Health Care Current: June 30 2015 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: June 30, 2015
The peloton of health care: Breaking away from the pack
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
The peloton of health care: Breaking away from the pack
My wife, Kerry, recently returned from a 10-day cycling trip in Italy, staying in a beautiful hotel near Tuscany that caters to professional cycling teams. Kerry’s group typically rode 50 to 70 miles each day through the countryside, culminating in a grueling 120-mile “gran fondo” with more than 12,000 feet of climbing. A highlight of the trip was when she watched at the finish line of one of the stages of the Giro d’Italia, a premier cycling race, along with the Tour de France and the Vuelta a Espana.
While she was away, the boys and I got by as best we could, frequently falling back on the loneliness exception to our “no bad dessert” rule. One evening, ice cream sundaes in hand, we watched TV coverage of the Giro d’Italia. In most competitive cycling races, you can watch as the peloton – the main pack of riders from all teams – moves along together. Riders do this to save energy by remaining close. At some point, a “breakaway” group emerges. In it, competing riders have to work together, leading or drafting off each other to maintain their distance from the pack. Ultimately, there is a winner at the finish line, but in a multi-stage race, those who finish before the peloton still gain advantage, even if they do not win the stage.
This concept struck me recently while I led a panel discussion with representatives from organizations that are often viewed as competitors in health care: a large health plan, a health care system, a pharmaceutical company and a former government leader. In the traditional fee-for-service environment, success for one often comes at the expense of another. However, as progressive organizations focus on outcomes and react to the government’s priorities for value-based care, they have created remarkable synergies in their approach to the market.
The upcoming Deloitte Center for Health Solutions paper, The convergence of health care trends: Innovation strategies for emerging opportunities, outlines four colliding trends that are changing the health care landscape. New technologies, a demand for value, the growing health economy and influential government policies are creating growth opportunities and pushing health care organizations to innovate. Like the peloton that creates both forward momentum as well as some dramatic collisions for riders, these converging trends will create opportunities and challenges for innovation among industry stakeholders.
In particular four significant areas rise to the surface:
- The shift from the traditional health care facility to “everywhere care”
- Wellness and preventive care
- Personalized care
- Aging, chronic and end-of-life care
“Innovation plays” that leverage all four of these colliding trends to utilize new technology, expand delivery options and access, improve patient experiences and form industry partnerships may help organizations gain a competitive edge in the changing health care landscape. For example, an organization seeking to capitalize on the challenge of wellness and preventive care could simplify and integrate the “monitored self” by harnessing a platform that aggregates consumer data from point-of-care devices and consumer actions, and seamlessly integrates them into the care system. Similarly, the shift to personalized care could create an opportunity for organizations to develop combinations of treatment, diagnostic and care protocols that are optimized for impact and ease of use based on individuals’ specific needs. Successful implementation of these programs will likely require collaboration across many industry stakeholders.
As the industry begins to tackle these innovation plays, there will be some tough uphill climbs. Connectivity is an area that all stakeholders are facing. One of the panelists said that while he believes that collaboration among the multiple stakeholders is challenging, it is doable. He cautioned that if 12 individual health plans designed their own proprietary systems, then there will be 12 that no one uses. Many organizations are already realizing this. These are the organizations that are breaking away from the peloton of the larger health care system and working in parallel with each other to differentiate themselves from the pack and address the needs of health care consumers.
The future of health care will likely be based on collaboration among competitors across the system, where everyone has the same shared capabilities and data standards. This may require some individual entities to invest in tools for population management, even if it benefits other organizations in the system. Along the way, members should be at the center of these initiatives and their data should be a tool to move toward value based care.
Ultimately, there will still be winners and losers. Just as in the Giro, leaders emerge and aggressively sprint to the finish to win the stage just ahead of the others in the breakaway. But by working together, they all finish ahead of the pack.
By Harry Greenspun, M.D., Director, Deloitte Center for Health Solutions, Deloitte LLP
US Supreme Court rules in favor of Administration: Tax credits will continue through all ACA exchanges
Last Thursday, the US Supreme Court ruled six-three in favor of the Administration to permit federal premium assistance tax credits under the Affordable Care Act (ACA) to continue to be made available through 34 federally-facilitated exchanges – in addition to exchanges established by the states – to help individuals purchase exchange coverage. See more in last week’s special edition Health Care Current.
Implementation & Adoption
ASCO releases value framework for cancer drugs
Last week, the American Society of Clinical Oncology (ASCO) released a framework that aims to help oncologists and patients evaluate the value and cost of cancer treatments against one another. The ASCO Value Framework was created by the Value in Cancer Care Task Force. The task force defines value in this context as the combination of three aspects of value: clinical benefit, toxicity (side effects) and cost.
Part of this effort is based on ASCO’s belief that high-cost care does not necessarily equate to high-quality care and better patient outcomes. It is also in reaction to the high and growing cost of cancer treatment in the US. ASCO published the framework shortly after the Centers for Medicare & Medicaid Services (CMS) released the second round of data on Medicare Part B payments to physicians. These data showed that oncologists are some of the most highly paid physicians through the program. However, oncologists have argued that much of this is because of the high cost of cancer drugs to their practices. According to recent figures, the seven most expensive drugs that Medicare covered were cancer medications.
The task force developed the framework by dividing the tasks into the three aspects of value. Each group evaluated the results of prospective, randomized trials to determine how new treatments compared with the currently prevailing standards of care. The framework is presented in a step-by-step guide:
People using the framework add the three scores (clinical benefit, toxicity and bonus points) together to calculate the net health benefit of the treatment. Ideally, once drug acquisition cost and patient co-pay are added into the equation, physicians will have a comprehensive view into the value of the treatment and can talk their patients through the calculation.
Analysis: This framework is a helpful start to better understand the economics of cancer treatment. Developing an understanding of the cost and real world outcome of cancer care across the disease timeline, integrating the costs of diagnosis, surgery, radiation, drug therapy, and end-of-life care will be important for stakeholders across the health care system. This framework is primarily applied to episodic drug-based therapy, which is a logical starting point. The use of more advanced analytics and real world evidence may provide clinicians, payers and patients with greater insights into interdisciplinary treatment approaches.
FDA seizes potentially dangerous drugs totaling $81 million in international operation
Earlier this month, the US Food and Drug Administration (FDA) collaborated with an international coalition of regulatory, law enforcement and private sector organizations to seize $81 million worth of counterfeit drugs. The sweep occurred between June 9 and 16 during the International Internet Week of Action (IIWA). IIWA is an INTERPOL-led effort to challenge the sale and distribution of illegal drugs and medical devices sold through the Internet.
FDA confiscated more than 20 million potentially dangerous drugs (more than double the amount seized in 2013) and removed more than 2,000 websites. This was the largest internet-based takedown of medical products in history. The operation, known as Pangea VIII, had broad international support from 115 participating countries. Many foreign drugs falsely marketed as FDA-approved products were on their way to the US. These products included antidepressants, hormone therapies and high cholesterol medications. Patients who buy medications through the internet risk adverse health events and identity theft.
STUDY: Use of HIT to support care coordination in PCMHs varies; HIT is not providing the information that practitioners want most
According to a study published in the Annals of Family Medicine, practices recognized as Patient-Centered Medical Homes vary in their ability to leverage health information technology (HIT) to support care coordination. The study also found that clinicians’ priorities do not align well with their practices’ use of HIT. While practitioners valued information related to their patients’ hospitalizations, this information was least likely to be obtained through an electronic system. Conversely, respondents identified patient summaries as the most common care coordination function supported by HIT, but they did not deem this function to be a priority.
The researchers sought to assess PCMHs’ ability to meet the ten care coordination activities outlined in Stage 3 of the Meaningful Use (MU) program, as it was proposed in 2012. An additional study objective was to understand clinicians’ HIT priorities for care coordination. The researchers surveyed clinicians from 305 PCMH practices between January and July 2014.
Approximately 21 percent of clinicians incorporated all ten care coordination activities in their practice. The typical clinician in the study accomplished six of ten of these activities using a computerized system. Although the results of the study indicate that several care coordination activities are being managed without the use of a HIT system, this report has shown greater overall rates of utilization than prior studies which used similar measures. This may reflect a growth in adoption of HIT systems in recent years.
(Source: Morton, Suzanne, Shih, Sarah C., Winther, Chloe H., Tinoco, Aldo, Kessler, Rodger S., Hudson Scholle, Sarah, Annals of Family Medicine, “Health IT-Enabled Care Coordination: A National Survey of Patient-Centered Medical Home Clinicians,” May/June 2015)
AHRQ Health Care Innovations Exchange focuses on improving quality and performance in primary care clinics
The Agency for Healthcare Research and Quality (AHRQ) released the latest issue of the Health Care Innovations Exchange last week. The purpose of this resource is to disseminate evidence-based strategies to improve quality and patient outcomes. The issue highlights three innovations designed to improve primary care.
The first innovation, implemented at the University of Oklahoma Health Sciences Center, uses practice enhancement assistants to improve quality of care. Practice enhancement assistants typically have a master’s degree in an area related to public health. They assess the current state of a primary care practice, recommend changes, help implement changes the practice desire and bring about cross-learning with other primary care practices. AHRQ found strong evidence that this model is cost-effective in improving patient care in primary practices through adherence to best practices and improved quality of preventive services.
The second innovation explores point-of-care alerts and reminders through electronic medical records (EMRs). The program was tested in the Northwestern Medical Faculty Foundation, a large internal medicine practice. The innovation alerted physicians to 16 quality measures related to heart disease, heart failure, diabetes, and preventive services in addition to providing quarterly feedback on physician performance. The system also provides physicians with a monthly report of patients who need to schedule an appointment or need to be prescribed medication. The system improved performance in 14 of the 16 quality measures by increasing provision of recommended care and/or improving documentation of exceptions. More physicians prescribed the recommended drugs and prescribed more proactively than prior to the EMR innovation.
The third program evaluated in the Innovations Exchange is the Care Management Plus Program. The innovation uses HIT and well-trained primary care managers to reduce costs for patients with complex diabetes. Primary care managers are public health professionals trained to coordinate services within a complex health care delivery system. They work with physicians in this program to develop a personalized care plan based on the clinical and social needs of the patient. The Care Management Plus program integrates care managers into the primary care workflow to improve care coordination for diabetes patients. The program was moderately successful according the AHRQ evaluation. The innovation improved connections to resources and settings, physician encounters with high-risk patients and use of IT systems.
CBO scores ACA repeal
Last week, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released an analysis on the main budgetary and economic consequences that would arise from repealing the ACA. As they have done in past reports, the CBO and JCT estimated the budgetary implications of a repeal in two major categories:
- The impact of repealing the insurance coverage provisions—including subsidies provided through the exchanges, added costs for Medicaid, revenues from certain penalties and taxes, and related effects; and
- The impact of repealing other provisions of the ACA, which would mostly be related to Medicare spending and tax revenues.
In addition, the report estimated that repeal would result in 19 million more uninsured individuals in 2016, and about 24 million more uninsured over the next decade. A repeal would save $1.15 trillion through the cancellation of subsidies, but that would be offset by undoing cuts in payments to insurance companies, hospitals and others. That would increase projected spending by $879 billion in the next ten years. The report acknowledged that estimates of the effects of ACA repeal are subject to substantial uncertainty, in part due to the challenges of projecting the effects of the ACA.
(Source: Congressional Budget Office, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” June 2015.)
On the Hill & In the Courts
CMS issues Medicaid managed care rate guidance
Earlier this month, CMS published a draft 2016 Medicaid Managed Care Rate Development Guide, which describes what information CMS expects health plans and states to include when developing actuarial rate certifications in Medicaid managed care. The guidance outlines that CMS expects states to include the studies, research papers, analysis, secondary sources and other data that were used to determine the rates set for health plans in Medicaid managed care.
Federal regulations require all rates in Medicaid managed care to be actuarially sound, meaning the rates will sufficiently cover all services expected to be performed by health plans. While this is set in federal regulations, many health plans say that some state rates are too low to cover all of the services expected of them. As such, CMS reiterated the three principles it will use to determine whether rates are actuarially sound:
Background: This guidance comes after the US Supreme Court ruled in April that providers cannot sue state Medicaid agencies if they feel their payment rates are set too low (see the April 7, 2015 Health Care Current). In Armstrong v. Exceptional Child Center Inc., the Court said that states cannot sue because the Supremacy Clause of the US Constitution says that federal law overrules state law. The majority of the justices agreed that private parties do not have a say in whether or not state plans “assure that payment are consistent with efficiency, economy and quality of care.” While providers may ask the Department of Health and Human Services (HHS) to intervene when they believe payment rates are too low, Justice Sonia Sotomayor wrote that the agency has many programs to oversee and the means by which it can intervene are “drastic” measures.
FDA issues guidance on physical attributes of generic drugs
Recently, the FDA issued guidance recommending that generic prescriptions in tablet or capsule form should closely resemble the reference listed drug (the listed drug identified by the FDA as the drug product upon which an applicant relies in seeking approval of its abbreviated new drug application). While generic formulations of drug products are required to be both pharmaceutically and therapeutically equivalent to a reference listed drug, the FDA guidance addresses physical characteristics (e.g., size and shape of the tablet or capsule) that may affect patient compliance and acceptability of medication regimens or could lead to medication errors. The guidance established recommendations for drugs seeking market approval. Approved drugs and those already on the market are exempt from these guidelines, unless the FDA determines that an approved medication should be modified to protect the public’s health.
In an effort to promote medication adherence and acceptance, the guidance recommends that generic drugs resemble their reference product in shape, size, weight and other attributes that could affect swallowing. Research indicates that difficulty swallowing a prescription pill is a major deterrent to medication adherence. Individuals who have difficulty swallowing prescriptions identify the size of the pill as the most commonly cited problem. Accordingly, the most specific guidelines address the size of the generic product. The FDA acknowledges that many factors can affect a patient’s ability to ingest a pill. However, the agency aims to increase patient safety through the manufacturing and design processes.
(Source: Food and Drug Administration Center for Drug Evaluation and Research, “Size, Shape, and Other Physical Attributes of Generic Tablets and Capsules,” June 2015)
CBO projects 21st Century Cures legislation to cost $106 billion
The Congressional Budget Office (CBO) recently published cost projections for the latest draft of the 21st Century Cures bill. According to the estimates, in its current draft, the bill would cost $106.4 billion to implement between 2016 and 2020. CBO estimated the cost of the bill at the request of the House Committee on Energy and Commerce (E&C). CBO based its estimates on the assumption that the legislation would go into effect in early 2016.
Major provisions of the bill considered by CBO include creating funds to support a proposed “NIH Innovation Fund;” provisions that aim to modify the FDA’s regulatory framework for overseeing the development and approval process for drug and biologics; and changes to CDC’s surveillance systems involving the development of a neurological disease surveillance system and activities to track the usage of antibiotics. Private sector mandates are included within the bill to extend marketing exclusivity for rare disease treatments by six months.
Assuming appropriation action consistent with the bill, CBO estimates that over the 2016-2020 period:
- Provisions implemented by the NIH would cost $105 billion;
- Provisions administered by the FDA would cost $872 million;
- Provisions administered by the CDC would cost $35 million;
- Provisions affecting discretionary spending by other HHS programs would cost $427 million; and
- Provisions affecting discretionary spending by other departments and agencies would cost $21 million.
Background: The 21st Century Cures bill aims to accelerate innovation through a three-pronged approach that emphasizes the discovery, development and delivery of medical treatments. The House bill has gained recent momentum, while the Senate has been developing similar legislation. Last month, the E&C Committee released its updated discussion draft which incorporated the views of stakeholders (see the May 5, 2015 Health Care Current).
(Source: Congressional Budget Office, “H.R. 6 21st Century Cures Act: Cost Estimate,” June 23, 2015)
House Subcommittee holds hearing on Medicaid demonstration projects
Last Wednesday, the House Subcommittee on Health held a hearing to discuss the process of gaining approval for a Medicaid Section 1115 demonstration waiver in light of a recent Government Accountability Office (GAO) report which provided recommendations to improve the process. The GAO issued three recommendations which would affect the HHS. HHS was asked to improve its evaluation criteria, provide documentation to show that state programs have met its criteria and provide assurances of state programs’ budget neutrality.
The subcommittee heard testimony from two panels of witnesses. The first panel was Katherine Iritani, the GAO’s Director of Health Care. The second panel comprised Haley Barbour, former Governor of Mississippi and Founding Partner of BGR Group; Matt Salo, Executive Director of the National Association of Medicaid Directors; and Joan Alker, Executive Director of Georgetown University’s Center for Children and Families.
Many subcommittee members and witnesses discussed ways to improve the approval process while continuing to encourage innovation. Mr. Barbour suggested implementing waiver clocks to expedite the approval process in some states. Some representatives, including Ranking Member Gene Green, felt that the broad criteria currently established by the Administration allow states to explore more innovative program designs than would the more prescriptive criteria the GAO recommends.
Background: Section 1115 demonstration waivers allow states to create innovative and tailored programs. Once the Secretary of HHS approves a demonstration, the program must periodically renew the waiver after implementation. The federal government cannot spend more on a demonstration program than it would have spent in the absence of the waiver. Although states may apply for Section 1115 waivers to meet various objectives, six states have opted to expand Medicaid with this approach. In his opening statement, subcommittee Chairman Joseph Pitts noted that nearly $150 billion was spent on Section 1115 waivers in fiscal year 2014.
Around the Country
Covered California exchange to analyze patient claims data
Covered California, the state-based exchange, has announced a plan to collect and analyze data on prescriptions, physician visits and hospital stays to measure the quality of care for its 1.4 million enrollees. The state signed a five-year contract with Truven Health Analytics Inc. to run the database. Details on individual enrollees will be withheld as they are in similar initiatives on the commercial side. Covered California is aware of growing concerns about privacy and security, and plans to seek input from consumer groups and experts on best practices.
Analysis: Data analytics create opportunities to discover opportunities to improve health care quality and reduce costs. For example, the exchange is interested in how many individuals with diabetes are receiving services to manage their condition, and how many recommended cancer screening tests led to early diagnosis and treatment. Some health policy experts have emphasized that disclosing plan performance encourages health care quality improvement and gives the state bargaining leverage when negotiating rates.
The future of wearables: Using optics to monitor blood pressure and glucose levels
A small startup has designed a wearable that goes beyond measuring heart rate and tracking steps. The wrist band, which is made by Echo Labs from the Stanford-affiliated Start X incubator, can monitor oxygen, carbon dioxide, potential hydration (PH) and blood pressure levels in the blood using optical signals. While it is not ready for market, the technology has garnered interest from life sciences companies and insurance plans.
The wristband works by taking advantage of every molecule’s “light signature” – or the fact that different molecules respond differently to light. The wearable has sensors that measure blood content with light and a proprietary algorithm. It shines electromagnetic waves through human tissue and then measures the reflection of varying light frequencies to detect the concentration of molecules in the blood. Other devices currently on the market, such as pulse oximeters that get clipped on a patient’s finger at the hospital, use LED light to measure oxygen levels in the blood. A major challenge with using optics to measure blood composition is “noise” – such as external light, movement or body hair. But the founders of Echo Labs say their algorithm is robust enough to overcome the noise problem and continuously measure blood composition whether the person wearing it is moving or not.
The team hopes to use the wearable to monitor glucose levels. If successful, it might help the millions of people who have diabetes or want to track what they eat. To date, there is not a non-invasive device that can do that. The team is working on packaging the technology in a wearable that is comfortable, not clunky and can accurately track the data. Because the company is small, its technology might be integrated into other existing devices rather than going straight to the market on its own.
Analysis: Rock Health (with which Deloitte Consulting is one of 15 Partners) conducts industry research on the wearables and biosensors market, and in a 2014 report, noted that the merging of these two markets into a single category has major potential to impact health care. Findings from the forthcoming Deloitte Center for Health Solutions 2015 Survey of Health Care Consumers show that the use of digital tools and mobile tech for health improvement and monitoring health conditions is on the rise, especially among younger consumers and those with chronic conditions. This year, 24 percent of consumers reported using technology such as smartphones, personal medical devices or fitness monitors to monitor health issues, compared to 15 percent in 2013. Three in four consumers with chronic conditions reported they are interested in monitoring technologies in the future. As consumers become more accustomed to relying on technology to track their activity, they may begin to expect more sophisticated physiology monitors that go beyond fitness tracking.