Health Care Current: April 29 2014 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: April 29, 2014
The new wallet biopsy
This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.
- My Take
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
The new wallet biopsy
Back when I was a medical student, I was exposed to the full spectrum of specialties and practice settings. One surprise I found along the way was how cynical some doctors could get at times. At one point, while doing a rotation at a community hospital, I was caring for a patient who required many complex procedures and expensive medications. Before we got too far, the attending turned to me and said, “Make sure you do a wallet biopsy first.”
At the time, the concept of a physician assessing his or her patient’s insurance coverage or ability to pay prior to creating a treatment plan was completely foreign to me. While we often discussed the expected outcome of options, we rarely addressed the cost of achieving it. Over time, I began to see such discussions become more commonplace, particularly as they related to the growing number of expensive drugs, devices and diagnostics. Still, patients were rarely engaged in this conversation.
Two decades later, consumers now increasingly find themselves looking into their own wallets as they contemplate medical care. While the struggle to pay medical bills is not a new problem (and the problem is broader than many appreciate as up to $621 billion in direct and indirect costs in the system are hidden1), more consumers are assuming greater financial responsibility for their own care. Nearly half of all respondents in the 2013 Deloitte Survey of Health Care Consumers reported increased out-of-pocket health care spending than in the previous year.2
For consumers, taking more out of their wallets for health care benefits and services might be more palatable if they saw value, but they don’t right now. They have a pretty dim view of the industry: consumers believe the U.S. health care system is expensive and wasteful and does not always provide value for the money spent. When asked how they grade the health care system on how well it delivers value, almost half of the respondents in Deloitte’s 2013 Survey of Health Care Consumers gave the system a “D” or an “F”.3
One of the results of increasing consumer responsibility in health care could be better decision-making—individuals may be more encouraged to seek appropriate, high-value care. Consumers have been empowered to make informed decisions in many other industries, utilizing vast sources of information, comparative websites, and social media.
But, health care is different.
While we see a growing number of consumers interested in utilizing quality and cost information, few actually do:10 percent of health care consumers looked online both for physician quality data and for price information. Yet, more than half (58 percent) feel very comfortable with using technology to choose between different treatment options.4
The industry itself still has some way to go in providing the information and tools that consumers want and will use: As seen in the article below, even some of the top-ranked providers lack the technology that consumers are seeking.
Instead of seeking other, potentially more affordable options, consumers have shown a willingness to either skip care or use over-the-counter products to avoid the cost of visits to doctors and hospitals. One in three consumers said they used over-the-counter or home remedies instead of going to see a doctor because it was cheaper, and 15 percent decided not to see a doctor when they were sick because it cost too much.5 Either of these scenarios can lead to self-doctoring, which has the potential to be an unhealthy choice.
Given these hurdles, a challenge for health care is how to demonstrate value to consumers so they decide it's worth it to spend their limited resources on care that could improve their health. And, what comes with this shift is the need to understand that for consumers, value means more than price—value includes quality of service experience, interpersonal interactions, and the availability of transparent information and tools to facilitate effective navigation.
Once consumers see value in the care they are receiving, then they could be more likely to come.
P.S. For more, see the new report from the Deloitte Center for Health Solutions: The quest for value in health care: A place for consumers.
1 Deloitte Center for Health Solutions, The Hidden Costs of U.S. Health Care: Consumer Discretionary Health Care Spending, 2012;
2 Deloitte Center for Health Solutions, 2013 Survey of Health Care Consumers;
By Harry Greenspun, MD, Senior Advisor, Deloitte Center for Health Solutions, Deloitte LLP
Implementation & Adoption
ACO spotlight: study reveals new patterns; CMS highlights efforts
Last week, the Journal of the American Medical Association Internal Medicine published results from a study that, before the program started, analyzed data eventually used to assign individuals to accountable care organizations (ACOs). Researchers looked at Medicare claims data from 2010 and 2011, as well as physician rosters for 145 organizations that are now participating in ACOs. Highlights include:
- Stability of assignment: The researchers looked at what share of patients would have been assigned to the same ACO year-to-year: 80.4 percent between 2010 and 2011.
- Leakage of outpatient care: Of those who would have been assigned to ACOs, beneficiaries had office visits with primary care physicians outside of their would-be ACO for 8.7 percent of visits.
- Contract penetration: 37.9 percent of Medicare spending billed by would-be ACO physicians was for beneficiaries who would have been assigned to an ACO.
Analysis: As noted by the authors of the study, it models what would have happened in the period before the ACOs started. The primary care providers who were examined were not necessarily thinking about how to manage their patient population—the incentives were not necessarily there to do that. But, while these results are hypothetical, the findings could illuminate differences in care and behavior patterns down the road. Future research might be able to examine provider trends in the years prior to ACO adoption and draw out any differences in these first few years of ACO adoption. Any differences found would likely need to weigh in the existing large variations in behavior and care patterns among beneficiaries in the Medicare population. This is a widely diverse population made up of recent retirees as well as older individuals who need end-of-life services. Recent retirees are more likely to “doctor shop” and would inherently be less “stable” in their care patterns and physician choices. Older beneficiaries’ care and behavior is even less predictable—depending on the type of care and disease burden of each individual, one might expect to see more use of specialist services and care transitions occurring often among this population. It will be interesting to see whether physicians who are providing care through ACOs will see more stability among their patients—and what the providers and organizations have done to make that happen.
Related: Rahul Rajkumar (CMS Department of Medicine), Patrick H. Conway (CMS Center for Clinical Standards and Quality) and CMS Administrator Marilyn Tavenner posted an update on CMS efforts to boost the adoption and use of accountable care. CMS acknowledges that the move to value-based payments will likely only be successful if clinicians and organizations are able to make changes in their day-to-day operations. And, according to the authors, these changes will only be made if they have greater financial incentives to do so. Thus, the authors call for a “critical mass” of payers to support payment reform. CMS is using three strategies to support the adoption of value-based care and alignment of payment mechanisms:
- CMS as a convener: through the Comprehensive Primary Care initiative, CMS worked with private health plans in seven U.S. markets to invest more in primary care practices. Additionally, State Innovation Models are giving millions to state governments to help transform payment and delivery systems.
- Incentivize clinicians and organizations: CMS is testing models in which clinicians and organizations must be supported by other payers as well as Medicare and Medicaid. For example, in the Pioneer ACOs model, participants need at least 50 percent of revenue from outcomes-based contracts with payers.
- State-level reforms: CMS is partnering with states such as Maryland and Oregon to test new payment models and changes to Medicaid through waivers, respectively. Maryland, over the next five years, aims to move all hospital revenue to a global payment model, while Oregon is testing coordinated care projects in its Medicaid waiver.
(Sources: McWilliams, Michael, Chernew, Michael E., Dalton, Jesse B., and Landon, Bruce E. JAMA Internal Medicine, “Outpatient Care Patterns and Organizational Accountability in Medicare,” April 21, 2014; Rahul Rajkumar, Patrick H. Conway, and Marilyn Tavenner. JAMA, “CMS—Engaging Multiple Payers in Payment Reform,” April 21, 2014)
JASON, AHRQ offer vision for future of the health IT ecosystem
JASON, an independent group of scientists who advise the U.S. government on a number of issues and topics, and the Agency for Healthcare Research and Quality (AHRQ) worked together to produce “A Robust Health Data Infrastructure.” This report highlights challenges the U.S. faces in “developing comprehensive clinical datasets, collected in real world environments and accessible in real time, to support clinical research and to address public health concerns.” These clinical datasets could be used to drive research, enable comparative effectiveness research and benefit public health. The group was asked to look outside of the health care industry for techniques and technologies for new ways to present tailored and specific data, use “fine-grained” analytics for individual care and solve challenges in data management capabilities. Additionally, the group was challenged to present what national security consequences might result in not addressing these opportunities and challenges.
Key highlights of the findings include:
- Interoperability remains a core challenge: The health care industry continues to be impeded by the inability of electronic health records (EHR) to communicate with one another; the group argues that this could be solved if software architecture for health information was created and challenges the Office of the National Coordinator for Health IT to do so.
- Improved health care and lowered costs could be realized: However, this can only happen if the public can exploit and explore health-related data for clinical and biomedical purposes. This will require a delicate balance of protecting privacy and allowing data integration.
The group acknowledges that wide adoption of health IT solutions remains slow in the U.S. As a result, there has been little evidence to prove that the use of health IT can improve quality, safety and efficiency in the health care industry. The group cites a study of 180,000 outpatients and 800 clinicians that found that over several years, EHR adoption reduced the overall cost of outpatient care by 3.1 percent. According to Dr. Karen DeSalvo, National Coordinator for Health IT, the ONC and CMS have already begun work on many of the recommendations made in the report.
(Source: JASON, The Mitre Corporation. “A Robust Health Data Infrastructure,” April, 2014)
Analysis: The adoption of EHRs has been considered by some a necessary first step in realizing the goals of improving patient outcomes and reducing costs. It addresses an additional step in the use of EHRs by proposing an architecture for a "Robust Health IT infrastructure." The report states that in addition to storing patient information in digitized form, it is desirable that patient information be accessible across multiple episodes of care, at different times, and at different medical institutions. It proposes an architecture that promotes interoperability across multi-vendor systems and mandates semantic interoperability by requiring the use of metadata, context and provenance information. The report’s recommendation is for CMS to leverage Stage 3 Meaningful Use to create a roadmap that could result in a "truly interoperable health data infrastructure.” Finally, this report makes the compelling argument that improving the nation's health is highly relevant from a national security perspective.
Report: many U.S. hospitals lack patient-centered websites
Evolve Digital Labs recently analyzed the digital presence of the 57 top hospitals in the U.S., as identified by U.S. News and World Report, to find that many of the hospitals are falling short in their online presence and offerings. Highlights:
- Nearly half (49 percent) of the hospitals examined do not have a mobile-friendly website or offer post-prescription refill requests (nearly 50 percent)
- One-third of those surveyed do not allow for online bill pay
- Four out of five do not allow patients to pre-register online
Analysis: As referenced in this week’s My Take, the health care system is not meeting consumers’ expectations for value—nor is it meeting their needs. Along with details about price and quality in health care, consumers are longing for information that can assist them in getting greater value from their health care as they increasingly take on more financial responsibility for that care. Furthermore, the Millennials and Gen X generation show more interest in using interactive technologies in navigating the health care system. As discussed in The Quest for Value in Health Care: A Place for Consumers, the three areas of price, quality and superior customer service experience are likely to be essential for future success in the health care market.
(Source: Evolve Digital Labs, "Aligning Patient Needs with Online Capabilities,” April, 2014)
Reports: policy options for FDA to improve internal performance and drug review process
This month, both the Manhattan Institute and RAND Corporation released reports that offered policy recommendations to improve the U.S. Food and Drug Administration's (FDA) internal performance and drug-review process.
The Manhattan Institute report examined performance disparities in the review and approval process within 12 divisions under the FDA’s Center for Drug Evaluation and Research (CDER) from 2004 to 2012. Approximately 200 products were analyzed, which accounted for 80 percent of new drug and biologic launches during that time period. The analysis found that drug-approval time varied significantly from one division to the other. For instance, the Oncology division was 60 percent faster on average than other divisions. The Neurology division took about 600 days to approve new drugs compared to the 200 days it took the Oncology and Anti-Viral units to approve new drugs. The Manhattan Institute recommends the FDA and Congress take action in the following areas to reduce the performance gap, produce cost savings and improve efficiency:
- Best practices: FDA should identify policies and procedures that are working in the better performing divisions and apply them to lower performing divisions, as well as apply private-sector quality management approaches that might be useful. Additionally, Congress should create a regular update mechanism for the agency’s commissioner to brief Congress annually or biannually on quality improvement efforts undertaken by the agency.
- Transparency: FDA should make self-analysis of approval delays and denials transparent as a way to ensure root causes of actions or inactions leading up to performance outcomes are identified.
- Special designation programs: FDA should expand use of its existing authority and engage the biomedical community in developing and evaluating outcome measures to better address unmet medical needs for serious illnesses.
- Staffing and resources: To alleviate workload fluctuation, the agency should establish “shock troops” to augment FDA review staff. The report mentioned the inability of the FDA to move resources around in order to address upticks in demand.
RAND Corporation argued that, in order to rein in technology spending, policies need to address the financial incentives of manufacturers and users of the medical technologies. The report made recommendations that would reduce spend on health care without losing health benefits and ensure that an increase in spending on development is accompanied by better health benefits to compensate for the additional costs. To achieve these goals, the report recommends:
- Efforts that would reduce the cost and risk of obtaining FDA approval: enable more creativity in funding basic science, offer incentive prizes to promote innovation, buy out patents, establish an investment fund that leans on public-interest and expedite the FDA review and approval process.
- Increase market rewards for products: To achieve this, the report recommends that the federal government reform Medicare payment and coverage policies, coordinate the FDA approval and CMS coverage processes, increase the demand for new technologies that lower spending and produce more technology assessments on a timely basis.
(Sources: DiMasi, Joseph A., Milne, Christopher-Paul, Tabarrok, Alex. Manhattan Institute. “An FDA Report Card: Wide Variance in Performance Found Among Agency’s Drug Review Division,” April 7, 2014; Garber, Steven, Gates, Susan M., Keeler, Emmett B., Vaiana, Mary E., Mulcahy, Andrew W., Lau, Christopher, and Kellermann, Arthur L. Rand Corporation, Redirecting Innovation in U.S. Health Care: Options to Decrease Spending and Increase Value,” April, 2014)
On the Hill & In the Courts
CMS guidance offers clarification on budget neutrality of the risk corridor program
On April 11, CMS released a Q&A guidance document on the three-year risk corridor program for the exchanges. The document explains how the agency plans to implement the program so that it is budget-neutral. CMS clarified that if the risk corridor payments are insufficient in the first year, payments for that year will be reduced “pro rata” to make up for the shortfall. The next year’s collections will be used to pay off the shortfall for the previous year before any reimbursements for the current year are made. If risk corridor collections do not match risk corridor payments in the final year of the program, CMS will issue future guidance or rulemaking to calculate and adjust for payments.
Background: The risk corridor program is one of three premium stabilization programs under the ACA established to protect qualified health plans offered under the exchanges. Specifically, the risk corridors will help to protect insurers if their rates were set incorrectly for the first three years. The risk corridor and reinsurance programs will run from 2014 through 2016, while the risk adjustment program will continue after 2016.
FDA announces collaborative program to expedite approval process for medical devices
Last week, the FDA introduced a new program for expedited approval of certain medical devices: the Expedited Access Premarket Approval Application for Unmet Medical Needs for Life Threatening or Irreversibly Debilitating Diseases or Conditions. The program, known as EAP, expedites the approval process for high-risk medical devices that can treat or diagnose patients with serious conditions that current technology cannot support. The program allows manufacturers of such products to access FDA faculty to engage and collaborate earlier in the approval process. The FDA will use the process to help companies develop plans for scientific and clinical data collection, as is necessary for device approval.
The EAP builds on prior programs, such as the 2011 Innovation Pathway Pilot, and focuses on reducing time during the premarket stage and adding a collaborative approach with the FDA during the product development stage. Medical devices seeking approval must meet criterion set by the FDA for access into the program. The main criterion is that the device in consideration must be intended to treat or diagnose life-threatening or irreversibly debilitating diseases or conditions. In a separate announcement, the FDA provided guidance outlining when data can be collected after the device is approved and action steps if aspects of the FDA approval conditions are not met.
Legislator sends comment to FTC asking for more regulation of consolidation
On April 17, Ranking Member of the Ways and Means Subcommittee on Health, Representative Jim McDermott (WA), sent comments to the Federal Trade Commission (FTC) expressing concern over the intersection of consolidation in the health care industry with delivery system reforms that are promoted by ACA provisions. His comments covered the arguments for and against consolidation and discussed the goal of achieving a balance between financial risk and management of population health. Some argue that the move toward population health does not inherently require consolidation and that other arrangements exist that allow successful mitigation of risk by organizations. On the other side, some in the health care industry have suggested that the ACA and its programs have encouraged mergers and acquisitions as the industry moves toward value-based care initiatives. In the comment letter, Representative McDermott offered three main concerns in this area:
- Increased oversight with no additional resources: Because the ACA has led to increased consolidation among industry players, more oversight is needed. McDermott is concerned that FTC and other regulatory agencies do not have enough capacity to handle the new onslaught of cases.
- Additional guidance for stakeholders: McDermott acknowledged that there has been guidance for organizations participating in the Medicare Shared Savings Program (MSSP), but stakeholders outside of this program are increasingly interested and participating in accountable care arrangements. Entities outside of the MSSP also need guidance.
- Increased use of analytics and data tools: While HHS has been pushing for greater use of analytics and data sources in health care, McDermott asked whether these tools could be used to increase insight and review of transactions among players in the industry, allowing for a more proactive approach to merger and acquisition oversight.
Last August, Representative McDermott requested a Government Accountability Office report examining the consolidation trend in the health care industry. The request specifically identified concerns in the Medicare program, including hospital mergers and acquisitions of physician practices and ancillary businesses, such as testing facilities and ambulatory surgery centers.
Around the Country
Arkansas releases demographic profile of approved applicants for alternative Medicaid expansion
The Arkansas Department of Human Services released a demographic profile of residents who have qualified for health insurance through the private option plan as of March 31, 2014. Although individuals can enroll in the program year round, findings from the demographic analysis, which includes data through March 31, show that:
- 155,567 of the estimated 225,000 eligible individuals (approximately 69 percent) applied and were deemed eligible through March 31.
- 61 percent of the enrollees are women.
- 64 percent of the enrollees are between the ages of 19-44 years.
Enrollment exceeded original expectations set by the state. This turn-out is expected to have significant impact on the competiveness of the program and strengthen the state’s future insurance market. The Private Option was approved by CMS to use federal funding to pay for the premiums of private health insurance plans for individuals with incomes up to 138 percent of the federal poverty level. Arkansas was the first state in the country to create such a program as an alternative to the ACA Medicaid expansion.
Related: Last week, the Arkansas Department of Human Services also released findings by an independent actuarial firm showing that, with allowable adjustment, the program is expected to meet projected budget targets. Participants are approximately two years older than the state had originally projected, and this increase added $24 to the average premium paid during the first four months of the program. However, the state built in allowable adjustments to caps if the demographic characteristics of the population differed from the original projections.
Maryland passes hospital readmission reduction incentive program
On April 9, the Maryland Health Services Cost Review Commission (HSCRC) approved the Hospital Readmission Reduction Incentive Program starting in fiscal year (FY) 2016 in an effort to reduce hospital readmissions across the state. Included in the program are payment reimbursement incentives for hospitals that meet or exceed a target of 6.7 percent in readmission reduction for the first year. Hospitals that reach readmission reduction targets during the first year will be compensated with a positive bonus of 0.5 percent. The Performance Measurement Workgroup at the HSCRC developed guiding principles for the program to help ensure that all patients are included in calculations regardless of the payer, the calculation is fair to hospitals, and that measures used in the program are consistent with the way CMS measures readmissions.
Background: In FY2013, Maryland hospitals readmitted 19 percent of their patients within 30 days of being released. While this percentage declined in recent years (down from 21.3 percent in FY2010), it is still higher than the national average of 17.6 percent.
Arizona passes bill to regulate insurance navigators
Arizona Governor Jan Brewer signed a bill that will require insurance professionals working as navigators or certified application counselors to go through extra licensing and background checks. The state Department of Insurance will ensure that those seeking to work as navigators are at least 18 years old, have not committed any acts that could be grounds for license denial, have navigator certification from HHS and have submitted a full set of fingerprints to the agency. The bill also clarifies that certified application counselors may not sell, solicit or negotiate insurance in the state; recommend, endorse or offer opinions about benefits offered through the exchange; or provide information for any services related to products not offered on the exchange.
Home health care workers use tablets to provide coordinated care to 100,000 patients
Sutter Care at Home, a large home health care agency, has begun using mobile health solutions to provide care to 23 counties and nearly 100,000 patients. Employing 1,300 caregivers, the agency uses tablets to communicate between caregivers and document care and plans for patients. Prior to enacting the program, documentation was completed within 72 hours of a visit, but the new technology has allowed for a faster turnaround. Clinicians now complete their documentation within 24 hours. Some processes have not sped up since the new technology was adopted; admissions visits can still take up to two hours. However, information contained in the admissions documentation can be streamlined and easily accessed for future visits and provider use. Especially important for diabetic patients, the technology allows home care nurses to send photos of wounds to specialists for review.
In reviewing the technology adoption by Sutter Care at Home, the College of Healthcare Information Management Executives highlighted some of the challenges that still remain with new technologies. The technology used by medical professionals often sees rapid development, and companies need to be able to remain flexible enough to react to changes in technology. In addition, many of the technologies that are developed were designed with the consumer in mind; these technologies still need to develop to meet needs for organizations. When using technology for health care, the relationships among medical device manufacturers, wireless carriers and the provider organizations that use them can be complex. Lastly, it’s likely that many providers will have different opinions about which software/hardware works best for their practice preferences.
Mississippi creates state-wide telehealth program for diabetes monitoring
Governor Phil Bryant of Mississippi has teamed with the University of Mississippi Medical Center, North Sunflower Medical Center, GE Healthcare, C Spire and Intel-GE Care Innovations to deliver a telehealth project aimed at curbing the rising diabetes prevalence in the state. And, last month, Governor Bryant signed legislation that requires health insurers, Medicaid and state employee health plans to reimburse for services provided through telehealth at the same rate as those provided in person. The Diabetes Telehealth Network, which will cost approximately $1.6 million, assists low-income state residents free of charge with managing health conditions via telehealth networks. The program provides internet accessible tablets that allow health care providers to remotely monitor patients in underserved and isolated regions of the state. Using Bluetooth, providers receive patient data (e.g., weight, blood pressure and glucose levels) daily and tailor treatment plans to the patient using videoconferencing to contact patients. Once the providers receive the data, they will be able to work together to provide a range of care for the patients as needed. There are also health care workers that can assist with signing uninsured individuals up for health insurance coverage.