing than working-age Americans to limit their choice of physicians and hospitals to save on out-of-pocket medical costs, according to a new national study by the Center for Studying Health System Change (HSC). Only 44 percent of seniors 65 and older were willing to trade broad provider choice to save money, compared with more than 70 percent of people aged 18 through 34. Among seniors, those enrolled in Medicare health maintenance organizations (HMOs) were the most willing to limit choice of providers in return for lower out-of-pocket costs, while Medicare seniors with supplemental coverage were the least willing. Seniors with supplemental coverage account for nearly six in 10 Medicare seniors, and with nearly two-thirds of these seniors opposing provider choice restrictions, policy makers seeking to expand enrollment in Medicare Advantage managed care plans may face challenges.

More Americans willing to limit physician-hospital choice for lower medical costs.

More Americans are willing to limit their choice of physicians and hospitals to save on out-of-pocket medical costs, according to a new national study by the Center for Studying Health System Change (HSC). Between 2001 and 2003, the proportion of working-age Americans with employer coverage willing to trade broad choice of providers for lower costs increased from 55 percent to 59 percent--after the rate had been stable since 1997. While low-income consumers were most willing to give up provider choice in return for lower costs, even higher-income Americans reported a significant increase in willingness to limit choice. Compared with other adults, people with chronic conditions were only slightly less willing to limit their choice of physicians and hospitals to save on costs. Perhaps as a result of growing out-of-pocket medical expenses in recent years, the proportion of people with chronic conditions willing to trade provider choice for lower costs rose substantially from 51 percent in 2001 to 56 percent in 2003.

Public coverage provides vital safety net for children with special health care needs.

In 2003, an estimated 13.5 million American children had special health care needs, ranging from learning disorders to severe disabilities. Medicaid or the State Children's Health Insurance Program (SCHIP) covered nearly two out of five children with special health care needs, according to a new study by the Center for Studying Health System Change (HSC). Despite the critical safety net provided by public insurance to millions of special-needs children, an estimated 650,000 of these medically vulnerable children were uninsured in 2003. Many likely were eligible for public insurance but not enrolled. Among special-needs children, those with public and private coverage reported about equal rates of problems obtaining health care, indicating Medicaid and SCHIP provide access to care comparable to private insurance. Overall, children with special needs faced more access problems than other children, and their families reported more problems paying medical bills. Policy measures now under consideration, such as increased cost sharing in Medicaid and SCHIP, would likely increase access problems for children with special needs.

Rising health costs, medical debt and chronic conditions.

About 57 million working-age Americans--18-64 years old--live with chronic conditions, such as diabetes, asthma or depression. In 2003, more than one in five, or 12.3 million people with chronic conditions, lived in families with problems paying medical bills, according to a new study by the Center for Studying Health System Change (HSC). Rising health costs have hit low-income, privately insured people with chronic conditions particularly hard. Between 2001 and 2003, the proportion of low-income, chronically ill people with private insurance who spent more than 5 percent of their income on out-of-pocket health care costs grew from 28 percent to 42 percent. For the 6.6 million uninsured, chronically ill Americans, the financial consequences are especially grave--nearly half reported medical bill problems, making them much more likely to forgo or delay needed medical care. Among the 3 million uninsured, chronically ill people with medical bill problems, four in 10 went without needed care, two in three put off care and seven in 10 did not fill a prescription in the past year because of cost concerns.