Perspectives

Untie the Gordian Knot, knit together a collaboration

Health Care Current | September 19, 2017

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

Untie the Gordian Knot, knit together a collaboration

By Bill Copeland, Vice Chairman, US Life Sciences & Health Care Industry Leader, Deloitte LLP

I am a big believer that many of the intractable problems we face today can be solved through a diverse and collaborative effort that includes a cross-sector of industries, public and private collaborations, and partnerships between nonprofit and for-profit organizations. I believe only when we break the constraints of an existing system are we able to imagine new and innovative ways to solve our collective challenges. This is true for most everything… including health care.

At Deloitte, I am proud and privileged to champion the RightStep program – a unique initiative, part of the Strive for College organization, that seeks to empower and motivate underprivileged students to become future leaders – starting with a college degree. This is a multi-faceted initiative that taps Deloitte’s most powerful asset: our people. Through skill-based volunteerism and mentoring, our team members help students from low-income families prepare for and enroll in college. There are 500,000 low-income students around the country who could attend college this year, but won’t pursue it for variety of reasons.

This year, more than 170,000 students will seek a mentor from Strive for College. This nonprofit organization has a virtual platform that matches students with mentors who help students navigate the college search and admissions process. Based upon Strive’s analytics, 97 percent of the students who are matched to a mentor wind up enrolling in a college, and 80 percent persist into their sophomore year.

The societal impact of intergenerational poverty keeps too many low-income children from going to college, finding a career, and reaching their potential. The numbers are staggering. While this is an intractable problem, the collaboration between Strive and leading companies that tap into their own pools of talent can positively impact hundreds of thousands low-income students. Imagine the possibilities if we extend that idea to health care.

Can health care collaborations break the constraints?

Similarly, the health care sector faces a dilemma that could be solved, or at least improved, through collaboration. In a recent survey, hospital CEOs told us that moving to value-based care and improving population health are two of their biggest challenges. Value-based care is also a major focus for health plans. Clinical analytics – which includes value-based care and population health – is now the largest investment category among health plans, according to a recent online survey of company executives, which is included in our new report on health plan analytics.

Many health plans are increasing their use of analytics to boost the value of their products and services. However, just 16 percent of our health plan respondents stated that collaboration with providers was a driver of their analytics investments. In our interviews with health care providers and health plans – and based upon our own experience – we confirmed that analytical insights are largely not being shared in most value-based contract arrangements.

Through the use of advanced analytics, health plans can analyze everything from value-based contracts to potential fraud and abuse. They also can create detailed insights into population health and social determinants of health. While these analytics can allow health plans to develop an impressive list of tools, not sharing their insights with network providers and value-based contract participants seems like a missed opportunity.

The data health plans collect isn’t as rich as it could be, and is largely confined to information generated by claims, eligibility, and encounters. It typically doesn’t include information about outcomes, patient satisfaction, wellness, or clinical data. In addition, the performance improvement desired by subscribers and employers often requires a more holistic view of the patient, which likely is not possible without information and insights from the clinical, the claims, and the patient. Health care providers could fill that gap by helping to form a complete picture.

Health plan executives provide good reasons why they don’t share analytics with providers. These include regulatory and competitive constraints, challenges related to patient attribution, lack of a master patient identifier, and technology that limits their ability to share insights at a scale to match their network size. There also are potential alignment issues that come up in the provider relationship.

These significant challenges may seem intractable in their own way, especially if each silo in the health care ecosystem tries to solve it on their own. But, being a big believer in collaborations, I don’t see these as insurmountable problems. All of the executives we interviewed agree that real success is only going to be sustainable when the health plan shares its data insights with clinical care delivery teams, and the clinical delivery teams shares their data insights with the health plan.

Collaborations between health plans, health systems, and physicians are being established in virtually every market, and are gaining acceptance as a model that might work. In the context of the Medicare Access and CHIP Reauthorization Act (MACRA) and the adoption of alternative payment models in Medicaid, the ability to improve performance and make health care more affordable may rely heavily on measuring, tracking, and finding new insights.

Imagine the possibilities when health care providers understand where the adverse variances are occurring and are able to find ways to innovate their processes, or identify new models of care that lower cost by improving access and patient engagement…or a health plan that creates a new plan design that encourages wellness. Breaking constraints isn’t easy, but the existing challenges can’t be solved without a commitment to collaborations.

And speaking of collaborating…if you want to make a difference in a very tangible, impactful way for one of the 170,000 students who is looking for a mentor like you to help them get into college, feel free to learn more about our collaboration with Strive for College.

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In the news

Graham-Cassidy bill released with narrow window for passage

With fewer than three weeks left before the Senate’s deadline to fast-track legislation, four Republican senators – Lindsey Graham (South Carolina), Bill Cassidy (Louisiana), Dean Heller (Nevada), and Ron Johnson (Wisconsin) – have introduced a bill aimed at repealing and replacing the Affordable Care Act (ACA).

The bill would:

  • Use block grants to replace federal funds that states received through the ACA to support Medicaid expansion, premium tax credits, and cost-sharing reduction payments to health plans for reducing out-of-pocket costs for low-income beneficiaries
  • Create a short-term stabilization program for the individual market for 2019 ($10 million) and 2020 ($15 million)
  • Repeal the ACA individual and employer mandates
  • Repeal the ACA medical device tax

The deadline to use budget reconciliation – which only requires 51 votes to pass and gives Republicans a chance at passing a more conservative fix – is September 30, 2017. After that, lawmakers will not be able to pass major health care legislation this year without 60 votes (which would require support from at least eight Democratic senators).

Senate Finance Committee agrees to five-year funding extension for CHIP

The Senate Finance Committee has reached a bipartisan agreement to renew funding for the Children's Health Insurance Program (CHIP) for five years. The $8 billion in the proposed legislation would maintain the ACA’s 23 percent increase in the federal matching rate to states for 2018 and 2019. Funding would begin decreasing in 2020 to 11.5 percent, and would be eliminated in 2021. The House Energy and Commerce Committee has not unveiled its legislation.

CHIP is authorized through 2019, but funding for the program is slated to run out at the end of September. The ACA increased federal CHIP funding by 23 percent, and many states assumed the funding would continue as they put together their budgets.

CHIP provides health coverage to children in families with income levels between 138 percent and 405 percent of the federal poverty level. States determine the eligibility levels within those parameters, and the ACA requires that states maintain eligibility levels that were in place as of March 23, 2010. States that reduce eligibility lose federal funding.

Senate hearings on individual market stabilization continue

Last week, the Senate Health, Education, Labor, and Pensions (HELP) Committee continued its discussions on short-term solutions to stabilize the individual insurance market. In two hearings, lawmakers heard from witnesses such as former Utah Governor Michael O. Leavitt, who also served as secretary of the US Department of Health And Human Services (HHS), and Bernard J. Tyson, chairman and CEO of Kaiser Permanente. Other witnesses represented health care providers, health plans, and consumers.

The themes from the testimonies did not differ significantly from the previous week’s hearings, which featured insurance commissioners and governors (see the September 12, 2017 Health Care Current). Most of the witnesses agreed that short-term solutions to stabilizing the individual market should include temporary funding of the ACA’s cost-sharing reduction payments, a temporary or permanent reinsurance program to help reduce premiums for individuals, state flexibility in the 1332 waiver program, and a reinstatement of navigator and outreach funding support.

During the most recent hearing, several witnesses suggested that Congress consider allowing more individuals to enroll in catastrophic health plans – health plans with high deductibles but lower premiums, which are now available only to qualified individuals under the age of 30. Proponents of these so called “copper-level” plans say that more individuals would buy coverage through the exchanges if these plans were available to them. A witness from the advocacy group Young Invincibles focused part of her testimony on an analysis of these plans, noting that the typical deductible would be about $9,000. An analysis conducted by the group found that a copper-level plan – coupled with a health savings account (HSA) – would require a typical young, uninsured individual to save $632 a month to cover expected health care spending while the deductible applied.

Similarly, a recent Deloitte analysis of plan designs in five markets examined the average cost of an outpatient hospital visit to determine the costs consumers under age 30 would face with a high-deductible health plan. We found that a 27-year-old would need to have between $3,617 and $6,572 in an HSA to cover the cost of the average outpatient hospital visit. However, the average 25- to 34-year-old in the group market holds an account balance of only $1,414.

Related: Last week, the Senate Finance Committee also held a hearing to discuss health care costs and coverage in the individual market. The Chairman of the committee, Senator Orrin Hatch, commented in his opening statement that he believes Congress can agree to fix some of the major issues affecting the individual market. He would like to start with members on both sides considering rolling back the individual and employer mandates. Meanwhile, Ranking Member Senator Ron Wyden focused his comments on giving states flexibility on 1332 waivers, a policy he authored in the ACA, and emphasizing transparency, competition, and choice for consumers in the individual market.

The committee heard from several health care analysts. Andy Slavitt, former Acting Administrator for the US Centers for Medicare and Medicaid Services (CMS), agreed with many of the witnesses from other hearings, saying funding the CSRs, reinsurance, outreach support, and revisiting the 1332 waiver process should be immediate focus areas for Congress. Avik Roy, the co-founder and president of the Foundation for Research on Equal Opportunity, went further to say that Congress should go beyond accelerating the timeline for 1332 waivers and address the underlying design of the requirements for such waivers. Roy also said that any funding of the CSRs should also be accompanied by relief from several ACA policies, such as the 3:1 age band and actuarial value mandates.

FDA holds public workshop on developing a framework for real-world data

The Duke-Robert J. Margolis Center for Health Policy, supported by a cooperative agreement with the US Food and Drug Administration (FDA), convened a day-long workshop on September 13 to bring the stakeholder community together to discuss a variety of topics related to the use of real-world data (RWD) and evidence (RWE) in drug development and regulatory decision-making. Topics included an update on FDA’s implementation of the 21st Century Cures Act’s provisions related to RWE, and the development of a framework for tackling challenges related to RWE’s regulatory acceptability. Panelists also discussed opportunities to improve the data development activities, study designs, and analytical methods used to create robust RWE.

Moderator Mark McClellan, director of the Duke-Robert Margolis Center, and other participants set the stage for what RWD and RWE are (see graphic), and discussed the need to integrate RWE into the regulatory process.

Many agree that drug and device development and approval is too long and expensive, due in part to the high costs of recruiting and running traditional clinical trials. Moreover, traditional trials do not always include critical data from patients, such as how their disease impacts their daily life. Key points from the day’s discussion were:

  • Importance of reaching consensus on data collection and methodology. Panelists acknowledged that the ability to collect reliable and timely data on patient outcomes will vary by a number of characteristics, and a determination of validity and reliability of the RWD. Agreeing on study designs and analytical methods, which are used to translate RWD into evidence that can tell a fuller story of the patient experience, will be important.
  • Next steps in advancing the regulatory guidance. Representatives from the FDA discussed the ongoing work of the agency to issue guidance on what it expects from nontraditional trials. Under both the Cures Act and the prescription drug user fee (PDUFA VI) provisions, FDA has established timetables for developing guidance on using RWE within its regulatory framework, and the agency will continue to seek guidance in the coming months and years with as much external collaboration and input as possible.

The FDA has opened an informal comment period through October 11, and will be accepting comments on how to develop a framework for regulatory use of RWE.

(Source: Duke-Robert J. Margolis Center for Health Policy, A framework for regulatory use of real-world evidence, September 13, 2017)

Former CDC director announces new global public health initiative

Tom Frieden, former director of the Centers for Disease Control and Prevention (CDC) who served during much of the Obama administration, is launching a $225 million global health initiative that aims to save 100 million lives by reducing cardiovascular disease and other public health threats. The initiative is called Resolve and is funded by Bloomberg Philanthropies, the Chan Zuckerberg Initiative, and the Bill & Melinda Gates Foundation. Vital Strategies, a global health organization working in more than 60 countries, will run the initiative, while Frieden will serve as the organization’s president and chief executive officer.

Cardiovascular disease is the world’s leading cause of death. The initiative will also work to help low- and middle-income countries fight infectious disease epidemics by strengthening laboratory networks to better track and identify the spread of disease.

California’s Assembly bill passes, targets drug-pricing transparency measures

The California legislature passed the nation's most comprehensive drug-price transparency law last week, with votes of 66-9 in the Assembly and 32-8 in the Senate. It heads next to Governor Jerry Brown.

The bill institutes a host of reporting and transparency measures for drug manufacturers and health insurers alike. For drugs that cost more than $40 for one course, manufacturers must give public and private insurers 60 days notice before raising the price by 16 percent or more over two years. They must also provide an explanation for the price increase. Health insurers must report how much they spend on prescription drugs and how much drug price hikes affect premiums. The state's Department of Managed Health Care and Department of Insurance must disclose this information to the public annually in an online report.

CMS grants emergency waivers to support state hurricane response

Last week CMS granted Florida 14 administrative waivers to support health care providers caring for patients impacted by Hurricane Irma. 

  • Four of the waivers allow clinicians to work outside of their typical scope of practice. 
  • Five of the waivers loosen various patient and admitting requirements for hospitals and medical facilities. These include the Emergency Medical Treatment and Labor Act (EMTALA), the three-day prior hospitalization requirement for Skilled Nursing Facilities, the 25-bed limit for Critical Access Hospitals, and Rehabilitation Hospital requirements.
  • Three of the waivers modify oversight enforcement and quality reporting activities.
  • One waiver requires Medicare Advantage plans to waive prior authorization and in-network provider requirements during a public health emergency. 
  • One waiver temporarily delays Medicaid fair hearings and decisions.

Background: Section 1135 of the Social Security Act authorizes the Secretary of HHS to waive certain Medicare, Medicaid, CHIP, and HIPPA requirements when the President has made a Stafford Act Emergency Declaration, and when the Secretary of HHS has declared a Public Health Emergency. CMS granted similar waivers to other states and territories in response to Hurricane Harvey.

HHS defers testing on physician-focused payment model recommended by PTAC

In early September, HHS Secretary Tom Price wrote a letter to the American College of Surgeons (ACS) and Brandeis University to request additional information about their ACS-Brandeis Advanced Alternative Payment Model (APM). He said that HHS will not make a final determination on whether to test the model until it obtains more information. HHS noted that:

  • The model scope is too large; HHS would want to test fewer than 54 episodes 
  • HHS would want to determine that the model’s changes to the episode grouper algorithm are valid and reliable
  • The submitters did not submit enough information to HHS for it to adequately review and assess the payment methodology

The model is one of several physician-focused payment models (PFPMs) that the Physician-Focused Payment Model Technical Advisory Committee (PTAC) recommended HHS evaluate as a qualifying APM under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). PTAC made its recommendation back in April after reviewing the model design and payment methodology (see the April 18, 2017 Health Care Current). Secretary Price also declined to test two additional PFPMs, one focused on patients with gastrointestinal disease and another for patients with asthma and chronic obstructive pulmonary disease.

Breaking Boundaries

Proposal aims to solve the challenges for developing new antibiotics

The shift from volume to value is happening all over health care, even in antibiotic development. A team of experts at Duke University released its Priority Antimicrobial Value and Entry (PAVE) proposal, which aims to assure a return-on-investment (ROI) for antibiotic developers. The proposal works by shifting the revenue of new antibiotics from the volume used to their value to treat high-risk infections from multidrug-resistant bacteria. The proposal seeks to promote antibiotic stewardship so that future drugs remain effective.

The proposal would use public funds to cover most of the revenue for the first one to two years a new antibiotic is on the market. The revenue would be phased out over five years and replaced with revenue from population-based contracts with health insurers. The health insurance companies would pay the company that develops the antibiotic on a per-volume basis in exchange for the company’s guarantee that the new drug would be available for any patients who develop high-risk infections from multidrug-resistant bacteria.

Developing new antibiotics comes with many financial challenges. Public and private partnerships help to provide incentives for companies to develop new antibiotics by providing funding during the pre-clinical and clinical trial phases of development. These partnerships are appealing to some start-up biomedical companies. But the challenge of a lack of ROI remains. The effectiveness of antibiotics is reduced the more they are used, so any new antibiotic – including those used for serious, multidrug-resistant infections – would need to be held in reserve to maintain effectiveness. Companies might not realize ROI if their medications are not widely used. The PAVE proposal represents an incentive that could help address that challenge.

The PAVE proposal uses the concept of a market-entry reward combined with population-based payments from the private sector. Health plans would pay the companies a certain amount per-member and per-month to ensure that all their members have access to the new antibiotic. They also would be encouraged to promote prudent use of the drug so that it remains effective. The model aligns with the health care system’s overall shift to link payment to value.

Other ideas put forth in the proposal include taxing pharmaceutical companies that are not developing new antibiotics. The rationale is that many types of drugs depend on effective antibiotics. Another idea is a transferable exclusivity voucher, by which a company would receive a 6- to 12-month exclusivity extension on the development and launch of a high-priority antibiotic. The company could apply that voucher to the new antibiotic or another drug in its portfolio, or sell it. The proposal could take years to implement and some ideas will likely be pilot-tested, but stakeholders think it is a positive sign that there is some consensus on ways to solve the challenges of developing new and effective antibiotics.

Related: Researchers are tackling the complex challenge of antibiotic resistance from multiple angles. A recent article in Nature describes some activities in the public and private sector to develop vaccines as a strategy. Vaccines can reduce the number of cases of diseases, which slow the rise of drug-resistant pathogens. Vaccines have an advantage over antimicrobials because they prevent infections, while antibiotics aim to stop an infection when there is already a dense population of microbes that can spur resistant strains. Vaccines face a similar ROI challenge in that they are expensive to develop. However, stakeholders working on the issue are determined to demonstrate their value in fighting antimicrobial resistance – as well as protecting against infections – to encourage governments and health organizations to provide better incentives for new products.

Crowdsourcing is another strategy to find innovative solutions to the challenges around antibiotic development. Innovation funder Nesta announced the Longitude Prize – an international competition with a multi-million dollar prize – to encourage teams to submit novel ideas to conserve antibiotics for future generations. Teams involved in the competition are proposing a range of ideas, including developing rapid tests or diagnostic tools that a pharmacy or patients could use to identify bacteria. Another team is trying to detect the body’s immune-response to pathogens and improve ways the body can fight infection without antibiotics.

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