Health Care Current: March 17, 2015

Change happens at the speed of trust

This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.

Change happens at the speed of trust

I have wasted another day on a familiar ritual. As a result of a security breach at a nearby retailer, I’ve had to replace my credit card and now must update the myriad of businesses that keep my information on file. Sifting through my monthly statement, I’m struck by just how many places that is: toll tags and parking apps, grocery and produce delivery, wireless carrier, video streaming service, airline and hotel accounts, my kids’ afterschool programs and countless online retailers. While the sheer number is alarming, what is more concerning is the picture this data paints about me and my family: it reflects where we go, what we do, what we eat, what we watch and what we buy. My credit card data isn’t just about my finances; the data detail nearly every important aspect of my life—including my health.

Maintaining privacy in health care used to be relatively straightforward. As a physician, I was bound by doctor-patient confidentiality. This gave my patients the confidence that they could share with me intensely personal information. And, security used to focus on limiting access to paper charts. Breaches typically involved only a handful of individuals.

Now, in an era of electronic health records (EHR) and clinical data warehouses, consumers’ confidence in the security of their data continues to be shaken. From lapses in protocols to sophisticated cyber attacks, the public is confronted by exposure on a massive scale. The value of health care data on the black market is even beginning to outpace financial data, as scammers and hackers can use information about individuals’ physical characteristics to steal identities. The information that comes with a person’s medical identity is also more difficult to move back into the private realm once it leaks out into the public.1

Some of this news could not come at a worse time. The future of health care depends on the secure flow of information. Nearly every major delivery reform, from value-based care and population health to personalized medicine and use of real-world evidence relies on data and the willingness of those who have it to share it. The ability to better serve individuals depends on our ability to view their data in aggregate.

Compounding the problem is the awareness that our overall privacy – not just health privacy – is slowly eroding. A casual glance at the online ads served up to you reveals how quickly your consumer data gets shared, but technology has taken us well beyond that. Last year, while participating in a conference on privacy in Abu Dhabi, one of the speakers asked, “Who knows you’re here?” The list grew rapidly: my office, the airline, customs and immigration, the hotel, the taxi company, the coffee shop, my cell phone carrier, the conference center and the owners of the literally thousands of security cameras I’d passed during my trip. Adding notes to family and friends along with followers on social media, it was clear that the record of my trip had been broadly dispersed.

As we sit on the cusp of the era of “big data” in health care, there are several important things to consider:

  • Health data concerns are different. While the loss of financial information can be distressing, the impact can usually be mitigated and consumer liability is often limited. By contrast, disclosure of certain medical information can be devastating with far-reaching consequences. In addition, breaches and misuse can introduce inaccuracies into a medical record, potentially impacting patient safety.
  • Privacy preferences fall along a continuum and vary within individuals depending on the topic. While many consumers may freely share certain health information for clinical research, on social media and with disease-specific websites, they fiercely protect other data about themselves. As we strive to gather more data to advance health care, the tension between the need for individual privacy and knowledge for the greater good is only going to increase.
  • The industry has a communication challenge. Do your own survey and ask some friends, “What are the risks of having your medical information stored electronically?” Once they have talked your ear off about identity theft, discrimination and even extortion, ask them, “What are the benefits?” Having done this many times myself, I’ve found that few have a compelling answer. While we have invested heavily in EHRs and health information exchange, we have done little to educate the public whose data may be at risk.

These are extraordinarily complex and highly personal issues that sit at the intersection of science, law, ethics and technology. Solving them may begin with establishing a firm foundation that addresses the pervasiveness of cyber risk and ensuring an organization’s strategy is secure, vigilant and resilient. This strategy might include:

  • Performing a risk review of the full health information supply chain of an organization
  • Articulating the organizational vision for security and privacy
  • Capturing policies and processes in an organization-wide plan that also includes business associates
  • Investing in and implementing a security and privacy program that includes continuous monitoring and updating

Change happens at the speed of trust. The need to transform health care is clear and the goals set are ambitious. However, progress will depend upon a public that is informed and confident that the industry will be a trustworthy steward of their data.

Email | LinkedIn | Twitter

Source: 1Fox Business, “Scammers Want Your Medical Records...Here's Why,” April 14, 2014

Back to top


My Take

By Harry Greenspun, M.D., Director, Deloitte Center for Health Solutions, Deloitte LLP


Subscribe to receive the Health Care Current via email

CBO updates insurance coverage projections in latest report

Last week, the Congressional Budget Office (CBO) revised downward its estimates of the number of Americans that will receive coverage through the federal and state marketplaces. It also lowered estimates of how much the Affordable Care Act’s (ACA) insurance provisions are projected to cost the federal government over the next decade:

The projections factor in the cost of individual and small business subsidies and spending on Medicaid and CHIP coverage expansions. Lower ACA costs will lead to a smaller federal deficit over the next decade: the cumulative budget shortfall from 2016 to 2025 is projected to be $431 billion smaller than the CBO’s estimate in January 2015. The CBO credited this largely to reduced spending on health care in 2013 because premium costs for private insurance grew slower than expected that year. The CBO also has better information on sources of health coverage and the size of the uninsured population, which led the CBO to lower its estimates of insurance coverage. Other notable findings from the report include:

  • Federal budget deficits will decline slightly in both real dollars and as a percent of the overall gross domestic product (GDP) through 2017. But, they are projected to rise steadily thereafter. 
  • Health plans sold in the first two years of the marketplaces appear to have lower payments to providers, narrower provider networks and stricter management of beneficiaries’ spending than comparable employer-based plans. The CBO said that health plans may not be able to sustain these features, and that may cause spending to increase again in future years. 
  • Total spending on major health care programs (Medicare, Medicaid, CHIP and ACA premium subsidies) will rise from 5.1 percent of GDP in 2015 to 6.1 percent of GDP in 2025.
  • The excise tax on high cost employer-sponsored plans, commonly referred to as the “Cadillac tax,” is now forecast to bring in $87 billion, down 41 percent from the January estimate. A 40 percent tax will be imposed on coverage that exceeds the cost threshold of $10,200 for individual coverage in 2018. CBO estimates that the tax will apply to fewer people since premiums are now projected to be smaller in the near term.

(Source: Marcellino, Amber, Masi, Sarah, et al., “Updated Budget Projections: 2015 to 2025,” Congressional Budget Office, March 2015)

Back to top

Implementation & Adoption

Fewer canceled health plans on individual market in 2014 than speculated

The Urban Institute analyzed the market for individual insurance in 2014 and found that plan cancellations due to non-compliance with the ACA were less widespread than many had speculated. Approximately 5.6 percent of consumers buying coverage in the individual market reported cancellations in 2014, for a total of around 900,000 policies being canceled.

Urban reported that in 2013, nearly one in five individual market consumers reported plan cancellations due to non-compliance with the health reform law. In response, the U.S. Department of Health and Human Services (HHS) allowed plans that existed prior to 2014 to be “grandfathered” into compliance with ACA regulations. HHS initially allowed this policy through 2014 but extended it to 2017.

(Source: Clemans-Cope, Lisa and Anderson, Nathaniel, “QuickTake: Health Insurance Policy Cancellations Were Uncommon in 2014,” Urban Institute, March 12, 2015)

Back to top

Study: Fewer young adults are visiting the ED after the ACA

The ACA’s provision that allows young adults (up to age 26) to remain covered by their parents’ insurance plans is associated with a drop in emergency department (ED) use, according to a study published in the Annals of Emergency Medicine. This part of the law has been in effect since September 2010. The following year, researchers found that visits to EDs among young adults age 18-25 fell by 1.4 percent—a small but statistically significant decrease. This was credited to an increase in private insurance coverage and decrease in the uninsured rate among this population during that time.

Notably, this decrease did not occur for weekend visits or visits due to injuries. Rather, the decrease was most visible among weekday visits and non-urgent conditions, suggesting that young adults began accessing medical care in different settings. According to HHS, overuse of EDs for non-urgent medical issues is an expensive problem, which can stem from people lacking insurance or access to primary care.

For the study, researchers analyzed data from 17 million emergency visits from 2007 to 2011 and compared young adults’ visit rates with slightly older adults (ages 27-29) as a control group. After the ACA took effect, the quarterly emergency visit rate declined from 114.2 per 1,000 to 112.6 per 1,000 individuals.

(Source: Annals of Emergency Medicine, “Changes in Emergency Department Use Among Young Adults After the Patient Protection and Affordable Care Act’s Dependent Coverage Provision,” March 10, 2015)

Back to top

RAND reviews debt financing for medical innovation

Researchers at RAND recently suggested that debt financing is a potential model to help pay for breakthrough medical innovations. Debt financing would use bonds, mortgages or credit lines to finance debt to support funding for manufacturers for innovative treatments they’ve developed without causing major budget issues for payers in the short term. Medicare, Medicaid and even commercial health plans are increasingly concerned about the cost of pharmaceuticals, especially for specialty treatments. Some analysts have projected that specialty drug spending will increase by more than 50 percent by 2017.

Debt-financing arrangements would need to emphasize and link payment to real-world treatment effectiveness, the researchers said. This would also ensure that manufacturers are rewarded for their efforts to improve real-world effectiveness of their products. The authors modeled a hypothetical situation to explain how the financing model might work:

In a debt-financing model, the general population would benefit from receiving the vaccine as soon as it is available, while the manufacturer would sustain revenue through the next several years. Other countries have had success with these financing structures. For example, the European Medicines Agency agreed to an arrangement with the manufacturer of a cholesterol treatment where the government issued a bond with five-year maturity and market-level interest rates to finance the cost of the drug.

(Source: RAND Corporation, “Borrowing for the Cure: Debt Financing of Breakthrough Treatments,” 2015)

Back to top

MedPAC offers two alternatives to current Part B drug payment

The Medicare Payment Advisory Commission (MedPAC) proposed two options to change Medicare Part B drug payment during its last public meeting on March 5. Under the current reimbursement model, Medicare pays physicians the average sales price (ASP) of drugs plus 6 percent. The ASP is not the price physicians pay for drugs, but rather the average price that manufacturers receive for all sales of a drug. Although little research has been conducted on the reimbursement model’s impact on prescribing behavior, there is the concern that physicians have the incentive to prescribe more expensive drugs to receive higher payment rates.

MedPAC also considered policy around the 340B drug program, which allows certain qualified entities (mostly hospitals) to pay discounted rates for drugs. Medicare payment follows the same policy as for physicians (ASP + 6 percent), even though those entities actually get significant markdowns from manufacturers. MedPAC is considering two options for recommendations to Congress, both of which would be budget neutral. The first option is a flat fee; the second option would blend a flat fee with a payment rate based on ASP:

  • Option 1: pay 100 percent of ASP plus $24 per drug administered per day 
  • Option 2: pay 102.5 percent of ASP plus $14 per drug administered per day

MedPAC projects that either of these options could increase payments for lower-priced drugs. As a result, physicians may be more inclined to substitute low-priced drugs for high-priced drugs, saving Medicare money over time. However, physicians may also face greater difficulty purchasing more expensive prescriptions under Option 1. The flat fee approach would increase overall payments to physicians and suppliers, but decrease payments to hospitals and certain specialists including oncologists and ophthalmologists.

(Source: Neuman, Kim, Winter, Ariel, Zabinski, Dan, Medicare Payment Advisory Commission, Public Meeting Transcript and Presentation Slides, “Part B drug payment policy issues”, March 5, 2015)

Back to top

On the Hill & In the Courts

CMS reveals Next Generation ACO Model

CMS’s Center for Medicare and Medicaid Innovation is launching a new model for accountable care organizations (ACOs) called the Next Generation ACO Model. The new initiative builds on the Pioneer ACO and Medicare Shared Savings Programs (MSSP), while adding in new elements to ACOs.

The model moves away from the “recent expenditures model” for setting benchmarks in an attempt to build long-term stability. The earlier model compared spending for the organization in the past with most recent spending to determine whether the organization saved money. Many providers have expressed concern that it is challenging to constantly improve performance year-over-year and that it is difficult to achieve savings in parts of the country where spending is already relatively low. By setting concrete benchmarks in advance, CMS hopes to create a model that is more agreeable to the participating organizations. ACOs can apply to join Next Generation by sending CMS a letter of intent by May 1; the program will start January 1, 2016. The government expects around 15 to 20 ACOs to join the program, and the initial agreement will be three years, with two one-year extensions available afterward.

Analysis: This represents a new stage in ACO models. One key change is in the prospective assignment of beneficiaries under the new model. CMS will continue to assign beneficiaries to an ACO using historical claims data. But, ACOs will also be allowed to ask beneficiaries if they want to be assigned to the ACO. If they choose to be assigned to the ACO, this “voluntary alignment” will be used in place of the attribution that claims data indicate. Thus, a beneficiary who may not have been assigned to an ACO based on information found in their claims data may be attributed to the organization. Most notably, however, is the Coordinated Care Reward where CMS will make direct payments to beneficiaries who get a certain percentage of services with Next Generation providers or suppliers. This was added to encourage beneficiaries to seek care from the providers within the ACO without restricting their access to other providers. A chief complaint of many MSSP ACOs has been that beneficiaries are not “locked in” to one ACO and can seek care from any Medicare provider. This feature has made it difficult for participating organizations to track their ACO population and could also affect financial and performance results. In addition, ACOs are now able to waive certain restrictions on care coordination such as the three-day skilled nursing facility rule, a long-requested change.

The financial risk-sharing expansion also is particularly notable—the two options for risk sharing in the new program are 80 or 100 percent. Many ACOs are not yet ready to take on significant risk sharing such as this, so the program will likely be best for the few systems that can truly take on this type of financial performance risk and that have shown the ability to do so through other contracts.

Back to top

HHS: Total enrollment in marketplaces reached 11.7 million

Last week, HHS announced that 11.7 million Americans enrolled in coverage through the federally facilitated (FFM) and state-based marketplaces (SBM) during the 2015 open enrollment period (November 15, 2014 to February 15, 2015). More than 8.8 million people selected or were automatically re-enrolled in plans through marketplaces in the 37 states that are using the platform this year:

Demographics: 3.2 million (28 percent) of the enrollees were age 18-34, the “young invincible” demographic that many health plans see as key to stabilizing the risk pools. Younger people typically have lower spending that offsets spending by older, sicker members with more medical needs. The same share of young people is in the mix this year as last year. However, there are interesting differences in the demographics of this year’s customers and consumers who enrolled during the first open enrollment period and reported information on their race and ethnicity. New customers are more likely to be young adults and African-American or Latino but less likely to have selected a silver plan and to be White.

Financial status: Almost 7.7 million (87 percent) who selected or were automatically enrolled in a 2015 plan through the marketplaces in the states qualified for a tax credit subsidy. The average subsidy is $263 per person per month and covers about 72 percent of the premium on average for individuals who qualify. Fifty-five percent of the 8.8 million individuals with plans in the states that are using the platform have a monthly premium of $101 or less after applying the subsidy. HHS reported on enrollees’ income data among states using the FFM this year:

  • 80 percent of the households enrolled in plans through the FFM had annual incomes below 250 percent of the federal poverty level (FPL), which equates to $29,425 for an individual or $60,625 for a family of four.
  • In states that did not expand Medicaid, significantly more low-income individuals who would have qualified for coverage through the expansion enrolled in marketplace plans.

(Source: HHS Office of the Assistant Secretary for Planning and Evaluation, “Health Insurance Marketplaces 2015 Open Enrollment Period: March Enrollment Report,” March 10, 2015)

Back to top

Around the Country

Health reform’s impact on charity care across the nation

The Center for Health Care Strategies (CHCS) recently examined how the ACA’s insurance coverage expansion has affected hospitals’ charity care programs (CCPs) throughout the country. CHCS analyzed programs in three states and one program that spans multiple states. The researchers found several themes:

(Source: Susan Shin and Shannon McMahon, Center for Health Care Strategies, “Health Reform’s Impact on Charity Care,” March 2015)

Back to top

Incorporating patient experience into medical research

Organizations across the health care industry are working to leverage the wealth of data that is available through medical claims, electronic health records, smartphones, wearables, social media and other sources. A recently launched website, iConquerMS, is using medical data and other information from patients living with multiple sclerosis (MS) to provide researchers with valuable insight to develop more effective treatments.

Around 400,000 people in the U.S. and 2.3 million people around the world have MS. There are currently 12 therapies for MS on the market and more in the pipeline. Researchers are still working to identify the underlying causes, what treatments work best for what individuals and why the disease progresses at different rates for different people.

iConquerMS is funded by the Patient-Centered Outcomes Research Institute (PCORI), an organization that was created by the ACA to work with health care providers and patient networks to increase patient involvement in medical research and promote comparative effectiveness studies. Industry, researchers, providers and regulators have focused on incorporating patient experience in research across all diseases.

People with MS may have trouble knowing what therapies will work best for them. The website will give patients the opportunity to offer research questions and share information on their daily lives and quality of life. This type of information may not be captured as well in a traditional clinical trial. Privacy and security information and the safeguards the website is taking are described on the website. The patient-centered research initiative, if successful in advancing MS treatments, could be applied to other diseases and conditions.

Analysis: Multiple stakeholders are advancing initiatives that aim to incorporate the patient perspective into research and care delivery. The 21st Century Cures discussion document recently released by the Energy and Commerce Committee (see the February 10 and March 3, 2015 Health Care Current) puts forth this vision as well. Empowered patients could be more actively engaged with their providers and in their health care, and collecting and analyzing large amounts of certain kinds of “real world” data provided by patients can inform the research process. The iConquerMS website is part of PCORnet, a national network of research networks. This network allows researchers to easily access data from millions of people across the country and use the collected data for many different research efforts.

PCORI was established to bring focus to comparative clinical effectiveness to foster the patient’s perspective in optimizing patient outcomes. One goal of initiatives like iConquerMS is to facilitate data sharing and clinical insights to help disseminate research more quickly than the historical 17-year bench to bedside translation of basic science to patient care.

Back to top

Breaking Boundaries

Did you find this useful?