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Health Care Current: June 21, 2016

Managing the costs of diabetes care

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.

Managing the costs of diabetes care

It is remarkable how common diabetes has become in the US, growing in prevalence from 4 percent of the population in 1980 to more than 9 percent in 2014.1 The ramifications of poor control of diabetes are also clear to many – both inside and outside of the health care system. When working on Medicare issues, I became aware of the terrible statistics around morbidity and mortality from end-stage renal disease, which usually starts with diabetes. Other awful consequences of diabetes can include loss of vision and circulation, leading sometimes to amputations. I have several colleagues at work who have type 2 diabetes. For one of them, it has limited his career choices – anything with an unpredictable schedule is out of the picture.

Diabetes is not only costly in terms of its potential effects on individuals’ health, but it is also expensive to care for. As we describe in a recent report from the Deloitte Center for Health Solutions, Turning the tide on diabetes management, the annual cost of diabetes – $245 billion – is one of the largest and fastest-growing economic burdens in the US.2

Well-managed diabetes is costly, but poorly managed diabetes and its complications is much costlier:

Many in the health care system recognize that some of the greatest opportunities for lowering the cost of care and enhancing outcomes are centered around The Chronic Care Model.3 Thus type 2 diabetes – one of the more prevalent and costly chronic conditions – is a common target for clinical and care management strategies. It also happens to be a condition for which there are a good number of quality measures, so organizations with strong clinical performance in managing diabetes will likely benefit from higher payments tied to quality.

In the not too distant future, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) may also speed the transition from fee-for-service toward new risk-bearing, coordinated care models. MACRA’s new payment systems – the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs) – will provide strong incentives to provide higher quality care for diabetes by paying a bonus to clinicians with better results and to encourage innovation in care management techniques that work to keep diabetes under control.

Because diabetes is a complicated and costly disease, many organizations are piloting strategies to better understand how to improve care for patients with the disease. Deloitte researchers interviewed several leading organizations in diabetes prevention and care to identify what strategies they are undertaking.

What are these organizations trying and learning?

Many health care organizations and payers are providing incentives to physicians and other providers to invest in prevention and care management through value-based payment models. Many are also exploring strategies to deal with the impact of high deductibles for some patients. Many interviewees also said having an integrated or capitated system avoids the fragmented care that fee-for-service encourages.

Our interviews with experts from health plans and health systems that have high quality scores for diabetes care or are recognized for being diabetes centers of excellence found that experimentation falls into several categories, among them:

Clinical innovation: Many organizations are experimenting with clinical care model innovations and incorporating technology into their care management strategies. Shifting care from specialists (endocrinologists) to primary care or community health models is a common strategy. Some health systems are moving 80-90 percent of diabetes patients to this model. For the respondents, this strategy is driven both by a shortage of endocrinologists and a recognition that since type 2 diabetes is a condition heavily influenced by lifestyle and behavior, it makes sense for primary care and community health providers to play a major role in managing the disease.

Other areas for innovation could include screening and management of depression, an important factor in effective care management and use of technology for disease management. Deloitte’s 2015 Survey of US Health Care Consumers showed that 74 percent of consumers with major chronic conditions are very interested or somewhat interested in monitoring technologies for health issues. Interviewees said that many of their patients and members like to organize and visualize their health data and many patients with diabetes like being able to track their numbers, manage their risk factors, and use reminders.

Patient engagement: Some organizations are partnering with patients and using technology to help patients make lasting changes to their diet, activity level/exercise, and disease management. One example of a patient engagement strategy designed to increase healthy behaviors or medication adherence is motivational interviewing. This involves practitioners finding out from patients their health goals, reviewing trends in A1C levels and other biometric data, and linking to decision aids and other tools to elicit and later remind patients of their goals.

Financial incentive alignment: Value-based care payment can offer health plans and providers strong incentives to invest in strategies like these – strategies that work to reduce spending for caring for this condition and improve outcomes.

As a society, we also should tackle the underlying causes driving this condition, which often results from poor lifestyle choices. That may require a partnership among many stakeholders – both within and outside of the health care market.

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1 Data from Centers for Disease Control and Prevention, National Center for Health Statistics, Division of Health Interview Statistics, data from the National Health Interview Survey. Statistical analysis by the Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Division of Diabetes Translation.
2 American Diabetes Association. “Economic Costs of Diabetes in the US in 2012”. Diabetes Care April 2013 vol. 36 no. 4 1033-1046.

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My Take

By Sarah Thomas, Managing Director, Research, Deloitte Center for Health Solutions, Deloitte Services LP


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MedPAC publishes its June 2016 Report to Congress

Last week, the Medicare Payment Advisory Commission (MedPAC) released its June 2016 Report to Congress, an annual report on pressing issues in Medicare payment, care delivery, and access. This year, MedPAC focused on Part B and D drug spending, MACRA, post-acute care payments, telehealth services, and more. MedPAC includes recommendations to Congress on many of these issues.

MACRA: MedPAC says that, as the US Centers for Medicare and Medicaid Services (CMS) implements MIPS and APMs, it should look to existing performance incentive programs for lessons. It also says that the quality measures used in both systems should emphasize population-based outcomes. MedPAC emphasizes that CMS should aim to coordinate MIPS and APM development to avoid unintended consequences for Medicare, beneficiaries, and taxpayers.

MedPAC also sent comments on the MACRA proposed rule (see the May 3, 2016 Health Care Current) to CMS Acting Administrator, Andy Slavitt. MedPAC says that clinicians should only receive incentive payments under MACRA if they successfully control costs, improve quality, or both. MedPAC says that, while this principle departs from the definitions and parameters that MACRA laid out, it is concerned that the incentives in MACRA will not bring “real change” to the health care system unless payments to clinicians are tied to their performance – not just to whether or not they participate.

Medicare payments for Part B and D drugs: Drug spending has been a major focus of many stakeholders, as Medicare spending on drugs and pharmacy services reached 19 percent of the program’s expenses in 2013. MedPAC says that one way to control drug spending is to modify how Part B pays for drugs and recommends that CMS should reduce dispensing and supplying fees in Part B to match other payers’ rates.

MedPAC also discusses ways to change Part D to decrease spending and protect beneficiaries from higher out-of-pocket costs. MedPAC says that one way to do this is to shift more financial risk onto health plans (e.g., cutting reinsurance protection from 80 percent to 20 percent when plans enroll beneficiaries with catastrophic spending and eliminating cost-sharing above the out-of-pocket threshold).

Post-acute care (PAC): The Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 requires MedPAC to develop a prospective payment system (PPS) spanning the four PAC settings–skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and care in the patient’s residence by home health agencies. The report describes a prototype PPS that would move PAC toward a more unified system that makes payments based on patient acuity, rather than the setting in which they receive care.

Related: In 2013, nearly half of all Medicare beneficiaries who stayed in an acute care hospital were discharged into a PAC setting. For years, acute care hospitals have had few financial incentives to coordinate care across PAC settings, often leading to higher costs and readmissions to acute care hospitals. But, Deloitte’s recent health policy brief, Medicare changes in post-acute payment, discusses three policy levers that are joining forces to change the way that Medicare pays for PAC services:

  • The IMPACT Act’s requirement to develop a unified payment system for PAC
  • Hospitals’ increasing focus on avoiding penalties under CMS’ Hospital Readmissions Reduction Program (HRRP)
  • The Bundled Payments for Care Improvement Initiative and Comprehensive Care for Joint Replacement Program increasing the use of bundled payments to health care providers

While the unified payment system for PAC services in Medicare may be years down the road, the changes occurring now emphasize the urgency that organizations should consider acting with.

(Source: MedPAC, “Report to the Congress: Medicare and the Health Care Delivery System,” June 2016)

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Implementation & Adoption

Survey: Some hospitals are moving toward value-based care more slowly than expected

Few hospitals and health systems are meeting CMS’s goals for value-based payments, according to a recent Health Catalyst survey. In early 2015, CMS set targets to link Medicare fee-for-service (FFS) payments to quality and move stakeholders toward APMs. CMS set a target of 85 percent of FFS payments linked to quality by 2016 and 90 percent by 2018. CMS also set the target of 30 percent of Medicare payments be part of APMs by the end of 2016 and 50 percent by the end of 2018.

Based on responses from 78 health care executives representing 190 US hospitals and health systems, researchers found that 3 percent of the respondents’ organizations meet CMS targets today; 23 percent expect to meet them within the next three years.

Despite the slower-than-hoped-for adoption, most respondents (99 percent) say they plan to engage in value-based care in some capacity over the next three years. Respondents reported that analytics and cultural alignment on quality (52 and 24 percent respectively) are the most important contributing factors to help their organizations move toward risk-based contracting.

(Source: Health Catalyst, “Hospitals and Value-Based Care,” June 2016)

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CMS to give $10 million to help clinicians adopt APMs under MACRA

Earlier this month, CMS announced a second round of funding to help provider organizations prepare for MACRA as part of the Transforming Clinical Practice Initiative (TCPI). Over the next three years, CMS will give up to $10 million to health care organizations participating as Support and Alignment Networks under the TCPI.

The Support and Alignment Networks under TCPI provide workforce development through professional associations and public-private partnerships and through medical education and certifications. The program focuses on small, rural practices in traditionally underserved communities. Ten national and regional health care organizations are Support and Alignment Networks, and CMS expects to announce the new awardees later in 2016.

The additional funding, referred to as Support and Alignment Networks 2.0, focuses on MACRA’s Quality Payment Program and the adoption of Advanced APMs. The new awardees will help to identify, enroll, and provide technical assistance to advanced practices working toward adopting APMs. Dr. Patrick Conway, CMS’ Acting Principal Deputy Administrator and Chief Medical Officer, says that these networks are a key support system for practices preparing for the payment changes under MACRA and will help clinicians transform the way they deliver care.

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ONC publishes two reports offering guidance on health IT safety

The US Department of Health and Human Services (HHS) Office of National Coordinator for Health Information Technology (ONC) released two reports on use of health information technology (IT). Health IT can improve the quality and safety of health care. However, health care organizations still need to address potential safety concerns related to usability, interoperability, ambulatory care, alerts, patient identification, communication, and trigger tools.

The first report – Report of the Evidence on Health IT Safety and Interventions – highlights how the correct use of electronic prescribing and/or electronic health records (EHRs) can reduce diagnostic and medication errors in ambulatory care settings. Unintended consequences from e-prescribing or EHRs can result from a wrong algorithm or even a copy/paste error.

To assist health care organizations interested in addressing these challenges, the second report – Goals and Priorities for Health Care Organizations to Improve Safety Using Health IT – explores how organizations can prioritize health IT adoption, implementation, and practice. For example, they should test applications and interfaces individually before and once they are installed. EHRs should display time-sensitive information more prominently than less urgent information and support acknowledgement and cancellation of medication orders through a tracked system.

The reports are part of a larger effort to help organizations meet health IT safety priorities as defined by the Institute of Medicine and HHS. The President’s Fiscal Year 2017 budget requests funding for tools to support the development of health IT, including interoperability, greater transparency, and promoting best practices.

(Source: Mark L. Graber, Robert Bailey, Doug Johnston, “Goals and Priorities for Health
Care Organizations to Improve Safety Using Health IT,” May 2016; Mark L. Graber, Robert Bailey, Doug Johnston, “Report of the Evidence on Health IT Safety and Interventions,” May 2016)

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CMS updates requirements for hospitals to participate in Medicare and Medicaid

Last week, CMS issued a proposed rule to modernize standards of practice and care quality by updating the criteria hospitals must meet to participate in the Medicare and Medicaid programs. These criteria are known as the Conditions of Participation (CoPs).

The proposed rule would target hospital readmission rates, overuse of antibiotics, and workforce shortages, while raising standards for Quality Assessment and Performance Improvement (QAPI) programs. These standards would apply to an estimated 6,228 hospitals, including critical access hospitals (CAHs).

The proposed rule comes after stakeholders and federal partners expressed concern that the CoPs are outdated, prompting CMS to conduct an internal review. The agency says that these proposed revisions would help modernize clinical practice and safety standards and is actively seeking industry and provider comment on the proposed updates. CMS estimates the new requirements could save the health care system $284 million annually, while improving both overall quality and patient access to care.

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On the Hill & In the Courts

Panel: New incentive programs, clinical pathways, and testing guidelines are needed to combat antibiotic resistance

Antibiotic resistance is a public health issue that may take up to a decade to fix, according to a panel hosted by the Senate Committee for Energy and Commerce. The panelists, representing the US Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), HHS, and the US Food and Drug Administration (FDA) testified before the Subcommittee on Oversight and Investigation last week. Witness testimony discussed prohibitive costs, lack of incentives, and inadequate development pathways as barriers to innovation of new antibiotic therapies.

According to a CDC report published last month, roughly 47 million, or one third of all antibiotic prescriptions in the year 2011, were unnecessary. Over-prescribing of antibiotics directly increases the strains of multi-antibiotic resistant bacteria, often called “superbugs.” Meanwhile, innovation in developing new antibiotics to combat them has stalled, the report says.

Developing new antibiotics can be expensive and time consuming, according to testimony from Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research. Funding needs can reach up to $2 billion, and research and development (R&D) can take up to a decade. For a newly developed antibiotic to be effective, it must be prescribed as infrequently as possible. This reduces return on investment, which may lead manufacturers to discontinue their antibiotic R&D programs in favor of other types of products. The panelists also said performing clinical trials for new antibiotics can be extremely difficult, as potential patients must be identified quickly and may require immediate treatment.

Witness testimony emphasized three key areas where lawmakers can encourage antibiotic innovation and help slow the trend of antibiotic resistance:

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State initiatives work on social determinants of health

A recent brief published by the National Academy for State Health Policy (NASHP) evaluated various levers and strategies that four states have used to improve care, reduce costs, and improve health through Accountable Communities for Health (ACHs). ACH is a CMS-supported model that works to address the social determinants of health for Medicaid beneficiaries by aligning state health care delivery system transformation with community-based social services. While ACHs are in the early stages of planning and development, California, Minnesota, Vermont, and Washington have discovered lessons for other states:

  • Communities need flexibility on governance and financing and to set their own priorities
  • States should align ACHs with existing policies, provide seed funding, link groups to delivery system infrastructure, provide technical assistance, and disseminate best practices
  • Funding sources can include wellness funds, health plans, federal, state, and local grants, Medicaid demonstrations, social impact bonds, and hospital community benefit programs

By providing seed funding, technical assistance, and linking ACHs to medical homes and community health teams, states can support the mission of the ACH model.

(Source: Felicia Heider, Jill Rosenthal, and Taylor Kniffin, “State Levers to Advance Accountable Communities for Health,” National Academy for State Health Policy, May 2016)

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Around the Country

CMS to provide $22 million to help states enforce ACA consumer protections

Last week, CMS announced that it would provide state insurance regulators with $22 million to help enforce consumer protection provisions of the Affordable Care Act (ACA). The ACA requires health plans to provide a defined set of essential health benefits which include preventive, mental health, and substance use disorder care and services.

State insurance departments typically oversee health insurance plans. Many states have rate review programs to ensure that premium changes, especially increases, are reasonable and justified, enforce solvency rules, and maintain consumer protections. HHS wants to improve states’ review of proposed premium increases.

The newly available funds are a part of a $250 million funding program for state rate review grants provided under the ACA.

Related: This follows HHS’s announcement of efforts to broaden the risk pool of exchange plans, work with state insurance regulators, and to increase outreach prior to the open-enrollment period, particularly to young adults. Earlier this month, HHS proposed insurance regulations to reduce use of short-term plans (see the June 14, 2016 Health Care Current).

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Crowdsourcing advancements in epilepsy treatment

The Mayo Clinic hosted an online competition where more than 500 teams of data scientists from all over the world analyzed hundreds of hours of brain activity in two people and five dogs before and during epileptic seizures. The results of the 2014 competition, published recently in Brain, showed that the crowd created a reliable prediction of epileptic seizures.

More than 50 million patients worldwide have epilepsy, a neurological disorder that causes unpredictable seizures. Because it is difficult to predict when a seizure may occur and they may lose consciousness suddenly, people with epilepsy may have severe limitations on driving, swimming, holding a child, and other common activities. Predicting and even preventing seizures could greatly enhance the quality of life for people with epilepsy; they could take medications only when needed and resume activities they may otherwise avoid.

Until now, researchers have not had access to large amounts of data necessary to create a predictive algorithm. Brain activity is typically measured through implanted electroencephalography (EEG). EEG recordings lasting seven days or fewer are taken before surgery when a patient’s medications are reduce to prompt seizures. However, this data has limited information about brain function under changing conditions. Researchers working separately cannot easily share the data due to cost, privacy, and intellectual property concerns.

The Mayo Clinic’s competition, however, enlisted several data scientists and encouraged them to share data and work together to develop a reliable algorithm while competing for a $15,000 prize. Many participants had little or no experience with EEG or epilepsy.

The teams tested algorithms on nearly 350 seizures over more than 1,500 days, and the winners agreed to share their computer code for free. A medical device company called Neuro Vista Corporation made the data from dogs available to Mayo and other researchers. During the contest, over half of the crowdsourced algorithms outperformed random predictions. The best performing algorithms accurately predicted more than 70 percent of seizures when tested on unseen portions of the canine data. Mayo Clinic and Medtronic, Inc. will work together to test the safety and efficacy of seizure forecasting first in canines, followed by human trials.

Analysis: Crowdsourcing can allow organizations to dynamically source specialized skills from virtually anyone, anywhere. Companies can use this knowledge to help with simple tasks, such as data entry and coding, and more specialized activities like advanced analytics and product development.

The Mayo Clinic’s crowdsourcing experiment with epilepsy may help other research groups compare their algorithms to the ones generated from this competition. Long-term data from medical devices have the potential to help researchers better understand the disease process. Combining these data with the crowdsourcing process and use of open data may allow experts from many fields to come together to solve problems.

(Source: Benjamin H. Brinkmann et al, “Crowdsourcing reproducible seizure forecasting in human and canine epilepsy,” May 27, 2016, Brain)

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Breaking Boundaries

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