Health Care Current: July 19 2016 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: July 19, 2016
MACRA: The status quo is not an option
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
MACRA: The status quo is not an option
166 days. 23 some odd weeks. Less than six months. This is how long the health care industry has to prepare for the first day of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).1 But, it may be an uphill battle to get there: According to Deloitte’s 2016 Survey of US Physicians, half of surveyed physicians have never heard of MACRA, and most physicians would have to change aspects of their practice to meet the law’s requirements and do well under its incentives.
Some physicians may think of MACRA simply as “the law that repealed the sustainable growth rate (SGR),” leading them to believe that they can move on and forget about the annual doc fix debate they had grown so accustomed to. Others may read the comments from Acting Administrator Andy Slavitt last week that the US Centers for Medicare and Medicaid Services (CMS) is open to considering changes to the implementation of MACRA, including shorter reporting periods and alternative start dates, as a repeat of ICD-10 implementation – a deadline that will inevitably change before it is finalized.2
But, MACRA is more than a Medicare payment law or a fix to the SGR debate. And it is here to stay.
MACRA is a transformative law that, with bipartisan support from both sides of the aisle in Congress, is on track to fundamentally change how physicians and other clinicians are reimbursed under the Medicare Physician Fee Schedule (PFS). It will also drive major health care payment and delivery system reform for clinicians, health systems, Medicare, and other government and commercial payers for years into the future.
Deloitte’s 2016 Survey of US Physicians sought to quantify where physicians – the primary subjects of this transformation – are in their familiarity and understanding of the law and how prepared they are to transform with it. The results suggest that many physicians will have a lot of work to do over the next few months to prepare for January 1, 2017. Indeed, half the non-pediatric physicians we surveyed say they had never heard of MACRA, and less than one-third say they recognize the name but are not familiar with the requirements.
More self-employed physicians and physicians in independently owned medical practices (21 percent) report that they are somewhat familiar with the law than physicians employed by hospitals, health systems, or medical groups owned by them (9 percent). But, physicians with a high share of Medicare payments tend to be just as unaware of MACRA as others.
We also found that while most physicians surveyed agree that health care system performance can be improved by measuring care outcomes and processes and measuring resource utilization and costs, most physicians also believe that performance reporting is burdensome. Few support tying compensation to quality and most prefer traditional compensation models, such as fee-for-service and salary over value-based payment models.
Early in my career, daily life involved many interactions that inevitably took me out of my comfort zone. The first day of residency was one of them. Making the leap from medical student to practicing physician was larger – and a bit more uncomfortable – than I could ever have imagined. But, day by day, practicing medicine became more comfortable – more natural.
Today, many physicians appear to feel the same way about payment reform. The new competencies and capabilities required of them may seem uncomfortable. Many physicians will need to change aspects of their practices to meet new reporting requirements. And, MACRA’s significant financial incentives to participate in risk-bearing, coordinated care models and move away from the traditional fee for service system suggest that physicians should consider bearing increased financial risk in the future.3
The good news is that, according to the survey, as physicians gain more experience with value-based care efforts, they tend to be more prone to understanding its identified benefits and are more open to its possible improvements to the delivery system. The industry as a whole has a great deal of work ahead to prepare for MACRA and its impact. At this point, staying within your comfort zone is not an option – keeping the status quo is not an option.
1 Deloitte analysis of the US Centers for Medicare and Medicaid Services, Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models, Proposed Rule, 2016
2 Shannon Muchmore, Modern Healthcare, “Slavitt suggests MACRA could be delayed,” July 13, 2016
3 Deloitte analysis of the US Centers for Medicare and Medicaid Services, Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models, Proposed Rule, 2016
By Mitch Morris, MD, Global Life Sciences and Health Care Industry leader, Deloitte Consulting LLP
CMS Acting Administrator testifies before Senate Finance on MACRA implementation
Last week, CMS Acting Administrator Andy Slavitt testified before the Senate Finance Committee about progress with and opportunities for implementing MACRA. According to CMS’s proposed rule, the first performance period under MACRA starts January 1, 2017. Committee members questioned Slavitt about reporting requirements, timing, and the likelihood of the agency publishing an interim final rule this fall.
Many of the lawmakers focused on when CMS plans to publish and begin enforcing the final rule. The rule is expected to be published in November 2016, less than two months before the start of the first performance period. However, Slavitt said CMS is considering several proposals to make sure providers are adequately prepared to succeed under MACRA. These include:
- Making the November publication an interim rule (allowing for changes), rather than a final rule
- Considering alternate start dates
- Allowing shorter reporting periods
- Allowing physicians to get experience with the program before it fully impacts them
Another issue discussed at the hearing was how to engage electronic health record (EHR) technology developers and vendors to help physicians report on cost and quality measures. Slavitt said that maintaining the certification standards of EHRs to ensure the protection of private patient health information (PHI) is critical to implementing MACRA successfully. Further, he said that interoperability standards are critical, both to improving care coordination and to streamlining reporting requirements through automatic EHR data feeds.
CMS has received 4,000 comments on the proposed MACRA rule. Slavitt said that CMS will continue to seek and actively engage clinician, health plan, and health system involvement throughout the implementation process. He also renewed the agency’s commitment to working with the Physician-Focused Payment Model Technical Advisory Committee.
Implementation & Adoption
KFF: Medicare spending in the last year of life declines with age
Recent research suggests that Medicare spending on the oldest beneficiaries in their last year of life may not be as high as previously thought. The Kaiser Family Foundation (KFF) analyzed spending trends in Medicare and found that spending per person in the last year of life peaks at age 73 and then decreases as people age.
According to the analysis, average spending on individuals who died at age 73 in 2014 was $43,353. But, the older the enrollee, the lower the spending in the last year of life:
KFF also found that spending has become less concentrated over the last decade for beneficiaries who died. In 2000, 18.6 percent of Medicare spending went to pay for services for beneficiaries who died that year. This decreased to 13.5 percent of Medicare spending in 2014. This could be due in part to more beneficiaries aging into the system, skewing the Medicare population toward a younger, healthier group. However, it could also be due to per capita spending on people who die in any given year growing more slowly than that for survivors.
(Source: Kaiser Family Foundation, “Medicare Spending at the End of Life: A Snapshot of Beneficiaries Who Died in 2014 and the Cost of Their Care,” July 14, 2016)
Report: Economic growth and an aging population to accelerate health care spending growth
Between 2015 and 2025, US health care spending is projected to grow 5.8 percent annually, according to CMS actuaries. As a share of the economy, health care spending is now expected to grow from 17.5 percent in 2014 to 20.1 percent by 2025, according the latest national health expenditures report published in Health Affairs. Government – federal, state, and local – paid for 47 percent of the total health expenditures in 2015, which is up from 45 percent in 2014.
The report credits rapidly growing health care prices, an aging population, and economic growth for driving health spending. The expansion of health coverage under the Affordable Care Act (ACA) also sped up health care spending. Medicaid and exchange enrollment growth were estimated to continue influencing overall spending between 2015 and 2016. Many areas of health care spending are projected to increase:
- Medicare spending is projected to increase at 6.7 percent per year as the Baby Boomers continue to age into the system between 2017 and 2019.
- Private health insurance spending is expected to grow by 5.6 percent from 2017 to 2019 due to the use of specialty drugs and increasing drug prices.
- Hospital and health system spending is estimated to have to sped up, growing from 4.1 percent in 2014 to 4.9 percent in 2015.
(Source: Sean Keenan, et al. Health Affairs, “National Health Expenditure Projections, 2015–25: Economy, Prices, And Aging Expected To Shape Spending And Enrollment,” July 2016)
HHS: Exchange consumers have lower out-of-pocket costs in 2016
HHS published a report that found that 2016 plans in the federal exchanges have lower out-of-pocket costs compared with 2015 plans. This analysis suggests that for many consumers, the subsidies are helping with out-of-pocket costs.
The median individual deductible for plans sold through the federal exchanges in 2016 is $850, down from $900 in 2015. The analysis takes into account the availability of financial assistance on cost sharing for 60 percent of enrollees in these plans. In addition, HHS found:
- One-third of exchange enrollees have deductibles less than or equal to $250
- Half of enrollees have deductibles below $1,000
Exchange consumers are most likely to choose silver plans (33 percent), which come with higher premiums and cost-sharing assistance for many, and less likely to choose bronze plans (21 percent), which have lower premiums but no cost-sharing assistance.
All exchange customers have access to preventive services, and many have access to other health care services offered at no or low cost-sharing prior to reaching their deductibles. Plans sold through the federal exchanges typically cover seven common health care services, including generic drugs and primary care visits, at no cost to consumers.
(Source: HHS, “Data Brief: 2016 Median Marketplace Deductible $850, with Seven Health Services Covered Before the Deductible on Average,” July 12, 2016)
Report: The 2 percent of people with the highest health care costs account for 31 percent of spending in employer plans
Less than 2 percent of employer-sponsored insurance (ESI) enrollees have annual health care costs above $50,000, according to a recent American Health Policy Institute (AHPI) report. This small population accounts for 31 percent of total spending.
AHPI also compared spending in the ESI population to spending on individuals covered by Medicare using 2013 Medicare fee-for-service (FFS) claims data. They found that ESI spends more money per high-cost member than Medicare does – $122,382 per year on average compared with $105,004 per year. People undergoing cancer treatment and individuals with heart disease are the costliest populations for employers while end-stage renal disease and congestive heart failure are the costliest population for Medicare FFS.
The two groups differ in several other ways:
(Source: American Health Policy Institute, “High Cost Claimants: Private vs. Public Sector Approaches,” 2016)
HHS OCR releases ransomware guidance
In a new fact sheet on ransomware, the US Department of Health and Human Services (HHS) Office of Civil Rights (OCR) says that these attacks should be considered a security incident under the Health Insurance Portability and Accountability Act (HIPAA). Organizations should respond to and report ransomware attacks using HIPAA security incident procedures and notify individuals that their personal health information (PHI) has been compromised, unless they can prove that there is a low probability that any such compromise has occurred.
HHS says that the HIPAA Security Rule can help organizations prevent and prepare for ransomware events by:
- Implementing a security management process
- Having procedures to guard against and detect malicious software
- Controlling access and limiting PHI access to specific people
- Training staff on ways to protect against malicious software
Members of the HHS Health Care Industry Cybersecurity Task Force are expected to publish a report by the end of March 2017 on ways to prevent and strengthen responses to cyberattacks.
This fact sheet comes shortly after Congressional lawmakers sent a letter to the deputy director of HHS urging the agency to develop guidance for ransomware attacks on hospitals. Lawmakers highlighted issues that they say make ransomware in health care organizations different from other types of cyberattacks. For example, the letter suggests that organizations might limit patient notifications, as the threat of a ransomware attack is not usually a privacy issue.
Background: Ransomware attacks on hospitals have come to the forefront after a several high profile attacks this spring. In these attacks, health care organizations are asked to make ransom payments to free their EHRs being held “hostage,” which has led many organizations to turn away patients for safety purposes during the attack. As Dr. Harry Greenspun recently described in the April 26, 2016 Health Care Current, health care has become a frequent target of cyberattacks for several reasons. For one, the data are valuable. Stolen personal health records can sell for up to $50 each on the black market, or about 50 times the value of a credit card number. Moreover, vulnerabilities are expanding as health information is shared more broadly and more individuals from more organizations have access to systems. Ultimately, heightened security, vigilance, and resilience may help health care organizations defend against and mitigate the impact of cyberattacks.
On the Hill & In the Courts
AHA: CMS should continue the reinsurance program through 2018
The American Hospital Association (AHA) weighed in on elements of the public health insurance exchanges, addressing the three programs to mitigate risk – risk corridors, reinsurance and risk adjustment. The recent letter to CMS also addressed the agency’s policies on special enrollment periods (SEPs). All of these policies are intended to add stability to the public exchange market.
The AHA recommends that CMS:
The AHA says that it supports tightening the eligibility criteria for SEPs in the public health insurance exchanges. CMS has proposed to limit SEPs to “permanent moves,” a policy that would help keep consumers from enrolling in coverage when they need it and then dropping their plan after receiving care. In the letter, the AHA also said it supports CMS’ efforts to conduct oversight and monitor the enforcement of the new criteria through enhanced eligibility documentation.
Background: The changes to the SEPs require consumers to prove that they had minimum essential coverage for at least one of the 60 days before they moved to qualify for an SEP. Under the interim final rule, individuals who did not have minimum essential coverage before their move would be ineligible for an SEP unless they meet several criteria (see the May 17, 2016 Health Care Current).
Senate hearing: The Stark law poses “significant risk” to organizations participating in value-based care arrangements
Last week, the Senate Finance committee heard testimony from a panel of health care organization leaders, all who said they are concerned that the Stark law limits their ability to engage in value based care (VBC) and innovative payment arrangements with physicians. At the hearing, Dr. Ronald Paulus, president and CEO of Mission Health, stated that to many health care organizations, the Stark law poses the “most significant risk” for health systems to transition away from fee-for-service (FFS) and into VBC arrangements.
Stark prohibits physicians from referring Medicare patients and some Medicaid patients to entities in which they have a financial stake and prohibits them from tying incentives to volume or value of referrals.
The witnesses said the Stark law restricts hospitals from participating in VBC arrangements with physicians and is counter to the goals of MACRA and the Triple Aim. The panelists said that the law poses a risk to health reform and innovative payment systems when physicians are not fully employed by a health care system but maintain their independence yet have financial relationships with a system; financial penalties for a violation require physicians to fully refund Medicare for any payments they received. Medical home models, gainsharing, bundled payments, and pay-for-performance outcome measures all might violate the Stark law.
The panelists agreed with suggestions included in Senate Finance Committee Chairman Orin Hatch’s recent white paper on how to modernize the law (see the July 12, 2016 Health Care Current). They agreed on improving the definition of violations and for CMS to be able to waive the law for organizations participating in the MIPS or Advanced APM incentive programs. They concluded that the best course of action may be to repeal the Stark law and use the Anti-Kickback Statute (AKS) and the False Claims Act to regulate referral relationships.
Congress passes bill to address the opioid crisis
Last week, Senate lawmakers passed (92-2) the Comprehensive Addiction and Recovery Act of 2016 (CARA) to address the nationwide opioid crisis. CARA is a bipartisan effort to curb abuse of opioids, including prescription drugs and heroin. CARA’s provisions attack the issue from multiple angles:
Expanding access to medication-assisted treatments is of particular importance to many patient advocates. Under current law, physicians can only prescribe buprenorphine, a medication that reduces opioid cravings, to 100 patients per year. CARA expands buprenorphine prescribing capabilities to nurse practitioners, physician assistants, and other clinician extenders in accordance with state law, although it leaves the treatment cap per clinician in place. This could help the estimated 1 million individuals who are affected by opioid dependence and have no access to treatment.
CARA would support opioid abuse programs by redirecting grant money from previously funded programs. The funding for naloxone and authorization of $25 million to expand the current treatment infrastructure are the only funding provisions in CARA. Adequacy of funding was a main point of debate around the bill before it passed. Many Democrats tried to get additional funding included in the bill, but many Republican lawmakers said that the appropriations process will provide adequate funding for the bill in FY 2017.
CARA originally passed in the Senate in March 2016, followed closely by passage in the House in May 2016. A full bipartisan conference assembled the final version of the bill earlier this month. President Obama is expected to sign the bill into law in the coming weeks.
Report: State prescription drug monitoring programs could prevent 10 opioid overdose deaths per day
State programs that monitor prescription drugs may prevent 10 opioid overdose deaths per day in the US, and improvements could save another two lives per day, according to a recent study published in Health Affairs.
In 2014, prescription opioids were responsible for roughly 19,000 overdose deaths, and more than ten million Americans reported using opioids non-medically that same year (see the May 31, 2016 Health Care Current). To combat this crisis, many states have implemented prescription drug monitoring programs (PDMPs) that require physicians to query databases prior to prescribing and to look for signs of potential opioid misuse.
The researchers looked at data from all states that implemented a PDMP between 1999 and 2013 to determine if implementation or specific program characteristics were associated with a decrease in opioid-related overdose deaths.
Using a time-series panel model that accounted for variations in state populations, the researchers found that states that implemented a PDMP saw a reduction of overdose deaths, decreasing 1.12 opioid-related overdose deaths per 100,000 one year after implementation. The researchers analyzed specific provisions of state’s PDMPs (e.g., monitoring more drug types or updating the databases weekly) and found that more robust monitoring programs had greater reductions in deaths, compared with states whose programs did not have these characteristics.
Their research concluded that if all states adopted a PDMP and states with existing PDMPs expanded their scope, the US would have 600 fewer overdose deaths in 2016, preventing approximately two deaths each day.
(Source: Stephen W. Patrick et al., “Implementation Of Prescription Drug Monitoring Programs Associated With Reductions In Opioid-Related Death Rates,” Health Affairs, July 2016)
Around the Country
Montana to use reference pricing for state employees and dependents
Montana’s benefit manager for state employees, their dependents, and retirees, has contracted with nine of the 10 major hospital systems in the state to set payment rates for services. For these nine hospitals, payments will be set based on average Medicare payments, accounting for any regional factors.
In addition, the state has rolled out a campaign to help enrollees understand how the new pricing system will work. Instead of using traditional “in-network” and “out of network” terminology, hospitals will either be “participating” or “non-participating.” Consumers will get the agreed upon rates at the participating hospitals, but would be responsible for paying any costs above the agreed upon rate at non-participating hospitals.
Governor Steve Bullock says that reducing price variation between facilities and patients could save Montana $25 million by the end of 2018. Currently only 33,000 people, those covered by the state, will be affected by the change.
Exploring innovative alternatives to pain management
Health care organizations across the country are grappling with the staggering cost of opioid addiction. In 2012, the cost of inpatient hospitalizations related to opioid abuse reached $15 billion. Three out of four Americans who are addicted to heroin were introduced to opioids through prescription drugs taken for pain. Many patients who leave the emergency department with opioid prescriptions risk becoming dependent.
Some hospitals are taking innovative approaches to pain management. At St. Joseph’s Regional Medical Center’s emergency department, one of the busiest in the US with about 170,000 patients per year, physicians are trying alternative pain therapies before resorting to opioids. Alternative methods include nonnarcotic infusions and injections, ultrasound guided nerve blocks, laughing gas, and energy healing. In certain emergencies, opioids are the preferred treatment.
At Geisinger Health System in Pennsylvania, a team of researchers analyzed the EHRs of more than 2,000 patients admitted to the hospital for overdoses over a 10 year period to identify factors affecting patient outcomes, including death. Results showed that history of previous addiction, mental illness, and comorbidities were associated with adverse overdose outcomes. Patients who were married and had private health insurance tended to have more positive outcomes. These kinds of studies suggest there are opportunities for identifying patients at-risk for overdosing.
In Canada, where nearly 13 percent of patients are on opioids for chronic pain, Toronto General Hospital is also developing and testing innovative strategies, particularly focused on transitioning patients who have had surgery off of opioids. The alternatives to opioids the hospital is trying include combinations of physiotherapy, meditation, acupuncture, and counselling. The transitional pain service has seen approximately 400 patients since its inception two years ago, and other hospitals have expressed interest in pursuing similar programs.
Many health plans also recognize they can help address this crisis. Blue Cross Blue Shield of Massachusetts created a Pain Medication Safety Program that requires prior authorizations for short and long-acting opioid prescriptions and imposes checks and balances between physicians and pharmacists to identify and curb multiple prescriptions. Cigna is partnering with the American Society of Addiction Medicine to analyze two years of de-identified claims to develop standardized metrics, baseline measures, and opioid use goals. Other health plan strategies include using algorithms to track where and how often members fill opioid prescriptions and using social workers to support high-risk members.
Analysis: Individuals with chronic pain are also at increased risk for long-term exposure to and dependency on pain medications. Similar to addiction treatment and recovery, the solutions to this complex problem may require innovative strategies from many different health care stakeholders. In “Collaboration at every level: Solving the country’s opioid crisis,” Deloitte’s US Public Sector Leader Mark Price called for coordination across the ecosystem – from state and federal government agencies to health plans, health care providers, and life sciences companies. For states, Medicaid programs can play a role in improving service delivery; and federal health agencies can collaborate on surveillance and guidelines. Hospitals are on the front lines of patient care and developing programs like those described above to address this crisis.
(Sources: Jan Hoffman, “An E.R. kicks the habit of opioids for pain,” New York Times
June 10, 2016; Beth Haynes, “ASAM collaboration with Brandeis and Cigna tests addiction treatment performance measures,” ASAM Magazine, May 3, 2016; Geisinger Health System, “Geisinger researchers profile overdose patients and predictors of death,” Geisinger Health News, June 2, 2016)