175th Interview: University of Michigan's Professor Andrew Ryan Discusses Measuring for Spending Efficiency or Value in Healthcare (June 11th)
www.thehealthcarepolicypodcast.com
Listen Now Americans spend over $3.5 trillion or 6% of the GDP annually on health care. One third, or over $1 trillion, of that spending is considered waste, i.e., health care that does not improve our health status. Despite substantial efforts to improve health care value or spending efficiency via so called pay for value, performance based and alternative payment models, for example ACOs and bundled payment arrangements, health care providers, Medicare and other payers, do not generally measure for value - defined as outcomes (the numerator) achieved relative to spending (the denominator). For example, the MACRA MIPS program, that reimburses Medicare physicians, measures quality and spending separately, not simultaneously. They are not correlated. As a solution the government has been over the past few years advocating increasingly health care price transparency, specifically here price transparency. If prices were transparent patients, less those riding in an ambulance, could shop for value. The problem is even if patients could intelligently shop for value, a big if, they would not get far because prices do not necessarily reflect value. As I note in my Bloomberg Law essay posted as a run up to this interview, former Princeton economist, Uwe Rinehardt, use to explain this reality, or the fact that the same health care service can dramatically vary in price between/among provides, via the quip, "the finest health care in the world costs twice as much as the finest health care in the world."
175th Interview: University of Michigan's Professor Andrew Ryan Discusses Measuring for Spending Efficiency or Value in Healthcare (June 11th)
175th Interview: University of Michigan's…
175th Interview: University of Michigan's Professor Andrew Ryan Discusses Measuring for Spending Efficiency or Value in Healthcare (June 11th)
Listen Now Americans spend over $3.5 trillion or 6% of the GDP annually on health care. One third, or over $1 trillion, of that spending is considered waste, i.e., health care that does not improve our health status. Despite substantial efforts to improve health care value or spending efficiency via so called pay for value, performance based and alternative payment models, for example ACOs and bundled payment arrangements, health care providers, Medicare and other payers, do not generally measure for value - defined as outcomes (the numerator) achieved relative to spending (the denominator). For example, the MACRA MIPS program, that reimburses Medicare physicians, measures quality and spending separately, not simultaneously. They are not correlated. As a solution the government has been over the past few years advocating increasingly health care price transparency, specifically here price transparency. If prices were transparent patients, less those riding in an ambulance, could shop for value. The problem is even if patients could intelligently shop for value, a big if, they would not get far because prices do not necessarily reflect value. As I note in my Bloomberg Law essay posted as a run up to this interview, former Princeton economist, Uwe Rinehardt, use to explain this reality, or the fact that the same health care service can dramatically vary in price between/among provides, via the quip, "the finest health care in the world costs twice as much as the finest health care in the world."