Bending the Cost Curve: Using Comparative Effectiveness Research to Improve Health Care

By Takvorian, Samuel | Kennedy School Review, Annual 2012 | Go to article overview

Bending the Cost Curve: Using Comparative Effectiveness Research to Improve Health Care


Takvorian, Samuel, Kennedy School Review


With the U.S. economy teetering on the edge of recession, policy makers have turned again to rising health care expenditures--hatchet in hand and ready to strike--as a necessary place to start in getting America's fiscal house in order. U.S. health care spending accounts for 17.9 percent of the nation's gross domestic product (GDP), the highest of any industrialized nation (Squires 2011). More worrisome, the growth of health care spending has for decades outpaced the growth of GDP by an average of 2.5 percent (Reinhardt 2009). While recent statistics from the Centers for Medicare & Medicaid Services (CMS) show some slowing of national health expenditures, this is largely due to decreased utilization during periods of slow economic activity; there is little reason to believe that the drivers of rising health care costs have fundamentally changed (Martin et al. 2012).

How to "bend" the cost curve remains the fundamental question of health care policy makers, as every dollar spent on health care is a dollar lost to other worthy investments. In the wake of national health care reform, legislators have proposed numerous solutions, including substantial expansions in care coordination, disease management, and value-based payment programs such as accountable care organizations. While many of these reforms have yet to be fully implemented, early results have been disappointing. A recent analysis of Medicare's demonstration projects by the nonpartisan Congressional Budget Office (CBO) concluded that: "on average, the 34 care coordination and disease management programs had little or no effect on hospital admissions or regular Medicare spending." Of the four value-based payment demonstrations evaluated, three had little or no effect on Medicare spending (Nelson 2012).

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Perhaps one of the most celebrated tools for reducing health care costs without compromising quality is comparative effectiveness research (CER), which is designed to uncover which treatments actually work in clinical practice, for whom, and under what circumstances. CER has great potential to reduce health care costs but only if its scope is broadened to encompass the delivery system as a whole in addition to specific treatments and technologies. President Barack Obama invested $1.1 billion in CER in his 2009 economic stimulus package and called for further measures in his landmark 2010 health care reform bill. Chief among these was the creation of a new institutional home for CER: the Patient-Centered Outcomes Research Institute (PCORI). An independent, nonprofit entity, PCORI was established to set national priorities for CER and to fund the systematic generation of evidence on the effectiveness of competing interventions (Garber 2011).

President Obama's investment in CER came after more than a decade of evidence demonstrating widespread deficiencies in the quality of U.S. health care. In 2000, the Institute of Medicine, an arm of the National Academies, published a seminal report estimating that 44,000 to 98,000 inpatient hospital deaths each year were attributable to preventable medical errors (Kohn et al. 2000). Three years later, a study by the RAND Corporation found that U.S. adults received only 54.9 percent of the care recommended by current evidence (McGlynn et al. 2003). These studies and others fueled a growing quality movement in American medicine, of which evidence-based medicine and CER were at the core.

Realizing that medicine's evidence base was insufficient for many decisions made by payers, providers, and patients, policy makers turned to CER as a way of both improving quality and lowering costs. Peter Orszag, CBO director from 2007 to 2008 and director of the Office of Management and Budget under President Obama, was a notable champion for an expanded federal role in CER, lauding not only its impact on patient outcomes but also its potential to drive down health care spending in the long run (Congressional Budget Office 2007). …

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