Little fires everywhere: Can health care organizations prepare for future risk without getting burned?

Health Care Current | June 11, 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

Little fires everywhere: Can health care organizations prepare for future risk without getting burned?

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

Risk leaders—whether working at a health plan or a multi-hospital health system—often see themselves as part of a fire brigade that must run from department to department stomping out flames. While these leaders are typically able to stay ahead of their day-to-day crises, it can leave them with little time to prepare for the bigger industry-wide emergencies that are building on the horizon.

In my meetings with C-suite executives, it became clear that risks and opportunities are at the top of their minds, but these priorities tend to be short-term. Many of these leaders are focused on helping their organizations overcome immediate challenges related to interoperability or ensuring compliance under the Merit-based Incentive Payment System (MIPS) for Medicare. All the while, they might also be working closely with the rest of the C-suite to maintain margins and achieve scale to stay competitive. The ability to overcome these short-term issues could be the difference between surviving or being swallowed up by a competitor. But organizations that successfully navigate the short-term challenges will likely need to pivot quickly to take on more complex and longer-term issues related to risk. Those who wait risk falling behind the early movers.

The Deloitte Center for Health Solutions recently surveyed chief financial officers (CFOs) from health plans and health systems to get a sense of how they are navigating the increasingly complex risk landscape. We also interviewed risk leaders, including chief risk officers and leaders from the risk functions (e.g., compliance, legal, and internal audit).

We asked CFO respondents to first rate the risks they face today on a scale of 1-10, then we asked them to predict where those risks might rank three years from now. In each of the 16 risk categories we identified, health organizations expect each category of risk will be more of a priority three years from now. By 2022, nearly 80 percent of surveyed CFOs anticipate that technology and digital transformation—including artificial intelligence (AI), cognitive computing, and other emerging technologies—will be their biggest risk priority. Consumer engagement is seen as the top risk priority today among 58 percent of respondents, and nearly 70 percent of them expect it to be a top priority in three years. Risk leaders generally are aligned with these priorities and are focused on topics that support consumer engagement, such as privacy and cyber security.

While most risk leaders said they felt prepared to deal with their highest priority risks, many of them noted that their departments are thinly staffed. They also acknowledged that they tend to devote significant time to crisis management—investigating potential HIPAA breaches, patient/member complaints, and patient safety issues. Most surveyed CFOs said they are either only moderately or not prepared in:

  • Consumer engagement (58 percent) 
  • Technology and digital transformation (58 percent) 
  • Transitioning to value-based care (58 percent) 
  • Cyber (65 percent)

Preparing for a new era of risk

Health care organizations have historically relied on prevention and limitations on access to help mitigate risks—particularly when dealing with patient records and personal devices. But this strategy might be ineffective as technologies become more advanced and more prevalent. While emerging technologies can lead to more efficient processes, improve clinical decision-making, and make it easier to engage with consumers, a minority of CFOs said their organizations are using these technologies to improve their responses to risk. Among our survey respondents, just 38 percent said they are using data analytics and other technologies to identify risks. While 30 percent of respondents are using AI or other technologies to identify risks, 45 percent expect to do so in the next three years. However, 25 percent of respondents have no such plans.

Here are three realities health care organizations should consider as they prepare for some of the new risks on the horizon:

  • New sources of data could bring new risks: Health organizations are tapping into many new streams of data to drive improved clinical decision-making, organizational efficiencies, and competitive advantage. However, the lack of standardized practices for collection, storage, and exchange of data can create new risk challenges. For example, aggregating data from medical apps, wearable devices, and social media portals can create new risks around privacy and transparency. Moreover, consumers might not understand these new risks and might give consent in exchange for convenience. Health organizations that have strong data quality and security strategies can gain the trust of patients, regulators, and ecosystem partners.
  • Advanced algorithms could lead to new insights into patients but could also create new biases: AI and intelligent automation hold the promise of more accurate decision-making and better efficiencies. However, the black-box nature of self-learning algorithms can make them difficult to understand and manage. Algorithms can be prone to human biases and faulty assumptions, and risks could be compounded by erroneous training data, unsuitable modelling techniques, and incorrect interpretation of algorithmic outputs. As algorithms become more pervasive and complex, organizations should adopt a risk-aware mindset to help manage the novel risks emerging from cognitive technologies.
  • Advanced data analytics could help improve regulatory compliance: The use of advanced data analytics, robotic process automation, and other emerging technologies could make it possible for health care organizations to analyze a much larger universe of transactions with fewer people. This could help them identify anomalies, regulatory and operational risks, and performance trends. Near real-time feedback could help organizations identify and correct instances of non-compliance and operational errors prior to regulatory audits. As robotic tools learn and understand data, deeper insights and understanding of risks can be identified—and can further inform the refinement of data modelling and algorithms.

CFOs and risk leaders from health plans and health systems face many of the same issues, which are becoming increasingly intertwined as convergence continues and interoperability becomes more of a focus in the industry. Risks are no longer standalone issues…they tend to all be connected to each other. The systems and resources that health care organizations rely on today might not be able to take on new, more complicated risks in the future—even though these opportunities are critical for the enterprise’s success. The leaders who oversee the risk function must continue to tend to the day-to-day fires, but they could get burned if they aren’t also able to prepare for the technology-related risks that might be four or five years down the road.

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In the News

DOJ, HHS recover $2.3B in fraudulent or improper payments, including $47M from SNFs

The federal government recovered $2.3 billion in allegedly fraudulent health care payments during fiscal year 2018, according to a joint report from the US Department of Justice (DOJ) and the US Department of Health and Human Services (HHS). DOJ and HHS operate the Health Care Fraud and Abuse Control (HCFAC) Program, which coordinates law enforcement efforts targeting improper Medicare and Medicaid billing.

Of the $2.3 billion that was recovered, $1.2 billion came from Medicare and $232 million from Medicaid. Of the joint program’s total financial recovery, $47 million came from improper payments to skilled nursing facilities (SNFs). Settlements with several large nursing home systems contributed to the recovery.

The HCFAC report praised HHS’s Office of the General Counsel (OGC) for its involvement in a case against more than 100 nursing homes throughout several states. According to the report, this effort generated federal civil monetary penalty (CMP) funds that will help address funding gaps in some states.

(Source: The Department of Health and Human Services and The Department of Justice, Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2018, May 2019)

Supreme Court rules against HHS for DSH payment cut

In a 7-to-1 decision on June 3, the US Supreme Court struck down a 2012 payment policy from the US Centers for Medicare and Medicaid Services (CMS) that cut Medicare payments to hospitals that serve large shares of low-income individuals. Under the formula set out in the 2012 policy, CMS combined Medicare Advantage (MA) enrollees and traditional Medicare enrollees when calculating disproportionate-share hospital (DSH) payments. According to the high court, HHS set this policy without first conducting a notice-and-comment period, which renders the payment cuts invalid. The American Hospital Association (AHA) expressed support for the court’s decision, which will only affect DSH payment cuts for fiscal year 2012 because payment changes for subsequent years included notice-and-comment opportunities.

Related: During a June 4 House Committee on Energy and Commerce Subcommittee on Health hearing, lawmakers discussed recalculating the formula used to calculate Medicaid DSH payments. Eliot Engel (D-NY) proposed repealing the Medicaid DSH payment cuts, which were mandated by the Affordable Care Act (ACA), while the panel’s Ranking Member Michael Burgess (R-Texas) pushed to change the formula itself—which determines how much each state receives in federal DSH payments. The approximately $12 billion in annual federal payments has been relatively constant since the early 1990s. In October, the government could cut up to $4 billion from Medicaid DSH payments, per the ACA. The rationale for the cuts was that increased Medicaid coverage through state-expansion efforts would reduce uncompensated care for hospitals, but this was not revisited after the Supreme Court decision that made Medicaid expansion optional (see the February 26, 2019 Health Care Current).

More health plans are offering virtual care services, according to AHIP

More health plans are covering virtual care, telehealth, and telemedicine services, according to America’s Health Insurance Plans (AHIP). In a report released last month—which contained survey results from commercial, MA, and Medicaid managed care plans—AHIP found that most commercial plans (94 percent) and MA plans (92 percent) offer virtual care services, while most Medicaid managed care plans (92 percent) are either offering or considering offering those benefits. The report also found:

  • Among commercial health plans, 80 percent of acute (non-emergency) care and 84 percent of behavioral health treatment and services can be provided virtually.
  • MA plans reported that 91 percent of acute care and 91 percent of behavioral health treatment and services can be provided virtually.
  • Among the surveyed Medicaid managed care plans, 100 percent of pediatric care and 92 percent of acute care assessment and diagnostic services can be provided virtually.

(Source: AHIP, Virtual Care Delivers Value, May 2019)


Final VA rule finalizes program for private care for veterans

On June 4, the US Department of Veterans Affairs (VA) finalized a rule outlining eligibility for the expanded Veterans Community Care Program, which Congress enacted last year in the MISSION Act. The VA also issued a final rule giving veterans access to urgent care coverage outside of Veterans Health Administration (VHA) facilities without prior approval. Veterans would be responsible for a copayment.

Under the final Community Care rule, which did not significantly change from the February proposed rule, a veteran must be enrolled in the VHA system and meet at least one of the six following conditions to be eligible for covered care outside of the health system:

  • The veteran needs a health service unavailable in any VHA facility.
  • The veteran lives in a state or territory without a full-service VHA medical facility.
  • The veteran qualifies under the “grandfather” provision regarding distance eligibility for the 2014 Veterans Choice Program.
  • The veteran and referring physician agree it is in the veteran’s best interest to receive outside care, based on specific factors.
  • The VHA cannot provide the service in a manner that complies with certain access standards, such as specific travel time to a facility (30 minutes for primary care or mental health services and 60 minutes for specialty care) or waiting time for an appointment (20 days or more for primary care or mental health services, or 28 days or more for specialty care).
  • The VHA cannot provide the service in a manner that complies with the agency’s quality standards.

The MISSION Act consolidated seven different programs that cover veteran health care outside of the VA—including Veterans Choice—into one (see the June 26, 2018 Health Care Current). The Veterans Community Care program began on June 6, 2019.


Breaking Boundaries

Deepening our understanding of the microbiome could prevent disease

More studies are coming out that deepen our understanding of how the microbiome influences our health. The Integrative Human Microbiome Project published three studies last week that examine the relationship between changes in the microbiome and conditions such as prediabetes, inflammatory bowel disease (IBD), and preterm births.

The human microbiome is the collection of microorganisms (including bacteria and viruses) that reside inside of our bodies. Many of these microbes are essential for maintaining overall health. They produce some essential vitamins, break down food to extract nutrients, teach the immune system to recognize dangerous invaders, and even produce anti-inflammatory compounds that fight off disease-causing microbes. A growing body of research shows that changes in the composition of our microbiomes correlate with numerous disease states. Highlights from the studies include:

  • People who are at risk of developing diabetes tend to have different microbes. People whose cells are resistant to insulin showed different changes in their microbiomes when responding to viruses or other types of infections. These conclusions came after examining the gut microbiomes of 106 people—with and without prediabetes—for four years. The researchers identified specific interactions between cells and microbes among people who are sensitive to insulin and people whose cells are resistant. While previous studies have shown that exercise, healthy eating, and losing weight can reduce the risk of diabetes, this study offers new information about the biology of the disease in its earliest stages.
  • The gut microbiomes among people who have inflammatory bowel disease (IBD) are significantly less stable than the microbiomes that live in the guts of other people. During IBD activity, the researchers observed increases in certain groups of microbes at the expense of others. IBD is an umbrella term for chronic inflammations of the body’s digestive tract. The researchers followed 132 people (with and without IBD). They collected blood samples and samples of their gut microbiomes throughout the year and collected self-reported information about the patients’ diets. Researchers were able to track which microbes were present and how they functioned. These data offer the most comprehensive available view of functional imbalances associated with changes in the microbiome during IBD flares and during remission. This dataset is the first to examine links between diet and the gut microbiome in such a large group of people over time.
  • There are unique microbial signatures early in pregnancy among women who experienced a preterm birth. Specifically, women who delivered their babies earlier had lower levels of Lactobacillus crispatus (a bacterium long associated with health in the female reproductive tract) than women who did not deliver prematurely. Women who gave birth early also had higher levels of several other microbes. The preterm birth-associated signatures were also associated with other inflammatory molecules. This study was based on prior research that suggested a potential link between the vaginal microbiome and the risk of preterm birth. For this study, the team collected samples from more than 1,500 pregnant women throughout their pregnancies. The researchers sequenced the complete microbiomes from the vaginal samples of 45 study participants who gave birth prematurely, and 90 case-matched controls who gave birth to full-term babies. The findings indicate a link between the vaginal microbiome and preterm birth. It might be possible to develop a microbiome test that can be performed early in pregnancy to predict the risk of premature delivery, or even alter the vaginal microbiome to prevent preterm birth.

Francis Collins, director of the National Institutes of Health (NIH), recently published a blog indicating how these landmark studies provide evidence that our microbiomes have important implications for our health—but that we are in the early days of understanding those implications.

(Source: Francis Collins, Fundamental Knowledge of Microbes Shedding New Light on Human Health, NIH Director’s Blog, May 29, 2019)

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