Jamie J. Gooch

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Data from the S&P Indices for  the S&P Healthcare Economic Composite Index indicate that the average per  capita cost of healthcare services covered by commercial insurance and Medicare  programs increased by 5.61% over the 12-months ending June 2011. Since posting  its lowest annual growth rate in its more than six-year history – +5.37% in  April 2011 – the rate for this index accelerated in both May and June.

Over the year ending June 2011,  healthcare costs covered by commercial insurance increased by 7.48%, as  measured by the S&P Healthcare Economic Commercial Index. Medicare claim  costs rose at an annual rate of 2.50%, as measured by the S&P Healthcare  Economic Medicare Index. This was the lowest annual growth rate recorded for  the Medicare Index in its history, which goes back to January 2005.

The Hospital and Professional  Services Indices reported increases of 5.16% and 5.89%, respectively, from  their June 2010 levels. For the Hospital Index, this rate is slightly higher  than the +5.08% posted in May 2011; whereas the Professional Services Index is  marginally lower than its +5.91% rate posted in May.

"With June's data, we saw  general acceleration in the annual growth rates in healthcare costs primarily  led by medical costs funded by commercial insurance plans," said David M.  Blitzer in a press release. Blitzer is chairman of the Index Committee at  S&P Indices. "The Medicare Index, on the other hand, was down 0.18  percentage points from its May 2011 annual rate and recorded its lowest annual  growth rate in its more than six- year history. The Composite Index rose by  5.61%, the Commercial Index by +7.48% and the Medicare Index by +2.50%,  compared to their June 2010 levels.

Overall, healthcare costs continue to rise. However,  while the Composite and Commercial Indices saw increases in annual growth  rates, the Medicare Index decelerated and posted a record low annual rate with  June's report. 

Articles

Since posting its lowest annual growth rate in more than six years, the average cost of healthcare services accelerated in May and June.

US healthcare costs accelerate

The  U.S. can learn from ways other countries slow prescription drug spending  growth, according to a new policy analysis from the National Institute for  Health Care Reform (NIHCR).

Written  by Jack Hoadley, a research professor at Georgetown University's Health Policy  Institute, in consultation with the Center for Studying Health System Change  (HSC), the policy analysis examines how reference pricing and  comparative-effectiveness, cost-effectiveness research might be adapted for the  U.S.

“With  appropriate modifications to fit the U.S. context, both approaches could  increase the use of generic drugs and less-expensive brand-name drugs, helping  to constrain spending growth,” the analysis state. “In particular, reference  pricing-an approach where a payer sets payment for a group of similar drugs  using a benchmark based on a lower-priced option-could increase consumer  incentives to select less-expensive alternatives. Similarly, an approach that  bases formulary placement and cost-sharing tiers on scientific assessments of  the clinical value of competing drugs offers the potential both to increase  acceptance of cost management by patients and physicians and to improve health  outcomes.

Outpatient  prescription drugs account for about 10%-$259 billion in 2010-of total U.S.  health spending. Other developed nations typically pay much lower prices for  brand-name drugs than the United States. 

Adapting Tools from Other Nations to Slow U.S. Prescription  Drug Spending

The U.S. can learn from ways other countries slow prescription drug spending growth, according to a new policy analysis from the National Institute for Health Care Reform (NIHCR)

Stealing other countries' prescription drug cost-saving ideas

Aetna  has created a dedicated team it calls the Aetna Innovation Labs to research the  practices that have the greatest potential to improve patient outcomes or  demonstrate measurable value to customers, healthcare providers or members. The  labs will allow Aetna to test specific initiatives such as those related to  disease prediction and intervention, determine success rates and impact across  populations of members, and expand programs that show promise.

The marketplace is rapidly changing,” said Michael Palmer,  head of the Aetna Innovation Labs. “Forces such as healthcare reform, emerging  technologies and economic conditions are driving our need to constantly develop  innovative and measurable programs to improve healthcare quality and reduce  costs for our customers and members.” 

Palmer  joined Aetna from Accenture, where he was global managing partner of medical  technology.

In  one of its first projects, the Aetna Innovation Labs is working to make cancer  care more effective, more affordable and safer by deploying technology  including the eviti clinical decision-support program. The company is  making eviti available through its data exchange and applications  platform, iNexx, and launching the program in New York and New Jersey. 

A  second project being undertaken by the Aetna Innovation Labs combines “big  data” provided by Aetna with a supercomputer-enabled platform from GNS Healthcare  with the goal of analyzing it to rapidly discover what types of interventions  drive better outcomes in those who are at-risk for metabolic syndrome, and for  whom these interventions work best.

“Aetna  Innovation Labs is currently focused  on clinical and platform innovation and on improving member and provider  engagement,” Palmer said. “But we are exploring a number of different areas that  will drive value, from next-generation platforms, to telehealth and mHealth  (mobile health), to genomics. We will likely also launch new businesses based  on the work of Aetna Innovation Labs to both strengthen our core offerings and  provide new capabilities to our customers.”

The Aetna Innovation Labs were created to test specific initiatives, determine success rates and impact, and expand programs that show promise.

Aetna Innovation Labs research best practices

More  than three-fourths of hospital executives responding to a national survey say  healthcare reform will decrease their private payer rates, and more than half  have no accountable care organization (ACO) strategy or plans. 

“As far as health reform, hospitals are  skeptical because it's clear that the only certain winner is the payer,” says  Brandon Edwards, president of ReviveHealth, the communication firm that  conducted the National Payor Survey. “Hospitals are getting hammered with cost  pressures, declining volumes, rate pressures, and tighter credit markets. They  are fixed asset executives living in a world that’s becoming service  economy based. The real problem is that payers are enjoying record profits,  with a shrinking base of commercial lives, and the providers are struggling.  Health reform is just an added layer of complexity, difficulty, and uncertainty  on top of a tough economy and an even tougher operating environment.”

He  also cites “the complexity of the  arrangements required, the costs, and the silly and counterintuitive rules for  assigning and managing members” as reasons why more providers aren’t planning  to adopt ACOs.

The survey, which also asks respondents to rank  health plans according to a number of factors, ranked WellPoint the worst  overall, and BlueCross plans the worst on payment rates for healthcare  delivered. 

“First, stop playing games - direct network staff  to tell their providers the truth, deal with them honestly, and address issues  promptly when they arise. Honesty and transparency goes a long way, even when  the payer is telling the provider something they don’t want to hear. Second,  payers can look for ways to truly partner with providers. That means being at  risk and sharing rewards fairly, rather than shifting risk to members and  providers and guaranteeing their own margin before putting anything at risk.  There are many other things, but this would be a pretty good start.” 

Survey taker says payers are the only winners in healthcare reform; calls ACO member rules silly.

Author | Jamie J. Gooch

Articles

US healthcare costs accelerate

Stealing other countries' prescription drug cost-saving ideas

Aetna Innovation Labs research best practices

Survey: Hospitals skeptical of health reform, ACOs