The BlueCross BlueShield Association intends to heighten consumer awareness of accelerating medical technology costs, which the group believes is a key driver of U.S. health expenditures in recent years.

"There's a whole host of new innovations that are shifting costs to the consumer, and it's unfair to shift that cost to the consumer if you don't educate them about the impact," BCBSA President and CEO Scott Serota stated Oct. 23 in Chicago.

Serota presided over a briefing to release the results of a ¹ three-part study investigating health care costs in the outpatient and inpatient sectors. For the outpatient and physician studies, BCBSA commissioned the Lewin Group, which has also prepared several reports for AdvaMed. The most recent report explored U.S. blood safety and availability (² Also see "CMS Blood Billing Rules Lead To Inadequate Reimbursement – Lewin Report" - Medtech Insight, 21 October, 2002., p. 25).

Singling out magnetic resonance imaging, SPECT scanners and cath labs, Serota asserted that "hospital costs, both in and outpatient, are now outstripping the pharmaceutical industry and pharmaceutical costs as the primary driver of health care costs."

Responding in an Oct. 23 release, AdvaMed characterized BCBSA's "narrow focus on the sticker price of new technology" as a "self-serving assessment."

"While many of the benefits of medical technology extend beyond the churn of health insurer coverage periods, it's myopic of [BCBSA] not to recognize these contributions," AdvaMed President Pam Bailey stated.

With the study, BCBSA sought to identify and analyze the factors driving health care costs in the inpatient, outpatient and physician settings. Medical technology costs and hospital consolidation and restructuring were identified as clear variables more directly amenable to health care policy intervention, according to Serota.

Other factors considered in the research included physician and specialist supply, general price inflation, demographics and general economic conditions, and provider operating costs.

To reduce new technology costs, BCBSA recommends using reimbursement mechanisms to discourage use of medical technologies that do not demonstrate cost-effectiveness.

The Lewin Group found that medical technology expenses contributed to 18% of outpatient hospital cost increases from 1998-2000. However, the authors note that some outpatient cost growth could be cost-effective since many inpatient procedures are gradually moving to the outpatient setting.

The outpatient cost data were compiled using a regression analysis, literature review and 31 structured interviews. Among experts interviewed were five BCBS chief medical officers, six BCBS health service researchers, five economists and six trade associations. AdvaMed was not included in the interviews.

The data on state-level health care expenditures for outpatient services were derived from a large, national group health (LNGH) insurer (1998-2000), the CMS Cost Report Information System (1996-1999) and the CMS 5% Sample Medicare Outpatient Standard Analytic File (1995-1999).

Although the LNGH model resulted in an 18% increase for new technology costs, the two other data sets demonstrated a 6% increase. The discrepancies could be attributable either to the different years or the methodologies used, according to the report.

In addition, the report highlights scintimammography, electron beam computed tomography and use of GP IIb/IIIa (platelet inhibitor) as examples of "costly technologies with limited incremental, clinical benefit" for outpatient care.

The report also cites a 2001 Project HOPE study finding that newer screening technologies may have a tendency to raise costs since they contribute to false positives and unnecessary tests. In addition, newer diagnostic technologies are often used to complement existing tests, rather than replace them (³ [A#01270110000], p. 3). For example, the PET scan is often used in conjunction with computed tomography or magnetic resonance imaging.

DTC advertising also "influenced expenditures" for MRIs, diagnostic tests and laser surgery in the outpatient setting, according to some experts interviewed by the Lewin Group. Some recommended cost-benefit assessments to address concerns about inappropriate use or misuse of new technologies, according to the report. In addition, University of Southern California researchers commissioned by BCBSA found that 19% of the rise in inpatient cost increases from 1998-2002 was due to new technology. Meanwhile, 11% of physician costs are due to new technology, the Lewin Group said.

Medical Technology Cost Awareness “Campaign” Led By Blues, Lewin Report

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