"Early-stage treatment of breast cancer costs, on average, nearly $14,000 per year, while late-stage treatment averages $61,000—a difference of $47,000 for one patient in one year," said Alan Katz, executive vice president of SeeChange Health, a provider of value-based health plans, in testimony delivered on April 10, 2012, before a California state legislative committee considering legislation on wellness incentive and rewards programs.
"Even more important, early intervention saves lives and can greatly improve patients' quality of life," testified Katz. "Instead of reducing utilization through denying treatment, savings can be achieved through improved patient outcomes—even if those outcomes result in increased utilization in the short term," he noted.
Colonoscopies Detect Precancerous Polyps
Another example of the benefits of diagnostic screenings and early intervention: A colonoscopy is considered the "gold standard" for colon cancer screening because cancerous and precancerous polyps found during a colonoscopy can be removed during the procedure. However, a study published in the April 9, 2012, issue of Archives of Internal Medicine found that many patients are reluctant to have the test.
Only about 38 percent of those who chose or were assigned to undergo a colonoscopy actually had one. And significant racial/ethnic differences existed in screening, with whites more likely to have a colonoscopy than nonwhites. Blacks had the lowest rate of colon cancer screening, according to a report on the study by Blue Cross/Blue Shield Association's Healthcare News on April 10, 2012.
Price and Quality
As important as these screenings are, price remains a consideration and can vary widely. According to insurance claims data for Americans with employer-sponsored insurance, the costs for high-volume procedures such as mammograms, colonoscopies and MRIs can be two to three times higher than the median price in the same market, depending on the provider, as noted in a February 2012 white paper by business information provider Thomson Reuters, Save $36 Billion in U.S. Healthcare Spending Through Price Transparency.
For instance, it's not uncommon for the price of a colonoscopy to range from $1,400 to $2,800 in a given region, with outcome data showing that lower costs are not correlated with lower quality.
Diagnostic Testing: Costs vs. Benefits
"When you look at the utilization of diagnostic testing, whether it's appropriate utilization, underutilization or overutilization, there's really a fine balance," commented Gregory Long, M.D., chief medical officer at ThedaCare, a health community system that includes five hospitals in Northern Wisconsin. Dr. Long spoke at the 2012 World Health Care Congress, held April 16-18, 2012, near Washington, D.C., where he was interviewed by SHRM Online.
"We recommend looking at what the evidence in the medical literature shows," said Dr. Long. With colonoscopies, for example, evidence-based studies demonstrate that this procedure is a cost-effective means for prevention or early detection of colon cancer. For individuals who are 50 years of age or older, or at high risk for colon cancer, if they have colonoscopies done in a timely fashion when it's appropriate, we can reduce their likelihood of getting colon cancer or having it spread and requiring chemotherapy."
However, he noted, there are other diagnostic screenings where the evidence-based literature is less conclusive in terms of widespread use, arguably including some screenings for prostate cancer. In these cases, "it's best to bring in the patient as part of that discussion, so they can make informed consent about whether to have the test or not."
And then there are costly procedures that often are not necessary, Dr. Long noted. "It's estimated about 30 percent of health care costs come under procedures, such as diagnostic testing, that show no improvement in terms of improved outcomes. Ordering higher-end imaging such as MRIs and CT scans for routine knee injuries and back pain may be driven by volume-based medicine and fee for services, rather than value-based medicine," he said. "Clearly the evidence shows there is overutilization when you have misaligned incentives, where if you provide conservative treatment instead, 80 percent of those musculoskeletal conditions typically are going to be resolved and will go away on their own."
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Costs Vary Widely for 'Shoppable' Procedures, SHRM Online Benefits Discipline, March 2012
Applying Effective In-Network Incentives at CalPERS, SHRM Online Benefits Discipline, February 2012
Managing Diabetes: Incentives and 'Coaches' Improved Health, Reduced Costs, SHRM Online Benefits Discipline, May 2009
Survey Reveals Shift to Value-Based Health Benefit Design, SHRM Online Benefits Discipline, May 2008
SHRM Online Benefits DisciplineSHRM Online Health Care Reform Resource Page