Health care outlook for 2019: Five trends that could impact health plans, hospitals, and patients

Health Care Current | December 4, 2018

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

Health care outlook for 2019: Five trends that could impact health plans, hospitals, and patients

By Steve Burrill, vice chairman, US health care leader, Deloitte LLP

Like a lot of business people, I travel quite a bit…and airline miles are golden. Even for those who only travel a couple of times a year, airline miles can help make leisure travel more attainable. Airlines have successfully changed the behavior of their customers by making them feel like they are members of a club. These members might get free access to airport lounges, discounts on hotels, or even occasional upgrades from a middle seat (the true Holy Grail for airline travel).

For the US health care system, as we move toward a financial model that is based on value rather than volume, keeping people healthy and out of the hospital will be key. Rather than seeing people as patients, health systems should treat them more like members—something health plans already do (to varying degrees). People who feel like they are part of a club might be more receptive to efforts to keep them healthy. Improving the patient experience can help strengthen customer loyalty, build reputation and brand, and, perhaps, improve the health of our nation.

In a fee-for-service (FFS) model, health systems generate more revenue when patient volume increases. Under a value-based model, a person who shows up at an emergency room (ER) or a doctor’s office becomes an expense rather than a source of revenue. In 2019, health systems and hospitals will likely move toward this value-based model at a faster pace than in previous years. But to succeed, they will need to work more closely with health plans. Here are five trends that I expect could impact health plans, health systems, and patients in 2019:

  1. Convergence and collaboration between health systems and health plans will become more important: As we move into 2019, the most successful health plans will likely be those that are able to connect consumers to their health care. Health plans are the only players in the health care ecosystem that have a complete dataset for each insured patient. This information will be important for health systems and physicians as they become more responsible for the long-term health of patients. Health care providers need health plans for their technology and their expertise in managing care, and health plans need providers because they understand care delivery and clinical effectiveness. Both sides should leverage each other’s strengths to create a better and stronger health system in the US.
  2. Health systems will continue to focus on encouraging wellness rather than treating illness: The Medicare Access and CHIP Reauthorization Act (MACRA) is more than three years old, but we are just beginning to see its impact on hospitals and health systems. We expect the law will affect health systems more profoundly in 2019, as more of them choose to take on shared and full-capitation risk contracts. There were a few early MACRA adopters in 2016 and 2017, and the trend accelerated in 2018 as health plans forged closer relationships with health systems to share risk. Many health systems are trying to figure out how to put their arms around the entire continuum of care. Historically, this has been more of the responsibility of health plans, which have always existed in a value-based world. In a value-based payment model, health systems and doctors should consider the full cradle-to-grave spectrum of care within a fixed premium payment. This could be another opportunity for health plans and providers to collaborate.
  3. Technology could help move patients to the center: Physicians spend 21 percent of their time on non-clinical paperwork.1 This takes away from the time they spend with patients—and can contribute to burnout. Artificial intelligence (AI), robotics, and cognitive technologies could automate many of daily duties for physicians and clinicians and give them more time to practice medicine. Over the next three to five years, 100 percent of health care providers expect to make significant progress in adopting these technologies, according to our Human Capital Trends research. However, those respondents also acknowledged that they haven’t made much progress yet. We believe that both enabling technologies (like EHRs) and emergent technologies (like blockchain, AI, etc.) will help improve the connectivity and engagement among health systems, health plans, and patients and families. Rather than requiring a patient to physically meet with a doctor, data from a patient’s EHR could be used to help manage chronic illnesses without the patient having to meet with a clinician—another market signal that speaks to the increased focus on wellness for 2019.
  4. More patients could consider virtual health: Very few of us really enjoy going to the doctor, which causes some people to wait until a condition worsens before seeking care. This mentality drives up costs, including expenses related to ER visits. Virtual health could help patients communicate directly with caregivers. The technology can help physicians see more patients, deal with rising clinical complexity, and support patients as they take a greater role in their own care. However, just 14 percent of physicians have implemented technology that allows them to conduct virtual visits with patients, and only 17 percent use the technology for physician-to-physician consultations, according to the results from our 2018 Physician Survey on virtual care. This could be because implementation is often costly for providers, and many organizations are still weighing the return on investment, as well as existing fee-for-service reimbursement rules. Health system leaders should determine when physicians and other caregivers should be at the site of care delivery and when their work can be performed virtually. Last summer, the US Centers for Medicare and Medicaid Services (CMS) proposed that Medicare pay physicians for virtual check-ins and other tech-enabled services. Telehealth is also becoming a common feature in commercial health plans. As of 2016, 74 percent of large employer-sponsored health plans had incorporated telehealth into their benefits (up from 48 percent in 2015).2
  5. There will be more focus on population health: Population health takes a broad look at the management of outcomes for all of a health system’s patients. Specifically, population health includes efforts to use health care resources more effectively and efficiently to improve the lifetime health and well-being of a specific population. In addition to disease prevention, population health activities include promoting health and well-being. In recent years, there has been an increased focus on the social determinants of health, and the recognition by health care stakeholders that many of the factors that influence our health have less to do with health care and more to do with our environment, our stressors, our income and education, and our level of social interactions and sense of community. While health care organizations might be grappling with how to measure the ROI of these efforts, they can be critical as we shift to a focus on wellness. We expect to see the social determinants of health continue as a hot-button issue in the new year.

The truth is, we need to reduce injury and illness, and we need to manage chronic disease more effectively to reduce utilization and resource consumption. We should give people incentives to engage with the health system as early as possible to keep them healthier. That keeps costs down. We are still going to get sick, but we likely won’t get as sick if we get patients (or members) into the system sooner and deal with health issues in real time before they become too acute.

The year 2000 is nearly two decades behind us, and the future of health is closer than we think. My colleague Doug Beaudoin recently sketched out a vision for health in the year 2040. He predicted that by then, health care stakeholders will be working cooperatively to improve the health of individuals and populations. I agree that we are headed in that direction, but to ensure we stay on the right trajectory, health plans, health systems, and patients should start to work more collaboratively with each other in 2019 and in subsequent years.

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1 Physicians Foundation 2016 Survey of America’s Physicians


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In the News

New waiver guidance could let states change federal subsidies for exchanges

On November 29, CMS released new waiver concepts—dubbed State Relief and Empowerment Waivers—which reflect the agency’s recent guidance on Section 1332 waivers (see the November 13, 2018 Health Care Current). CMS Administrator Seema Verma said allowing states to waive certain ACA provisions would help them create alternatives to “the ACA’s otherwise one-size-fits-all approach.”

Under the new guidance, states could:

  • Change guidelines on who is eligible to receive federal subsidies, including making subsidies available to people who have incomes above the current threshold of 400 percent of the federal poverty level (FPL).
  • Allow consumers to use federal subsidies to purchase coverage sold outside of the exchanges, including short-term, limited-duration (STLD) plans that offer less-comprehensive health benefits than policies sold on the exchanges.
  • Direct federal subsidies to portable health accounts that consumers can use for premiums and out-of-pocket expenses for plans sold inside and outside of the exchanges, as well as for Medicaid and employer-sponsored coverage.
  • Create new risk-stabilization programs, such as state-based reinsurance programs.

The Affordable Care Act (ACA) calls for advance premium tax credits (APTCs) to offset the cost of health coverage for qualified applicants. The subsidies, which are based on a sliding scale tied to the applicant’s annual income (up to 400 percent FPL), are available only for ACA-qualified health plans sold through or state-based exchanges.

In a letter to CMS and the US Department of Health and Human Services (HHS), six Democratic lawmakers said the new guidance “upends the prior administration’s interpretation” of Section 1332 waivers, which must abide by strict “guardrails” to ensure that any changes protect or improve coverage, affordability, and benefit comprehensiveness. The letter contends that the guidance, which would allow purchase of less-comprehensive coverage, is contrary to the intent of the ACA and can only be changed through legislative action. However, the administration says the waivers could expand access to coverage by making it more affordable.

Related: As of November 24—three weeks into the six-week open-enrollment period—2.4 million people had signed up for 2019 coverage through (the federal insurance exchange site that operates in 39 states). At the halfway point a year ago, nearly 2.8 million people had selected coverage, according to CMS data. The open-enrollment period runs until December 15. Some state-based exchanges have extended their open-enrollment periods beyond December 15.

(Source: CMS, State Empowerment and Relief Waiver Concepts, November 29, 2018)

FDA proposes modernization of medical device approval pathway

A new proposal to modernize the 510(k) clearance pathway would impact nearly 80 percent of medical devices that undergo review by the US Food and Drug Administration (FDA). Congress established the 510(k) pathway more than 40 years ago. Under the pathway, new-product manufacturers can pursue an expedited approval process if they can show their products are substantially equivalent to products that were grandfathered in when the pathway was established. The FDA proposal aims to ensure that devices in the approval pathway account for modern technology advancements and are based on the latest safety and performance criteria.

As new devices incorporate more sophisticated technologies, such as automation and robotics, FDA plans to change what companies consider to be substantially equivalent to already approved and marketed devices. As lower-risk devices seek FDA approval through the 510(k) pathway, they are compared to devices that have been on the market for decades. Under the proposal, FDA is considering requiring applications to compare devices with those that have been on the market for fewer than 10 years.

(Source: FDA, Statement from FDA Commissioner Scott Gottlieb, M.D. and Jeff Shuren, M.D., Director of the Center for Devices and Radiological Health, on transformative new steps to modernize FDA’s 510(k) program to advance the review of the safety and effectiveness of medical devices, November 26, 2018)

CMS proposal would allow Part D plans to exclude some drugs in protected classes

On November 26, CMS issued a proposed rule to give Medicare Part D plans more flexibility to use utilization-management tools, such as allowing the plans to exclude protected-class drugs from their formularies because of price increases or if the drug is a new formulation of an existing drug. Reducing drug prices has been a significant priority for the administration, which issued its Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs in May (see the October 16, 2018 Health Care Current).

In their formularies, Part D plans must now include all drugs from the six protected classes: (1) antidepressants; (2) antipsychotics; (3) anticonvulsants; (4) immunosuppressants for treatment of transplant rejection; (5) antiretrovirals; and (6) antineoplastics. The rule would allow Part D plans to:

  • Use prior authorization and step therapy for protected-class drugs.
  • Exclude protected-class drugs from formularies if the drug is for a non-protected-class indication, is a new formulation of an existing drug, or if the manufacturer increased the price beyond the rate of inflation during a specific look-back period.

CMS also proposed codifying a policy it adopted for 2019 to allow Medicare Advantage (MA) plans to use step therapy for Part B (physician-administered) drugs (see the August 14, 2018 Health Care Current). Finally, the proposal would require Part D plans to adopt, by January 2020, electronic Real Time Benefit Tools, which help prescribers find lower-cost therapies in real time.

(Source: HHS, Proposed Changes to Lower Drug Prices in Medicare Advantage and Part D, November 26, 2018)

Real-world evidence can improve clinical trial participation, increase efficiency

During a November 19 presentation at the Reagan-Udall Foundation (RUF), FDA Commissioner Scott Gottlieb discussed opportunities to incorporate real-world evidence (RWE) into the development of drugs and other medical products. According to Gottlieb, FDA is exploring how to harness RWE gathered via electronic health records (EHRs), apps, and other technologies to collect data on medical products’ risks and benefits. He noted that more than 150,000 mobile health apps have been launched during the last three years. Results from Deloitte’s annual RWE benchmarking survey show that biopharma companies are increasingly using RWE to demonstrate their products’ value, drive drug development, and reduce products’ time to market.

In his statement, Gottlieb discussed how incorporating technology into clinical trials can help address financial and geographic barriers to patient participation. Clinical trials can contribute to high costs for drug development. Incorporating RWE and digital tools could help make trials more efficient and apply to more patients, Gottlieb added. FDA’s Center for Devices and Radiological Health (CDRH) is working with the Medical Device Innovation Consortium (MDIC) to further advance RWE use in clinical trials.

HHS releases strategy to reduce health IT burden

Last week, the Office of the National Coordinator for Health IT (ONC) at HHS released a draft strategy for reducing the regulatory and administrative burden of health information technology, including electronic health records (EHRs). The 21st Century Cures Act requires the agency to publish this strategy, which was developed by four ONC- and CMS-led working groups that focused on quality and public health reporting, clinical documentation, usability, and user experience.

The strategy outlines three main goals:

  1. Reduce the effort and time required to record health information in EHRs for clinicians.
  2. Reduce the effort and time required to meet regulatory reporting requirements for clinicians, hospitals, and health care organizations.
  3. Improve EHR functionality and intuitiveness.

The strategy also speaks to unique data needs stemming from the opioid crisis and calls for better coordination among state prescription drug-monitoring programs (PDMPs) and increased usage of e-prescribing for controlled substances (see the November 5, 2018 blog, Radical Interoperability: Let's break down the barriers on health care information systems).

(Source: ONC, Draft: Strategy on Reducing Regulatory and Administrative Burden Relating to the Use of Health IT and EHRs, November 2018)

HHS finalizes implementation of 340B rule for January 1, 2019

On November 29, HHS’s Health Resources and Services Administration (HRSA) finalized a regulation that would require the 340B ceiling price and penalties rule to go into effect on January 1, 2019—six months earlier than HHS previously proposed (see the November 6, 2018 Health Care Current). According to HRSA, the earlier implementation of the rule, called the “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation,” will not interfere with HHS’s drug-pricing strategy, nor will it impede HRSA’s continued 340B rulemaking. In June, HHS published a final rule delaying implementation of the rule from July 1, 2018 to July 1, 2019.

Several hospital groups have expressed support for the earlier implementation, which determines how ceiling prices for the drug-discount program are calculated and establishes penalties for manufacturers that knowingly overcharge providers. However, representatives for some drug manufacturers oppose the rule.

The 340B program, named for the numbered section of the law, gives certain hospitals and clinics access to discounts from drug manufacturers. In 2010, the ACA broadened the definition of covered entities that could participate in the program. The number of covered entities increased from 8,605 to 38,396 between 2001 and 2017 (see the July 17, 2018 My Take). The 2018 Hospital Outpatient Prospective Payment System (OPPS) final rule reduced payments for covered outpatient drugs under the 340B program from the standard rate of average sales price (ASP) plus 6 percent to ASP minus 22.5 percent for most hospital-affiliated providers. For 2019, CMS finalized a policy to apply this payment methodology to off-campus hospital clinics.

Kentucky’s Medicaid work requirement is approved, again

CMS has approved Kentucky’s Medicaid work requirement demonstration waiver again. The waiver was initially approved in January, but a federal judge blocked it in June (see the July 17, 2018 Health Care Current). Following the court’s decision, the administration opened a 30-day public comment period on the waiver. In a November 27 letter to state officials, CMS announced its approval of Kentucky’s plan, which is slated to take effect April 1.

Related: On November 8, the Medicaid and CHIP Payment and Access Commission (MACPAC) sent a letter to HHS Secretary Alex Azar asking the agency to stop approving state requests to incorporate work requirements into their Medicaid programs, and to pause disenrolling beneficiaries for noncompliance (see the November 6, 2018 Health Care Current).

Breaking Boundaries

Health tech CEOs team up to bring high-tech solutions to Medicaid beneficiaries

A new organization founded by more than 40 health care technology CEOs seeks to use tech-enabled patient-engagement tools to expand access to care for Medicaid beneficiaries. The group, HealthTech4Medicaid (HT4M), says Medicaid recipients can face more challenges accessing health care and getting the right services at the right time, compared to the general population (see the November 20, 2018 Health Care Current). HT4M leaders say it is imperative to connect those beneficiaries to IT innovations that could help improve their health.

Almost 75 million people are enrolled in Medicaid, and many live at or below the federal poverty level (FPL). Sixty percent of children in the US are in the Children’s Health Insurance Plan (CHIP), and almost half the babies born in the US receive services through Medicaid. While most adult Medicaid members own a smartphone, HT4M says Medicaid recipients and other traditionally disadvantaged populations tend to be overlooked by new technology. By developing partnerships among health IT innovators, health plans, health systems, and state Medicaid policymakers, HT4M aims to increase their access to tech-enabled treatment options, such as remote patient-monitoring or telehealth tools.

This is not the first time leaders from technology companies have collaborated with public health officials to improve health outcomes. Since 2010, a shared partnership among HHS, mobile phone companies, and other health care organizations made free texting available to help improve health outcomes for expectant and new mothers as part of the Text4Baby program. Participation in the program boosted prenatal and well-baby appointment visits, and helped beneficiaries understand how to have healthier pregnancies—and newborns.

RELATED: The Deloitte 2018 Survey of US Health Care Consumers found that most adult Medicaid beneficiaries own mobile technologies. They use their devices for a variety of health purposes and are interested in trying new digital health applications in the future. Adult Medicaid beneficiaries differ from people who have private insurance in important ways: Medicaid members generally have lower incomes, fewer years of formal education, and are more likely to have social needs related to unstable housing, employment, and food security. However, when it comes to the adoption of digital technology, such as smartphones and tablets, the survey shows that the Medicaid population looks like other groups. Eighty-six percent of adult Medicaid beneficiaries own smartphones, and 69 percent own tablets, which nearly mirrors the general adult US population. While 29 percent of Medicaid beneficiaries report owning wearables, the rate is lower than that of the general population (39 percent). The report explores how states and Medicaid health plans might integrate digital strategies into their outreach and engagement initiatives with the Medicaid population.

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