Behavioral Economics and Reducing Low Value Care Provision among - - PowerPoint PPT Presentation

Behavioral Economics and Reducing Low Value Care Provision among Providers and Patients

Academy Health June 28, 2017

Kevin Volpp, MD, PhD Janet and John Haas President’s Distinguished Professor

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@kevin_volpp

Agenda

• Demand for low value services among patients
• Provision of low value services by providers
• Thoughts on path forward

@kevin_volpp

We can’t assume information alone

• r economic rationality will prevail

Behavioral Economics Standard Economics

Information

• If people know

what to do, they will do it.

• People are perfectly

rational.

• Size of reward is what

matters

• People are predictably

irrational.

• Decisions affected by

present bias, loss framing, emotions, social context, inertia

• Incentive delivery and

design and choice environment are critical

@kevin_volpp

Providing information has not been all that effective

Price transparency efforts not all that successful

“13% to 14% reductions observed for advanced imaging and common laboratory tests and a 1% reduction noted for routine office visits” “slight relative increase in health spending relative to patient populations who were not offered these tools”

@kevin_volpp

Behavioral reasons why price transparency may not reduce costs

• Framing of choices can make

big difference in effectiveness

• Consumers assume higher price

means higher quality

• Services above deductible are

seen as ‘free’

• Difficult to engage patients as
• consumers. . .most don’t use

the tools @kevin_volpp

@kevin_volpp

How much is 10% of an ER visit? I don’t know how much I have spent this year and don’t know what 100%

• f an ER visit costs…

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Level of understanding of different cost sharing mechanisms is not very high

97% 100% 57% 93% 78% 72% 34% 55% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Deductible Copay Coinsurance Max Out-of-Pocket Think Understand Correctly answer question Source: Loewenstein G, Friedman JY, McGill B, Ahmad S, Beshears J, Choi J, Kolstad J, Laibson D, Madrian B, List J, Volpp KG Journal of Health Economics 32(5): 850-862, 2013.

@kevin_volpp

Americans have difficulty estimating costs of healthcare

Source: Loewenstein G, Friedman JY, McGill B, Ahmad S, Beshears J, Choi J, Kolstad J, Laibson D, Madrian B, List J, Volpp KG Journal of Health Economics 32(5): 850-862, 2013.

Percent of survey respondents correctly estimating cost

@kevin_volpp

Based on Loewenstein G, Friedman JY, McGill B, Ahmad S, Beshears J, Choi J, Kolstad J, Laibson D, Madrian B, List J, Volpp KG: Journal of Health Economics 32(5): 850-862, June 2013

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When the cost is high, patient cost-sharing is high

Source: Fendrick AM, et al. Am J Man Care 2001;7:861-867

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When the value is high, patient cost-sharing is low

Source: Fendrick AM, et al. Am J Man Care 2001;7:861-867

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Using behavioral insights to enhance value- based designs

Decision Error Example Solution Loss aversion Highlight relative increases in going to more expensive site of care, using lower value care Loss aversion Put rewards at risk if behavior doesn’t change Mental accounting Make relative changes in price tied to value highly salient (don’t bury in premiums) Regret aversion Tell people they would have won had they chosen the higher value alternative Present-biased preferences (myopia) Provide feedback on desired behaviors immediately Status quo bias Modify path of least resistance using well-chosen defaults

Loewenstein, G., Brennan, T. and Volpp, K. (2007). Protecting People from Themselves: Using Decision Errors to Help People Improve Their Health. JAMA. 298(20), 2415-2417; Volpp, Pauly, Loewenstein, Bangsberg, (2009) Pay for Performance for Patients. Health Affairs 28(1): 206-14

@kevin_volpp

Behavior economics applied to physicians

• Emanuel, Ezekiel J., et al. "Using behavioral economics to design physician incentives that deliver high-value

care." Annals of internal medicine 164.2 (2016): 114-119.

• Navathe AS and EJ Emanuel. Physician Peer Comparisons as a Nonfinancial Strategy to Improve the Value of Care.
• JAMA. 2016. 316 (17). 1759-1760
• Liao JM, LA Fleisher, and AS Navathe. Increasing the Value of Social Comparisons of Physician Performance Using
• Norms. JAMA. 2016. 316 (11). 1151-1152

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New provider payment systems. . .

• Promise to create better alignment with health

improvement BUT

• Many provider payments systems are overly complicated
• Incentive systems are difficult to understand
• Too many measures being tracked
• In many ACOs providers still paid FFS
• Need to get micro-incentives right and make payment

simpler

@kevin_volpp

Mahie 2020: Transitioning to a New Primary Care Payment Model

2016 2017+

CHALLENGE – Penn Medicine Clinics Facing Financial Penalties for Low Generic Prescription Utilization

• Primary care practices ranked

in the bottom quartile compared to peers

• Educating physicians did not

significantly change prescribing habits

• Implemented a change in EHR

prescription defaults

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Rates of generic prescribing heavily influenced by changes in defaults

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Unnecessary imaging in palliative cancer patients

68%

• f patients received daily CT

scans despite guidelines for no imaging

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68%

received daily imaging

Implementation of evidence-based default at PCAM

30%

received daily imaging Before After

Team led by Justin Bekelman, M.D., Dept of Radiation Oncology/Medical Ethics and Health Policy, Penn

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Nudge Units Around the World

Penn Medicine Nudge Unit

Summary

• Reducing use of low value services requires shifts in

both what consumers demand and what providers supply

• Ideally these should be aligned
• Need to use benefit design/provider payment BUT

also should consider systematic use of defaults and

• ther behavioral economic strategies as a way to

augment the effectiveness of those incentives

@kevin_volpp

Questions?

• volpp70@wharton.upenn.edu
• www.chibe.upenn.edu

@kevin_volpp