Health Care Current: October 7, 2014

The Open Payments database is now live

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.

Attention passengers: The Open Payments database is now live

I fly a lot, so I’ve gotten pretty good at managing travel disruptions. Despite storms, strikes, technical malfunctions and even volcanoes, I generally find a way to arrive close to where I need to be relatively close to when I need to be there. 

Therefore, when I woke up in Chicago on Friday, September 26 to the alert that O’Hare and the nearby airspace was shut down, I was confident I could find my way home to Washington, D.C. that night. Between using my airline’s website, monitoring a third-party flight status site that pulled data from the Federal Aviation Administration and exchanging emails with my friend Jim (a commercial pilot), I was quickly able to ascertain that my flight would not go, but another might. After securing a reservation on that flight, I was able to track and monitor the status of the inbound aircraft, re-arrange calls and meetings and update my rides to and from the airports. Ultimately, I arrived home about 90 minutes later than originally planned, which allowed me to keep my normal evening schedule of eating dinner with my family and walking the dog. In this instance, faced with real-time decisions, I was able to access the data I needed to take action.

Four days later, last Tuesday, September 30, 2014, I got the alert that the Centers for Medicare & Medicaid Services (CMS) Open Payments database, a next step in the governments march toward transparency, had gone live. Intended to “give the public more information about the financial relationships between physicians and teaching hospitals and applicable manufacturers and GPOs,” the site includes a broad swath of data:

  • Information about financial relationships between physicians and teaching hospitals and medical device and pharmaceutical manufacturers and group purchasing organizations (GPO) that might exist (including names and locations for each in the relationship)
  • The nature of the payment being shown, such as consulting fees, gifts, food and beverage, research and grants
  • Whether the payment is associated with a specific drug or medical device, and if so, the applicable name1 

Reaction to the release mirrored the prior release of Medicare data on physician payments (see the My Take, “Seeing past the blind spot: is transparency in health care enough?” from the January 28, 2014 Health Care Current). While some groups lauded the increase in transparency, others raised concerns about accuracy and whether users could take the data out of context or confuse the payments for research with marketing and entertainment relationships. The next day, the headline in my inbox read “Open Payments website reveals $3.5 billion paid to docs, hospitals.”2

Curious, I decided to look for myself, utilizing the CMS Data Explorer. It took me a few tries, and the help of one of our policy analysts, but I was eventually able to get an 11 MB spreadsheet that contained many lines of information, physicians’ names and companies. The immediate question that came to my mind was, once any concerns about the site and context are quelled, will patients begin to take notice? Aside from the catchy headlines, consumers’ interest in and use of publically available data has historically been quite low. Deloitte’s survey of U.S. health care consumers found that only one in eight consumers say they referred to a score card or report card to compare doctors in the past year.3 

If consumers really do begin to take notice, in my opinion, it could open up additional areas for individual organizations and the industry to address:

  • What will be the impact on policies at institutions? Conflict of interest policies are nothing new, and many organizations (both by regulation and by choice) have adopted strict rules around relationships and disclosure related to business interests, self-referral and other sources of undue influence. However, other organizations may lack this rigor, and the release of this data could serve as a call to action.
  • How will the information impact innovation, public-private partnerships and industry-sponsored research? As noted, a major category of payments highlighted is for clinical research, and those who take the time to examine the data closely will hopefully be able to tell the difference between that and payments for meals and entertainment. Still, some may be concerned that their appearance in the database may ultimately be misinterpreted and their level of trust undermined. As a consequence, will institutions begin to reconsider their relationships with incubators, consortia and other platforms for research and development?
  • What about other new entrants? While the data reflects payments from pharmaceutical and medical device companies, many other industries are pushing their way into health care and seeking relationships with physicians. While many types of firms may currently fall outside the scope of this program, technology firms, retailers, developers and others represent a vast new frontier of potential influences to physician behavior. Will physicians begin to prescribe use of these new devices (e.g., mobile apps)? If so, will that bring those types of products into the regulatory spotlight?

As I sat in O’Hare airport, even in an evolving situation, I had the information I needed to respond. As health care consumers become savvier, using the experiences they gain from other industries, they may expect to have information and tools to support their health care decisions. The health care industry, and new firms wishing to enter into it, might have a competitive advantage if they pay more attention to consumer perception and decision making. 

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1 CMS, “Open Payments Data in Context,
2 Jaimy Lee, Modern Healthcare, “Open Payments website reveals $3.5 billion paid to docs, hospitals,” September 30, 2014
3 Deloitte Center for Health Solutions, “2013 Survey of Health Care Consumers”

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My Take

By Harry Greenspun, M.D., Senior Advisor, Deloitte Center for Health Solutions, Deloitte Services LP


Open Payments site goes live; includes 4.4 million payments to physicians and teaching hospitals

Last week CMS published the first round of publicly available information on payments made from pharmaceutical and medical device manufacturers and GPOs to physicians and teaching hospitals on the new Open Payments site. The site includes information on 4.4 million payments to 546,000 physicians and 1,360 teaching hospitals and totals $3.5 billion. The payments cover areas such as payments made for research, relationships (e.g., physician ownership of a GPO) and non-research items (e.g. meals, entertainment) over the last five months of 2013. The site went live on Tuesday, September 30 despite the fact that a portion (40 percent) of the information did not include provider identities. This was due to concerns that some of the payments were incorrectly attributed to certain providers. The information on these payments still included the name of the pharmaceutical or medical device manufacturer or GPO. CMS has indicated that the de-identified information will be identified next year. 

Reaction: A survey conducted last month by the American Medical Association (AMA) found that 62 percent of the physician respondents had discovered information that was incorrectly attributed to them, and many had difficulty going through the agency’s process for disputing the attribution. Further, registration that allows physicians to preview and dispute the information has been low. The AMA has said that only 26,000 physicians (less than 5 percent) registered on the Open Payments site. Morning Consult surveyed registered voters from September 26 through 28 to find that 51 percent said they would be less likely to choose a physician if they had received payments from a pharmaceutical or medical device company. 28 percent of respondents indicated their choice would not differ based on this information. Before the site opened, the presidents of three life sciences trade groups sent a letter to CMS Administrator Marilyn Tavenner requesting that CMS add context to the information shared through the program (for more information see the September 30, 2014 Health Care Current).

(Sources: American Medical Association, “New Shut Down of the Open Payments System Underscores Site is Not Ready for Prime Time,” August 28, 2014; Marissa Evans, Morning Consult, “How Patients Will Use Physician Payment Data,” October 5, 2014)

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Implementation & Adoption


Survey: Vendors and health plans make ICD-10 progress, but providers lagging

The Workgroup for Electronic Data Interchange (WEDI) released its August 2014 ICD-10 Industry Readiness Survey results on September 26 finding that vendors and health plans have made progress on implementing ICD-10 since the last time the group administered the survey (October 2013). However, progress was slower among providers. While providers have increased external testing, they have not increased the number of completed impact assessments. According to WEDI, slow progress may lead to disruptions due to reduced time for adequate testing and unanticipated production impacts. Specific findings, compared to last year, include the following:

The group received responses from 514 individuals from health plans, providers and vendors. The area of most concern for WEDI is the limited amount of testing that these groups are doing given the additional time the delay has provided. WEDI has surveyed on ICD-10 implementation since 2009. In April the Protecting Access to Medicare Act delayed the ICD-10 compliance deadline to October 1, 2015. 

(Source: WEDI, “Results from WEDI’s ICD-10 Industry Readiness Survey Released,” September 26, 2014; WEDI, “Workgroup for Electronic Data Interchange ICD-10 Survey Results,” December 13, 2013)

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GAO: Integrated dual-eligible benefits may not lead to lower Medicare spending

A recent report by the U.S. Government Accountability Office (GAO) found that dual-eligible special need plans (D-SNP) that integrate Medicare and Medicaid benefits often met high quality criteria, but had limited experience serving the dual-eligible population and demonstrating Medicare savings relative to the fee-for-service (FFS) program. The GAO concluded that D-SNPs that have received designation as Fully Integrated Dual-Eligible (FIDE) SNPs by CMS were more likely than non-designated D-SNPs plans to have high quality performance, but did not report lower costs than the FFS program. The analysis also found:  

  • Few FIDE-SNPs with high quality performance served disabled dual-eligibles
  • Even when disabled dual-eligible individuals enrolled in D-SNPs had better health outcomes than those in traditional Medicare Advantage programs, their use of costly Medicare services (e.g. inpatient stays) was not lower

GAO concluded that CMS’s projects to integrate benefits and align Medicare and Medicaid policies for this population might not produce the cost savings originally expected. 

Background: Medicare and Medicaid spend more than $100 billion annually on disabled dual-eligible beneficiaries. D-SNPs were created as a special category of Medicare Advantage plans available to certain beneficiaries, including dual-eligible individuals. As of 2011, according to the Kaiser Family Foundation, more than 1.3 million Medicare beneficiaries were enrolled in one type of SNP. The Affordable Care Act (ACA) created FIDE-SNPs to encourage SNPs to better integrate and coordinate care between Medicare and Medicaid.

(Source: GAO, “Disabled Dual-Eligible Beneficiaries: Integration of Medicare and Medicaid Benefits May Not Lead to Expected Medicare Savings,” released September 29, 2014)

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MGMA: Medical practice spending on operations staff per physician increased from 2012 to 2013

The Medical Group Management Association (MGMA) recently published results of its latest cost survey, finding that the more than 2,500 groups surveyed reported a 4.6 percent increase in costs for business operations staff per physician from 2012 to 2013. The majority of the spending for operating costs is for personnel—accounting for 85 percent of all practice costs. Other costs such as building and occupancy, medical and surgical supply and ancillary costs are less than 10 percent of the average practice budget. Payer mix for physician-owned and hospital/integrated delivery system (IDS) practices does not vary substantially:

The survey also uncovered large differences among practices in the amount of revenues that exceed operating costs in different geographic locations. For example, a primary care single-specialty practice in the Midwest netted on average nearly $200,000 per full-time equivalent physician, as compared with $54,000 for a practice in the South. Total operating costs as a percentage of total medical revenue has varied over the last five years in specialties such as family medicine, pediatrics and cardiology, all which reported a decrease over the previous year. Orthopedic surgery specialty practices experienced fairly stable rates, and OB/GYN practices saw an increase of more than 8 percent from 2012 to 2013. Further, the survey found that practices operating patient-centered medical homes (PCMHs) spend more in total general operating costs per patient than their counterparts, but earn $65.54 more per patient in their total medical revenue after operating costs than non-PCMH practices. 

(Source: MGMA, "MGMA Cost Survey: 2014 Report Based on 2013 Data,” 2014) 

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Committee requests best practices to improve upon Medicaid managed care program

Lawmakers from the House Energy and Commerce and Senate Finance committees requested information from health plan trade groups (America’s Health Insurance Plans [AHIP], Association for Community Affiliated Plans, and Medicaid Health Plans of America) regarding best practices in managed care for providing quality care, effectively and efficiently. The lawmakers asked that the group specifically detail best practices for: 

  • Rate-setting processes and how to best assess actuarial soundness
  • Methods for developing provider networks that meet the needs of a diverse patient population
  • Measures that best evaluate quality
  • Chronic disease management and treatment methods and what the best clinical interventions are for high-need patients
  • Programs or policies that are useful for interacting with and providing services to vulnerable populations
  • Data collection methods
  • Ways to prevent fraud and abuse
  • Human capital practices (e.g., management culture and processes) that can better respond to the program and enrollees’ needs
  • Practices that can enhance collaboration and engagement from partners (e.g., states)

The Medicaid program serves 67 million individuals and more than half of the enrollees are enrolled in managed care plans. Last week CMS also released guidance for states to use in setting payment rates for managed care plans in Medicaid. The guidance lists new requirements that states must follow to show that payments to plans are actuarially sound (i.e., cover costs that a plan is responsible for). 

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On the Hill and In the Courts


U.S. District Court rules against the ACA subsidies for FFM

On September 30, the U.S. District Court for the Eastern District of Oklahoma ruled that the ACA does authorize the federally-facilitated marketplaces (FFM) to provide health insurance subsidies. Judge Ronald White ruled in Pruitt v. Burwell and Lew that the rule the Internal Revenue Service had issued that allows the FFM to provide subsidies was invalid. Oklahoma Attorney General Scott Pruitt argued the case for the state, indicating that the state is a large employer and it must comply with the employer responsibility requirement.

Even though Oklahoma is a large employer and already offers coverage to all of its employees, it faces additional costs to comply with the employer responsibility provisions. The employee responsibility provisions are linked to the provision of subsidies in the law. In his opinion, Judge White ruled that only the text of the ACA was applicable for this discussion, and that the text “unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the state.’” This ruling comes shortly after the U.S. Court of Appeals for the District of Columbia agreed to a full panel review of Halbig v. Burwell, dismissing the original judgment that was decided against the subsidies in that case. For more information, see the September 9, 2014 Health Care Current.

Related: Last week the Association of American Physicians and Surgeons and Alliance for Natural Health USA petitioned the U.S. Supreme Court to review the constitutionality of the ACA, stating that because the Court converted the individual mandate into a tax, the entire bill should be void because it did not originate in the House, where tax legislation must originate. Earlier this year a similar case was brought before the U.S. Court of Appeals for the D.C. Circuit, where the Court ruled that the ACA is constitutional and not in violation of the Origination Clause of the Constitution. For more information, see the August 5, 2014 Health Care Current.

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FDA releases final guidance on medical device cybersecurity

The U.S. Food and Drug Administration (FDA) issued final guidance for manufacturers of networked medical devices that implements cybersecurity standards for device design and development processes and premarket submissions. Recognizing that cyber threats are increasing in number and complexity, the FDA sought to give clarification to medical device manufacturers on how they could build cybersecurity standards into their devices from the beginning. The FDA suggests that manufacturers “establish a cybersecurity vulnerability and management approach” for their medical devices, which would address threats and vulnerabilities and what their impact could be on the device’s functionality. The guidance suggests a cybersecurity framework for manufacturers to use to complete their assessments. This framework includes:

  • Identify and protect: Manufacturers should consider how the device will ultimately be used (function) as well as the setting in which it will be used (i.e., home vs. facility). The security controls should be mapped to these considerations. 
  • Detect, respond and recover: Manufacturers should include protections that allow any compromises of the device’s security to be detected, logged and acted upon. Information on how to complete these actions should be included for the end user, and devices should be able to perform their critical functions even if they have had a cybersecurity compromise. 

The FDA concludes that when submitting a premarket submission for a medical device, manufacturers should include information on:

  • The risks identified during the design of the device
  • The controls that were included for those risks and how the risks map to each other
  • A plan for software updates and patches, malware controls and instructions on how the cybersecurity controls should be used 

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CMS: RACs correct $3.75 improper payments and return $3.03 billion to the Medicare Trust Fund

CMS sent a report to Congress that the Recovery Audit Program corrected $3.75 billion in improper payments during fiscal year (FY) 2013. Recovery Auditor Contractors (RACs) identify and collect overpayments that were made to providers and pay underpayments from Medicare. Of the $3.75 billion improper payments identified, RACs collected $3.65 billion in overpayments, and $102.4 million went back to providers for underpayments. After taking program costs (RACs typically receive from 9 to 12 percent of improper payments) and appeals into consideration, RACs returned $3.03 billion to the Medicare Trust Fund. The majority of improper payments were from Part A claims for inpatient hospital claims:


In FY2013, the number of improper payments identified increased over the previous year, and the fees and costs increased as well. Recovery Auditor collections make up only 0.75 percent of Medicare’s overall FFS spending. 

Note: The most common causes of improper payments are for payments made for services that do not meet coverage and medical necessity criteria, payments that were incorrectly coded, and payments in which submitted documents did not support services that were ordered.

(Source: CMS, “Recovery Auditing in Medicare for Fiscal Year 2013,” September, 2014)

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Health organizations seek changes in Indiana’s HIP 2.0 demonstration plan from CMS

On September 21, a group of health organizations and foundations, including the American Cancer Society Cancer Action Network, Families USA, the Center on Budget and Policy Priorities and the National Women’s Law Center, sent a letter to CMS expressing concerns with Indiana’s Healthy Indiana Plan (HIP) 2.0 demonstration project. While the group expressed support for the state’s decision to accept federal funds to expand the Medicaid program, the organizations are concerned about components of the program and asked CMS to omit these. Specifically, the group expressed concerns with the following: 

  • Premiums: The demonstration would require certain enrollees, including those with little to no income, to pay monthly contributions to a POWER account. If approved, this demonstration would be the first to require enrollees with incomes below 50 percent of the federal poverty level (FPL) to pay premiums.
  • Premium requirements for coverage: The HIP 2.0 would require enrollees to pay premiums within 60 days in order for their coverage to start. Individuals with incomes above a certain FPL who missed this deadline would be locked out for six months. No other states that have received approval for the alternate expansion program has a lockout period built into it. 
  • Lack of choice in plans for beneficiaries: The plan would allow newly eligible beneficiaries to choose between HIP Basic or HIP Plus. The advocacy group said that these two options do not provide sufficient choice for enrollees and urged CMS to consider another structure for the HIP Plus program. 
  • Waiving retroactive eligibility: Indiana has requested to waive retroactive eligibility for newly eligible low income adults. No other recently approved alternative expansion has included a provision like this.  
  • Waiving non-emergency medical transportation (NEMT): Under the current proposal, Indiana requests to waive NEMT for newly eligible low income adults, further limiting access to care. 

Background: Indiana submitted the Medicaid section 1115 waiver for the HIP 2.0 demonstration program in late August and it is under review with CMS. See the September 9, 2014 Health Care Current for more information. 

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Around the Country


AHIP: “Any Willing Provider” laws may lead to an increase in health spending and impact care quality

In late September, AHIP published a report that concluded that “Any Willing Provider” (AWP) laws impede health plans from building networks based on efficiency and quality and lead to an increase in overall health care spending in states. AWP laws, which are currently enforced in 17 states, allow providers to demand inclusion in a health plan’s network if they are willing to sign the terms and conditions imposed by insurers. According to AHIP, AWP laws evolved out of the increasing use of preferred provider organization (PPO) health plans. AHIP’s analysis of AWP, narrow network plans and health spending in AWP states found: 

  • Lower prices: Provider networks are a tool that health plans use to reduce spending. The potential for a provider to lose patients prompts them to agree to lower rates, which in turn can result in lower premiums. AWP laws can put providers under less pressure to negotiate prices. 
  • Provider efficiency and quality: Health plans rely on network structures to reduce use of providers who show patterns of overutilization of tests and procedures (which can indicate fraud and abuse in some cases). AWP laws interfere with insurers’ ability to favor provider efficiency, which in turn may lead to higher premiums and undermine incentives for patients choose based on quality.
  • Narrow network plans: Narrow networks have been growing in popularity, and AHIP notes that AWP laws could be disruptive to narrow networks. In the public health insurance marketplace, for example, most consumers had the choice between a more expensive, broad network and a less expensive, narrow network. Employers are shifting their employee populations to private health insurance exchanges, which have the potential to give employees more choice in plans and benefits. AWP laws also could impede this development. 
  • Health care spending: Most studies have concluded that AWP laws increase health care spending; only one did not find this. AHIP concludes that more research in this area is needed, as are measures to understand the real effect of these laws. 

AHIP concludes that AWP laws have the potential to disrupt the way health plans approach cost-savings and promote quality. Additionally, AHIP noted that other important cost factors to consider with AWP laws are the associated administrative and legal costs. In recent years AWP laws have picked up more interest from providers in response to narrow provider networks in Medicare Advantage plans as well as those offered in the private marketplace. 

(Source: AHIP, “Analysis: How Any Willing Provider Makes Health Care More Expensive,” September 23, 2014)

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Data analytics could hold the promise of better care, better experiences and lower costs

During last week’s AHIP 2014 National Conferences on Medicare & Medicaid, Jason Wainstein, Principal, Deloitte Consulting LLP, and Megan Cormier, Specialist Leader, Deloitte Consulting LLP, presented a session, Improving Care through Advanced Data Analytics: Insights on Leveraging Information and Leading Edge Tools to Drive Better Care. The session gave the audience of Medicaid health care executives from around the country an overview of health care analytics methodologies and tools that can be instrumental to health plans’ ability to adapt to the health care system transformation occurring in Medicaid, including fundamental shifts in delivery models, shifting coverage patterns brought on the by the ACA and evolving reimbursement paradigms. 

Advanced analytics has the potential to have a disruptive impact on health care. The session outlined strategies in advanced analytics that Medicaid organizations could apply to create an enhanced population health management framework, to target the needs of high-risk populations, to identify and monitor a high-value provider network, and to build and utilize effective executive and clinical management dashboards.

Medicaid plans are looking for solutions to transform their programs and to reach and engage difficult-to-reach populations in new and innovative ways. Health care analytics encompasses a broad set of applications including consumer engagement, population health and self-management. Integrated analytics incorporate clinical and financial data and can allow users to mine data, identify targeted action steps, and send alerts to the care team to provide individuals with the right interventions. New tools can enhance provider and membership demographics with geographic, quality and cost data to generate critical information a health plan might need to create a value-based network. Health plans have the potential to incorporate data from remote monitoring devices/apps and translate that data into actionable insights for the care team and individual. 

Organizations are exploring new data sources and using both internal and external data to effectively identify distinct consumer groups and determine how best to engage them in their health and health care. Approximately 5 percent of the population accounts for 50 percent of the costs in Medicaid;* advocates of analytics think that these applications may lead to effective population management programs that reduce cost and improve quality of care. 

(*Source: The High Concentration of U.S. Health Care Expenditures: Research in Action, Issue 19. June 2006. Agency for Healthcare Research and Quality, Rockville, MD)

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Breaking Boundaries


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