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Perspectives

States that expand Medicaid in 2019 could see spike in utilization, but fewer non-emergency ER visits

Health Care Current | November 20, 2018

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

My Take

States that expand Medicaid in 2019 could see spike in utilization, but fewer non-emergency ER visits

By Sarah Thomas, managing director, Deloitte Center for Health Solutions, Deloitte Services LP

As we watched the results of the mid-term elections unfold this month, health policy wonks like myself were paying close attention to a handful of states. Three states (Idaho, Nebraska, and Utah) voted “yes” on Medicaid expansion through ballot initiatives, while three other states, including Kansas and Maine, elected governors who stumped for expansion. Nearly 500,000 uninsured adults in those states could gain access to Medicaid coverage.1

Based on what we have seen from the 33 states that have already expanded Medicaid, as called for by the Affordable Care Act (ACA), these new expansion states could see fewer non-emergency visits to emergency rooms (ERs), but they also should expect a short-term spike in utilization.

Hospitals could see more revenue, less bad debt
The big winners in Medicaid expansions tend to be hospitals and health systems. As people go from being uninsured to having coverage, payment for services increases. This new health coverage can also lead to a short-term increase in utilization as people seek care for health issues they had neglected. Some of this additional utilization is medically necessary and appropriate. However, Medicaid programs, along with the health plans that serve Medicaid beneficiaries, should avoid low-value care. A patient using an ER for non-emergency services is an example of low-value care. Visiting the ER is expensive by itself, and it can lead to costly inpatient admissions.

The Deloitte Center for Health Solutions recently analyzed data from the National Health Interview Survey (NHIS). Our researchers found that once people go from being uninsured to having Medicaid coverage, the pattern of ER use shifts, with a much lower share of people using the ER as a regular source of care.

We found that many uninsured people view the ER as the place they go for care—because they often lack access to other care settings. For instance, one-third of uninsured respondents who visited the ER in 2016 said the ER was “their usual place of care.” That compares to just 12 percent of Medicaid respondents and 7 percent of Medicare respondents. Similarly, more than half of uninsured respondents said they visited the ER in 2016 because “they had no other place to go,” compared to 39 percent of Medicaid and 30 percent of Medicare respondents.

But what happens once the uninsured gain coverage under Medicaid? We found that beneficiaries who are new to Medicaid are more likely than the uninsured to visit the ER due to the acuity of an underlying condition, rather than lack of access to other care sites, which is good news.

Here are two important lessons many states discovered after expanding Medicaid eligibility:

1. Most new enrollees went to the ER instead of a physician’s office not because of access problems, but because of a serious health problem: Nearly all (98 percent) of new Medicaid enrollees who visited an ER said they thought their condition was too serious for a physician’s office. Among the uninsured, only 54 percent cited this reason for visiting the ER.

2. Uninsured people are more likely to choose the ER for care: More than one-third of uninsured respondents said they considered the ER as “their usual place of care.” Only 4 percent of new Medicaid enrollees had the same perspective.

Trends were similar in states that expanded their Medicaid program after 2014. In 2016, for instance, only 16 percent of new Medicaid enrollees in new expansion states said they had gone to the ER because they had no other place to go—compared to more than half of uninsured respondents.

Stakeholders are working to reduce low-value-care
States, health systems, and health plans often have programs aimed at encouraging Medicaid enrollees to see their physicians, or go to other ambulatory care settings, for non-emergency conditions, instead of the ER. These initiatives are designed to try to reduce spending, and to encourage Medicaid patients to develop a continuous relationship with a primary care physician, which can improve outcomes.

Case in point: One telehealth ambulance triage system reduced unnecessary ER visits by nearly 7 percent, according to our report on reducing low-value care. For every avoided ER visit, the program saves approximately $2,500 (about $1 million a year). The Emergency Telehealth and Navigation (ETHAN) program established a system of ambulance-based teleconsultations that reduced ER use and gave emergency medical services (EMS) teams more time to respond to other calls. Patients who request ambulance services receive on-the-spot referrals to the most appropriate sites of care—ER, hospital, urgent-care clinic, or home.

When EMS teams aren’t sure whether a patient needs emergency transport to the hospital, ETHAN uses a tablet-based video chat feature that allows emergency physicians to conduct real-time patient assessments. For patients deemed in need of emergency care (or who refuse the proposed alternatives), EMS provides transportation to hospital by ambulance or taxi. For patients who do not need emergency care, EMS teams can use an app to schedule appointments at partner clinics, refer patients to their primary care doctor, or facilitate self-care at home. Local partner organizations help with follow-up monitoring and can connect patients to community-based resources that address social health-related needs—an important part of reducing ER utilization.

Some states and Medicaid managed care plans have worked to reduce unnecessary ER visits through incentives built around quality measures, patient outreach, and education, and by investing in access to other settings (e.g., primary care and urgent-care facilities) to address access issues.

States that opt to expand Medicaid eligibility in 2019 should look for opportunities to help ensure that newly covered beneficiaries receive the right care at the right time. A focus on non-emergency ER use is just one of many delivery system innovations that could help reduce low-value care. For more information on Medicaid and value-based payment strategies, please see Deloitte’s recent health policy brief.

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1 Kaiser Health News, November 8, 2018

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In the News

Most eligible clinicians received a bonus during first year of MIPS

Nearly all (93 percent) of the 1.06 million clinicians who participated in the Merit Based Incentive Payment System (MIPS) will receive a bonus in their Medicare Part B payments to reflect their performance in 2017, according to a recent announcement from the US Centers for Medicare and Medicaid Services (CMS). Participants will start to receive their bonuses January 1, 2019.

For the first year of the program, which Congress established through the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), participants had to score a minimum of 3 points (out of 100) to qualify for positive payment adjustments. According to CMS, most clinicians—71 percent—scored between 70 and 100 points and will receive a bonus between 0.28 percent and 1.88 percent.

MIPS clinicians

In May, CMS said that 91 percent of MIPS-eligible clinicians participated during the first year, exceeding the agency’s goal of 90 percent. CMS Administrator Seema Verma noted that bonus payments this year are modest due to the budget-neutrality requirement MACRA established for MIPS. CMS relaxed many of the reporting requirements in 2017 to help ease clinicians into the program.

(Source: CMS, Quality Payment Program (QPP) Year 1 Performance Results, November 8, 2018)

CMS encourages flexibility to address mental health for Medicaid beneficiaries

CMS is giving states more flexibility to access federal-matching funds for providing mental health and substance-use disorder treatment services for Medicaid beneficiaries. In a November 13 letter to state Medicaid directors, the agency outlined guidance for providing services to beneficiaries who have serious mental illness (SMI), and to children who have serious emotional disturbance (SED). The agency also cited a new demonstration opportunity for states to cover care provided by institutions for mental disease (IMDs).

This guidance is significant because the Social Security Act generally prohibits the federal government from matching state payments for medical services provided to patients age 21 to 65 who are in IMDs. For years, policymakers have debated this payment exclusion, which makes inpatient behavioral health for adults the main responsibility of states. Critics have argued that it prevents seriously mentally ill beneficiaries from receiving the most appropriate care.

The guidance makes clear that states can provide, without a waiver:

  • Earlier identification and engagement in treatment
  • Integration of mental health and primary care
  • Increased access to evidence-based services that address social risk factors

The letter also announced a new SMI/SED demonstration opportunity, under the Section 1115 waiver program, to allow Medicaid programs to cover an average of 30 days of care at IMDs. CMS says this new demonstration will test if the existing IMD payment exclusion is a barrier to access for Medicaid beneficiaries with SMI/SED.

In a recent speech at the National Association of Medicaid Directors conference, US Department of Health and Human Services (HHS) Secretary Alex Azar encouraged states to apply for new Section 1115 waivers to expand access to mental health treatment for their residents.

(Source: CMS, CMS Announces New Medicaid Demonstration Opportunity to Expand Mental Health Treatment Services, November 13, 2018)

CMS approves Michigan’s request for pharmaceutical outcomes-based contracts in Medicaid

On November 14, CMS approved Michigan’s request to allow its Medicaid program to enter into outcomes-based contracts with drug manufacturers (see the October 23 Health Care Current). During the November 14 Biopharma Congress, CMS Administrator Seema Verma noted the drug industry’s interest in outcomes-based payments and reaffirmed the agency’s focus on lowering drug prices through its proposed International Pricing Index (IPI), which was announced in October (see the October 30, 2018 Health Care Current).

Under outcomes-based contracts, health plans or state agencies negotiate with manufacturers over drug prices based on how well patients respond—if they do not do as well as expected, the manufacturer may rebate some of the payments back to the health plan or state. Michigan is the second state approved to try this type of payment in its Medicaid program. CMS approved Oklahoma’s request in June, and the state now has outcomes-based contracts for four drugs—two antipsychotics, a treatment for epilepsy, and a one-time injection to treat skin infections (see the July 17, 2018 Health Care Current).

According to the Medicaid and CHIP Payment and Access Commission’s (MACPAC) 2016 publication, Medicaid Spending for Prescription Drugs, average prescription-drug spending increased by 12 percent for all health plans in 2014, but for Medicaid, the increase was 24 percent as new high-cost specialty drugs began to enter the market. MACPAC also found that Medicaid spent an average $42 billion for drugs in 2014, with a national net expense of $22 billion after collecting approximately $20 billion in rebates from drug manufacturers.

More health plans available in public exchanges for 2019

People who buy health coverage through a public insurance exchange this fall could see more health plan options, according to an analysis from the Kaiser Family Foundation (KFF). Several years of declining profits and regulatory uncertainty led some health plans to exit the exchanges.

  • For the 2019 plan year, 58 percent of shoppers will have access to products sold by three or more carriers—up from 48 percent a year ago.
  • During last fall’s open-enrollment period, 26 percent of shoppers were limited to products sold by one insurance carrier. For the 2019 plan year, that percentage has fallen to 17 percent.
  • In more than 600 counties, people searching for coverage on an exchange will see at least one more health plan than they saw during last year’s open-enrollment period. However, consumers in five counties will see fewer health plans.

(Source: KFF, Insurer Participation on ACA Marketplaces, 2014-2019, November 14, 2018)

US health tech leaders join forces to bring innovation to Medicaid

More than 40 health technology leaders from organizations across the US are working to bring technological innovation to Medicaid. HealthTech4Medicaid (HT4M) is a new national nonprofit organization that aims to spur innovation, increase patient access, reduce health care costs, and improve health outcomes in Medicaid.

In August, 17 health systems across 21 states formed the Medicaid Transformation Project to develop digital care solutions to complex health challenges, including behavioral health, care for women and infants, substance use disorders, and unnecessary ER visits. This new group seeks to facilitate partnerships among policymakers, health plans, and doctors to increase health IT accessibility for vulnerable populations. A Deloitte report from earlier this year discussed how state Medicaid programs could improve health outcomes by adopting new technologies.

HHS: Addressing social determinants can improve health, reduce costs

During a November 14 symposium hosted by the Orrin G. Hatch Foundation and Intermountain Healthcare, HHS Secretary Alex Azar discussed the agency’s interest in incorporating social determinants of health into care delivery.

Azar highlighted the Center for Medicare and Medicaid Innovation’s (CMMI) Accountable Health Communities model, which started last year to help providers integrate health and social services for at-risk patients. Under the model, participating doctors screen high utilizers of health services for issues such as food insecurity, transportation limits, and housing needs, among other concerns. Patients are also paired with navigators who can help direct them to resources.

Azar said the model could drive down health care costs. As the health care landscape shifts toward value-based care, health systems that take on more risk can receive larger payments, he explained. Recent Deloitte research provides insight into how states can incorporate social determinants into their health care payment policies.

(Source: HHS, The Root of the Problem: America’s Social Determinants of Health, November 14, 2018)

Breaking Boundaries

Health care organizations highlight innovations to watch in 2019

It’s that time of the year again when health care innovators make their predictions about the medical advancements we should watch in the coming year. Cleveland Clinic and the HealthCare Executive Group (HCEG) recently released their annual lists. Cleveland Clinic focused on the top 10 medical innovations to watch, while HCEG assembled a panel of executives from health plans, health systems, and technology organizations to vote on the top 10 critical challenges, issues, and opportunities they expect to face in 2019.

A common element in both lists was opioid management. Cleveland Clinic highlighted pharmacogenomic testing, which uses a patient’s genetic makeup to predict how he or she will metabolize certain drugs, including some opiate-based drugs. Clinicians can use this information to eliminate unnecessary prescriptions and replace them with more effective medications. Pharmacogenomics can also help identify patients who might not respond to some opiate-based analgesics and provide them with tailored pain-management therapies. HCEG focused on the need to develop strategies for identifying and supporting individuals and populations that are at-risk for substance use disorders.

Leveraging data, analytics, and digital capabilities were other common features of both lists. HCEG highlighted the broader themes of leveraging clinical data to manage health and drive better decision-making. Their list also highlighted ways that wearables and patient-generated data could improve health monitoring. Cleveland Clinic targeted the use of artificial intelligence (AI) to improve decision support, image analysis, and patient triage.

Cleveland Clinic included virtual and mixed reality (VR/MR) for medical education. A growing number of health care professionals are using VR/MR for simulation training to enhance traditional medical schooling. Two items on Cleveland Clinic’s list focused on cardiovascular care. A hemorrhage-scanning visor is a technology that patients can wear to detect bleeding, which can help quickly diagnose hemorrhagic strokes. Mitral and tricuspid valve percutaneous replacement and repair—a less-invasive cardiac surgery performed with a catheter through the skin—was included on the list for its potential to significantly impact cardiac care. One non-technological innovation that made the list is 2018 guidelines from two cardiovascular specialty societies that expand the window for treatment and are expected to lower the risk of disability—and give a greater number of future stroke patients an opportunity for recovery.

Rounding out Cleveland Clinic’s list are RNA-based therapies, robotic surgery, cancer immunotherapy, and 3D printing. RNA-based therapies have shown potential to intercept genetic abnormalities early and could greatly improve therapies for certain rare diseases, cancers, and neurological conditions. Robotic surgeries are giving doctors the ability to be extremely precise, which could help shorten recovery time, reduce pain, and lead to more effective outcomes.

Other items on HCEG’s list included population health services (specifically operationalizing community-based strategies and chronic-care integration) and the social determinants of health. The group also touched on value-based payments and the continual transition toward targeting specific medical conditions to manage costs and improve care quality. Rising pharmacy costs—and strategies to address these costs—is another area to watch. The list also acknowledged that disruptors from outside the traditional health care industry could change how stakeholders engage with consumers regarding health.

Stay tuned for upcoming issues of the Health Care Current where we will be providing our expected trends and predictions for 2019 for the industry.

(Source: Cleveland Clinic, Cleveland Clinic Unveils Top 10 Medical Innovations for 2019, October 24, 2018; HCEG, Healthcare Executives Rank the Top 10 For 2019, September 18, 2018)

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