IOM panel: Insurance exchanges will fail unless cost factor is faced
■ A report for the Dept. of Health of Human Services notes that greater use of standardized, evidence-based medicine could reduce health spending.
By Doug Trapp — Posted Oct. 17, 2011
Washington -- Federal officials must balance cost and comprehensiveness when crafting the minimum benefits package required for health insurance exchange plans, according to an advisory group. Otherwise, these coverage expansions in the health system reform law will fall short.
"Unless a strategy for containing costs throughout the health care system is adopted, the definition of an essential health benefits package will ultimately fail to achieve congressional intent to establish an appropriate basic package that is affordable," an Institute of Medicine panel wrote in an Oct. 6 report requested by the Dept. of Health and Human Services.
One way to hold down costs, according to the IOM panel, is to emphasize evidence-based medicine as a means to standardize care.
"[C]urrent incentives in the health care system -- whether related to physician behavior, patient behavior, hospital behavior or manufacturer behavior -- are not necessarily aligned with evidence-based practice ... contributing to unexplained and/or unintended variation in medical and health care quality," the IOM panel wrote. "Evidence-based practice ... could be fostered through [essential health benefits] design."
The health reform law requires HHS to establish a minimum health benefits package -- known as essential health benefits -- to be offered by health plans in the exchanges, set to begin operating in 2014. HHS Secretary Kathleen Sebelius asked the IOM to propose methods for creating and updating the benefits package.
The IOM-convened committee said HHS should choose an essential health benefits package that costs about the same as an average small group health plan, provides a range of services backed by evidence of their medical effectiveness, and balances the competing needs of health plan affordability and covered benefits.
"If that package of benefits is too narrow, health insurance might be inadequate to ensure access. If it is too expansive, insurance might become too expensive," said John R. Ball, MD, chair of the IOM essential benefits committee and former executive vice president of the American Society for Clinical Pathology. The IOM committee did not suggest specific benefits to be covered because that was not part of its mission.
The panel said HHS should lead a national effort to limit the growth of health costs, which have risen faster than economic growth since the late 1990s. Otherwise, premiums for the exchange plans will become increasingly unaffordable.
"If we ignore rising health care costs, we're set up to fail -- end of story," said IOM committee member Marjorie Ginsburg, MPH, executive director of the Center for Healthcare Decisions, a health care consultancy firm in Rancho Cordova, Calif. "We thought it was irresponsible to put something out there that didn't recognize that this fundamental challenge has to be dealt with."
"Everybody cannot have everything that they want," said IOM panel member Christopher F. Koller, Rhode Island's health insurance commissioner. The panel said controlling national health spending will require a public-private effort.
However, some wondered if HHS was capable of leading a national discussion on health spending. "That's a tall task for HHS to engage in. They've got quite a lot already [to do]," said Amanda Austin, director of federal public policy for the National Federation of Independent Business.
"It is certainly a very challenging request," said Sherry Glied, PhD, HHS assistant secretary for planning and evaluation. Glied said she wasn't sure how HHS would react to the IOM recommendations, but the agency will try to deliver the essential benefits package as soon as possible.
The IOM panel suggested that HHS finalize the benefits list by May 1, 2012, after seeking extensive public input. Tens of millions of people are expected to seek coverage in health insurance exchanges in 2014, beginning with individuals and firms with fewer than 100 employees. Exchanges will offer large group plans in 2017.
Seeking the right balance
Physician leaders and small-business associations took note of the IOM panel's focus on balancing health care costs and comprehensiveness.
The American Medical Association's goal is to ensure the essential health benefits package is affordable, maximizes the number of insured, protects the most vulnerable, encourages better care practices, focuses on high value services and protects against catastrophic events or illnesses, said AMA President Peter W. Carmel, MD.
Glen Stream, MD, president of the American Academy of Family Physicians, said "from a purely theoretical standpoint, what you'd like to do is define the most complete benefit package." But, he added, that's not feasible in a time when physicians have to focus more on being good stewards of medical resources.
The National Retail Federation welcomed the IOM panel's focus on health care costs, said Neil Trautwein, vice president and employee benefits policy counsel. "In our view, [health reform] didn't go far enough to address the cost of medical care."
The IOM panel suggested that HHS examine the value of health care services it includes as essential benefits.
Dr. Ball noted the U.S. Preventive Services Task Force on Oct. 7 issued recommendations against prostate cancer screening of healthy men. The task force cited conflicting evidence on the effectiveness of such screening and possible physical harm from the tests in some cases.