Hotspotting helped show us the link between social determinants and health …so how do we fix it

Health Care Current | August 8, 2017

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My Take

Hotspotting helped show us the link between social determinants and health …so how do we fix it?

By Sarah Thomas, Managing Director, Deloitte Center for Health Solutions, Deloitte Services LLP

It has been about six years since Atul Gawande, MD – a surgeon, writer, and public health researcher – profiled Jeffrey Brenner, MD, in an article in The New Yorker.1 Dr. Brenner used advanced analytics to identify patterns underlying health care utilization data, which he dubbed “hotspotting.” It’s a term used by some police departments to identify high-crime areas. Dr. Brenner used it to pinpoint neighborhoods within a community that had unusually high health care costs.

Many of the factors that drive high health care costs, he determined, are non-health issues such as unstable housing, violence in the community and at home, loneliness, and other issues. Dr. Brenner’s work complements more recent research that ties some health care costs to social determinants. Outside of the US, other research has shown that countries that spend more on social programs tend to spend less on health care.

Together, this research can make a compelling case for widening our perspective on managing health care costs by considering how we can meet a broader set of needs that people may have – for housing, social services, transportation, employment, education, and nutrition, among others.

Private and public initiatives address social determinants
The Robert Wood Johnson Foundation, The Commonwealth Fund, and others organizations at the forefront of this issue in the US, provide financial support for a wide variety of community and health-system based initiatives. Organizations such as Health Leads were created to assist hospitals and other caregivers connect patients to community-based programs.

Dr. Brenner has an accountable care organization (ACO) in New Jersey that focuses on bringing the insights from hotspotting into practice, and it offers a toolkit to others interested in replicating his work in their own communities.

Some states are incorporating directives to address social determinants in ACOs. In June, for example, Massachusetts Gov. Charlie Baker announced that 18 ACOs from across the state had been selected to participate in a restructured ACO program that will integrate providers with community-based health and social service organizations. The state secured more than $50 billion in federal funding through a Medicaid waiver. The program represents the first major overhaul of MassHealth in 20 years, and is expected to cover more than 900,000 MassHealth members.2

In many countries, local and national governments are working to build more connections between social and health programs. Our colleagues in the Centre for Health Solutions based in the United Kingdom have provided a wealth of examples in their recent report, Breaking the dependency cycle.

Many hospitals are trying to address social needs, but need more information on what works

According to our new Deloitte Center for Health Solutions research, many hospitals in this country are devoting some resources to help direct patients to social programs that can help address a broad set of needs. Not surprisingly, many hospitals tend to focus on populations that have the greatest health care spending – inpatients and those with high risk scores according to predictive modeling.

The finding that really struck me most is that several hospital executives told us that they are seeing limited short-term return-on-investment (ROI) from such programs. Health systems that invest in improving the health of their communities generally would like to see ROI in terms of improved health outcomes, reduced costs, or both. Indeed, about half of our respondents say evidence of ROI would encourage their organization to increase its investments in health-related social needs activities.

I think this points to an important gap. Even though research has shown a strong relationship between social determinants and health care spending, directing high-cost populations to social programs probably won’t reduce health care spending immediately. Such investments might be effective for certain groups of people, and some social-program investments might have a more substantial influence than others. Over the long term, some of the more impactful programs might be those that target children, who might not show up in the health care system until they reach adulthood.

We clearly need to invest more in research that can find the most efficient use of health system resources to get to the goal of lower health care spending – both in the short and the long term. It is probably unrealistic to expect hospitals themselves to figure this out. Sustainable funding is already a challenge for some hospitals and for the programs they have. They might not be able to devote additional resources to research and evaluation. Before we can understand how to target programs and people most effectively, we likely need data from many different initiatives and populations.

Social programs are not the only answer to better care
Figuring out what works, along with determining the health outcomes and cost impact, is especially important if these investments are to help us get to better outcomes at lower cost – the goal of many value-based care initiatives. Indeed, our study did find that hospitals with greater involvement in value-based care were generally more committed to referring patients to social programs, and measuring outcomes related to health, patient experience, and costs. Many interviewees also said that, regardless of the direction federal and state funding takes in the years ahead, the move toward value-based care is expected to advance the health care system’s ability to address social needs.

Many hospitals and clinicians continue to adopt value-based care payment models, and are turning their attention to the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA). Our research indicates that many hospital system executives want to advance their collaborations with community-based organizations outside the health care system to strengthen their understanding of the gaps patients face, and to help them engage more effectively with patients. As described in our recent report on MACRA, many senior leaders across health care organizations are also interested in hiring patient advocates, navigators, social workers, and/or home health workers to assist with patient coordination, and to help patients navigate the system.

Coming back to hotspotting, Dr. Brenner’s work also showed that some high-cost patients benefited from different models of health care that is supported by richer data and a change in perspective among clinicians. These models include improved care coordination and monitoring between visits, and better alignment between behavioral health and physical health care.

So, not only do we need to have better information about the ROI of social needs programs, we need to be able to combine this information with what health care clinicians and hospitals can do better under new incentives that are aimed at the people where it will have the greatest impact on outcomes and costs.

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1 The Hot Spotters, The New Yorker, January 24, 2011
2 Massachusetts Department of Health and Human Services,,


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In the News

Medicare finalizes payment rules for FY 2018

On August 2, the US Centers for Medicare and Medicaid Services (CMS) finalized the Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Prospective Pay System rule. CMS estimates that acute care facilities will see a 1.2 percent ($2.4 billion) increase under the IPPS, and that LTCHs will receive a 2.4 percent ($110 million) decrease in fiscal year 2018, compared to FY 2017 levels.

Additionally, the final rule delays the stage 3 meaningful use deadline. Hospitals can use electronic health records (EHRs) that meet 2014 certification rules through the end of 2018 before being required to use 2015 certified EHR technology. The delay follows an earlier proposed change to the Quality Payment Program which would allow clinicians to continue using 2014 certified EHR technology for another year (see the June 27, 2017 Health Care Current).

The rule also finalizes changes to the formula used to calculate uncompensated care payments to Disproportionate Share Hospital (see the August 1, 2017 Health Care Current).

Related: CMS also published the payment rates for inpatient rehabilitation facilities (IRFs) and skilled nursing facilities (SNFs) beginning October 1, 2017. CMS estimates IRFs will see a $7.5 million increase (0.9 percent) over last year’s payments, and SNFs will see an aggregate increase of $370 million – $20 million less than was originally projected under the proposed rule.

MACRA requires that both IRF and SNF payment rates increase by 1 percent for FY 2018 from FY 2017 levels. However, CMS is updating the baseline threshold used to calculate IRF payment levels – from 2010 data to the most recently available (2014) data – which is why aggregate IRF payments are estimated to only increase 0.9 percent. The final rule also removes a 25 percent payment penalty for IRFs that are late to submit quality reporting data and removes quality-reporting measures related to all-cause readmissions.

The difference between the proposed payment rate and the final payment rate for SNFs, according to CMS, is due to the agency’s revision of the market basket index used to calculate payments, which updated the base year from FY 2010 to FY 2014. CMS also added four outcome-based patient functional measures to the SNF quality-reporting program, and instituted financial penalties of 2 percent for SNFs that do not meet reporting requirements.

Additionally, CMS added quality scoring and operational policies for the new Medicare SNF value-based purchasing program, which is slated to begin October 1, 2018. The program applies to freestanding SNFs, SNFs associated with acute care facilities, and all non-critical-access rural hospitals. Currently, the program only includes outcome measures relating to readmissions to conduct performance scoring, which some advocates say could disadvantage facilities that serve primarily low-income, high-risk, or high-acuity patients. In the final rule, CMS requests comments on potential reporting measures and additional strategies to reduce the impact of patients’ socioeconomic status on a SNF's performance score.

Several states join lawsuit to support continuing cost-sharing subsidies

On Tuesday, a judge ruled that 17 states and the District of Columbia could join health insurers in a lawsuit to support continued federal payments to health plans participating in public exchanges to offset costs for reducing out-of-pocket expenses (cost-sharing reductions or CSRs) for low-income enrollees.

The US House of Representatives filed a lawsuit in 2014 to end the CSR payments, which the House argues are unconstitutional because the funds were never appropriated by Congress. Insurers joined the lawsuit on the other side, which was supported by the previous administration. They argue that stopping the payments would significantly raise premiums (see the April 18, 2017 Health Care Current).

The appeal is in abeyance pending resolution or legislative action.

Related: Defunding the CSRs would reduce federal spending, but some of these savings would be offset by a rise in subsidy payments for the higher premiums – by $2.3 billion, according to a recent Kaiser Family Foundation (KFF) estimate. Many health plans anticipated receiving federal payments in their premium bids and could lose money if the government decides not to pay them. KFF estimates that health insurers would need to boost premiums by an average of 19 percent above their existing projected increases for the 2018 plan year to cover the loss of the federal payments.

Minnesota releases proposed 2018 rates

On August 1, Minnesota regulators filed proposed premium rates for health plans in the individual and small-group markets for coverage year 2018. For this filing, health plans released two sets of proposed rates: rates that take into account a state reinsurance program and rates that assume no reinsurance program in 2018.

Minnesota’s plan for a state-based reinsurance program, the Minnesota Premium Security Plan, is pending approval from the US Department of Health and Human Services (HHS). If approved, the program would provide health plans with partial financial protection against high-cost claims. According to the filings, premium rates would, on average, decrease for the 2018 coverage year if HHS approves the waiver request. However, if HHS does not approve the waiver, some health plans requested double-digit premium increases.

If approved by the Minnesota Commerce Department, final 2018 rates will be publically available October 2, 2017. The open enrollment period for the 2018 coverage year begins November 1, 2017.

Related: California's rates for 2018
California’s public exchange, Covered California, released its proposed premium rate filings for the 2018 coverage year on August 1. All 11 health plans that now sell coverage through Covered California intend to return for 2018. The statewide weighted average proposed rate increase – among the 11 health plans that intend to sell coverage on the exchange – is 12.5 percent. In 2017, the average rate increase over 2016 was 13.2 percent. Because the federal government subsidizes premiums for lower income people, the realized rate increase may be lower than the total. According to Covered California, increased cost of medical services, and increased utilization by beneficiaries, are behind the premium increases.

Bipartisan group proposes plan to stabilize health insurance markets

A bipartisan group of 40 House members in the “Problem Solvers Caucus” released a proposal that aims to improve the individual health insurance market. The proposal would immediately fund CSR payments, which help pay insurance premiums and co-payments for low-income Americans. Additionally, the proposal would create a “dedicated stability fund” that states could use to reduce premiums.

The proposal also would:

  • Repeal the medical device tax
  • Remove the requirement for employers with fewer than 500 employees to provide health insurance to their workers
  • Allow greater flexibility through waivers for states to improve their health insurance markets

The proposal was released after a bill to repeal the Affordable Care Act (ACA) failed to pass the Senate.

Related: Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) also introduced a plan that would take current federal funding for premium tax credits, CSRs, and Medicaid and give it to states in the form of block grants. The amendment would reduce overall funding to the states and require that the states match the proposed federal funds that would be in state control at a higher rate. Several senators met with the administration to discuss the amendment, which they argue would give states more leeway.

Sen. Lamar Alexander (R-TN), who chairs the Health Education Labor and Pensions (HELP) committee, announced that the group will hold bipartisan hearings in September on plans to stabilize the individual health insurance market. The hearings are scheduled ahead of the September 27 deadline for insurance companies to sign contracts with the government to sell coverage through Additionally, the Senate Finance Committee is holding September hearings on the Children’s Health Insurance Program (CHIP) as well as other proposals for overhauling federal health care policies.


Senate extends VA Choice program

After passing the House of Representatives, on August 2, the Senate passed the VA Choice and Quality Employment Act of 2017, which extends the Veteran’s Administration Choice program by an additional six months. VA Choice provides financial assistance for US veterans to receive care from providers outside of the Veteran’s Health Administration (VHA). It would have run out of funds on August 15. The extension bill includes $2.1 billion and authorizes funding for the VHA to lease 28 new hospital and outpatient sites in 15 states.

According to Congress, the Act will ease the burden at existing VA facilities by allowing veterans to receive care more quickly and closer to their homes or within their communities. The VA Choice and Quality Employment is expected to reach the President’s desk for signature soon.

Senate passes FDARA, reauthorizing FDA user-fee programs

On August 3, the Senate passed the US Food and Drug Administration Reauthorization Act (FDARA) of 2017, renewing the FDA user-fee programs for prescription drugs (PDUFA), generic drugs (GDUFA), medical devices (MDUFA), and biosimilar products (BsUFA). The new user-fee package, which is renegotiated every five years, will run from fiscal years 2018-2022, and will account for nearly half of the FDA’s budget. FDARA grants the FDA authority to collect and use fees paid by the life sciences industry in exchange for a timely and transparent regulatory process to get their products approved.

In 2018, the new package authorizes the FDA to collect:

  • PDUFA: $880 million
  • GDUFA: $494 million
  • MDUFA: $183 million
  • BsFUFA: $45 million

The House of Representatives passed FDARA on July 12 (see the July 18, 2017 Health Care Current), including amendments that address medical device regulation, which the Senate approved, including:

  • An amendment to clarify the FDA’s process for classifying medical devices as “accessories” based on their function
  • An amendment to create a pilot program to gather real-world evidence about device safety
  • An amendment requiring the FDA Commissioner to report to Congress about opportunities to regulate third-parties that refurbish or service medical devices already in use

White House opioid commission releases preliminary recommendations

Last week, the White House Commission on Combating Drug Addiction and the Opioid Crisis released several recommendations to the President. Importantly, the Commission recommended that the President declare a national emergency under the Public Health Service Act or the Stafford Act to activate federal assistance and emergency provisions for the opioid crisis.

The Commission, chaired by New Jersey Gov. Chris Christie, was created by an executive order on March 29 to address the opioid epidemic (see the April 4, 2017 Health Care Current). For this interim report, the Commission gathered input from all governors and held a listening session with members of Congress. Additionally, the Commission sought input during a public meeting on June 16 with nine leading nonprofits. It subsequently received more than 8,000 public comments.

The White House Commission on Combating Drug Addiction and the Opioid Crisis recommended:

For its final report, the opioid commission will do a full-scale review of federal funding and programs targeted toward addressing addiction. The final report and recommendations are expected to be released on October 1.

Prescription drug importation could save $7 billion by 2027

Allowing the importation of prescription drugs from certain countries could save $6.8 billion by 2027, according to a preliminary cost estimate from the Congressional Budget Office (CBO). The CBO prepared the analysis for Sen. Bernie Sanders (I-VT), the ranking member of the Senate Budget Committee.

Last February, Sens. Sanders, Cory Booker (D-NJ), and Bob Casey (D-PA) introduced the Affordable and Safe Prescription Drug Importation Act in an effort to lower the cost of prescription drugs by importing safe and affordable drugs from certain countries. Under the bill, the Secretary of HHS would have authority to allow wholesalers, pharmacies and individuals to import qualifying prescription drugs from licensed Canadian sellers. After two years, the bill could allow prescription drug importation from other Organisation for Economic Cooperation and Development (OECD) countries.

Any prescription drug import, however, would have to adhere to the same standards required by the FDA in the US. The bill outlines safeguards and consumer protections. Qualifying prescription drugs, for example, must be imported from certified foreign sellers from Canada.

Breaking Boundaries

Innovations in infant monitoring devices

Inc. magazine released its 11th annual 30 Under 30 list featuring young entrepreneurs working to solve some of the world's biggest challenges. The founders of Neopenda made the list – the startup makes wearables that monitor four newborn vitals in developing countries. The women who founded Neopenda, which launched in 2015, studied biomedical engineering and came up with their idea on a trip to Uganda.

In Uganda, nearly 600,000 newborns require medical interventions at birth. The staff at the country’s Neonatal Intensive Care Units (NICU) had to do much with few resources. Typically, one physician or nurse cares for 15 to 30 newborns. A 2015 report from the United Nations Children’s Fund shows that fewer than 25 percent of newborns in the least developed countries receive proper health checks in the days after birth. Having better technology to monitor vital signs - heart rate, respiration, blood oxygen saturation, and temperature – would improve the quality of care the newborns received.

The device the company created is a battery-charged sensor that tucks into a baby hat and wirelessly transmits data to a central monitor that alerts the care team if the infant is in distress. The entrepreneurs raised money through Kickstarter, grants, venture capital investments, and competitions. The company also benefits from a diverse board of experts in pediatrics and nonprofit research and advocacy.

While a typical medical-grade monitor in the US costs $2,500, the company is targeting a price of $50 per cap, including the tablet. The system can handle 15 babies at a time. Neopenda is integrating user feedback from some clinics in Uganda and hopes to enter the market in 2018. If the company receives government approval, it can expand across East Africa.

Related: The monitoring market for infants is on the rise, with more products for clinical settings, especially in developing countries, and for anxious parents who want to monitor their babies from home. These monitors come in several forms, with wireless electronics integrated into socks, leg bands, buttons, onesies, or diaper clips that send data to parents' smartphones. Some use motion sensors that can determine if a baby stops breathing. Others use pulse-oximetry probes, which shine a light through the skin to measure blood-oxygen levels. Parents can purchase these devices online or at a store.

Market research analysts at Technavio forecast the global smart connected baby monitors market to grow at a compounded annual rate of more than 28 percent over the next four years. However, for the home monitoring market, some pediatricians and other health care specialists warn that the information may not always be accurate and that parents or medical providers may not know how to use the information. Anxious parents may take a healthy baby to the hospital for monitoring and interventions, which might not be necessary. At the same time, many families have touted the benefits of the devices for their peace of mind and for alerting them of when their infant needs medical attention. In the coming years, as more devices enter the market, manufacturers, researchers, and regulators will have to work together to figure out how best to strike a balance between spurring innovation and providing appropriate and efficient oversight of the rapidly expanding mobile medical app market.

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