Health Care Current: August 25 2015 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: August 25, 2015
Brand and cost: Equal partners in the health care value equation
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.
- My Take
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
Brand and cost: Equal partners in the health care value equation
As the summer draws to an end, my kids are gearing up to head back to school. In years past, procuring school supplies and getting together the requisite vaccination forms has been challenging, particularly as the start of the school season typically coincides with a ramp up in my business travel. But more recently, between online shopping and electronic health records, we have been able to get the items we need quickly and easily, even if we’re on the road. Now, after just a few clicks, we’ve sent medical forms to the county, school supplies to our third-grader’s classroom, and new clothes to our doorstep (for our increasingly fashion-conscious middle schooler).
My own “back to school” tradition is to get a flu shot. That process, too, has evolved. For the last several years, I’ve gotten my flu shot at Chicago O’Hare Airport. I find myself there regularly, I generally have time to spare, and the cost is reasonable. Naturally, I would hesitate to walk up to just any stranger at an airport and ask them to stick a needle in my arm, but the kiosk is staffed by a reputable institution. This is an important detail because brand matters to me.
Brand matters to many consumers, whether they’re shopping for cereal and clothes or for their health care provider. But, when it comes to health care, brand is just one part of the equation. As health care consumers begin to have more skin in the game, cost and value may play a larger role, especially for consumers on the individual market.
In June, Deloitte published the 2015 American Pantry Study. It examines factors that drive how American consumers shop when they head to the grocery store. While this study focused primarily on consumer behavior and attitudes about consumer packaged goods, the study’s findings become particularly interesting when contrasted with findings about enrollees in health insurance exchange (HIX) plans from the Deloitte Center for Health Solutions 2015 Survey of US Health Care Consumers.
As the HIXs mature and become a trusted option for people shopping on the individual market, the habits consumers have developed in other areas of their lives may have begun to impact the way they shop for health insurance coverage.
The findings above suggest that is already happening in several ways, especially among HIX enrollees. Many HIX enrollees look like grocery shoppers on a budget: They are tech savvy, cost-conscious, looking for better value, and willing to do some background research before they make a purchase. While many consumers turn to coupon cutting to cut costs and shopping apps to organize their grocery lists, many health care consumers are looking for apps and tools to help them enroll in coverage.
But, one distinction arises when you look at how brand impacts purchasing decisions in health care. Today, more than in recent years, consumers believe they are making a sacrifice when they purchase a store brand at the grocery store. But, at the height of the recent recession, cost mattered far more than brand to many consumers. So they made tradeoffs. As health care costs continue to grow, we may see consumers adopt more willingness to make similar tradeoffs in health care. There are some early signs that this is already happening. The percentage of insured enrollees who say that they would be willing to accept a smaller network of hospitals or doctors in exchange for lower payments rose from 2013 to 2015.
As these characteristics come to light and more people obtain coverage through HIXs or private exchanges, stakeholders may need a greater appreciation of the drivers of individual consumer choice. While brand may have carried the day in the past, people are increasingly looking for value—and that may mean different things to different people. As many retailers will tell you, understanding the drivers behind purchases and choices is critical to reaching a target market. Unless you satisfy the consumer’s needs, you risk losing them as a customer.
For me, the airport flu shot meets my value requirements – convenience and trust – so I expect to roll up my sleeve on my next layover. But, with my share of my own health care expenses rising, cost is becoming increasingly important, so I may start looking for high-value options as I travel. I wonder if anyone is doing colonoscopies at DFW?
By Harry Greenspun, MD, Director, Deloitte Center for Health Solutions, Deloitte LLP
Study: Fewer workers employed by firms that offer health insurance coverage in 2014
Last week, the Agency for Healthcare Research and Quality (AHRQ) released a report that found that fewer employees worked for firms that offer employer-sponsored coverage (ESI) in 2014 (83.2 percent) than in 2013 (84.9 percent). This decrease in coverage was primarily among individuals who work for small (3.3 percentage point decline) and medium-sized (4 percentage point decline) firms. Rates in large firms fell only slightly by 0.7 percentage points.
Employees had more health plan options in 2014 than in 2013. In 2014, 67 percent of employees who were offered insurance had a choice of two or more plans compared to 59.7 percent in 2013. But, costs for ESI coverage are increasing. Average health insurance premiums increased from 2013 to 2014:
- Single coverage: $5,832 (+4.7 percent over 2013)
- Employee-plus-one coverage: $11,503 (+4.7 percent over 2013)
- Family coverage: $16,655 (+3.9 percent over 2013)
Background: AHRQ used data from the Medicare Expenditure Panel Survey Insurance Component (MEPS-IC), an annual survey of approximately 39,000 private, state, and local government employers across the US. ESI remains the most common source of health insurance for individuals between the ages of 18 and 64. The percentage of employees enrolled in coverage at firms that offered insurance remained steady from 2013 (58.2 percent) to 2014 (57.8 percent).
The Affordable Care Act includes a number of provisions for the ESI market, including availability of new options in Medicaid and the HIXs, small business tax credits, employer penalties for not offering coverage, and the high cost excise (or “Cadillac”) tax.
(Source: AHRQ, “MEPS Insurance Component Chartbook 2014,” August 2015)
Implementation & Adoption
Survey: One in 10 consumers paid $100 more for prescriptions out of pocket
A recent survey by Consumer Reports found that health care consumers are paying more out of their pockets for prescription drugs than one year ago. One in 10 respondents said they are paying $100 more compared to the prior year, and overall consumers are paying $39 more on average.
Most (81 percent) consumers said they still purchased their prescription regardless of the increase in their share of cost. Approximately one in four asked their health insurance company to cover more of the costs or asked their doctor to switch them to a lower-cost medication. Some consumers have changed the way they spend money in other areas to compensate for higher spending on their medications. Forty percent of the respondents said they have spent less on entertainment and dining out as a result and 32 percent said they have spent less on groceries.
The survey also found that some consumers are avoiding care or changing their health care habits to accommodate their higher spending. Nearly one-quarter of the respondents said they have skipped filling a prescription due to cost. Nearly one in five said they have either skipped a dose without consulting their physician or pharmacist to save money or have taken expired medications.
(Source: Consumer Reports, “A Consumer Reports’ poll shows one-third of Americans hit by high drug prices,” August 13, 2015)
Health systems using health IT to combat readmissions and prevent unnecessary admissions
According to a recent FierceHealthIT report, many health systems are leveraging health information technology (IT) to help reduce hospital readmissions and prevent unnecessary admissions. These strategies are driven both by the health systems’ desire to keep patients healthy and the desire to avoid penalties, such as those under the CMS Hospital Readmissions Reduction Program (HRRP). In 2016, more than 2,600 US hospitals will see lower Medicare payments because of this program; the average penalty in the HRRP program will be a 0.61 percent cut.
The report highlighted how three US health systems are using health IT to combat readmissions.
(Source: Katie Dvorak, FierceHealthIT, “Hospitals face readmissions head on with help from health IT,” August 19, 2015)
FDA begins process for PDUFA reauthorization
On July 15, 2015, the US Food and Drug Administration (FDA) held a meeting to discuss its goals and priorities for reauthorization of the Prescription Drug User Fee Act (PDUFA). During the meeting, stakeholders identified several areas they believe could be enhanced in the law and regulation.
The FDA has made progress in many areas since the last time PDUFA was reauthorized. The Act includes performance goals for the FDA, many of which it has continued to meet and exceed. The FDA has also improved communication between drug companies and developers through higher adoption of risk-benefit frameworks. Through the Patient-Focused Drug Development program, the FDA has acquired more patient perspectives on diseases and treatments.
Background: Congress first passed PDUFA in 1992 and has reauthorized it four times since. PDUFA gives the FDA the authority to collect payments (i.e., user fees) from pharmaceutical companies to help pay for its drug review process. The FDA uses the funds to hire staff and improve processes so it can conduct more timely reviews and enhance consumer safety. During each reauthorization, the PDUFA establishes performance goals to increase efficiency of the drug review process.
(Source: Theresa Mullin, FDAVoice, “Kicking off the PDUFA VI Reauthorization Process,” August 18, 2015)
On the Hill & In the Courts
Nearly one million sign up for HIX plans after open enrollment
According to the US Centers for Medicare and Medicaid Services (CMS), approximately 944,000 individuals selected a health plan in the HIXs from February 23 through June 20, 2015, after the close of the open enrollment period. These individuals took advantage of special enrollment periods (SEP). Nearly 84 percent of individuals who enrolled during this period fell into one of three categories that trigger an SEP: 50 percent had lost their original health coverage, 19 percent became ineligible for Medicaid or the Children’s Health Insurance Program (CHIP), and 15 percent enrolled during the SEP aligned to the end of the tax season (March 15 - April 30).
CMS established an SEP for the end of the tax season to accommodate individuals who did not grasp the tax implications of failing to enroll in a plan (see the February 24, 2015 Health Care Current). Before March 15, on average, approximately 5,000 individuals enrolled in coverage per day. When the tax season SEP started, enrollment steadily increased and reached a high of 38,000 plan selections on April 30.
Background: Nationally, the total enrollment figure could be higher; this report only captures enrollees in the 37 states that use the HealthCare.gov platform. Individuals may enroll in HIX coverage outside the open enrollment period if they experience a qualifying life event. Qualifying life events can last up to 60 days and include a loss of health coverage, marriage, or the birth of a child, among other events.
(Source: CMS, “2015 Special Enrollment Period Report – February 23 – June 30, 2015,” August 8, 2015)
Study: Arkansas Private Option Medicaid expansion could save state $438 million over four years
A preliminary analysis found that Arkansas’ Private Option for Medicaid expansion is expected to reduce approximately $438 million in state spending from 2017 through 2021. Most of the savings will come from discontinuing optional waiver programs (due to their overlap with the Private Option), shifting the costs of some individuals (e.g., individuals who moved from traditional Medicaid into the Private Option), and lower spending on uncompensated care.
The state is expected to see higher tax revenue because more insurance policies, which the state taxes, are being offered by health plans. The Private Option also brings new federal funds into the state’s economy, further increasing taxes the state will collect as that money is spent there. However, growth in spending on the traditional Medicaid population will outweigh savings from the Private Option in the future. CMS recently projected Medicaid costs to grow 5.9 percent on average from 2015 through 2024 across all states.
Related: Last week, Arkansas Governor Asa Hutchinson said he supports continuing the Private Option, but only if the federal government gives the state more flexibility to change the program. Governor Hutchinson has proposed several changes to a state legislative task force, all of which would need federal approval:
- Add workforce training requirements for unemployed or underemployed beneficiaries
- Limit insurance subsidies by tying them to income levels
- Require individuals who have access to ESI to enroll in it, using the Private Option to cover their deductibles and copays if they need help with them
- Require individuals with income above 100 percent of the federal poverty level ($11,770 for an individual, $24,250 for a family of four) to pay premiums
- Eliminate coverage of non-emergency medical transportation for individuals in the Private Option program
(Source: The Stephen Group, “Status Report #3,” August 19 & 20, 2015)
Around the Country
Report: Preventing information overload among physicians
As health IT becomes increasingly integrated into health care, providers are using more data to monitor patients’ health, reduce avoidable health events, and implement effective accountable care organization (ACO) models. But, as use of data and information grows, so does the risk that physicians will experience information overload.
As state Medicaid programs continue to adopt ACO models, many are focused on preventing information overload among physicians. The Center for Health Care Strategies, Inc. (CHCS) recently outlined some of the strategies states are using in this area:
- Analyzing data to determine what information helps physicians
- Limiting the volume of data physicians receive
- Streamlining information and patient utilization data into digestible formats for providers (e.g., rather than sending physicians raw data, the Minnesota Department of Human Services distributes monthly utilization reports and quarterly total cost-of-care reports)
- Providing care coordination tools through an information management system (e.g., Colorado hires contractors to help ACOs manage data)
- Encouraging physicians to dedicate personnel to data management (e.g., Arkansas pays for care coordination services for providers in its patient-centered medical home program)
Health IT has created a wealth of data that can be used to improve care and health outcomes. However, more targeted information may help physicians improve quality and focus care delivery in meaningful ways.
(Source: Jim Lloyd and Rob Houston, Center for Health Care Strategies, Inc., “How Can States Help ACO Providers Avoid Data Overload?” August 6, 2015)
Texting for better health
Text4baby is a texting service for pregnant women and new moms. Since Voxiva launched the program five years ago, it has delivered health-related messages to more than 685,000 new mothers. A recent study in the American Journal of Preventive Medicine shows that tailored text messages included in the Text4baby program doubled the chance that expectant and new moms would get vaccinated against influenza.
Women who enroll in Text4baby receive three free health-related text messages each week from pregnancy through their child’s first birthday. The topics include prenatal care, labor signs and symptoms, developmental milestones, immunizations, nutrition, birth defect prevention, safe sleep, and safety.
The study included 89,000 enrollees who received a text message that asked them about their vaccination plans. Approximately one-third of the enrollees responded. The women who were planning to get vaccinated were randomized into two groups. One group received an encouragement message and the other group received that message and the opportunity to schedule a reminder. The women who were not planning to get vaccinated were also randomized into two groups: one group received general education on vaccinations, while the other group received information tailored to the reason they gave for not getting vaccinated.
The results showed that the text reminders doubled the women’s chances of getting the vaccine. The tailored text messages only affected women who identified high cost as the reason for not getting vaccinated. Their tailored message gave information about low-cost vaccination options. Many women enrolled in the program found the text on how to access free and low-cost vaccinations helpful, and individuals who were not initially planning on getting a vaccine due to cost were almost twice as likely to report vaccination at follow-up. As a result of the study, vaccination reminders will now be included in the program during flu season.
Another recent study published in the Journal of Clinical Nursing showed that text messages can improve medication adherence. The study examined 13 relevant studies involving text-message interventions that aimed to increase medication adherence to a prescribed oral medication. In nine studies, adherence rates improved between 15.3 and 17.8 percent with use of text messages. Text messages that were standardized, tailored, one- or two-way, and timed either daily, weekly, or monthly to medication regimen were characteristics associated with increased adherence.
Analysis: In the last decade, health care workers have used text messages to improve health and save lives. A hospital in Malawi, for example, implemented a text messaging in the community that saved approximately 2,048 hours of worker time and $3,000 in fuel, while doubling the capacity of the tuberculosis treatment program. A 2011 study reported that text messages to remind health workers in Kenya about the recommended guidelines for malaria management improved care by 23.7 percent immediately after the intervention and 24.5 percent at a six-month follow-up. Use of mHealth will likely continue to grow in less developed countries, and there is much the US health care system can learn from their experience of designing and implementing text messaging and other mHealth programs.
(Sources: Elizabeth T. Jordan, Jessica A. Bushar, Juliette S. Kendrick, Pamela Johnson, Jiangxia Wang, American Journal of Preventive Medicine, “Encouraging influenza vaccination among Text4baby pregnant women and mothers, July 29, 2015; Tracy DeKoekkoek et al., Journal of Clinical Nursing, “mHealth SMS text messaging interventions and to promote medication adherence: an integrative review,” July 27, 2015)