Perspectives

My conference in Colombia: In this foreign country, health care challenges don’t seem so foreign

Health Care Current | October 30, 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.

My Take

My conference in Colombia: In this foreign country, health care challenges don’t seem so foreign

By Sarah Thomas, managing director, Deloitte Center for Health Solutions, Deloitte Services LP

I was recently invited to present at the Health Forum (Foro de la Salud) in Cartagena, Colombia on the topic of innovation and value. I came back with some chocolate, a mild tan, and a new perspective on their health care challenges—many of which aren’t so different from our own.

The key issue I focused on at the meeting is the tension the health sector faces between opening the door to more innovative therapies while meeting the more basic public health needs of Colombia’s growing economy. The morning of my talk, the newspaper reported that Colombia has fewer people living in extreme poverty than ever before. With near-universal health care, a growing economy, and a new government that business leaders hope will be business-friendly, the country seems attractive for investment—from pharmaceutical manufacturers and other health investors. For now, the government appears to be keeping a pretty tight rein on both coverage and prices for innovative drugs, although I was told it supports intellectual property to a greater extent than in some neighboring countries.

Juan Pablo Uribe Restrepo, Colombia’s Minister of Health and Social Protection, laid out his perspective on the country’s health system during a thorough presentation. The new administration has been in place for only a few months, but Uribe seems to have done an in-depth analysis of the main issues. Based on his presentation, it appears that many of the overall indicators of outcomes (e.g., doctors per capita, life expectancy, child mortality) are moving in the right direction.

The key challenges in Colombia are familiar—meeting patient expectations, keeping spending sustainable, and raising the overall standard of care at hospitals. There is also a big focus on chronic conditions (the battle against communicable disease appears to be largely over).

Colombia is dealing with an influx of Venezuelan immigrants.1 While some of these immigrants could become important innovators or health industry professionals, others might pull resources from human services. In addition, the health minister pointed out that hospitals in many Colombian areas do not meet standards for quality and require investment to provide the level of care that people need.

Three innovations taking root in the US might also work in Colombia

The Deloitte Center for Health Solutions has done extensive research on a number of topics that might be of interest to stakeholders in both the US and Colombia. They include:

  • Telemedicine and virtual care: Although many Colombians live in the country’s major urban centers, telemedicine could provide a relatively low-cost way to get care to people in rural parts of the country and areas without enough providers. In the US, virtual health is expanding in hospitals and health systems, and patients, physicians, and employers are growing more comfortable with the idea, according to the results of our recent consumer survey.
  • Value-based payment for innovative drugs: As a condition of coverage, pharmaceutical manufacturers could contract with the Colombian government, or with the country’s many health plans (if they can cover these drugs), to take on more financial risk for the effectiveness and value of their products.
  • High-value care: Many of the case studies we describe in our report on low-value health care might be worth piloting in Colombia—potentially as public-private partnerships between the health plans and the government’s health authorities. I think that measuring consumer experience and quality and using financial incentives to draw attention to key clinical and access issues is a way for the country to deliver on its goals of meeting consumers’ expectations.

Colombia’s new leadership and relatively strong economy provide room, I think, to experiment with new payment models and support systems for physicians to help them target therapies to those who would benefit the most. I think this is equally true for the US. Even as we debate policies targeted at spending on drugs in the US, we should consider experimenting with ways to get the most value out of these game-changing therapies. We should keep in mind that some therapies are worth paying for if they keep people well, productive, and out of the hospital.

Not your typical US health conference

While there are many parallels between US and Colombian health systems, let me tell you about four fun differences I noticed between a typical US conference and the one I attended in Cartagena:

  1. Business casual: Especially among the women in the audience, I was struck by the vibrancy of the dress—bright and usually paired with dangly earrings—much more fun than the pencil skirts and suits in the US. Business casual for men meant no jackets, and I saw lots of linen shirts in the audience. I suspect this is due to the warm weather in Cartagena.
  2. Coffee: The coffee (“tinto”) in Colombia is delicious and served in very small cups with no milk. A waitress serves people in the audience, kind of like peanut vendors at a baseball game.
  3. International speakers: I was one of several speakers from another country, and it was fine to give my presentation in English. The conference offered devices for instant translation from English to Spanish for those who needed it. I rarely have seen non-English presentations at US conferences.
  4. Nametags: They were slightly larger than a compact-disc jewel case, and were by far the biggest nametags I’ve ever seen in my many years of going to conferences. It was large enough to fit the whole agenda for the three-day meeting on the back! I found this very handy for reference and for spotting fellow conference-goers from far away.

An important debate in Colombia is whether the country has reached a tipping point in its economic development where it can open the door for transformative therapies and innovation in health care more broadly. Opening that door could be a step in the right direction. Along with creating more jobs, it also could lead to new innovations. Although health is defined as a fundamental right in Colombia, many people don’t have access to the health care system. However, unlike the US, Colombia might be able to try new initiatives without needing to prioritize the expansion of coverage and financing mechanisms.

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1 Colombia gives 440,000 Venezuelan migrants permission to stay (Reuters, August 2, 2018).

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In the News

HHS announces new payment model to reduce drug costs for patients

On October 25, the US Department of Health and Human Services (HHS) announced plans to test a new “International Pricing Index” (IPI) payment model to reduce what the Medicare program and beneficiaries pay for drugs under Part B. Part B drugs are administered in hospital outpatient departments and by physicians, and are often injected or infused.

Reducing drug prices has been a significant priority for the administration, which issued its Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs in May (see the October 16, 2018 Health Care Current). HHS projects that if the model is implemented, taxpayers and patients would save a total of $17.2 billion over five years.

This mandatory pilot (applying to a part of the country) would phase in over five years. It would apply to reimbursement for most drugs in Medicare Part B. Today, when a physician administers a drug, Medicare pays the drug’s Average Sales Price (ASP), plus an add-on fee. The add-on increases with the price of the drug, which HHS says can encourage physicians to prescribe more expensive drugs. Additionally, Medicare does not negotiate prices for Part B drugs. HHS says these two factors are driving higher out-of-pocket costs for Medicare beneficiaries.

The IPI model would allow private vendors to buy drugs, distribute them to physicians and hospitals, and bill Medicare. Vendors also could aggregate purchasing, seek volume-based discounts, and compete for business from providers. Instead of a percentage-based add-on, physicians and hospitals would receive set payment amounts—which would not be tied to drug prices—for storing and handling drugs.

According to HHS, the IPI model would achieve several goals, including:

  • Reducing costs for Medicare beneficiaries, which could boost adherence and consumer access to prescription drugs.
  • Encouraging competition for physician-administered drugs by allowing private-sector vendors to participate.
  • Reducing some of the administrative burden on physicians who now manage drug inventories. 
  • Addressing the price disparity between drugs sold in the US with those sold in other countries. 

The US Centers for Medicare and Medicaid Services (CMS) is considering a proposed rule for the IPI, which could be released next spring. The IPI model could then become effective as early as spring 2020. HHS seeks to pilot this test model for five years, from 2020-2025.

(Source: HHS, HHS Advances Payment Model to Lower Drug Costs for Patients, October 25, 2018)

Administration reinterprets, rebrands ACA Section 1332 waivers

Last week, new guidance was released for Section 1332 Innovation Waivers, which allow states to waive certain provisions of the Affordable Care Act (ACA). The new guidance reinterprets the criteria that the agency uses to evaluate waiver proposals, significantly expanding the scope of what the agencies will permit states to do. The administration, which is rebranding 1332 waivers as “State Relief and Empowerment Waivers,” outlined the following five goals for the program:

  1. Provide increased access to affordable private-market coverage
  2. Encourage sustainable spending growth
  3. Foster state innovation
  4. Support and empower those in need
  5. Promote consumer-driven health care

A recent Deloitte article provides a further analysis on the new guidance for these waivers.

Background: During ACA negotiations, Innovation Waivers (also called 1332 Waivers after the section of the law authorizing them) were envisioned as a way for a state to achieve the coverage goals of the ACA while pursuing alternative approaches to suit the unique needs of its health care market. Section 1332 lets states waive certain provisions of ACA, such as qualified health plans, cost-sharing reductions and advanced premium tax credits, and individual and employer mandates. The statute requires states, when developing their alternative approaches, to ensure that coverage:

  • Is at least as comprehensive as coverage available without a waiver
  • Is as affordable as coverage available without a waiver
  • Is held by as many of the state’s residents as would have held coverage without a waiver
  • Does not increase the federal deficit

The previous administration interpreted these requirements to mean that state proposals had to offer coverage that was both as comprehensive and as affordable as ACA-compliant plans. By contrast, the current administration has expanded the definition of what constitutes coverage to let states offer less-comprehensive coverage such as short-term, limited-duration (STLD) plans as long as residents still have the option of enrolling in other ACA-compliant coverage. The current administration also plans to take a broader view in evaluating the impact of the waivers. This means a state could decrease the affordability or availability of coverage for some subpopulations if affordability or availability improves overall. Moreover, temporary coverage losses could be allowed as long as the proposal projects that coverage will increase and will meet or exceed the coverage guardrail over the life of the waiver.

(Source: CCIIO, State Relief and Empowerment Waiver Guidance, October 22, 2018)

Back to top

State Medicaid directors report increased focus on quality and outcomes

States are placing greater emphasis on quality and outcomes in Medicaid, according to a survey of state Medicaid directors conducted by the Kaiser Family Foundation. The report highlights state Medicaid programs that were in place in fiscal year 2018, and looks at expected policy changes for FY 2019. Key findings include:

  • Alternative payment models (APMs): As of July, 33 states reported that at least 75 percent of their Medicaid beneficiaries were enrolled in a Medicaid managed care plan. Nearly all state Medicaid programs include quality initiatives, and a growing number are now requiring APMs for a certain percentage of provider payments.
  • Home and community-based care settings: Nearly all states continue to use state-plan options and/or home and community-based services (HCBS). As of July 2016, 24 states covered long-term services and supports (LTSS) through at least one capitated managed care arrangement.
  • Payment increases for providers: Nearly half of states that have Medicaid managed care programs require that plans reflect changes to fee-for-service (FFS) rates in payments to providers.
  • Mental health and SUD treatment: In FY 2018, 19 states expanded or enhanced covered benefits, and 24 intend to do so in FY 2019. The most common added benefits were for mental health and substance use disorder (SUD) services and treatment.
  • Prescription drugs: Many states are trying to strengthen their prescription drug cost containment strategies. Almost all states that use Medicaid managed care are trying to align managed care pharmacy policies with FFS policies. Additionally, all states are working to reduce opioid abuse by implementing one or more FFS pharmacy management strategy, such as setting quantity limits.
  • Using section 1115 waivers to restrict eligibility: Six states implemented eligibility restrictions in FY 2018 and 11 states plan to do so in FY 2019.

The Kaiser Family Foundation predicts that the economy, Section 1115 waiver policy changes, and November election outcomes will further shape Medicaid in FY 2019.

(Source: KFF, States Focus on Quality and Outcomes Amid Waiver Changes: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2018 and 2019, October 25, 2018)

RELATED: The Institute for Medicaid Innovation (IMI) released results from a survey of Medicaid managed care organizations (MCOs). Common components of high-risk care coordination include developing plans of care for family members and supporting adherence, engaging care teams, and conducting risk assessments. Medicaid MCOs are increasingly using value-based payment (VBP) models—half of surveyed MCOs indicated they were piloting VBP models, and nearly 15 percent were expanding successful pilots in 2017.

Surveyed MCOs provided health care to nearly 20 million Medicaid beneficiaries across 34 states, representing 44 percent of MCO enrollees in 2017.

(Source: Institute for Medicaid Innovation, Unique Medicaid survey breaks new research ground, capabilities of managed care unveiled, October 22, 2018)

Administration proposes to expand HRAs

The administration issued a proposed rule to expand employers’ use of health reimbursement arrangements (HRAs) as part of its larger strategy to expand insurance coverage options in the individual market. Employers fund HRAs by putting tax-free funds into accounts that employees can use for qualified medical expenses. The balance usually remains with the employer if the employee leaves the company. This is different from health savings accounts (HSAs), which are portable and owned by the employee.

Under the proposed rule, the administration would expand the use of HRAs in two ways:

  • Removing existing rules that prohibit employers from giving money to employees that can be used to purchase coverage on the individual market. The proposal would limit HRAs to qualified health plans purchased from the individual market, and would prohibit their use for the purchase of short-term, limited duration (STLD) plans. However, in the proposed rule, the administration asked for comments on whether it should include STLDs. The proposed rule would also allow employees to keep their coverage if they leave the employer, even if the employer ceases to pay for it through an HRA. To protect against adverse selection, such as employers shifting their sicker employees into an HRA while keeping others on a different plan, the administration would only allow employers to differ their offers based on certain classes of workers (e.g., full-time, part-time, seasonal).
  • Creating an excepted benefit HRA option. This would allow employers to offer HRAs of up to $1,800 in 2020 (indexed to inflation in years following) for use toward qualified medical expenses. In this instance, employers would be required to offer group coverage in addition to the excepted-benefit HRA.

The administration estimates that up to 10 million people could gain coverage under the proposal, and that premiums in the individual market would decrease by approximately 3 percent.

A recent Deloitte article provides a further analysis on the proposal to expand HRAs.

Alternative payment models (APMs) are growing

In 2017, 34 percent of all health care payments in the US were tied to alternative payment models (APMs), up from 23 percent two years earlier, according to an October 22 report from the Health Care Payment Learning & Action Network (HCP-LAN).

The 2018 HCP-LAN APM Measurement Effort includes data from the HCP-LAN survey, Medicare fee-for-service (FFS) data, and surveys fielded by health plan trade organizations. The survey was fielded from May through July 2018, and yielded data representing nearly 226.3 million Americans, or 77 percent of the covered US population.

The HCP-LAN APM Measurement Effort was launched in 2016 to assess national APM adoption and implementation. The 2018 report marks the third year for this initiative. A Deloitte health policy brief discusses the HCP-LAN APM framework, which divides APMs into four categories, based on their underlying payment arrangements.

According to the HCP-LAN APM framework, each of the four assigned payment model categories has a different risk-level:

 

increasing risk

The 2018 HCP-LAN APM Measurement Effort report found that during 2017:

  • 41 percent of health care dollars went toward Category 1 (traditional FFS or other legacy payments not linked to quality)
  • 25 percent of health care dollars went toward Category 2 (pay-for-performance or care coordination fees)
  • 34 percent of health care dollars went toward Categories 3 and 4 (including shared savings, shared risk, bundled payment, or population-based payments)

(Source: HCP-LAN, 2018 APM Measurement Effort, October 22, 2018)

North Carolina to pilot new Medicaid managed care initiative

On October 24, CMS announced had it approved North Carolina’s Medicaid reform demonstration to shift the state’s program from fee-for-service to a managed care delivery system. CMS Administrator Seema Verma stated that this five-year demonstration will allow the state’s Medicaid program to collaborate with health plans to coordinate care for beneficiaries who have significant health needs, including behavioral health services, targeted care for developmental disabilities, and specialized plans for youth in foster care. Verma also noted this demonstration will allow North Carolina to test innovative approaches to address issues that can directly impact an individual’s health, such as behavioral health and social determinants.

According to a nationally representative Deloitte survey, many health care stakeholders, including hospitals and health systems, are developing processes to address social determinants as part of clinical care.

(Source: HealthAffairs, CMS Approves North Carolina’s Innovative Medicaid Demonstration To Help Improve Health Outcomes, October 24, 2018)

Breaking Boundaries

Strategies to improve medication adherence could improve care, save costs

About half of all patients do not take their medication as prescribed, according to a new report from the National Council for Behavioral Health’s Medical Director Institute. The report discusses medication non-adherence in chronic conditions, mental health, and substance use disorders, and offers some possible solutions for stakeholders. The report estimates that medication non-adherence costs the health care delivery system $100 billion to $300 billion annually due to more frequent use of high-cost services, additional prescriptions to offset non-adherence, and interventions to address relapses. If many of the solutions in the report were to be adopted by 2025, the report projects the health system would save $2 billion a year from reduced hospital costs alone.

The reports outlines the following solutions:

  • Better communication between physicians and patients
  • Increased use of health risk assessments to help identify patients who are least likely to take medications correctly
  • Greater use of long-lasting injectables over medications taken at home
  • Increased patient access to pharmacy services
  • Enhanced data-sharing to flag instances of non-adherence 

The institute recognizes that the first recommendation—improving communication—is critical, but complicated. If patients don’t feel comfortable expressing concerns about their prescribed medications, they might not admit that they stopped taking them. Physicians need to take the time to ask these questions. For health plan and employer strategies, the report recommends improving communication around formulary changes and helping patients understand their formularies.

Technology is playing a role

Other stakeholders are coming up with solutions to reduce medication non-adherence. Some of the more high-tech solutions include apps, robots, and integration of electronic medical records (EMRs). Some retail pharmacies are introducing app-mediated refill reminders and pill reminders. Catalia Health launched a desktop robot called Mabu that connects patients to their care teams. It can remind patients to take medication, ask how they are feeling, and offer friendly health tips such as reminders to drink water or take a walk. The robot can maintain eye contact, sense patient’s emotions, and even make jokes.

DrFirst’s medication-adherence platform can integrate into the EMR to help physicians monitor adherence. The platform sends out alerts for at-risk patients and tracks whether patients picked up their prescriptions.

MediSafe is an app that helps patients remember dosages and recognize the appearance and types of their prescription medications. MediSafe can be integrated with fitness and blood-glucose-tracking apps.

(Sources: National Council Medical Director Institute, Medication Matters Causes and Solutions to Medication Non-Adherence, September 2018; Jeremy A. Lacocque, Four innovations that are improving medication adherence, Emergency Physicians Monthly, July 2017)

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