Direct from HIMSS17: Customers are driving transformation in health care from the outside in | Deloitte US has been added to your bookmarks.
Direct from HIMSS17: Customers are driving transformation in health care from the outside in
Health Care Current | February 21, 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.
- My Take
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
Direct from HIMSS17: Customers are driving transformation in health care from the outside in
By David Betts, Principal, Deloitte Consulting LLP
We’ve seen this before—spurred on by technology advances and changing market conditions, customers can gain the upper hand in their relationship with industry. Empowered to choose where and how they transact business, customers often begin to drive transformation from the outside in. Meanwhile, as some industry players struggle to make sense of their customers’ power, many are forced to respond either to competitors who reacted more quickly or to new entrants who fundamentally change the game.
Consider the financial services industry. Many financial services companies have been disrupted by customers who have effectively wrestled power away from retail bankers. From checking and savings to investment management and mortgage banking, much is driven by the customer these days. Those who acknowledged this shift early and responded accordingly were able to take the lead, sparking a wave of innovation that swept through the industry in a remarkably short period of time.
We believe the health care industry is on the cusp of a similar wave of innovation today. Health care organizations that are able to fundamentally reimagine the relationships they have with their customers – those who can design the experiences customers want and need – could be the ones who allow their customers to take ownership of the relationship. And, according to Deloitte Center for Health Solutions (DCHS) research, they could reap the benefits from a financial perspective, too.1
When DCHS analyzed Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores and examined their association with hospital performance measures such as net and operating margins and return on assets (ROA), researchers found that hospitals with high patient-reported experience scores have higher profitability. Further, the research suggests that the association of patient experience with financial performance is large, even after controlling for other hospital characteristics that can drive hospital performance.
This shift will likely take large-scale transformation. But, it is likely to pay off – both from a financial and brand perspective. And, if it is done in a thoughtful, customer-centric manner, it may drive the next wave of innovation this industry needs.
The needs of health care consumers are changing
Perhaps the only surprise in the current state of the health care industry is that it has taken so long to reach this point. In health care, many customers – patients – are becoming savvy shoppers. They are often faced with an increasing range of care choices, and they’re benefiting from more information to guide those choices every day. According to Deloitte’s 2015 Survey of US Health Care Consumers, 75 percent of customers are seeking a partnership with their providers to determine the most effective treatment decisions. One in three wants their provider to push them to be more active in researching and questioning their prescribed treatments.2
Customers also increasingly want technology when it comes to their health care: According to our research, seven-in-10 customers are likely to use at least one of the technologies we surveyed them on (such as telemedicine and remote patient monitoring) for care. But we’re still playing catch up to other industries: A whopping 72 percent of consumers are using mobile or online banking for personal finance. On the flip side, only 31 percent of consumers are paying medical bills online – a seemingly simple task, but if delivered in the right way, could be an opportunity to build brand and trust.3
As a result of these shifts in customer demand, many health care providers are starting to ask some very important questions: How can we better integrate technology to provide end-to-end customer service and in a way that customers will actually benefit? And further, what does it take for our organization to be the first choice for consumers? As in other industries, for many, the answer is a superior customer experience – one that begins well before the consumer has to make a choice about care, not just at the moment care is first needed.
Shaping the customer experience
Creating a customer experience that begins before care is initiated is a stretch for most health care organizations today, many of which are still working to create a cohesive experience for consumers at the point of care. To make things even more interesting, many providers rely on contractors, who are delivering everything from scheduling to payments services to helping deliver the customer experience.
For the consumer, this could create a confusing brand experience: They have one type of experience in scheduling, another in care, a different one when making payments, and so on. One challenge for providers looking to be the first choice of consumers is to create a cohesive, coherent, and compelling brand experience that stretches from the time before a relationship is initiated all the way through to ongoing care and payments. In an environment in which many customers have more power than ever, this has never been more important. Here are some starting considerations for making it happen.
- Identify the brand promise: The customer experience is often inextricably linked to brand promise. Organizations who do not have this should try and get clarity. The brand promise can be the one thing that ties together all the threads of the customer experience, and it is a practical, useful tool in decision making.
- Make a map: What does the customer experience actually look like – from pre-engagement all the way to ongoing care and billing? Exactly which aspects of the organization directly shape the experience? How do they interact with one another? It’s one thing to have a grand theory of customer experience – but making it a reality will likely require a detailed understanding of all these mechanisms.
- Recognize the central role of technology: Ask anyone on the executive team who should lead a new customer experience initiative, and you probably won’t be surprised to find that the CIO doesn’t always top the list. But when you consider the central role that technology plays in the customer experience, it’s often critically important that a highly engaged technology leader has a seat at the table with a chief customer experience officer at the helm.
- Get your partners on board: Customer experience is increasingly comprised of a patchwork of partners – both from within the organization and externally. It can be critical to connect the dots and break down the internal silos. For instance, reviewing social media presence can help organizations understand how marketing contributes to the overall brand promise. These internal stakeholders – as well as external partners who can enable a holistic customer experience – should be brought together in a cohesive way to execute against the overarching strategy.
There is clearly a lot of work to be done, but I’m confident we will get there. This week at HIMSS provides a great opportunity to drive this dialogue forward with key industry stakeholders. Because customer experience is critical in health care, and it’s about time we move from playing catch up to the driver’s seat.
1 Deloitte Center for Health Solutions, “The value of patient experience,” 2016, https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/hospitals-patient-experience.html
2 Deloitte Center for Health Solutions, “Health care consumer engagement: No "one-size-fits-all" approach,” 2015, https://www2.deloitte.com/content/www/us/en/pages/life-sciences-and-health-care/articles/health-care-consumer-engagement.html
3 Deloitte Center for Health Solutions, “Will patients and caregivers embrace technology-enabled health care?” 2016, https://dupress.deloitte.com/dup-us-en/focus/internet-of-things/digitized-care-use-of-technology-in-health-care.html?id=us%3A2el%3A3dc%3Adup3164%3Aawa%3Adup%3Aiot%3Adcpromo
Implementation & Adoption
CMS proposes to alter special enrollment periods, actuarial value, and guaranteed availability in the exchanges
Last week, the US Centers for Medicare and Medicaid Services (CMS) proposed updates to the regulations implementing the Affordable Care Act (ACA) to increase choice and improve the risk pool in the public health insurance exchanges. If finalized, the rule would:
- Change the annual enrollment period dates: The annual enrollment period for 2018 would run from November 1, 2017 through December 15, 2017. This is approximately half the amount of time of 2017 open enrollment and similar to many employer-based and the Medicare Advantage open enrollment periods.
- Increase the scope of the pre-enrollment verification process: CMS had planned to test a pre-enrollment verification process with 50 percent of potential enrollees in the federal exchanges to reduce the number of individuals who are gaming the system (enrolling outside of the annual enrollment period even if they had no qualifying health event). CMS would require 100 percent of the individuals to verify that they qualify for a special enrollment period beginning in June 2017.
- Allow health plans to collect outstanding debt before allowing individuals to enroll: Before allowing them to enroll again, health plans could require individuals to pay back any owed debts from not paying premiums from previous enrollment.
- Allow greater flexibility under the actuarial value (AV) requirements to increase or decrease cost sharing: Plans offered in the individual and small group markets must meet AV requirements (e.g., silver level plans have an AV of 70 percent). This sets the amount that the health plan (70 percent in the case of a silver plan) and the individual (30 percent) pay for care. CMS would now allow the de minimis variation to increase from +/- 2 percent to -4/+2 percent. As an example, a silver level plan could have an AV of 66 to 72 percent.
- Defer to states on network adequacy issues: CMS would allow states to do their own network adequacy review. If states do not have sufficient review processes, CMS would rely on accreditation from National Committee for Quality Assurance, URAC, or Accreditation Association for Ambulatory Health Care to assess network adequacy.
CMS also asked commenters to the regulation to provide recommendations about policies that it could enact to encourage individuals to maintain continuous coverage. As an example, it said that the Health Insurance Portability and Accountability Act of 1996 required individuals to keep continuous coverage (no gaps larger than 63 days) to avoid pre-existing condition exclusions and/or waiting periods. CMS is also exploring whether late enrollment penalties could be an effective way to keep people continuously enrolled.
Notably, CMS says that the regulatory action in the proposed rule does not impose costs to the economy. As such, it does not trigger the actions required under President Trump’s recent executive order requiring two regulations to be repealed for every new regulation proposed.
Related: As discussed in the latest Reg Pulse Blog post, last week the Internal Revenue Service (IRS) announced that it would accept individual tax returns if taxpayers do not indicate on the return whether they are enrolled in health coverage, are exempt, or agree to be subject to the individual mandate. The IRS said the change in policy comes in response to President Trump’s January 20, 2017 executive order on the ACA and means that this year’s filing will follow last year’s rules.
On February 17, 2017, CMS’ Center for Consumer Information and Insurance Oversight (CCIIO) proposed to extend the deadline for insurers to file plans on the federally-facilitated exchanges for the 2018 benefit year from May 3, 2017, to June 21, 2017. If finalized, health plans could begin filing products May 10, 2017. CCIIO proposes providing final notices to health plans by October 12, 2017, rather than September 22, 2017.
Uninsured rate reached low of 8.8 percent in 2016
The US reached its lowest uninsured rate in 2016, according to the National Center for Health Statistics (NCHS) at the US Centers for Disease Control and Prevention (CDC). Approximately 8.8 percent of people in the US were uninsured in the first nine months of 2016. This is a decrease of 20.4 million from 2010 when about 16 percent or 48.6 million of Americans were uninsured. The findings are estimates based on data from the 2016 National Health Interview Survey for 38 states.
The report also looked at other trends in health insurance coverage:
- Private insurance coverage has increased: The percentage of adults ages 18-64 who had private insurance coverage, including through the health insurance exchanges, grew from 64.2 percent in 2013 to 69.0 percent in the first nine months of 2016.
- Enrollment in high-deductible health plans (HDHPs) increased: 36.7 percent of people under the age of 65 had HDHPs in 2015. This grew to 39.1 percent by the first nine months of 2016.
(Source: National Center for Health Statistics, “Health insurance coverage: Early release of estimates from the National Health Interview Survey, January–September 2016,” February 2017)
Actuarial society reviews policies to shore up the individual market
The American Academy of Actuaries recently looked at the potential impact that policies that have been proposed during the ACA repeal and replace discussions could have on the individual market.
The Academy says that low enrollment of healthy individuals is the greatest threat to the viability of the individual market long term. Enrollment in the individual market is highest during the annual open enrollment period, but declines during the year as people transition to different coverage sources (including employer-sponsored insurance) or become uninsured. In 2015, 11.6 million individuals enrolled in exchange plans, but only 8.8 million were still enrolled by the end of the year. People who remained enrolled were more likely to be less healthy and had higher spending. The Academy also says that special enrollment periods (SEPs) also skew the risk pool. While they are meant to allow people who experience a qualifying life event (e.g., loss of employer coverage) to enroll outside of open enrollment, they may allow individuals to enroll only once they become sick.
The paper discusses how the following policies considered by lawmakers could impact the individual market:
(Source: American Academy of Actuaries Individual and Small Group Markets Committee, “An Evaluation of the Individual Health Insurance Market and Implications of Potential Changes,” February 2017)
On the Hill & In the Courts
CMS nominee Seema Verma testifies before Senate Finance committee
Last week, Seema Verma, the nominee for CMS Administrator, testified before the Senate Finance Committee about her potential priorities if she is confirmed. Verma is a former health care consultant from Indiana and was the architect of the state’s innovative Medicaid program, the Healthy Indiana Plan (HIP).
In the hearing, Verma stated that if confirmed, her priorities as CMS Administrator would be threefold:
- Modernizing CMS programs through innovation and technology
- Targeting fraud and abuse
- Allowing state flexibility and leadership
Verma said she supports giving states more leeway to design their own Medicaid programs. For example, she said that to promote beneficiary choice, states (rather than the federal government) should define what is included in “essential health benefits.”
Like recently confirmed US Department of Health and Human Services (HHS) Secretary Tom Price, Verma supports innovative payment models, but expressed concerns about some mandatory pilot programs under the CMS Innovation Center.
Background: Indiana’s HIP prioritizes helping beneficiaries understand the rules of health insurance so that they may transition into commercial coverage smoothly. It emphasizes beneficiary engagement using defined beneficiary contributions into health savings accounts (HSAs) called POWER accounts.
US Claims Court: Government must make full remuneration under risk corridor program
Earlier this month, the US Court of Federal Claims ruled that the federal government must pay the full amount owed to health plans under the ACA’s risk corridor program. The case, brought last year by Moda Health Plan, Inc., sought remuneration for payments it claimed under the risk corridors.
The risk corridor program is one of three premium stabilization programs in the ACA and expired at the end of 2016. Intended to help keep premium rates stable as health plans adjusted to the new population in the public health insurance exchanges, HHS collected charges from health plans if they brought in more in premiums than they had to pay out. HHS was supposed to make payments to health plans whose premium revenue fell short of their costs. But, claims exceeded charges collected throughout the program’s lifespan, and Congress did not appropriate funds to make up the difference. HHS has been unable to pay the remaining balance due to health plans.
The government has paid 12.6 percent of Moda’s claimed risk corridor payments for 2014 and has made no risk corridor payments for 2015. The total amount owed is more than $214 million. The court ruled that HHS must pay the full amount owed to Moda. The court found that Congress did not design the program to be budget neutral. It also said that the ACA constituted a contract between the federal government and health plans. The fact that Moda and other health plans offered plans in the exchanges meant that they were accepting the terms of that contract.
The ruling is expected to be appealed.
Stakeholder coalition recommends changes to CMMI
A coalition of health care organizations developed a set of principles it says should guide HHS Secretary Tom Price as he takes leadership over the CMS Innovation Center. The Healthcare Leaders for Accountable Innovation in Medicare says it wants to ensure that the Innovation Center continues to test new models that have the potential to lower costs and improve quality of care. But, notes that some of the recent demonstrations have worried some stakeholders due to their scale and scope.
The coalition says that the following principles could help ensure the Innovation Center’s future success:
The 35-member coalition includes CAPG, the National Committee for Quality Assurance, the Healthcare Leadership Council, and the Joint Commission.
CMS delays bundled payment rule
Last week, CMS delayed implementation of several recent bundled payment initiatives. CMS began reviewing the rule under President Trump’s regulatory freeze. CMS announced the mandatory episode-based bundled payment demonstrations in late December 2016, which falls within the 60-day review period.
The rule finalized the Advancing Care Coordination through Episode Payment Models (EPMs) initiative and expansions to the Comprehensive Care for Joint Replacement (CJR) and Cardiac rehabilitation models (see the January 10, 2017 Health Care Current). The provisions for the CJR and Cardiac rehab model are delayed until March 21, 2017. The new EPM initiative will still be implemented in July as planned and will run for five years.
Around the Country
Report: The challenges with selling insurance across state lines
Congress and President Trump have been considering insurance sales across state lines as a policy that might be included in repealing and replacing the ACA. The National Academy for State Health Policy (NASHP) recently published a report looking at the experience of several states in considering this policy option.
While insurers often provide products in multiple states, this not the same as “selling across state lines,” wherein they meet the requirements of plans sold in a home state and sell that product across a border to a state with different regulations. Since 2008, 21 states have introduced legislation to allow insurance products to be sold across state lines, and five have approved such laws. But, no health plans have sold plans across state lines.
Proponents of selling insurance across state lines say that deregulation in the non-group and small group would propel the sale of new insurance products and use market forces to drive down costs, benefiting both health plans and consumers. However, critics argue that there are more issues to consider, such as the high cost of creating provider networks in new markets. Benefit mandates and regulations are not the only factors that affect insurance premiums. Health care practice patterns, provider supply, consolidation, market power, pricing, and consumer demand also affect costs and vary significantly between local markets.
Related: The National Association of Insurance Commissioners (NAIC) submitted comments to the House Judiciary Subcommittee on Regulatory Reform in conjunction with the committee’s hearing on amending the McCarran-Ferguson Act, which says that state laws governing insurance cannot be invalidated, preempted, or superseded by any federal law unless the federal law specifically relates to the business of insurance. Some proponents of amending the Act see it as a barrier to insurers selling products across state lines. NAIC advocated that in fact the Act does not prevent states from allowing health insurance carriers sell products across state lines and amending it could hinder competition in some cases and harm consumers.
(Source: Jenn Jenson and Trish Riley, “Selling Health Insurance Across State Lines: Lessons for States and Questions for Policymakers,” National Academy for State Health Policy, February 2017)
Report: Lessons from health savings accounts in Indiana and Michigan
HSAs and HDHPs are popular among conservative lawmakers in encouraging consumers to become more focused on the cost of care and are featured in several proposals to repeal and replace the ACA. NASHP recently looked at how Michigan and Indiana are using HSAs and other similar accounts in their Medicaid programs.
Only 10 percent of the individual market is enrolled in an HSA-eligible HDHP, so it may be too soon to know whether HSAs curb spending and change consumer behavior. Proponents of HDHPs say that shifting costs will encourage consumers to shop around and make more savvy health care decisions. However, a lack of price transparency from health care providers may make this difficult. Critics also note that federal and state contributions to HSAs may not cover health care expenses for low-income individuals.
Background: HSAs, often paired with HDHPs, are tax-exempt accounts used to pay for certain medical expenses – generally not premiums – until enrollees reach their deductible and insurance coverage begins. In the group market, individuals and employers can both contribute to HSAs. In 2016, 15.2 percent of Americans under the age of 65 were enrolled in a HDHP (average deductible of $1,300 for an individual or $2,600 for a family) paired with an HSA. A single person with a HDHP could pay up to $6,550 and a family could pay up to $13,100 out-of-pocket, not including premiums, before coverage starts.
(Source: Amy Clary and Trish Riley, “Health Savings Accounts — Lessons from States: Questions for Policymakers,” National Academy for State Health Policy,” February 2017)
Health systems are designing innovative back pain treatment to improve outcomes, reduce costs
Low back pain is one of the most common reasons employees go to the doctor or miss work. It also is a major health care cost driver. Some traditional methods for managing low back pain could fit the definition of low-value health care – costly tests and invasive therapies that may not help patients and frustrate clinicians and payers. As evidence mounts that more intensive therapies do not always mean better outcomes for back pain sufferers, health systems around the country are developing new, innovative programs for back pain that focus on noninvasive, nondrug therapies. New guidelines from the American College of Physicians (ACP) that came out last week also emphasize conservative, non-drug and non-surgical treatments such as mindfulness-based stress reduction, tai chi, and acupuncture.
The guidelines strongly discourage the use of opioids, encourage nondrug therapies, and provide specific guidance for acute, subacute, and chronic low back pain:
The ACP relied on randomized controlled trials and systematic reviews of studies evaluating noninvasive, nondrug, and drug therapy for low back pain in adults, along with feedback from a public comment period, to develop the guidelines.
Two years ago, some large employers in Seattle wanted to address low back pain in their employee population. The employers worked with Virginia Mason Hospital and Medical Center in Seattle to develop a spine care program that aimed to improve service and same-day access for employees and reduce unnecessary medical care. The spine clinic began reserving slots in the schedule for same-day appointments for patients with acute back pain. Physicians also created a new form for ordering MRIs that required patients to meet certain criteria. This process cut down on unnecessary imaging that can drive up costs and expose patients to potentially harmful radiation. The program also included increased access to physical therapists (PT), who were able to listen to a patient’s concerns, assess mobility, and do basic diagnostic testing. This allowed physicians to spend their time developing a care plan with the therapist and patient. The program has shown early successes in reducing costs, increasing patient satisfaction, and less time missed from work.
Cleveland Clinic is also targeting chronic low back pain by creating a pilot population health initiative aimed at helping patients recover and become active again. The initiative launched last year and emphasizes functional outcomes rather than procedure-based care, with a focus on combination of physical therapy and behavioral medicine. It targets patients at high risk for extended disability.
The program takes a multidisciplinary approach: A team of PTs and behavioral medicine specialists treats participants in the 12-week pilot program. The program has individual therapy sessions with a PT and group conditioning sessions. The individual sessions use manual therapy and corrective exercise, but also rely on pain neuroscience education, which helps patients understand more about their pain which may reduce their anxiety about it. Physicians support the program by reinforcing the messages from the rest of the care team.
Analysis: An editorial by a specialist at Massachusetts General Hospital appearing alongside the guidelines published in the Annals of Internal Medicine noted what a major change nondrug therapy is for primary care clinicians treating back pain. The editorial called for more studies with real world applications so that drug and non-drug approaches can be assessed as they are applied in routine practice. They are usually combined (medication plus PT) or used sequentially – starting the new intervention after the one before it fails. In particular, the recommendation for patients with acute or subacute low back pain to try nondrug therapies first may be challenging for primary care clinicians. The main challenge in widespread adoption of nondrug therapies will likely be lack of insurance coverage, patient access, and affordability, the editorial concluded.
(Sources: Amir Qaseem, Timothy J. Wilt, Robert M. McLean, Mary Ann Forciea, for the Clinical Guidelines Committee of the American College of Physicians, Noninvasive treatments for acute, subacute, and chronic low back pain: A clinical practice guideline from the American College of Physicians, Annals of Internal Medicine, February 14, 2017; Steven J. Atlas, Management of low back pain: Getting from evidence-based recommendations to high-value care, Annals of Internal Medicine, February 14, 2017)