Health Care Current: December 3, 2013

Shared challenges leading to shared solutions

This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.

Global health care: Shared challenges leading to shared solutions

During my travels around the world, especially in Africa and Asia, I have seen increasing evidence of  industry challenges that are similar across the globe, but because health care is local, there are striking differences in how severe and pervasive many of these challenges manifest themselves. Governments, health care delivery systems, employers and consumers in both developed and emerging markets will face enormous pressure to deal with the following health care issues in 2014 and beyond:

Aging population and chronic diseases: between 2000 and 2050, the global population age 60 and above is projected to grow from 605 million to nearly two billion—doubling in size.1 Chronic diseases—heart disease, stroke, cancer, chronic respiratory diseases and diabetes among others—increasing due to the aging population, more sedentary lifestyles, diet changes and rising obesity levels have quickly become another shared demographic trend expected to drive demand for health care services in both developed and emerging economies.

Cost and quality: public and private health care funding systems are economically stressed—across the globe rising costs are unaffordable and unsustainable. Also, research has not conclusively found for any country that higher spending always correlates to better results or higher-quality care. For example, over-prescribing of drugs is increasing the cost for health care and resulting in greater side effects for over-dosage of medicines. The U.S. Centers for Disease Control and Prevention (CDC) reported in 2010 that more than 12 million patients misused their medications and more than 16,000 cases a year result in an unintentional death.2,3

Access to care: most countries across the globe are facing a challenge to meet their required number of skilled and educated health care workers, a shortage that directly affects the access to and quality of care. In the U. S., the Association of American Medical Colleges (AAMC) predicts shortages of 63,000 physicians by 2015 and 130,000 by 2025.4 A European commission projects a shortage of 230,000 physicians across that continent in the near future.5 The number of caregivers in 36 African countries is inadequate to deliver even the most basic immunization and maternal health services and China is lacking millions of nursing home employees to care for the country’s growing older adult population.

The lack of health care facilities in certain regions is also contributing to patient access problems. The number of hospital beds per 10,000 persons varies from country to country—ranging between 1 per 10,000 in Mali to 165 in Monaco6—clearly indicating the difference in access to care.

Technology: health care technology changes will be rapid and, in some regions, disruptive to established care models. Some exciting advancements are taking place at the intersection of information technology and medical technology, such as using 3D printing to help in preparing tissues for transplants. Yet, acquiring and leveraging technology innovations requires financial investments that many health care providers—even in developed economies—may struggle to afford in an era of cost-cutting and reform.

Health care challenges are extensive across the globe. Shared challenges could lead to shared solutions if stakeholders innovate in new and exciting ways to generate scientific, medical and care delivery breakthroughs that improve the health of people worldwide. Maybe we need to establish a global congress of health care experts in financing, care delivery models, technologists, clinical pathways researchers, logistics experts that could deliver medicine and services to remote locations, public policy economists and consumers. Pooling knowledge and sharing it more broadly could help to improve productivity of all nations…which would benefit us all.

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P.S. – Join the next Live from the Center update on December 18 to learn more about the status of the ACA implementation and the potential impact on providers, health plans, life sciences companies, employers and consumers; implications from health insurance exchange open enrollment; and other regulatory and policy decisions expected next year. Click here for more information and to register.

1 World Health Organization, “Ageing and Life Course,” May 30, 2013,
2 Centers for Disease Control and Prevention, Policy Impact: Prescription Painkiller Overdoses, 2013,
3 Centers for Disease Control and Prevention, Drug Induced Deaths, United States, 1999-2010,
4 Association of American Medical Colleges, “Physician Shortages to Worsen Without Increases in Residency Training,” 2010,
5 Nele Jensen, Health Poverty Action, “The Health Worker Crisis: an analysis of the issues and main international responses,” October 2013,
6 Kaiser Family Foundation, Hospital beds per 10,000 population, 2013,

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My Take

By Russ Rudish, Global Health Care Leader, Deloitte Touche Tohmatsu Limited



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Implementation & Adoption

Administration delays SHOP online enrollment one year

The U.S. Department of Health and Human Services (HHS) announced last week that it would delay again online enrollment in the federally-facilitated Small Business Health Options Program (SHOP) until November 2014, a year later than expected. Instead, small businesses that wish to apply must continue to do so through an agent or broker or submit their enrollment applications via fax or mail. SHOP plans will still take effect January 1, 2014 as scheduled, providing coverage for an estimated two million people. The Administration previously announced in October a one month delay of online SHOP enrollment, but cited technical issues with the website as the reason for further delay.

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CMS releases 2014 physician fee schedule and payment policy updates

Friday, the Centers for Medicare and Medicaid Services (CMS) released the final revisions to physician payment rates and hospital outpatient perspective payment (OPPS) and ambulatory surgical center (ASC) payment rule for 2014. The physician fee schedule updates payment policies and rates for Medicare services provided on or after January 1, 2014. Medicare will begin making a separate payment for chronic care management services including but not limited to:

  • Development, revision and implementation of a plan of care
  • Communication with the patient, caregivers and other treating health professionals
  • Medication management

The rule also made modifications to the geographic criteria of eligible telehealth services to include locations outside of urban areas that have a shortage of health professionals. The Physician Quality Reporting System added 57 new individual quality measures and two new measures groups, for a total of 287 measures and 25 measures groups in 2014. CMS will be accepting comments on more than 200 interim code changes until January 27, 2014.

Total OPPS payments are projected to increase by $4.4 billion (9.5 percent) and 2014 Medicare payments to ASCs are projected to increase by $143 million (5.3 percent) as compared to 2013. The rule also updates partial hospitalization payment rates for hospitals and community mental health centers.

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HHS and CMS release rule for reinsurance and risk corridors

Last week, HHS and CMS released the proposed rule Notice of Payment Parameters for 2015 which would alter various payment limits and oversight provisions for insurance companies participating in the federally-facilitated health insurance exchanges (HIX). Under the reinsurance program, designed to protect insurers from high-cost claims, plans that take on high-cost individual HIX enrollees will have access to Affordable Care Act (ACA) reinsurance funds. The annual reinsurance contribution rate will be set at $44 per enrollee to be paid by health insurance issuers and self-insured group health plans in order to fund the $6 billion reinsurance payments pool.

The rule also made updates to the risk corridors formula, designed to shield insurance plans from incurring financial losses or gains due to inaccurate insurance rates being set after ACA implementation. Insurers incurring lower costs than expected must submit payments to the risk corridor fund to reimburse insurers whose costs were higher than expected. CMS is also considering whether to have state-specific risk corridor formulas to account for states that allow plans that are non-compliant with ACA standards in 2014. State-based HIXs will have until June 15, 2015 instead of January 1, 2014 to submit their blueprints to allow states more time to transition. In the small-group market, insurance carriers offering plans (including SHOP) with a composite (i.e. average enrollee) premium will keep the same premium for the entire plan year, even if the composition of the group changes. The agencies will accept comments on the proposed rule until December 31, 2013.

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Home health services to see smaller pay cuts than originally proposed in 2014

CMS recently released the final payment rule for home health services, reducing Medicare payments under the Home Health Prospective Payment System (HHPPS) by 1.05 percent, instead of the proposed 1.5 percent. The payment rates take effect January 1, 2014, totaling approximately $200 million less than the 2013 rates. The reduction is a result of coding adjustment cuts and prior home health payment updates. As required by the ACA, CMS also adjusted the national, standardized 60-day episode rate to include a 2.81 percent reduction. This is less than the proposed 3.5 percent reduction and will be phased in over a four-year period through 2017 under the final rule. Previously, CMS based their rates on data from 2000 when the HHPPS was first implemented; but ACA provisions require that the rate update is based on 2010 base year data and is reflective of changes in episode visits, average cost of care and other factors. Other notable changes released in the payment rule include two new quality measures in which home health providers are required to report hospital readmissions and emergency room usage without readmission during the first 30 days of home health.

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On the Hill & In the Courts

U.S. Supreme Court to review two ACA employer contraceptive coverage cases

Last week, the U.S. Supreme Court accepted two cases challenging the legality of the ACA’s requirement for employers who provide group health insurance plans to provide coverage for contraceptives. Appellate courts nationwide have been divided on the issue, with several cases brought forth by private employers with religious objections to the mandate. The Supreme Court’s ruling will determine whether a private, for-profit, secular corporation can claim constitutional protection from the mandate based on religious beliefs. HHS implemented an exemption to the mandate for certain non-profit religious organizations, but not for private employers. The White House Press Secretary issued a press release in response to the news that the Court would review the matter stating, “We believe this requirement is lawful and essential to women’s health and are confident the Supreme Court will agree.” The cases will be heard together and given hour of oral arguments before the Court.

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House members express concern over CMS Sunshine Act interpretation

In a letter to CMS Administrator, Marilyn Tavenner, more than a dozen House Representatives expressed concern over recent regulations released by CMS regarding the Physician Payments Sunshine provision of the ACA (a.k.a. Sunshine Act). In their letter, House members stated that the interpretation of the law was contrary to what the Sunshine Act was designed for: to promote transparency for payments and financial transfers of value between physicians and the medical product industry. Specifically, Congress outlined 12 Sunshine Act exclusions from reporting requirements, one of them being “educational materials that directly benefit patients or are intended for patient use.” The House Representatives also requested a meeting with Dr. Jonathan Blum, Principal Deputy Administrator and Director of CMS, to discuss the matter. Earlier this month the American Academy of Family Physicians, American Psychiatric Association and the Infectious Diseases Society of America also wrote to CMS expressing similar concerns. For more information please see the November 5, 2013 Health Care Current.

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Around the Country

D.C. and Pennsylvania announce decisions on the extension of individual health policies

State insurance commissioners continued to make announcements regarding insurance companies’ ability to sell plans in the individual and small-group markets that do not meet the minimum requirements under the ACA through the end of 2014. Last week, Pennsylvania Insurance Commissioner Michael Consedine announced that the state will allow insurers to extend such policies stating, “Options for policyholders may differ and may include continuation of their current policies or enrollment in a new ACA-compliant product. Options will be insurance company specific and consumers are encouraged to call their current insurance carrier for information. Insurance companies will have the option to continue individual policies originally set for cancellation.”

In contrast, the District of Columbia (D.C.) acting Insurance Commissioner Chester McPherson announced the District will not allow consumers to keep old insurance policies into 2014 stating, “The department carefully considered all factors involved in this decision — District residents, the industry and the unique characteristics of our market — and concluded that there are greater benefits to continuing the District’s ACA implementation efforts as planned. The department believes this approach provides more certainty for residents and carriers by subjecting all health plans to the same standard as outlined in the law.”

As of Wednesday, November 27, 11 states and the District have elected not to grant insurers extensions on non-compliant plans and 14 states thus far intend to allow consumers to renew canceled insurance plans:

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Washington receives CMS approval for capitated dual-eligible demonstration

Washington State signed a memorandum of understanding (MOU) with CMS last week to move forward with the second half of the state’s dual eligible demonstration program regarding capitation payments. The demonstration aims to use a managed fee-for-service approach to align Medicare and Medicaid services. The program will use in-person care coordination services and target comprehensive care interventions by using its predictive modeling and clinical decision support tool system (PRISM), a web-based tool integrating Medicaid and Medicare data. Approximately 27,000 dually eligible beneficiaries in Washington age 21 and older are eligible to enroll in the capitated duals demonstration coverage, which begins July 2014 and continues through 2017. Opt-in enrollment will begin June 2014 and passive enrollment will begin July 2014 and be effective as follows:

  • Phase 1: passive enrollment effective September 2014
  • Phase 2: passive enrollment effective November 2014
  • Phase 3: passive enrollment effective January 2015

Dual eligible beneficiaries will be assigned a passive enrollment phase at random and will be enrolled on a monthly basis beginning February 2015.

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Breaking Boundaries

Mobile app helps gastroenterology patients measure ostomy bags

A mobile application (app), Ostom-i Alert, has been developed to help patients know when their ostomy bag, used to collect body waste from the colon after surgery, is full. Michael Seres, a Crohn’s disease patient and co-founder of 11 Health, a startup company in the United Kingdom, designed the app after he had a bowel transplant and experienced first-hand the lack of technology in the ostomy industry. Ostom-i Alert clips onto an ostomy pouch and uses a sensor to “sweep” the ostomy bag, giving accurate readings every few seconds regarding fullness. Ostom-i uses Bluetooth technology to send the information to a smartphone or web portal and can automate a report for medical providers. The app also allows patients to set alerts that will go to their smartphone so they know when their bag is filling up. Ostom-i received U.S. Food and Drug Administration (FDA) approval as a class I medical device and regulatory approval in Europe.

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Study uses EMRs to link DNA variations to skin disease

Electronic medical record (EMR) data can help link diseases to genetic variants, according to research published last week in Nature Biotechnology. The study, conducted by Vanderbilt University researchers, surveyed 13,000 EMRs to find that specific DNA variants are linked to skin diseases, non-melanoma skin cancer and keratosis. Researchers grouped 15,000 billing codes from EMRs that had DNA data available into 1,600 disease categories. Examining multiple diseases at once rather than a single disease helped to determine how single genes might affect multiple characteristics or conditions of a person. The study results indicate that analyzing larger sets of EMR data could help uncover even more complex disease relationships.

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