Health Care Current: May 12, 2015

Physicians under pressure: Was the “doc fix” enough?

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.

Physicians under pressure: Was the “doc fix” enough?

One day when I was a kid, I came home from school and Sedgie, the family dog, wasn’t there to greet me at the door like usual. I asked my mom where Sedgie was and she replied that she had taken him to the vet to be “fixed.” Now quite suspicious, I asked her why. She told me that it was to help him stay out of trouble and make him easier for us to manage. A few hours later, we went to pick him up at the vet. Still woozy from pain killers and sporting the “cone of shame,” one thing was clear: Sedgie was not happy.

On April 16, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which addressed the perennial “doc fix” issue by permanently repealing the sustainable growth rate (SGR) (see the April 21, 2015 Health Care Current). Along with the SGR repeal, MACRA also includes language that consolidates three existing quality incentive programs into the Merit-Based Incentive Payment System (MIPS). Beginning in 2018, MIPS will assess eligible professionals on their quality, use of resources, Meaningful Use of electronic health records (EHRs) and clinical practice improvement activities.

While the SGR issue may have been fixed, many of my doctor friends are still not happy. And much of their frustration is directed at governing bodies. Whether it’s coming from regulatory agencies or their own certifying boards, physicians are under a great deal of pressure.

For years, physicians have faced a series of measures intended to modernize and digitize the practice of medicine. Each program and new legislation followed a similar path: encourage early adoption through incentives and discourage laggards through penalties. An easy example to recall was the passage of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), which incentivized physicians for their e-prescribing practices. Through the E-Prescribing Incentive program, the US Centers for Medicare and Medicaid Services (CMS) paid eligible professionals (EPs) bonuses that started at 2 percent in 2009.1 Until the program expired in 2013, EPs who successfully utilized electronic prescribing received bonus payments averaging $3,000 in 2009, $3,836 in 2010 and $1,912 in 2011. In 2011, CMS decreased the incentive from 2 to 1 percent.2 Physicians were also on the hook if they failed to report during these years. As recently as 2014, EPs could see 2 percent adjustments in their Medicare payments for not being a “successful e-prescriber.”

In 2009, the passage of the Health Information Technology for Economic and Clinical Health (HITECH) Act ushered in the era of Meaningful Use. CMS is expected to provide $27 billion in incentive payments over the six-year duration of the program.3 Meanwhile, providers are also expected to transition from using the ICD-9 coding system to the more robust ICD-10 by October 1, 2015.

While these programs were designed to transform an antiquated and unsustainable health system, Deloitte’s 2014 Survey of US Physicians found that one in four physicians believe the scale and speed of health care system transformation has been far too fast. It also found that approximately three in four physicians believe EHRs increase costs and do not save time.

So they’ve fought back, seeking changes to the requirements and timetables of these programs. The deadline to transition to ICD-10 has been delayed twice, and due to industry pushback, CMS has also proposed modifying the Meaningful Use program to reduce reporting requirements.

Beyond governmental programs, battles now rage between physicians and their own specialty boards. In 2014, the American Board of Internal Medicine (ABIM) adopted new maintenance of certification (MOC) requirements. In a recent JAMA Internal Medicine publication, 11 physician focus groups pushed back against requirements intended to ensure that physicians were up-to-date on today’s standards of practice. The publication cited misalignment between the MOC's intent and a cumbersome recertification process.4 In protest, many of my colleagues now sport a “no MOC” button along with their stethoscopes and pen lights on their white coats.

There is broad agreement that in order to transform our health system into one that rewards healthy populations and improved outcomes, significant change likely will be needed. However, the pace of that change, the burdens it imposes and the role of various stakeholders likely will continue to be debated. Deloitte’s 2014 Survey of US Physicians shows that more than seven out of 10 physicians are satisfied with the practice of medicine. But, physicians have demonstrated that if they perceive they are being pushed too far, they push back.

Physicians today are facing demands from multiple fronts, whether it’s compliance requirements for federal health IT programs or demands from their own certifying boards. Organizations can support their physicians through these demanding times by developing capable physician leaders and partnering with them to navigate the complex regulatory, capital and governance issues that will likely help manage the transition.

Sedgie was a wonderful dog and lived a full and happy life. However, even though he had been fixed and readily responded to treats, if he felt cornered or threatened he would snarl and snap. The one thing that could never be changed about him was his instinct for self-preservation.

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My Take

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


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CMS: Pioneer ACOs saved more than $384 million in two years; program meets criteria for expansion

According to an analysis provided by the CMS Office of the Actuary, the Pioneer Accountable Care Organization (ACO) Program saved Medicare more than $384 million in just two years. CMS also announced it will be the first of the Center for Medicare and Medicaid Innovation programs to expand. Pioneer ACOs saved approximately $300 per beneficiary per year for the more than 600,000 Medicare beneficiaries served by the program. Patients served by Pioneer ACOs reported better outcomes than their counterparts in fee-for-service (FFS) and Medicare Advantage plans:

Background: The Pioneer ACO model is a demonstration program created by the Affordable Care Act (ACA). It is one of several innovative payment models that aims to transition Medicare away from traditional FFS payments toward rewarding providers for quality care and lower spending. Pioneer ACOs differ from ACOs participating in the larger Medicare Shared Savings Program (MSSP). Pioneer ACOs assume a greater level of risk for their patient population, and they also have greater potential to share in savings. The Pioneer program is designed for more seasoned health care organizations that have experience with care coordination. Some analysts have questioned the success of the Pioneer program because it began with 32 ACO participants but only 19 remain. However, the majority of organizations that withdrew from the program transitioned to the MSSP program.

The ACA policy that allows CMS to expand demonstrations is a departure from the past when CMS had to request permission from Congress to expand programs. Now, CMS may expand innovative models if the results show lower spending without reducing quality of care or improved quality without increasing spending.

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Implementation & Adoption

Analysis: More than 40 percent of Medicare payments are tied to value

Last week, the Catalyst for Payment Reform (CPR) released an analysis finding 42 percent of Medicare’s $360 billion in payments are tied to value. The remaining 58 percent of Medicare payments are distributed through traditional FFS models. Using 2013 data verified by CMS and the Center for Medicare and Medicaid Innovation, CPR found that value-based care (VBC) largely fell into the following categories:

Background: CPR is a non-profit organization that represents large employers or other purchasers of health insurance and aims to improve health care payments. CPR said that this analysis could serve as a benchmark to identify progress against the goals the US Department of Health and Human Services (HHS) announced earlier this year. HHS aims to have 50 percent of FFS Medicare payments tied to quality or value by 2018 (see the February 3, 2015 Health Care Current).

Related: The Deloitte Center for Health Solutions developed a US health care system performance dashboard to track the effects of VBC. The dashboard, to be updated annually, provides a picture of the current system based on the aspects of performance that VBC is most likely to affect. The dashboard also offers information on performance variation to provide insights into how the system might look in five years if VBC is effective. VBC can improve the US health care system’s outcomes in the Triple Aim areas of cost, patient experience and clinical quality/population health. Many stakeholder organizations may have opportunities to bridge the performance gap. As organizations move toward an aspirational VBC state, they should consider the following questions: “Can we simultaneously improve in all the Triple Aim areas or are trade-offs necessary?” “Which aspect of the Triple Aim will we go after?” “What has made some organizations effective?”

(Source: Catalyst for Payment Reform, “CPR Scorecard on Medicare Payment Reform,” 2015)

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Study: Mid-level practitioners in the VA provide same quality care as physicians

In a study published in the American Heart Association journal Circulation: Cardiovascular Quality and Outcomes, researchers found no significant differences in the quality of care provided to heart patients by physicians, nurse practitioners and physician assistants. To measure the differences in care quality, researchers tracked outcomes for more than one million patients with heart problems seen by one of the three different types of clinicians in a primary care setting. The study took place in 130 different US Department of Veterans Affairs (VA) health care facilities between 2013 and 2014. It focused on three measures:

  1. Prescriptions for and adherence to beta-blockers 
  2. Blood-pressure monitoring and control 
  3. Cholesterol control

While the study found that only 54 percent of patients experienced appropriate care in all three measures, there was no statistically significant difference among patients who saw physicians and those who saw non-physician practitioners.

The study did not focus on the quality of specialty care or care furnished outside of VA settings. Additionally, the role of non-physician practitioners differs widely from state to state. Only twenty states allow nurse practitioners with sufficient experience to treat patients without a physician’s supervision. The VA is currently considering revising the Veterans Health Administration Nursing Handbook to expand nurse practitioners’ autonomy within the VA system, even outside of the twenty states that allow treatment.

Analysis: Many policymakers have been interested in expanding the scope of practice for nurse practitioners and physician assistants. Medicaid expansion and the new health insurance marketplaces have generated a throng of newly insured patients. As a result, stakeholders have questioned whether there are enough physicians in the US to care for the millions of newly insured patients. The Deloitte Center for Health Solutions 2014 Survey of US Physicians shows that 44 percent of physicians are treating more newly insured patients. Primary care physicians, compared with other specialists, were the most likely to have experienced an increase in the number of newly insured patients.

A recent Deloitte report, Expanding coverage: How primary care physicians are accommodating the newly insured, provides the survey results and discusses policies that may help alleviate some of the strain the expansion of coverage is causing on the system. Research suggests that nurse practitioners and physician assistants could help alleviate some of the pressure by providing direct patient care, care coordination and chronic disease management. Some states have begun initiatives to allow these clinicians to practice at the top of their license. For example, Nebraska recently passed a bill that expanded nurse practitioners’ scope of practice. Under the initiative, nurse practitioners in Nebraska can now prescribe medications, which may lead to better disease management in patients with chronic diseases. Initiatives like the one in Nebraska could help convince regulators and policy makers that these clinicians should have a larger role in patient care.

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S&P Ratings Services: Risk corridor pool for 2014 may be underfunded

A recent review of health plans’ balance sheets from 2014 indicates that the risk corridor program – one of the three premium stabilization programs for plans participating in the public health insurance marketplaces – may be underfunded. The risk corridor program exists to protect health plans against uncertainty in rate setting and costs associated with pricing for a new risk pool (i.e., the marketplaces). Organizations that are offering qualified health plans in the individual and small group markets are afforded this protection for the first three years of the marketplaces (2014-2016).

Standard & Poor’s (S&P) Rating Services reviewed publicly available balance sheets from the National Association of Insurance Commissioners annual statutory filings and the Securities and Exchange Commission’s 10K filings. It found that 14 percent of health plans are expecting to pay into the program, while 30 percent are expecting to receive payments from the program:

S&P calculated that the payments health plans are expecting to make for the 2014 plan year make up less than 10 percent of payments some health plans projected in their balance sheets.

Analysis: Last spring, CMS released a Q&A guidance document on the risk corridor program that explained how the agency plans to implement the program so that it is budget-neutral. CMS clarified that if the risk corridor payments are insufficient for 2014, payments for that year will be reduced “pro rata” to make up for the shortfall. CMS will use collections from 2015 to pay off the shortfall for 2014 before any payments out for this year are made. If risk corridor collections do not match risk corridor payments in the final year of the program, CMS will issue future guidance or rulemaking to calculate and adjust for payments.

While large health plans may have the capital to withstand losses, many smaller health plans and Consumer Operated and Oriented Plans (COOPs) may depend on these payments. In fact, S&P also analyzed the balance sheets to find that larger health plans, such as Health Care Service Corporation and Humana Inc., are expecting payments of greater than $50 million from the risk corridor program. However, this amounts to less than 3 percent of their capital. In comparison, several COOPs are expecting payments that are greater than 100 percent of their capital. Ultimately, if the risk corridor program is unable to pay out these expected amounts, some smaller health plans may be unable to sustain their business in the marketplaces and consumers in the individual market may experience changes in the available plans or volatile premiums in years to come.

Many health plans remain concerned that the administration may not have the funds required to cover potential losses. Furthermore, a report from the Government Accountability Office recently raised concerns that CMS might not have authority in 2015 to issue payments for the risk corridor program. Many lawmakers in Congress are seeking to delay or prevent the appropriations needed to run the program.

(Source: S&P Ratings Services, “The Unfunded ACA Risk Corridor May Make The US Insurance Market Less Stable, Not More,” May 1, 2015)

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On the Hill & In the Courts

Senate HELP Committee holds Precision Medicine hearing

On Tuesday, May 5, the Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing on Precision Medicine. This initiative was launched by the administration and has bipartisan support in Congress.

The committee heard testimony from Dr. Francis Collins, Director of the National Institutes of Health (NIH); Dr. Karen DeSalvo, National Coordinator for Health Information Technology (ONC); and Dr. Jeff Shuren, Director of the Center for Devices and Radiological Health, Food and Drug Administration (FDA). The witnesses provided insight into their respective agency’s contributions to the efforts of Precision Medicine. Dr. Collins discussed the medical gains that could result from the NIH’s research cohort of one million individuals who will volunteer their health data. He also said that cost-savings from this program may not be visible for many years.

Chairman Lamar Alexander and Ranking Member Patty Murray asked what role cyber-security and interoperability will play in the Precision Medicine Initiative. Dr. DeSalvo outlined measures the ONC is taking to ensure patient privacy, such as securing and encrypting patient data for movement across systems (health information exchange) and when the data is not being exchanged.

Background: President Obama announced the Precision Medicine Initiative in his State of the Union address earlier this year. The FY2016 budget included a proposal of $215 million to facilitate the launch of the initiative. The Precision Medicine Initiative supports individualized medicine research, disease prevention and treatments that are “customizable” to an individual patient (see the January 27, 2015 and February 3, 2015 Health Care Current).

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Pennsylvania proposes state-based marketplace contingency plan

Pennsylvania Governor Tom Wolf announced his intent to form a state-based health insurance marketplace if the US Supreme Court rules against allowing premium subsidies in the federally facilitated marketplaces (FFM) in King v. Burwell. In a letter sent to HHS, Governor Wolf explained that the state would operate the marketplace using the FFM's existing infrastructure. The governor said the state would approve plans, operate a call center and collect fees for operational expenses.

While Pennsylvania will work with the Center for Consumer Information and Insurance Oversight within CMS to get approval for its marketplace application, the letter is non-binding and does not guarantee the state will move forward with a marketplace. In the press release, the governor’s office explained, “[t]his simply leaves the door open so the state has this option in the event of an adverse Supreme Court ruling.”

According to the Kaiser Family Foundation, approximately 382,000 Pennsylvanians receive premium subsidies through the federal marketplace in 2015. By 2016, more than 736,000 Pennsylvanians could be covered by subsidized plans. Overall, the Foundation estimates that more than 13 million people in the 34 states without a state-based marketplace could lose access to subsidies in 2016. Fourteen states have established and are running their own marketplaces.

HHS Secretary Burwell has publically stated that there is no “contingency” plan in the event that the Supreme Court rules against the federal government in King v. Burwell. Pennsylvania is the first state to express a desire to move forward with a state-based marketplace dependent on the outcome of the case.

Related: The Supreme Court heard oral arguments on the King v. Burwell case in early March and is expected to rule on it this summer. The case challenges an important coverage provision of the ACA: whether individuals in the FFM are eligible to receive premium subsidies. During the oral arguments, the justices presented exploratory questions: What was the federal statutory model after which the ACA was designed to establish national insurance rules and provide federal assistance to states? Does the ACA tie states' hands – in either a coercive or cooperative way – to receiving federal assistance only if they establish an insurance marketplace? Is it like Medicaid or the Clean Air Act?

In the March 10, 2015 Health Care Current, Anne Phelps, Principal, US Health Care Regulatory Leader, Deloitte & Touche LLP, reflected on the case. She discussed HIPAA as the precursor to the ACA. The structures of the laws are similar, they amend the same statutes and there are options provided for states, including the option to pass enacting legislation or “fallback” to the federal government. There is one important difference: in establishing new insurance market rules, and in an effort to expand coverage under the ACA, Congress provided advanced premium assistance tax credits to help individuals purchase marketplace coverage. Ultimately, one of the most pressing questions may be, “Will the Supreme Court decision spur states to action?”

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Around the Country

Oregon insurers increasing rates for individual plans

Plans offering coverage in the health insurance marketplace in Oregon proposed rates for the 2016 plan year to the state for approval last week. Time Insurance Company and PacificSource Health Plans requested average rate increases of 52 and 42.7 percent, respectively. On average, plans have proposed increasing rates from 5 to 52 percent. Two new plans have proposed lower rates than plans already in the market. None of the proposed rates are final.

Background: Health plans’ proposals reflect their cost and claims experience from 2014 and 2015, which were unavailable when the organizations were setting premium rates for the first two open enrollment periods. Oregon initially had some of the lowest rates in the country. However, now many plans are saying that the people who enrolled were sicker and costlier than they originally expected. Similar requests may be seen in other markets.

The new rates will need to be approved by the Oregon Insurance Division. Consumers can comment on the proposed rates and attend hearings to voice their opinions. If the rates are approved, consumers will be able to switch plans during the 2016 open enrollment period (which begins on November 1, 2015) before any increases go into effect on January 1, 2016.

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Maryland initiative reduces ED visits among high-need populations

For several years, Maryland has tested an initiative that connected uninsured emergency department (ED) patients with primary care providers to reduce ED visits. The program was successful among patients with chronic physical or behavioral conditions, according to recent study in Health Affairs. The Emergency Department-Primary Care Connect initiative was one of twenty-nine community projects funded by CMS in 2008. The initiative connected uninsured ED patients with primary care providers in one of four safety-net clinics to establish a usual source of care.

The study analyzed data for 10,761 patients between 2009 and 2011 and found that, among people with chronic physical or behavioral conditions, subsequent ED visits decreased significantly. These high-need individuals were also more likely to seek continuous care from their referred primary care provider than individuals who did not have similar conditions. The results were not significant for the broader patient population.

Related: Seven of the country’s ten busiest EDs reported increases in patient visits between 2012 and 2013. Although this trend seems to contradict the expected effect of expanding coverage through the ACA, those who have recently gained insurance coverage may require more time to change the way they seek health services (see the January 27, 2015 Health Care Current).

(Source: Kim, Theresa Y., Mortensen, Karoline, Eldridge, Barbara, “Linking uninsured patients treated in the emergency department to primary care shows some promise in Maryland,” May 2015)

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Finding a simpler, cost-effective strategy to eliminate vaccine-preventable disease

Researchers from the Georgia Institute of Technology and the US Centers for Disease Control and Prevention (CDC) are working on a microneedle patch that could make it easier to vaccinate people against measles and other vaccine-preventable diseases. The patch is about one square centimeter, and designed so that vaccinators with minimal training can deliver it with the press of a thumb. The microneedles press down in the upper layers of the skin when applied and dissolve within minutes, releasing the vaccine. Compared with conventional needles, this design simplifies vaccine storage, distribution and disposal.

This process reduces the need for syringes, sterile water or sharps disposals and eliminates the risk for needle-sticks. This new method of delivery also could help get the measles vaccine to remote areas of the globe in a cost-effective way, especially since the patch is more stable at varying temperatures than the currently available vaccine. Researchers expect manufacturing costs for the patch to be comparable to the currently available needle and syringe vaccine.

Measles kills 400 children a day around the world, and 20 million people are affected each year. The vaccine only reaches about 85 percent of the global population each year, which is below the targeted 95 percent needed to interrupt transmission of the virus. Researchers hope this patch will help eliminate the measles virus. The study showed that the patch produces a strong immune response in an animal model and did not identify any adverse effects or health issues. Human clinical trials could begin as early as 2017.

Analysis: While this is certainly good news for anyone who dislikes needles, the implications of this patch could be significant in the Global Vaccine Action Plan’s plan to prevent millions of deaths by 2020 through universal access to vaccines for people in all communities. One of the biggest challenges in getting vaccines to those who need them, especially in underdeveloped countries, is maintaining the vaccine at a constant temperature. This process is called the “cold chain.” If this system permits greater variance in temperature and obviates the need for a cold chain, it could greatly advance vaccine delivery to those most at risk and increase the chance for eradication of measles.

If administration of the measles vaccine through microneedles proves to be successful, it could provide an additional delivery mechanism for other vaccines and potentially decrease incidence of vaccine preventable disease. The CDC is also collaborating with Georgia Tech to see if microneedles could be used to administer inactivated polio vaccine. Additional research is being conducted to study microneedle-administration of the influenza, rotavirus and tuberculosis vaccines.

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Breaking Boundaries

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