Perspectives

Health Care Current: August 11, 2015

HIX enrollees: From passive patient to engaged consumer

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.

HIX enrollees: From passive patient to engaged consumer

When the Medicare Part D program began in 2006, I was the “go-to” person for my mother and all of her friends as they enrolled in plans through Medicare.gov, the website that helps people shop for coverage. At the time, shopping online was fairly new to that demographic group, but the tool allowed you to sort plans by premiums and whether they cover certain prescriptions. It was much easier than sorting through Medigap options, which I had done with my mother a few years earlier.

Today, many people in my mother’s generation are confident online shoppers, getting good deals by comparing product features and prices. That’s true for several of their services, as many get online to book their flights and order books.

When public health insurance exchanges (HIX) were still being discussed as a notion, supporters of the idea painted a picture of a new generation of shoppers. This new generation would find good health insurance coverage just as easily as they find affordable and convenient airfare. In direct opposition to “the old days” of individual insurance, where in most markets people would have to go to a broker or to each company’s site to find out what was available, a key to delivering on this promise was functional websites that allowed for online comparison and reasonably knowledgeable consumers who would figure out how to shop and what to shop for. Of course many helpers – formal ones (navigators and brokers) and informal ones (like me for my mom and her friends) – stood ready to help.

To gain ground in driving the competitive virtual marketplaces that many hoped for, key stakeholders, such as health plans, regulators, and advocates, identified three important ingredients:

  • Consumers needed to be cost-conscious and searching for a good deal
  • Consumers needed to understand the differences between options – what benefits are covered and the total cost (premium and cost sharing) of the products being offered
  • Consumers needed to trust (and be able to use) the websites

So has it turned out like we thought it would?

Findings from Deloitte’s 2015 Survey of US Health Care Consumers reveal that the HIXs are beginning to deliver on the promise of transforming the individual insurance market. Many HIX customers are actively engaging in the buying process, using both “high-tech” and “high-touch” purchasing channels and putting health plans on notice that they will switch if they are dissatisfied. The exchanges already rank among consumers’ most trusted sources for information, suggesting they are quickly becoming an accepted way to purchase health insurance.

HIX consumers are more price conscious than consumers with employer coverage. To some extent, this is probably because they have lower incomes and are exposed to more of their premium than those with employer coverage. But many people with employer coverage do not have much choice among plans and options, so often are not in the position to shop for coverage to begin with. Even though the last figure on shopping tools indicates that tools like one finds on HIX websites are more important to HIX enrollees than people with employer coverage, the number being in the low 40 percent range shows, I think, that there is room for improvement in the tools.

HIX enrollees are relatively confident in their knowledge of the benefits included and cost of their coverage. Fifty-one percent of HIX enrollees said they had a good understanding of their benefits at the time they enrolled, compared with 47 percent of people in employer plans and 45 percent of people in Medicaid. When it comes to the total costs of their coverage, 55 percent of HIX enrollees said they understand this, compared with 47 percent of people with employer or Medicaid plans. Again, I think this is a good signal that people getting coverage through the HIXs feel they understand what their coverage is.

HIX enrollees expressed relatively high levels of trust in the information they find on HIX websites. Thirty-five percent of HIX enrollees report they trust the information they were provided. On its face, this might not sound very high, but it is just behind their trust in friends and family (38 percent) and health care providers (36 percent).

I find these results encouraging, but the work is not over. Price is the most commonly reported driver of dissatisfaction and switching among HIX enrollees. Satisfaction varies by age, subsidy eligibility, and prior insurance status, which could be a reflection of differences in expectations, needs, and preferences within the HIX population.

What is needed to equip this new generation of health care consumers? The survey findings suggest that multiple purchasing channels, more reliable information sources, better decision support, and further development of online resources and digital technologies could help health plans and exchanges fulfill the promise of these new marketplaces for health insurance coverage. Exchanges and health plans will likely need to give thoughtful consideration to strategies for accommodating differences within their HIX populations as they strive to retain customers and prepare for subsequent waves of enrollees.

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My Take

By Sarah Thomas, Research Director, Deloitte Center for Health Solutions, Deloitte Services LP

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Study: Super-utilizers not a consistent population over time

A recent study published in Health Affairs found that the concentration of spending in the super-utilizer population – low-income, high-cost individuals with comorbid conditions – looks the same across time. At any given time, 3 percent of adults are super-utilizers and services for this population account for 30 percent of charges. However, people in this group at any given time do not always remain super-utilizers.

Researchers took cross-sectional and longitudinal views of more than 4,700 super-utilizers. They found that fewer than half of the people in that group remained a super-utilizer seven months after they were initially identified. Only 28 percent remained a super-utilizer at the one year mark. This could mean that most super-utilizers have temporary periods of high use, but eventually return to normal levels of use. This trend may be attributed to natural progression of illnesses, receiving appropriate care from a provider, and/or death. Other results of the study are that while most super-utilizers have multiple comorbidities, a significant portion (18 percent) do not. People without comorbidities account for 27 percent of the total expenditures associated with super-utilizers.

Providing additional or differentiated services to super-utilizers might reduce some of the service use that leads to being a super-utilizer. Enhanced predictive modeling could better identify super-utilizers before they use high-cost services that might have been avoidable. Alternative care models, such as home- and community-based services, could also be more appropriate for super-utilizers. Policymakers might also consider efforts to enhance substance abuse and mental health services, as many super-utilizers could benefit from more integrated services in these areas.

Related: Last week, the Center for Health Care Strategies, Inc. (CHCS) announced winners of its digital health competition that aimed to address the needs of super-utilizers. The first-place winner and recipient of $25,000 was AdhereTech for its smart pill bottle design that alerts patients with a text message or phone call if they skip their medication. The smart pill bottles also remind patients when to take their prescriptions and gives physicians real-time data to promote medication adherence.

CHCS launched the Super-Utilizer Health Innovation Challenge earlier this year. It invited digital health entrepreneurs to create technology solutions for the super-utilizer population. Other competition entries included mobile applications, wearables, and provider-centered web tools. This competition is one of three CHCS challenges that aim to spur digital innovation to help individuals with increased health care needs.

(Source: Tracy L. Johnson, et al, Health Affairs, “For Many Patients Who Use Large Amounts of Health Care Services, The Need is Intense Yet Temporary,” August 2015)

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Implementation & Adoption

Greater state and local spending on health care may not be due to increasing Medicaid costs

Last week, Austin Frakt, a health economist and researcher, wrote in The New York Times’ The Upshot that public employees and retirees have contributed more to the growth in state and local spending on health care than Medicaid enrollees. From 1987 to 2013, spending on benefits for this population grew 447 percent, while Medicaid spending grew 386 percent.

Medicaid expansion will drive greater state spending on health care, but a large portion of Medicaid costs are covered by the federal government. States will pay none of the costs for the expansion population until 2016, when the states’ cost-sharing gradually begins increasing, reaching 10 percent by 2020. Medicaid spending is growing more slowly than spending on private coverage. Spending for the average Medicaid beneficiary is $3,200 per year to insure, compared with $5,300 per year for the average individual with commercial insurance.

Retiree coverage for state employees has increased 61 percent. One source projects that state spending on health care will outpace spending on other services over the next 40 years. Another study found that state and local governments are liable for $1.1 trillion in retiree health benefits—approximately one-third of their total revenue per year. Nearly all (97 percent) of that liability is unfunded.

Analysis: As costs for health care continue to rise, many states have increasingly looked to new solutions to reduce the costs of providing employee health care. One of the more well-known initiatives is the California Public Employees’ Retirement System (CalPERS) accountable care organization (ACO). This ACO program was launched in 2010 and aimed to reduce spending on health care for California’s public sector and retiree population. In its first three years, CalPERS saved $59 million, or $480 annually per person. Other states are beginning to encourage retirees that are not eligible for Medicare to apply for coverage on the state’s HIX. Many of those individuals would be eligible for federal subsidies for their coverage, reducing costs for state and local governments.

(Source: Austin Frakt, The New York Times, “Don’t blame Medicaid for most of the rise in state and local health care spending,” August 3, 2015)

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More than 2,600 hospitals to receive lower payments through Medicare hospital readmission program

The US Centers for Medicare and Medicaid Services (CMS) recently released data on hospital penalties for excess 30-day readmissions under the Hospital Readmissions Reduction Program (HRRP). In 2016, more than 2,600 US hospitals will see reductions in their Medicare payments. However, the average penalty decreased slightly from last year (0.63 percent) to 0.61 percent, and fewer hospitals are seeing penalties compared with last year. Thirty-eight hospitals will see the maximum penalty when the new fiscal year begins in October.

CMS implemented the HRRP in 2012. Medicare financially penalizes hospitals with higher than average readmission rates for heart attacks, heart failure, or pneumonia. The first year, the penalty could be as high as one percent of a hospital’s total Medicare reimbursements, and after two years it increased to three percent of a hospital’s total Medicare payments. Since then, Medicare has added more medical conditions to the program.

Studies have shown that the program may be reducing readmissions. A recent paper published in Health Affairs found that readmissions for heart attack, heart failure, and pneumonia fell in New York after the program began. Although there were concerns that certain hospitals were more likely to be penalized through the program, a recent study found that after three years of the HRRP, penalties (which are risk adjusted) are less concentrated in teaching and other safety-net hospitals, even though these types of hospitals still continue to get these penalties more often than other hospitals. About 80 percent of hospitals eligible for the program had a penalty during fiscal year 2015. More than half of hospitals (57 percent) were penalized all three years of the program. In year three, the differences in penalties between teaching hospitals and other types of hospitals narrowed (see the June 2, 2015 Health Care Current).

Related: The HRRP is one of three pay-for-performance programs created by the Affordable Care Act (ACA). The Value-Based Purchasing (VBP) Program and the Hospital-Acquired Condition (HAC) Reduction Program also tie Medicare reimbursement to specific measures of hospital performance and care quality. A recent analysis published in Health Affairs evaluated the effect of these programs on hospitals.

More than 10 percent of hospitals (358) were penalized for their performance under three of the programs, and 41 percent of hospitals were penalized under at least one of the programs. Only 515 hospitals (15 percent) avoided penalties under all three of the programs.

The authors conclude that the three programs could benefit from several improvements. For one, the programs are affecting a disproportionate number of large and teaching hospitals, so the risk-adjustment system may need to be improved. Measures in the programs may overlap and hospitals’ scores may be calculated differently. These differences could reflect piecemeal implementation of the programs. Finally, the authors suggest that alternative programs should be considered to replace the three programs.

(Source: Sabriya Rice, “Most hospitals face 30-day readmissions penalty in fiscal 2016,” August 3, 2015)

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CMS issues final pay rules for hospital, hospice, psychiatric, and inpatient rehab care

On July 31, CMS issued final Medicare payment rules for hospitals, hospices, inpatient rehabilitation facilities (IRFs), and inpatient psychiatric facilities (IPFs). The rules set forth payment rates, program changes, and new policies for fiscal year 2016, which begins on October 1, 2015.

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On the Hill & In the Courts

Senate lawmakers introduce bipartisan mental health bill

Last week, Senators Bill Cassidy and Chris Murphy introduced the Mental Health Reform Act of 2015. If passed, the legislation would reform parts of the US mental health care system. In addition to reauthorizing a number of programs administered by the Substance Abuse and Mental Health Services Administration, the bill would provide incentives to integrate behavioral health delivery with physical health services, establish training and education programs for behavioral health providers, and help ensure access to effective, evidence-based treatments.

Background: Approximately 44 million (one in five) US adults suffer from mental illness. Each year, mental illness costs the US more than $193 billion in lost earnings and productivity. Access to mental health services continues to be an issue. According to the National Association for Mental Illness, 60 percent of individuals with mental illness were unable to receive needed services in the last year. Part of the problem is that mental health services are covered differently than medical services. Coverage for mental health services can be more restrictive with higher cost-sharing limits.

In 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA) to garner more attention and put more emphasis on mental health treatment. It mandated large group health plans (both fully and self-insured) to offer the same treatment limits, cost-sharing, and network coverage for mental health services as for medical services. The ACA then extended MHPAEA to apply to the individual market and HIX plans. It took a step further when it made mental health and substance abuse treatment one of the essential health benefits in the individual and small group markets.

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Study: Coordination between state health departments and other health care facilities can reduce hospital-acquired infections

The US Centers for Disease Control and Prevention (CDC) released a report that found that better coordination between health departments, hospitals, long-term acute-care facilities, and nursing homes could reduce hospital-acquired infections (HAIs).

The report says that if state health departments tracked and alerted hospitals, long-term care providers, and nursing homes about patients with C. difficile and antibiotic-resistant infections, they could work together to stop the spread of infections between facilities. Researchers used a predictive model to estimate that coordination among these organizations could reduce infections by 74 percent over five years.

The model looked at three scenarios. In the coordinated approach, organizations transfer patients without communication about infections or infection control processes. In the independent efforts scenario, some organizations work to control infection rates, but information is not always shared amongst organizations. In the coordinated approach, public health departments alert all organizations that there are outbreaks in the area or that other facilities have infections. The coordinated approach could save approximately $7.7 billion and prevent an estimated 619,000 HAI cases over five years.

Analysis: The US is struggling to address an increasing number of drug-resistant bacteria. Roughly 2 million illnesses and 23,000 deaths a year stem from antibiotic-resistant germs. The report focused on the four most aggressive pathogens: Clostridium difficile (C. diff), CRE, Pseudomonas aeruginosa, and methicillin-resistant staphylococcus aureus (MRSA). These four infections alone could increase by as much as 10 percent over five years to 340,000 infections annually. In the most recent budget, the Obama Administration proposed doubling federal funding to combat and prevent super bugs to more than $1.2 billion for fiscal year 2016.

(Source: Rachel B. Slayton, et al, CDC, “Vital Signs: Estimated Effects of a Coordinated Approach for Action to Reduce Antibiotic-Resistant Infections in Health Care Facilities — United States,” August 7, 2015)

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Around the Country

Arizona governor proposes changes to Medicaid program

Last week, Arizona Governor Doug Ducey proposed to overhaul the state’s Medicaid program. Arizona’s Section 1115 waiver expires in September 2016, so Governor Ducey wants to change the program. His proposal would add health savings accounts (HSAs), co-pays, and work requirements and would instate a five-year lifetime limit.

The proposal, if finalized, would require certain individuals to:

  • Pay 2 percent of their income into an HSA, which they could use for services the program does not cover (e.g., dental and vision care)
  • Make copayments of up to 3 percent of their household income for services the state discourages (e.g., using the emergency room when a doctor's appointment would suffice)
  • Demonstrate they are actively seeking work
  • Meet certain health goals, such as getting a wellness exam or an annual flu shot

Enrollees who make more than the federal poverty level (FPL) ($11,770 for a single person) and neglect to make payments would be dropped from the program for six months. Individuals that make less than the FPL would owe the state if they fail to make the payments.

Arizona plans to submit the new waiver request this fall. Of the 1.7 million Arizonans currently on Medicaid, this proposal would affect roughly 350,000, or less than 25 percent of the Medicaid population.

Analysis: Arizona is following a trend of states changing their Medicaid programs through the Section 1115 waiver. Many states are adding personal responsibility requirements into their expansion programs. For example, Arkansas was the first state to receive approval from CMS for an alternate expansion program. Arkansas’ Private Option uses federal Medicaid funds to purchase private insurance coverage for eligible residents with income below 138 percent of the FPL (about $1,353 in monthly income). Since January 2014, Arkansas has been using federal Medicaid expansion funds to buy coverage for the expansion population through the state’s health insurance marketplace. Although Governor Tom Wolf converted the alternate expansion into the ACA expansion when he entered office, Pennsylvania originally had cost-sharing built into its alternate expansion program, Healthy Pennsylvania.

Critics of Arizona’s proposal say it may make it harder for low-income people to get care and emphasize that the federal government has rejected a five-year limit of Medicaid coverage in the past. Proponents of the plan say that it encourages health and responsibility and highlight that recipients can take any remaining HSA funds with them if they move to private coverage.

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Robots may improve outcomes of physical therapy

Researchers at the University of Texas at Austin are developing a therapeutic robot that could assist patients dealing with spinal cord injuries or stroke. The robot simulates the range of motion that exists in the upper body and could help patients that have limited range of motion perform recurring activities of daily living.

The device is designed to fit around the entire upper body unlike existing technologies that focus on one arm. It connects to patients at three places on each side of the upper body and allows for a wide range of natural motion. The robot is equipped with sensors that allow clinicians to collect data on motion and forced transfer. This enables clinicians to observe a patient’s progress and fine tune the therapy program for the particular patient.

The researchers hope that the ability to personalize the therapy will reduce recovery time for patients. Patients affected by stroke and spinal cord injuries are beginning to enroll in small trials this summer, and these studies will compare the device with conventional rehabilitative therapy.

Analysis: This is a compelling example of how the future of health care is being transformed by emerging technologies. This type of robot could decrease downstream costs by reducing disability and increasing productivity. From a patient perspective, it could substantially increase quality of life. Robotics has also entered the world of care delivery, particularly in surgery where there is the first patient-side robotic laparoscopy platform. Robotics could reduce variability in care by assisting surgeons with certain protocols. Robots are also starting to automate certain administrative activities in the hospital, such as food delivery.

Beyond health care, robots are beginning to transform the customer experience in retail stores, as greeters who can assist customers. As consumers become more accustomed to robots in their everyday life, they may become more comfortable seeing them in the health care setting. All of these examples raise a number of questions including, “How will robots impact the size of the workforce of the future?” and “What are key safety issues that need to be addressed?”

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Breaking Boundaries

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