Health Care Current: March 8, 2016

Laying new tracks for measuring performance in health care

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

Laying new tracks for measuring performance in health care

Have you ever experienced that frustration when you finally finish a project only to find that all of the pieces don’t fit together? I have had more than my fair share of these experiences, especially when it comes to home improvement projects where, despite my best efforts to measure three times and cut once, it doesn’t fit, or I don’t have the right tool, or I assembled it backwards. Each time I start a new one, my wife laughs at me as I say, “This time will be different.”

In the last three years, most health plans and their network of health care providers have been attempting to create different payment models based on improving the value for patients. However, changing the way the fee-for-service model has worked for the past 50 years presents formidable challenges. Even if we had all the requisite tools and technology, adoption is slow and arduous. Meanwhile, health plans, hospitals, and physicians also are trying to steer organizations down two tracks going very different speeds – one, the old fee-for-service track and the other, the high-speed value-based care (VBC) track.

In the Deloitte Center for Health Solutions report, Unlocking the potential of value-based care in Medicare Advantage, we surveyed how health plans and providers approach Medicare Advantage (MA) using VBC payment models. Not surprisingly, each has their own perspective about the value these new payment models can achieve and what is needed to make the pieces fit.

When asked about the major challenges in making population health more effective, there were significant differences between the perceptions of the health plan executives and health care provider executives. Health plans believe that providers’ biggest challenges are expertise in care management, their ability to effectively measure providers’ performance, and directing patient referrals to efficient physicians in their network. Providers, on the other hand, believe that quality and patient satisfaction can be positively impacted by VBC payment models. But, only half believe it will reduce costs.

The other, maybe not surprising insight from the research is that providers report a greater and more diverse set of experiences with VBC models in fee-for-service Medicare than they do with commercial health plans. It didn’t matter what type of payment innovation – whether bundled payments, primary care medical home, shared savings accountable care organizations (ACOs), or capitation – providers have had more experience with the US Centers for Medicare and Medicaid Services (CMS) than with commercial health plans.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) fundamentally changes how Medicare will pay physicians and other clinicians paid under the Medicare fee schedule in the future. The law puts significant revenue at stake for physicians. Although it affects physicians most directly, it also will affect hospitals that own physician practices and that participate in alternative payment models (APM). It defines elements of Medicare’s pay-for-performance system for physicians – including use of electronic health records, quality, and service use. It also defines what an APM looks like, including the need to share upside and downside risk.

Last week, CMS and America’s Health Insurance Plans (AHIP) released the proposed first set of quality metrics that will be used for assessing physician performance across seven different clinical areas. The metrics were developed by the Core Measure Quality Collaborative, a group of health plans, medical societies, employers, and consumer organizations. These proposed metrics may inform the composite score for physicians in the APMs and new Merit-Based Incentive Payment System (MIPS) program and help to form the basis of payment increase physicians will earn in the following year and will be made publicly available. After reviewing the metrics, it is clear that tracking and monitoring these performance measures and managing unplanned adverse variances will not be an easy or inexpensive proposition.

In July, CMS will publish a feasibility analysis on how it may integrate MA into the new payment system and what impact that may have on physicians who participate in VBC arrangements through MA. At the same time, starting in 2021, physicians that receive at least 50 percent of their payments from VBC arrangements under any payer will be eligible for temporary bonus payments. This “all-payer” model will include MA plans, Medicaid, and commercial health plans. Counting physicians’ VBC experience through MA plans might accelerate both plans and physicians’ movement into VBC arrangements – thereby creating more momentum for physicians to get on the VBC track and leave the old fee-for-service track behind.

A challenge for health plans is to understand that the next wave of payment innovation is right before their eyes and should not be ignored. CMS is already laying the tracks for how the new systems of Medicare payment innovation and measurement will be designed. Medicare revenue will continue to be important to physicians – expenditures are estimated to reach $1,038 billion in 2024 – and physicians are paying attention to the work CMS is doing to speed this transformation.

Given the investment in technology, process, and operating models that may be required for physicians to succeed and maximize their reimbursement, commercial health plans may need to find ways to run their trains on the same track as CMS. Physicians may simply not have the interest nor resources to manage to a myriad of metrics. The chance that health plans can operate a completely different approach is probably as workable as my next home improvement project – the fee-for-service and VBC tracks are quickly converging.

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My Take

By Bill Copeland, Vice Chairman, US Life Sciences & Health Care Industry Leader, Deloitte LLP


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Final 2017 benefit and payment parameters for federal exchange drops network adequacy standards and decreases state user fee

CMS released the final Notice of Benefit and Payment Parameters for 2017, easing a number of changes it had proposed for health plans. The final rule sets standards for health plans participating in the federal health insurance exchanges (HIX).

CMS finalized some policies with modifications from the proposed rule:

CMS will implement several other policies as originally proposed. CMS finalized the policy for six standardized benefit designs with varying levels of coverage and cost-sharing requirements. In addition to standard bronze, silver, and gold plans, insurers can offer three additional silver level plans at 73 percent, 87 percent, and 94 percent actuarial value levels. Insurers will not be required to offer standardized benefit designs, but they will be displayed more prominently on the website to help consumers compare options.

CMS is increasing out-of-pocket maximums to $7,150 for an individual and $14,300 for family coverage. To improve price transparency, CMS will begin publishing all premium rate changes. The final rule also requires health plans to provide 30 days notice to patients of providers being dropped from a plan.

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Implementation & Adoption

Health IT vendors commit to improving interoperability

During the 2016 Healthcare Information and Management Systems Society (HIMSS) convention, Sylvia Burwell, Secretary of the US Department of Health and Human Services (HHS), announced that several health information technology (IT) organizations have committed to improving interoperability between disparate systems. The 17 vendors engaged in this initiative provide electronic health records (EHR) and other IT systems to 90 percent of US health systems. The agreement aims to increase providers’ and patients’ access to health data.

Collectively, the health IT firms have three objectives through this initiative:

In December 2015, the Office of the National Coordinator for Health Information Technology (ONC) provided guidance on national interoperability standards for health care firms. Secretary Burwell said that in the fall, HHS will assess companies’ progress.

Related: Last week, the ONC proposed a rule to heighten its oversight of health IT vendors and their products. A priority is to reduce business practices that intentionally prevent the easy flow of data among EHRs, also known as data blocking. The rule would allow the ONC to review certified health IT products and practices to make sure companies are not, for example, charging fees to access medical records. Companies found at fault might be suspended or terminated from certification.

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Health IT leaders believe cybersecurity attacks will increase in 2016

Modern Healthcare’s annual Survey of Executive Opinions on Key Information Technology Issues found many healthcare organizations are investing in more resources to address cybersecurity. Three out of four surveyed health system leaders report that their IT security spending will increase in 2016; nearly a quarter of the respondents say they spend 2.1 to 3 percent of their organization’s budget on security. A majority of the respondents say that the threat of cybersecurity breaches will have some or a considerable impact on their organization’s IT security spending this year.

Other key findings include:

  • 53 percent of health system leaders say their organizations are encrypting personally identifiable data in storage
  • 81 percent expect the number of cybersecurity attacks in 2016 will exceed last year’s
  • Cyber and data security ranked among the top three health IT priorities
  • Ransomware threats have reemerged as a major issue among health care system leaders

Many hospital systems are building more robust IT departments, evaluating areas for improvement, and implementing training programs to educate employees on industry best practices. Leaders across the industry are taking action to mitigate increasing risks from cybersecurity threats.

(Source: Modern Healthcare, “Survey of Executive Opinions on Key Information Technology Issues,” February 2016)

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Medical professionals do not always reveal conflict of interest information in social media posts

According to STAT, few health care professionals reveal potential conflicts of interest when they offer medical advice or promote certain prescription drugs on social media. STAT looked at hundreds of health care professionals’ social media accounts and found that health care professionals promoting certain products rarely say that they are receiving compensation to do so.

No law requires medical professionals to disclose payments from drug companies in social media and most are likely not trying to mislead patients. Some patient advocates, however, say that physicians’ use of social media to promote specific treatments can misinform patients and might alter medical decision making. Many studies have shown a positive correlation between payments from drug makers and the rate of prescribing certain medicines. The Physician Payments Sunshine Act, part of the Affordable Care Act (ACA), requires drug and medical device companies to report all payments to doctors for promotion of medical products, consulting, and other services. Additionally, most medical journals require authors to disclose payments they have received from the industry and publish those ties.

The US Food and Drug Administration (FDA) requires drug manufacturers to present the benefits and risks of their products on social media platforms, but social media remains a largely ungoverned space for physicians and other medical professionals. Some are trying to ensure that patients are aware of any potential conflicts of interest. The Massachusetts Medical Society, for example, recently required all members to reveal their financial relationships to a medical procedure or service they mention online. Although the American Medical Association has published guidelines for social media use, they do not require physicians to disclose financial relationships over social media.

(Source: Sheila Kaplan, STAT, “Doctors promoting treatments on social media routinely fail to disclose ties to drug makers,” February 29, 2016)

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Comprehensive Addition and Recovery Act aims to curb opioid abuse epidemic

Last week, Senate lawmakers met to discuss the Comprehensive Addiction and Recovery Act (CARA), a bill that aims to address the opioid epidemic in the US. The epidemic has been in the spotlight in recent months, as many of the presidential candidates have raised concerns with heroin deaths in parts of the country. Deaths resulting from opioid abuse are now the top cause of injury-related deaths (beating out car accidents).

The Administration supports CARA. The bill would:

Senate lawmakers voted last week on several amendments to the bill. One would have granted $600 million in emergency funds to combat the opioid epidemic, but it was defeated in the committee. Another that passed would allow health plans to require at-risk beneficiaries to use one prescriber and one pharmacy for their opioid prescriptions. At this point, funding for the bill is unclear.

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On the Hill & In the Courts

FDA will grant $2 million for research on rare diseases

Last week, the FDA announced that it will distribute $2 million for studies investigating the natural history of rare diseases. The grants are designed to close a portion of the funding gap and help patient advocacy groups introduce key therapies to patients with rare diseases.

The FDA will fund two kinds of studies:

  • For prospective natural history studies, the FDA will grant a maximum of $400,000 each year for up to five years. 
  • Retrospective chart reviews or survey studies will qualify for $150,000 per year for up to two years.

The FDA said that prospective, longitudinal studies are more likely produce the most useful information. However, these studies can take decades to complete, which can delay drug development programs. This is why the FDA also will fund retrospective studies – to encourage companies to continue research and development on these diseases and help patients with serious conditions get access to promising therapies sooner. The FDA is accepting grant applications through October 14, 2016 and expects to begin funding recipients in March 2017.

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CMS expects health plans to limit premium growth in 2017 when tax on health plans is suspended

Last week, CMS addressed the suspension of the tax on health plans through a frequently asked questions document, saying it expects health plans to adjust their administrative costs to account for the suspension. Congress suspended the tax on health plans for one year when it passed the Consolidated Appropriations Act of 2016 (see the December 22, 2015 Health Care Current). The tax will be in effect until December 31, 2016 and then begin again on January 1, 2018.

CMS said that it expects health plans to reduce the index rates in their filings for the individual and small group markets to reflect the tax suspension. It estimates that the tax would have cost health plans approximately $13.9 billion in 2017, and suspending it should lower premiums.

This comes at the beginning of the last year for three of the premium stabilization programs in the ACA – risk corridors, reinsurance, and risk adjustment. The risk corridors and reinsurance programs sunset after this year, and many analysts say that premiums in the individual and small group markets could increase as a result. Some analysts say that the administration suspended the tax on health plans in 2017 to alleviate the cost pressures that will come from the end of these two programs.

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Legislators debate public vs. private options for long-term care

At a House of Representatives Energy and Commerce Committee hearing last week, lawmakers discussed new approaches for financing and delivery of long-term care. Long-term care is a large and growing share of state Medicaid budgets, and many lawmakers would like to find a funding solution. In 2012, 6.2 percent of Medicaid enrollees who used long-term care made up 43.4 percent of all Medicaid benefit spending. The Congressional Budget Office projects public and private spending on long-term care to increase from 1.3 percent of gross domestic product (GDP) in 2010 to 3 percent in 2050.

Lawmakers discussed several options for financing and delivering long-term care. For example, Representative Frank Pallone proposed adding an additional Medicare benefit, “Part E,” to cover long-term care services. But, Alice Rivlin from the Bipartisan Policy Center said that this may not be feasible and could reduce investments in services for young Americans. Rivlin said that lawmakers can take steps to make private long-term care insurance more affordable and improve access to such plans, while also establishing public catastrophic coverage after a cash deductible is met. She said that people may be more likely to buy private long-term care insurance if employers opt them into it by default.

This discussion follows the Bipartisan Policy Committee’s February report on improving financing of long-term care. The report says that more than one solution may be needed to address long-term care needs in the US and that these solutions may need to come from public and private sources. The ACA attempted to address long-term care needs through the Community Living Assistance Services and Supports (CLASS) program, which create a federally administered, voluntary insurance program for long-term care. However, shortly after the ACA passed, the administration and lawmakers said that the program was unsustainable and could not succeed. CLASS was repealed in early January 2013.

The Bipartisan Policy Committee will review options for enhancing long-term care coverage in the next year. It will examine:

  • How to strengthen the tie between long-term care coverage in Medicaid, catastrophic insurance programs, and employer insurance
  • Options for adding limited long-term care benefits to Medigap and Medicare Advantage plans
  • The impact of expanding and refining caregiver expense tax credits 
  • How to improve and expand respite care benefits in Medicare

(Source: Bipartisan Policy Committee, “Initial Recommendations to Improve the Financing of Long-Term Care,” February 2016)

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Survey finds many Americans like their care even if they dislike the health system

In a survey conducted by NPR, the Robert Wood Johnson Foundation, and the Harvard TH Chan School of Public Health, approximately 80 percent of surveyed respondents said that the care they receive is “good” or “excellent.” Forty-two percent rate the health care system as fair or poor. Eighteen percent of respondents rated their care as “fair” or “poor” overall and 29 percent and 13 percent, respectively, rated the care system as “fair” or “poor.”

The researchers investigated consumer experiences and views of the health care system in the US and across seven states: Florida, Kansas, New Jersey, Ohio, Oregon, Texas, and Wisconsin. Three of these states expanded Medicaid, and three did not. Wisconsin did not have to expand Medicaid after the ACA because it already had Medicaid eligibility criteria at that level.

Researchers analyzed the effect of the ACA on people’s views on health care. Three-fourths of respondents believe their health care has stayed about the same. Only one in six adults say their benefits have increased in the past two years, and 12 percent believe they have declined. Moreover, approximately 14 percent say the care they receive is better, and 9 percent say it is worse.

Generally, adults in the US have mixed feelings about health care quality. When asked about health care experiences at different sites – doctors’ offices, hospitals, emergency rooms, urgent care centers, and retail or drug store mini-clinics – 46 percent of respondents reported that the care they received in their most recent overnight hospital visit was excellent. Only 29 percent say the same about their most recent urgent care center visit.

(Source: “Patients’ perspectives on health care in the United States: A look at seven states & the nation,” NPR, Robert Wood Johnson Foundation and the Harvard TH Chan School of Public Health, February 2016)

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Around the Country

Supreme Court rules that states cannot mandate self-insured employers to report claims data for all-payer claims databases

A US Supreme Court decision last week ruled that Vermont cannot make self-funded insurance plans report medical claims data to the state. This overturns a lower court ruling on a 2011 law that required all health insurers, providers, facilities, and governmental agencies to submit claims information to the Vermont Department of Financial Regulation.

As reported in the December 8, 2015 Health Care Current, the case focused on two issues:

  • Whether data collection is a core function of the federal Employee Retirement Security Act (ERISA)
  • Whether the data collection required by Vermont is burdensome to insurers

In the 6-2 decision, Justice Anthony Kennedy said that reporting and record-keeping fall under ERISA, and therefore it pre-empts state efforts to place similar regulations on plans subject to ERISA (self-insured plans). The majority also said that different types of reporting rules across states could create burdensome regulations for plans. Justice Ruth Bader-Ginsburg disagreed, saying that Vermont’s law does not intrude on ERISA.

The US Department of Labor filed an amicus brief to the Court before the ruling, saying that states’ ability to collect and analyze claims data is important to the ACA’s success. In its decision, the Court said that Vermont and other states with claims reporting requirements for self-insured, ERISA-based health plans can still gather information. However, they need to seek approval from the federal government because the Secretary of Labor has the authority to establish additional reporting and disclosure requirements under ERISA.

Background: In 2011, Vermont established an all-payer claims database. Because the state defines health insurer broadly, it included third party administrators, pharmacy benefit managers, health insurance companies, and self-insured benefit plan administrators in the reporting requirements. When a self-insured company barred its third party administrator from sending medical and pharmacy claims to the state for the database, it argued that the ERISA prevents states from requiring them to provide data on the costs of their services. This decision will impact a number of state efforts to collect health care claims data.

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Medical devices are getting smarter – are consumers ready?

For children with scoliosis, a musculoskeletal condition that causes curvature of the spine, wearing a brace is often critical to avoid costly and invasive surgery. Researchers at Yale University set out to address some of the major challenges with the traditional brace, namely that children do not always wear it regularly, and it is easy to wear it incorrectly. They created a “smart” device to gather information on the treatment to help with adherence.

The device has a “smart strap” embedded with sensors to show how long the patient has worn the device and how tight it is. The smartphone application that downloads the data from the device can show how tight the strap is and how tight the strap needs to be pulled. A clinician can access this data from the web and can view it on a dashboard to evaluate and set different tightness levels. Preliminary testing shows potential for the device to improve adherence, and the device may be on the market within the next year.

In related news, a new study out of the Cleveland Clinic demonstrates that an at-home vitals monitor placed under the mattress can effectively predict hospital readmission for heart failure patients. The monitor tracks respiration rate, heart rate, and motion. This finding could be a step forward in encouraging care continuum from the hospital into the home. The sensors are non-invasive and can detect adverse events to allow for intervention prior to hospitalization. Hospitals wanting to improve readmission rates might invest in these. The study showed that change in respiratory rate is an effective predictor of hospital admission for patients with heart failure. Patients who were readmitted to the hospital had higher average heart and respiration rates and more respiration variability.

Analysis: Deloitte’s recent publication, “Technology-enabled home health: Are consumers ready?” discusses findings from focus groups on how consumers view technology’s role in health care. Overall, consumers are optimistic and believe the benefits of technology-enabled home health far outweigh the risks. For the unwell, home health technology can help manage their conditions and slow disease progression. For caregivers, it can offer peace of mind. For the healthy, it can provide the tools and support to maintain healthy behaviors.

Though interest is high, the findings did reveal some concerns. Consumers value the personal nature of health care and the patient-doctor relationship, and many are concerned that increasing reliance on technology will erode these relationships. Technology-enabled solutions that are perceived to intrude on people’s privacy, such as sensors that monitor an individual’s sleep quality or motion patterns at home, face resistance. Education may be required to effectively convey the benefits of such monitoring; consumers that evaluate the pros and cons often become amenable to the tradeoff.

As more care moves to self-care, consumers want to have influence and control over their own care and health information. They expect to learn about new technologies and to be actively involved – as patients or caregivers – in deciding which technologies are used for their care, how they are used, and what data will be disclosed and shared.

(Source: Shinichiro Ohshimo, Takuma Sadamori, and Koichi Tanigawa, “Innovation in analysis of respiratory sounds,” Annals of Internal Medicine, February 16, 2016)

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Breaking Boundaries

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