Perspectives

Health Care Current: August 4, 2015

The health plan of the future is easy to see

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.

The health plan of the future is easy to see

For years, my son dreamed of being an officer in the US Army. Today, he is six years into that dream, serving as a Captain in the Armor Division of the First Infantry – Big Red One.

Because of his assignments in the US, Kuwait and most recently in Iraq, it has been a challenge to get time with him. However, recently my wife and I rendezvoused with him on his way to a new assignment. The time went quickly, but we had a chance to meet his girlfriend, catch up on family and his career plans. We also helped him make investment decisions with his savings. The Army provides a living allowance for officers while state side, and when he was deployed in theatre, his salary was tax free. It also didn’t hurt that there isn’t much you can spend your money on when you are on a base in Iraq. He had accumulated a nice sum that he wanted to invest.

We reviewed the past performance of his investment portfolio using his investment management company’s website, shopped for different funds, used the tools on the website to balance his portfolio given his age and investment goals and completed trades and new investments. All of this took about 30 minutes—what once took days or weeks to execute with much less certainty or precision at a much higher cost can now be completed in minutes.

As I worked through this process with my son, I began to realize that the health plan of the future is easy to see. Just look around: the financial services industry has built a customer model that has made the complex simple, with transparency, low cost and the ability to meet each person’s unique investment needs anytime, day or night, and tools and information that guide them through the process.

New customer models that facilitate and enable customers to get the service, product and information they want, when they want it and in the location they need it are everywhere. They’re becoming very familiar to many of us—and even more so for Millennials. Take Uber as an example. On demand, Uber’s app connects consumers to transportation, in the exact location where they need it and at a cost that meets their budget. It allows consumers to pay without hassle and lets them express their satisfaction (or dissatisfaction) with the service.

I believe the health plan of the future will not just help with the financing but will also be the facilitator and enabler of achieving health through a consumer-focused platform. The future health plan may simplify the complex, helping consumers get the services, products and information they need to achieve their health and wellness goals.

Today, there are many constraints that are holding us back from realizing the great potential these future health plans could deliver. Conventional provider networks, patriarchal ownership of clinical data, lack of transparency, payment complexity, rudimentary telemedicine capabilities, delayed adjudication of consumers’ financial responsibility for services and little ability to estimate the cost of the health care services are but a few of the roadblocks on this journey.

But, companies seeking to be health plans of the future might use these roadblocks as jumping off points, seeking to turn convention on its head.

For starters, the health plan of the future may not rely on conventional provider networks. While each provider will probably still have an agreement with the health plan, patients would select their provider through an app or online platform that presents options based upon their search criteria, geography and provider expertise. Then, based on their benefit plan and co-insurance, the member would be able to see how much services will cost. Advanced capabilities in this area would allow health plans to drive patients to providers based on the providers’ total cost of care and value, not just their discount levels. Value-based care payment innovations and delegation of care management would have co-insurance amounts calculated based on a holistic view of value as opposed to a transactional fee-based arrangement.

Future health plans may also leverage technology similar to that of Open Table. Members could book their appointment, review ratings posted by other patients and confirm pre-visit requirements and payment options in advance. They would then download their electronic passbook coupon for the visit. Members might also give providers access to their cloud-based electronic chart, which could include their dates of availability and sections of their chart that should be kept private. For many visits, the provider practice could offer telemedicine as an option rather than the traditional in-person visit.

Once they complete their visit, members would pay their co-insurance using their account preferences. Service recommendations and programs the member is eligible for would be uploaded to their account, and their health savings account balance would be updated. Alerts – from a request to rate their provider to calendar reminders for follow ups and prescriptions – could all be built into this consumer platform.

In this new operating model most health care providers would be responsible for managing their patient’s care needs and ensuring that the best possible outcome is achieved. In turn, health plans would provide tools and information to augment the patient’s knowledge and offer incentives and ad hoc programs to support the patient’s own goals for their desired health outcome.

Convenience and simplicity are fundamental to each of these operating platforms. But so is the creation of a marketplace where transparency, choice and reduction in switching costs hold the suppliers of the services accountable for cost, service and quality.

While this may seem too futuristic to drive today’s investments and operating model decisions, technology isn’t the barrier. Nor is it low consumer interest in a simpler, easier way to use the health care system. In fact, Deloitte’s 2015 Survey of Health Care Consumers found that 40 percent of surveyed consumers view the availability of an online tool that suggests the best plan based on their personal information as an important factor for choosing a health plan. This is likely to become even more critical as deductibles increase and consumers take on more of their health care costs.

I believe one barrier to this future state is that many health care market leaders and regulators are not ready to accept these new marketplace dynamics. But they may need to if they want to keep up. Otherwise someone else might do it for them.

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My Take

By Bill Copeland, Vice Chairman, US Life Sciences & Health Care Leader, Deloitte LLP

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CMS: Health care spending expected to pick up after slower growth

Last week, the Office of the Actuary at the US Centers for Medicare and Medicaid Services (CMS) released estimates for health care costs in the US, expecting spending to grow faster after years of slow growth. Insurance coverage expansion, economic growth and the aging population are expected to increase spending, which will grow 5.8 percent on average from 2014 through 2024. This is higher than the expected growth in gross domestic product (GDP) at 4.7 percent.

In the mid-term projections, health care prices are expected to be the driver behind increasing spending. By then, coverage expansion-related costs are expected to be a smaller driver of the spending increase. In the long term, spending is expected to pick up as Medicaid enrollees continue to age and the Baby Boomer population increasingly enrolls in Medicare. Both of these programs are projected to comprise 40 percent of health care costs. The actuaries commented that these growth rates are still lower than the average rates seen over the last 30 years.

(Source: Sean P. Keehan, et al, Health Affairs, “National Health Expenditure Projections, 2014–24: Spending Growth Faster Than Recent Trends,” July 2015)

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Implementation & Adoption

BPC outlines ways to foster medical innovation

Last Monday, the Bipartisan Policy Center (BPC) released a report at a meeting on fostering medical innovation. BPC offers recommendations for medical development and approval processes.

The BPC report supports a number of 21st Century Cures provisions that were included in the bill passed by the House of Representatives (see the July 14, 2015 Health Care Current). These include enhancing personalized medicine through better use of biomarkers, incorporating patient experience into treatment development and administration, creating new incentives to invest in research for treatments for rare diseases and accelerating the development and approval of antibiotics.

The BPC report also includes recommendations to Congress that are new or were dropped from the House bill.

(Source: Bipartisan Policy Center, “Advancing Medical Innovation for a Healthier America,” 2015)

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CareFirst PCMH initiative reduces costs, improves quality, reduces readmissions

Four years into operating its patient-centered medical home (PCMH) initiative for the Northern Virginia-DC-Maryland area, CareFirst reports it has saved the organization $609 million. Despite consistent enrollment levels, readmissions dropped 19 percent, and the percent of admissions for acute illnesses has grown as a percent of the overall total (less sickly people are not being admitted as often).

The 3,600 physicians that provide services under CareFirst receive a blended fee-for-service and global capitation payment. Each year, CareFirst sets a global budget target for primary care physicians (PCPs). The PCPs work as a team and are accountable for quality and cost outcomes for their assigned patient population. They can share savings if they meet certain quality measures.

CareFirst measures quality in five areas: PCP engagement, appropriate use of services, effectiveness of care, patient access and structural capabilities (e.g., e-prescribing). More than one-third of the weight in calculating overall quality is given to PCP engagement, which is measured by factors such as member satisfaction and physician engagement with the PCMH program.

Through the Total Care and Cost Improvement (TCCI) Program, CareFirst offers more than financial incentives to physicians. TCCI offers supportive services to CareFirst physicians and provides them with data on utilization patterns for their patients.

Characteristics of the highest performing groups of physicians were high scores on community interaction, care coordination and engagement. CareFirst plans to enhance the type of data and feedback it gives to physicians, expand the initiative in its Medicare population and include dual eligibles in the model.

(Source: CareFirst, “2014 PCMH Program Performance Report,” July 30, 2015)

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NIST issues guidance on securing EHRs on mobile devices

The National Institute of Standards and Technology (NIST) released guidance on how organizations can keep patient information secure when using mobile devices to access electronic health records (EHRs). NIST looked at hypothetical scenarios and tested different responses to security threats in which mobile devices were compromised. In one experiment, they tested how organizations should respond to a stolen device. The evaluators determined that security breaches could be avoided if providers or health organizations wiped all patient information from the device remotely.

NIST also outlined guidance to help health care organizations and providers limit vulnerabilities to internal and external attackers. NIST recommended that organizations with limited resources select a cloud-based EHR vendor. Although cloud services are susceptible to the vulnerabilities of a shared network, NIST said this can be a cost-conscious tactic.

Analysis: More organizations are using mobile devices in health care settings. NIST issued this guidance in response to this trend and because mobile devices are increasingly susceptible to cybersecurity breaches. In a recent blog post, Mark Ford, Principal, Deloitte & Touche LLP, explained that there are two types of health care organizations – those already hit by cyber-attacks, and those that will be. The health care industry is more vulnerable today than ever before for several reasons. Health care has underinvested in security, and attackers tend to go where rewards are high and risks are low. Digital health and patient consumerism are expanding rapidly. Investments are not keeping up with the new and evolving risks. As more and more providers, health plans and life sciences organizations begin to understand the strategic imperative of addressing cyber risk comprehensively, they should consider relying on three pillars of a cyber-defense strategy: a secure foundation, a vigilant grasp of the continuously evolving threat and the resilience to bring the business back.

(Source: National Institute of Standards and Technology, National Cybersecurity Center of Excellence, “Securing Electronic Health Records on Mobile Devices: Practice Guide,” July 2015)

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CCIIO writes to state regulators to keep 2016 marketplace premiums affordable

Earlier this month, the Center for Consumer Information and Insurance Oversight (CCIIO) sent a letter to state insurance commissioners that outlines factors they should consider in approving 2016 insurance exchange premium rates. CCIIO gathered five key points during its conversations with health plans and officials over the last year.

Related: Last week, the US Department of Health and Human Services (HHS) published a report that found that choice among health plans in the federally facilitated exchanges has increased. In 2015 versus 2014, 16 percent more individuals could choose from at least three health plans. Sixty percent of counties in states with a federally facilitated exchange gained at least one health plan, and only 8 percent had a net loss of health plans. HHS found that increased competition from additional plans helped keep premiums down in many areas. Premium growth for the second lowest silver plan was 8.4 percentage points lower in counties that had a net growth in participating health plans.

(Source: Counihan, Kevin, Centers for Medicare and Medicaid Services, Letter to State Insurance Commissioners, July 21, 2015; Steven Sheingold, Nguyen Nguyen, and Andre Chappel, “Competition and Choice in the Health Insurance Marketplaces 2014-2015: Impact on Premiums,” July 27, 2015)

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House Ways & Means committee introduces three hospital bills

Lawmakers in the House Ways and Means Committee introduced three bills last week that, if passed, would reform Medicare hospital payment systems. Two of the bills aim to improve the distribution of special payments to hospitals. A third bill looks to align Medicare’s payments for inpatient and outpatient care.

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On the Hill & In the Courts

ONC awards $38 million in grants to support HIT

Last week, the Office of the National Coordinator for Health Information Technology (ONC) announced $38 million in awards for 20 organizations participating in three health IT grant programs. These cooperative programs aim to improve care delivery and provider payments and make progress toward interoperability. All three programs are funded for two years and build on programs funded by the Health Information Technology and Clinical Health (HITECH) Act. The program recipients are outlined below:

(Source: US Department of Health and Human Services, “More than $38 million awarded to improve coordinated health information sharing in communities across America,” July 28, 2015)

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Court ruling may impact “patent dance” process

The Ninth Circuit Court of Appeals recently ruled that biosimilar manufacturers do not have to give the abbreviated biologics license application (aBLA) or manufacturing information to manufacturers of the reference produce to be compliant with the Biologics Price Competition and Innovation Act (BPCIA). If a biosimilar maker chooses not to disclose manufacturing information, however, it is required to notify the manufacturer of the drug’s reference product 180 days before it can begin marketing the product. This advance notice may only be filed after getting approval from the US Food and Drug Administration (FDA) for the biosimilar product.

Last year, Sandoz submitted an application to the FDA for approval of a biosimilar to one of Amgen’s products. In October 2014, Amgen filed a complaint in US District Court alleging that Sandoz unlawfully refused to follow the BPCIA’s patent resolution procedures. They are looking for a stay in the launch of Zarxio.

This case is significant to the biosimilar market because it may impact whether manufacturers have to go through the “patent dance” that often delays products from entering the market earlier. When biosimilar manufacturers release manufacturing and marketing information, manufacturers of the reference product often use that information to determine whether their patent has been violated. The resulting litigation can hinder or slow products from entering the market.

Background: The BPCIA is a provision of the ACA and was enacted in 2010. The BPCIA creates an expedited regulatory approval process for biological products that are interchangeable with a product that has already been approved by the FDA. These previously approved products are also referred to as reference products.

(Source: US Court of Appeals for the Federal Circuit, “Amgen Inc., Amgen Manufacturing Limited v. Sandoz Inc.,” July 21, 2015)

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More states pass false claims laws to pursue fraudulent claims

According to Modern Healthcare, Maryland and Vermont recently joined 27 other states that have passed or strengthened false claims laws so they can more aggressively pursue fraudulent claims in their Medicaid programs. States use these laws to recover questionable billings from drug manufacturers, providers and suppliers.

In 2005, Congress passed a law that encouraged states to create their own false claims laws. If HHS determines that a state’s law is as strict as the federal False Claims Act, the state can reclaim fraudulent payments and receive a 20-35 percent increase in their share of any recoveries. Since the federal rules passed, the number of states with their own false claims laws has doubled.

Congress passed the False Claims Act in 1863. It prohibits charging the federal government for services not rendered, double billing and more. Under the law, the government may file cases against drug makers, suppliers and providers it alleges falsely billed Medicare and Medicaid. In addition, the federal government can join cases brought forward by whistle-blowers, who are entitled to a percentage of any money recovered.

Analysis: In 2014, the federal government recovered $2.3 billion under the False Claims Act. With more people on Medicaid and state budgets stretched thin, states may feel more pressure to pass their own false claims laws. However, some conservative lawmakers have criticized the incentive structure, saying that it hurts business. In response to these concerns, Wisconsin repealed its false claims law this year.

(Source: Lisa Schencker, Modern Healthcare, “Anti-fraud fervor: States step up false claims actions to recover Medicaid dollars,” July 25, 2015)

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Around the Country

CMS and Rhode Island to test a dual-eligibles coordinated care model

Last week, CMS announced it will work with Rhode Island to test ways to provide more coordinated and patient-centered care to Medicare-Medicaid enrollees, also known as dual eligibles. The model will address complexity coming from several sets of rules, benefits, insurance cards and providers (e.g. Medicare Parts A and B, Part D, and Medicaid). The complexity can be challenging for this population, especially since they are often sicker than the general population and could benefit from higher levels of care coordination.

This demonstration project builds on Rhode Island’s Integrated Care Initiative, which established the Rhody Health Options (RHO) Medicaid managed care program. For the first phase of the program, Rhode Island enrolled Medicaid beneficiaries – including dual eligibles – in a health plan that coordinates Medicaid services, including long-term services and supports. Eligible beneficiaries enrolled in either an enhanced Primary Care Case Management model called Connect Care Choice Community Partners (CCCCP) or the Rhody Health Options Medicaid managed care program.

This initiative is phase II of Rhode Island’s Integrated Care Initiative. Health plans participating in the program will receive a prospective payment from CMS and the state to manage Medicare and Medicaid benefits for the enrollees. Approximately 30,000 individuals will be eligible for the demonstration.

Background: CMS is funding and managing an external evaluation of each demonstration under the Financial Alignment Initiative. The demonstration will evaluate how each state performed on quality measures, including overall beneficiary experience of care, care coordination and support of community living, as well as changes in Medicare and Medicaid costs. CMS uses demonstration projects to test and measure the effect of potential program changes. This project will measure the impact of new benefit management models for dual eligibles. If successful, it could improve patient experience and be a model for other states moving forward.

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Study: Minnesota identified 1.3 million unnecessary ED visits through all-payer claims database

The Minnesota Department of Health used data from the state’s all-payer claims database to estimate that two in three (1.3 million) emergency department (ED) visits in 2012 could have been avoided.

Researchers defined potentially preventable visits as health care that could have been avoided with timely access to care, medication management, better understanding of how to navigate the health care system and better care coordination between clinicians, social service providers, patients and families. Treating urinary tract infections in a primary care setting rather than the ED is one example of a potentially avoidable visit by the report’s definition. If patients had pursued less-costly care, $2 billion in health care costs could have been saved.

Patients with chronic diseases made up 30 percent of the potentially avoidable visits. The analysis also revealed 50,000 “frequent flyers,” which are patients with more than four potentially avoidable ED visits per year. These patients sought care for sinus or respiratory infections, abdominal pain and back pain most often, which can be treated in a primary care setting in many cases.

The Department of Health will use the analysis as a baseline as it identifies and initiates population health management programs.

Implications: The Commissioner of Health, Dr. Ed Ehlinger, said that though Minnesota is known for delivering efficient and cost-effective care, this study indicates there is room for improvement. Medicaid patients disproportionately used the ED instead of more appropriate primary care settings. In Minnesota, Medicaid patients comprise 14 percent of the population but 40 percent of ED visits. This report suggests that if the state could increase primary care utilization among the Medicaid population, it may be able to reduce unnecessary ED visits and help reduce costs and improve efficiency of the Medicaid program.

(Source: Minnesota Department of Health, “An Introductory Analysis of Potentially Preventable Health Care Events in Minnesota,” July 2015)

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Online tools may help those with chronic pain

A new study in the journal Pain found that people with chronic pain may be able to use online tools to manage their symptoms, reducing the need for frequent physician office visits. Chronic pain costs the US economy an estimated $600 billion a year. The most common treatments – narcotics and surgery – have drawbacks, including risk of addiction and complications from surgery. Available treatments do not help all people find relief from chronic pain.

Individuals in the study participated in a series of web-based pain management tutorials with different levels of contact with clinicians. Researchers divided 490 adults who had experienced pain for at least six months into one of three treatment groups to receive the web-based tutorials.

  1. One group had regular contact with clinicians during the study. Regular contact was defined as weekly phone or email conversations with clinicians trained in psychology, in addition to using the web-based tools. 
  2. People in the optional contact group used the web-based tools and were told that the regular clinician contact option was available if they wanted it.
  3. The non-contact group used the web-based tools and was told clinicians were only available if they had technical difficulties or a mental health emergency.

A fourth control group carried on usual treatment with their clinicians. The regular contact group (group 1) had an average of 68 minutes of contact with clinicians over the eight-week treatment period compared with 13 minutes for the optional contact group (group 2) and about five minutes for the group with only emergency contact (group 3).

All participants in the treatment groups, regardless of how much contact they had with clinicians, reported significant reductions in disability (18 percent), anxiety (32 percent), depression (36 percent) and average pain levels (12 percent) at the end of the eight week study. These effects remained at the three month follow up. Individuals in the treatment groups had significantly greater reductions in disability, depression and anxiety than the patients in the control group.

The lead researchers acknowledged that while in-person pain management programs are important, many adults with chronic pain can benefit from web-based programs and many do not need a lot of contact with the clinicians to benefit. One limitation the researchers acknowledged was that all participants in the treatment program were seeking a pain management program, and they do not know if these results would differ among people not looking for this type of care.

Analysis: Studies have shown that about 100 million Americans have chronic pain, and that persistent pain (defined as frequent or constant pain lasting longer than three months) is correlated with other indices of health-related quality of life, such as anxiety, depression and fatigue. From a public health perspective, persistent pain may be an indicator of unmet need for pain management in the general population, as well as a risk factor for disability, depression and dependency. Individuals with chronic pain are also at increased risk for long-term exposure to and dependency on pain medications. New approaches such as web-based programs could offer a viable therapeutic option for some individuals.

(Source: BF Dear, “The pain course: a randomized controlled trial examining an internet-delivered pain management program when provided with different levels of clinician support,” Pain, May 30, 2015)

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Breaking Boundaries

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