Health Care Current: November 4 2014 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current: November 4, 2014
Ebola outbreak: Turning fear into action
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
Ebola outbreak: Turning fear into action
Last week my wife, Kerry, helped host our school’s 2nd grade parent social. Located just outside Washington, D.C., our school has families from all over the world. Not surprisingly, a big topic of conversation was the Ebola outbreak; the tragic consequences in Africa were (and still are) being felt at home. Along with diplomats who visit their home countries regularly, several parents in the group – including me – spend a good part of their time on airplanes. Others are health care workers at a nearby facility for the National Institutes of Health, a designated Ebola treatment center, and were just as concerned with their exposure risk as they were about reports of health care workers being discriminated against. The parents were wondering how to proactively manage this and other threats, and the entire conversation seemed reminiscent of prior concerns around SARS, H1N1 and even anthrax.
For years, the health care system has chalked many of its problems up to a lack of consumer engagement. The recent outbreak of Ebola in Africa and the U.S. is yet another opportunity to engage consumers in a conversation about how the U.S. health care system can become one that rapidly identifies, contains and mitigates novel health threats—because this won’t be its last. While unrelenting media coverage has nearly guaranteed that potential Ebola cases will likely be detected, it has also fueled drastic responses from both individuals and organizations. The U.S. health care system needs improvements to be one that can better deal with a broad range of issues across the population wherever they might be, and it needs more engaged and informed consumers in order to get there.
What is needed in the health care system to achieve this? How do those needs translate to the average consumer? In my opinion, the health care system needs to become an intelligent, responsive and adaptable one with certain critical capabilities:
Proactive monitoring of emerging threats: Sick patients arriving at hospitals are often a late indication that something is going on. Early warning signs of new or changing diseases often come from other sources: spikes in over-the-counter medication purchases, reduced public transit usage, Internet searches, weather events and more are early indicators that the system should be able to use. Analytics capabilities could encompass a broad range of data to give health officials a clearer sense of potential threats. Engaged and informed consumers will likely be those who understand the broader implications their actions and the actions of others have on these emerging threats. Even small actions like washing hands frequently and getting an annual flu shot help consumers remain engaged with the system before the threat becomes real and arrives at their doorstep.
Collaborative development of policies and updated workflows: As threats are identified, public health and clinical officials alike should consider assessing protocols that are in place, and either reinforcing or modifying as necessary. However, these stakeholders might also take into account how changes will affect workflow and whether these changes will require new resources. Consumers need the tools and education to understand how to interact with the system—the best workflow and policies in the world will not necessarily help if consumers cannot find the information and care they need.
Optimization of the collection and sharing of health data: The country’s investment in health information technology is poised to improve the quality and safety of clinical care. Many institutions, however, lack the ability to rapidly align their electronic health records (EHRs) with evolving needs or updated decision-support tools so much of the data remains trapped within an organization. EHRs can be valuable tools in identifying and managing critical public health issues, especially in the absence of broad awareness or media coverage. Consumer engagement with health care data and information technology is on the rise, but could still be stronger. Deloitte’s survey of U.S. health care consumers found that one-third of Millennials and only 18 percent of Baby Boomers have a personal EHR. Clearly the case has not been made to enough consumers that collection and sharing of data could strengthen the health care system and leave it better prepared to handle crises such as outbreaks, outweighing the potential privacy and security concerns (that should also be addressed).
Leadership and governance: Amid the fear and uncertainty of new public health threats, decisions should be made in a thoughtful manner that addresses the level of risk, individual freedoms and public interest. Greater collaboration and communication among stakeholders is critical, and as with the others, consumers need transparency around these decisions.
As the world seeks to control the impact of this disease and others that continue to take precious lives and resources, I see this as a teachable moment. This situation could (and should) strengthen the rationale for broader stakeholder and consumer cooperation, data stewardship and appropriate protection of privacy. Within health care, it should strengthen the business case for EHR adoption, interoperability and expanded analytics capabilities for organizations and consumers alike.
This outbreak, like other issues we have confronted in the past, may get the public more engaged and educated as to the benefits of a modern, data-driven health care system. People want to be confident that the U.S. health care system can see threats emerging, prepare for them adequately, identify cases quickly, treat them effectively and prevent broader impacts. They should be able to trust that the health care industry, government and other stakeholders have the tools and capabilities to deal with a broad range of issues and understand where they can help to fill gaps. According to the 2012 Deloitte survey of U.S. health care consumers, trust in information provided by academic medical centers, teaching hospitals, and medical associations and societies is quite high. The opportunity before the industry now is either to reinforce trust and garner support for a more integrated and capable system or see that trust erode.
By Harry Greenspun, MD, Senior Advisor, Deloitte Center for Health Solutions, Deloitte Services LP
CMS releases final rules on Medicare physician payments, hospital outpatient services and end-stage renal disease
Last Friday the Centers for Medicare & Medicaid Services (CMS) released final rules that implemented changes and updates to payments made under the Medicare Physician Fee Schedule (PFS), hospital outpatient services and end-stage renal disease (ESRD). Notably, CMS finalized the following changes:
Analysis: The final regulations for the PFS for CY2015 implement policies in the ACA and other legislation. Last year the Protecting Access to Medicare Act of 2014 prevented significant reductions to physician payment through the sustainable growth rate formula, but this policy is in effect only until March 31, 2015. The new Congress will need to address physician payment early next year to prevent the significant reductions to payments that are scheduled to start in April 2015. Notable among the many policy changes to physician payment in the final rule is the first year of implementation of the Value-Based Payment Modifier, which increases or decreases physicians’ payments under fee-for-service Medicare based on the individual physician’s performance on quality and utilization measures. Many physicians face reductions in pay through the payment modifier, PQRS and EHR Incentive Program—these could have a significant effect on profit margins for providers.
Implementation and Adoption
Report: Individuals with employer-sponsored insurance spent more per capita on health care services despite declining utilization
Last week the Health Care Cost Institute (HCCI) published an analysis of spending, utilization and prices experienced by the population covered by employer-sponsored insurance (ESI) from 2011 to 2013. The results indicate that individuals covered by ESI increased their spending on services 3.9 percent nationally over those two years to $4,864 per capita. HCCI found that the rise in spending was due to increasing prices and not greater utilization, as inpatient (-2.3 percent) and outpatient services (-0.5 percent) and brand prescription (-15.5 percent) utilization decreased during this period. Inpatient (6.7 percent) and outpatient (6.4 percent) visits experienced the highest growth in per capita expenditures from 2012 to 2013. Use of generic prescriptions rose by 4.5 percent during the study period, but prices paid for these prescriptions fell by 0.5 percent. Lower rates of utilization could reflect greater cost sharing for employees. Notably, even though women continue to spend more on health care per capita ($5,403) compared with men ($4,305), spending among men in this population grew during this period while women slowed their health care spending.
Related: HCCI released another analysis that examined out-of-pocket (OOP) spending by the ESI population in 2013. Their OOP expenditures grew by 4 percent from 2012 to 2013 to $800 per capita, representing 16 percent of their total health care spending. In 2013 spending on acute inpatient admissions increased by 10.5 percent to $51. OOP spending on prescription drugs decreased by 0.6 and 10.2 percent for generics and brand drugs, respectively. The level of OOP per capita spending rises with age, but people in some age groups had higher rates of increase in OOP spending. In 2013 children ages 0-18 had the lowest per capita OOP spending ($454) but the highest growth rate (4.8 percent). Notably, young adult women (ages 19-25) were the only age-gender group without increases in OOP spending. This is because their spending on prescriptions – specifically for hormones and synthetics – dropped enough to offset their increases in spending on medical services.
(Source: Health Care Cost Institute, “Out-of-Pocket Spending Trends (2013),” October 2014; Health Care Cost Institute, “2013 Health Care Cost and Utilization Report,” October 2014)
Study: States’ role in accountable care is growing
The National Academy for State Health Policy reviewed state activities, policies, legislation and programs to find that many states are actively developing strategies around accountable care. The researchers analyzed activity from 2012 through 2014, and engaged federal agencies, foundations, think tanks and consulting groups to collect the data on accountable care, value-based care and payments and shared savings programs, legislation and more. The researchers discovered three patterns in states’ adoption of these strategies:
- Seven states are using their role as a public payer to finance ACO models: Using their purchasing power through both Medicaid and state employee health benefits, these states are influencing their health care delivery systems. Six of the states in this group are working with community partners such as behavioral health providers to support Medicaid ACOs. California is unique because its ACO work is separate from the Medicaid program; California is testing ACO initiatives through the California Public Employees’ Retirement System (CalPERS). CalPERS partnered with a health plan, physician group and hospital chain to create an ACO that covers a specific population in the CalPERS system. The ACO uses a global budget to manage costs and allows organizations making up the ACO to share achieved savings.
- Three states are working to develop state standards and certifications for ACOs: The researchers reported that three states, Massachusetts, New York and Texas, are working to establish a regulatory framework in their state to certify ACOs. The aim is to encourage health plans and providers to collaborate on multi-payer ACO initiatives that use the same standards.
- Six states are helping create community-based organizations and refining managed care contracts to align them with accountable care: These states are establishing new organizations and revising contracts to provide more emphasis on quality, raise expectations for use of analytic capabilities in these organizations and keep spending increases low.
The researchers identified four emerging themes in their review of states’ ACO strategies:
- Existing medical home initiatives can be useful bases to build upon
- Accountability for patient care remains a concern and focus
- Performance measurement strategies need to be aligned to ensure accountability
- Building an ACO infrastructure comes at a cost
Related: The October 28, 2014 Health Care Current explored big decisions states face in health care, including implementing the small business marketplace, ICD-10 delay and provider network standards. As decision makers determine how they want to position their states for the future, adapting the role of the state to promote innovation, building a 21st century connected infrastructure to enable transformation and unleashing the power of data to drive outcomes will likely be critical considerations.
Report: The ACA employer mandate may lead to a small drop in employment or hours worked
Last week The Commonwealth Fund released an issue brief that analyzed the impact of the ACA’s employer mandate. The ACA employer mandate and rules about what benefits need to be offered applies to employers that have at least 50 full-time equivalent employees that work 30 hours per week or more. Approximately 100,000 employees work for firms that are close to employing 50 full-time-equivalent employees, and 296,000 currently uninsured employees work roughly 30 hours per week for a firm with greater than 50 employees. Overall, researchers concluded that less than 10 percent of all employees could see a reduction in their hours worked or employment in the short-term. This represents less than 0.03 percent of the total U.S. labor force. The researchers concluded that one of the main reasons why few Americans could be affected is because most employees near the threshold are employed by firms that already meet ACA requirements.
The study notes that employment patterns in the labor market may shift over time, which may lead to less employment and a reduction in hours worked by employees. According to the study, similar provisions implemented prior to the ACA in other states may shed light on the labor market in the long term. Notably, the employer mandate in Massachusetts was followed by an increase in employer-sponsored insurance coverage and employment in both high- and low-wage industries from 2001 to 2010. Meanwhile, a similar provision in Hawaii did not affect wages or employment, but it did increase by 1.4 percent the number of employees that worked fewer than 20 hours per week.
Background: The ACA employer mandate requires employers of a certain number of employees to provide health coverage or be subjected to a fine; the fine is $2,000 per full-time equivalent employee after the first 30 employees for a firm with greater than 50 workers. The fine will begin in 2015 for employers with 100 or more employees and in 2016 for those with 50-99 employees. The ACA required the mandate to begin in 2014, but the administration delayed it for all employers in 2013 and for mid-size employers earlier this year (see the February 18, 2014 Health Care Current). Employers will also face fines if their low-income, uninsured employees qualify for federal health subsidies in the health insurance marketplaces.
(Source: Glied, Sherry and Solis-Roman, Claudia. The Commonwealth Fund, “What will be the impact of the employer mandate on the U.S. workforce?” October 28, 2014)
CMS delays ACA transparency coverage requirement, gives insurers more time to collect data
Last week the New York Times reported that CMS issued a notice to health insurers informing them that some of the transparency in coverage requirements under the ACA will not be enforced for now. A CMS spokesperson also told the newspaper that the requirement is likely to be delayed until after a full year of claims information has been collected by the insurers. The transparency coverage requirement calls for insurers to make information available about claims payment policies, enrollment, denials, rating practices, out-of-network cost-sharing and enrollee rights in the health insurance marketplaces. The notice has delayed some of these requirements – the number of individuals they have enrolled in a plan, how many claims they have denied and costs for specific services. CMS indicated that both the administration and insurers needed more time to collect and analyze the data. Consumer advocates and policy experts expressed concern over the delay, because many deem consumer transparency as critical to increasing health insurance literacy and health insurance coverage.
(Source: Pear, Robert. New York Times, “Insurers’ Consumer Data Isn’t Ready for Enrollees,” October 25, 2014)
On the Hill & In the Courts
CMS releases final rule updating the Home Health Prospective Payment System rates for 2015
Last Thursday CMS released a final rule updating the Home Health Prospective Payment System (HH PPS) rates for home health agencies for fiscal year (FY) 2015. The updates are the second of a four-year, phased-in rebasing of HH PPS payment rates as required by the ACA. Specifically, the rebase adjustments include:
- A reduction in the payment for a 60-day episode payment by $80.95
- An increase in the per-visit payment, ranging from $1.79 for home health aide services to $6.34 for medical social services
The final rule also updated requirements around therapy reassessments; they will now be required at least every 30 calendar days. Finally, CMS made changes to the face-to-face requirement, removing the requirement for a physician narrative describing a patient’s clinical conditions because of the confusion it caused and concerns over improper claims denials.
HHS allows five states to preview FF-SHOP marketplace before open enrollment
Last week the U.S. Department of Health and Human Services (HHS) announced that the federally-facilitated Small Business Health Options Program (FF-SHOP) marketplace opened early in five states. Starting October 27, small businesses in Delaware, Illinois, Missouri, New Jersey and Ohio began logging onto the site that they will use to help their employers gain health insurance coverage. The FF-SHOP marketplace can be used by businesses with 50 or fewer employees.
The early access will allow employers to try new features on the site, establish an account on the marketplace, search for and assign an agent or broker to their account, complete an application, determine eligibility and upload the names of their employees into the system. Employers will not be able to enroll their workers in a plan yet because health plans’ pricing will not be available until the marketplace opens on November 15, but they can begin taking the first steps to prepare their organization for the SHOP marketplace.
In two of the states getting an early preview, Missouri and Ohio, employers will be able to choose the benefit package (e.g. Bronze, Silver or Gold metal level) they will offer their employees in the marketplace, and workers will be allowed to select from a number of plans. These two states, along with 12 others, elected to allow employee choice in their FF-SHOP. The employee choice feature gives small business workers the flexibility to choose from any health plan at the metal level their employer chooses rather than letting business owners choose a plan for them (see the June 17, 2014 Health Care Current for more information).
Marketplace premiums decline in Colorado and Connecticut, increase in Vermont
Last week researchers from the Commonwealth Fund, with support from NORC at the University of Colorado, published its latest analysis of premiums for 2015 in three states—Connecticut, Colorado and Vermont. Open enrollment for the health insurance marketplaces begins on November 15, and states are beginning to finalize premiums for individuals and families that will be offered through the marketplace. Rates in one of the states that Commonwealth Fund examined in its latest update will increase, while rates for the other two will decrease:
All three states established their own health insurance marketplaces for the first year, rather than using the federally-facilitated marketplace and HealthCare.gov. In Colorado, statewide premiums across metal levels dropped 8 percent; no new health plans entered that market, but the ones that are in the market are offering more choices of benefit packages – the number of choices grew from 44 to 53. In Vermont, the number of health plans in the marketplace and choices offered did not change.
Around the Country
Report: Oregon insurers continue to sell coverage through association health plans
Through a recent analysis of Oregon’s health insurance market by the Urban Institute, with support from the Robert Wood Johnson Foundation, researchers interviewed state regulators, benefits consultants and association health plan (AHP) stakeholders to analyze what impact the ACA has had in the AHP market in Oregon. AHPs are associations that offer health plans to individuals and small employers. The ACA set new requirements (e.g., guaranteed issue, elimination of preexisting condition exclusions) for health insurance offered on the individual and small group market, and most AHPs must conform to these standards. There are exceptions to these rules for some AHPs, and some experts have argued this may provide the opportunity for health plans to sell through associations to avoid the new rating rules. The researchers looked at Oregon’s health insurance market to find that many AHPs in Oregon are sidestepping the ACA’s new individual and small group rating requirements by positioning themselves as a single large-group health plan; a large group health plan is a type of AHP. Prior to the ACA, Oregon had around 25 AHPs; because of the policy this number is expected to continue to grow.
Background: Most AHPs are required to meet the same standards as those sold in the individual and small-group market, including rating and benefit standards and review. However, AHPs that meet criteria for being a “bona fide group or association of employers” fall under the jurisdiction of the Employee Retirement Income Security Act (ERISA) and can be exempted from these requirements. Oregon prohibited AHPs from being exempt from its small-group market rules, but an AHP can still claim they are a large-group health plan if they are categorized as an employer that is sponsoring one group health plan.
(Source: Lucia, Kevin, Ahn, Sandy, and Corlette, Saprina. Urban Institute and Robert Wood Johnson Foundation, “Federal and State Policy Toward Association Health Plans in Oregon,” October 2014)
Massachusetts Alternative Quality Contract yielded savings and improved care
A study published in The New England Journal of Medicine found that the Massachusetts Alternative Quality Contract (AQC), an alternative payment model that pays participating providers a risk-adjusted global budget, yielded 6.8 percent in savings over four years. To assess cost-savings, researchers analyzed enrollee claims data for a group of the plan’s members whose care was paid for under the AQC and compared them to a control group of commercially insured individuals from eight other states in the Northeast. Specific study findings include:
- Spending: The AQC cohort spent an average of $62 less per enrollee per quarter than the control group during the four-year intervention period (2009-2012), leading to 6.8 percent savings. Notably, the largest savings were achieved in the outpatient setting (4 percent in professional spending and 19.3 percent in facilities spending). The study also showed that 40 percent of savings came from decreased utilization; the rest came from lower prices.
- Total payments: From 2009 to 2010, spending was lower on claims for AQC enrollees, but the plan paid out more in incentive payments than it saved. Incentives are in the form of shared savings and quality bonuses with providers and infrastructure investments. However, that trend reversed in 2012 when savings were high enough that they exceeded incentive payments; overall spending came in below the 3.6 percent spending target that year.
- Quality: The AQC cohort increased quality of care in the measures of chronic care management (3.9 percentage points), adult preventive care (2.7 percentage points) and pediatric care (2.4 percentage points). Quality of care performance was above the national averages for other plans reporting measures from the Healthcare Effectiveness Data and Information Set (HEDIS).
(Source: Song, Sirui, Rose, Sherri, Safran, Dana Gelb, Landon, Bruce, Day, Matthew P., and Chernew, Michael E. The New England Journal of Medicine, “Changes in Health Care Spending and Quality 4 years into Global Payment,” October 30, 2014)
Public-private initiative aims to harness data to improve health
The Robert Wood Johnson Foundation (RWJF) recently launched Data for Health, an initiative that will examine how information and data on health can be harnessed to help people lead healthier lives. The significant effort put forth by the public and private sector to invest in health IT and the uptake of EHRs has highlighted the potential to improve health care through electronic patient information. Use of mobile apps and devices that track biometric data is growing, as is the field of data analytics, which holds the promise of capturing information about consumers that may be relevant to their health. Secure, protected access to rich data has the potential to help individuals, health care providers and communities make smarter, faster decisions that improve health and promote healthy lifestyles.
The RWJF calls the Data for Health initiative a starting point for identifying what infrastructure is needed to turn this information into effective tools for improving health nationwide. The Data for Health advisory committee, comprising multiple stakeholders, plans to host a series of “Learning What Works” events in five cities across the country to hear from what information is important and how to use it to improve health outcomes. The events will be opportunities to discuss how data should be collected, shared, used and protected in ways that are meaningful to individuals and help providers and communities make a measurable impact on improving health and well-being. The advisory committee will issue a report and recommendations in early 2015.
Analysis: One of the different facets of this approach is the use of listening sessions to work directly with stakeholders of health care data. Many initiatives tend to focus on the “build it and they will come” approach, and do not necessarily align the structure and availability of data to the user they are trying to serve. Through the use of listening sessions, and with a much more critical eye on transparency, the Data for Health initiative aims to introduce a new model where big data is built directly to the benefit of the data consumer.
One of the challenges with this and other big data initiatives is that simply having access to even the most relevant data does not always translate to changing consumer behaviors around health or improved health outcomes. Big data holds much promise in many possible scenarios, but in some cases, the rush to assemble the large data set can blur the need to focus on discrete and manageable bits of information for analysis, where controlled studies and the scientific method can more easily be applied. Though the listening session process is a good step, more work may be needed to realize the potential benefits of big data in health care.