Medicare’s 2019 payment proposal is another reason to embrace virtual care

Health Care Current | July 31, 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

Medicare’s 2019 payment proposal is another reason to embrace virtual care

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

The virtual door to the doctor’s office swung open a little wider on July 12 when the Centers for Medicare and Medicaid Services (CMS) proposed that Medicare pay physicians for virtual check-ins and other tech-enabled services.

Over the years, we have seen regulatory and payment barriers, along with sometimes clunky technology, limit the adoption of virtual care among health care providers. As these barriers fall away, and as the technology improves, health system leaders and physicians should try to get ahead of the trend. Along with the potential to extend the reach of physicians, improve outcomes, and enhance patient experience, I think the ability to offer virtual care could also give health systems and physicians an advantage over traditional and non-traditional competitors. Physical contact between doctors and their patients will always be important, and virtual care isn’t going to replace that. But such technology could be an important tool for hospitals and physicians.

While virtual care isn’t new (I have been talking and writing about it for years), it has been slow to gain traction. But the pace of adoption appears to be accelerating as CMS, state regulators, and health plans encourage adoption. Consider this:

  • Medicaid offers telehealth coverage in 49 of 50 states and the District of Columbia.1
  • As of 2016, 74 percent of large employer-sponsored health plans had incorporated telehealth into their benefits (up from 48 percent in 2015).2
  • Some states are exploring, or have already passed, legislation allowing physicians to conduct virtual visits with patients outside of their own state. Parity laws that require virtual visits to be paid at the same rate as face-to-face encounters are becoming more common in states.3
  • In its 1,400-page proposed rule for the 2019 Medicare Physician Fee Schedule, CMS proposes—and seeks public comment on—ways for Medicare to pay for phone or video chats between patients and physicians. These virtual visits could be conducted without a face-to-face appointment. The agency is also considering paying physicians for the time it takes to review videos or images that a patient transmits to the office.

Physicians, consumers see promise in virtual chronic-care management

Evidence of improved health outcomes, cost savings, and the potential for better access and more convenience for patients are among the reasons we expect virtual health to become more commonplace in hospitals and physician practices. Some studies estimate that virtual health strategies can help reduce hospital stays.4 After discharge, the technology can cut readmission rates by making it possible for patients to be monitored remotely.5

The ability to remotely monitor and manage chronic conditions are among the most promising uses of virtual care technology, according to the results of the Deloitte 2018 Survey of US Physicians. Along with connecting physicians to patients, virtual care can connect primary care doctors to specialists who can work together in managing a patient’s condition.

About 70 percent of the 624 primary care and specialty physicians we surveyed said remote patient monitoring could be particularly useful in the treatment of chronically ill patients. A majority of respondents (67 percent) also saw potential in email/patient portal consultations, and 65 percent said remote care management and coaching would be useful in managing the treatment of chronically ill patients. We also found that primary care physicians are more than twice as likely as specialists to see virtual care technology as a useful tool in the management of chronically ill patients.

Case in point: Massachusetts General Hospital’s primary care practices have been offering virtual visits for some chronic conditions since 2012. A recent study among hypertension patients from MGH and another Boston hospital found no significant difference in outcomes between chronically ill patients who met virtually with a primary care doctor and those who met their doctor in person.6

Results from our upcoming consumer survey found that patients who have one or more common chronic diseases have been highly satisfied with their virtual visits. Survey respondents whose conditions have a major impact on their lives are even more likely to report high satisfaction with virtual visits. However, follow-up questioning indicates that consumers see a need for improvement. We also found that the vast majority of consumers (77 percent) have never had a virtual health care visit, though many of them (57 percent) said they are interested in trying it. Stay tuned for our upcoming paper detailing more findings on consumers’ experiences and attitudes toward virtual health from our consumer survey.

The ability to offer virtual care could create a competitive edge

Patients wait an average of 24 days to schedule an appointment with a specialist—up from 18.5 days in 2014, according to the results of a 2017 survey from Merritt Hawkins, a physician search firm and subsidiary of AMN Health Care. The longer appointment times likely indicate a shortage of physicians, according to the report, which evaluated wait times for commonly used specialty physicians in 15 large cities.

Virtual care could help address physician shortages by extending the reach of doctors and by offering around-the-clock access to consumers. Patients can get a quick answer to a medical question or be triaged and sent to a hospital, clinic, or physician office.

We live in a world where some of the most successful transportation companies don’t have cars, and the largest operators of vacation rentals don’t own properties. Hospitals without beds might not be far behind. Three years ago, a large midwestern hospital system opened a virtual care center with four floors, more than 300 employees, and no hospital beds…or patients.

As regulatory and payment barriers go away, we could see a shift in market share from traditional providers (e.g., physician offices, clinics, and hospitals) to technology-driven clinicians that offer more convenient and cost-efficient options to patients. To keep pace and preserve market share, traditional provider groups might need to revamp their business models.

Despite the name, virtual care is real care. It connects patients to care providers and can also connect primary care doctors to specialists. The technology can transcend time and space, allowing patients and physicians to interact without needing to be together in one place. Let’s see where this new world takes us.

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1. Center for Connected Health Policy:
3. Center for Connected Health Policy, 2017 report
4. American Telemedicine Association, State Policy Resource Center
5. National Center for Biotechnology Information, US National Library of Medicine, Using telehealth to reduced all-cause 30-day hospital readmissions among heart failure patients
6. Massachusetts General Hospital, May 2018 press release,


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In the news

Proposed rule seeks to ensure site-neutral payment, transparency in Medicare

On July 25, CMS released the 2019 Outpatient Prospective Payment System (OPPS) & Ambulatory Surgical Center (ASC) proposed rule. Under the proposed rule, the overall OPPS payment rate would increase by 1.25 percent. This would increase OPPS provider payments to $74.6 billion—a $5 billion increase from this year. Payments for some services, however, would decrease under the proposal.

CMS proposes moving toward site-neutral payments for clinic visits—which the agency says are the most commonly billed services under the OPPS—by applying a payment rate for the visit that is equivalent to a physician fee schedule. The agency says Medicare typically pays more for care provided at off-campus hospital outpatient clinics than it pays for the same services provided in a physician office. CMS estimates this change will result in lower copayments for patients and will save Medicare an estimated $760 million for 2019.

The proposed rule includes other policies to address payment differences between sites of service. The agency says this gives patients more choice when deciding where to seek care. For 2019, CMS proposes to do the following:

  • Expand the number of procedures payable at ASCs to include additional procedures that can safely be performed in that setting.
  • Ensure that ASC payment for procedures that involve certain high-cost medical devices parallels the amount paid to hospital outpatient departments.
  • Help ensure that ASCs remain competitive by stabilizing the differential between ASC payment rates and hospital outpatient payment rates.

The proposed OPPS and ASC rule seeks to extend CMS’s 2018 hospital payment methodology for 340B drugs to outpatient clinics by paying off-campus hospital clinics average sales price (ASP) minus 22.5 percent for drugs acquired through the program. According to CMS, the changes to 340B saved beneficiaries an estimated $320 million in out-of-pocket payments for 2018.

CMS asked for comments on several topics through Requests for Information (RFIs):

  • Leverage the Competitive Acquisition Program (CAP) to introduce competition to Medicare Part B.
  • Pay separately for certain non-opioid pain-management drugs in ASCs.
  • Allocate separate payments under OPPS and ASCs for certain non-opioid treatments for chronic pain.
  • Determine whether providers and suppliers should be required to inform patients about charges for services, including out-of-pocket costs.

In a statement released the same day, the American Hospital Association (AHA) said it opposed the proposed rule’s plans to reduce payments for hospital clinic services and to expand 340B cuts to outpatient departments. The proposed changes, according to AHA, could cause hospitals to lose close to $1 billion.

Risk-adjustment payments are back on schedule, CMS says

Less than a month after CMS put risk-adjustment payments on hold, it announced that the program was back on schedule. On July 7, the agency said it had suspended distribution of more than $10 billion owed to health plans through the risk-adjustment program—a provision of the Affordable Care Act (ACA). The decision was tied to a court ruling that determined the formula for payments and collections was flawed (see the July 17 issue of the Health Care Current).

In a July 24 press release, CMS said it had issued an interim final rule that clarifies the risk-adjustment methodology (see Deloitte’s Reg Pulse for an in-depth overview). The proposed rule, which does not make any changes to the methodology, responds to issues raised by a federal judge in New Mexico who determined the methodology was flawed. The temporary freeze on the program affected the 2017 plan year.

In a Notice of Proposed Rulemaking, CMS announced its intention to propose and solicit comment on the risk-adjustment methodology that will apply to the 2018 benefit year. Risk adjustment distributes funds from health plans that attract lower-risk members to health plans that attract sicker members in the individual and small-group markets. It is one of three premium-stabilization programs created by the ACA. While the other two programs—reinsurance and risk corridors—concluded in 2016, the risk-adjustment program is permanent.

House Energy & Commerce hearing highlights efforts to implement 21st Century Cures Act

On July 25, the House Energy and Commerce Health Subcommittee held a hearing on implementation of the 21st Century Cures law. Witnesses included US Food and Drug Administration (FDA) Commissioner Scott Gottlieb, M.D., and National Institutes of Health (NIH) Director Francis Collins, M.D.

The Cures law was enacted on December 12, 2016. The bipartisan legislation allocates $6.3 billion to advance medical research, and to fund basic science research, at NIH. Among other provisions, the law allows for innovation and regulatory flexibility at FDA.

During the hearing, Collins’ remarks focused on progress in the Cancer Moonshot initiative as well as the All of Us precision medicine initiative, which launched in May. He told lawmakers that the Cancer Moonshot is yielding tremendous results in immunotherapy for certain cancers. The All of Us initiative, which aims to recruit one million American volunteers from a diverse range of racial and ethnic groups, recruited 86,000 volunteers during its first two months. Almost half of the volunteers are from minority groups that tend to be underrepresented in research.

Gottlieb’s remarks focused on the agency’s efforts to help bring new therapies to market for rare diseases by modernizing clinical trials. He spoke about the use of master clinical protocols, which is defined as one overarching protocol designed to answer multiple questions. He also discussed the use of natural-history models to partially replace the placebo arm in some trials. The FDA is also compressing the traditional three phases of clinical trials into one continuous phase and is working to make clinical endpoints more achievable. The agency recently released guidance updating clinical endpoints.

RELATED: Deloitte’s report on 21st Century Cures describes the different provisions of the law. It also provides analysis and considerations for biopharma and medical device companies, health plans, provider organizations, and government agencies as they collaborate and work toward improving the development and delivery of innovative therapies to patients.

Access to employer-sponsored health insurance ticked up in 2018

More people were offered health insurance benefits by an employer in 2018 than in 2017, according to new data from the US Bureau of Labor Statistics. As of March 2018, 72 percent of civilian workers had access to health insurance, up from 70 percent in March of 2017, according to the report. The participation rate remained unchanged at 52 percent. This year, participating civilian employees paid an average of 20 percent of the premium for single coverage and 32 percent for family coverage—unchanged from a year ago.

As in prior years, large employers—both in the private and government sectors—were most likely to offer health coverage. More than half (55 percent) of small employers (fewer than 100 employees) offered health coverage to their workers, while those benefits were available to 88 percent of workers at the largest companies (500 employees or more). In state and local governments, health benefits were available to 85 percent of employees in small organizations and 92 percent of employees at the largest organizations.

GAO identifies payment risks, recommends oversight for Medicaid managed care

On July 26, the Government Accountability Office (GAO) released a report identifying six types of payment risks associated with managed care. Four of these are related to payments made by state Medicaid agencies to managed care organizations (MCOs), and two are related to payments made by MCOs to providers. Of the six types of payment risks identified, states responsible for ensuring Medicaid program integrity most frequently cited the following to factors as having the highest level of risk:

  • Incorrect fee-for-service payments from MCOs, where the MCO paid providers for improper claims, such as claims for services that were not provided.
  • Inaccurate state payments to MCOs resulting from using incorrect data or improper inclusion of costs.

According to the report, stakeholders most frequently cited challenges relating to appropriate allocation of resources, quality of data and technology used, and adequacy of state policies and practices.

GAO recommends that CMS quickly issue guidance on Medicaid managed care program integrity, address impediments to managed care audits, and ensure that states account for overpayments when setting future MCO rates. The Department of Health and Human Services (HHS) agreed with these recommendations.

MCOs in the Medicaid program receive periodic payments, per beneficiary, to provide health services. In 2017, federal spending on services under Medicaid managed care was $171 billion, almost half of the total federal Medicaid expenditures for that year. Federal and state program integrity efforts have largely focused on Medicaid fee-for-service delivery where the state pays providers directly, rather than managed care. Previously, CMS initiated efforts to assist states with managed care program oversight, but the agency’s planned guidance for states has been delayed.

Breaking Boundaries

Robots could transform care for patients with Alzheimer’s disease and other types of dementia

Scientists from around the world are investigating how robots can help people who have Alzheimer’s disease. Approximately 50 million people worldwide are living with Alzheimer’s and other types of dementia. According to the Alzheimer’s Association, more than 16 million people in the US provide unpaid care for family members. These caregivers collectively deliver an estimated 18.4 billion hours of care—worth more than $323 billion. It is harder to quantify the toll these diseases take on patients and their families.

While scientists work toward better preventive therapies and treatments, researchers are exploring the use of robots to help care for these patients. Some robots could help patients in and out of bed, remind them to take their medicine, measure their mood, and provide regular updates to human caregivers.

A robot called Silbot3, from a South Korean company, can help patients stay at home longer before needing to go to a care facility, according to preliminary studies. Other research teams have focused on using robots to help patients deal with loneliness and isolation. A Japanese baby seal robot called Paro has demonstrated an ability to calm patients and keep them company.

A robot called MARIO, which is being studied in several European universities, is designed to provide companionship and support through a number of individualized applications that promote social connectivity. These apps include games, news apps, apps that play music, and apps that might help trigger memories by sharing photographs from the patient’s past and prompting conversation about the photo. A calendar-of-events app reminds patients of special events. Researchers tested MARIO in hospitals and in residential care facilities and found that patients and caregivers were accepting of the robot and had positive perceptions toward it.

While the intent is not for robots to replace human caregivers, they could help fill in when a caregiver needs a break, which could help prevent caregiver burnout. Robots can also collect and transmit valuable patient data, such as information about mental decline.

RELATED: In 2016, Deloitte conducted its biennial survey of US health care consumers and polled a nationally representative sample of adults about their interest in using robots in various future scenarios. Thirty-five percent of survey respondents were interested in using robots to monitor patients or to assist caregivers. As we grow more accustomed to seeing robots perform other health care duties—such as certain administrative tasks in hospitals— more consumers may embrace them to help patients with Alzheimer’s disease stay in their homes longer.

(Source: Dennis Thompson, “Robots May Soon Join Ranks of Alzheimer’s Caregivers,” HealthDay, June 28, 2018)

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