Surprise, out-of-network charges billed to privately insured Americans who received inpatient care at in-network hospitals more than doubled between 2010 and 2016, according to a study by researchers at the Stanford University School of Medicine.

Many have heard the stories of patients hit with massive, unexpected medical bills after an emergency-room visit or routine surgery, even if that hospital is in their insurance network. News organizations, including Vox.com, have reported on the problem, and both houses of Congress will continue debating draft legislation to tackle unexpected bills after members return from summer recess.

Yet there has been little data-driven research about the financial consequences of out-of-network billing on patients.

 “Our paper is one of the first to spell out just how big the problem really is,” said Eric Sun, MD, PhD, an assistant professor of anesthesiology.

 he paper was published Aug. 12 by JAMA Internal Medicine. Sun is the lead author. The senior author is Laurence Baker, PhD, professor of health research and policy and core faculty member at Stanford Health Policy.

Co-author Michelle Mello, PhD, JD, professor of law and of health research and policy, said news coverage has tended to focus on the real horror stories: patients who got surprise bills for tens or hundreds of thousands of dollars.

“Our study asked what a typical patient who goes to a hospital they’re supposed to go to can expect,” said Mello, who is also a core faculty member at Stanford Health Policy. “And what we found was that although typical out-of-network bills are lower than the horror stories, they’re still high enough to create enormous stress for families — and they’re also really common.”

The authors pointed to a recent survey that found 4 in 10 Americans would not be able to pay an unexpected expense of $400 without selling something or borrowing money. 

Yet the average amount of balance bills sent to patients in the study exceeded that: $2,040 for inpatient admissions and $628 for emergency visits in 2016. Further, 10% of the patients in the study faced an average of  $4,112 for inpatient admissions and $1,364 for ED visits.

Why is this happening?

Mello said there are two potential explanations behind the significant rise in out-of-network bills: insurers may be excluding more physicians from their provider networks, even when they essentially have no choice but to include the hospital; and hospitals may be increasingly tempted to make use of physician staffing groups that have market power and can resist pressure to come in-network at lower rates. 

Balance billing may also occur because insurers pay doctors too little to practice at one given hospital, so to make ends meet, they bill patients directly for additional amounts, Sun said.

“It certainly may be the case that consolidation among insurers has resulted in reduced payments to physicians, and that out-of-network billing is a way to compensate for this,” he said.

The classic example, Sun said, of how surprise billing works can be found at community hospitals that are not run by a multispecialty organization, such as Stanford Health Care or Kaiser Permanente. In that community hospital, everyone is in business for themselves. So, for example, when a patient comes to the emergency department and needs an operation, even if the patient’s chosen surgeon is in-network, all the specialists helping the patient through the surgery may not be. It is often difficult for patients who are in- or out-of-network to walk away if he or she doesn’t like the arrangement, particularly in emergencies.

“The bottom line is this: In a lot of situations, patients can’t choose the doctor, and the doctors can’t choose the patient,” Sun said. “It’s an especially big problem for hospital-based physicians, such as emergency room physicians, anesthesiologists, and radiologists.”

Even if a patient schedules a procedure, such as knee-replacement surgery or the delivery of a baby, accidents or the unknown often occur.

“What if something goes horribly wrong and you have to go to the ICU?” Sun said. “Now everyone seeing you, from the cardiologist or a neurologist, could be out-of-network.”

Crunching the numbers

The researchers examined 5.5 million inpatient admissions and 13.6 million emergency room admissions between 2010 and 2016, using data from the Clinformatics Data Mart, which comprises private health insurance claims from all 50 states from a large commercial insurer. The individuals in the database represent about 19% of all American who have commercial health insurance.

The researchers found the percentage of emergency department visits resulting in one or more out-of-network bills increased from 32.3% to 42.8% and that the average amount billed nearly tripled from $220 to $628. A whopping 85.6% of ambulance rides to emergency departments resulted in an out-of-network bill..

The proportion of inpatient admissions with out-of-network bills increased by almost 60% over that period, from 26.3% to 42%, with the average out-of-network bill more than doubling from $804 to $2,040.

The study found out-of-network billing was common among ambulance services and hospital-based physicians — such as emergency physicians, radiologists and anesthesiologists — providing care at in-network hospitals. “In some circumstances, patients could easily assume that the entire hospital team is in-network and thus the balance billing may come as a surprise,” the authors wrote. “Further, in these contexts, patients may have limited ability to choose.”

The authors note that the findings support current efforts in Congress and the states to limit balance billing in contexts where surprise is likely to be involved. They also note that patients may succeed in getting out-of-network bills reduced in some circumstances.

Still, Mello added: “This is not the way to run a health-care system. Avoiding outrageous bills shouldn’t require a PhD in health policy.” 

The other co-author of the study is Jasmin Moshfegh, a graduate student in the Health Policy PhD program.

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Fourteen years ago, Stanford Health Policy’s Douglas K. Owens and colleagues published a cost-effectiveness analysis that would change the face of HIV prevention. Their landmark study in The New England Journal of Medicine showed that expanding HIV screening would increase life expectancy and curb transmission of the disease — and was cost effective in virtually all health-care settings.

Not long after their model-based results were published, their findings became key evidence in the decision to expand screening by the Centers for Disease Control and Prevention. Their work has been used in HIV screening guidelines from the U.S. Preventive Services Task Force — which Owens now chairs — the American College of Physicians and the Department of Veterans Affairs, among others.

Owens and his Stanford colleague Margaret Brandeau, professor of management science and engineering, have led this team of decision scientists who have been at the forefront of developing scientific models for the screening and prevention of HIV for two decades now. This modeling team — which also includes colleagues from UCSF and Yale — has published nearly 250 peer-reviewed studies and is one of the most experienced and respected in the world.

But today, the opioid epidemic is threatening the hard-fought gains in the prevention and control of HIV and hepatitis C virus (HCV). In support of their continued work to address the opioid epidemic, Owens received a highly prestigious MERIT award from the National Institute on Drug Abuse (NIDA),which provides up to 10 years of funding for the team.

“We are extremely grateful to NIDA for this support and to our colleague at NIDA, Dr. Peter Hartsock, who has worked with us for over 20 years to mitigate the harms from HIV and HCV,” said Owens.

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The team will now turn its sights on the complex interplay of the opioid epidemic, and HIV and hepatitis C virus (HCV) transmission. The transmission of HCV has been fueled by the opioid epidemic, and HCV now kills more Americans than all other infectious diseases combined.  

“The unfolding opioid epidemic is a defining challenge for the public health and medical systems in the United States,” Owens, the principal investigator of the team, and his colleagues wrote in their grant proposal. “The reversal of life expectancy growth in the demographic groups most affected by the opioid epidemic represents the aggregation of a complex web of harmful public health and population trends, including a rise in overdoses, suicides, mental health afflictions, economic disadvantages, and infectious disease outbreaks.”

Indeed, for the first time since the 1960s, the U.S. life expectancy has contracted for the second year in a row; drug overdoses have been the leading cause of death for Americans under age 50, with an estimated two-thirds of those deaths resulting from opioids.

Since the last renewal of their NIDA-funding grant in 2013, the team has watched the dramatic rise of opioid overuse, injection drug use, and overdose become a national public health crisis, with more than 60,000 drug overdose deaths in the United States reported by the CDC.

“The growing use of needle-based opioids increases the likelihood of accelerating HIV and HCV transmission,” said co-investigator Jeremy Goldhaber-Fiebert, an associate professor of medicine and core faculty at Stanford Health Policy. “Identifying the best combination of approaches to reduce HIV and HCV transmissions stemming from the opioid epidemic is of critical public health importance.”

The other co-investigators on the team of the project, “Making Better Decisions: Policy Modeling for AIDS and Drug Abuse,” are:

1. Eran Bendavid, an infectious diseases physician and associate professor of medicine at Stanford who is another a seasoned HIV modeler and outcomes expert;
2. Keith Humphreys, professor of psychiatry and behavioral sciences at Stanford and a former senior policy advisor in the White House Office of National Drug Control Policy; 
3. David Paltiel, a Yale School of Public Health professor who pioneered policy options for mitigating the impact of HIV in the United States and abroad;
4. Gregg Gonsalves, an assistant professor of epidemiology at Yale and a 2018 MacArthur Foundation Fellow who will focus on developing new algorithms to detect and predict opioid-related outbreaks of HIV and HCV;
5. James Kahn of the Institute for Health Policy Studies at UCSF, professor of epidemiology and biostatistics and an expert on the individual and population impact of prevention and treatment for HIV, HCV and opioid use.

The End of AIDS? 

Toward 2012, a series of scientific advances led to calls for “the end of AIDS.” The two big factors were the cost of the “triple cocktail” of antiretrovirals plunging in developing countries and then huge donations from wealthy countries began pouring in to fight the disease.

Yet the researchers say successes have been too few and that the incidence of HIV remains far too high. About 40 million people were living with HIV around the world in 2017; an estimated 940,000 people died from AIDS-related illnesses that same year.

The year 2015 marked the first time in two decades that the number of HIV diagnoses tied to opioids increased.

"Although it was started by prescription opioid overprescribing, the epidemic has evolved to include significant injection opioid use which is now threatening to significantly increase the spread of infectious diseases like HIV and Hepatitis C,” said Humphreys.

The most visible example of an opioid-related HIV outbreak took place in Scott County, IN, in 2014-2015. A single infection introduced into the community resulted in nearly 200 new HIV cases within six months, largely related to oxymorphone injections. In 2017 and again in March 2018, two additional substantial outbreaks occurred in Scott County, likely linked to both risky sex and needle sharing. 

In addition, the CDC has identified 220 counties in 26 states that are uniquely vulnerable to HIV and HCV outbreaks related to opioid injections.

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“Developing models that forecast high-risk areas for HIV and HCV is essential for aligning surveillance and public health interventions with risk,” said Brandeau, a leader in designing models for the prevention of HIV and hepatitis, especially in drug abuse disorders.

There have also been striking increases in the injection of opioids and heroin that are closely linked to the spread of viral hepatitis. In the demographic areas most affected by opioids, the researchers found, diagnoses of acute hepatitis have more than quadrupled — reversing trends of the previous decade. And in the country as a whole, the number of new HCV cases has nearly tripled since 2010. 

“For any type of contact with an infected source such as a dirty needle, or even cocaine straws, HCV is by far the most rapidly transmissible of the blood-borne infections,” said Bendavid. “One of the challenging issues with hepatitis C is that its major health manifestations do not appear for many years after infection."

What’s the Plan? 

In the next five years, the team intends to evaluate how strategies to prevent and mitigate the harms of opioid use can decrease the spread of HIV and HCV and thereby reduce morbidity and mortality from opioid use. They have four specific goals: 

1. Model the effect of the opioid epidemic on transmission of HIV and HCV.
2. Model the epidemiological and population impacts of individual strategies to prevent and mitigate the harms of opioids and drug injection on HIV and HCV outcomes by evaluating prevention strategies;
3. Model the epidemiologic and population impact of portfoliosof strategies to mitigate the harms of opioid use and drug injection on HIV and HCV outcomes;
4. And model the impact of barriers to implementation of effective strategies to reduce the harms of opioid use on HIV and HCV.

“We will perform novel analyses assessing intervention impacts singly and in combination assessing outcomes for HIV, HCV and opioid use disorder,” the researchers wrote in their grant proposal.

Then, the researcher will model new methods for building complex multi-intervention and multi-disease models and developing adaptive testing algorithms for identifying outbreaks.

Finally, the team intends to assess the barriers and intervention approaches “that more realistically reflect implementation issues than current models and hence identify resource needs for system planning.”

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Most studies that look at whether democracy improves global health rely on measurements of life expectancy at birth and infant mortality rates. Yet those measures disproportionately reflect progress on infectious diseases — such as malaria, diarrheal illnesses and pneumonia — which relies heavily on foreign aid.

A new study led by Stanford Health Policy's Tara Templin and the Council on Foreign Relations suggests that a better way to measure the role of democracy in public health is to examine the causes of adult mortality, such as noncommunicable diseases, HIV, cardiovascular disease and transportation injuries. Little international assistance targets these noncommunicable diseases. 

When the researchers measured improvements in those particular areas of public health, the results proved dramatic.

“The results of this study suggest that elections and the health of the people are increasingly inseparable,” the authors wrote.

A paper describing the findings was published today in The Lancet. Templin, a graduate student in the Department of Health Research and Policy, shares lead authorship with Thomas Bollyky, JD, director of the Global Health Program at the Council on Foreign Relations.

“Democratic institutions and processes, and particularly free and fair elections, can be an important catalyst for improving population health, with the largest health gains possible for cardiovascular and other noncommunicable diseases,” the authors wrote.

Templin said the study brings new data to the question of how governance and health inform global health policy debates, particularly as global health funding stagnates.

“As more cases of cardiovascular diseases, diabetes and cancers occur in low- and middle-income countries, there will be a need for greater health-care infrastructure and resources to provide chronic care that weren’t as critical in providing childhood vaccines or acute care,” Templin said.

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Free and fair elections for better health

In 2016, the four mortality causes most ameliorated by democracy — cardiovascular disease, tuberculosis, transportation injuries and other noncommunicable diseases — were responsible for 25 percent of total death and disability in people younger than 70 in low- and middle-income countries. That same year, cardiovascular diseases accounted for 14 million deaths in those countries, 42 percent of which occurred in individuals younger than 70.

Over the past 20 years, the increase in democratic experience reduced mortality in these countries from cardiovascular disease, other noncommunicable diseases and tuberculosis between 8-10 percent, the authors wrote.

“Free and fair elections appear important for improving adult health and noncommunicable disease outcomes, most likely by increasing government accountability and responsiveness,” the study said.

The researchers used data from the Global Burden of Diseases, Injuries, and Risk Factors Study; V-Dem; and Financing Global Health databases. The data cover 170 countries from 1970 to 2015.

What Templin and her co-authors found was democracy was associated with better noncommunicable disease outcomes. They hypothesize that democracies may give higher priority to health-care investments.

HIV-free life expectancy at age 15, for example, improved significantly — on average by 3 percent every 10 years during the study period — after countries transitioned to democracy. Democratic experience also explains significant improvements in mortality from cardiovascular disease, tuberculosis, transportation injuries, cancers, cirrhosis and other noncommunicable diseases, the study said.

Watch: Some of the authors of the study discuss the significant their findings: 

What Templin and her co-authors found was democracy was associated with better noncommunicable disease outcomes. They hypothesize that democracies may give higher priority to health-care investments.

HIV-free life expectancy at age 15, for example, improved significantly — on average by 3 percent every 10 years during the study period — after countries transitioned to democracy. Democratic experience also explains significant improvements in mortality from cardiovascular disease, tuberculosis, transportation injuries, cancers, cirrhosis and other noncommunicable diseases, the study said.

Foreign aid often misdirected

And yet, this connection between fair elections and global health is little understood.

“Democratic government has not been a driving force in global health,” the researchers wrote.  “Many of the countries that have had the greatest improvements in life expectancy and child mortality over the past 15 years are electoral autocracies that achieved their health successes with the heavy contribution of foreign aid.”

They note that Ethiopia, Myanmar, Rwanda and Uganda all extended their life expectancy by 10 years or more between 1996 and 2016. The governments of these countries were elected, however, in multiparty elections designed so the opposition could only lose, making them among the least democratic nations in the world.

Yet these nations were among the top two-dozen recipients of foreign assistance for health.

Only 2 percent of the total development assistance for health in 2016 was devoted to noncommunicable diseases, which was the cause of 58 percent of the death and disability in low-income and middle-income countries that same year, the researchers found.

“Although many bilateral aid agencies emphasize the importance of democratic governance in their policy statements,” the authors wrote, “most studies of development assistance have found no correlation between foreign aid and democratic governance and, in some instance, a negative correlation.”

Autocracies such as Cuba and China, known for providing good health care at low cost, have not always been as successful when their populations’ health needs shifted to treating and preventing noncommunicable diseases. A 2017 assessment, for example, found that true life expectancy in China was lower than its expected life expectancy at birth from 1980 to 2000 and has only improved over the past decade with increased government health spending. In Cuba, the degree to which its observed life expectancy has exceeded expectations has decreased, from four-to-seven years higher than expected in 1970 to three-to-five years higher than expected in 2016.

“There is good reason to believe that the role that democracy plays in child health and infectious diseases may not be generalizable to the diseases that disproportionately affect adults,” Bollyky said. Cardiovascular diseases, cancers and other noncommunicable diseases, according to Bollyky, are largely chronic, costlier to treat than most infectious diseases, and require more health care infrastructure and skilled medical personnel.  

The researchers hypothesize that democracy improves population health because:

1. When enforced through regular, free and fair elections, democracies should have a greater incentive than autocracies to provide health-promoting resources and services to a larger proportion of the population;
2. Democracies are more open to feedback from a broader range of interest groups, more protective of media freedom and might be more willing to use that feedback to improve their public health programs;
3. Autocracies reduce political competition and access to information, which might deter constituent feedback and responsive governance.

Various studies have concluded that democratic rule is better for population health, but almost all of them have focused on infant and child mortality or life expectancy at birth.

Over the past 20 years, the average country’s increase in democracy reduced mortality from cardiovascular disease by roughly 10 percent, the authors wrote. They estimate that more than 16 million cardiovascular deaths may have been averted due to an increase in democracy globally from 1995 to 2015. They also found improvements in other health burdens in the countries where democracy has taken hold: an 8.9 percent reduction in deaths from tuberculosis, a 9.5 percent drop in deaths from transportation injuries and a 9.1 percent mortality reduction in other noncommunicable disease, such as congenital heart disease and congenital birth defects.

“This study suggests that democratic governance and its promotion, along with other government accountability measures, might further enhance efforts to improve population health,” the study said. “Pretending otherwise is akin to believing that the solution to a nation’s crumbling roads and infrastructure is just a technical schematic and cheaper materials.”

The other researchers who contributed to the study are Matthew Cohen, Diana Schoder, Joseph Dieleman and Simon Wigley, from CFR, the University of Washington-Seattle and Bilkent University in Turkey, respectively.

Funding for the research came from Bloomberg Philanthropies and the Bill & Melinda Gates Foundation. Stanford’s Department of Health Research and Policy also supported the work.

Something as simple as, "Are you taking your medications?" could conceivably prolong a life.

The study, detailed in a new working paper released this week by the National Bureau of Economic Research, was co-authored by Petra Persson, an assistant professor of economics; Maria Polyakova, an assistant professor of health economics at Stanford School of Medicine and core faculty at Stanford Health Policy; and Yiqun Chen, a doctoral student in health economics at Stanford School of Medicine. Persson and Polyakova are both faculty fellows at the Stanford Institute for Economic Policy Research (SIEPR).

Their study tackles the issue of health inequality and specifically examines the effects of having access to informal health expertise by having a doctor or nurse in the family. It finds that those with relatives in the health profession are 10 percent more likely to live beyond age 80. They are also significantly less likely to have chronic lifestyle-related conditions, such as heart attacks, heart failure and diabetes.

Younger relatives within the extended family also see gains: They are more likely to have been vaccinated, and they have fewer hospital admissions and a lower prevalence of drug or alcohol addiction.

In addition, the closer the relatives are to their familial medical source – either geographically or within the family tree – the more pronounced the impact of the health benefits, according to the findings.

The researchers used data from Sweden, where lotteries were used in the early 2000s to break ties among equally qualified applicants for admission into medical schools. The researchers then compared the health of the family members of lottery winners against lottery losers – a setup similar to a randomized control trial.

The strong findings of health benefits funneled from a familial sphere of medical knowledge suggest it would be worth ramping up access to health expertise in our health care system, the researchers say.

A doctor, for instance, could prescribe statins – a type of drug known to lower the risk of heart attacks – but whether the patient continues taking it from day to day is a decision made at home.

“Our work shows that there is a lot of value in trying to improve people’s decisions about their investment in their own health,” Persson says.

“If the government and health care system, including public and private insurers, could mimic what goes on inside families, then we could reduce health inequality by as much as 18 percent,” she says, referring to a main finding of the study.

Intra-family transmissions of health-related expertise might encompass frequent nagging to adhere to prescribed medications, get vaccinations or refrain from smoking during pregnancy, and “these behavioral changes are – from a society’s perspective – simple and cheap,” the study states.

Disparity despite access

The study also reveals limitations to the impact of equal access to medical care, underscoring the importance of other health efforts.

The researchers compared mortality data of Sweden – where there is universal access to health care – to the United States. They found the overall mortality was lower in Sweden but the level of health inequality largely mirrored that of the United States. In Sweden, despite its extensive social safety net, the rich also live longer and the poor die younger. Specifically, among people alive at age 55, more than 40 percent of individuals at the bottom of the income distribution in Sweden will have died by age 80 – as opposed to fewer than 25 percent for those at the top of the distribution.

“This health inequality appears to be extremely stubborn,” Persson says. “We can throw a universal health insurance system at it and yet substantial inequality persists. So, is there anything else that can help us close that health gap between rich and poor?”

According to their latest research, yes.

Health effects from having a medical professional in the family were substantial and occurred across the income spectrum, according to the study. And because the effects from the exposure to medical expertise was often even stronger for those at the lower half of the income distribution, the researchers estimated that information-driven behaviors could make a significant difference in getting rid of health disparities.

Closer ties, less churn

The study did not examine the complexity of family dynamics or specific actions that led to the positive health effects, but the researchers hypothesize that the mere presence of a medical professional in the family translates somehow to either a heightened health culture or, at least, having a coach of sorts to encourage healthy, good-patient behavior.

Although general public health campaigns (e.g., “Get Your Flu Shot Today!”) may not carry the same level of influence as intimate dinner-table discussions or persistent prodding among family members, there could be other ways society can improve its exposure to medical expertise to lead to healthier, longer lives, the researchers say.

Community health worker or nurse outreach programs can perhaps lead to more targeted, personalized communication efforts, they say. Digital nudges delivered through mobile phone apps could potentially make healthy dents.

Reminders of preventive care can also come by way of closer patient-doctor relationships and more consistent, longer-term ties to the same doctor.

“The idea of continuity of care and developing a true relationship with your doctor, who becomes someone who pays attention to you as an individual and sees you and your family over a long period of time, is well known,” Polyakova says. “Today, it’s what they might call old-fashioned primary care, where the whole family goes to the same doctor for many years. Many countries, the U.S. included, appear to be moving increasingly away from this model, and our results suggest that we might want to do the reverse.”

The finding of how a closer family connection or closer proximity leads to even stronger health outcomes helps substantiate the potential difference a closer bond between any doctor and patient could make – improvements that would be hard to glean from rushed and infrequent medical appointments, Persson and Polyakova say.

Communication-focused health initiatives don’t have to come with hefty price tags either, they say.

“We pour a lot of resources into getting even fancier machines inside hospitals, but the things that are making a difference here are not that expensive,” Persson says of their findings. “These are cheap, easily scalable preventative investments that are translating to gains in longevity, which is remarkable.”

Sweden’s medical school lotteries

Using large-scale data from Sweden, the researchers focused on quantifying the role of informal exposure to health expertise via a medical professional in the family while avoiding results that would be muddled with other differences between individuals with and without a doctor in the family.

The researchers used two different approaches. First, they took advantage of the fact that in some years, lotteries were used to break ties among equally qualified applicants to Sweden’s medical schools. This allowed the researchers to use medical school application records and track the health of family members of applicants who won and lost the lottery.

The researchers looked at more than 30 years of continuous health and tax records spanning four generations of family members, and examined health-related outcomes of the extended family members of newly trained doctors and nurses – including their siblings, parents, grandparents, children, aunts, uncles, cousins and in-laws.

Second, researchers sought to double-check whether higher income and higher social status associated with the medical profession had anything to do with the positive health benefits they found.

One of the ways they did this was to draw a comparison to lawyers, a similarly paid profession. The parents of doctors, they found, were 16 percent more likely to be alive than the parents of lawyers 20 years after their children matriculated. The parents of doctors also faced lower prospects of lifestyle-related chronic diseases.

In addition to the higher likelihood of their parents living past age 80 and the lower likelihood of heart diseases, the relatives of health professionals showed higher levels of preventive behaviors, including purchases of heart and blood-thinning medications, and vaccinations for HPV, or human papillomavirus. Younger family members also had fewer hospital admissions and addiction cases.

“People with health professionals in the family essentially make preventative investments that everyone should be doing,” Persson says.

Americans know that choosing a health insurance plan can tough. And once you’re retired and possibly on a limited or fixed income, it can become downright brutal.

Stanford Health Policy’s M. Kate Bundorf and Maria Polyakova and their colleagues set out to develop an online decision-support tool to test whether machine-based expert recommendations would influence choice among Medicare Part D enrollees — and make it easier.

“The use of technology seems like a natural way to address the challenges of choosing among plans,” they write in their study published in Health Affairs.

Medicare beneficiaries have been choosing among Medicare Advantage and Part D prescription drug plans for years, and more recently the Affordable Care Act established health insurance marketplaces for those who are younger than 65.

All that choice is supposed to create incentives for plans to offer a variety of low-cost, high-quality products that allow people to choose the plan that best meets their needs.

But sometimes too many good choices can lead to bad outcomes.

“Health insurance is a complex financial product with complicated cost-sharing rules, and the implications of different benefit designs for out-of-pocket spending and health care use vary across consumers depending on their needs,” wrote Bundorf, chief of the Department of Health Research and Policy and an associate professor of medicine at Stanford Medicine.

Another researcher in the study was Albert Chan, chief of digital patient experience and an investigator at Sutter Health, in Palo Alto, as well as an adjunct professor at the Stanford Center for Biomedical Informatics Research. Ming Tai-Seale, a professor of family medicine and public health at University of California San Diego, was also a principal investigator of the study.

Choosing Health Plan is Complicated

“Consistent with these challenges, researchers have documented that many consumers, both young and old, do not understand the characteristics of their plans,” they wrote in the March issue of Health Affairs, which is holding a public briefing on patients-as-consumers at the National Press Club on March 5th. Bundorf will present their research at the briefing in Washington, D.C., which will be streamed live and will be posted here once it has aired.

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“(Patients) often make decisions that may signal inaccurate evaluation of the costs and benefits of coverage — such as staying in their plan when better options are available, not enrolling in the plan that provides the best coverage for their drugs, or enrolling in plans that are objectively inferior to other available choices,” the authors wrote.

The Centers for Medicare and Medicaid Services (CMS) offers a tool to help beneficiaries choose among plans, but older adults — even those with high levels of formal education — find it difficult to use.

So, the research team developed a decision-support software tool called CHOICE to assist Medicare beneficiaries in choosing a Part D prescription plan. The software automatically imported the user’s list of current drugs from their electronic medical records (allowing users to adjust the list if desired); the algorithm would then crunch the numbers to come up with three recommended plans which were likely to be the least expensive for the user.

The team then conducted a randomized trial of this software tool among 1,185 patients of the Palo Alto Medical Foundation (PAMF), a large health-care provider in Northern California. Fifty-four percent of those patients were women, 65 percent were white, and 54 percent were married. Living in the Bay Area, their income and education levels were fairly high: They lived in areas in which the median income is $106,808 and 54 percent of the population has a college degree or more education.

While not representative of the general population of seniors in the United States, the researchers emphasized that it was important to conduct this study among these potential users, who are more likely to respond positively to an interaction with a computer. If these users didn’t find this software helpful or user friendly, it would not likely be a useful tool to roll out across the country as a whole.

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The study participants received access to one of two versions of the CHOICE tool: expert recommendations or individual analysis. Both versions automatically imported information on patients’ prescription drugs from their electronic health records and combined it with information on plan benefit design to provide individually customized information on users’ likely spending on both premiums and prescription drugs in each of the stand-alone Part D plans available in their area. The version of CHOICE that offered expert recommendations combined this information with an explicit recommendation on which plans were best for the user.

Willing and Able

The researchers found that providing an online tool not only increased older adults’ satisfaction with the process of choosing a prescription drug plan, but they also spent more time choosing that plan.

“The most significant finding of our trial is that individually customized information alone didn’t seem to be enough,” Bundorf, who is also a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR), said in an interview. “The tool we developed was most effective when individually customized information paired with a clear-cut algorithmic expert recommendation that highlighted three plans that the computer thought were the best for the user based on total spending for prescription drugs.”

She said she was surprised to see that people spent more time choosing a plan and were more satisfied with the process when they had access to the CHOICE tool.

“Prior to our trial, I thought people might spend less time choosing a plan when they had access to expert recommendations because it would make the process easier,” Bundorf said. “But taken together, these results suggest that people are more engaged in decision-making when they have access to a patient-centered tool.”

Polyakova, who is also a faculty fellow at SIEPR, said a key takeaway from the trial is that people who are likely to use sophisticated tools are already more likely be more sophisticated shoppers of health care and prescription plans.

Research by Stanford Health Policy’s Michelle Mello looks at what happens when a group of hospitals started systematically acknowledging adverse outcomes in care by apologizing and proactively offering compensation where substandard care caused serious harm. 

Hospitals have traditionally “crouched in a deny-and-defend posture when things go wrong in medical care,” said Mello, a professor of law at Stanford Law School and a professor of health research and policy. The new approach, called “a communication-and-resolution program,” or CRP, is being adopted by an increasing number of health-care facilities.

“None of the hospitals experienced worsening liability or trends after CRP implementation, which suggests that transparency, apology, and proactive compensation can be pursued without adverse financial consequences,” Mello and her co-authors write in the study published Monday in Health Affairs. However, despite the growing consensus that CRPs are the right thing to do, concerns over liability risks remain.”

Stanford Health Policy asked Mello some questions about the research:

Could this new approach to resolving patient conflict be a thing of the future?

Hospitals that adopt CRPs believe they will help improve patient safety and are consistent with the ethical obligation to disclose medical errors; they also hope they will reduce liability costs. However, there is a lot of uncertainty about their effects on costs. On the one hand, being honest with patients could avoid the anger that prompts patients to sue, and compensating injured patients early on saves on litigation expenses. On the other hand, in the traditional system, very few patients injured by substandard care ever get compensated. Offering up admissions of error and early compensation could mean a lot more patients receive payment, raising total costs. Uncertainty about this issue continues to be a barrier to widespread adoption of the CRP approach.

What were the key findings in your study?

We evaluated the liability effects of CRP implementation at four Massachusetts hospitals by examining before-and-after trends in malpractice claims, volume, cost, and time to resolution. We then compared those to trends among similar hospitals in the state that did not adopt CRPs. We found that CRP implementation was associated with improved trends in the rate of new claims and legal defense costs at the two big hospitals that implemented these programs — favorable developments that were not seen at comparison hospitals with no communication-and-resolution programs in place. CRP implementation was not associated with significant changes upward or downward in trends of new claims receiving compensation, compensation costs, total liability costs, or average compensation per paid claim, nor was it associated with a significant change in time to resolution.

So then why are the findings important?

The study helps resolve uncertainty about the liability effects of admitting and compensating medical errors, especially since the study design was much stronger than that of previous studies. We found that the CRP approach does not expand liability risk and may, in fact, improve some liability outcomes. Therefore, hospitals can “do the right thing” — be honest about errors, apologize, and compensate patients who are injured by negligence — without adverse financial consequences.

Who began the CRP approach and what is the average payment proactively made to patients who did not receive proper care?

The approach dates to the late 1990s and was first publicized by a Veterans Affairs hospital in Kentucky and then by the University of Michigan Health System, both of which reported very positive outcomes.  Stanford was also an early adopter.

The model calls for patients to be compensated at about what the hospital estimates their claim would be worth in traditional litigation. In our study in Massachusetts, the median payment to patients was $75,000. That’s a lot lower than the median payment in the tort system, but the mix of injuries is different. In traditional litigation, 85 percent of claims involve very serious injuries or deaths, because smaller claims aren’t attractive to plaintiff attorneys. They just go uncompensated. In CRPs, it’s easier for patients with moderate-severity injuries to have access to justice.

A cutting-edge treatment for blood cancer in children with promising short-term remission rates has nevertheless come under intense scrutiny due to its unprecedented cost.

Acute lymphoblastic leukemia (ALL) is the most commonly diagnosed pediatric cancer. Though treatment advances have driven five-year survival rates above 90 percent, relapse is common and ALL remains a leading cause of death from childhood cancer. Those surviving relapse typically require hematopoietic stem cell transplant (HSCT) to remain in remission.

The Food and Drug Administration last year approved tisagenlecleucel as the first anti-CD19 CAR T-cell therapy for relapsed or refractory pediatric ALL. While tisagenlecleucel-induced remission rates are encouraging compared with those of established therapies — more than 80 percent compared with less than 50 percent — a one-time infusion costs $475,000.

That makes it one of  the most expensive oncologic therapies out there, even though no studies exist to show how the therapy maintains remission in the long term.

So Stanford Health Policy’s John K. Lin, Jeremy Goldhaber-Fiebert and Douglas K. Owens, in collaboration with Kara Davis, an assistant professor of pediatrics at Stanford’s Lucile Packard Children’s Hospital, set out to determine whether the treatment is cost-effective. 

Their study was recently published in the Journal of Clinical Oncology.

“CAR-T cells are an exciting new therapy to help us cure more patients with ALL,” said Davis. “They use a patient’s own immune system to precisely target their leukemia and remission rates are impressive for patients with relapsed disease.”

The researchers note, however, it remains unknown whether tisagenlecleucel is sufficient to cure relapsed or refractory disease without a transplant.

Not only is it a very expensive treatment, it also has expensive and serious side effects, such as cytokine release syndrome, which can cause symptoms ranging from fevers and muscle aches to lethal drops in blood pressure and difficulty breathing, requiring ICU-level care.

“Given [its] high cost and broad applicability in other malignancies, a pressing question for policymakers, payers, and clinicians is whether the therapy’s cost represents reasonable value,” the authors wrote.

In order to evaluate the economic value of tisagenlecleucel, the authors created a computer simulation that modeled children with relapsed or refractory ALL. Since the durability of the therapy’s effects are unknown, they evaluated the therapy at different levels of long-term effectiveness.

Through their analyses, the authors found that at the simulation’s most optimistic projections, patients receiving tisagenlecleucel would, on average, live over a decade longer than those receiving alternative therapies. At these projections, the therapy would be cost-effective. However, at more modest long-term outcomes, its clinical and economic benefits declined.

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“The durability of CAR-T cell therapy is the main question. For many children with relapsed or refractory ALL, their disease is fatal — if the therapy results in sustained remissions, it would represent an important advance,” said lead author Lin, who is a VA Health Services Research and Development Fellow at Stanford Health Policy.

In the end, the researchers concluded that at tisagenlecleucel’s current price, its economic value is “uncertain,” as the true cost-effectiveness depends on its long-term performance, which has yet to be determined. They noted that substantial price reductions would improve its cost-effectiveness even if its long-term performance is relatively modest.

“A commonly asked question for many expensive, novel therapies is why can’t prices be lowered at least until we know how well they work,” said Goldhaber-Fiebert. 

The “Catch-22” here is that long-term effectiveness data are needed to justify a drug’s price, but current uncertainty about its effectiveness, along with its high price, means developing the data to justify its price occurs much more slowly.

“CAR-T is an individually tailored treatment that has thus far been produced for a relatively small number of patients,” Goldhaber-Fiebert said. “Its current production costs may well be very high, and certainly the companies that have spent heavily on its research and development are interested in achieving returns on their investments.”

When the effectiveness of a therapy is uncertain, some pharmaceutical companies and health policy experts have proposed something called outcomes-based payment, which is essentially a “money-back guarantee” if the therapy doesn’t work as intended.

Novartis, which developed tisagenlecleucel, has a money-back guarantee; if the patient does not achieve initial remission within the first month, they are not responsible for the payment of the therapy.

“However, we find that because most children have an initial remission, this does not materially improve cost-effectiveness,” Lin said.

He suggested that if the money-back guarantee were extended to see whether the patient relapses within a year, such a guarantee would improve the treatment’s cost-effectiveness.

The other co-authors of the study are James I. Barnes, Alex Q.L. Robinson, Benjamin J. Lerman, Brian C. Boursiquot and Yuan Jin Tan.

Federal health advisors say women can now consider three options when it's time for their cervical cancer screening tests. The influential group, the U.S. Preventive Services Task Force (USPSTF), has expanded its recommendations for this potentially life-saving exam.

The new recommendations were published in the latest issue of JAMA.

Pap smears have saved many lives since they became available decades ago. Inspecting samples of cervical tissue for pre-cancerous changes is effective at catching possible cancer, and is still the go-to test for women aged 21 to 29, according to the USPSTF guidelines. But there's another option. 

"Most cervical cancer is caused by what's called the human papilloma virus, or HPV," says Stanford Health Policy's Dr. Douglas Owens, a professor of medicine at Stanford Medicine and vice-chair of the USPSTF. "And we now have tests for HPV and that's an important step forward."

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