For Immediate Release - April 10, 2017

CO-PAYS, PHYSICIAN REFERRALS, AND QUALITY RATINGS FOUND TO DRIVE CONSUMER HOSPITAL CHOICES

From new research funded by the Robert Wood Johnson Foundation, HPC releases select findings on consumer preferences in health care

BOSTON – Monday, April 10, 2017 – Today, the Massachusetts Health Policy Commission (HPC) released select findings from research designed to understand consumer preferences and perceptions of value in choosing health care providers. The HPC’s research, conducted in conjunction with Tufts University School of Medicine and funded by the Robert Wood Johnson Foundation, also investigated what might lead consumers to seek routine care at lower-cost community hospitals as opposed to higher-cost academic medical centers. A full publication on this study is forthcoming.

The findings build upon HPC’s previous analyses including the 2016 Annual Cost Trends Report and 2016 Community Hospitals at a Crossroads Report, and seek to inform market-driven approaches to lowering health care costs through incentivizing and empowering consumers to make value-based choices.

“In the 2016 Cost Trends Report, the HPC recommended that payers and employers continue to pursue strategies that empower consumers to make high-value choices,” said Dr. Stuart Altman, HPC Board Chair and health economist. “Among those strategies was a recommendation to increase price and quality transparency. The study presented today is the next step for the HPC in promoting research that demonstrates that consumers – and the system – can save money with the choice of high-value, community-based settings of care.”

Community hospitals play a vital role in the Massachusetts health care system by providing convenient, high-quality, cost effective care for a range of services. Many patients, however, travel to higher-cost academic medical centers for care that could be provided in their community, adding cost to the health care system. As a cost containment opportunity, the HPC has recommended redirecting routine care from academic medical centers and teaching hospitals to community hospitals. The HPC estimates that redirecting 5% to 10% of community appropriate inpatient-care to high value, community-based settings could lead to $43 million to $86 million in potential annual cost savings in Massachusetts.

While many dynamics drive this costly shift away from the community, it is well understood that consumer preferences play a role. Through this new research, the HPC sought to develop greater insight into consumer values in choice of hospital care. The HPC found that, for less risky procedures, consumers consider cost the most important factor in selecting where they will receive care. The research also found that the majority of consumers will trust hospital quality information from their friends and relatives, but do not generally trust such information from their employers or government websites.

“These results demonstrate that consumers need clear information that they trust regarding quality and cost tradeoffs as they seek care,” said HPC Executive Director David Seltz. “Moving forward, objective and experience-based quality and cost information would help increase the use of community-based settings for routine care, which could net significant savings for the health care system and better care for patients.”

Harvard University researchers also presented findings today from several studies on the impact of tiered network plan designs on hospital choice and medical spending in Massachusetts.

 

METHODOLOGY

The HPC conducted its research in three phases, including a survey of state residents, analysis of the all-payer claims database (APCD), and a series of consumer focus groups, to evaluate patient choice of community hospitals or academic medical centers.

For the first phase, the HPC and Tufts conducted an online survey of 1,000 Massachusetts adults, age 18-64, whose income was greater than $25,000. The survey tested consumers’ preferences for community hospitals and academic medical centers using four “shoppable” scenarios (maternity care, knee replacement, cancer care, and choice of location for an MRI) and tested the effects of out-of-pocket cost, primary care provider referral, quality, and convenience.

During the second phase, the HPC and Tufts analyzed claims data for 2,812 low-risk births to commercially-insured women in Massachusetts in 2011.

The third phase featured eight focus groups of commercially-insured, non-Boston residents with varying incomes, gender, and education, to explore the survey topics in greater depth and gather input on three possible factors which may influence consumer choices.

 

FINDINGS

The Impact of Cost and Quality Information on Consumer Choice

  • Co-pays, physician referrals, and quality ratings all impact consumer hospital choices – and such factors could shift significant numbers of patients away from seeking care at AMCs under the scenarios studied.
  • Cost is the most important factor for consumers when a procedure is less risky and less invasive (e.g., an MRI). As the seriousness of the illness or the risk associated with a procedure increases, consumers consider quality the most important factor when choosing where to receive care. Similarly, consumers consider referrals a more important factor for routine care (e.g., maternity care) and quality more important for more serious illnesses (e.g., cancer).

 

The Impact of Consumer Information and Trust on Consumer Choice

  • Consumers overwhelmingly trust their doctor and will typically follow a referral for routine care. The majority of consumers also trust information about hospital quality from their friends and relatives.
  • Consumers do not generally trust information provided by their employers or quality information on government websites to guide their network decisions.
  • Consumers are skeptical of attempts to be steered toward low-cost providers.

 

RECOMMENDATIONS

The select findings discussed today highlight the significant challenges and potential lessons for health plans, purchasers, and providers in developing effective “demand-side” incentives. Specifically, the HPC recommends that employers and health plans:

  1. Clearly present tradeoffs to employees, including the relationship between plans, networks, choice, and premium costs. The presentation should include side-by-side choices that feature any salient financial differences, including out-of-pocket expenses and cash-back incentives.
  2. Focus on financial incentives and consumer convenience for routine care that patients could receive at cost-effective environments, and focus on quality measures for specialized and invasive care.
  3. Align physician referral incentives and improve information to support with high-value care.
  4. Increase the use of objective and experience-based quality information to promote use of community settings for routine care.

 

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The Health Policy Commission (HPC) is an independent state agency established through Chapter 224 of the Acts of 2012, the Commonwealth’s landmark health care cost containment law. The HPC, led by an 11-member Board with diverse experience in health care, is charged with developing health policy that reduces overall cost growth while improving the quality of care, and monitoring the health care delivery and payment systems in Massachusetts. The HPC’s mission is to advance a more transparent, accountable, and innovative health care system through its independent policy leadership and investment programs. Visit us at Mass.gov/HPC. Tweet us @Mass_HPC.