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Health Care Current: March 25, 2014
Riding the new wave of social entrepreneurship
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.
- My Take
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
Fixing an unsatisfactory equilibrium in health care: riding the new wave of social entrepreneurship
In 2007, Roger Martin and Sally Osberg attempted to describe “social entrepreneurship” in an article for the Stanford Social Innovation Review. They pointed out that social entrepreneurship often addresses an “unsatisfactory equilibrium.”1 Pierre Omidyar and Jeff Skoll identified an unsatisfactory equilibrium in geographically-based markets, and as a result, eBay was born. Before Omidyar and Skoll created eBay, individuals had to rely on phonebooks and garage sales to get the exact (or close to it) products and materials they sought. This isn’t the only example. Martin and Osberg go on to describe the unsatisfactory equilibriums that led to the creation of the Snugli, FedEx and the personal computer.
Today, more than 250 million people who live in urban slums around the world suffer from chronic diseases.2 But, the funding that goes to global health care improvement efforts is mostly focused on infectious diseases. There seems to be an unsatisfactory equilibrium between what care is needed and where funding goes.
Creating solutions to address this imbalance was the challenge presented to MBA students participating in this year’s Hult Prize—an annual competition sponsored by the Hult Foundation and the Clinton Global Initiative. In 2009, Time Magazine identified the Hult Prize as “one of the top five ideas changing the world.”3 Through this competition, more than 200 teams of graduate students dedicate a tremendous amount of time and energy to creating effective and sustainable solutions to complex social problems. The prize to the winning team is $1 million in start-up capital. Earlier this month, I had the pleasure of participating on an executive jury in London tasked with reviewing the 2014 regional submissions. Nearly every team had individuals with diverse professional backgrounds hailing from different countries of origin, which brought unique points of view and a multinational perspective to the proposals.
The Hult Prize is an example of how the traditional philanthropic approach of giving financial aid to those in need is evolving. Funding is now being infused with technology and business strategy to spark innovative business-based, socially-focused enterprises that seek to solve some of today’s toughest problems. Importantly, solutions are designed to be self-sustaining and focused on return on investment (ROI).
The scope and scale of this year’s Hult Prize proposals are amazing to consider. All are innovative, with the potential to lead to significant improvements either through incremental steps or maybe even disruptive strides. Some ideas are narrowly focused, while others are more broad-based solutions hoping to impact multiple areas. The regional winners spanned that spectrum. Attempting to address the health problems plaguing many slums around the world, the students presented possible solutions ranging from “Sweet Bites,” a proposal to locally manufacture chewing gum that can improve oral health, to “NanoHealth,” an approach to create micro-insurance health networks, to “Dox-in-Box,” a device to support diagnosis and connect patients to providers who can provide adherence plans.4
As I listened to the presentations, it occurred to me that the efforts and themes baked into this competition present a few important lessons for the health care industry:
- Pull ideas from a broader base: Good ideas can come from anywhere, and the industry needs to be ready to recognize promising ideas from unexpected sources. Non-traditional players such as Google are entering the health care space, and crowdsourcing approaches like prize competitions can be an especially productive way to solicit creative contributions.
- Pressure test ideas in a systematic way: Applying the same rigorous evaluation process to every proposal could illuminate the relative merits and shortfalls of each. Hult Prize participants had only ten minutes to pitch their solution and two minutes to respond to questions. This required them to be clear about the essential elements of their proposal.
- Consider new investment opportunities: Only one team will receive financing through the Hult Prize to pursue their solution, yet there were many more promising ideas brought to the table. These could be financed through other sources, including health care and life sciences companies interested in investing in innovative social enterprises. Hackathons, such as the one mentioned below, are continuing to show innovative ways to connect the health care industry to new technologies and approaches.
- Think about ROI: Metrics that are typically used to assess the ROI in business ventures may not directly apply to social enterprises aiming to address major social challenges, but that doesn’t mean their ROI should go unmeasured. Given the growing emphasis on sustainability, evaluating the extent to which social enterprise solutions meet their objectives and outcomes given specific levels of investment will be a key step to determining long-term viability and success.
Leading organizations could learn how to contribute to and benefit from this new wave of social entrepreneurship. I am excited to see where this new direction will take us.
PS – for more information about the 2014 Hult Prize visit their website: http://www.hultprize.org
1 Roger Martin & Sally Osberg, “Social Entrepreneurship: The Case for Definition,” 2007, http://www.ssireview.org/articles/entry/social_entrepreneurship_the_case_for_definition
2 Hult Prize, “Social Enterprise Challenge: Improving Chronic Disease Care in Slums by 2019,” http://www.hultprizesix.com/pdfs/2014-Hult-Prize-Challenge.pdf"
4 Hult Prize, “Meet the Six,” http://www.hultprizesix.com/
By Reynold W. (Pete) Mooney, Deloitte Touche Tohmatsu Limited (DTTL) Global Managing Director, Life Sciences and Health Care
Implementation & Adoption
Survey: 66 percent of Americans are satisfied with U.S. health care system
Last week, Gallup released survey findings that suggest 66 percent of the U.S. population is satisfied with how the health care system is working for them. The findings vary significantly by health insurance status, as 72 percent of individuals who have insurance coverage and 33 percent of those without coverage report being satisfied with the health care system. Additional findings include:
- Individuals under the age of 30 (73 percent) and older than 65 (80 percent) report greater satisfaction than those between the ages of 30-64
- Democrats are significantly (78 percent) more satisfied with the health care system, while only 60 percent of Republicans and Independents are satisfied
While Gallup notes that it is difficult to measure what exactly individuals are considering when they answer this question, these findings are similar to those in a poll the group conducted in November of last year. That survey found that, overall, 79 percent rate the quality of the health care they received as excellent or good, 69 percent gave excellent or good ratings to their personal health care coverage and 59 percent were satisfied with their total health care costs.
Related: Deloitte’s Survey of Health Care Consumers offers insights into consumers’ behaviors and attitudes and identified six unique segments that comprise the health care consumer market. Each segment approaches decisions about health, health
Using a typical report card scale with grades of A, B, C, D, and F, how would you grade the overall performance? Percent ranking the system an “A” or “B”
Source: The U.S. Health Care Market: A Strategic View of Consumer Segmentation, Deloitte Center for Health Solutions. 2012.
For more information, see The U.S. health care market: A strategic view of consumer segmentation.
Study: 18-34 year-olds may not be enrolling in HIXs on account of narrow subsidy eligibility
A recent report by HealthPocket details findings suggesting that individuals in eight major cities age 18 to 34, otherwise known as the “young invincibles,” are falling into a subsidy gap on the HIXs. The ACA designed premium tax credits to lower the cost of premiums for individuals with incomes between 100 and 400 percent of the federal poverty level ($11,490 and $45,960 for individuals). However, because income is not the only factor that determines eligibility for subsidies on the HIXs, in all eight cities, individuals in this age group with higher incomes will not get as much of a subsidy or—in the case of some plan options—may not get a subsidy at all. For example, the study outlined the highest subsidy-eligible incomes for each of the following ages:
Click here for a larger image.
In all of these cities, individuals with incomes above $36,013 do not qualify for a subsidy for their premium because the cost of the benchmark silver plan was too low. The study notes that average earnings are higher than many of these caps within each age group, as
(Source: Jesse Geneson & Kev Coleman, HealthPocket, “18-34 Year-Olds Can Face 41% Narrower Income Bracket to Qualify for Obamacare Subsidies,” March 12, 2014)
Study: current or planned ACO participation depends on practice size
According to findings published this month in Health Services Research Journal, 60.6 percent of physician practices have not, and have no plans to, become involved in accountable care organizations (ACOs). Larger practices are much more likely to participate: 74 percent of practices with greater than 100 physicians are participating in ACOs and only 7 percent of those with 1-2 physicians are participating. Researchers conducted 40-minute phone surveys with a nationally-representative sample of approximately 1,180 medical groups and studied characteristics of practices that are associated with participation in ACOs. Additional findings suggest that non-participating medical groups are more likely to have limited access to resources such as electronic health records, care
Note: to date, more than 350 organizations participate in the Medicare Shared Savings Program, after the Centers for Medicare and Medicaid Services (CMS) announced 123 new organizations had joined at the end of 2013.
Analysis: ACOs are part of the move toward a value-based care system and are becoming a thriving payment model to incentivize meeting quality and cost targets. Major players to date have included hospitals and large physician groups, but this study offers insight into provider practices—an area where the largest transformation could occur. While there is an emerging knowledge base on some of the successes and challenges faced by early ACOs, no information has been published to date on the extent to which individual physician practices have joined or are planning to join an ACO. While these findings might indicate physician practices may be slower to evolve, some health care experts have suggested that physician-led groups may be more advantaged as they have been able to remain more nimble in their execution of value-based care strategies.
(Source: Stephen et al, “Physician Practice Participation in Accountable Care Organizations: The Emergence of the Unicorn,” Health Services Research, March 14, 2014)
Ponemon: survey reveals new, expanded threats to security and privacy of patient information
Data breaches could be costing the health care industry up to $5.6 billion annually, according to the Ponemon Institute’s fourth annual Patient Privacy and Data Security study. Key findings in the 2014 report include:
- 90 percent of health care organizations had at least one data breach in the past two years: while data breach occurrences are still widespread, the number of incidents has been on the decline, with 38 percent reporting more than five incidents last year versus the 45 percent that reported the same the previous year.
- Data breaches have cost individual organizations an average of $2 million over the past two years: cost for data breaches can range from $10,000 to more than $1 million over two years. While this is a costly issue, the $2 million cost of data breaches decreased 17 percent over the previous year.
- Lost devices, employee
mistakesand third party slip-ups are top concerns among health care leadership: while criminal attacks have increased 100 percent from 2010, employee negligence is still considered to be the biggest risk to securityof patient information. This is followed by use of public cloud services (41 percent), mobile device insecurity (40 percent) and cyber attacks (39 percent). Bring your own device usage also continues to rise, as 88 percent of organizations allow their employees and medical staff to use their own devices to connect to networks and enterprise systems.
- Only 51 percent of organizations report conducting annual or periodic security risk assessments, and only 18 percent conduct privacy risk assessments annually or periodically: 49 percent report not being compliant or being only partially compliant with the Health Insurance Portability and Accountability Act (HIPAA) Final Omnibus Rule.
A majority of organizations say the HIPAA Final Omnibus Rule has either not affected patient data privacy or security programs or that it is too early to tell. Organizations must comply with provisions of the HIPAA Omnibus Final Rule that went into effect on September 23, 2013, or could face penalties up to $1.5 million per violation. For more information, see the March 18,
Analysis: Breaches can be costly to health care organizations, and cyber attacks are increasing at a rapid pace. Leading
(Source: Ponemon, “Fourth Annual Study on Patient Privacy and Data Security,” March 12, 2014)
Recently, researchers published findings in Health Services Research which suggest that online hospital ratings might not be helpful for patients seeking to determine the best hospitals in their area because there is such little variation in the results. Using the CMS Hospital Compare website, the researchers examined surgical site infections quality measures as reported by hospitals. The results suggest that 97 percent of hospitals in hospital referral regions (HRR) designated by the Dartmouth Atlas of Health Care Project had median surgical site infection scores of at least 95 percent, and in 93 percent of the HRRs, half of the hospitals fell within 5 percent of the median score. Only one percent of hospitals had much higher performance on this measure.
(Source: Health Behavior News Service, “Online Ratings Don't Help Patients Compare Hospitals,” March 18, 2014)
On the Hill & In the Courts
FDA report: medical device recalls increased by 97 percent between 2003 and 2012
Friday, the U.S. Food and Drug Administration (FDA) released the Medical Device Recall Report for fiscal years (FY) 2003 to 2012, which found that the number of annual recalls increased 97 percent, from 604 to 1,190 during that period. The report details the number of Class I recalls, a situation in which there is a “reasonable probability” that a device will cause serious adverse health conditions or death; Class II recalls, a situation in which the use of device may cause temporary or medically reversible adverse health conditions or there is a remote chance it could cause serious health consequences; and Class III recalls, a situation in which the use of device is unlikely to cause adverse health conditions. Class I recalls have mostly risen over this period, up to 57 in FY2012 from 7 in FY2003; Class II recalls have also increased, more than doubling during that period to 1,043; Class III recalls have mostly decreased over this period, falling from 137 in FY2003 to 90 in FY2012. During this same period, the number of medical devices increased by 25 percent.
The FDA completed this review in response to a 2011 report conducted by the U.S. Government Accountability Office, which found that recalls were often too late for a company to do much about a defective product. The FDA notes that the increase in recalls can mostly be attributed to two industry segments: manufacturers of radiology devices and those that receive notifications following FDA inspections. Both segments of the industry increased their reporting over the time period and, if adjusted for, make the increased recall rate fall to 27 percent. The FDA stated that it will continue to use the information from recalls to inform decision-making processes, disseminate guidance to the industry and identify targeted inspections and interventions.
CMS now releasing doctors’ Medicare payment data
On March 18, CMS began accepting requests from the public under the Freedom of Information Act for physician payment data through the Medicare program. Under the rule, individuals and groups seeking Medicare physician payment data must submit specific requests, and the agency will use a “balancing test” that weighs individual physicians’ privacy interests against the potential public benefit presented by the release of information to determine what will be released. For the last 35 years, CMS has considered release of this information to be a violation of physicians’ rights. However, the policy announced earlier this year follows a court case in Florida in which a federal judge ruled that making physicians’ payment data accessible to the public is no longer a violation of privacy and that the public interest in making the data transparent outweighs doctors’ privacy rights. The Freedom of Information Act contains exemptions that could prevent some information from being disclosed to the public if it is deemed damaging to doctors. For more information on increasing efforts around health care transparency, see the My Take, “Seeing past the blind spot: is transparency in health care enough?” from the January 28, 2014 Health Care Current.
CMS moves forward with Medicare Care Choices Model pilot; testing begins on alternative palliative care and hospice benefits
Last week, CMS announced it is moving forward with the Medicare Care Choices Model (MCCM) pilot that was proposed in the ACA. The pilot will test utilization of hospice and palliative care services while allowing beneficiaries to continue with curative treatments. Current policy requires beneficiaries to choose between curative and palliative care services, but under the initiative, participants may use both services simultaneously. The objective of MCCM is to evaluate whether beneficiaries who meet hospice eligibility criteria will choose hospice care while continuing their curative services and use it earlier in their disease progression. Medicare claims data show only 44 percent of beneficiaries use hospice benefits at the end of life, and most use the benefit for a short period of time.
During the pilot program, CMS will evaluate changes in patient care; caregiver, patient or family satisfaction; and quality at the end of life. This program was built from evidence that suggests providing hospice care to the terminally ill lowers Medicare costs. The MCCM expects to enroll 30 hospices and have 30,000 beneficiaries over a three year period. Hospices will receive $400 monthly for each participant receiving hospice care, while providers and suppliers continue to bill Medicare for participants’ curative services. CMS is accepting applications from hospice providers until June 19, 2014.
Lawmakers request more transparency around FDA regulation of medical mobile applications, medical software
Last week, a bipartisan group of six senators sent a letter to FDA Commissioner, Dr. Margaret Hamburg requesting more “transparency” around the agency’s regulation of medical mobile applications and medical software. In addition to commending the agency for using a risk-based approach in defining what the FDA considers to be a medical mobile application, the lawmakers requested responses to several questions about current policies and oversight related to these technologies:
- Compared to current FDA guidance, what impact would Congress establishing categories of medical software in legislation have on the FDA’s oversight of medical mobile applications?
- What role, if any, can statutory definitions play to clarify uncertainty with respect to assigning risk level to medical software?
- When a medical mobile application presents a novel function that has never been classified by the FDA, what procedures are used to determine if and how that application should be regulated by the FDA?
- How has the FDA been coordinating with the Office of the National Coordinator (ONC) and Federal Communications Commission (FCC) to address the recent FDA Safety and Innovation Act (FDASIA) working group’s concerns over interoperability?
The lawmakers request responses to their questions within three weeks and urge the agency to continue working with Congress to identify the best policies to adopt regarding this technology.
Related: each chamber of Congress has introduced a bill to remove FDA regulation from several types of technologies related to medial mobile devices. S. 2007, Preventing Regulatory Overreach To Enhance Care Technology Act of 2014, or PROTECT Act, would remove FDA regulation from applications such as consumer use melanoma applications, drug dose calculators and disease managers for patients. Similarly, H.R. 3303, Sensible Oversight for Technology which Advances Regulatory Efficiency Act of 2013’’ or SOFTWARE Act, aims to limit FDA regulatory authority over medical mobile applications and other software that functions similarly to medical devices. HHS will soon send to Congress a report that outlines how the FDA, in partnership with ONC and FCC, will address a strategy for health IT and mobile health technologies. Section 618 of FDASIA required that, within 18 months of the law’s enactment, these three agencies publish a strategy that outlines how the agencies will promote innovation, protect patient safety and avoid regulatory duplication.
BIO submits alternative options for FDA proposed generic labeling rule
On March 13, the Biotechnology Industry Organization (BIO) submitted a letter to the FDA in response to the proposed generic labeling rule issued last November. BIO notes that while they support the FDA’s proposal to open the “changes being effected” (CBE) labeling supplement process, greater clarity and agency accountability could benefit the overall process. In the letter, BIO proposes two processes and accountability models that could “advance the shared industry and agency obligation to ensure scientifically accurate information appears on drug product labeling.” Both options would require the FDA to respond within five days of receiving a CBE supplement. A 30-day evaluation period would follow, during which the FDA would determine the appropriateness of the submission as a CBE supplement and what the final labeling decision would be. BIO then proposes two options:
- The first would require the submitter to abstain from making any updates or notifying providers while the FDA assesses the proposal
- The second would allow the requestor to make the labeling change and notify providers, but other application holders would be required to abstain from making changes until after the agency assesses and makes a final decision
BIO indicates in the comments letter that the first option would “ensure consistency of multi-source product labels, [provide] clarity of roles, actions, and timelines for both NDA and ANDA holders and [minimize] the potential for patient and health care professional confusion.” The second option would allow a longer period of time for “discordance” between product labels.
Around the Country
Maryland, Nevada to allow enrollment in HIX for special cases after March 31 deadline
Last week, the Maryland Health Benefit Exchange board voted to adopt a plan to “maximize enrollment” in the state’s HIX. State officials announced that individuals who attempt to enroll in the HIX before the March 31 deadline will be allowed to continue the application process after the official end of the open enrollment season. These special cases will be considered for individuals who call a hotline or are referred to a call center, and individuals will receive assistance with enrollment for coverage beginning on May 1, 2014. State officials were clear that this is not an extension of the open enrollment period and the assistance will only be made available to individuals who have attempted to enroll by March 31. All four insurers that are offering medical plans on Maryland's exchange agreed to the special extension.
Related: last Thursday, Nevada’s Silver State Health Insurance Exchange board also voted to approve a similar plan. Individuals in the state who have attempted to enroll by March 31 will be given 60 additional days to complete the process. According the latest enrollment figures from HHS, Nevada has successfully enrolled approximately 28,000 individuals in health plans through the HIX, but officials estimate that up to ten times that number may have unsuccessfully tried to sign up throughout the 6-month enrollment period.
Note: HHS Secretary Sebelius has stated that the open enrollment deadline of March 31 will not be extended and that the agency has no legal authority to extend the deadline. Meanwhile, several other states running their own exchanges have begun discussions to implement the same plan as Maryland. Washington state announced on March 10 that customers who have encountered an eligibility or payment error will be handled on a case-by-case basis as to whether they qualify for a special enrollment period. Lawmakers in Vermont, Oregon and Kentucky are reportedly considering similar plans as the end of open enrollment approaches. While open enrollment ends on March 31, individuals will be allowed to enroll in the HIXs throughout the year during special enrollment periods if certain qualifying events such as loss of employer-sponsored insurance coverage, gain or loss of dependents (e.g., marriage, birth of child or divorce) or changes in eligibility for cost-sharing reductions occur.
California’s HIX, Covered California, makes up one-fifth of total U.S. enrollment
Last week, California’s state-run HIX, Covered California, announced they had enrolled more than one million people in health plans. By March 15, enrollment in the HIX had reached 1,018,315, and nearly 85 percent of enrollees had paid their premiums. California has the largest pool of subsidy-eligible enrollees and now accounts for more than 20 percent of national enrollment. Health Affairs recently outlined some successes and challenges California has faced to include:
- Enrollment disparities: California’s population is widely diverse, with Hispanics making up 52 percent of uninsured nonelderly adults and 46 percent of subsidy-eligible individuals. By the end of 2013, however, enrollment among this population had only reached 18.7 percent. To address the issue, the state implemented targeted outreach to Spanish-speaking individuals and successfully increased enrollment to 28 percent by the end of January.
- Technology challenges: California has faced technical challenges with their online portal, preventing people from applying for subsidies and enrolling. In February, the HIX website was down for five days, during which at least 37,000 completed and partially-completed applications for Qualified Health Plans (QHPs) and Medi-Cal, the state’s Medicaid program, were affected.
- Enrollment: while enrollment in the HIX has shown to be successful, exceeding the initial goal of 580,000 enrollees for the state, an additional 1.5 million are estimated to be newly enrolled into the Medi-Cal program. However, similar to the national trend, young adults are underrepresented relative to their proportion of HIX eligibility. According to latest estimates, 25.9 percent of Covered California enrollees are age 18-34, despite this demographic making up 36 percent of subsidy-eligible individuals.
- Plan selection among enrollees: similar to national figures, most enrollees in California signed up for silver plans, and 61 percent of subsidy-eligible individuals signed up for silver plans. Some have criticized the state for the increasingly narrow networks among the plans, but the state’s senior medical adviser emphasizes that about 80 percent of doctors and hospitals in the state are included in at least one of the plans in the HIX.
While Covered California continues outreach efforts encouraging enrollment, other states could be watching the success and challenges that the state faces in creating an insurance market that is affordable and accessible and offers an array of options for its residents.
NY hospital hosts hackathon, resulting in innovative mobile health apps for patient engagement
On March 15-16, New York-Presbyterian Hospital hosted a weekend-long hackathon, during which 17 teams competed to develop mobile health apps aimed at improving hospital patient engagement. The campaign, InnovateNYP, challenged the teams to develop technologically-driven solutions to improve the online patient care experience. Three health technology experts judged the entries and awarded prizes of up to $50,000 to the top three (in order of place):
- PresbyHangouts: this video chat service connects patients with similar interests, allowing for searching by topics from health care to chess.
- Intermed: this technology connects patients who are experiencing feelings of isolation and anxiety with other patients and mentors with similar conditions, as well as family and friends, to learn relaxation techniques and get support and motivation from others.
- Presbyterian Plus: this platform incentivizes patients to take better care of their health with better health choices, support networks and regular checkups.
Leadership at New York-Presbyterian has said they plan to reach out to hackathon participants with innovative concepts to continue development with goals to help patients within the hospital via mobile health apps. The hospital leveraged ChallengePost, a platform whose goal is to “[enable] government agencies and software companies to invite the public to solve problems.”
Stanford laboratory creates the Foldscope, a paper microscope that costs less than $1
A laboratory at Stanford University recently unveiled new microscope technology, known as Foldscope. Foldscope is made of paper and costs less than one dollar to produce. Using the Japanese art of origami, the Foldscope can be assembled in less than 10 minutes, but still provides 2,000X magnification with submicron resolution. Weighing less than two nickels and powered by a single button cell that lasts up to 50 hours, the Foldscope provides brightfield and darkfield images, lens-array and fluorescence microscopy. The total cost of the materials that go into building one Foldscope is estimated at $0.97. The developers expect the Foldscope to provide a cheap device to the masses including educational institutes and developing regions with limited funds and will now begin adding stains and filters to the device to be disease specific. This technology could allow Foldscope to be widely disseminated, and the Stanford innovators hope to encourage the next generation to gain a more hands on approach to microscopy and STEM fields.