The health care sector experienced many bright spots in 2017 | Deloitte US has been added to your bookmarks.
The health care sector experienced many bright spots in 2017
Health Care Current | December 12, 2017
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 care sector experienced many bright spots in 2017
By Sarah Thomas, Managing Director, Center for Health Solutions, Deloitte Services LP
Whenever I get to the final page of my wall calendar, I always feel compelled to reflect on the past 12 months. There were quite a few bright spots for health care stakeholders in 2017. Innovations in delivery and payment system reforms appear to be working. New therapies are curing diseases. Competition is expanding in the life sciences space. And after years of volatility, the individual health insurance market is showing some signs of stability.
I contacted the leaders of Deloitte’s Life Sciences and Health Care practice, as well as our research and policy teams, and asked them to highlight some of the bright spots they saw in 2017. We came up with a pretty extensive list.
Delivery and payment system reforms show positive trends
Let’s start with some of the initiatives being led by Medicare, private payers, and states:
- Many accountable care organizations (ACOs) are delivering impressive savings. For example, over 30 percent (134 out of 432) of ACOs in the Medicare Shared Savings Program generated shared savings. Collectively, the savings totaled more than $700 million in the 2016 performance year – double the savings reported the prior year. When you include savings from the Pioneer program, total savings from ACOs was even higher – $836 million.1
- Some patient-centered medical home programs are showing strong results. For example, a multi-payer initiative in Michigan (4,534 primary care doctors) posted a 15 percent decrease in adult emergency department visits, and a 21 percent drop in inpatient hospital stays, which experts classify as preventable if patients receive the appropriate ambulatory care.2
- Integrated delivery systems are reducing costs and boosting quality. These systems are accomplishing this by leveraging data from their electronic health records and applying sophisticated analytics. During a webinar hosted by the Scottsdale Institute, I heard how Intermountain Healthcare is using big data and analytics to improve diagnoses and outcomes while cutting waste. Many of the examples they cited were results of collaboration with other technology and delivery system partners.3
- State initiatives to reduce opioid abuse are beginning to take effect. More states have adopted prescription-drug monitoring programs, and they are beginning to see some reductions in opioid prescribing and fewer bad outcomes associated with the drugs.4
New therapies and more competition for life sciences companies
This year we are seeing real progress in immunotherapy, and the first two CAR-T (Chimeric Antigen Receptor T-cell) treatments have won approval. While these therapies are limited to very specific populations of cancer patients, I think there is great potential to transform the way other cancers are treated. Also in 2017, a Food and Drug Administration (FDA) advisory panel recommended approval of the first gene therapy in the US – and approval could happen in early 2018.5
We also have seen some momentum around biosimilars, which by competing with brand-name biologics, have the potential to bring prices down. A few more biosimilars were approved this year, and a controversial issue around payment under Medicare policy was settled. I will be closely watching the pace of adoption, which will be determined by the physicians who prescribe these alternatives and the formulary design choices made by health plans.
A raft of initiatives being worked on at the FDA also falls into the good news category for our life sciences clients. These initiatives include:
- A new process that allows for faster approval of software as a medical device.6 FDA recently launched a first-of-its-kind pilot program to test a more agile digital health software precertification pilot program that focuses on the software developer rather than an individual product.
- Early guidance around implementation of the 21st Century Cures law. This includes advancing breakthrough pathways for drugs and devices, and the exemption of more than 70 types of devices from regulatory approval.
- Increased use of real-world evidence in making regulatory decisions. This includes patient information from a wide range of sources (e.g., electronic medical records, disease registries, patient advocacy groups). Greater reliance on such information could help reduce the time it takes to recruit patients for clinical trials and to conduct research, which might make development and approval processes more efficient for drugs and devices.
I’ve talked to several industry stakeholders, and find that the general sentiment is positive about working with the agency.
State and health plan efforts to ensure options in the individual market
Finally, I was impressed by state insurance commissioners and their ability to work with health plans to ensure the availability of coverage options in the individual market despite a year of great uncertainty.7 State regulators also worked with health plans to change the way they set premiums for different benefit packages. Additionally, a couple of states came up with initiatives to use waiver authority to re-establish risk-sharing programs that make the individual market a better bet financially.
This proactive activity is especially notable given that many of these states were not necessarily supporters of the Affordable Care Act (ACA). It seems they have been focused on keeping coverage options available to consumers who otherwise would have a hard time purchasing coverage.
Looking ahead to 2018
Thinking ahead, I anticipate we will see more bright spots in 2018 in terms of new policies, more state innovations, and continued advancements in new curative therapies. My hope is that we will continue to see a steady pace of private sector innovation that breaks constraints and is supported by state and federal policy.
What other bright spots have you seen? Send me a tweet @ssthomas2010 and let me know!
3Big Data and Machine Learning in Healthcare: Actual Experience, Actual Results at Intermountain
In the news
MedPAC evaluates payment adequacy, looks at steps to take in 2018 and beyond
At its monthly meeting on December 7-8, the Medicare Payment Advisory Commission (MedPAC) primarily focused on ways to assess payment adequacy and update payments.
Under the Merit-based Incentive Payment System (MIPS), providers receive a penalty or bonus payment based on a number of quality indicators. But it does not assess the value of care accurately, the commissioners said. Only a few of the indicators correlate with meaningful outcomes; many are process measures and have not been shown to reflect high-value care, according to the Commission.
As a result, MedPAC is considering recommending Congress eliminate MIPS and institute a new program called the Voluntary Value Program (VVP). Under VVP, clinicians would choose to be measured as part of a group, and those groups could qualify for a value payment based on their performance on population-based measures as a whole.
During a later discussion, speakers said that payments for inpatient and outpatient services seem largely accurate based on a number of measures. Access to care is good, as excess capacity exists. Access to capital is strong, with hospital employment on the rise. Quality is improving, with mortality and readmissions rates declining.
CMS seeks to reduce regulatory burden on clinicians; may move to value-based pricing for drugs
The US Centers for Medicare and Medicaid Services (CMS) wants to reduce the regulatory burden on clinicians, Administrator Seema Verma said at the Office of the National Coordinator Annual Meeting on Health IT on December 1. Verma explained this is part of CMS’s renewed focus on patients and noted that the regulatory burden on clinicians is impeding patient care.
As a part of this effort, CMS has begun the following initiatives:
- Patients over Paperwork: CMS is gathering information on how to reduce administrative burden for providers
- Meaningful Measures: The agency intends to move toward outcomes-based measures instead of process-based ones. The agency’s goal is to reduce burdens related to quality measurement. Additionally, the agency is reviewing the measures around pain in response to the opioid crisis (see the November 7, 2017 Health Care Current).
- Drug prices: CMS is examining a move toward value-based drug pricing, which would use outcomes.
- Interdisciplinary teams: CMS is forming interdisciplinary teams to examine regulations to potentially make changes, such as inpatient and outpatient rules integration.
Congress approves a two-week spending bill
On December 7, Congress approved a two-week continuing resolution (CR) that will keep the federal government open and spending at current levels. The Children’s Health Insurance Program (CHIP), for which funding expired September 30, and the bipartisan health insurance exchange stabilization Senate bill (Alexander-Murray), were not included. However, the CR allows more redistribution of residual CHIP funding through Dec. 30. The legislation funds the federal government through Dec. 22.
Arizona moves to limit drug coverage
In an effort to reduce spending, the Arizona Health Care Cost Containment System (AHCCCS), the state's Medicaid program, might apply for an exemption from a federal requirement to cover nearly all prescription drugs.
The Medicaid Drug Rebate Program requires drug companies to sign an agreement with the US Department of Health and Human Services (HHS) to provide rebates to states when they buy drugs for their Medicaid programs. In return, states must cover nearly all drugs those companies make – only 11 types of drugs are exempted.
In a letter to CMS Administrator Verma and Medicaid Director Brian Neale, AHCCCS Director Thomas Betlach requested permission not to cover breakthrough drugs (until their market prices stabilize) and drugs that have a therapeutic equivalent.
Betlach said AHCCCS's spending on prescription drugs between fiscal year 2014 and 2016 increased $413.4 million, or $628 per enrollee. His letter proposes a number of other changes such as instating a work requirement, excluding non-disabled adults from certain services, and making changes to the program’s reimbursement structure for Federally Qualified Health Centers.
Related: A recent report from the National Academy of Sciences outlined several ways the federal government can reduce drug prices, including revising the Medicaid Drug Rebate Program. Some other strategies included expanding federal purchasing power, defining different drugs’ value, requiring manufacturers to disclose net price, and establishing a fixed-fee reimbursement system.
Emergency room use stays steady while visit severity increases
Emergency room (ER) facility fees rose 85 percent between 2009 and 2015 — twice as fast as outpatient care – according to a new analysis from Vox Media and the Health Care Cost Institute.
Generally, emergency room facility fees, or the fee for coming in and using the ER regardless of services rendered, are coded by severity from 1 to 5 – with 1 being the least complex cases.
Using commercial claims data, researchers determined that spending more than doubled on high-severity cases. Average prices for ER visits classified as 5 increased from $498 in 2009 to $900 in 2015. Although overall use of the ER remained constant, patients visiting the ER were increasingly classified as “high-severity,” which magnified the effects of the facility fee increases. Researchers said the reasons behind the trend are unclear, and more research is necessary to determine if ER patients actually have more severe needs.
(Source: Kevin Kennedy and John Hargraves, “ER spending increased 85 percent, driven by price increases for the most severe cases (2009-2015),” Health Care Cost Institute, December 2017; Sarah Kliff, “Emergency rooms are monopolies. Patients pay the price,” Vox Media, December 2017)
Senate HELP Committee holds hearing on anniversary of 21st Century Cures Act
On December 7, the one-year anniversary of the Senate passage of the 21st Century Cures Act (Cures), National Institutes of Health (NIH) director Francis Collins, and FDA Commissioner Scott Gottlieb testified on the agencies’ progress and success in implementing the legislation. The Senate Health Education Labor and Pensions (HELP) Committee asked for updates on how the funding has been spent and if Cures is helping researchers spend more of their time on research and less on administrative tasks. Collins spoke about NIH’s investment in the Cures Innovation Fund, and Gottlieb discussed recent approvals of CAR-T therapies for cancer patients. HELP Committee Chairman Lamar Alexander (R-Tenn.) emphasized the need for the FDA and NIH to make sure they are advancing important work while ensuring the tools put forth in the Cures are used appropriately. The directors also gave updates on their agencies’ efforts on Cures before the House Energy and Commerce Committee (see the December 5, 2017 Health Care Current).
Background: Deloitte’s report, 21st Century Cures and life sciences innovation, outlines the Act’s provisions and potential implications for biopharma and medical device companies. As the industry strives to meet the needs of patients, providers, and health plans, the regulatory flexibility and provisions included in the 21st Century Cures Act is imperative to driving product approval and market access.
Practices that opt for quality tiering tend to offer higher-quality, lower-cost care
During the first year of the Physician Value-Based Payment Modifier program, practices that opted to use quality tiering provided higher-quality care at a lower cost when compared to practices that opted not to do so, according to a new study published in Health Affairs.
Out of the 899 practices that were eligible for the bonus payment program (i.e., practices with more than 100 clinicians and at least one attributed beneficiary), 636 reported performance data for evaluation. Of those, 120 chose to receive a penalty or bonus through a system called “quality tiering.” Those practices performed better on measures of quality. For instance, they tended to have lower readmission rates among patients with ambulatory-care sensitive conditions. At the same time, those practices spent less money on care, including care for expensive conditions such as chronic obstructive pulmonary disease, heart failure, coronary artery disease, and diabetes.
These findings could have implications for policies and programs that seek to increase the quality of care while lowering cost, such as the Merit-Based Payment System (MIPS). The practices that chose to participate in quality tiering might have done so because they expected to fare well. For instance, the study noted that those practices had better access to health information technology. Practices that lack access to health IT, along with other disadvantages, might be especially vulnerable to penalties.
(Source: “Performance and participation of physicians in year one of Medicare’s Value-Based Payment Modifier Program,” Health Affairs, December 2017)
Can technology make you more empathetic?
Empathy might be the next big thing in health care. Klick Health, a digital innovation lab, recently developed a device that can stimulate tremors associated with Parkinson’s disease – to give healthy people the chance to experience the condition. The company is also working on a device to simulate chronic obstructive pulmonary disease (COPD), a disease that results in trouble breathing and a persistent cough. The goal is to build empathy between patients and their caregivers. It is possible that the technology could also dissuade people from unhealthy behaviors. For example, a young person who might have just started smoking could try the COPD device and experience what it might be like if their lungs weren’t functioning after years of smoking.
Along with giving people a reason to think twice before choosing unhealthy behaviors, these technologies can also be useful to medical students. Clinical empathy for future clinicians involves understanding the patient’s circumstances, thoughts, and feelings. It can help clinicians verify those with the patient and respond appropriately. The benefits of clinical empathy include facilitating trust and engagement between the clinician and patient, and achieving higher levels of patient satisfaction. Other benefits that have been supported by studies include improved diagnostic empathy, improved adherence to medical recommendations, and better outcomes.
The field of tele-empathy is advancing because of technologies and devices including virtual reality (VR) and simulation devices. Some medical schools are implementing these technologies to help students learn empathy for their patients helping them experience various medical conditions. At the University of New England, students can feel what it is like to be a much older patient, with hearing and vision loss. Through VR technology from Embodied Labs, students can sit at a computer, put on a headset, and experience the world through the eyes and ears of a 74-year-old African American patient with advanced macular degeneration and high-frequency hearing loss. The students experience the family celebrating his birthday, but he cannot see family members without tilting his head to look around the large dark spots at the center of his field of vision. The birthday singing sounds are muffled. When he tries to speak to the physician, the physician responds in a business-like manner with complicated medical information. Students who have gone through the scenario say it captures feelings of frustration and helplessness. In one study, 92 percent of the students reported having increased empathy after the experiment; 88 percent said they had a greater knowledge of macular degeneration; and 89 percent said they had a greater understanding of hearing loss.
Looking ahead: Tele-empathy devices are now being used in clinical studies to quantify the level of empathy experienced by neurologists who treat Parkinson’s Disease – by comparing results before and after the use of the device. Future studies are planned to measure the longer term effects of the device. Companies are developing new tele-empathy devices for diseases including diabetes (peripheral neuropathy) and pruritus (dermatologic and systemic diseases). The VR market continues to expand, and a growing number of studies are coming out showing that the technology can lead to health behavior change in areas such as addiction, weight management, and management of depression.