Calculating the cost of waste

Tool helps states measure low-value care

SHELBY LIVINGSTON  June 01, 2019 01:00 AM

The first step on the journey to eliminating low-value care is measuring it. 

Several initiatives, from Choosing Wisely to the Task Force on Low-Value Care to the U.S. Preventive Services Task Force, have created lists of tests and procedures considered to have little to no clinical benefit. 

But turning those lists into measures that can be identified in claims data is no easy feat. An inappropriate test for one patient may be necessary for another, and insurance claims often lack details needed to tell the difference.

The Virginia Center on Health Innovation and the Washington Health Alliance analyze data from their states’ all-payer claims databases using a health waste calculator sold by Milliman under the MedInsight name. 

The tool, which was developed in collaboration with VBID Health, focuses on measures that are prevalent, have simple definitions and lack controversy, according to Marcos Dachary, director of MedInsight product management for Milliman. It also picks measures that organizations could feasibly do something about. 

The tool, which tracks 47 different tests and procedures that reflect 85 Choosing Wisely measures, can comb through millions of lines of claims to pinpoint care that is potentially wasteful. 

On a post-adjudicated claims basis, the tool identifies the age of the patient, diagnosis and services provided to allow organizations to see what types of low-value care are most prevalent among the population. Often, those are services that don’t cost much but occur frequently. 

A 2017 Health Affairs study found that of the 1.7 million low-value healthcare services Virginians received in 2014, 93% were low or very low cost, or $538 per service or less. Those largely included lab tests and medications. Just 7% were high or very high cost, or $539 or more. Those included imaging tests 
and procedures.

Virginia spent $381 million on the low and very low cost services that year, which was nearly twice as much as it spent on the high to very high cost services. In total, it spent more than $586 million on low-value care in 2014, or 2.1% of total statewide healthcare costs. That’s a conservative estimate though; the study looked at only 44 low-value care measures.

Meanwhile, the Washington Health Alliance’s December 2018 report showed that for about 2 million commercially insured and Medicaid patients, $341 million was spent on 48 measures of unnecessary healthcare from mid-2016 to mid-2017.

The study found that 92% of all wasteful services analyzed were either low or very low cost. The top three drivers were opioid medications for lower back pain in the first four weeks, antibiotics for upper respiratory and ear infections, and annual EKGs or cardiac screening for low-risk patients.

Beyond Virginia and Washington, Dachary said Milliman is processing data for Maine and Colorado. It is also slated to publish a report with RAND Corp. on wasteful spending among Medicare beneficiaries. 

https://www.modernhealthcare.com/providers/calculating-cost-waste?utm_source=modern-healthcare-hits&utm_medium=email&utm_campaign=20190603&utm_content=article3-readmore