government

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

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

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.

Back to top


ADDITIONAL INFORMATION

Balancing essential against affordable

In deciding the makeup of health insurance exchanges, an IOM-convened panel concluded that HHS should:

  • Establish a benefits package roughly equivalent to the projected cost of an average small group health plan in 2014, when health exchanges are expected to begin operating.
  • Create a public comment process to get advice on how to annually update the essential benefits list. HHS also should establish a framework to obtain data needed to update the benefits list, including payment rates, scope of practice and financial incentives.
  • Allow the cost of the benefits package to increase annually based on medical inflation.
  • Develop a strategy with private sector partners to limit growth in health spending to economic growth in order to ensure that plans in health exchanges remain affordable.
  • Allow states to establish their own essential health benefits package, provided it is actuarially equivalent to the national version.

Source: "Essential Health Benefits: Balancing Coverage and Cost," IOM, October

Back to top


ADVERTISEMENT

ADVERTISE HERE


Featured
Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story


Read story

Goodbye

American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story


Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story


Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story


Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story


Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story


Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story


Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story