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An industry on the brink of exponential change: Health in 2040
Health Care Current | November 6, 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.
An industry on the brink of exponential change: Health in 2040
By Doug Beaudoin, vice chairman, US Life Sciences & Health Care leader, Deloitte LLP
My colleague Janet Foutty, chairman and CEO of Deloitte Consulting LLP, and I just arrived in San Diego for Exponential Medicine 2018—an immersive and mind-expanding week devoted to exploring the future of the industry. We will be leading a panel discussion focused on just that: an exploration of what the future of health might look like two decades from now. While we don’t know with precision how the future will play out, we can look at signals in the market today—and disruption in other industries—to start to paint the picture.
Fundamental shifts in innovation tend to occur in seven-year cycles. By 2040, three of these cycles will have passed—each building off the other. To determine where health might be headed, we should start by looking back three innovation cycles and consider where technology has taken us. In 1997—three innovation cycles ago—the first hybrid car was made available to the public.1 We now have fully electric cars and routinely see autonomous vehicles being tested on the roads in many of our cities. The following year, the first robot-assisted heart bypass surgery was performed.2 Today, robotic surgery is the standard of care for many procedures. In 1999, the first complete music album by a major artist was made available over the internet in advance of its physical release.3 Today, it is hard to remember buying music on physical media. In 2000, the first rough draft of a human genome was announced—a $1 billion undertaking that took 13 years.4 Today, for less than $100, we can learn whether we have the specific genetic variants for BRCA1 and BRCA2 (the genes associated with an increased risk of developing certain cancers, including breast cancer and ovarian cancer). We can do this through the mail and without an order from a physician.
A future rooted in radically interoperable data and open, secure platforms
What can we expect during the next innovation cycle, and how will subsequent cycles build on that? We expect that radically interoperable data will lead to highly personalized or hyper-local, consumer-centric health. Consider this: Rather than scribbling out a grocery list on the back of an envelope, today we can tell a digital assistant what items we need and then send it to our mobile device. Taking that a step further, maybe groceries are ordered automatically based on the consumer’s personal preferences, health status, or nutritional needs. During the drive to the store, an app might warn our self-driving vehicle about construction and direct it to an alternate route…and estimate how long the drive will take. The next innovation cycle might combine that technology with radically interoperable data and artificial intelligence (AI). While we are sleeping, our device or digital assistant might determine the pollen count is too high for our scheduled morning workout. Before we wake up, it has already connected with other digital assistants and moved our afternoon calls to the morning so that we can work out later in the day when the air quality is better. A refill on our allergy medication will be placed before we wake up and delivered by drone before we leave the house.
Here’s another example of where technology might take us: Consider current smart homes that allow us to remotely adjust the thermostat, set alarms, and turn lights on. Cycle that forward to a hyper-connected bathroom where the mirror and other tech-enabled appliances process, detect, and analyze health information. Highly attuned sensors embedded in a bathroom mirror, for example, might track body temperature and blood pressure, and detect anomalies by comparing those vitals to a person’s historic biometric data. Maybe this smart mirror even plays a skincare tutorial reminding the user to apply sunscreen. Analyses conducted by a tech-enabled toilet might be able to spot bio-markers that would indicate a potential change in health status long before symptoms appear. Such information could help keep consumers in tune with their health and quickly spot issues that could indicate the early stages of illness or disease. Rather than picking up a prescription at the pharmacy, personalized therapies based on a person’s omics could be dropped off via drone when needed.
From B2C to C2B
Based on where we are now, we can be reasonably certain that digital transformation—enabled by radically interoperable data and open, secure platforms—will drive the future of health. We expect that the term health care will become, simply, health, meaning peoples’ physical health and wellbeing plus their social, mental, emotional, and spiritual health. And consumers will be in the driver’s seat.
Radically interoperable data and AI will empower consumers in ways that are difficult to imagine today. The consumer, rather than health plans or providers, will determine when, where, and with whom he or she engages for care, or to sustain wellbeing. Health systems, health plans, and life sciences companies have shifted some of their focus to wellness, but it is still the system that serves the consumer. In the future, care will be organized around the consumer, rather than around institutions, and consumers will serve themselves.
Today, we are seeing more consumers who are interested in sharing their electronic health records (EHRs)—46 percent would be open to sharing their EHRs with their health plan or a hospital affiliated with a university, according to the results of our 2018 Health Care Consumer Survey. Fewer people are willing to share this information with medical device manufacturers (35 percent), state/public health agencies (34 percent), or pharmaceutical companies (31 percent).
Trust is critical, and to build it, some organizations today are letting consumers own their data:
- Apple Inc. recently added a feature to its smartphones that can access the user’s collated medical records. Apple worked with the health care community to take a consumer-friendly approach, creating health records based on Fast Healthcare Interoperability Resources (FHIR), a standard for transferring electronic medical records.
- Ciitizen is a start-up working to give cancer patients access to their own medical records. The company is developing technology to make it easy for patients to access electronic versions of their labs, genetic test results, and images, which they can share with doctors, researchers, and their broader care team. That level of sharing could help cancer patients connect to relevant clinical trials and potential lifesaving therapies.
This all signals to the potential paradigm shift of the health care consumer taking control of their health.
The emergence of information markets
Over the next 20 years, all health information will likely become accessible and—with appropriate permissions—broadly shared. Ensuring the privacy and security of personal health information and technical issues have kept interoperability from evolving to this point, but blockchain and other sophisticated security modalities could keep information secure. Once data security is resolved, consumers themselves can manage, sell, and potentially even market their health information.
Consumers will control this enormous pool of health information. Innovators could develop information markets that take personal health information (e.g., blood tests, medical exams, genomic and genetic information) and aggregate it to build virtual models of each consumer. If these consumer models are housed in the cloud, the information could be sold to companies that configure clinical trials, for example.
Stakeholders in 2040
The changes now taking place in health care are driving the industry toward large-scale disruption that is impacting both traditional and emerging players. The traditional sectors that now make up the health care ecosystem will likely look completely different by 2040. The lines will blur and we will see greater cooperation. Here’s a look at how we see the roles of stakeholders evolving:
- The future of clinicians: While traditional health care jobs won’t change much on the surface, they will be radically different. Doctors, for example, will continue to focus on the health and wellbeing of their patients, but their roles will change. They will make decisions in concert with technology, augmented with up-to-date data about the specific interventions that are tailored to the patient’s uniqueness. Even though clinicians won’t perform work the same way, nothing will replace the importance of humanity, empathy, and compassion—all of which are critical to enhancing health and sustaining wellbeing.
- The future of hospitals: While hospitals will always exist, the patients who use them will be different. Rather than focusing on general medical issues, hospitals will be places where only highly complex and specialized procedures are performed. Localized health hubs will provide more routine care and services. Rather than simply helping patients manage their care, health system leaders will be focused on enabling their wellbeing.
- The future of health plans: Successful health insurance companies will connect consumers to their health care. Along with paying claims, or even perhaps instead of, health plans will connect consumers to health systems, physicians, and wellness programs. In retail, AI helps map buying habits of each customer. That information is then used to generate highly personalized (and effective) marketing messages. The same thing could happen in health care. Using AI, health plans could help individuals make informed choices about the type of health coverage they buy. Highly predictive technology like this might leverage a much broader set of interoperable data sources and streams, which could help health plans improve the health and wellbeing of individuals and populations.
- The future of life sciences companies: Enabled by personalized technologies, pharmaceutical companies will be able to deliver tailored treatments to individuals, focusing on an “N of 1.” Mass-produced drugs—and the facilities in which they’re made—could become a thing of the past as pharma companies harness consumer data to create personalized treatments. Additionally, medtech companies will become the vehicles to deliver many of these personalized treatments, collecting vital signs and other crucial biometrics. Direct-to-consumer medical devices are already driving change in the market.
- The future of regulators: Federal and state regulators could become partners rather than traffic cops. Regulators understand that they can be a catalyst, rather than a barrier, to improving access to higher-quality, more affordable health care.
- The future of disease: We won’t be able to eliminate disease, but technology might help reduce the volume of disease and lessen the severity. We will be able to identify disease earlier, intervene proactively, and better understand disease progression to help consumers more effectively sustain their wellbeing.
As we embark on the future of health—a time where exponential change can accelerate the pace of disruption in the marketplace—I look forward to the promise that technology, innovation, and data hold. It will be truly exciting to see what the next health innovation cycles deliver as the most impactful trends in health come to the point of convergence.
1 US Department of Energy (https://www.energy.gov/articles/history-electric-car)
2 National Center for Biotechnology Information, US National Library of Medicine (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3831835/)
3 Rolling Stone magazine, August 30, 1999 (https://www.rollingstone.com/music/music-news/david-bowie-to-release-entire-new-album-online-255118/)
4 National Human Genome Research Institute (https://www.genome.gov/10001457/2000-release-working-draft-of-human-genome-sequence/)
In the News
HHS to implement 340B rule in January
A rule that establishes price ceilings and financial penalties in the 340B drug-discount program will go into effect in January, according to an October 31 notice from the US Department of Health and Human Services (HHS). In June, HHS announced its intent to delay implementation of the final rule—340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties—from July 1, 2018 to July 1, 2019.
The final rule came out in January 2017, and the implementation date has been delayed five times, most recently in June. According to HHS, the delays were needed to allow time for “developing new comprehensive policies to address the rising costs of prescription drugs…in government programs, such as Medicare Parts B & D, Medicaid, and the 340B Program.” The agency determined that implementing the final rule will no longer interfere with developing those policies. HHS has made drug prices a top priority, and the 340B program is mentioned in the administration’s blueprint to lower prescription drug costs (see the June 19, 2018 My Take).
The 340B Program, named for the numbered section of the law, gives certain hospitals and clinics access to discounts from drug manufacturers (see the July 17, 2018 My Take). In 2010, the Affordable Care Act (ACA) broadened the definition of covered entities that could participate in the program. Following this, the number of covered entities increased from 8,605 to 38,396 between 2001 and 2017 (see chart below).
In the 2018 Hospital Outpatient Prospective Payment System (OPPS) final rule, which went into effect in January, the US Centers for Medicare and Medicaid Services (CMS) reduced payments for outpatient drugs covered under 340B. For most hospital-affiliated providers, payments went from the standard rate of Average Sales Price (ASP) plus 6 percent, to ASP minus 22.5 percent. This reduced 340B drug payments by $1.6 billion in 2018.
CMS proposes to expand telehealth benefits in Medicare Advantage
On October 26, CMS issued a proposed rule to expand coverage of telehealth benefits under Medicare Advantage (MA). If it goes forward as proposed, the policy would start in 2020. CMS already permits MA plans to offer more telehealth services than those available under traditional Medicare as part of supplemental benefits. The proposed rule would allow MA plans to offer telehealth as part of the basic benefit package as well. The change could increase the number of MA plans offering these services, CMS stated in a press release.
According to the results of the Deloitte 2018 Survey of US Physicians, the ability to remotely monitor and manage chronic conditions are among the most promising uses of virtual care technology. About 70 percent of the 624 primary care and specialty physicians surveyed said remote patient monitoring could be particularly useful in the treatment of chronically ill patients (see the July 31, 2018 My Take).
CMS began offering new flexibility to MA plans for the 2019 plan year. According to premium and benefit information released in September, some MA plans will provide adult daycare, in-home support, and benefits tailored to patients who have chronic diseases, such as diabetes (see the October 9, 2018 Health Care Current).
The proposed rule also seeks to improve the quality of care for dually eligible beneficiaries enrolled in “Dual Eligible Special Needs Plans,” or D-SNPs. The proposed changes would impose stricter requirements for plans to integrate Medicare and Medicaid benefits to improve care coordination for these enrollees, who often have complex health needs.
(Source: CMS, CMS Proposes to Modernize Medicare Advantage, Expand Telehealth Access for Patients, October 26, 2018)
CMS issues 2019 OPPS and ASC final rule
On November 2, CMS issued the 2019 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule (see the July 31, 2018 Health Care Current).
The final rule moved forward several provisions from the July proposed rule, including reducing payment differences between hospitals and ASCs, such as:
- Adopting a site-neutral payment rate for clinic visits: Under the final rule, CMS will set a payment rate—similar to the Physician Fee Schedule (PFS)—for clinic services provided in off-campus, provider-based departments (PBDs) paid under OPPS. These are the most commonly billed services under OPPS. According to CMS, this policy would lower copayments for beneficiaries and increase savings for the Medicare program by an estimated $380 million for 2019. Medicare pays approximately $116 for a clinic visit in an off-campus PBD, and the average beneficiary copayment is $23. Lowering this payment to a PFS-equivalent rate would reduce the OPPS payment to an estimated $81 with a beneficiary copayment of about $16. This could save beneficiaries an average of $7 per visit in 2019.
- Extending CMS’s 2018 hospital payment methodology for 340B drugs to outpatient clinics: The 2018 final rule reduced payments for covered outpatient drugs under the 340B program from the standard rate of the Average Sales Price (ASP) plus 6 percent to the ASP minus 22.5 percent for most hospital-affiliated providers. This change did not apply to drugs purchased at non-excepted off-campus departments. In the 2019 proposed rule, CMS proposed extending this payment methodology to off-campus hospital clinics, and will move forward with this policy change.
- Removing certain quality measures: CMS will remove certain measures from the Hospital Outpatient Quality Reporting Program and from the Ambulatory Surgery Center Quality Reporting Program. CMS expects the deletions will allow organizations to focus on reporting and tracking measures with the greatest impact on patient care.
(Source: CMS, CMS finalizes Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System changes for 2019 (CMS-1695-FC), November 2, 2018)
CMS releases 2019 Medicare Physician Fee Schedule final rule
On November 1, CMS released the final 2019 Medicare Physician Fee Schedule (PFS) rule, the annual update of Medicare payment rates for physician services (see the July 17, 2018 Health Care Current). The rule reduces payments for new Part B Drugs and changes the way the agency will pay for evaluation and management (E/M) services, one of the more debated issues of the proposed rule. CMS received significant negative feedback from physician groups on the proposed policy. The final rule will:
- Reduce administrative burden and improve payment accuracy for the E/M of visits in 2019: As part of its administrative simplification efforts, CMS initially proposed to collapse the E/M codes from five levels down to two. Instead, the final rule creates three levels and phases in the new billing codes, starting in 2021. CMS kept the code for the most complex payments, as physicians worried removing those codes would mean lower payments for complex cases. Additionally, the agency is not finalizing the proposed rule’s provision to reduce payments for E/M visits that occur the same day as a procedure. Finally, doctors will no longer be required to prove why they perform a home visit instead of an office visit. For established patient visits, doctors no longer need to re-record the defined list of required elements if the patient’s information has been reviewed and updated.
- Reduce payments for Part B drugs: Beginning January 1, 2019, CMS reduced the add-on fee for Part B drug payments based on wholesale acquisition cost (WAC) from 6 percent to 3 percent. The payment reduction will only apply to new drugs.
- Pay for communication technology-based services: The rule creates payments for two newly defined services that use communication technology—virtual check-ins and remote physician assessment of recorded video or images from an established patient. Now, Medicare will pay doctors for the time they spend with patients on the phone or over video to determine whether an office visit or other service is needed.
- Expand the use of telehealth services to treat opioid-use disorder: Through an interim final rule, CMS is implementing a provision to allow an individual’s home to be used as an originating site for telehealth services to treat opioid and other substance-use disorders on or after July 1, 2019.
- Address changes to the Medicare Shared Savings Program for accountable care organizations (ACOs): CMS will implement a voluntary six-month extension for ACOs that have participation agreements expiring on December 31. CMS is also reducing the Shared Savings Program core quality measure set by eight measures (see the August 14, 2018 Health Care Current).
(Source: CMS, Final Policy, Payment, and Quality Provisions Changes to the Medicare Physician Fee Schedule for Calendar Year 2019, November 1, 2018)
Greater savings needed to cover Medicare out-of-pocket expenses in retirement, study reveals
Married couples covered by Medicare might need as much as $400,000 in savings to cover out-of-pocket costs, according to a new study from the Employee Benefit Research Institute (EBRI). The projected savings needed to cover out-of-pocket costs has risen nearly 9 percent since 2011, the study noted.
The study examines the savings that will likely be needed to cover premiums for Medicare Part B, Part D, and Medigap Plan F, as well as out-of-pocket spending for prescription drug benefits. Medicare covers about two-thirds of health care costs for beneficiaries age 65 and older, and out-of-pocket spending makes up nearly 12 percent of costs.
A few significant findings in the report include:
- A 65-year-old man will need $75,000 in savings for a 50 percent chance of having enough money to cover out-of-pocket expenses in retirement, and $148,000 for a 90 percent chance.
- A 65-year-old woman will need $99,000 savings for a 50 percent chance of having enough to cover out-of-pocket expenses in retirement, and $161,000 for a 90 percent chance.
- A couple with median prescription drug expenses will need $174,000 in savings for a 50 percent chance of having enough to cover out-of-pocket expenses, and $296,000 for a 90 percent chance.
The analysis does not factor in the amount needed to cover long-term care expenses and other expenses that Medicare does not cover.
(Source: EBRI, Savings Medicare Beneficiaries Need for Health Expenses: Some Couples Could Need as Much as $400,000, Up From $370,000 in 2017, October 8, 2018)
AHRQ report reveals access, quality, and disparities in health care in 2017
The Agency for Healthcare Research and Quality (AHRQ) has released findings from its 2017 National Healthcare Quality and Disparities Report. Mandated by Congress, the annual report provides an overview of health care access, quality, and disparities throughout various health care settings. The report, which has been released for 15 years, is based on more than 250 measures of quality and disparities.
Key findings from the report include:
- Access to health care improved in some areas, worsened in others: Between 2000 and 2016, nearly 43 percent of health care access measures showed improvement, but 43 percent did not. Additionally, 14 percent of access measures showed worsening. From 2000 to 2017, the percentage of individuals who reported having insurance coverage increased.
- Quality of health care has improved: While quality of health care generally improved between 2000 and 2015, the pace of improvement varied among categories (e.g., person-centered care, patient safety, healthy living, effective treatment, care coordination, care affordability). Almost 70 percent of person-centered care measures improved overall, whereas 80 percent of care affordability measures did not change.
- Some health disparities have decreased: Several disparities decreased between 2000 and 2015, but other disparities were unchanged. Poor and uninsured populations in each category faced disparities.
(Source: AHRQ, 2017 National Healthcare Quality and Disparities Report, October 2018)
MACPAC panel wants HHS to delay Medicaid work requirement approvals
The Medicaid and CHIP Payment and Access Commission (MACPAC) will urge HHS to delay the approval of state requests to implement Medicaid work requirements. During MACPAC’s October 25 meeting, panelists decided to outline their concerns in a letter to HHS Secretary Alex Azar. The panel, which advises Congress and health care agencies, holds monthly public meetings.
Work requirements tie a beneficiary’s Medicaid eligibility to maintaining employment, pursuing education, volunteering, or other specified activities. Those who do not report the minimum working hours are no longer eligible for coverage. Individuals who meet certain criteria are exempt from these requirements. Four states have been approved to include work requirements in their Medicaid programs, and eleven other states have work requirements pending (see the September 18, 2018 Health Care Current).
App detects and responds to social triggers of addiction relapse
While many facets of addiction and substance use disorders are still not well-understood by the medical community, recovery and relapse tend to follow familiar patterns. Relapses are common among people who are trying to overcome a substance use disorder. Often, if people trying to recover are around friends or acquaintances with whom they used to take drugs—or from whom they used to buy drugs—they face a greater chance of relapse. A graduate student at the Massachusetts Institute of Technology (MIT) saw some of these patterns first-hand while helping a friend recover from an opioid addiction. The experience inspired her—as part of a team that competed in the Harvard-MIT Health Sciences and Technology program—to create an app that addresses the social contact triggers of addiction relapse.
The team set out to think through some of the patterns related to social contacts that created triggers and determine how an app might be able to help. MIT has many ways to support student innovation, including hacking competitions, student funding, and mentoring programs. The team took advantage of these opportunities to create their app, Hey,Charlie.
Other apps help people in recovery by offering lifestyle tips and helping them communicate with their physicians. But the MIT team was not aware of any app that targeted social contacts. The Hey,Charlie app asks users to enter information about their contacts and answer objective questions about how helpful those people are to their recovery process. It also collects information about where the person brought drugs or did drugs. The app sends an encouraging message to users when they are near trigger areas.
To date, the team has developed a business plan and has run a usability pilot. Clinician advisors think that the app has potential to help people in recovery in ways their physicians cannot—by supporting them outside the clinical setting.
RELATED: Deloitte’s interactive opioid epidemic impact map highlights gaps in evidence-based treatment for opioid use around the country. The tool shows that many Americans do not live in an area where they can readily access medication-assisted therapy (MAT), and few live near facilities that offer both mental health treatment and MAT. Deloitte’s paper, Strategies for stemming the opioid epidemic, discusses health plan and PBM strategies to expand treatment access, including the use of apps and other emerging technologies.
(Source: Eva Charles and Anna Frederick, "Hey,Charlie" app supports those struggling with opioids, MIT News, October 25, 2018)