Proposed rules on interoperability and pricing transparency are challenging, but might be exactly what patients want

Health Care Current | July 2, 2019

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

Proposed rules on interoperability and pricing transparency are challenging, but might be exactly what patients want

By Anne Phelps, principal, US Health Care Regulatory leader, Deloitte & Touche LLP

During a recent routine medical appointment, my ear, nose & throat (ENT) specialist asked me about a lump on my thyroid—years ago, I had it biopsied in a hospital and it was quite the ordeal. With my consent, my specialist contacted my endocrinologist who shared my medical history and looped in my primary care physician. Armed with that information, my ENT specialist performed the biopsy that same day in his office. I felt an enormous sense of relief. I was able to get the procedure done right away and with far less stress than the last time. I felt taken care of by all my providers, and they each received my results electronically (all is fine, by the way!).

What is worth noting about my experience that day is these three physicians are all at different practices and have no contractual relationship with each other. However, they shared information to help me. I felt like I was in control of my health care journey. The ability to communicate with each other—and share real-time information—saved me an extra doctor visit, allowed my doctors to agree on an efficient course of action, and likely reduced costs to my health plan. This was such a positive experience that I have an even stronger sense of loyalty to my doctors because they did what was truly best for me.

Why I am telling this story? I think it helps put into context some of the thinking (as I see it) set forth by the administration’s proposed rules on interoperability and information blocking—as well as the executive order on pricing transparency that the president issued last week.1

Interoperability and pricing transparency could move us closer to true value-based care

Back in February, the administration released proposed rules to drive our health care system toward greater interoperability between electronic health records (EHRs) to improve the care quality and reduce costs (see the February 19, 2019 Health Care Current).

Here’s the rub: Care needs to be coordinated wherever patients show up—just as my physicians did for me even though they were not part of the same network. This is part of a larger effort to create a truly value-based health care system in both government and commercial programs, and to reward those that do it effectively.

The US Centers for Medicare and Medicaid Services (CMS) contends that the proposed rules will make it easier for health plans, providers, and patients to coordinate care, analyze population health trends, manage benefits, and track health outcomes and costs more effectively. The guidance would affect Medicare Advantage (MA) plans, qualified health plans sold through public insurance exchanges, Medicaid, and the Children’s Health Insurance Program (CHIP). The proposed rules, which are not yet final, have an effective date of January 1, 2020 for some programs.

Another critical component in the transition to true value-based care is the recent push toward pricing transparency. By helping consumers understand the actual cost of services, they might not be caught by surprise when bills arrive from out-of-network providers. In an executive order signed June 24, the president instructed several federal agencies to propose rules—within the next six months—to provide patients with information about hospital prices, health care resources, likely out-of-pocket (OOP) costs, and other data that could help them navigate the health care system more effectively (see the June 25, 2019 Health Care Current).

Stakeholders have concerns about new policies

I have been paying close attention to the reactions from health care stakeholders in response to CMS’s proposed interoperability rules, and to the recently released executive order. Several themes have emerged, including:

  • The implementation timeline for the proposed interoperability rules is seen as too aggressive
  • Patient data needs to be secure—whether in open-application programming interfaces or patient-facing “apps”
  • Certain information—such as competitive prices negotiated between health plans and providers—should remain proprietary

Each of these bullets represents a valid concern, and all should be considered. But it is also important that stakeholders look at the bigger picture of what is behind the new standards and why it is important. Sharing health information and data, including pricing information, can make it possible for health plans, hospitals, and clinicians to provide patients with a quality health care experience that is appropriate and affordable. Additional time may be warranted, and concerns should certainly be addressed. But I urge the health care community to view this not as just another compliance challenge, but rather as a strategic and competitive opportunity that should be embraced for the sake of patients.

This is the future of health that many consumers want. It isn’t going to be easy to get there, but in a world connected by technology (combined with our growing expectation of superior service), change is going to happen, and it is going to revolve around the consumer experience. As a patient who has experienced this type of interoperability, I know for sure I am sticking with my doctors who helped me out.

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1 Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First, June 24, 2019


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In the News

Out-of-pocket costs continue to climb across all care settings, study finds

While a growing number of patients are seeking care at lower-cost settings, out-of-pocket (OOP) costs continue to grow, according to a June 25 report from revenue-cycle management provider TransUnion. Between 2017 and 2018, the combined costs of deductibles and copayments for inpatient services increased by an average of 14 percent. During the same period, OOP costs for outpatient care increased by an average of 12 percent, and expenses related to emergency room care grew by an average of 7 percent—totaling $617. The study also found that in 2018, 59 percent of patients faced an OOP expense between $501 and $1,000 for a single health care visit—up significantly from 39 percent in 2017. Moreover, the number of patients that had an average OOP expense of $500 or below decreased from 49 percent in 2017 to 36 percent in 2018. TransUnion analyzed OOP costs among self-pay, commercially insured, and Medicare patients. The findings were released at the Healthcare Financial Management Association’s annual conference.

(Source: TransUnion, Out-of-Pocket Costs Rising Even as Patients Transition to Lower Cost Settings of Care, June 25, 2019)

Low-value health service spending growth declined between 2014 and 2016 even as overall spending rose

Between 2014 and 2016, low-value health-service spending growth decreased by nearly 1.7 percent for privately insured patients, according to a recent report from the Altarum Institute. During the same period, commercial insurance spending increased by 6.6 percent. Researchers, who conducted their analysis using data from one large private insurer, focused on what they defined as five low-value health services:

  • Unnecessary testing prior to low-risk surgery
  • Tests screening for Vitamin D deficiency
  • Prostate-specific antigen testing in males over the age of 75
  • Early imaging services for uncomplicated lower-back pain
  • Using brand-name drugs instead of available generics

Even though overall spending for these services declined, other types of spending grew. Spending growth related to one of the low-value services—early imaging for uncomplicated low-back pain (within the first six weeks)—increased by 44 percent, for example. However, researchers also found that spending on high-value services—those associated with positive patient outcomes—increased by nearly 5.6 percent. The five high-value services analyzed in the study are:

  • Flu vaccinations
  • Antiretroviral drug regimens for HIV
  • Vaginal birth deliveries
  • Retinopathy screenings for individuals with diabetes
  • Counseling patients on healthy behaviors, such as weight loss or tobacco cessation

(Source: Altarum Institute, The "Top 5" Low- and High-Value Services: Trends in Health Care Spending Among the Privately Insured, 2014-2016, May 2019)

Senate HELP Committee advances Lower Health Care Costs Act with amendments

Last week, the Senate Health, Education, Labor & Pensions (HELP) Committee voted to move the Lower Health Care Costs Act forward after discussing several amendments to the legislation (see the June 25, 2019 Health Care Current). Committee Chair Lamar Alexander (R-Tenn.) said he expects a full Senate vote on the legislation before the August recess. In the meantime, he plans to work with Senator Bill Cassidy (R-La.) on any additional amendments.

The two amendments that passed by voice vote last week include one that would raise the tobacco-purchasing age from 18 to 21, and another that would require health plans to inform members if their coverage plan does not include in-network ancillary providers (such as for radiology or lab work).

Retail prices for specialty drugs rose more than inflation, according to AARP study

Retail prices for commonly used specialty prescription drugs among older Americans increased more than general inflation every year from 2006 to 2017, according to a new report from AARP. Specialty drugs are used to treat several complex and chronic health conditions most prevalent in older populations, such as cancer, multiple sclerosis (MS), and rheumatoid arthritis (RA). These drugs might require special administering or patient care management—and are among the most expensive therapies on the market, the report notes.

AARP’s study found that the average annual cost of prescription specialty drugs was $78,781 per year in 2017. This was higher than the median US household income of $60,336 that same year. Further, the median income for Medicare beneficiaries in 2017 was $26,200. According to the study:

  • Specialty drug prices increased by 7 percent in 2017, which was more than three times faster than general rate of inflation that same year—2.1 percent.
  • Retail prices for 27 chronic-use specialty drugs that were on the market at the beginning of the study increased cumulatively by an average of 226.4 percent between 2006 and 2017, while general inflation in the US grew by 25.1 percent during the same period.
  • The average annual cost for one specialty drug would have been $29,843 in 2017 if retail price changes for these therapies had been limited to general inflation between 2006 and 2017.

(Source: AARP Public Policy Institute, Trends in Retail Prices of Specialty Prescription Drugs Widely Used by Older Americans: 2017 Year-End Update, June 2019)

AHIP announces initiative to address social determinants of health

On June 20, the association America’s Health Insurance Plans (AHIP) announced a new initiative that seeks to bring health plans together to address social determinants of health (SDoH). According to AHIP, this initiative, called Project Link, will help develop strategies—and policy agendas—to address issues such as food insecurity, lack of mobility or transportation, and social isolation, which can create barriers that negatively affect patient health and wellbeing. Project Link will include a learning collaborative for health plans to discuss barriers to health, a website featuring research and case studies, and community partnership opportunities. A recent Deloitte paper discussed how health plans, physicians, and government agencies have been increasingly focused on addressing SDoH. Some of these initiatives are associated with improved patient health outcomes and lower health care use.

Breaking Boundaries

White House releases strategic plan for artificial intelligence

On June 21, the White House Office of Science and Technology Policy updated its three-year-old National Artificial Intelligence Research and Development (AI R&D) Strategic Plan. This update addresses all seven strategies that appeared in the initial 2016 version and adds another strategy directing federal agencies to partner with the private sector—and with universities—around AI.

The AI R&D strategy is included in the American AI Initiative—part of an executive order the president signed in February 2019. The American AI Initiative calls for $7.6 million in funding, which will be awarded in three-year grants to researchers. Follow-up funding could be as much as $20 million.

These research and development priorities were carried over from the 2016 plan:

  1. Make long-term investments in AI research
  2. Develop effective methods for human-AI collaboration
  3. Understand and address the ethical, legal, and societal implications of AI
  4. Ensure the safety and security of AI systems
  5. Develop shared public datasets and environments for AI training and testing
  6. Measure and evaluate AI technologies through standards and benchmarks
  7. Better understand the national AI R&D workforce needs

AI in life sciences and health care

AI applications in life sciences and health care could streamline workflows and reduce human error, speed up drug discovery, assist in surgery, and improve billing and coding methods. The drug-discovery process can take 10 to 15 years and cost approximately $2.6 billion, according to the Tufts Center for the Study of Drug Development. Pharmaceutical manufacturers are investing in AI to help identify new drug compounds faster and with fewer miscalculations, which could make the drug-approval process quicker and less expensive. In addition, machine-learning technology can correlate vast amounts of data, uncover less-obvious associations, and lead to new solutions.

AI could help physicians make better-informed decisions around patient care. AI also can help with repetitive tasks—such as analyzing test results and entering data—and has the potential to reduce human error and make care teams more efficient. AI could help physicians make faster diagnoses, which can result in more appropriate, personalized treatment plans. It is also possible that AI could provide a care team with important data about a patient’s routine, which might help identify barriers to medication adherence.

(Source: The National Artificial Intelligence Research and Development Strategic Plan: 2019 Update)

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