Health Care Current: June 28 2016 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: June 28, 2016
Improving patient outcomes: Translating better evidence into better results
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
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
Improving patient outcomes: Translating better evidence into better results
At many points in US history, regulatory and legislative bodies have emphasized safety in researching, testing, manufacturing, and distributing drugs. In 1901, the importance of safety in the production of drugs became even more apparent when 13 children who were treated with an antitoxin for diphtheria died of tetanus after it was discovered that the horse from which the manufacturer had derived the serum for the antitoxin had tetanus. After that tragic incident, Congress passed the Biologics Control Act (also known as the Virus-Toxin Law), which give the government control over monitoring the production processes for the manufacturing of biological products.1
For years now, safety monitoring has been an important foundation of the process by which biopharma companies get their drugs into market and maintain their license to operate. From laboratory experiments to clinical trials, to the application stage, through long-term safety monitoring, biopharma companies have both a regulatory and ethical responsibility to ensure that the products they are producing are as safe as possible.
And now, with the transformation to value-based care taking hold across the system, biopharma companies are increasingly concerned with how to get their products into market via outcomes-based contracts. Indeed, this was a key takeaway we discovered from in-depth conversations about medical innovation in a value-based care world with 21 leaders from across the health care system. Value-based payment models will shift financial risk from health plans to providers and other stakeholders and change how these stakeholders evaluate innovation.2
While we are still early in the move toward value-based care, in this new framework, medical innovation will likely be measured against an evolving definition of value, based on clinical and economic factors, as well as the ability of products to optimize care delivery. As a result, biopharma leaders are shifting their conversations to focus on value over the traditional marketing-centric messages, concentrating now on evidence to support a product’s efficacy, economic value, “beyond the pill” services, and – most importantly – safety.3 The bottom line in these new conversations: Does your product improve patient outcomes?
It is no longer enough for companies to produce safety information about their products and perform ongoing monitoring for the purpose of maintaining compliance and withstanding regulatory scrutiny. The safety data derived from the entire life cycle can and should be used to help companies make critical decisions and manage competing demands while delivering on their number one priority of improving patient outcomes.
This shift may be difficult to navigate for many. Too often, biopharma companies rely on cobbled together processes and siloed technological capabilities designed to address a specific need or issue. Traditional safety systems deliver on traditional needs – helping monitor and evaluate a product’s safety profile – but they often lack the level of integration required to deliver truly measurable impact of a product.
To ensure that safety data is properly and efficiently utilized throughout the cycle of drug manufacturing, companies should consider developing advanced analytics capabilities that support deeper insights and detect patterns and signals using real-time data. Ongoing monitoring and analysis will allow leading organizations to understand the challenges ahead of them – and shift to meet them.
Many biopharma companies recognize that in order to survive the transition to value in health care, their organizations must constantly adapt and begin to leverage non-traditional safety information (e.g., electronic health record data and social media sites) to enhance patient outcomes. Data should be the foundation of that adaptation and the path forward because with better evidence, biopharma companies can produce better results.
PS – Translating better evidence into better results is Deloitte’s theme for the DIA 2016 annual meeting. Explore more, as Deloitte leaders share insights on key topics facing the discovery, development, and life cycle management of health care products.
Note: We will not be publishing a Health Care Current on Tuesday, July 5, 2016. We will resume publication on Tuesday, July 12.
1 Science and the Regulation of Biological Products, http://www.fda.gov/AboutFDA/WhatWeDo/History/ProductRegulation/100YearsofBiologicsRegulation/ucm070022.htm
2 Deloitte Center for Health Solutions, Delivering medical innovation in a value-based world, 2016, http://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/delivering-medical-innovation.html
3 Terry Hisey and Brett Davis, Pharmaceutical Executive, “Pharma’s Big Push for Value,” May 2016
By Greg Reh, principal and Life Sciences Sector leader, Deloitte & Touche LLP
Study: Health care spending on people with diabetes is increasing faster than spending on people without diabetes
Total per capita health care spending for people with diabetes grew 5.9 percent to $16,021 in 2014, according to a recent report from the Health Care Cost Institute (HCCI). This is higher than the 3.2 percent growth ($4,396 per capita) in spending for people without diabetes during the same time period. Researchers used claims data for the employer-sponsored insurance (ESI) population under the age of 65 for this analysis of spending and utilization between 2012 and 2014.
Spending for people with diabetes has grown faster than spending for people without diabetes in all types of health care services. Researchers analyzed four service categories: acute inpatient care, outpatient care, professional services, and prescriptions. For example, the utilization of services by people with diabetes is between 2.4 times higher for outpatient visits and 7.1 times higher for brand prescriptions than for people without diabetes.
People with diabetes had more than twice the out-of-pocket spending per capita than people without diabetes. In 2014, people with diabetes spent $1,944 per capita compared with $752 per capita by people without diabetes.
Analysis: Diabetes is a complicated, costly, chronic disease. However, many organizations are implementing strategies to better manage diabetes, and some appear to be improving outcomes as a result. Deloitte’s recent report, Turning the tide on diabetes management, looks at what is working for the organizations that have scored well on diabetes quality measures or that have a reputation for innovating in care delivery. It found three common themes among these organizations:
- Clinical innovation: Many organizations are experimenting with clinical care model innovations and incorporating technology into their care management strategies.
- Patient engagement. Many are partnering with patients and using technology to help patients make lasting changes to their diet, activity level/exercise, and disease management.
- Financial incentive alignment. Creating incentives for prevention and care management through value-based payment models can promote efforts to provide more coordinated care. Many organizations also are exploring strategies to deal with the impact of high deductibles for patients with diabetes.
(Source: Health Care Cost Institute, “2014 Diabetes Health Care Cost and Utilization Report,” 2016)
Implementation & Adoption
Report: Drug spending in the exchanges increased more rapidly than in the commercial market in 2015
Express Scripts recently found that although drug utilization and spending for people in exchanges is lower than for people in commercial, employer-based plans, it has grown faster for people in exchanges. Spending on specialty drugs also grew faster for people in the exchanges. The company has data from approximately one-third of exchange enrollees. More than half of the exchange enrollees in the sample joined in 2015 and were not in the exchanges in 2014.
Key highlights of the report include:
(Source: Express Scripts, “Exchange Pulse: Public Health Exchanges Report,” June 2016)
Study: Employers focusing efforts on targeted wellness benefits
The Society for Human Resource Management (SHRM) found that within the last 12 months, most employers (60 percent) kept their benefits packages (including health-related, wellness, and flexible working benefits) the same, while one-third increased benefits and only 7 percent decreased their benefits. This is according to the organization’s recently published 2016 Employee Benefits Survey, which looks at trends in wellness and health-related benefits between 1996 and 2016.
Of the organizations that decreased their benefits, most reduced their health-related benefits, followed by retirement savings and planning benefits. Only 19 percent of the organizations that reduced benefits overall made cuts to wellness benefits. Wellness programs are intended to help employers lower health care costs by reducing the incidence of chronic health conditions among employees. In addition to wellness programs, employers often have other types of wellness benefits. For example, in 2016, 72 percent of organizations surveyed said they provided wellness resources and information to their employees. However, the rate has decreased in recent years; 77 percent of organizations provided wellness resources and information in 2012 and 80 percent in 2015.
Onsite health screening programs (e.g. glucose, cholesterol) and seasonal flu vaccinations, 24-hour nurse lines, health and lifestyle coaching, and premium reductions for tobacco cessation and/or weigh loss programs all have declined in recent years. However, 20 percent of organizations report having a smoking surcharge for employee health coverage, which may explain why fewer were offering a premium discount to employees who do not smoke. Wellness benefits that increased between 2015 and 2016 are standing desks and onsite fitness centers, while smoking cessation programs have remained the same since 1996. The findings show that organizations are not necessarily decreasing wellness benefits overall, but rather becoming more strategic about the wellness benefits they do offer. Programs with low employee participation or those proving to be relatively ineffective may be dropped or replaced with other programs.
Related: A report published by the Deloitte Center for Health Solutions, Employers still bullish on wellness programs, discusses the role that employers play in providing and financing health insurance and the significant stake that they have in maintaining employee productivity. Employers face numerous challenges when developing a wellness strategy: understanding sensitivities in engaging with employees around lifestyle behavior, sifting through studies and examples to identify evidence-based interventions that can keep employees motivated over time, and navigating an evolving regulatory landscape. As interest in wellness programs continues to grow, employers may find that seeking employee input and giving employees several options for participating may increase employee satisfaction, long-term engagement, and overall program success.
(Source: SHRM, “2016 Employee Benefits Survey,” 2016)
House Republicans release health care plan
House Republican leaders would repeal the Affordable Care Act (ACA) and replace it with a mix of new policies and some that are in the ACA. This is according to a white paper describing their proposal, called “A Better Way,” which was released last week by the speaker of the House, Representative Paul Ryan, and members of the Speaker’s Task Force on Health Care Reform.
*In late December 2015, as part of a bill to fund the federal government for 2016, Congress delayed the “Cadillac tax” for two years.
(Source: “A Better Way: Our vision for a confident America,” June 22, 2016; Kaiser Family Foundation, “Summary of the Affordable Care Act,” April 25, 2013)
On the Hill & In the Courts
301 individuals charged for approximately $900 million in false billings
Attorney General Loretta E. Lynch and US Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced last week that the federal government has charged 301 individuals for participating in health care fraud schemes that amount to $900 million in false billings. This is the largest fraud enforcement action in terms of defendants and money in US history.
The federal government worked with the Medicare Fraud Strike Force in 36 federal districts and 23 state Medicaid Fraud Control Units to find the fraudulent schemes. The charges include:
- Conspiracy to commit health care fraud
- Anti-kickback statute violations
- Money laundering
- Aggravated identity theft
The services involved include home health, durable medical equipment, and prescription drugs, among others. To date, the federal government has charged nearly 1,200 individuals that had fraudulently billed more than $3.4 billion through similar actions.
One-third (100) of the individuals were located in the southern district of Florida. They were involved in schemes that amounted to $220 million in false billings. Other areas of the US with large numbers of individuals charged in this round include Texas, California, and Illinois.
FDA draft guidance recommends standards for sharing information from medical devices with patients
Earlier this month, the US Food and Drug Administration (FDA) issued draft guidance for medical device manufacturers about sharing medical data directly with patients using their devices. The FDA says that the Health Insurance Portability and Accountability Act (HIPAA) does not prevent a medical device manufacturer from sharing identifiable health information from an affected patient with that patient.
However, the FDA proposed recommendations related to what and how information is shared. The agency says that information shared with patients should be up-to-date and the manufacturer should include all relevant data. The patient’s information should also be shared in a way that takes into account the characteristics of the patient and should be presented in a format that is interpretable and useful to a non-medical professional.
The FDA recommends that manufacturers include supplemental instructions, materials, or references to help patients understand their medical data and the function of their devices. However, if the supplemental materials meet the definition of labeling, the agency says that the materials will be subject to regulation and restrictions.
SCOTUS upholds standard of patent appeals and review
In a unanimous decision, the US Supreme Court of the United States (SCOTUS) upheld that the US Patent and Trademark Office (PTO) may continue to hear challenges to patents using an appointed board of appeals. It also upheld the standard of review that the appeals board can use.
In 2011, Congress passed the Leahy-Smith America Invents Act, which allows the PTO to use a judicial standard known as inter partes review. Under this system, patent challenges are reviewed by a Patent Trial and Appeal Board at the PTO. Under the inter partes review, patents are more likely to be broadly interpreted. Thus, under the inter partes review, generic drug manufacturers may be more likely to win a case in which brand drug manufacturers challenge them for patent infringement.
Reaction: According to America’s Health Insurance Plans and the Generic Pharmaceutical Association, upholding the standard of inter partes review is critical to consumer protection in prescription drug pricing. Because inter partes review may be initiated by a third party, many say that it may fill a vital need for an efficient patent review process, rather than the financially and administratively burdensome course of pursuing litigation in court.
Alternatively, critics of the decision say that loosening the standards for interpreting patents may have the unintended consequence of stifling innovation in pharmaceutical research and development. Under the new standard, it may be easier for manufacturers of generic pharmaceutical drugs to avoid lawsuits by patent holders. Considering the high cost of developing a new pharmaceutical drug and bringing it to market, patent holders depend on the protections of the system in order to achieve adequate return on a very high investment. Critics also say that this decision creates two separate standards of review – one for the internal appeals process and one for use in trial courts – which creates uncertainty in the patent application process.
Medicare Trustees: Hospital insurance fund will be too low to pay obligations by 2028; no IPAB yet
According to the Medicare Trustees 2016 report, the Medicare Hospital Insurance (HI) Trust Fund, which funds Medicare Part A, will be depleted by 2028. This is two years earlier than was predicted last year. But, it is also two years later than the Congressional Budget Office’s estimates in January 2016.
Medicare is financed through two trust funds: the HI Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. HI fund spending is for Part A, hospital and other provider services, and makes up the largest portion of Medicare spending, while SMI covers Parts B and D. The SMI fund is expected to be adequately funded in the future.
The HI fund is financed through income tax. A combination of low payroll tax revenue and a high use of inpatient hospital services led to a $5.5 billion deficit in the HI in 2015. The Trustees project a slight surplus every year from 2016 through 2020, but expect the HI to deplete by 2028, when Medicare will only be able to pay 87 percent of expected benefits.
The Trustees also say that Medicare spending in 2016 is not projected to trigger the formation of the Independent Payment Advisory Board (IPAB) and automatic cuts to payment rates. IPAB was established by the ACA to impose mandatory, across-the-board cuts and enforce a limit on spending growth when the Chief Actuary of CMS determines that the Medicare per capita spending growth rate is too high. The Trustees project that IBAP could be triggered in 2017, when Medicare spending growth is expected to reach 2.82 percent – above the 2.62 percent target for that year.
Related: All projections in the report assume that the cost-control measures in current law, including those from the ACA, have been fully implemented. The estimates do not include any future laws, including any that might be passed to prevent future changes in physician payment, which are scheduled to happen in 2025 under MACRA. MACRA includes $500 million in additional payments to physicians in the Merit-Based Incentive Payment System (MIPS) and 5 percent bonuses to physicians participating in Advanced Alternative Payment Models (APMs). However, these provisions expire in 2025. The Trustees say that in future years, payment rates to physicians will be lower than they would have been under previous law (the sustainable growth rate formula) and that beneficiary access to Medicare physicians could be lower if Congress makes no changes.
(Source: Medicare Trustees, “2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” June 2016)
Patients in Oregon can receive hospital pricing in advance
Every Oregon hospital is able to provide a cost estimate for scheduled procedures within three days of the request, according to the Oregon Association of Hospitals and Health Systems (OAHHS). Health plans generally provide cost estimates to plan holders, but this information could help the uninsured and out-of-network patients get financial information prior to making a decision on where to go for a scheduled procedure. Though the hospital initiative is voluntary, beginning in July, the Oregon Health Authority will comply with a legislative mandate, Senate Bill 900, to post the median prices of the 50 most common inpatient procedures and the 100 most common outpatient procedures.
OAHHS also hosts a website, OregonHospitalGuide.org, which provides searchable, comparable financial and quality information for every hospital in the state. The key features on that website include:
- Hospital billing and financial assistance policies information and web links
- Quality metrics reported to the federal government
- Financial information about hospitals, including margins, payer mix, and uncompensated care
- Comparative statistics on hospitals, such as average length of stay and charity care
Background: Pricing and cost transparency, in general, has long been a priority for many consumer advocates, health plans, and business organizations. Proponents support additional cost transparency as a way to enable consumers to make high-value choices – improving quality and reducing costs. Providers have traditionally resisted mandates to make price information publically available, noting that the cost of a procedure depends on a multitude of factors. By providing this type of information voluntarily, hospitals may reduce the likelihood that states pass legislation requiring the release of certain cost information.
Around the Country
Report: Primary care access did not decline after Medicaid expansion in Michigan
Michigan’s 2014 Medicaid expansion did not limit access to primary care, according to a recent study. Researchers made “secret shopper” calls to nearly 300 primary care clinics before and after the expansion and found that the 600,000 Michiganders who were newly covered had better odds of getting an appointment times after the expansion.
Prior to Medicaid expansion, there were widespread concerns that it would overwhelm the supply of Medicaid providers. Researchers found that 49 percent of clinics offered an appointment to Medicaid patients before expansion, compared with 55 percent afterward.
One explanation for increased access is that alternative care providers might have helped alieviate potential shortages. Before Medicaid expansion, 8 percent of new Medicaid patients and 11 percent of privately insured patients saw a nurse practitioner or physician assistant at their first appointment. One year after expansion, 21 percent of new Medicaid enrollees and 18 percent of people with private insurance saw nurse practitioners or physician assistants for their first appointment.
Background: To conduct the study, researchers posed as relatively healthy patients looking for a routine checkup with a new health provider. They called nearly 300 primary care clinics several months before expansion took effect and three times in the first year afterward to assess the availability and wait times of providers. Michigan projected it would enroll 620,000 people through the expansion by 2020, but 600,000 enrolled in the first year. This represented 90 percent of previously uninsured working-age adults in the state.
Related: The Deloitte Center for Health Solutions 2014 Survey of US Physicians found that, after the ACA’s insurance coverage expansion (Medicaid and the exchanges), 44 percent of physicians were treating more newly insured patients. More primary care physicians (PCPs) (56 percent) experienced an increase in the number of newly insured patients than did surgical specialists (40 percent), non-surgical specialists (38 percent), and other physicians (33 percent). The physician respondents also reported that the additional patients were causing longer appointment wait times and driving PCPs to work longer hours. To cope, many PCPs said they added new physicians and hired clinical staff to help with care coordination. This could help explain why access did not decrease in Michigan.
(Source: Renuka Tipirneni et al., “Primary Care Appointment Availability and Nonphysician Providers One Year After Medicaid Expansion,” American Journal of Managed Care, June 2015)
Medical education is evolving for the physician of the future
As the health care market is changing, so are the capabilities physicians need to best practice medicine and serve their patients. As described in the Deloitte report, Preparing the doctor of the future: Medical school and residency program evolution, medical education is in an era of transformation as medical schools innovate to prepare new physicians for emerging models of care. Now more than ever before, physicians and care teams must understand population health, value-based payment models, and how to operate in a patient-centered system rather than one that is centered on the physician. Another key skill will be learning to incorporate new technologies into the practice of medicine. Telehealth and virtual reality are two key technologies in medical education making news this month.
At its annual meeting earlier this month, the American Medical Association (AMA) adopted a policy to incorporate telemedicine training into medical school curricula. The new policy encourages the accrediting bodies for both undergraduate and graduate medical education to include telemedicine core competencies for telemedicine in their programs. The policy is part of the AMA Accelerating Change in Medical Education Consortium, which involves 32 of the nation's leading medical schools working together through a learning community to train future physicians in the newest technologies and better serve underserved populations. The University of North Dakota School of Medicine and Health Sciences, one school in the Consortium, has begun to use advanced simulation and telemedicine technologies to help students learn skills specific to the needs of rural or remote communities.
Case Western Reserve University, which joined the AMA’s consortia earlier this year, is experimenting with virtual reality holograms as another potential innovative solution for medical education training. The university recently built a new Health Education Campus to support interprofessional learning and offer advanced technology. Instead of the traditional laboratories where students learn anatomy from cadavers, medical students will wear Microsoft HoloLens headsets to see the body’s organs and systems in three dimensions. The HoloLens allows students to examine a beating heart hologram or watch the process to insert a catheter from educators miles away. For now, the university is testing the technology, but is expecting to use it in practice by 2019, after the evaluation is complete.
Analysis: Many medical schools are using new ways to teach about the health care system, integrating technology into the practice of medicine, and helping physicians learn the leadership and communication skills required to effectively connect with patients and team members. These changes may improve quality of care while also improving the experience of receiving care.
In addition to physicians who are competent clinicians, hospital CEOs want innovative leaders as well as employees with technology and data analytics skills. According to Deloitte’s 2015 Survey of US Health Care Consumers, consumers expect to partner with doctors instead of relying passively on them to make treatment decisions. And with the health care system moving toward a value-based model, many physicians anticipate needing new business, health information technology, and communication skills to practice effective value-based care.
(Sources: AMA, “AMA encourages training in telemedicine for medical students and residents, June 15, 2016; Case Western Reserve University, “CWRU takes the stage at Microsoft’s Build conference to show how HoloLens can transform learning,” 2015)