By Julia Appleby
KHN Staff Writer 

Higher prices charged by hospitals, outpatient centers and other providers drove up health care spending at double the rate of inflation during the economic downturn– even as patients consumed less medical care overall, according to a new study.

Prices rose at least five times faster than overall inflation for emergency room visits, outpatient surgery and facility-based mental health and substance abuse care from 2009 to 2010, says the report by the Health Care Cost Institute, a nonpartisan research group funded by insurers.

Prices declined in only one category: nursing home care, which saw a 3.2 percent drop in the cost per admission.

One of the areas with the fastest growing spending, meanwhile, was children’s medical care.

“The story really does seem to be prices,” said Martin Gaynor, chair of the institute’s governing board and a health care economist at Carnegie Mellon University.

Representing one of the broadest looks at actual claim payments made by insurers, the study’s findings raise questions that go to the heart of the nation’s $2.6 trillion annual bill for health care: Why are prices for medical services rising far faster than inflation? Is a rapid increase in spending on children an anomaly, or a long-term trend with major implications for future costs?

Hospital admissions, outpatient visits, procedures all fell

“If you don’t know what the cause is, you don’t know what the right policy lever is (for a solution),” Gaynor says

He says the Institute, founded last year to make insurance industry payment data available to the public, will address some of those questions in subsequent research.

The findings are based on about 3 billion claims paid by Aetna, Humana and UnitedHealthcare on behalf of 33 million people with job-based insurance nationwide.

The data represent about 20 percent of the people with insurance nationally, but do not include spending for people who are on Medicare, Medicaid or those who buy their own policies.

Hospitals and other medical providers “just seem to be able to raise prices faster than general inflation,” he says.

Workers’ copayments and deductibles, which they pay on top of their share of premium costs, also rose, according to the study. Such “out-of-pocket costs” jumped 7.1 percent between 2009 and 2010 to an average of $689 per person.

Prices and overall use of medical care are major factors driving the cost of health insurance. While the study does not analyze premium increases, those have risen steadily, with one national employer survey by the Kaiser Family Foundation showing a cumulative 138 percent increase in job-based insurance premiums between 1999 and 2010. (KHN is an editorially independent program of the foundation.)

As part of the federal health law, all states last year began reviewing premium increases of 10 percent or more, requiring insurers to justify the increases.  There are no similar national efforts to examine price increases by hospitals or other medical providers.

Insurers argue they are just passing along rising costs to consumers, keeping only a narrow profit margin and are often outgunned in contract negotiations by hospitals, many of which are “must-have” facilities in an insurer’s network.

“This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans, the industry lobby. “Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers.”

Researcher White says insurers must take a more active role. “If insurers are incapable of reining in growth of prices they pay providers, that’s a problem,” he says.

Struggling with rising costs, some states and insurers are looking at new approaches. In Massachusetts, for example, supporters and opponents are sparring over a proposal that would impose financial penalties on hospitals or other providers who exceed by 20 percent or more a specified state median for a medical service.

In North Carolina, one major insurer aims to negotiate contracts with hospitals and other medical providers that limit increases to no more than the medical inflation rate.

“We have met that goal for the past two years,” says Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina. That effort, along with lower use of medical services, translated into zero to 5 percent premium increases for policies sold to individuals — the smallest rise in five years.

The report found the biggest spending increases in the Northeast, up 4.3 percent and – surprisingly — among children under 18, up 4.5 percent nationally.

That compares with a 3.1 percent jump in spending on 55 to 64 year olds.

While spending grew fastest among pediatric patients, the report found medical care  for older patients costs more in total dollars – averaging $8,327 a year – than for those under 18, at $2,123.

A future report will probe the reasons for the growth in pediatric spending. Possibilities could include big expenses for premature babies, the rising incidence of obesity and related diseases or an increasing demand for mental health and behavioral services.

It could also reflect families’ increasing struggle to pay their share of medical costs by foregoing or delaying medical visits for their children, says Irwin Redlener, a professor at Columbia University’s Mailman School of Public Health and president of the Children’s Health Fund, a nonprofit that provides medical care to underserved children.

“Even families with employer-based insurance are seeing their costs going up , but not their salaries,” says Redlener. So they may be “saving where they can” and foregoing preventive care, such as vaccinations, and treatments for chronic illnesses, such as asthma or diabetes.

Overall, during the period analyzed, prices charged nationally grew the most for emergency room visits, up 11 percent, surgery that did not involve a hospital stay, up 8.9 percent, and mental health and substance abuse services, up 8.6 percent.

The price per hospital admission rose an average of 5.1 percent, hitting $14,662. Surgical admissions had the highest overall price tag, at an average of $27,100,  representing a 6.4 percent increase from 2010.

Spending by insurers and policyholders on medical care rose 3.3 percent per person from 2009 to 2010, about twice the 1.6 percent increase in the Consumer Price Index.

Mary Agnes Carey contributed to this story.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

Source: NPR/Robert Wood Johnson Foundation/Harvard School of Public Health Poll. Credit: Alyson Hurt/Nelson Hsu, NPR

From KHN partner NPR

In the lull between the Supreme Court arguments over the federal health overhaul law and the decision expected in June, we thought we’d ask Americans who actually use the health system quite a bit how they view the quality of care and its cost.

When the results came back, we found that people who have a serious medical condition or who’ve been in the hospital in the past year tended to have more concerns about costs and quality than people who aren’t sick.

No big surprise there.

But what was notable: 3 of 4 people who were sick said cost is a very serious problem, and half said quality is a very serious problem.

Nearly half of those with recent serious illness say they felt burdened by what they had to pay out of their own pocket for care.

The recently ill are more likely to say the cost and quality of care have worsened over the past five years, compared to people who weren’t sick.

Among people who’ve recently required a lot of care, significant proportions say their treatment was poorly managed, with nearly a third complaining of poor communication among their caregivers. One in eight believe they got the wrong diagnosis, treatment or test.

Those findings led us to investigate the problems people are having, both in our poll and in a series of stories on the radio and the Web we’re calling “Sick in America.”

The poll, a joint venture of NPR, the Robert Wood Johnson Foundation and the Harvard School of Public Health, is one of very few focusing on people who’ve actually been seriously ill, injured or hospitalized in the past year.

“This poll listens to the voices of the sick,” says Robert Blendon of Harvard. “That provides a good barometer of what’s happening in health care in America.”

The poll randomly surveyed 1,508 adults across the nation. A little more than a quarter of them had a serious illness, injury or disability requiring “a lot of medical care,” or overnight hospitalization within the past 12 months.

If you want to dive deeper:

• Here’s a summary of the poll findings,

• plus the topline data and charts.

Can you cut health care spending without undermining the quality of care? It’s a major concern as Medicare prepares to prod hospitals to provide medical care more efficiently by giving bonuses to those whose patients cost less and taking money away from places that send the government higher bills.

Last week, Kaiser Health News’ blog Capsules culled through the Medicare data to identify the hospitals whose patients cost Medicare the most, from the three days before admission to a month afterward.

Here is an admittedly unscientific first pass at how the nation’s best-regarded hospitals rate in terms of their patients’ Medicare spending.

Kaiser Health News looked at the 16 hospitals that U.S. News includes in its widely followed “Best Hospitals’ Honor Roll,” which is calculated based on a mix of quality indicators and reputation surveys.

(One hospital, Johns Hopkins in Baltimore, was omitted because Medicare didn’t provide figures for Maryland hospitals.)

As a group, the average cost to Medicare for a patient at a U.S. News top hospital was $17,808, or 1 percent below the national median spending of $17,988.

The least expensive of these hospitals had patients who, on average, cost Medicare 5 percent below the median (represented as a ratio of 0.95).

The most expensive hospital had patients who, on average, cost Medicare 3 percent above the median (1.03).

• New York-Presbyterian Hospital (New York, N.Y.): $17,089 (0.95)

• University Of Washington Medical Center (Seattle, Wash.): $17,089 (0.95)

• Mayo Clinic St. Mary’s Hospital (Rochester, Minn.): $17,269 (0.96)

• Mount Sinai Hospital (New York, N.Y.): $17,269 (0.96)

• Ronald Reagan UCLA Medical Center (Los Angeles, Calif.): $17,628 (0.98)

• UCSF Medical Center (San Francisco, Calif.): $17,628 (0.98)

• Duke University Hospital (Durham, N.C.): $17,628 (0.98)

• Cleveland Clinic (Cleveland, Ohio): $17,808 (0.99)

• Barnes Jewish Hospital (Saint Louis, Mo.): $17,808 (0.99)

• Vanderbilt University Hospital (Nashville, Tenn): $17,808 (0.99)

• Stanford Hospital (Stanford, Calif.): $17,808 (0.99)

• UPMC Presbyterian Shadyside (Pittsburgh, Penn.): $18,168 (1.01)

• University Of Michigan Health System (Ann Arbor, Mich.): $18,168 (1.01)

• Brigham And Women’s Hospital (Boston, Mass.): $18,348 (1.02)

• Hospital Of University Of Pennsylvania (Philadelphia, Penn.): $18,348 (1.02)

• Massachusetts General Hospital (Boston, Mass.): $18,528 (1.03)

None were outliers among the 3,346 hospitals that Medicare evaluated.

In fact, more than a quarter of the nation’s hospitals were more costly than all of the “honor roll” hospitals and another quarter of the hospitals were less expensive than all of the “honor roll” hospitals.

Let us know what you think about Medicare’s Spending Per Hospital Patient ratings in a comment below.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

By Judith Graham

This story was produced in collaboration with 

Doctors assess patients’ breathing, heart rate and blood pressure routinely at office visits. Soon, they may be adding body mass index to that list too.

Tracking this measure – an indicator of whether someone is obese or overweight – as if it were a vital sign at medical checkups is among a new set of strategies recommended for battling obesity, a concern that some experts predict will affect 42 percent of adults by 2030.

Although professional medical societies have said for years that physicians should monitor patients’ body mass index, most doctors fail to do so.

For example, a 2006 survey of family physicians found that fewer than half checked BMIs for children over the age of 2, even though 71 percent knew this has been recommended.

Just over 40 percent of adult patients in commercial HMOs had documented BMI measurements in 2009 and 2010, according to a survey by the National Committee for Quality Assurance, an organization that evaluates health plans. That figure falls to 12 percent for patients in commercial PPOs, a more common type of plan.

The Institute of Medicine last week called for the medical profession and health insurers to become more rigorous in their approach in a report proposing an anti-obesity campaign that would involve every part of society, from individuals and families to schools, communities, workplaces, the food industry and the media.

Pointing to the more than 90 million children, teens and adults counted as obese, well-established links to medical conditions such as diabetes, hypertension, heart disease, and arthritis, and annual healthcare expenses exceeding $190 billion, the report urged comprehensive and sustained action.

For physicians, monitoring body mass index – a ratio of height to weight – is at the top of the list of priorities because it’s the best way to identify people who have a weight problem. (Adults are counted as obese if they have a BMI of 30 or higher; children if their BMI is at the 95 percentile or higher for kids of the same age and sex.)

“We need to normalize the process of obesity screening and lifestyle counseling so they’re usual and people expect this,” said Dr. Sandra Hassink, a member of the panel that prepared the IOM report and director of the Obesity Initiative at Nemours, a pediatric health system in four states.

Medical Groups Call For Change

Groups such as the American Medical Association and the American Academy of Pediatrics have recommended regular BMI checks for years. Several health care systems also have embraced the practice.

Kaiser includes BMI as a “vital sign” in electronic medical records for nearly 9 million members, and it is planning to do the same for physical activity, another contributor to the obesity epidemic, said Ray Baxter, the plan’s senior vice president for community benefit and health policy. (Kaiser Health News is not affiliated with Kaiser Permanente.)

So why the problem? Many harried physicians are unprepared to advise people about how to change their behaviors, unconvinced they have time to do so, and therefore look skeptically at screening, said Dr. Robert Kushner, clinical director of the Comprehensive Center on Obesity at Northwestern University.

If doctors are overweight themselves, they’re less likely to recognize the issue in their patients, research shows. What’s more, doctors aren’t trained in medical school to handle weight issues.

They also often aren’t convinced obesity treatments work, and many believe there aren’t good community programs to which they can refer patients.

“The question is, how many programs are out there for primary care doctors to refer to in the community, and answer is – not many,” said Dr. Ned Calonge, a Colorado physician who is the immediate past chairman of the U.S. Preventive Services Task Force.

Northwestern is tackling a part of that by weaving instruction in “lifestyle medicine” throughout all four years of a new medical school curriculum being introduced this August.

Another significant problem has been a historic lack of reimbursement from insurers for obesity screening and counseling. That changed last year for seniors, when Medicare said it would cover up to six months of weight loss counseling for obese beneficiaries as part of a package of new preventive services. Nearly 13 million Medicare members are thought to be obese.

Meanwhile, new preventive services guidelines from the government call for all insurance plans to cover obesity screening and counseling without charge to patients.

And insurers are expanding childhood obesity programs following a 2010 recommendation from the U.S. Preventive Services Task Force that endorsed comprehensive weight management programs for youngsters at least 6 years old. Previously, the task force supported BMI screening but not weight loss programs.

Seeking Evidence-Based Programs

For the insurance industry, the challenge now is providing evidence-based programs that can be introduced on a broad scale.

UnitedHealth Group is promoting “Join for Me,” a year-long behavioral modification program piloted with the YMCA of Greater Providence, R.I., in which youngsters 6 to 17 years old, accompanied by a parent, learn about healthy eating and exercise in a group led by a coordinator.

“Doctors are in short supply” and it makes sense to conduct intensive behavioral change programs in the community, not in their offices, said Dr. Deneen Vojta, senior vice president of UnitedHealth’s Center for Health Reform & Modernization.

For overweight and obese adults, the company is looking at offering a version of the Diabetes Prevention Program, a well-studied intensive intervention that has been shown to help people lose weight.

WellPoint has taken a different approach, choosing to work through doctors and with the Alliance for a Healthier Generation, an organization that’s trying to convince health plans to offer more comprehensive coverage for obesity counseling and treatment.

The alliance asks participating plans to offer four visits with a child’s primary care doctor and four visits with a dietitian if the youngster is found to be overweight or obese.

So far several plans, including WellPoint, Aetna, Humana and Highmark, Inc., have signed up, and 2.4 million children are covered.

WellPoint recently launched a limited pilot study of this type of benefit in California and is learning what physicians need and members want before deciding whether to roll it out more broadly, said Harvinder Sareen, clinical program director for the insurance company.

Insurance companies and some self-insured employers are also exploring the use of financial incentives — cash payments or reduced premiums or deductibles – to motivate members to keep their weight in check and to adopt other lifestyle changes.

One program at UnitedHealthcare offers members up to $250 for reaching a BMI of 25 or less, and similar incentives for not smoking and lowering cholesterol and blood pressure.

“Is there coverage [for obesity] is yesterday’s conversation. Today’s conversation is how to design coverage to encourage people to use it and continue using it,” said Karen Ignagni, president of America’s Health Insurance Plans, an industry trade group.

Others disagree that coverage for obesity counseling is adequate.

“The problem is there’s no real incentive for the insurance industry to pay for better prevention and treatment, because the costs are immediate while the benefits are long-term,” said Dr. David Ludwig, director of the new Balance Foundation Obesity Prevention Center at Children’s Hospital, Boston. “Although reducing the prevalence of obesity is one of the most profitable investments the healthcare system could make, it doesn’t make a lot of sense for individual plans when families change policies every three to five years.”

Updated at 2:00 p.m. on May 13 to clarify the description of the NCQA study findings.

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.