October 2010 Data Brief COMMISSION ON A HIGH PERFORMANCE HEALTH SYSTEM Health Care Opinion Leaders’ Views on Transparency and Pricing K ristof S tremikis , K aren D avis , and S tuart G uterman The mission of The Commonwealth ABSTRACT: More than nine of 10 leaders in health care and health care policy believe it Fund is to promote a high performance is important for the public to have information on clinical quality and prices, and such health care system. The Fund carries information is essential for improving U.S. health system performance, according to a out this mandate by supporting Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey. Most independent research on health care leaders support moving toward salaried physician practice with appropriate rewards for issues and making grants to improve quality and prudent use of resources. Survey respondents also support rewards for account- health care practice and policy. Support for this research was provided by able care organizations through use of partial capitation and shared savings payments. The Commonwealth Fund. The views Similarly, they support innovative mechanisms to foster price competition, including presented here are those of the authors value-based benefit design, reference pricing for services, and tiered networks. Seventy- and not necessarily those of The one percent of leaders believe it is important for all payers to use the same method of pay- Commonwealth Fund or its directors, ment for rewarding quality and efficiency, and a majority support using all-payer payment officers, or staff. rate setting or a single system of rate negotiation on behalf of all payers.      OVERVIEW For more information about this study, please contact: Improving the U.S. health care system will require increasing the amount of pub- Kristof Stremikis, M.P.P. licly available data on clinical quality and prices. Such information could encour- Senior Research Associate age physicians to perform better to meet benchmarks, allow public and private The Commonwealth Fund ks@cmwf.org payers to become more prudent purchasers of care, and empower patients to 1 select high-quality providers. Provisions in the Patient Protection and Affordable Care Act (ACA) aim to increase the transparency and use of clinical information by developing measures that will allow individuals and insurers to more easily To learn more about new publications examine and compare health outcomes and appropriate use of resources. The law when they become available, visit the will also introduce incentives for providers to publicly report measures of quality Fund's Web site and register to receive Fund e-mail alerts. and patient experience and will allow Medicare data to be pooled with informa- 2 Commonwealth Fund pub. 1451 tion from other public and private payers to facilitate comparisons. Vol. 102 2T he  C ommonwealth F und In the latest Commonwealth Fund/Modern These views are in line with the recommenda- Healthcare Health Care Opinion Leaders Survey, lead- tions of the Commonwealth Fund Commission on a ers in health care and health policy were asked about High Performance Health System, which has a mission their views on transparency and pricing in the U.S. to promote better access, improved quality, and greater 3 health care system. More than nine of 10 respondents efficiency across the U.S. health care system. The believe it is important for the public to have informa- Commission has concluded that generating more trans- tion on clinical quality and prices. Such information, parent information to guide and drive innovation opinion leaders agree, is essential in moving the U.S. among health care payers and providers has the poten- health system toward high performance. Risk-adjusted tial to improve patient experiences and significantly 4 capitation and shared savings for accountable care reduce the cost of care in the United States. An analy- organizations (ACOs), along with other innovative sis of the ACA demonstrates that the significant pay- payment methods that employ cost and quality infor- ment and delivery reform provisions included in the mation, will be effective methods for facilitating a law utilize these strategies and place the nation on a more efficient health system, a majority of opinion path to a high performance health system that works 5 leaders find. for all Americans. Most respondents also support moving toward salaried physician practice, with appropriate rewards The Health Care Opinion Leaders Survey for quality and prudent use of resources. Payment The Commonwealth Fund and Modern Healthcare mechanisms that use cost and quality information to recently commissioned Harris Interactive to solicit the foster price competition among providers and suppli- perspectives of a diverse group of health care experts ers—such as value-based benefit design, reference on transparency and pricing in the U.S. health care pricing for services, and tiered networks—also enjoy system. The 190 individuals who took part in the sur- substantial support. More than seven of 10 leaders feel vey—the 23rd in a continuing series of surveys assess- it is important that all payers use the same basic ing the views of experts on key health policy issues— method of payment for rewarding quality and effi- represent the fields of academia and research; health ciency. A majority favor either all-payer payment rate care delivery; business, insurance, and other health setting or a single system of payment negotiation on industries; and government, labor, and advocacy groups behalf of all payers. Less than 10 percent prefer the (see Methodology, Appendix A). Respondents were current system, in which public and private health asked for their perspective on transparency and pricing insurers each engage independently with multiple between September 7, 2010, and October 6, 2010. health care providers to negotiate payment rates with hospitals and physicians. A bout the H ealth C are O pinion L eaders S urvey The Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey was conducted online within the United States by Harris Interactive, on behalf of The Commonwealth Fund, between September 7, 2010, and October 6, 2010, among 1,327 opinion leaders in health policy and innovators in health care delivery and finance. The final sample included 190 respondents from various industries, for a response rate of 14 percent. Data from this survey were not weighted. A full methodology is available in Appendix A. H ealth C are O pinion L eaders ’ V iews on T ransparency and P ricing 3 Exhibit 1. Availability of Public Information Exhibit 2. Health System Performance Improvement “In your view, how important do you think it is to have information “In your view, how important would each of the following be about each of the following available to the public?” in improving U.S. health system performance?” Important Very important Important Very important Clinical quality—health outcomes (e.g., mortality or infection rates) 26 69 95% Stimulating provider performance improvement activities 34 62 96% Prices paid for care (including pharmaceutical, imaging, medical devices, hospital and physician 34 61 94% services, and total net charges for treatment of selected conditions) Encouraging payers to recognize or reward quality and efficiency 39 55 94% Patients’ experiences with care 32 61 93% Clinical quality—processes of care (e.g., timely use of antibiotic Helping patients make informed 37 54 91% choices about their care 40 49 88% for infections or beta blockers for heart attacks) * Percentages may not be equal to the net because of rounding. * Percentages may not be equal to the net because of rounding. Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, October 2010. October 2010. More than nine of 10 survey respondents think it is Opinion leaders believe using information to stimulate important for the public to have information on clini- provider performance improvement, encourage payers cal quality, cost, and patient experiences. to recognize or reward quality and efficiency, and help More than nine of 10 health care opinion lead- patients make informed choices is important. ers believe it is important or very important that infor- Opinion leaders were asked to rate the impor- mation on clinical quality, prices paid for care, and tance of using clinical quality and efficiency informa- patient experience with care be available to the public tion in different ways. A large majority of respondents (Exhibit 1). Clinical information on outcomes (e.g., feel that using information to stimulate provider per- mortality and infection rates) and processes (e.g., formance improvement activities (96%), encourage timely use of antibiotics for infections or beta blockers payers to recognize or reward quality and efficiency for heart attacks) were both deemed important by an (94%), and help patients make informed choices about overwhelming majority of respondents. their care (88%) are either important or very important This is consistent with a Commonwealth Fund strategies for moving the U.S. health system toward survey that found that nearly nine of 10 adults feel it is high performance (Exhibit 2). important to have information on the cost and quality 6 of care provided by different doctors and hospitals. However, a 2006 survey by the Employee Benefit Research Institute and The Commonwealth Fund found that fewer than half of insured respondents 7 reported receiving such data. 4T he  C ommonwealth F und Exhibit 3. Health Care Payment Options Exhibit 4. Physician Compensation “How effective do you think each of the following payment approaches would be in facilitating a more efficient health care system?” “Do you support salaried physician practice with appropriate rewards for quality and prudent use of resources as a primary method of physician compensation?” Very effective Extremely effective Risk-adjusted capitation to accountable 63% 33 30 No, I do not support salaried care organizations practice as the primary method of Shared savings to accountable physician compensation care organizations 38 17 55% 11% Yes, I support Bundled acute hospital and post-hospital salaried practice 40 9 49% Yes, I support with appropriate case rate with bonus payments for high quality salaried practice with rewards for quality appropriate rewards and prudent use of Primary care medical home fee, 27 10 37% for quality, but not resources with bonus payments for high quality related to prudent 73% A blended system of fee-for-service use of resources and bundled per-patient payment 24 8 32% 16% Current fee-for-service payment system 3% Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, * Percentages may not be equal to the net because of rounding. October 2010. Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, October 2010. A majority of health care opinion leaders feels that Leaders overwhelmingly support a move toward sala- risk-adjusted capitation and shared savings for ried physician practice with appropriate rewards for accountable care organizations are effective strategies quality and prudent use of resources. for facilitating a more efficient health care system. Health care opinion leaders were asked to The ACA includes numerous payment and indicate their support for salaried physician practice as delivery system reform provisions designed to realign the primary method of physician compensation. Nine incentives and encourage providers to deliver high- of 10 respondents (89%) support using such an quality, patient-centered care. One provision creates a approach, with appropriate rewards for quality; 73 per- program in Medicare that provides the opportunity for cent support basing rewards for salaried physicians on ACOs to receive a share of the savings they generate both quality and prudent use of resources (Exhibit 4). after formally assuming responsibility for the cost and Support for such payment methods is high among all quality of health care given to a defined group of respondent categories—81 percent of those in health patients. This provision also calls for the new Center care delivery, respondents least likely to support the for Medicare and Medicaid Innovation to develop change, support using salaried practice as the primary alternative payment methods for ACOs. method of physician compensation (Table 4). Fifty-five percent of opinion leaders feel that providing ACOs with shared savings payments (e.g., Forty-nine percent of survey respondents feel it is bonuses for increased efficiency, subject to required important that patients choose services and providers performance on quality measures) will be a very or on the basis of cost. extremely effective strategy, and 63 percent believe Increasing the amount of publicly available that providing a risk-adjusted capitation payment information on cost may empower patients to choose arrangement to ACOs will be very or extremely effec- providers that use resources efficiently. About half of tive (Exhibit 3). Only 3 percent of survey respondents health care opinion leaders (49%) feel it is important feel the current fee-for-service payment system is an or very important that patients choose services and effective method for facilitating efficiency. providers on the basis of cost (Exhibit 5). Thirty-three percent of survey respondents are neutral, and H ealth C are O pinion L eaders ’ V iews on T ransparency and P ricing 5 Exhibit 5. Patient Choice Exhibit 6. Health Care Payment Options “Please indicate the extent to which you support the following mechanisms “How important is it that a patient chooses services to provide patients incentives to lower the cost of care.” and providers on the basis of cost?” Support Strongly support Not sure Very important Value-based benefit design (i.e., cost-sharing Very unimportant 8% 6% for individual services depending on the 4% effectiveness and potential benefit to the 47 26 73% patient of using that service) Unimportant 6% Reference pricing for services (i.e., insurers and public programs paying for each drug, device, Important or imaging or laboratory service based on the 43% lowest price of equally effective treatments, 44 22 68% with patients having the option of using more Neither important expensive but equivalent treatments and nor unimportant paying the difference in cost themselves) 33% Tiered networks (i.e., lower premiums for enrollees based on total bills for hospital, 34 18 53% physician, and other providers meeting a Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, quality threshold) October 2010. Reference pricing for providers (i.e., insurers and public programs paying the lowest price in a geographic area for a given physician or 33 15 48% hospital service, with patients having the option of using more expensive service and paying the difference in cost themselves) 11 percent feel that patient use of cost information is either unimportant or very unimportant. * Percentages may not be equal to the net because of rounding. Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, October 2010. A majority of leaders support using value-based bene- fit design, reference pricing for services, and tiered effective treatments. Fifty-three percent of leaders sup- networks. port or strongly support using tiered networks, in Several provisions in the American Recovery which premiums for enrollees vary based on the level and Reinvestment Act and ACA are designed to of spending by the hospitals, physicians, and other increase the amount of publicly available data on the providers that they choose. relative effectiveness of clinical treatments, drugs, and 8 services. Such comparative information has been used More than seven of 10 opinion leaders believe it is in other countries to improve the quality of patient out- important that all payers use the same basic method of comes and reduce the use of treatments with marginal payment for rewarding quality and efficiency. 9 or no value. Respondents were asked to indicate the Inconsistency among the incentives offered by degree to which they support or oppose several mecha- different payers can diminish their effects and create nisms that use information on cost and quality to foster 10 confusion about what behavior is desired. Using a competition among providers and suppliers. uniform method of rewarding quality and efficiency Seventy-three percent of leaders support or across private insurers and public payers may be an strongly support using value-based benefit design, a effective way of improving patient outcomes, reducing method in which cost-sharing for individual services wasteful administrative expenses, and lowering costs. varies based on the established effectiveness and More than seven of 10 (71%) opinion leaders feel it is potential benefit of the treatment or service (Figure 6). important or very important for all payers to use the A strong majority (68%) also supports the use of refer- same basic method of rewarding providers (Exhibit 7). ence pricing for services. In a reference pricing sys- Eleven percent of respondents feel it is unimportant or tem, insurers and public programs pay for a drug, very unimportant. device, or service based on the lowest price of equally 6T he  C ommonwealth F und Exhibit 7. Uniform Method of Reward Payments Exhibit 8. Payment System Options “How important is it that all payers use the same basic method of payment “Currently, each private insurer independently negotiates payment rates for rewarding quality and efficiency?” with hospitals and physicians. Do you support replacing the current payment system with:” Not sure Other Very unimportant 5% 13% 4% Very important All-payer payment Unimportant 31% Keeping the current system 7% 9% rate setting 29% Neither important Letting each provider nor unimportant set their own prices, 12% with insurers paying the lowest price and patients paying A single system of the difference in cost payment rate negotiation for seeing higher-priced on behalf of all payers Important providers 27% 40% 23% * Percentages may not sum to 100 percent because of rounding. * Percentages may not sum to 100 percent because of rounding. Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, Source: Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey, October 2010. October 2010. A majority of respondents support all-payer payment THE PATH TO A HIGH PERFORMANCE rate setting or a single system of payment rate HEALTH SYSTEM negotiation. Health care opinion leaders overwhelmingly agree it is Currently, public and private health insurers important for the public to have information on clini- engage in a complex and continuous process of negoti- cal quality and prices, and that such information is ations with multiple health care providers to establish essential to improving U.S. health system perfor- reimbursement rates for services. This increases mance. Most opinion leaders support moving toward administrative expenses among payers and providers salaried physician practice with appropriate rewards 11 and leads to wide variation in prices. Fifty-six per- for quality and prudent use of resources. Survey cent of leaders support replacing the current system respondents also support the use of mechanisms that with either all-payer payment rate setting or a single foster competition among providers and suppliers to system of payment rate negotiation on behalf of all increase the quality and lower the cost of care, includ- payers (Figure 8). Twenty-three percent of respondents ing value-based benefit design, reference pricing for support letting each provider set its own prices; insur- services, and tiered networks. Seventy-one percent of ers would pay the lowest price and patients would pay opinion leaders believe it is important to use the same the difference in cost for seeing higher-priced provid- basic method of payment for rewarding quality and ers. Nine percent of leaders support keeping the cur- efficiency, and a majority support using all-payer pay- rent system. ment rate setting or a single system of payment rate negotiation on behalf of all payers. Fortunately, many significant provisions designed to improve the transparency and use of qual- ity and cost information are included in the Affordable Care Act. The new law provides for the development of measures that will allow individuals and insurers to more easily examine and compare health outcomes and appropriate use of resources. The law will also introduce incentives for providers to publicly report H ealth C are O pinion L eaders ’ V iews on T ransparency and P ricing 7 measures of quality and patient experience and will local and regional benchmarks, and allow public and allow Medicare data to be pooled with information private payers to become more prudent purchasers of from other public and private payers to facilitate com- care. Together with the significant payment and deliv- parisons. ery system provisions included in the new law, efforts Commonwealth Fund research and analyses to improve transparency can help ensure that the U.S. have suggested that these reform provisions will health system adequately rewards high-quality provid- empower patients to identify and receive care from ers while responding to the needs of all patients. high-quality providers, encourage physicians to meet N otes 6 1 K. K. Shea, A. Shih, and K. Davis, Health Care S. K. H. How, A. Shih, J. Lau, and C. Schoen, Opinion Leaders’ Views on the Transparency of Public Views on U.S. Health System Organization: Health Care Quality and Price Information in the A Call for New Directions (New York: The United States (New York: The Commonwealth Commonwealth Fund, Aug. 2008). Fund, Nov. 2007). 7 P. Fronstin and S. R. Collins, The 2nd Annual 2 K. Davis, S. Guterman, S. R. Collins, K. Stremikis, EBRI/Commonwealth Fund Consumerism in Health S. Rustgi, and R. Nuzum, Starting on the Path to a Care Survey, 2006: Early Experience With High- High Performance Health System: Analysis of the Deductible and Consumer-Driven Health Plans Payment and System Reform Provisions in the (New York: The Commonwealth Fund, Dec. 2006). Patient Protection and Affordable Care Act of 2010 8 Davis, Guterman, Collins et al., Starting on the (New York: The Commonwealth Fund, Sept. 2010). Path, 2010. 3 The Commonwealth Fund Commission on a High 9 G. R. Wilensky, “Developing a Center for Performance Health System, Keeping Both Eyes on Comparative Effectiveness Information,” Health the Prize: Expanding Coverage and Changing the Affairs Web Exclusive, Nov. 7, 2006, w572–w585. Way We Pay for Care Are Essential to Make Health Reform Work for Families and Businesses (New 10 M. B. Rosenthal and R. G. Frank, “What Is the York: The Commonwealth Fund, Nov. 2009). Empirical Basis for Paying for Quality in Health 4 Care,” Medical Care Research and Review, April The Commonwealth Fund Commission on a High 2006 63(2):135–57. Performance Health System, The Path to a High Performance U.S. Health System: A 2020 Vision 11 U. E. Reinhardt, “The Pricing of U.S. Hospital and the Policies to Pave the Way (New York: The Services: Chaos Behind a Veil of Secrecy,” Health Commonwealth Fund, Feb. 2009). Affairs, Jan./Feb. 2006 25(1):57–69. 5 Davis, Guterman, Collins et al., Starting on the Path, 2010. 8T he  C ommonwealth F und A ppendix A. M ethodology This survey was conducted online by Harris Interactive on behalf of The Commonwealth Fund among 190 opinion leaders in health policy and innovators in health care delivery and finance within the United States between September 7, 2010, and October 6, 2010. Harris Interactive sent out individual e-mail invitations to the entire panel containing a password-protected link and a total of five reminder e-mails were sent to those that had not responded. No weighting was applied to these results. The initial sample for this survey was developed using a two-step process. The Commonwealth Fund and Harris Interactive jointly identified a number of experts across different professional sectors with a range of perspectives based on their affiliations and involvement in various organizations. Harris Interactive then conducted an online survey with these experts asking them to nominate others within and outside their own fields whom they consider to be leaders and innovators in health care. Based on the result of the survey and after careful review by Harris Interactive, The Commonwealth Fund, and a selected group of health care experts, the sample for this poll was created. The final list included 1,246 individuals. In 2006, The Commonwealth Fund and Harris Interactive joined forces with Modern Healthcare to add new members to the panel. The Commonwealth Fund and Harris Interactive were able to gain access to Modern Healthcare’s database of readers. The Commonwealth Fund, Harris Interactive, and Modern Healthcare identified readers in the database that were considered to be opinion leaders and invited them to participate in the survey. This list included 1,467 people. At the end of 2006, The Commonwealth Fund and Harris Interactive removed those panelists who did not respond to any previous surveys. In 2007 recruitment for the panel continued with Modern Healthcare recruiting individuals through their Daily Dose newsletter. In addition, Harris Interactive continued to recruit leaders by asking current panelists to nominate other leaders. The final panel size for the Healthcare Transparency and Pricing survey included 1,327 leaders. With this sur- vey we are using a new definition of the panel. One hundred ninety of these panelists completed the survey, for a 14.3 percent response rate. With a pure probability sample of 190 adults one could say with a 95 percent probability that the over- all results have a sampling error of +/– 7.11 percentage points. However, that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sam- pling error can be calculated. The data in this brief are descriptive in nature. It represents the opinions of the health care opinion leaders interviewed and is not projectable to the universe of health care opinion leaders. H ealth C are O pinion L eaders ’ V iews on T ransparency and P ricing 9 A bout the A uthors Kristof Stremikis, M.P.P., is senior research associate for the president of The Commonwealth Fund. Previously, he was a graduate student researcher in the School of Public Health at the University of California, Berkeley, where he evaluated various state, federal, and global health initiatives while providing economic and statistical support to faculty and postdoctoral fellows. He has also served as consultant in the director’s office of the California Department of Healthcare Services, where he worked on recommendations for a pay-for-performance system in the Medi-Cal program. Mr. Stremikis holds three undergraduate degrees in economics, political science, and history from the University of Wisconsin at Madison. In May 2008, he received a Master of Public Policy degree from the Goldman School at the University of California, Berkeley. He can be e-mailed at ks@cmwf.org. Karen Davis, Ph.D., is president of The Commonwealth Fund. She is a nationally recognized economist with a distinguished career in public policy and research. In recognition of her work, Ms. Davis received the 2006 AcademyHealth Distinguished Investigator Award. Before joining the Fund, she served as chairman of the Department of Health Policy and Management at The Johns Hopkins Bloomberg School of Public Health, where she also held an appointment as professor of economics. She served as deputy assistant secretary for health policy in the Department of Health and Human Services from 1977 to 1980, and was the first woman to head a U.S. Public Health Service agency. A native of Oklahoma, she received her doctoral degree in economics from Rice University, which recognized her achievements with a Distinguished Alumna Award in 1991. Ms. Davis has published a number of significant books, monographs, and articles on health and social policy issues, including the landmark books Health Care Cost Containment; Medicare Policy; National Health Insurance: Benefits, Costs, and Consequences; and Health and the War on Poverty. She can be e-mailed at kd@cmwf.org. Stuart Guterman, M.A., is a vice president at The Commonwealth Fund, where he directs the program on Payment and System Reform. Previously, he was director of the Office of Research, Development, and Information at the Centers for Medicare and Medicaid Services; senior analyst at the Congressional Budget Office; principal research associate in the Health Policy Center at the Urban Institute; deputy director of the Medicare Payment Advisory Commission (and its predecessor, the Prospective Payment Assessment Commission); and chief of institutional studies in the Health Care Financing Administration’s Office of Research. He holds an A.B. in economics from Rutgers University and an M.A. in economics from Brown University. He can be e-mailed at sxg@cmwf.org. Editorial support was provided by Deborah Lorber.