Using evidence-based medicine to lower health costs - a view from the CBO, and HR 2184

Evidence-based medicine (EBM) can reduce health spending, according to two analysts at the Congressional Budget Office. Note that there's a piece of legislation in Congress to fund EBM research.

The very level-headed essay in the November 8th issue of the New England Journal of Medicine explains the positive role that EBM could play in preventing Medicare and Medicaid from consuming 20% of the GDP by 2050.

Peter Orszag and Philip Ellis, the CBO's Director and senior analyst, respectively, talk about the merits of marrying EBM -- which generates information about the effectiveness of medical treatments -- with rewarding clinicians when they adopt proven, effective health care practices.

In today's less-than-transparent and under-IT'd practice environment, Orszag and Ellis estimate that less than 50% of all medical care in the US is based on evidence -- conversely, that most health care delivered in the US is not based on "firm evidence of effectiveness."

Furthermore, reimbursement incentives can subtly drive physicians to prescribe and use treatments that, at the margin, provide greater compensation -- thus often motivating doctors to take the expensive route, which may not necessarily be the most effective course of treatment.

The CBO team argues that expanding research into comparative effectiveness would go a long way toward aligning patient and physician incentives and eventually reducing costs in the system. This would occur when payers (whether Federal/public or commercial/private sector) pay physicians based on evidence.

To drive down costs even further, payers could require a payment by consumers who wish to receive the more expensive, less effective treatment -- thus putting the patient into a true consumer role by having to decide: "is the added expense I would bear really worth the expected benefit I would experience?"

In May 2007, Congressman Thomas Allen (D) and Congresswoman Jo Ann Emerson (R) introduced H.R. 2184, which attempts to improve the effectiveness and reduce the cost of health care. The bill will allocate about $3 billion in funding over five years for comparative effectiveness studies conducted by the Agency for Healthcare Research and Quality (AHRQ). Drugs, biologics, medical devices and other therapies will be evaluated against other available treatments with regard to effectiveness, safety and cost. Research is expected to be funded by the Federal government, health insurers and large self-insured employers.

According to Fitch Ratings, the passage of this bill would have little impact on the health care industry in the near term but, in long run, would have "a significant impact on the health care industry."

Health Populi's Hot Points: Among the various approaches bandied about by health reformers, the EBM proposal is rational, dispassionate, and sensible. Furthermore, it is do-able -- if we allocate, today, the resources required to do large-scale research into effectiveness. There are a lot of 'ifs' around this -- such as what entities should do the research, and who finances said research. But considering the prospect of Medicare and Medicaid consuming 20% of the GDP, which is the current share of GDP accounted for by the entire Federal budget -- we can't afford not to make this investment.