Health Care Current: April 21, 2015

Interoperability falls flat

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.

Interoperability falls flat

Prior to flying to Chicago for the annual Healthcare Information and Management Systems Society (HIMSS) Conference, I had a lot to do. More than 40,000 health IT professionals, vendors, policy makers, investors and other stakeholders gather for educational sessions, speeches, exhibits, interviews and social events. And lots and lots of walking.

Along with preparing my presentations, packing and sorting through various meeting requests, I had one critical priority: band practice. My band is preparing for a large (for us) gig at the end of May for our high school reunion.

As with prior events, we welcome guest performers to sit in with the band and as a result, we’ve had a range of people showing up to practice in my basement. Each comes with a guitar or bass, plugs into one of my amplifiers and we start making music. Given the distinctive sounds of some of the songs, we will often use effects pedals with our guitars to get the right tone. Each pedal contributes to the overall sound, easily swapped depending on who is playing what, simply by re-routing cables. While we may obsess over the sound, the one thing we don’t fret over is the setup. We just plug and play.

A few days later I found myself in Chicago, walking the exhibit halls and touring the Interoperability Showcase, where vendors highlight the flow of information from one application to the next. To the casual observer, one would think that the industry had fully embraced interoperability.

But, the truth is actually more complicated.

Earlier this month, the Office of the National Coordinator for Health Information Technology (ONC) released a report saying it is “increasingly concerned about” what it views as unreasonable interference and information blocking coming from both vendors and providers. It noted in particular that a few entities had too much control over electronic health information.

The report said that “current economic and market conditions create business incentives” for certain entities to control electronic health information and limit its availability. It pointed to 60 reports of this practice in 2014. Though no specific companies or “bad actors” were named, the report also included several recommendations to increase the exchange of EHR information. The ONC’s recommendations include creating new transparency obligations for developers and new certification requirements that strengthen surveillance of health IT capabilities and pushing for a national governance framework for health IT exchange with clear principles regarding interoperability and information sharing (see “ONC releases report on information blocking in health care sector” below for more information).

How do we reconcile the seemingly contradictory views between the ONC and the broader health IT industry? Health care is evolving quickly, and the requirements many sought when implementing systems have changed dramatically in the last few years. When Meaningful Use (MU) was born out of the Health Information Technology for Economic and Clinical Health (HITECH) Act in 2009, users sought systems to help document visits between providers and patients. Accountable care organizations (ACOs) did not exist, and outside of integrated delivery networks, few engaged in alternative payment methods (APM) that focused on value or outcomes. Even some of the MU Stage I requirements, such as the requirement to share data with patients by burning them a CD, appear quite dated now.

With value-based care, new priorities have emerged: data sharing, care coordination, patient engagement, and predictive analytics. In addition, consolidation among providers and overall convergence in the industry has accelerated the need for interoperability, not just for electronic health records (EHRs), but also for medical devices, wearables and more.

Ultimately, the broader question is, “How can systems keep pace amid such rapid change?” ONC has said it will work with the US Department of Health and Human Services (HHS) to explore whether creating new conditions of participation in federal health programs is feasible or if a more traditional enforcement agency should take a leading role. The ONC also said in the report that requiring more transparency from developers regarding business practices that could interfere with the exchange or use of electronic health information “would be an effective, market-based approach to preventing many types of information blocking.” In particular, it highlighted enabling customers to access, discuss and share information on vendors.

While there is a role for government to set and enforce rules and point the industry in the right direction, I believe market forces will likely dominate. I can pull any guitar off my wall and plug it into any combination of amplifier and effects to suit my needs. If something does not sound right, I can quickly swap it out. If something goes wrong, I can easily identify and fix malfunctions. Therefore, I don’t buy products that don’t harmonize with the other elements of my system.

Health systems are beginning to shop for technology the same way, both for EHRs and medical devices. The Center for Medical interoperability will assist hospital and health systems as they and broader health care stakeholders advance interoperable practices across the system. With greater needs to connect applications and facilities to meet new payment models and operational challenges, hospitals and health care systems are sending a message to the industry that they intend to buy products that are proven to be interoperable and, in some cases, interchangeable. Industry efforts, such as the CommonWell Health Alliance, which is creating a vendor-neutral platform to advance effective health data exchange, are responding as well.

While I cannot predict how soon health care technology will play well together, the good news is that our band is sounding pretty good. I am also confident that if my friend Pete shows up with his Telecaster, or Dave arrives with his 1949 Gibson J-45, they can join in without missing a beat.

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My Take

By Harry Greenspun, M.D., Director, Deloitte Center for Health Solutions, Deloitte LLP

Listen to Harry Greenspun, M.D. discuss the state of interoperability in health care


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Congress passes bill to repeal SGR formula

Last week, the Senate voted 92-8 to pass the bipartisan bill that repeals the sustainable growth rate (SGR) formula. Senate lawmakers reached the deal before April 15, which is the day that a 21 percent cut in Medicare fees to physicians would have gone into effect. The US Centers for Medicare and Medicaid Services (CMS) was prepared to begin processing payments at the lower rates starting on Wednesday, April 15.

Now, physicians will receive a 0.5 percent pay raise in July 2015. Each year through 2019, they will receive an additional 0.5 percent pay raise. From 2019 through 2025, rates will remain at the 2019 level, but payments will vary depending on the physicians’ performance on the Merit-Based Incentive Payment System (MIPS) or an APM program. The MIPS consolidates three existing incentive programs:

Analysis: As Mitch Morris, M.D., Vice Chairman and National Health Care Provider Lead, Deloitte LLP explained in the April 14, 2015 Health Care Current, Congress has used this most recent legislation as an opportunity to continue the drive toward value-based care (VBC). The old system set a total budget cap on Medicare payments for physician services. The new system puts greater weight on performance and encourages physicians to migrate to VBC. It connects incentives with individual physician performance. It also gives more weight to quality and volume control and creates financial incentives for physicians to participate in APMs that incorporate VBC. The new system also alleviates some of the burden that the myriad incentive programs have placed on physicians to date. Routing the intricacies of these programs has been a challenge for most physicians. As organizations consider how to navigate the terrain ahead, hitting cruise control may not be wise. Health care organizations that leave now on their journey to VBC can put in place the necessary capabilities and processes that may give them first-mover advantage and increased market share, while others may be left behind.

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Implementation & Adoption

Gallup: National uninsured rate down to 11.9 percent

According to Gallup-Healthways, the uninsured rate among adults in the US has dropped to 11.9 percent, continuing the trend of increasing insurance coverage. This number is the lowest rate since the organization began tracking the statistic in 2008. The rate dropped sharply after most of the provisions of the Affordable Care Act (ACA) took effect at the end of 2013:

The rate of uninsurance fell across all demographics. However, it fell most sharply among Blacks and Latinos, who had greater gains in insurance coverage than Whites. Despite these gains, these demographic groups still lag behind Whites in total insurance coverage by a large degree:

(Source: Gallup, “In US, Uninsured Rate Dips to 11.9% in First Quarter,” April 13, 2015)

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IMS: Drug spending increased 13 percent in 2014

Total US dollars spent on prescription drugs increased 13.1 percent in 2014, reaching $373.9 billion, according to a report released last week by IMS Institute for Healthcare Informatics. This growth in spending is the highest seen since 2001, when spending rose 17 percent. Several factors may have contributed to this rapid growth in spending. One is an unprecedented low number of patent expirations since the peak in 2012 (patent expirations tend to bring spending down as generic competition lowers prices). Last year the number of releases and use of specialty products rose. This increase came primarily from oncology, hepatitis C and autoimmune disease treatments. Specialty prescriptions accounted for 73 percent of overall drug spending growth in 2014.

IMS argued that other factors may have contributed to the growth, including the Food and Drug Administration’s (FDA) approval of 42 new prescription drugs (the most seen since 2001), 12 breakthrough therapies, and 18 orphan drugs last year. However, approvals may not always be directly correlated to increased cost. In fact, if new prescriptions enable greater competition in a particular therapeutic area, often costs may be driven down.

(Source: Aitken, Murray, Kleinrock, Michael, Lyle, Jennifer, Nass, Deanna, Caskey, Lauren, IMS Institute for Healthcare Informatics, “Medicines use and spending shifts,” April 2015)

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ONC releases report on information blocking in health care sector

The ONC recently sent a report to Congress that discussed “information blocking” in the health care sector and warned of future steps that the government will likely take to prevent this practice. Without calling out any specific companies, ONC characterized the situation as a few “bad apples” exercising too much control over electronic health information. It pointed to 60 complaints on this practice that it received in 2014 alone.

ONC believes that the current shape of the market creates incentives for software vendors and providers to limit the portability of EHRs. Among some of the alleged unscrupulous practices, the report charges that some vendors charge per-transaction fees for sending, receiving or searching for patient EHRs. However, while most of the criticism was directed at vendors, ONC said that some providers may block information in order to gain greater control over referrals. Some of the example scenarios:

  • Rival ACOs only sending information to each other via fax to slow down workflow
  • A “kill switch” on EHR software activated by the vendor upon late payment from the provider
  • IT service providers limiting access to a health information exchange to only members of a verified “trust community”

Nonetheless, ONC noted that the government’s ability to act against information blocking is limited. The ONC cannot take direct action against providers who block information, and current federal health program regulations do not specifically prohibit information blocking. The legal protections and enforcement capabilities are often inadequate as “most information blocking does not violate any current provision of law.” Finally, minimal transparency around restrictions, limitations and costs of the technology from developers interferes with information exchange.

The report made several recommendations to Congress for steps that stakeholders and federal agencies can take to cut down on information blocking:

Industry reaction: The American Medical Association (AMA) announced its support of some of the ONC’s findings and recommendations. However, AMA is concerned about some of the solutions suggested in the ONC report. In a press release, the group stated they categorically oppose “the notion of further tying physician payments or their participation in Medicare to activities outside their control.” The AMA further stated that the challenges of health information exchange and interoperability are best if left to the industry to address, citing the public-private partnership Carequality as an example of an industry effort in this area.

(Source: The Office of the National Coordinator for Health Information Technology (ONC), “2015 Report to Congress on Health Information Blocking,” US Department of Health and Human Services, April 2015)

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On the Hill & In the Courts

CMS draft rule would ease MU program demands

CMS intends to give more flexibility to hospitals, office-based physicians and other health care providers to meet federal targets for MU of EHRs, according to a proposed rule issued earlier this month. In the proposed rule, CMS said it will scale back specific provisions of MU Stage 2 by:

  • Reducing the overall number of objectives
  • Removing redundant, duplicative and/or widely adopted measures 
  • Aligning the reporting period to the calendar year (rather than the fiscal year as it is currently)
  • Making the reporting period 90 days in 2015 to accommodate the implementation of these proposed changes

CMS also will change the requirement around patient interaction with EHRs. If finalized, CMS would require just one patient, instead of 5 percent of patients, to “view, download or transmit” their medical data to a third party during the reporting period. CMS explained that this new requirement will ensure that providers can demonstrate they have the capacity to transfer information without punishing them if few patients used the service.

Response: At the 2015 annual HIMSS conference, Dr. Farzad Mostashari, the former ONC chief, spoke out against the change in the patient interaction provision. He encouraged consumers to request electronic access to their records and stressed that the MU program should encourage greater patient access to health care data. Others noted that that many consumers do not know they have a right to access their medical records under the HIPAA privacy rule and that demand will rise with awareness.

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Amicus brief urges court to rehear St. Luke's antitrust case

In a brief filed with the 9th US Circuit Court of Appeals, 17 law and economics professors argue that the antitrust case that St. Luke’s Health System lost earlier this year after it acquired a physician group could prevent beneficial mergers in the future. They state that this decision could also adversely affect consumers.

In 2012, St. Luke’s Health System acquired Saltzer Medical Group in Nampa, Idaho. The Federal Trade Commission (FTC), two hospitals in Nampa and the State of Idaho sued, alleging that the merger violates the Clayton Act. The Clayton Act prohibits mergers and acquisitions that are likely to inhibit competition. The plaintiffs argued that the acquisition would have anticompetitive effects and would have resulted in higher prices because St. Luke’s would have control over a large market share of physicians in the area. St. Luke’s argued that the merger would allow the health system more control over patient care and would allow the system to improve care quality in the area.

The case first went to the US District Court for the District of Idaho, which rejected St. Luke’s argument. In the ruling, Judge B. Lynn Winmill said, “The Acquisition was intended by St. Luke’s and Saltzer primarily to improve patient outcomes. The Court believes that it would have that effect if left intact, and St. Luke’s is to be applauded for its efforts to improve the delivery of health care in the Treasure Valley. But there are other ways to achieve the same effect that do not run afoul of the antitrust laws and do not run such a risk of increased costs.” The 9th US Circuit Court of Appeals affirmed the district court’s judgment in its ruling.

Analysis: St Luke’s, the law professors and other stakeholders said the Court should have given more weight to St. Luke’s arguments that the acquisition would improve quality of care. They argued that the goal of competition and antitrust laws is to improve consumer welfare and improve care quality while reducing costs. They went on to make the case that health care integration is a “critical priority” in this aim and said the ruling will inhibit future integration activity.

Health care is moving away from paying for volume toward paying for value and improving quality of care while reducing costs. Health care providers engaging in VBC want to be able to manage patient care over the entire continuum of care. Many argue that integration and closer alignment of health care systems and physicians is one way to achieve VBC goals. Many have also argued that traditional antitrust market analysis and laws such as the Clayton Act focus solely on market power and do not consider other outcomes. The professors wrote that the Circuit Court’s position does not take into consideration modern antitrust thought and economics, “which treat improvements to consumer welfare as the very aim of competition and antitrust laws."

This case prompts many questions. What should the government consider when evaluating transactions between entities in the health care system? How does antitrust law and traditional antitrust market analysis square with quality improvement? Are there valid alternative structures to achieving quality improvements in health care that do not involve mergers or acquisitions (M&A) as the FTC claims?

Ultimately, observers are watching this case closely for its influence on how the FTC and other regulatory agencies will view and rule on M&A transactions in health care.

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CMS proposes 1.4 percent increase for skilled nursing facility Medicare payments

Skilled nursing facilities could see increased payments in fiscal year (FY) 2015, according to a proposed rule published by CMS last week. CMS proposed to increase payments by 1.4 percent, or a total of $500 million, in FY2015. This is a lower increase than FY2014, which came out to a 2 percent increase.

CMS also proposed other policy changes:

  • Measures for the Improving Medicare Post-Acute Care Transformation Act of 2014 quality reporting program: This Act requires skilled nursing facilities to submit quality data beginning in 2018 in order to avoid an annual penalty of 2 percent. CMS proposed three new quality domains for FY2018: skin integrity and changes in skin integrity; incidence of major falls; and functional status, cognitive function and changes in function and cognitive function.
  • Value-Based Purchasing (VBP) Program: The Protecting Access to Medicare Act of 2014 established the VBP Program for skilled nursing facilities. Starting in 2019, the rule proposes using a 30-day all-cause readmission measure as the all-cause, all-condition readmission measure for the program. CMS also is seeking comment on performance standards, improvement measures, baseline and performance periods, scoring methodology and more for the VBP Program.

Related: Late Friday, CMS also proposed updates to payment rates for acute care facilities and long-term care hospitals. CMS proposed increasing payments to acute care facilities that participate in the Hospital Inpatient Quality Reporting (IQR) Program and meet MU requirements by 1.1 percent. Acute care facilities that do not participate in the IQR program would see payment reductions of 0.25 percent. CMS also proposed to decrease payments to long-term care hospitals by 4.6 percent in FY2016 (approximately $250 million).

Last week, House lawmakers in the Energy and Commerce Health subcommittee held a hearing to discuss the Bundling and Coordinating Post-Acute Care Act of 2015 (BACPAC). Medicare payments to PAC providers, such as hospice, long-term care hospitals, skilled nursing facilities and home health agencies, have doubled since 2001, reaching $59 billion in 2013. In the hearing, experts debated whether the fee-for-service (FFS) payment system for PAC providers continues to be appropriate, given the similarities among patients treated in these facilities. Each type of facility currently receives a different rate. The BACPAC Act would help foster high-quality and cost-effective PAC services. It would also help promote competition among PAC providers on the basis of quality, cost, accountability and customer service.

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Georgia passes bill to ease interchangeability for biosimilars; awaits governor’s signature

A bill awaiting Georgia Governor Nathan Deal’s signature would make Georgia the second state to request label changes for biosimilars and prescriber notification requirements as some other substitution laws require.

Senate Bill 51 passed the state House unanimously and the state Senate with a vote of 43-3. The bill changes rules for biosimilar labeling and would make it easier for physicians or pharmacists to exchange a biosimilar for its reference product. The bill would require a pharmacist to indicate on the label that the biosimilar product is an “interchangeable biological product for [the reference product]” or similar language to indicate substitution has occurred. This language must appear on the prescription label and be affixed to the container or an auxiliary label. Biosimilar products dispensed for inpatient hospital services, hospital-administered products for outpatients and biological products in specialty packaging would be exempt from the bill’s requirements.

Reactions: The Biotechnology Industry Organization (BIO), a trade association that represents biotechnology companies, academic institutions and state biotechnology centers, and its state affiliate group, Georgia Bio, have pressed Georgia Governor Nathan Deal to sign the bill. BIO asserts that the bill will “create a pathway for the substitution of interchangeable biologic medicines.” The organization did not comment on the label changing rules.

The FDA said that it will not take an official stance on the legislation. However, spokesman Kristofer Baumgartner said that the Biologics Price Competition and Innovation Act “expressly states that an interchangeable biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.”

Governor Deal may sign the bill. If he does nothing for a certain period of time, the bill will automatically become law. If he vetoes, it will require two-thirds of members of each chamber to override his veto. Delaware is the only other state that has passed legislation requiring pharmacists to indicate if patients were given an interchangeable biosimilar.

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Around the Country

Texas Medical Board votes to restrict telemedicine

The Texas Medical Board recently voted to restrict the circumstances under which physicians can use telephones and video services to provide medical care. Prior to its most recent decision, the Board required physicians to have an established relationship with patients before providing a diagnosis or prescribing drugs. The recent rule change said that “questions and answers exchanged through email, electronic text, or chat or telephonic evaluation of or consulting with a patient” are inadequate to establish a relationship.

These new restrictions do not ban telemedicine services outright but they could sharply limit its practice in the state. Doctors will be able to treat patients by phone or video under specific circumstances, for example if patients are at a hospital or clinic with another provider available to assist.

The decision came out of a long standing conflict between the Texas Medical Board and Teladoc, a national company based in Dallas that has roughly 700 physicians providing telephone or video consultations for routine problems like urinary tract infections, sore throats and rashes. The Board threatened to discipline the company’s doctors for prescribing drugs to patients they did not have a relationship with in 2011. The company accused the Board of changing rules without due process. A state appeals court granted a temporary injunction while the Board went through its formal rule changing process, resulting in the new rules that limit the scope of telemedicine doctors.

Analysis: At a time when many states are expanding access to telemedicine services in response to increasing demands for care, Texas has chosen to limit the scope in which telemedicine can be used. The Texas Medical Association and other physician groups expressed support for the new restrictions. This is in contrast to states, like Idaho and Utah that are working to establish an interstate agreement to simplify physician licensing and grow telemedicine.

Due to increased demand for care and the increasing capabilities of new technology, the telemedicine industry is expanding globally. Telemedicine has been increasingly considered as health care providers seek new ways to deliver quality care in a cost effective way. Typically, telemedicine companies charge consumers a flat free, roughly $40 per consultation, or work with employers and insurers to provide the consultations as a benefit.

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Researchers explore non-invasive ways to detect neurological disease earlier

A skin test may help researchers understand more about Alzheimer’s disease and other neurological diseases, and potentially help diagnose these conditions earlier. Researchers at the Central Hospital at the University of San Luis Potosi in San Luis Potosi, Mexico published a study that shows skin biopsies can detect elevated levels of abnormal, misfolded proteins associated with Alzheimer’s. Currently, a brain biopsy is necessary to confirm the diagnosis. However, since skin has the same origin as brain tissue while in the embryo, the researchers hypothesized that they may also show the abnormal proteins.

The study is small: Researchers collected skin biopsies from 20 people with Alzheimer’s disease and 12 with non-degenerative dementia. These data were compared to 17 healthy people in the same age group to see if certain types of altered proteins were found. Compared with healthy patients and ones with dementia caused by other conditions, individuals with Alzheimer’s disease had significantly higher levels of a certain protein.

Currently 5.4 million Americans have been diagnosed with Alzheimer’s disease, a progressive disease where dementia symptoms gradually worsen over a number of years. More research is needed to confirm the results. But the research team agreed the findings were exciting because of the potential to begin to use skin biopsies from living patients to study and learn more about Alzheimer’s and other complex neurological diseases.

Analysis: This is a small study and results should be considered preliminary until the findings are replicated in more patients. Of note, these researchers also found the abnormal proteins in patients with Parkinson’s disease, suggesting that the test may not be highly specific for Alzheimer’s disease. More research is needed to determine the accuracy of the test and whether or not the test can diagnose people with Alzheimer’s disease before they show clinical signs.

At the present time, these findings may be more useful to researchers who are trying to understand the association between the abnormal proteins and progression of Alzheimer’s disease rather than to clinicians or patients. In the future, this type of test might be performed in a standard practice setting. If the skin biopsy test is sensitive enough to detect Alzheimer’s disease before clinical signs are apparent, it could be helpful in understanding the development of disease and also in planning for patient care.

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Breaking Boundaries

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