Perspectives

Health Care Current | October 11, 2016

Repeat after me: Inventions do not always lead to innovation

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

Repeat after me: Inventions do not always lead to innovation

By Greg Reh, principal and Life Sciences sector leader, Deloitte Consulting LLP

Teachers know this well: In order to internalize something—a fact, a figure, a concept—you likely have to be exposed to it over and over again. Oftentimes, it’s not until you’ve repeatedly seen, read, or heard something that you can truly understand or remember it.

This can even be true in health care. And in the case of innovation to support healthy aging, it may be especially true. As Joe Coughlin, director of the AgeLab at the Massachusetts Institute of Technology puts it, when it comes to tech-enabled solutions to aging, the problem is not a lack of transformative technologies. But, in his view, inventions do not always lead to innovation. Plenty of new technologies exist to bring solutions to aging issues. But, Coughlin says that these are often labeled as “novel” or “special,” rather than placing aging at the core of the innovative technology.1

You can see evidence of this virtually everywhere. Many software developers retrofit smartphone apps in an attempt to get a corner on the market. Other developers develop new technologies that target a small issue plaguing a niche area of the system, sometimes neglecting to see the larger issues at play. Moreover, few times are these technologies developed with a sense for how—or if—the reimbursement will ever come.

As results from the Deloitte Center for Health Solutions 2016 Survey of Health Care Consumers suggest, this issue has impacted health care consumers, too. Indeed, while 86 percent of the consumers we surveyed have gone online to shop and 72 percent have used mobile or online banking for personal finance, less than one-third of consumers are using most health technologies.

Source: Deloitte 2016 Survey of US Health Care Consumers

However, there is one area in which our survey saw larger adoption of health technology: More than half (58 percent) of current prescription users report going online to refill their prescription.

This adoption rate is something that life sciences companies should consider tapping into. Medication adherence is a large driver of preventable readmissions, high costs, and complications in post-acute care. Technologies that tackle this issue may be able to bring to bear new solutions to an age-old problem, one that many older people are confronted with even more often. An earlier Deloitte study, Improving medication adherence: Tailored approaches may boost potential for success, suggested that medication adherence is related to consumers’ attitudes about the health care system, wellness, and engagement with digital tools.

The 2016 Survey of Health Care Consumers also suggests that caregivers are a key population. In fact, the caregiver market is projected to reach a sizable $72 billion in only four to five years. From 2016 to 2020, the cumulative total for the market is expected to reach $279 billion—nearly one-fourth of which is projected to be caregivers’ out-of-pocket spending.2 According to our survey, more consumers say they are likely to use sensor technology when caring for others than on themselves. And, caregivers are also more likely to use telemedicine and remote monitoring technology than are non-caregivers.

Connected homes that leverage the Internet of Things (IoT) are increasingly of interest to many consumers. IoT technologies could begin to transform how health care is delivered and alter hospital, health system, nursing home, and medical device company operating models. New technologies that enable providers to furnish more care outside of traditional health care settings could help lower costs and improve outcomes by keeping patients out of the hospital, lowering readmission rates, and promoting adherence to care plans.

New payment policies that help create the business case for achieving these outcomes could help support this vision. One potential step in that direction is the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). A recent survey of health care executives showed that most medical technology respondents (five out of six) and most biopharmaceutical executives (six out of eight) believe that MACRA will cause hospital and health plan demand for value-based contracting arrangements from their company to increase.

These changes—innovative technology solutions for connected care supported by new payment arrangements—are unlikely to happen until the industry begins to change its thinking. Technology-enabled care to serve older adults and caregivers may not be just a “niche” market. Care inside the home—or outside of traditional settings—is likely the way of the future.

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PS – We will be discussing these topics and more at AdvaMed 2016. Visit www.deloitte.com/us/advamed for more information.

Sources:
1 Robert B. Hudson, Public Policy & Aging Report, “Aging and Technology: The Promise and the Paradox,” 2014
2 AARP, “Caregiving Innovation Frontiers,” January 2016

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Implementation & Adoption

CMS selects six Medicare Part D plans for new medication therapy management initiative

Last week, the US Centers for Medicare & Medicaid Services (CMS) Innovation Center announced that six health care organizations will participate in the Part D Enhanced Medication Therapy Management (MTM) model. The model allows stand-alone prescription drug plans (PDPs) to test ways to optimize medication use and improve care coordination.

The model will give participating stand-alone PDPs more flexibility to target MTM services to beneficiaries based on conditions and varying levels of risk. CMS will pay organizations upfront to conduct more extensive MTM interventions better tailored to beneficiary needs. CMS will track plans’ performance on value and data reporting requirements and will pay a bonus to the plans that perform best. The pilot may be expanded if it works.

CMS will test the enhanced MTM model in five different regions, selected based on geography, population, and market characteristics and competition. The six organizations that were selected offer 22 plan benefit packages and provide benefits to approximately 1.6 million Medicare beneficiaries. The five-year performance period starts in January 2017.

Analysis: Many commercial health plans have used MTM to improve quality and reduce costs. A recent report from America's Health Insurance Plans (AHIP) says using that MTM in new ways could lower costs for the Medicare Part D program. Part D plans use tiered pharmacy benefit designs, formularies, and MTM programs to target at at-risk beneficiaries and improve medication administration accuracy, increase appropriateness of prescribing, and reduce duplicative therapies. AHIP says that the Enhanced MTM program should be expanded nationwide to support more beneficiaries.

However, according to CMS, regulatory constraints and misaligned financial incentives have inhibited Part D plans from using MTM tools to reduce expenditures and improve quality. The Enhanced MTM model aims to give stand-alone PDPs greater flexibility and use a plan-specific prospective payment to test enhanced MTM interventions.

(Source: AHIP, “The Medicare Part D Program: A Record of Success,” September 2016)

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Bloomberg: US ranks low on Health Care Efficiency Index

According to Bloomberg’s Health-Care Efficiency Index, the US health care system ranked 50th out of 55 countries in 2014. The index, created in 2012, compares countries based on life expectancy, health care spending per capita, and health care spending relative to the gross domestic product (GDP). In 2014, US life expectancy was 78.9 years, health care expenditures averaged $9,403 per person, and health care spending accounted for 17.14 percent of GDP.

Five countries ranked lower than the US: Jordan, Colombia, Azerbaijan, Brazil, and Russia. Bloomberg says that the top-ranked countries (e.g., Hong Kong and Singapore) are smaller countries with stronger government involvement in health care and that the US system tends to be more fragmented and less coordinated. Many of the top ranked countries also have less diverse populations than the US.

While the index includes data from the first year of expanded access to health insurance coverage under the Affordable Care Act (ACA), Bloomberg says it was too soon to see the law’s impact on the measures used to calculate efficiency. Over time, analysts expect the index to reflect boosted spending as a result of expanded coverage and use of services.

(Source: Lisa Du & Wei Lu, Bloomberg, “US Health-Care System Ranks as One of the Least-Efficient,” September 28, 2016)

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Survey: More consumers are comparison shopping for health care

More consumers are using technology to comparison shop for services, according to a 2016 UnitedHealthcare Consumer Sentiment Survey. Many consumers are increasingly turning to technology as their first resource for health care-related information. About a third (32 percent) of consumers compare the cost of medical services using the internet or mobile applications (up from 14 percent in 2012). Millennials are leading the trend both in using technology for shopping for health care services (47 percent) and seeking health care information (32 percent).

Many do not understand their benefits: Only 7 percent of respondents showed strong “health literacy” or an understanding of basic health insurance terms (premium, deductible, out-of-pocket, co-insurance, etc.). Misunderstanding of basic insurance concepts and costs is prevalent among many consumers. Though a few consumers overestimate costs, most consumers underestimate the cost of health care services taking into account premiums, deductibles, co-pays, and out-of-network expenses.

Thirty-seven percent of respondents said they are likely to use telemedicine to access health care services. The advantages of telemedicine include access to health care, convenience, and cost savings.

Analysis: Deloitte’s 2016 Consumer Survey found that most surveyed consumers are interested in using telemedicine for post-surgical care and chronic disease monitoring (49 and 48 percent, respectively). Millennials appear especially keen on using telemedicine technology for post-surgical care and chronic diseases (55 percent each). Of the respondents interested in telemedicine, 63 percent said they would be willing to use another health care provider if it saved them time and money. Only 27 percent of Millennials, for example, would limit telemedicine to their regular health care provider. Lastly, many consumers say they are concerned that care through telemedicine could be lower-quality than that of an in-person provider.

(Source: UnitedHealthcare, “UnitedHealthcare Consumer Sentiment Survey,” September 2016)

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Report: Average Hospital Readmissions Reduction Program penalties remain under one percent

The Kaiser Family Foundation evaluated the impact of the first three years of the Hospital Readmission Reduction Program (HRRP) on hospitals to find that the average hospital penalty has remained below one percent of hospitals’ Medicare payments for inpatient claims.

In an effort to improve care quality and reduce hospital readmissions, the HRRP reduces payments for hospitals with high rates of Medicare readmissions. For the first two years of the HRRP, hospitals faced penalties for heart attack-, heart failure-, and pneumonia-related readmissions. In the third year, CMS added penalties for chronic obstructive pulmonary disease and elective hip or knee replacement. Penalties for coronary artery bypass graft surgery related readmissions may be added in the future. Each year, CMS caps penalties, allowing them to be no more than one percent of payments for Medicare inpatient claims in fiscal year 2013 and rising to no more than three percent in 2015.

While average penalties remained below one percent, the share of hospitals with penalties increased each year of the program. Sixty-four percent were penalized in 2013, 66 percent in 2014, and 78 percent in 2016.

Major teaching hospitals were more likely than non-teaching hospitals to have received a penalty (86 percent vs. 61 percent). And, hospitals with the highest proportion of low-income Medicare patients were more likely than ones with the lowest proportion to have received a penalty (77 percent vs 49 percent).

Researchers’ analysis of data from the Hospital Compare website found that readmission rates began to fall in 2012, before the start of HRRP. Hospitals may have adopted strategies to lower readmission rates because they knew that penalties in 2013 would reflect their performance from prior years.

Hospital and health systems have raised three main concerns about HRRP:

  • CMS does not adjust for certain socioeconomic or community-level factors in readmissions penalties. This could be one reason why teaching hospitals and hospitals with a greater share of low-income Medicare enrollees see higher readmissions penalties. 
  • Many health systems have said that the way performance is measured (based on a national average, thus a constantly moving target) makes it possible for individual hospitals to improve readmissions scores, but still be penalized. 
  • Finally, health systems may be penalized for the care of patients after they leave the hospital.

As discussed in Medicare changes in post-acute care payment, this last issue is one of the reasons why health systems have been developing strategies for smoother care transitions and enhancing referral processes to ensure that patients are discharged to the most appropriate setting.

(Source: Kaiser Family Foundation, “Aiming for Fewer Hospital U-turns: The Medicare Hospital Readmission Reduction Program,” September 2016)

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On the Hill & In the Courts

CMS announces 2017 MA-VBID participants

Last week, the CMS Innovation Center announced participants for the first year of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model. The demonstration will begin in January 2017 and will include nine MA health plans operating in three states:

The MA-VBID model allows MA health plans to offer different benefit designs for enrollees that have certain health conditions. Currently, CMS’s “uniformity” requirement requires health plans to offer the same benefits and cost sharing to all plan enrollees. MA-VBID will waive this requirement so that health plans have more flexibility to design clinically-nuanced benefit designs. CMS requires proposed models to include reduced cost sharing for high-value services and providers, reduced cost sharing for patients that participate in disease management programs, and coverage of additional supplemental benefits.

In the first year, the model will allow benefit design flexibility for patients with these conditions:

  • Diabetes
  • Chronic obstructive pulmonary disease
  • Congestive heart failure
  • Patient with a past stroke
  • Hypertension
  • Coronary artery disease
  • Mood disorders

CMS will add rheumatoid arthritis and dementia in 2018. CMS will begin accepting applications from MA plans, including ones that offer Part D benefits, for the second program year later this fall.

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FDA, stakeholders request input on pre-approved product data sharing

At the Academy of Managed Care Pharmacy (AMCP) partnership forum last month, stakeholders and industry leaders developed a set of recommendations for biopharma companies to communicate with health care organizations about products awaiting US Food and Drug Administration (FDA) approval. This type of information can now only be shared for approved products in the market.

Health plans say that receiving clinical and economic information on products sooner could help them establish appropriate copayments, premiums, and formularies faster. AMCP stakeholders recognize that strict safeguards must be in place to protect information from leaking to unintended audiences. That said, getting information about clinical and economic data and anticipated indications or drug administration techniques earlier could improve financial forecasting and the way that health plans provide access to new products.

The AMCP will publish the full list of recommendations in the Journal of Managed Care & Specialty Pharmacy in December. The FDA scheduled a public hearing to discuss the recommendations, covering:

  • What clinical and scientific standards pre-approval information should meet
  • What value organizations would gain by disseminating and receiving pre-approval information
  • What safeguards to prevent pre-approval information from reaching unintended audiences should be created

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American Heart Association requests Medicare coverage for supervised exercise

Last month, the American Heart Association (AHA) submitted a formal request for CMS to cover supervised exercise therapy services for Medicare beneficiaries with peripheral artery disease (PAD). The association submitted a National Coverage Determination request.

PAD affects 12-20 percent of Americans over 60. The disease causes plaque to build-up in the arteries outside of the heart, which often results in fatigue, cramping, and pain in the lower extremities, which can lead to decreased mobility. The AHA says that exercise can be a first-line, non-invasive, low-risk therapy that can improve mobility for these patients. The Inter-Society Consensus for the Management of Peripheral Arterial Disease, a multi-national coalition of experts, says that supervised exercise therapy can save an estimated $20,000-$40,000 per life year gained and recommends it as a first line therapy.

Medicare covers supervised exercise therapy for cardiac rehabilitation programs, but not for patients with PAD who have not yet had an acute cardiac episode.

The AHA estimates that 6.7 million Medicare beneficiaries have PAD, and about 10 percent (670,000) would benefit from supervised exercise therapy. The proposed benefit would cover 45-60 minute sessions, three times per week for 12 weeks. The therapy sessions would need supervision by a physical therapist, physiologist, physician, or nurse.

CMS will be accepting comments on the AHA’s proposal until October 15 and plans to make a preliminary decision by March 15, 2017.

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Around the Country

CMS and Arizona agree on Medicaid expansion waiver

Last month, CMS approved Arizona’s 1115 demonstration waiver for Medicaid expansion. CMS will allow the state to charge additional out-of-pocket fees for individuals enrolled in the state’s Medicaid expansion program with incomes above the federal poverty level (FPL). However, CMS did not approve the proposals to add work requirements, time limits on coverage, or a six-month lock-out for not paying premiums.

Under the waiver program, Arizona’s Medicaid program will:

Report: Labels for health plan network breadth are inconsistent

CMS has developed measures to gauge relative network size at the county level for exchange plans. Applying these labels, however, researchers at NORC at the University of Chicago found that what networks are considered “broad” “basic” or “standard” differs around the country.

During the fourth year of the exchanges, CMS will require qualified health plans to provide accurate, up-to-date provider directories. Consumers shopping for plans on Healthcare.gov in six states will see networks labeled as “broad,” “basic,” or “standard” to indicate how broad provider networks are.

NORC researchers evaluated provider directories from 233 health plans participating in the federally facilitated exchanges in 2016. They found:

  • 74 percent of adult primary care networks nationwide would be classified as standard
  • 15 percent of networks would be classified as basic 
  • 11 percent would be classified as broad

Narrow networks are increasingly common in exchanges. Four in ten networks had less than 25 percent of eligible providers participating in the network.

(Source: Aaron Wesolowski, Matthew Green, and Lily McCutchan, “Assessing the State of Provider Networks in Federally-Facilitated Marketplaces,” NORC at the University of Chicago, September 2016)

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Breaking Boundaries

Startups are increasingly interested in disrupting the sleep industry

A decade ago, pedometers were considered an innovative tool to count our steps. They had the potential to encourage people to walk more and get healthier. Now, many technology-enabled activity trackers are in the market that have evolved past simply counting our steps and are being incorporated into clothing, accessories, and devices that allow consumers and clinicians to easily monitor aspects of health. Some analysts are noticing that devices and apps that track and help consumers have healthy sleep patterns are gaining traction, as many consumers and health professionals are increasingly paying more attention to how important sleep is to overall health.

An increasing body of research shows that sleep plays a vital role in our attention, mood, performance, and life. The US Centers for Disease Control and Prevention estimates that a third of American adults do not get the recommended minimum of seven hours of sleep a night. Lack of sleep has been associated with heart disease, diabetes, and stroke. A study in the Journal of Occupational and Environmental Medicine showed that fatigue-related productivity losses cost employers $1,967 per employee every year.

Many developers of digital health devices and solutions are taking notice and are developing sleep products, devices, and trackers to meet growing demand. A company called Beddit makes a thin mattress sensor that tracks the sleeper’s movements, snoring, and environment and then provides analysis and guidance on how the individual can improve sleep. Resmed makes the S+ sleep sensor, which tracks sleep patterns and makes daily charts, and the company Oura makes a sleep ring that measures pulse waveforms, heart rates, and body temperature. Other products hitting the market cool the forehead and offer help in settling the racing mind or emit sounds, lights, and aromas that are thought to induce sleep.

While therapeutic sleep aids have been on the market for years, consumer interest in these newer devices and products is rising. It is not surprising that many consumers who are interested in monitoring their heart rate and activity levels and keeping track of their calorie intake want to know what is going on with their personal sleep patterns.

Related: For years, employers and health plans have been using employee and member incentives to encourage healthy eating, fitness, and tobacco cessation. Last month, the Employee Healthcare Benefits Congress held in Washington, DC made sleep a cornerstone of their annual employer wellness conference. The summit focused on innovative sleep programs for employers, the return-on-investment for sleep programs, and the business case for making sleep a priority. It also provided information on how to implement corporate sleep health programs, along with metrics to measure the success of the programs.

Last year, Aetna started a program to encourage employees to prioritize sleep. The program gives employees the chance to earn up to $500 if they can demonstrate they are sleeping at least seven hours for 20 nights in a row. Participating employees wear sleep trackers to help them record the data. The company also has information on sleep, yoga, and meditation to supplement the program.

(Sources: Mark R. Rosekind, Kevin B. Gregory, Melissa M. Mallis, Summer L. Brandt, Brian Seal, and Debra Lerner, “The Cost of Poor Sleep: Workplace Productivity Loss and Associated Costs,” Journal of Occupational and Environmental Medicine, January 2010)

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