“What’s the best way to actually address medical overutilization?”
In a recent article, I explained why medical overutilization is such an important issue for accountable care organizations, and identified key focus areas for healthcare systems that want to tackle this problem. I also explained how an aggregated data asset – showing all the services rendered to a population across all points of care – is essential to understanding the patterns of overutilization and therefore the opportunities for reining it in.
I want to state at the outset that reining in overutilization actually improves quality of care which may seem counterintuitive to some. The reason for this is that unneeded tests, medications and procedures carry real risks to patients’ health in terms of unanticipated side effects. So, where are the opportunities?
Top 8 Focus Areas for Addressing Medical Overutilization
Those of you who read my previous article on medical overutilization might remember this list of the top 8 focus areas:
- In-patient stays. Hospitals usually charge around $1000/day.
- Skilled nursing facility (SNF) stays. SNFs usually charge around $500/day.
- Medications. The proliferation and cost of expensive drugs has exceeded the rate of rise of costs of any other sector in the medical world.
- Procedures. Joint replacements, cardiac stents, colonoscopies, arthroscopies, biopsies to name a few. There is a great deal of overutilization in this area.
- Lab tests. High rates of unnecessary testing abound, e.g. thyroid and Vitamin D levels and many other lab tests.
- Radiology exams. High rates of unnecessary CT scans, MRIs and PET scans.
- Emergency department visits. ED charges are usually around $1000 per event. Often high incidence of unnecessary ED visits.
- Specialist visits. These are not so expensive in and of themselves, but as stated above, specialists like to do procedures which are very expensive.
Today, I will share some tactical guidance for addressing these drivers of utilization.
Utilization changes throughout the human lifecycle
First of all, it is important to understand that the patterns of utilization tend to change through the human lifecycle. If we arbitrarily start measuring opportunities after conception, we sometimes see an overutilization of prenatal genetic testing. Correctly targeted genetic testing offers highly important information to an expectant mother. However, abusive and expensive over-testing does not add to healthcare quality and drives up costs.
Next, if we move to obstetrical delivery, we see that the C-section rate in the United States is currently around 32%. This is widely considered to be far higher than it should be. Unnecessary C-sections expose mothers to unnecessary surgery-related risk and add expense to the overall budget.
As we move through the lifecycle, we rarely hear about overutilization in children and young adults. That is simply because in general they are healthy, and consume a small fraction of our overall medical resources.
The next real opportunities to address overutilization are found in the population of adults aged 30 to 65 and the population of adults over age 65. Commercial patients aged 30-65 typically have PMPM premiums in the $500 range, whereas the over 65 Medicare population has PMPM premiums in the $1000 range.
Target population: adults aged 30-65
Let’s focus first on the population aged 30-65, who by and large are in the workforce and have commercial insurance. In this population, there is a demand for expensive drugs and procedures in many realms – behavioral health, rheumatoid and other autoimmune disorders, neurological and GI disorders, orthopedic, dermatologic and oncology illnesses. There exists the perfect storm of demand from healthcare consumers (patients) and supply from providers, especially specialists, who feel obligated to practice with the “latest and greatest” drugs and techniques.
With commercial insurance covering the majority of the costs, overutilization is a reality. High cost imaging – CT, MRI and PET scans – are a useful target for utilization management in this population. Certain procedures, such as upper endoscopies, colonoscopies, arthroscopies and nasal endoscopies can also be rich targets for reducing overutilization. Having clinical pharmacists work with an aggregated ACO database can also present opportunities for increasing generic prescribing rates and controlling the use of highly expensive drugs that may only be providing minimal to no improvements in the quality of care.
Let me drill down a little bit and explain how a typical overutilization project can work. Take for example overutilization of MRIs for uncomplicated back pain. First, the chief medical officer of the ACO needs to recognize this as a priority. She will ask her analyst to look at the variation in rates of MRI use for back pain between groups of primary care doctors within the ACO. The CMO or Medical Director tasked with this project then needs to disseminate high quality data to the leaders of these primary care groups showing them which doctors are overutilizing MRIs. Next they need to collect accurate data and reflect back the change in rates of MRI use on a monthly basis. It is worth noting that all of these overutilization projects require accurate and timely data along with experienced local provider leaders.
Target population: adults over age 65
I am about to make some major generalizations, but they mostly hold true. As patients age into Medicare at 65, they have more likely than not accumulated several illnesses and are taking multiple medications. These patients are far more likely than the commercial population to be hospitalized, and this takes on the largest share of cost.
That being said, the strategies to deal with overutilization in the Medicare population must focus on preventing unnecessary ED visits and admissions. Though we often focus on readmissions, because Medicare rightly forces us to, it must be reiterated that there cannot be a readmission without an index admission that precedes it!
Skilled nursing facility (SNF) days also take up a large part of the Medicare budget and are a ripe target for reducing overutilization. An aggregated, curated data set allows an ACO or other healthcare organization to stratify its most complex patients and identify those with actionable issues, amenable to care management.
The curated data set can also allow stratification of the top 1% of sickest patients who can benefit from home visits from a nurse practitioner, thus preventing unnecessary hospitalizations. The next 2-8% of sickest patients may be good candidates for disease management and care management. An ACO will need good analytic tools to help determine which sick and complex patients have actionable profiles – it turns out that the sickest patients, e.g. with metastatic cancer are not necessarily the most actionable.
After identification of the top 1% sickest patients, the primary providers must peruse the list and determine which patients in their estimation would likely benefit from a home visit from a nurse practitioner. This is a good example of melding the strengths of algorithmic identification of patients with the primary provider’s intimate knowledge of the patients. Utilization of medical resources, including ED visits and admissions, is closely tracked both retrospectively and prospectively to demonstrate the financial ROI on this type of clinical intervention. When done correctly, patients, families, and providers all benefit and the cost of care goes down.
Putting the tools in place
If I have made this all sound easy, I didn’t mean to. All of these initiatives require an aggregated dataset including claims and EHR data along with thoughtful governance, executive and local physician leadership, adequate staff (including nurses, NPs and analysts) and a financial structure that allows for fair sharing of surpluses with those who do the work. The good news is that more and more ACOs are figuring out how to put together these elements for successfully reducing unnecessary utilization at the same time they are improving the quality of care.
Do you have a question for Dr. Parker?
We’re always happy to talk about value based care. Please fill out the short form below to send your question or comment directly to Dr. Parker.