More than half of employers aren't actively managing healthcare waste despite the cost of $750 billion annually, according to a new report from National Alliance of Healthcare Purchaser Coalitions and Benfield.
Though 57% of employers believe that up to one-quarter of healthcare dollars are wasted, nearly two-thirds of businesses surveyed don't collect or analyze data to track waste.
Employers also report little success managing healthcare waste. Those efforts were in the areas of medical imaging and physician referrals.
Healthcare stakeholders understand unneeded and ineffective care is a problem. However, reversing that trend isn't easy. A large piece takes nudging physicians to change habits, including restricting tests and prescriptions that aren't valued. Limiting physicians can also make them feel like a health plan is building walls between them and their patients.
The new online survey asked questions about wasteful spending to 126 employers ranging in size and industries.
Employers said most waste comes from medical imaging, specialty drugs and prescriptions. Few businesses believe primary care services and disease screenings are wasteful.
Businesses that are currently tackling wasteful spending have focused on prescription drugs and specialty medicine. More than half of surveyed businesses are working on efforts in those two areas.
The most common way employers are tackling specialty drug waste is limiting initial doses. Nearly three-quarters of businesses said they're also restricting access to medication through prior authorization. More than half said they're imposing dosing limits.
Another way to improve value and reduce low-value care is Choosing Wisely, an industry campaign to improve clinical conversations with patients about avoiding low-value care. The report found that more than half of employers weren't familiar with Choosing Wisely. Only 13% said they're educating employees using the campaign's recommendations.
Most businesses aren't using benefit design to reduce waste either. Only one-quarter of employers have bundled payment arrangements. A similar percentage of employers are contracting directly with a provider group or health system. A mere 10% have incorporated a value framework into their benefit design.
The report suggested ways to drive value and cut waste, including requesting information on waste from vendors, considering value-based benefit design that reduces low-value service through increased co-pays and prior authorization, shifting away from fee-for-service and to alternative payment models (APMs) that don't reward unnecessary services and promote Choosing Wisely to educate providers and patients about valuable care.
APMs like bundled payments have become more common. A recent report by Health Care Payment Learning and Action Network found that more than one-third of healthcare payments in 2017 involved APMs. That's 13 percentage points higher than in 2015.
This increase doesn't mean providers are comfortable with the change, though. A recent RAND-American Medical Association study suggested that physician practices aren't interested in high levels of financial risk that comes with APMs.
A different Leavitt Partners white paper published this month found widespread pessimism among doctors. The paper warned that pessimistic providers don't support value-based payment models. Most of those physicians don't plan to transition to global or bundled payments.
This resistance shows that stakeholders will need a multi-layered approach that reduces low-quality care, bends the cost curve and incentivizes doctors to provide high quality without destroying their bottom line.