Health Care Current: June 10 2014 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: June 10, 2014
All health care is local – or is it?
This weekly series explores breaking news and developments in the U.S. 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
All health care is local – or is it?
I recently had the opportunity to travel to India and meet the team working with Deloitte’s U.S. professionals on health services research as part of the U.S. Deloitte Center for Health Solutions. Like so many other U.S. companies, Deloitte has developed a strategy to leverage the talent and value of hiring professionals in India and allow them to work remotely. The communication technology between the U.S. and India works effectively, but the time difference is a big challenge (although sometimes that works to our advantage as we can tag team on fast projects!).
The time difference isn’t the only hurdle. Consider how complicated the U.S. health care system is for American professionals to learn; this team has to learn all of this from a distance. For some team members with experience in the life sciences area, the companies and industry we work in are already international, so the challenges are not as great. But imagine trying to grasp health insurance marketplaces, U.S.-based health plans and value-based care payments from such a different health care perspective.
The Indian health care system is public, with specific programs delegated to the states. But those who can afford it may take advantage of commercial health care coverage or pay non-public doctors and hospitals out of pocket when they need care. Health insurance in India usually only covers hospitalization and emergency costs. The quality of Indian health care can be varied. In major urban areas, health care can be good. However, access to quality medical care is limited or unavailable in many rural areas—the World Bank estimates that there is only 0.7 hospital bed per 1,000 persons in India (almost one-third the amount the U.S. has).1 The physician to patient ratio in India is 1:1,538 whereas the U.S. has an estimated ratio of 1:413.2
When employers in India offer family coverage, policies often cover not only children (as ours do), but the employee’s parents as well.3 But, many offer this only to one set of parents – so one has to choose between covering one’s own parents or the in-laws. How does one choose? This insight made me grateful for Medicare. Even though Medicare may not consistently deliver the quality results we are asking of it, how lucky we are in the U.S. to have peace of mind that there is a program that supports our older adults as they age.
Medical tourism is also an interesting phenomenon in India. Their country was one of the pioneers in creating an industry that flies in Western patients to get high-quality health and dental care in the country for a fraction of the cost in the U.S. India has 19 hospitals accredited by the Joint Commission International.4
When we had a few minutes, I asked the team in India two questions about their perceptions of the differences between the two countries’ health systems. They had some interesting views:
What do you think India can learn from the U.S. health care system?
- How U.S. government policies and private investments incentivize new startups in the health care space.
- How the public research and development structure supports collaboration between different stakeholders from academic institutions, private- and public-sector; India is lacking in this area despite having a strong human capital pool.
- The role of non-traditional players in U.S. health care delivery: How technology, media and finance companies can contribute to delivering health care to a wider population.
- How the regulatory and control system surrounding health care in the U.S. differs from the elementary system that exists in India.
- How medical education curriculum and facilities in the U.S. operate, especially in primary care, nursing and the area of hospital planning/designing.
- The differences between outpatient and ambulatory facilities in the U.S. compared to the clinics in India.
- How doctors are leveraging technology tools to deliver medical care to patients.
What do you think the U.S. can learn from the Indian health care system?
In India, the adage, “Necessity is the mother of invention,” fits quite literally for health care. Significant medical innovations occur in India, as consumers are more directly involved in their health care. This is probably because many lack health insurance, forcing the country to come up with low-cost, highly innovative ways to address health care. A recent Harvard Business Review article sums up three things the U.S. could learn from India:
- The hub and spoke model (hub hospitals located in major cities and spoke hospitals in rural areas): This strategy concentrates the best equipment and expertise at the hub, with telecommunication links that allow hub specialists to serve spoke patients remotely. By contrast, hospitals in the U.S. are less coordinated, duplicating specialized care without enough volume in most of them to make procedures affordable.
- Transfer of responsibility for routine tasks to lower-skilled workers: This leaves doctors free to focus on complicated medical procedures. Several hospitals in India have created a tier of paramedic workers with two years of training after high school to perform routine medical jobs. Compare that with the U.S., where hospitals reduce costs by laying off support staff and shifting mundane tasks such as billing and transcription to doctors who are overqualified for those duties.
- Old-fashioned frugality: For example, the Indian system builds hospitals at a fraction of the cost spent in the U.S., replaces imported devices with local equivalents that cost a fraction of the price and sterilizes and reuses clamps for open-heart surgery that are routinely discarded after one use in the U.S. One hospital sends a daily message to all doctors with the previous day's financial results, encouraging them to consider the cost-effectiveness of their medical choices. In contrast, U.S. hospitals often resemble luxury hotels, with much wasted space and underutilized equipment.5
Another idea the team had was to look at innovative and scalable care delivery models like Aravind Eye Hospital, Narayana Health, Health Care Global and Jaipur Foot. And one colleague also pointed out that India offers multiple forms of treatment, such as homeopathy, Unani medicine, Ayurveda and yoga, along with allopathy. In the U.S., we certainly have a growing industry of alternative medicine, but allopathic medicine is the default.
Even though one adage is that health care is local, it feels to me that health care is really international. There are many opportunities for us to learn from each other about how to provide care more efficiently and effectively. I strongly believe that it is unrealistic to import another country’s system into our own, especially given our own particular history and values. But I do think we can continue to learn from tactics and experiences in both developed and emerging economies. And if we figure out how to get to value-based care in this country, maybe others can learn from us too.
1 The World Bank, Hospital beds (per 1,000 people), 2011, http://data.worldbank.org/indicator/SH.MED.BEDS.ZS; 2 Kaiser Family Foundation, Physicians (per 10,000 population), 2012, http://kff.org/global-indicator/physicians/;
3 Towers Watson, “Healthcare Benefits in India,” April 2010;
4 Joint Commission International, JCI-Accredited Organizations, 2014, http://www.jointcommissioninternational.org/about-jci/jci-accredited-organizations/?c=IN;
5 Vijay Govindarajan and Ravi Ramamurti, Harvard Business Review, “India’s Secret to Low-Cost Health Care,” October 15, 2013
By Sarah Thomas
Research Director, Deloitte Center for Health Solutions, Deloitte Services LP
Implementation & Adoption
Survey: At least half of ACOs identify as physician-led
From October 2012 to May 2013, researchers at the Dartmouth Institute for Health Policy and Clinical Practice and University of California, Berkeley, fielded the National Survey of Accountable Care Organizations (ACO), the first survey of public and private ACOs. After receiving 173 responses from ACO executives, including CEOs, executive directors and chief medical officers, researchers found that more than 50 percent of the respondents identified themselves as physician-led organizations. An additional 33 percent responded that they were led by hospitals and physicians, and 3 percent responded that they were led solely by hospitals. Additional findings include:
- 40 percent of the ACOs that responded reported that physicians owned the equipment and employed the staff.
- Physician-led ACOs had fewer patients under contract than other ACO organizations, were more likely to have a Medicare contract and less likely to be participating in the Pioneer ACO program. (The Pioneer program is primarily designed for larger organizations that opt to take on more significant financial risk.)
- Physician-led ACOs were more capable in the areas of outpatient care management and health information technology (IT), but lagged behind other types of ACOs when it came to their capacity to manage patient care across settings (e.g., transitions, readmissions).
- Physician-led ACOs were more likely to predict rapid expansion of ACO contracts over the next five years, as 54 percent believed that at least half of U.S. patients will be under an ACO contract by that time; 33 percent of other ACO leaders anticipate this to happen.
The researchers argue that active leadership by physicians in ACO efforts will be critical to the success of these new models of care and payment. According to the authors, research has shown that overcoming resistance to change among physicians, patients and other stakeholders can be supported through physician leadership and governance of ACOs. The authors also acknowledge that ACOs with other leadership types (e.g., hospital-led) might be better able to coordinate across the care continuum due to relationships with hospitals and other settings.
Related: Deloitte’s 2013 Survey of U.S. Physicians found that physician respondents believe ACOs could successfully implement performance reporting and benchmarking (37 percent) and better identify and manage high-risk patients (28 percent). When asked what would make them consider working in an ACO setting, physicians ranked the opportunity to work in an environment based on high-quality, evidence-based care standards the highest factor (28 percent). Finally, physicians working in ACOs were more likely to believe that capitation will replace fee-for-service (FFS) payments in the next one-to-three years over those not working in ACO settings.
Analysis: This study could provide a strong foundation for future evaluation of ACOs and other population health enterprises. However, the researchers allowed respondents to self-report their type of leadership, and this could confound the overall conclusions. The respondents’ definition of physician leadership may be driven to some degree by the requirements of board membership by the Centers for Medicare & Medicaid Services (CMS) or other payers, and may not reflect actual decisions made by the ACO. In the future, it could be helpful to know how organizations make decisions and the degree to which they demonstrate active leadership by physicians. What this research does seem to reinforce is the need to focus on physician leadership models and behavior change—these could be key indicators of success in this emerging model of patient care. It also could be a call for the industry to begin looking beyond the organizational and governance structure of these models and move toward a focus on operating models, their associated decision rights and distributed physician leadership. These factors are likely to be crucial in order to support and sustain the change in behavior among frontline health care workers. The researchers also acknowledge that some new capabilities may be more difficult for physician-led ACOs—standardized processes, team-based care and resistance to change are barriers faced by these organizations.
(Source: Colla, Carrie H., Lewis, Valerie A., Shortell, Stephen M., and Fisher, Elliott S. Health Affairs, “First National Survey of ACOs Finds that Physicians are Playing Strong Leadership and Ownership Roles,” June, 2014)
CBO, JCT: 2 million fewer expected to pay mandate penalty than originally projected
Last week, the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) released updated analysis on the expected projection of individuals who will pay the mandate penalty under the Affordable Care Act (ACA). According to the updated analysis, approximately 4 million individuals will have to pay a penalty for being uninsured in 2016. This is about 2 million fewer than the previous projection. CBO and JCT attribute their adjustment to regulations that were released by the U.S. Department of Health and Human Services (HHS) and Department of the Treasury and to adjustments made in the economic outlook. In 2016, these 4 million individuals will pay approximately $4 billion in penalty fees to the government for remaining uninsured. This is expected to increase to $5 billion after that year and remain constant over the 2017 to 2024 period.
CMS: 89 percent of claims accepted during ICD-10 testing
Last week, CMS announced results of the ICD-10 testing week the agency conducted in March. Approximately 2,600 (about 5 percent of all submitters) providers, suppliers, billing companies and clearinghouses participated. During test week, clearinghouses, which submit claims on behalf of providers, represented the largest group of testers, submitting 50 percent of claims. Results from the testing (127,000 test claims were submitted nationally):
- Some regions reported acceptance rates as high as 99 percent, but the average acceptance for CMS was 89 percent.
- Normal acceptance rates for Medicare FFS averaged 95 to 98 percent.
Testers submitted correct claims, but also submitted claims that contained errors to see if they would be rejected. To improve the system and make it more robust, CMS announced that further testing will be conducted in 2015 before the required move to use of ICD-10 codes in October 2015. HHS also expects to release an interim final rule “in the near future” to provide guidance on the updated timeline for ICD-10 implementation.
Analysis: Though this first round of testing was helpful, more frequent testing could benefit provider organizations. If more testing were granted by CMS for this year and into next year, providers could have additional time to resolve issues and test the entire payment cycle. Testing the entire cycle would allow providers to evaluate potential claims edits, denials, and more, compared to an acknowledgement of receipts. Some organizations created test claims for this exercise because they were not ready to submit claims coded from actual medical records (i.e., natively coded claims). Therefore, the ability for policymakers and providers to generalize the results of this first test and truly see how claims will be processed and paid may be somewhat limited. From the payers’ perspective, companies have been interested in understanding the scope, volume and results of the testing CMS is conducting with providers so they can use this information to gauge industry readiness. Many payers also want to see CMS add an additional testing cycle—one that will support full claims processing throughout the payment cycle. This initial test was more of a “handshake test” between CMS and providers; it did not look at claims payment and diagnostic related groups. In the testing many insurers are performing with providers, companies are seeing a fair number of variances as a result of provider coding issues. These coding issues could be related to a learning curve on documentation and training, among others.
Study: Variation in silver plans leads to variation in cost-sharing
Avalere Health analyzed the benefit design of plans offered through the health insurance exchanges (HIX) in 34 states to find that cost-sharing structures across all benefits vary substantially. The study looked at differences between cost-sharing reduction (CSR) plans and the standard silver plan. In CSRs, plans must limit maximum out-of-pocket limits, but also reach a minimum required actuarial value (AV). The AV can differ between plans and is the percentage of overall health care costs that an issuer pays for the average enrollee. The silver level plans are required to have an AV of 70 percent; issuers offering CSR plans must offer three plans that have an AV of 73 percent, 87 percent and 94 percent. In order to meet the AV requirements for CSR plans, issuers use a variety of cost-sharing methods. When Avalere Health looked at the plans, they found differences, notably between cost-sharing, deductibles and coinsurance for drugs:
The ACA provides financial assistance to individuals who enroll in HIX plans through advanced premium tax credits and CSR plans. CSR plans are available to individuals and families that earn between 100 and 250 percent of the federal poverty level. According to the authors, low-income individuals who enroll in the lowest AV CSR plans may face barriers in accessing brand-name drugs or certain services that have higher cost-sharing, potentially increasing their out-of-pocket cost for care.
(Source: Avalere Health, “Analysis of Benefit Design in Silver Plan Variations,” June, 2014)
On the Hill & In the Courts
CMS releases another set of payment data and information on provider utilization
Last week, CMS released Medicare hospital data on the 100 most common inpatient services, 30 common outpatient services and procedures and services performed on Medicare beneficiaries. Using CMS’s National Claims History Standard Analytic Files, the agency compiled more than 9 million lines of data. Included in the release were interactive dashboards that highlight geographic variation in per capita spending across the country. Highlights:
- Average spending per beneficiary was $8,973 nationally in 2012, but three states (Texas, Louisiana and Florida) have per capita cost averages of more than $10,319.
- Chronic disease rates were highest in New Jersey and Florida (18 percent of residents had six or more chronic diseases).
- Average charges for some procedures increased over the previous year: chest pain (10 percent), digestive disorders (8.5 percent) and back pain (9 percent).
- Southern, Midwest and mid-Atlantic states are spending more on inpatient and post-acute care than are Northern and Western states.
The data have been standardized to account for geographic differences in how much Medicare pays for services. But, CMS did not adjust the data for the health status differences between beneficiaries. When these data were released last year, the Federation of American Hospitals argued that the data neither provide price transparency nor out-of-pocket cost sharing liability to help consumers. However, some health care experts argue that these data could add to the conversation around health care costs in the U.S.
Related: The January 28, 2014 Health Care Current explored the topic of CMS’s most recent move toward transparency in allowing physician reimbursement data to be released on a case-by-case basis. Read more here.
Medicare to cover Hepatitis C screening
Last week, CMS issued a national coverage determination (NCD) updating its regulation around screening for Hepatitis C in the Medicare beneficiary population. The U.S. Preventive Services Task Force (USPSTF) gives a B grade to Hepatitis C screening, and CMS concluded that screening is “reasonable and necessary” for certain populations at risk for the disease to receive screening. According to the NCD, Medicare will cover a screening test for high-risk individuals who have a current or past history of injectable drug use, who have received a blood transfusion prior to 1992 or who were born between 1945 and 1965. Health care experts and officials believe that this could drive up the demand for coverage of certain Hepatitis C drugs that are currently on the market and some that are expected to come to market over the next several years. In addition, some experts remain concerned that though Medicare will now cover screening, access to treatment will not as easily follow and beneficiaries could see gaps in coverage once diagnosed.
Background: Hepatitis C, one of the major causes of chronic liver disease, is an infection of the liver that leads to inflammation and can go undiagnosed for decades. The Baby Boomer population is 30 percent of the U.S. population and accounts for two-thirds of Hepatitis C cases in the U.S.
House E&C Committee sends letter to ONC requesting clarification on role
Last Tuesday, leaders from the House Energy and Commerce (E&C) Committee sent a letter to Dr. Karen DeSalvo, National Coordinator for Health Information Technology at the Office of the National Coordinator for Health Information Technology (ONC) to request clarification on their recent risk-based regulatory framework report. The report was released in April 2014 (see April 8, 2014 Health Care Current), and was compiled jointly by the U.S. Food and Drug Administration (FDA), Federal Communications Commission (FCC), and HHS. One area of the report mentions that the ONC would create a Health IT Safety Center to regulate software and other health IT projects. It also outlined a new user fee to support certification and standardization activities in the ONC; vendors and developers would be responsible for paying this fee. The E&C leadership requested more clarification on this and several other areas of interest, including:
- Whether the ONC believes it has the statutory authority to regulate health IT and the use of electronic health records (EHR) after the authorization for the Medicare and Medicaid Incentive programs expire.
- What authority the ONC has to coordinate efforts around regulatory activities with the FCC and FDA.
- The scope of ONC’s plans to play a role in future strategies around health IT safety and EHR certification requirements.
The ONC was established by the 2009 Health Information Technology for Economic and Clinical Health Act (HITECH) Act. Earlier this month, the agency announced that it was restructuring its leadership and organization, including creating an Office of Standards and Technology. The HITECH Act’s support of health IT infrastructure and program investments are expiring, and the ONC is restructuring to account for this change.
Around the Country
Burwell confirmed as new HHS Secretary
Last Thursday, the Senate voted (78-17) to confirm Sylvia Matthews Burwell as the new Secretary of HHS, succeeding Kathleen Sebelius who resigned in early April. Burwell comes from the Office of Management and Budget after serving as Director of that office since April 2013. The vote came after Senate lawmakers held hearings during May to debate over the decision of whether to confirm her for the cabinet seat. At the Senate Health Education Labor and Pensions (HELP) Committee hearing, Burwell was questioned about the technical issues that face the federal HIX, the state of Medicaid expansion and other areas of concern for lawmakers. Later last month, at the Senate Finance committee, Burwell indicated that she would try to further the recent efforts of lawmakers to reach an agreement over a permanent replacement of the sustainable growth rate for Medicare physician pay. In an 85-page response to HELP committee members, Burwell answered questions about a range of subjects, including the FDA electronic labeling rule, the ability for Medicare to negotiate drug pricing, the federally-facilitated and state-based exchanges, drivers of health care costs, Medicare and Medicaid challenges, workforce issues at CMS, HHS and the Center for Consumer Information and Insurance Oversight and more.
Study: Expansion states saw an increase in Medicaid hospital charge volumes
According to a Colorado Hospital Association (CHA) study published last week, states that expanded Medicaid under the ACA saw a 29 percent growth in their volume of hospital Medicaid charges during the first quarter of 2014 compared to the first quarter of 2013. Non-expansion states, 15 of them included in the study, showed no growth in Medicaid charges over the same time period. Nationally, Medicare volume charges showed little variation during the same timeframe, indicating that changes that caused the variation only affected the Medicaid program. The study analyzed financial and volume data for 465 hospitals in DATABANK, a CHA project. The study specifically found the following:
- Self-pay volumes: Hospitals in expansion states had a 25 percent drop in self-pay charges, from 4.7 to 3.1 percent of total charges. Non-expansion states had a slight increase from 4.8 to 5.0 percent.
- Charity care volumes: Hospitals in expansion states had a 30 percent drop in average charity care, from $2.8 to $1.9 million in charges. Non-expansion states had an increase from $3.8 to $4.2 million.
The researchers attribute the decline in charity care and increase in Medicaid proportion of total charges across expansion states to growth in the number of Medicaid beneficiaries.
Related: A recent 50-state survey by CQ Roll Call found that an estimated 2.9 million applications are still pending for individuals who attempted to enroll in Medicaid under the ACA. If the applications are processed and the individuals are determined to be eligible for Medicaid, the number of uninsured Americans will further decline.
(Source: Colorado Hospital Association, Center for Health Information and Data Analytics, “Impact of Medicaid Expansion on Hospital Volumes,” June 2014)
New York to spend $55 million to connect 10 regional health systems into a statewide HIE
The New York state legislature voted recently to provide $55 million to help connect 10 regional health systems into one statewide health information exchange (HIE) database by next year. Known as the State Health Information Network of New York (SHIN-NY), the clinical patient HIE data network was launched in 2007 and is coordinated by the New York eHealth Collaborative (NYeC) with the New York Department of Health. Initial studies published early last year compared three regional health information organizations in New York to find that patients who are enrolled in the SHIN-NY program were:
- 55 percent less likely to be readmitted to a hospital within 30 days after being discharged than those not participating in the program.
- 30 percent less likely to be admitted to the emergency room than those not participating in the program.
- 27 percent less likely to have repeated radiological scans than those not participating in the program.
According to NYeC, about 71 percent of all New York hospitals and 20 percent of doctors are now connected to the database. SHIN-NY is operated as a public utility, and providers must join one of 11 Regional Health Information Exchange Organizations before connecting to the SHIN-NY.
Kaiser Permanente receives $7 million grant to enhance patient-centered database
Kaiser Permanente, Group Health Cooperative, HealthPartners and Denver Health are making investments to develop a “learning health system” by using patient-centered outcomes research. Researchers will create cohorts of patients to study, including individuals with colorectal cancer or a rare congenital heart disease diagnosis and adults who are overweight or obese. The project will focus on:
- Enhancing data standards
- Incorporating patient-reported data systematically
- Implementing a multisite data governance process
- Combining the PCORnet PopMedNet platform across their partner research centers
Kaiser Permanente received a $7 million grant from the Patient-Centered Outcomes Research Institute (PCORI) to work on the Kaiser Permanente & Strategic Partners Patient Outcomes Research to Advance Learning (PORTAL). This award follows PCORI’s December announcement that it would allocate $93.5 million to projects that make up PCORnet to make research more patient centered. PCORnet will focus on comparativeness effectiveness research. Eleven clinical data networks and 18 patient research networks received funding to continue to standardize patient-centered outcomes databases for research and enhancing data-sharing capabilities.
ONC announces winners of the Code-a-Palooza and Digital Privacy Notice Challenge
Last week, the ONC announced the winners of two recent challenges:
- Code-a-Palooza: The first prize place went to LyfeChannel for their Smart Health Hero electronic tool. The tool is designed to navigate Medicare claims data to help consumers make health care decisions. A total of fifty-seven proposals were submitted to Code-a-Palooza to make new tools to assist consumers with navigating the recently released Medicare Provider Payment data.
- Digital Privacy Notice Challenge: The ONC, in conjunction with the Office of Civil Rights, awarded the first prize of this challenge to the PatientPrivilege electronic tool. The PatientPrivilege tool assists consumers with streamlining notices of privacy practices from their health care providers and plans into their personal health records or portals.
The announcement outlined the next steps in the national campaign to spread the use of Blue Button, a tool that helps to make medical records more accessible for patients. Twenty-three new federal and private partners have signed on with ONC to promote consumer awareness of electronic access to health information for consumers.