What’s on the horizon for the Military Health System?

Health Care Current | December 13, 2016

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

What’s on the horizon for the Military Health System?

By Terri Cooper, PhD, principal, Federal Health Sector leader, Deloitte Consulting LLP

As we close out this year and look ahead to the next one, I have been reflecting on the topics and issues we have covered in the past 12 months. Several themes emerged that are seen across the health care system, including in the Military Health System (MHS). The MHS is facing many of the same challenges as the commercial market, such as rising costs, pressure to meet consumer demand, and making the transition from volume to value. Though there are many similarities, the primary difference between the MHS and other large integrated delivery systems is its mission of readiness—ensuring both a “ready” medical workforce and a “ready” force that can be deployed anywhere at any time across the world.

Readiness and the Quadruple Aim
The Triple Aim has been a major driving force behind many health care system initiatives. For the MHS, the Quadruple Aim is its strategic vision and core values. The concept of Readiness sits at the center of the MHS mission, surrounded by three other Aims, as the MHS balances this set of strategic initiatives to maximize value for all of its customers.

The Quadruple Aim:

  • Readiness: Ensure that the entire military force is medically ready to deploy and that the medical force is ready to deliver health care anytime, anywhere 
  • Population health: Keep people healthy and reduce the frequency of the visits to hospitals and clinics 
  • Experience of care: Provide a care experience that is safe, timely, effective, efficient, equitable, and patient- and family-centered 
  • Per capita cost: Create value by focusing on quality, eliminating waste, reducing unwarranted variation

Whether it is providing humanitarian assistance in an underdeveloped country, aero evacuating a wounded warrior in an austere environment, or providing lifesaving combat casualty care, the MHS can be a model for other health care organizations. This summer, the National Academies of Sciences, Engineering, and Medicine published a report suggesting the US could significantly improve trauma care if we integrated insights from military care into civilian hospitals.1  While the battlefields have only grown more dangerous for our soldiers, the MHS has reduced fatality rates for wounded soldiers from nearly 25 percent in Vietnam to less than 10 percent in Afghanistan and Iraq. It has also succeeded in cutting death rates from injury by half from 2005 to 2013.2

But, the MHS is more than just a trauma care system for treating soldiers in combat. The MHS is under pressure to accomplish many critical missions in addition to providing health care to service members in dangerous settings in the battlefield. These include supporting the deployment of a medically ready force and providing services to almost 10 million beneficiaries who are not on the battlefield, such as non-active duty, military family members, and retirees.

The challenges MHS is facing are multi-faceted: It operates in a highly matrixed organization with multiple lines of authority that is undergoing a changing organizational structure; it must integrate new regulatory stipulations and increased security requirements, all while facing budgetary pressures; and it must manage electronic health record (EHR) modernization efforts, which include the acquisition and deployment of the new EHR by 2017.

As one of the largest health care systems in the US, with total spending of more than $50 billion per year, the MHS shares many features with civilian health care systems.3 It is continually adapting and evolving to changing demographics, new policies and standards for access and quality, advances in science and medicine, complex payment and cost considerations, a changing health IT landscape, and the continual challenge of meeting patient expectations.

Looking ahead: Future of MHS
The MHS is a complex global, comprehensive, integrated system of both commercial providers and health plans as well as over 60 inpatient Military Treatment Facilities. It is tasked with care delivery and public health services, medical education and training, and advancing medical research. I see MHS evolving and adapting to prepare for the future in the following areas:

  1. Moving from a system of health care to health: The MHS is focusing on prevention by implementing innovative population health initiatives and leveraging public health partnerships to create healthy communities.
  2. Shifting from volume to value-based care: All activity military duty providers and administrators are focused on shifting budgeting and reimbursement from productivity to outcomes based on quality and cost thresholds and implementing innovative payment models.
  3. Establishing a culture of safety: The MHS patient safety mission centers around promoting a culture of safety to end preventable patient harm by engaging, educating, and equipping care teams to put evidence-based practices in place across the organization.
  4. Investing in medical education and training: The MHS system manages a comprehensive medical research and development program that works closely with academia and private research organizations to provide diverse medical education and training programs. The next generation of physicians and clinicians, whether they serve in the MHS or not, must learn how to operate in a team-based, integrated, interoperable system and provide holistic, patient-centered care with a focus on prevention and an increased emphasis on shared decision-making with patients.
  5. Advancing medical research: The MHS is continually finding innovative ways to protect, support, and advance the health and welfare of the community it serves. In the coming year, the MHS will likely continue its focus on leveraging data analytics, robotics, and Artificial Intelligence to improve outreach, diagnosis, and treatment as well as to advance clinical research and training.4

The National Academies of Sciences’ report focused on the benefits the civilian sector could reap if the system adopted leading practices from the MHS on reducing trauma deaths after injury. But, joint efforts to share leading practices in other areas, including care delivery, public health, training, and advancing research, could also reap benefits for both systems.

As we prepare for President-elect Trump and a new administration to transition to the White House, we know the only constant in health care is change. In the coming year, the MHS, like the rest of the stakeholders in the system, will move forward in advancing its understanding of population health, new opportunities in clinical innovation, and future generations of physicians and clinicians to train. I look forward to tracking progress, sharing lessons learned, and challenges overcome to finally achieve the Quadruple Aim.

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The National Academies Press, “A National Trauma Care System: Integrating Military and Civilian Trauma Systems to Achieve Zero Preventable Deaths After Injury,” 2016
2 The National Academies Press, “A National Trauma Care System: Integrating Military and Civilian Trauma Systems to Achieve Zero Preventable Deaths After Injury,” 2016
3 Department of Defense, “Overview of the Department of Defense’s Military Health System,” 2014
4 Military Health System, Innovation

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Implementation & Adoption

Report: Health care prime target for cyberattacks in 2017

According to Experian’s fourth annual data breach forecast, the health care industry will remain a prominent target for cyberattacks in 2017. Hospital networks, especially their EHR systems, are the most likely targets. New vulnerabilities in EHR technology stem from the increased use of tablets, smartphones, and other aspects of the internet of things (IoT). Moreover, EHRs often have many different entities accessing the data, making them even more vulnerable.

Health care organizations are particularly attractive targets because they give hackers access to personal medical information, which often includes a patient’s full name, social security number, date of birth, and current address. Breaches of personal health information can lead to traditional identity theft and also to the relatively new crime of medical identity theft. Medical identity theft is when an individual unlawfully obtains a health plan beneficiary’s information and fraudulently uses their insurance to obtain or bill for medical care. This defrauds the health plan and creates problems with the real beneficiary’s medical records.

The health care industry is also uniquely vulnerable to ransomware attacks – when hackers hold patient records or an entire EHR system hostage until the organization pays the ransom to have them restored. According to worldwide estimates, organizations paid $30,000 per day to hackers in these types of attacks in 2012. However, that number rose to $300,000 per day in 2016, according to Experian. The average amount paid per organization is estimated to be under $700.

(Source: Experian, “Fourth Annual 2017 Data Breach Industry Forecast,” 2017)

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Health spending rose in 2016, while life expectancy declined

According to new data from the Centers for Medicare and Medicaid (CMS) published in Health Affairs, total health care spending increased 5.8 percent from 2014 to $3.2 trillion in 2015. Health care’s share of GDP reached 17.8 percent (a 0.4 percentage point increase) that year. Moreover, per capita health spending reached $9,990, a 5.0 percent increase. But, while health care spending growth is the highest it has been since 2012, it is still lower than pre-ACA levels.

Health care spending grew for two main reasons – higher rates of coverage and prescription drug spending. Between 2014 and 2016, 20 million people gained health care coverage – 9.7 million through private plans and 10.3 million in Medicaid. Retail prescription drug spending grew quickly, rising 12.4 percent in 2014 and 9 percent in 2015. It reached $324.6 billion in total spending in 2015. The federal government (29 percent) and individual households (28 percent) are the largest payers of health expenditures.

Related: According to the National Center for Health Statistics, life expectancy in the US declined in 2015 (the first decrease since 1993), while the overall death rate rose by 1.2 percent (the first increase since 1999). The most common cause of death is heart disease, followed closely by cancer (168.5 and 161.2 deaths per 100,000 standard population, respectively). However, rates of cancer actually decreased, which the authors attribute to a decrease in prevalence of tobacco smoking and improved diagnosis and treatment techniques. Alzheimer’s disease had the largest cause of death rate jump – increasing from 25 to 29 deaths per 100,000 standard population.

According to Tom Frieden, director of the US Centers for Disease Control and Prevention (CDC), the increasing prevalence of obesity is a major contributing factor to declines in life expectancy. Unintentional injuries, which includes motor accidents, drug overdoses, and suicide, also contribute to the decline.

(Source: Martin, Hartman, Washington, Catlin, and the National Health Expenditure Accounts Team, “National Health Spending: Faster growth in 2015 as coverage expands and utilization increases,” Health Affairs, December 2016;
Bernstein, “US life expectancy declines for the first time since 1993,” The Washington Post, December 8, 2016)

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On the Hill & In the Courts

CBO outlines 18 health care related policy options to reduce the budget deficit

Last week, the Congressional Budget Office (CBO) released its latest series of options to reduce the budget deficit by either decreasing federal spending or increasing federal revenues over the next decade. The volume contains 115 different options, and 18 are focused on health care. While all of the proposed options would impact the federal budget, they would also impact health care stakeholders – from consumers and doctors to health plans and life sciences companies. Below is a summary of key health related options.

Option (savings potential from 2017-2026)

CBO analysis

Impose caps on federal spending for Medicaid ($370 to $680 billion)

  • Capping the amount of funding the federal government gives to states to operate their programs would affect federal and state budgets
  • Federal Medicaid costs might be more predictable and lower
  • States would have lower incentives to increase spending; today any increased spending is matched by the federal government

Limit states’ taxes on health care providers ($16 to $40 billion)

  • Most states finance portions of their Medicaid program with taxes from providers and the federal government reduces payments to states if they collect more than 6 percent of providers’ net patient revenue
  • Lowering this threshold to either 5 or 4 percent would reduce the amount of taxes states can collect from providers without incurring a federal payment reduction

Repeal all insurance coverage provisions of the ACA ($1,236 billion)

  • ACA provisions include the exchanges, insurance regulations, Medicaid expansion, individual and employer mandates, and the Cadillac tax
  • CBO modeled the repeal of these insurance coverage provisions, but not the law in its entirety

Repeal the individual health insurance mandate ($416 billion)

  • The ACA requires non-exempt individuals to have health insurance or pay a penalty
  • Between 2017 and 2026 the CBO projects the federal government will collect $38 billion in penalty payments
  • The mandate increases the federal deficit by encouraging consumers to obtain subsidized coverage through Medicaid, the marketplace, or employment-based plans

Change the cost-sharing rules for Medicare and restrict Medigap insurance ($18 to $66 billion)

  • CBO modeled increasing, decreasing, or combining deductibles, changing coinsurance rates and copayments, adding a catastrophic cap (a limit on out-of-pocket spending), and imposing limits on supplemental coverage
  • It also modeled restricting Medigap insurance – a policy that covers most or all of Medicare’s cost sharing – by imposing a surcharge, limiting the percentage dollar amount covered, or prohibiting first-dollar coverage

Reduce Medicare’s coverage of bad debt ($15 to $31 billion)

  • Decreasing the share of allowable bad debt that the program reimburses to eligible facilities would reduce Medicare spending
  • CBO modeled two options: Reducing allowable bad debt from 65 percent to 45 percent or to 25 percent by 2020

Reduce tax preferences for employment-based health insurance ($174 to $429 billion)

  • Employment-based health insurance is excluded from income and payroll taxes
  • CBO modeled several options: Modifying the tax exclusions and the Cadillac tax, replacing the tax exclusions with a tax credit, and replacing the excise tax with a limit on income and payroll tax exclusions


(Source: CBO, “Options for Reducing the Deficit: 2017 to 2026,” December 2016)

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21st Century Cures passes Senate, heads to President Obama’s desk

The US House of Representatives and Senate approved (392-26 and 94-5, respectively), the 21st Century Cures Act. It now goes to President Obama for expected signing.

As noted in the December 6, 2016 Health Care Current, the spending package totals $6.3 billion and includes funding for the Cancer Moonshot Initiative, Precision Medicine Initiative, and funds to streamline clinical trials over ten years. Additionally, the legislation included $1 billion for efforts to prevent opioid abuse and provisions to reform mental health care.

Though the wide-encompassing bill has strong industry support, some critics say the bill failed to include stricter prescription drug pricing provisions. The bill also cuts the Prevention and Public Health Fund by $3.5 billion over 10 years. This fund provides money for prevention programs, such as ones that promote self-management of chronic disease and improve breastfeeding rates, help fight against Alzheimer’s disease, stroke, heart disease, and diabetes, and track hospital-acquired infection rates.

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Around the Country

State health care officials to offer input on potential health care reform

House Majority Leader, Kevin McCarthy, requested input and recommendations from governors and commissioners on Republicans’ plans to repeal and replace the ACA. The letter solicits feedback on the “A Better Way” health care proposal, as well as state experiences with the health insurance exchanges and the Medicaid program to gain insights from both expansion and non-expansion states.

The letter asks about the potential implications of using a coordinated waiver application process for both 1115 and 1332 waivers. Under current law, Section 1332 waivers authorize five-year waivers to meet ACA goals while 1115 waivers test new coverage and care models under Medicaid.

The request comes as two states are actively pursuing these waivers. Alaska is seeking a 1332 waiver to allow the state to subsidize premiums increases in the individual health insurance market. Oregon Governor Kate Brown is accelerating the states plans to secure a Medicaid 1115 waiver extension before the new Administration takes office, rather than applying for a new, expanded waiver when Oregon’s current waiver expires in 2017.

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Vermont approves prescription opioid limits

Earlier this month, Vermont approved regulations to limit the number of opioids a provider can prescribe based on the severity and duration of a patient’s pain. The law will go into effect on July 1, 2017. Under the rule, providers face specific restrictions for opioid prescribing depending on patient acuity level.

Vermont Governor Peter Shumlin made opioid abuse a priority during the final year of his third term in office. By limiting the number of prescriptions and mandating counseling on the risk of addiction before prescribing, Shumlin hopes to reduce opioid abuse in the state. In the accompanying press release, Shumlin said that last year enough painkillers were distributed to give every man, woman, and child in Vermont a bottle of 100 pills. Vermont is one of 22 states to either adopt or toughen prescribing limits for opioid painkillers in 2016 after opioid overdoses killed more than 28,000 people in 2014. The CDC also has published prescribing guidance for clinicians (see the March 15, 2016 Health Care Current).

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Breaking Boundaries

NIH analyzes use of data analytics to improve infectious disease surveillance

The last decade has seen an explosion of health care data – from increasingly sophisticated electronic health records and the growth of digital health to connected devices and social media. Data analytics has been touted as a solution to many challenges in health care, if stakeholders can appropriately harness the right data at the right time. The National Institutes of Health (NIH) recently published an analysis of the role of data analytics in infectious disease surveillance in a series of articles in a supplement to the Journal of Infectious Disease. The analysis featured several examples of innovative surveillance models. It also cautioned that non-traditional infectious disease data may lack key demographics and information on certain populations, some sources are unstable due to funding and other issues, and all sources must be validated.

Leading authorities in epidemiology, computer science, and modeling collaborated on the series. The articles feature opportunities and challenges associated with different types of data, including medical encounter files (e.g., records from healthcare facilities and claim forms), crowdsourced data collected from volunteers who self-report symptoms in near real time, and data generated by the use of social media, the internet, and mobile phones.

Examples featured include:

  • ResistanceOpen: An open-collaboration database that serves as a global map of antimicrobial resistance based on aggregated publicly available and user submitted resistance data from laboratories, hospitals, health networks or surveillance networks. Antibiotic resistance values displayed are based on weighted averages from all resistance indices (from the most recent available year) from all sources within the region of interest. Users can type in their zip code and find stats about antibiotic resistant superbugs in their area.
  • epiDMS: A novel epidemic simulation data management system developed by researchers to collect massive amounts of information on previous epidemics into a readable format so that public health decision-makers can find and compare similar epidemics. 
  • Influenzanet: A network that monitors the activity of influenza-like-illness in Europe with the help of volunteers via crowdsourcing. Volunteers self-report symptoms on a weekly basis using standardized online surveys. It is operational in eleven countries. Influenzanet collects its data directly from the population to create a fast and flexible monitoring system whose uniformity allows for direct comparison of illness rates between countries and now includes information on Zika and salmonella.

While traditional infectious disease surveillance based on laboratory tests and other data collected by public health institutions is the gold standard, this type of surveillance is not in real time, can be costly, and can make accurate monitoring challenging at the local level. In contrast, big data streams from internet queries are available in real time and can track disease activity locally. However, they can be biased. The authors say that tools that combine traditional surveillance and big data sets may provide viable solutions to advancing global infectious disease surveillance. The next step in advancing the field is to compare validated data sets in high-income countries to models in low-resource settings where traditional surveillance is sparse.

Analysis: In the US, federal, state, and local governments are continually working to improve infectious disease surveillance and management. Becoming an intelligent, responsive, and adaptable health care system calls for collaborative development of policies and updated workflows and optimization of data collection and sharing. Early warning signs of new or changing diseases come from a variety of sources, from traditional health care data sources such as clinics and facilities, to spikes in over-the-counter medication purchases, reduced public transit usage, Internet searches, weather events, and even sources such as childcare centers. Data analytics capabilities could encompass a broad range of data to give health officials a clearer sense of potential threats in the US and around the world.

(Source: NIH New Releases, “NIH-led effort examines use of big data for infectious disease surveillance, November 14, 2016)

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