Health Care Current: October 25 2016 | Deloitte US | Center for Health Solutions | Life Sciences has been added to your bookmarks.
Health Care Current | October 25, 2016
What do the Ford Model T, retail clinics, and MACRA have in common?
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
- Implementation & Adoption
- On the Hill & In the Courts
- Around the Country
- Breaking Boundaries
By Bill Copeland, Vice Chairman, US Life Sciences & Health Care Industry Leader, Deloitte LLP
Albert Einstein was once quoted as saying that the definition of insanity is doing the same thing over and over and expecting different results. The principles of innovation also tell us that doing the same things the same way will produce the same outcomes.
Today, many in health care are seeking ways to improve quality and lower the overall cost of chronic care, which makes up a whopping 86 percent of health care spending in the US.1 Moreover, research suggests that as much as 29 percent of the current costs for chronic care in the US could even be avoided.2 Many have tried to remedy this situation. But, most have tried the same tactics over and over, expecting old habits to lead to new breakthroughs.
How might this cycle be broken? Convergence and collaboration could be the innovation principles that, when applied to health care, could create more value for less cost and complexity.
Henry Ford invented neither the automobile nor the concept of an assembly line. Yes, there were many car manufacturers in operation when he started the Ford Motor Company. But, his competition produced cars that only the very rich could afford. By using convergence and collaboration, Henry Ford made the automobile affordable ($825 in 1908) for the masses.3
Ford borrowed from the meat packing industry. He perfected the assembly line by standardizing the process through simplicity, quality controls, integration of the suppliers, and rigid discipline to reduce unplanned variations. This convergence of different elements dramatically lowered production costs. He created “more-for-less-innovation,” which enabled him to serve a larger market. So large a market, that unlike the other competitors, Ford needed a way to reach his customers. This need spurred a new business collaboration between the Ford Motor Company and local car dealers who would sell and service the Model T and promote automobile ownership. The Model T was a successful automobile for almost 20 years and ranked in the top ten for the most cars sold at the time at 16.5 million.
Borrowing from lessons Ford learned in convergence and collaboration, today there exists an example of this in health care that could create more for less, specifically when it comes to serving the needs of people with chronic conditions: Retail clinics.
Historically, retail clinics have not been viewed as a valuable partner to health systems or primary care physicians. In a fee-for-service system, the loss of revenue and patient continuity is a barrier to collaboration.
But, findings from our recent research, “Beyond the acute episode: Can retail clinics create value in chronic care?” suggest that this emerging trend is an example of collaboration that could benefit patients and health care providers alike.
In a “fee-for-value” payment model, retails clinics offer greater access and convenience to patients in a lower-cost setting. These settings can also create an opportunity for health systems and primary care physicians to lower the overall cost of caring for their patients and improve treatment adherence and quality. And, the elements of success can be leveraged to deliver more for less. Examples include:
- Well-defined clinical protocols
- Sharing of clinical data
- More frequent patient touch points
- Greater opportunities for patient engagement
- Analytical tools to provide deeper insights into patients’ behavior and medication adherence
- Convenient locations and hours
This model can work effectively with many types of chronic diseases, including diabetes, high cholesterol, hypertension, and asthma. Once the partnership operating model is in place, many more chronic care programs could be added.
Of course, collaboration of this nature cannot work effectively unless there is a mutual commitment to work together to prioritize data sharing, measurement and alignment around patient outcomes, and leveraging each other’s strengths.
Henry Ford was a disruptive innovator whose Model T may not have been as fancy or powerful an automobile as his competitors’ models. But, he perfected his innovation to break the existing constraints and create a lower-priced, but good enough, car to become the market leader. In the realm of health care, many retail clinics have successfully managed to make minor acute health episodes more convenient and lower cost.
With changing consumer expectations, growing out-of-pocket costs, and an aging population, the chronic care model could be the next natural step in the evolution of retail clinics. In the fee-for-service model this might have been viewed as a disruptive force. But, with the Medicare and CHIP Reauthorization Act of 2015 (MACRA), health care providers now have an incentive to find ways to improve quality and lower overall cost of chronic care treatments. Now, through the growing focus around resource use, quality, and advancing care information, the retail clinic can be an innovation through convergence and collaboration.
1 Centers for Disease Control and Prevention, “Chronic diseases: The leading causes of death and disability in the United States,” http://www.cdc.gov/chronicdisease/overview/index.htm, accessed September 28, 2016.
2 Francois de Brantes, Amita Rastogi, and Michael Painter, “Reducing potentially avoidable complications in patients with chronic diseases,” Health Services Research 45, no. 6 part 2 (2010), DOI:10.1111/j.1475-6773.2010.01136.x; Kathryn Fitch, Bruce S. Pyenson, and Kosuke Iwasaki, “Medical claim cost impact of improved diabetes control for Medicare and commercially insured patients with type 2 diabetes,” Journal of Managed Care and Specialty Pharmacy 19, no. 8 (2013)
3 History.com, “1908: Ford Motor Company unveils the Model T”
Implementation & Adoption
The Comprehensive Primary Care (CPC) initiative saved Medicare $57.7 billion during the second performance year. Quality also improved markedly. However, the savings were offset by the $58 billion in care management fees paid to participating practices.
Of the 481 participating practices, nearly all practices (95 percent) met quality of care requirements, and more than half of the participating practices will receive a share of more than $13 million in earned shared savings. Practices in Arkansas, Colorado, New Jersey, Oregon, New York’s Hudson Valley region, the Cincinnati-Dayton region of Ohio and Kentucky, and Oklahoma Greater Tulsa region are participating in CPC. Four of the regions (Arkansas, Colorado and Oregon, and Greater Tulsa) earned shared savings in 2015. Notably, the savings generated in these four regions offset the losses in the three other regions.
Dr. Patrick Conway, Chief Medical Officer of the US Centers for Medicare and Medicaid Services (CMS) and Deputy Administrator of the Innovation Center, praised the potential of the program and participating primary care clinicians to improve care quality. He also highlighted that many CPC practices outperformed benchmarks for electronic Clinical Quality Measures (eCQMs), particularly in preventive health measures. Although this was the first year in using eCQM performance in the formula for shared savings, 97 percent of CPC practices successfully reported nine eCQMs. Notably, nearly all practices exceeded national levels for colorectal cancer screening and influenza immunizations.
Analysis: CMS is relying on the CPC program to save money and improve quality. A new Comprehensive Primary Care Plus (CPC+) initiative begins in 2017 with around 5,000 practices in 14 regions. CMS said in the final MACRA rule that it expects to consider CPC+ an advanced alternative payment model (APM), which would qualify participating practices for higher Medicare payments.
As mentioned in the August 9, 2016 Health Care Current, CMS opened applications for the two-track CPC+ payment model in August 2016. Both tracks require primary care clinicians to develop comprehensive solutions for chronic care management, provide preventive care, and coordinate with specialists and hospitals. Practices participating in Track II must also meet additional conditions of participation, including around high-need patients.
Survey: Health care industry at higher risk of cyberattacks than other industries
Nine out of 10 attorneys for health care organizations believe that health care organizations face greater cyber risk than organizations in other industries, according to a survey by Bloomberg Law and the American Health Lawyers Association. Researchers surveyed a nationally representative sample of 300 health care attorneys and found that nearly all of the respondents (97 percent) say they expect their involvement in cybersecurity issues to increase over the next three years.
Most attorneys (84 percent) say they have been brought in to develop internal policies and determine whether to report an incident. Additionally, seven in 10 attorneys say they are enhancing their data security expertise to respond to the growing needs of organizations.
Many believe their health care organizations are not well prepared for handling cyberattacks:
- Forty percent report that their cyber risk plans are generic and lack specific guidance and adequate testing to respond to cyber incidents.
- One-third of respondents says their plans are out of date and cannot properly deal with the rapidly evolving nature of cyberattacks.
- Twenty-five percent of respondents say their health care organization is very prepared, 70 percent say it is somewhat prepared, and 5 percent say it is not prepared at all to handle future cyberattacks.
(Source: Bloomberg BNA and American Health Lawyers Association, “In The Crosshairs -- Over 9 In 10 Corporate Health Care Attorneys Believe Their Organizations At Greater Risk For Cyberattack Than Other Industries,” October 13, 2016)
HHS projects that nearly 14 million people will enroll during 2017 exchange open enrollment
Last week, the US Department of Health and Human Services (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE) published its projections for the 2017 exchange open enrollment period. ASPE estimates that 13.8 million people will purchase qualified health plans (QHPs) on the exchanges during the enrollment period that runs November 1, 2016 through January 31, 2017.
This would be a net increase of 1.1 million people, or 9 percent, over last year’s enrollment period, when 12.7 million individuals purchased QHPs, and the highest enrollment ever. The individual market is growing both on and off the exchanges. ASPE estimates that this market has grown by 65 percent since 2011, increasing from 11 million consumers in 2011 to 18 million in 2016.
ASPE projects that the majority of individuals who will purchase a plan on the exchange in 2017 will be those who were in one in 2016:
In March, the Congressional Budget Office (CBO) estimated that 15 million people would enroll in a QHP during 2017 open enrollment. However, the CBO projection relies on the assumption that 4 million fewer individuals would be covered by employer-sponsored insurance by this year. There is no evidence to suggest that this shift has occurred.
(Source: HHS ASPE, “Health Insurance Marketplace Enrollment Projections for 2017,” October 19, 2016)
Last week, the Social Security Administration announced that monthly Social Security and Supplemental Security Income (SSI) benefits will have a cost of living adjustment (COLA) increase of 0.3 percent in 2017. This is the first COLA in two years. At the same time, Medicare Part B premiums are rising. While most people will not see the increase, an estimated 30 percent of enrollees may.
Most people have their Medicare Part B premium deducted from their Social Security check. Under the “hold harmless” provision, Medicare cannot charge most people a higher premium if it makes the net (Social Security minus Medicare Part B) go down. The remaining 30 percent—new enrollees, high-income beneficiaries, and enrollees who do not receive a Social Security check—are not protected by the provision. These enrollees will have to pay more to make up the difference.
According to the Medicare Trustees’ June report to Congress, premiums for that subset of Medicare beneficiaries could increase by as much as 22 percent. The report says that higher use of outpatient services and the rising cost of specialty drugs are major factors driving the Part B cost growth.
Background: Last year, lawmakers were able to partially avert the Part B premium spikes through the Bipartisan Budget Act, which limited the increase to 14 percent for the beneficiaries not covered by hold harmless provision (see the November 17, 2015 Health Care Current). The Senate Finance Committee is expected to discuss additional options to keep Medicare premiums affordable in 2017. CMS could announce Medicare premium rates in November.
NQF: Better measurement of quality in home- and community-based services is needed
The National Quality Forum (NQF) recently reported on gaps in performance measures to support home- and community-based services (HCBS). NQF says the lack of standardized measures across the country, limited access to timely data, variability of reporting requirements across programs, and administrative burden for quality improvement activities needs to be addressed. It also says that Medicaid should vary payments to HCBS programs based on their quality.
In addition to this wide set of recommendations, NQF created more specific recommendations to improve quality of life and community integration (e.g., community inclusion, workforce, caregiver support, holistic health, and human and legal rights).
Background: The need for HCBS in the US is growing. Roughly 12 million Americans need long-term services and supports, and 3 million receive Medicaid-funded HCBS. Understanding the quality of HCBS will be increasingly important as funding from federal, state, local governments, and private payers begin to shift from institutional care settings to emphasize community-based settings and as demand for HCBS rises.
(Source: National Quality Forum, “Quality in Home and Community-Based Services to Support Community Living: Addressing Gaps in Performance Measurement,” September 2016)
On the Hill & In the Courts
ONC final rule increases oversight of Health IT Certification Program
On October 14, 2016, the Office of the National Coordinator for Health Information Technology (ONC) issued a final rule that increases its oversight of electronic health record (EHR) certification under the Health IT Certification Program. The rule extends the program’s authority to review and oversee already certified health IT products while they are in use, in order to maintain accountability for vendors and transparency for health care providers. It will go into effect in December 2016.
ONC-accredited certification bodies (ONC-ACBs) review and test health IT products, including EHRs, before they certifying them. To become certified, health IT products must meet standards for technical capabilities, patient privacy, and data portability. The certification program is voluntary. But, health care organizations that participate in the Medicare and Medicaid EHR incentive programs must attest to using certified EHR technology.
The final rule focuses on three key areas:
Some industry leaders say that a direct review process could potentially suspend a vendor’s Meaningful Use certification mid-year based on new compliance or quality measures before a developer has a chance to update their product.
Cancer Moonshot Task Force report highlights public-private collaboration
Last week, Vice President Joe Biden released The Report of the Cancer Moonshot Task Force, whose goals are to advance scientific breakthroughs, unleash the power of data, bring new therapies to patients, strengthen prevention and diagnosis, and improve patient access and care. The task force is to develop a strategy to meet these goals for the next five years.
The report highlights a new oncology research partnership between the National Cancer Institute, Amazon Web Services, and Microsoft. The three will collaborate to build a sustainable model for housing cancer genomic data in the cloud.
The US Food and Drug Administration (FDA) will prioritize review of cancer products through a series of policies directed at improving the quality and efficiency of clinical research, helping people find trials, enhancing clinical trial design, and increasing the efficiency of the drug and device development process. With input from stakeholders, the FDA will establish a pilot program to integrate real-world evidence into regulatory decisions for oncology products during the second year of the initiative. Additionally, the agency will modernize clinical trial eligibility criteria to increase efficiency and prevent any unnecessary restrictions.
(Source: The White House, “Report of the Cancer Moonshot Task Force,” October 17, 2016)
FDA requests input on regulating software as a medical device
Earlier this month, the FDA published draft guidance on software as a medical device (SaMD). The draft guidance focuses on methods for conducting clinical evaluations of SaMD and the level of clinical evidence necessary to demonstrate that SaMD products are safe and effective. The FDA is requesting comments on the scope of the proposed guidance, relevant SaMD terminology, and the impact it may have on currently-regulated devices.
The FDA monitors medical devices for safety, effectiveness, and performance using ongoing clinical evaluations. SaMD products, including mobile medical apps, are mainly used to inform clinical management, diagnosis, or treatment. SaMD typically relies on other medical devices (e.g., in-vitro diagnostic devices) to generate physiological data from patients. SaMD uses that physiological data to help clinicians diagnose and treat patients.
The FDA proposes sorting SaMD according to risk using two criteria:
- Whether the device informs care, drives care, or treats/diagnoses a condition
- How serious the condition is that it addresses
The guidance also proposes allowing SaMD products to move from one risk category to another after the initial evaluation based on post-market surveillance.
Regulating SaMD poses unique challenges because the products often operate in a complex, highly-connected, interactive environment; SaMD products change more rapidly than traditional medical devices. Agency oversight and surveillance can be difficult. In addition, new technology and mobile-application companies that may be unfamiliar with medical device regulations and terminology are rapidly entering the market.
The FDA prepared the guidance in collaboration with the International Medical Device Regulator’s Forum, which identifies and reduces differences in regulatory policies amongst regulatory agencies in different countries to foster innovation.
Around the Country
NASHP has 11 recommendations for reducing state drug spending
A recent National Academy for State Health Policy (NASHP) report contains 11 proposals for states to limit drug prices. In 2014, Medicaid spent $27 billion (both the state and federal share) on outpatient drugs for its 70 million beneficiaries.
The recommendations range from using regulatory interventions to encouraging market-oriented approaches to slow rising drug prices. Though some of the policy suggestions would require federal approval to be implemented, others could be implemented without changing the law.
Representatives from Medicaid programs, public employees, state exchanges, and corrections departments worked on the recommendations, which are meant to promote discussion. The group says it plans to discuss the recommendations with pharmaceutical trade groups next month.
(Source: Pharmacy Costs Work Group, “States and the Rising Cost of Pharmaceuticals: A Call to Action,” National Academy for State Health Policy, October 2016)
Report: Medicaid spending growth slows
Total Medicaid spending growth has slowed down, despite enrollment increases after Affordable Care Act expansion, according to a recent report from the Kaiser Family Foundation.
Spending growth slowed in all states, but those that had expanded their programs had higher Medicaid enrollment and total spending growth in 2016 on average and have higher projected growth in 2017. However, the difference is narrowing. Researchers project that states’ share of spending will increase in 2017 because the federal share of financial support for Medicaid expansion will drop from 100 percent to 95 percent next year.
(Source: Robin Rudowitz, Allison Valentin, and Vernon Smith, “Medicaid Enrollment & Spending Growth: FY 2016 & 2017,” Kaiser Family Foundation, October 2016)
Ridesharing and ride-hailing services address health care needs
Many people rely on services like Uber and Lyft to make their lives easier. Could these services help the millions of Medicaid, Medicare, and low-income Americans for whom transportation can be a major barrier to accessing health care?
Uber and Lyft have been rolling out services to help transport patients to medical appointments. MedStar Health, a health system serving patients in the Washington, DC area, partnered with Uber earlier this year to provide their patients with reliable transportation. Patients can enter their location through a link on the MedStar Health web site, along with the date and time of their appointment, and their ride is scheduled. They can opt for appointment reminders and they can get a cost estimate as well. For lower income patients, MedStar is piloting a program to subsidize rides.
Uber is also partnering with a Boston-based startup, Circulation, a company that makes software to manage non-emergency medical transportation for patients. Its main target groups are older adults, people with disabilities, and low-income populations. Circulation and Uber are piloting a program to transport patients to and from certain health care facilities. Uber can use Circulation’s software to connect to the hospital or clinic, so the facility can schedule rides for patients. Uber also handles the billing. The software can send reminders and real-time updates via phone call or text message to patients and caregivers. Medicare and Medicaid pay for some of the rides through vouchers.
Lyft is also testing a pilot program with the National MedTrans Network, which arranges nonemergency medical transportation for patients. The program allows MedTrans operators to book a Lyft ride for clients using a web-based dashboard. This feature helps seniors who do not own a smartphone take advantage of the ride-hailing service, which typically finds riders through a mobile app.
Another potential advantage of the Lyft and MedTrans Network partnership could be reducing ambulance fraud. In 2015, the government reported that Medicare paid more than $50 million in potential fraudulent bills to ambulance companies who billed for providing rides to seniors. In some cases, the investigating agency found that rides that were billed did not occur. Lyft’s real time reporting of its services could cut down or potentially eliminate this type of fraud.
Aside from providing transportation services to patients, Lyft also recently partnered with HHS to promote open enrollment in the public health insurance exchanges through outreach to its drivers around the country. Last week, Lyft and Uber announced support for the Cancer Moonshot Initiative by expanding their ride services to cancer patients with transportation issues. The companies are reaching out to patients in low income communities with credits and free rides.
Analysis: Lack of reliable transportation is a major reason patients miss medical appointments. A Community Transportation Association study found that 3.6 million Americans miss or delay medical care because of transportation issues.
Other startups are seeing the opportunities in transportation: RoundTrip is a startup out of Philadelphia that created a web portal and mobile app so that care coordinators at health care facilities can connect patients in need of nonemergency transportation to medical appointments. Unlike the ridesharing and ride-hailing companies, RoundTrip focuses on serving health care facilities. Its main clients are care managers and social workers who arrange transport typically by ambulance, wheelchair van, or other medical transportation vehicle. The revenue model is based on charging a small fee for every completed ride. The company estimates that medical transportation companies operate at about 35 percent efficiency, and their model increases efficiency by making better use of these vehicles.
(Source: Community Transportation Association, “Medicaid Non-emergency Medical Transportation (NeMT) saves lives and money”)