Variation: How It Manifests, What to Do About ItCarolyn M. Clancy, MDDirector

Agency for Healthcare Research and Quality

AHA Task Force on Variation in Health Care Spending Meeting

Washington, DC November 10, 2009

A Major Public Policy IssueVariation in Care Delivery and SpendingComparative Effectiveness Research: Can It Help?Variation: How It Manifests, What to Do About It

The Status Quo Is Not Acceptable

Not Just for Policy WonksUp to 30 percent of health care spending goes toward useless treatments that we dont needOvertreatment costs the U.S. system $700 billion a yearUnnecessary treatment and tests arent just expensive; they also can harm patients.

The Public Is Paying Attention!June 1 article became required reading in the White HouseMcAllen, TX, is the second most expensive health care market in the USA: why?Medicare spending half of that of El Paso, TX, despite similar community profiles

Health Care Spending Per CapitaSource: Congressional Research Service. Washington, DC. Pub No. RL34175

Based on 2003 data from the Organisation for Economic Co-operation and Development (OECD)

Pharmaceutical Spending Per CapitaSource: Congressional Research Service. Washington, DC. Pub No. RL34175

Based on OECD data 2006

Global Trends inHealth ExpendituresFrom: http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html

Per Capita Medicare Spending: Regional VariationsFrom: Congressional Budget Office. Research on Comparative Effectiveness of Medical Treatments. 2008

How Do They Do That?Lowest region in state (actual-expected)La Crosse, WIPortland, ME (one of only two HRRs in Maine)Asheville, NCActual cost < expectedTemple, TX (second lowest after Lubbock)Everett, WA (second lowest after Spokane)Four are problematicRichmond, VA (highest actual-expected in state)Sacramento, CA (actual > expected)Cedar Rapids, IA (actual > expected, but in a low-cost state)Tallahassee, FL (actual > expected)Source: Calculations from HCUP data using Dartmouth Atlas regions http://www.ihi.org/IHI/Programs/StrategicInitiatives/HowDoTheyDoThat.htm?TabId=0Multi-stakeholder effort examining high-performing regions

Variation in Employer-Sponsored Health InsuranceAmong the 116.1 million private sector employees in the USA, 87.7 percent worked where employer-sponsored health insurance was offered in 2008For the 10 largest metro areas, premiums for single coverage ranged from $3,857 to $4,874 in 2008For the 10 largest metro areas, premiums for family coverage ranged from $11,454 to $13,835 in 2008Crimmel BL. Offer Rates, Take-Up Rates, Premiums, and Employee Contributions for Employer- Sponsored Health Insurance in the Private Sector for the 10 Largest Metropolitan Areas, 2008. MEPS Statistical Brief #261, September 2009

Variation in Family Premiums

Health Care Spending Per Capita and Life ExpectancySource: Congressional Research Service. Washington, DC. Pub No. RL34175.

Based on OECD data 2006

Higher Prices Dont Always Mean Better CareNew York Times, September 8, 2009

AHRQs National Reports on Quality and DisparitiesThe median annual rate of change for all quality measures was 1.4%Of 190 measures, 132 (69%) showed some improvement Some reductions in disparities of care according to race, ethnicity, and incomeInequities persist in health care quality and access

Geographic variation in practice patternsPoor relationship between costs and outcomesNeed to establish best practicesCost containment Recognition of limited resources System managementImproved management, accountabilityThe Outcomes MovementA. Epstein, NEJM 1990

Comparative Effectiveness and the Recovery ActThe American Recovery and Reinvestment Act of 2009 includes $1.1 billion for comparative effectiveness research:AHRQ: $300 millionNIH: $400 million (appropriated to AHRQ and transferred to NIH)Office of the Secretary: $400 million (allocated at the Secretarys discretion)Federal Coordinating Council appointed to coordinate comparative effectiveness research across the federal government

AHRQs Priority Conditions for the Effective Health Care ProgramArthritis and non-traumatic joint disordersCancerCardiovascular disease, including stroke and hypertensionDementia, including Alzheimer DiseaseDepression and other mental health disordersDevelopmental delays, attention-deficit hyperactivity disorder and autism Diabetes MellitusFunctional limitations and disabilityInfectious diseases including HIV/AIDSObesityPeptic ulcer disease and dyspepsiaPregnancy including pre-term birthPulmonary disease/AsthmaSubstance abuse

IOMs 100 Priority TopicsTopics in 4 quartiles; groups of 25. First quartile is highest priority. Included in first quartile:Compare the effectiveness of screening, prophylaxis and treatment interventions for eradicating MRSACompare the effectiveness of strategies for reducing HAIsCompare the effectiveness of genetic and biomarker testing and usual care in preventing and treating clinical conditions for which biomarkers existInitial National Priorities for Comparative Effectiveness Research http://www.iom.edu

Office of the Secretarys Spend Plan for Recovery Act CER FundingDesigned to complement AHRQ and NIH activitiesData Infrastructure: Identify unique high-level opportunities to build the foundation for sustainable CER infrastructure to fundamentally change the landscapeDissemination, Translation and Implementation: Innovative strategies that go beyond evidence generation and lead to improved health outcomesPriority Populations and Interventions: Coordination of efforts across multiple activities to include subgroups that traditionally have been under-represented in research activity

Specific Investments (Examples)Data InfrastructureEnhance Availability and Use of Medicare Data to Support Comparative Effectiveness ResearchDistributed Data Research Networks, Including Linking DataDissemination and Translation Dissemination of CER to Physicians, Providers, Patients and Consumers Through Multiple Vehicles Accelerating Dissemination and Adoption of CER by Delivery Systems ResearchOptimizing the Impact of Comparative Effectiveness Research Findings through Behavioral Economic RCT ExperimentsComparative Effectiveness Research on Delivery Systems

AHRQ Spend Plan for Recovery Acts CER FundingStakeholder Input and Involvement: To occur throughout the programHorizon Scanning: Identifying promising interventionsEvidence Synthesis: Review of current research Evidence Generation: New research with a focus on under-represented populationsResearch Training and Career Development: Support for training, research and careers The Right Treatment for the Right Patient at the Right Time

Translating the Science into Real-World ApplicationsExamples of Recovery Act Evidence Generation projects:Clinical and Health Outcomes Initiative in Comparative Effectiveness (CHOICE): First coordinated national effort to establish a series of pragmatic clinical comparative effectiveness studies ($100M)Request for Registries: Up to five awards for the creation or enhancement of national patient registries, with a primary focus on the 14 priority conditions ($48M)DEcIDE Consortium Support: Expansion of multi-center research system and funding for distributed data network models that use clinically rich data from electronic health records ($24M)

Additional Proposed InvestmentsSupporting AHRQs long-term commitment to bridging the gap between research and practice:Dissemination and TranslationBetween 20 and 25 two-three-year grants ($29.5M)Eisenberg Center modifications (3 years, $5M)Citizen Forum on Effective Health CareFormally engages stakeholders in the entire Effective Health Care enterpriseA Workgroup on Comparative Effectiveness will be convened to provide formal advice and guidance ($10M)

Opportunities for Hospitals CER can:Provide evidence to inform choices of drugs, devicesEnhance potential for understanding how research can benefit diverse populations and engage communities Help develop infrastructure, training, registries, and non-government investment for future research

Thank You www.ahrq.gov www.hhs.gov/recovery

***These American automotive giants had issues long before the current financial crisis.

For years, they watched as Toyota, Honda, Nissan and other foreign automakers chipped away at their market shares by building more dependable and efficient cars by relying on flexible and more efficient business plans.

Today, more than half of the vehicles sold in the United States by foreign automakers are made here: Nissan in Mississippi and Tennessee; Mercedes, Honda and Hyundai in Alabama; BMW in South Carolina; the list goes on.

Meanwhile, Chrysler and Chevy have asked Congress for bailouts that could cost more than $30 billion, and all three have said they will have electric cars on the road in 2010, with many more models offering greater fuel efficiency.

Clearly, the financial crisis has not helped. However, one could at least argue that the Big Three would be in a better position today if they had been using high reliability plans that could have helped them maintain their competitive edge as the global marketplace evolved. *In this figure that plots health care spending per capita by country, you can see that the US has the highest per capita spending among countries, more than twice the average spending by countries in the organization for economic cooperation and development (OECD). *In this figure that plots pharmaceutical spending per capita by country, similar to overall healthcare expenditures, the US has the highest per capita spending among countries, twice the average among countries in the organization for economic cooperation and development (OECD).

*Health expenditures as a proportion of total gross domestic product have increased in many countries since 1960 (OECD data accessed 2009). However, the rate of growth in health care expenditures as a proportion of GDP has been greater in the US than other countries. *There is much regional variation in spending. This map illustrates the regions where per capita spending is highest (the darkest red areas), while the lowest spending is in light beige areas. Many studies have found the higher-spending regions do not tend to have better health outcomes, and some estimates of potential saving of about 30% in Medicare spending from reducing treatment variations if more conservative practice styles were adopted nationwide. ***Despite the highest health spending per capita, life expectancy is comparable to, or lower than, other developed countries.*The principle motivation behind comparative effectiveness research is similar that which led to the outcomes research. The movement towards outcomes research in the late 1980s was driven by the desire to contain costs, the rise of managed care, and the recognition that there was a poor relationship between costs of care and outcomes of care. In addition, measurement of economic, clinical and humanistic outcomes can improve accountability and management in health care. ***