The cost of healthcare is rising and is expected to reach $2.6 billion by 2026, according to the National Institutes of Health.
While this is an alarming projection, of equal concern is that approximately one-third of all healthcare spending in the United States is considered “wasteful.” Wasteful, as defined by the Centers for Medicare & Medicaid Services (CMS), is inefficient spending that does not improve the health of patients.
Included among the categories of wasteful spending are technologies (devices, drugs, services, and technology) that are either low value, unnecessary or yet unproven.
With the introduction of new and emerging technologies and services showing no signs of slowing, payers are faced with some very serious challenges. They must ensure the best options are used when providing care to their members, and that the options are of the highest quality and value.
Advancements in genetics and molecular medicine are providing new treatment options and giving hope to people with cancer, chronic medical conditions, and rare, inherited disorders. This is certainly exciting news; however, it is met with caution for several reasons. First, FDA approval does not necessarily greenlight a technology as the best option for all clinical applications.
Second, the cost of new and emerging technologies can be astronomical and potentially have a major financial impact on insurers as well as patients.
Because rare conditions don’t apply to the largest category of patients (e.g., diabetes, heart disease, arthritis, etc.), the cost of related technologies is not disbursed among many insurers. Instead, it must be paid for by the few insurers with members impacted by these conditions if the new technology is proven to be the best option for the patient. That is a very important "if" for both the payer and the member.
Cutting through the noise
Determining the best, proven options for individuals versus large patient groups is a complex challenge, as payers and providers must weigh new options against traditional standards of care.
The increasing rate of innovation means that payers must sift through a flood of literature to make fully informed decisions, and much of the literature for new technologies requires specialized training to understand. In addition, payers must find ways to forecast how emerging technologies are likely to significantly affect their populations and then prepare for the potential clinical and financial impact. All of this is almost impossible for all but the largest payers.
Recognizing the issues payers are up against, the private sector has been working hard to help bring down costs while promoting high quality of care. In some cases, this has required merging the specialties of otherwise unrelated companies. For example, information technology now exists that combines evidence-based measures with claims analytics to help payers identify spending that is occurring on technologies (devices, drugs, services and technology) that are either unproven, have insufficient evidence, or are potentially harmful when applied to specific clinical applications.
This helps payers to quickly find potentially low-value spending hidden in their existing claims, analyze compliance with existing policies, improve or create new coverage policies, reduce costs, and ensure the best care for their members.
A prospective view
Historically, payers have taken a retrospective approach to planning, forecasting and budgeting. And while there is definite value in retrospective analytics, including the ability to find wasteful spending hidden in the volumes of claims analytics, it is no longer enough to avoid the impact disruptive technologies can pose on future claims. Adding better knowledge to predictive modeling is key to being successful in today’s ever-changing healthcare environment.
Better knowledge comes from powerful forecasting tools that are now available. Their sophisticated algorithms analyze claims, unique population variables (e.g., diagnoses, gender, age), and data about technologies that are in various phases of research to identify where the likelihood exists of being impacted by, and the potential cost of, emerging and disruptive technologies. With the insights gained, payers can make better, more defensible clinical and policy choices to improve the lives of members, including those with rare conditions, while controlling rising cost and risk.
Planning for the future
The influx of new and emerging technologies and services isn’t going away. In fact, the rate and volume will continue to increase, along with the mounting tide of evidence professionals have to wade through.
Options for various clinical applications continue to grow, as do costs. Overall, managing care and the business of healthcare is more challenging than ever. Thanks to advancements in claims and evidence analysis technology, decision-makers can be much better prepared for what the future holds, without compromising care.
Going forward, evidence-based claims analytics will play a crucial role in helping health plans and providers to better manage the explosion of new and emerging technologies. It will aid in ensuring that only technologies with proven benefits that exceed those of existing options are used and that unproven or potentially harmful options are avoided.
This new depth of analytics will also enable payers to more accurately predict the effects new and emerging technology will have on members and premiums in the future so that gaps can be closed, waste minimized, costs controlled, and care optimized.
David Zieve, M.D., M.H.A., is the medical director of Hayes, a division of TractManager.