ACP Offers Recommendations for Reducing the Rising Cost of Health Care

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Policy paper lays out strategies to reduce health care costs implemented through a universal health care system

Feb. 7, 2020 (ACP) – In the midst of increasing health care costs in the United States, the American College of Physicians is envisioning a better future in which expenses are controlled and patients get the care they need without having to worry about affording it.

In one of its landmark new policy papers, ACP offers recommendations about how the United States can transform its medical system through a variety of reforms in areas such as primary care, efficiency, benchmarks and pricing. ACP hopes to see its recommended strategies implemented through a system in which cost savings can help fund universal coverage.

“Critics often ask whether the United States can afford universal coverage. But I think the better question is whether we can afford to continue the existing system,” said Ryan Crowley, an ACP senior associate for health policy. “Almost 18 percent of our gross domestic product is spent on health care. Other countries that have achieved universal coverage spend far less and have better outcomes. We aren't getting what we pay for. The rising cost of health care affects government spending, employers, patients and physicians.”

Crowley is lead author of a new ACP policy paper titled, “Envisioning a Better U.S. Health Care System for All: Coverage and Cost of Care.” It's one of a series of papers that ACP released in January 2020 as part of the “Better Is Possible: The American College of Physicians Vision for the U.S. Health Care System” initiative. The papers were published in Annals of Internal Medicine.

ACP's recommendations regarding health care costs include:

  • Invest in primary care and comprehensive services. As ACP puts it, “an effective approach to reducing or slowing the growth of health care costs should recognize, support, and sustain the role that internal medicine specialists play in delivering high-value, patient- and family-centered care.”
    “Primary care is essential for the prevention and early detection and treatment of disease, but our health system has undervalued it for too long,” Crowley said. “Primary care is associated with reductions in emergency department visits and total hospitalizations. ACP strongly believes that patients need to have an ongoing relationship with an internist or primary care physician. States like Oregon and Rhode Island have dedicated more funding and attention to primary care, and results show that the return on investment is very favorable.”
  • Address costs directly by targeting excessive prices, unnecessary administrative costs and inefficiencies in the health care system.
  • Reduce low-value care, such as the overutilization of certain imaging services, and reduce the costs of preventive care.
  • Boost the use of innovative models that target overspending. One of these models is known as “global budgets.” As Crowley explained, “Under fee-for-service reimbursement, hospitals have an incentive to increase admissions. Global budgets flip this by encouraging hospitals to reduce admissions.”
    Essentially, hospitals are given annual budgets, and they suffer penalties if they go over their allocated amount. “The hope is that hospitals will invest more in prevention, primary care and disease management than in treating illness with costly procedures,” Crowley said. “So, you may have a hospital system collaborating with social service agencies or nonprofits to address patients' social determinants of health, like housing or food insecurity issues, to prevent more serious health problems.”
    Another strategy is known as the “all-payer rates setting,” in which each insurer or public program pays the same rate per service. And a third approach is the “health care growth benchmark” – a statewide target for the rate of growth of total health care expenditures.
    ACP's research revealed that various states have adopted these strategies, and the results are promising so far.
  • Analyze health system budget reforms with an eye toward identifying and mitigating unintended consequences.
  • Adopt well-designed reference pricing programs for certain elective health care goods and services. “Reference pricing is a way to encourage use of high-value goods and services and reduce price variability,” Crowley said. “Essentially, a payer will set a cap on how much they'll pay for a certain medication or procedure, and the enrollee pays the difference above the cap. If the drug or procedure's cost is below the payer's cap, the enrollee pays little or no additional cost.”
  • Implement cost-effectiveness analyses into coverage or pricing determinations made by public and private purchasers. And incorporate value statements into clinical guidelines.

“Change can be difficult, but we need to move to a more efficient, effective and fair system,” Crowley said. “Better is possible.”

More Information

The ACP policy paper “Envisioning a Better U.S. Health Care System for All: Coverage and Cost of Care” is available on the Annals of Internal Medicine website.

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