Health Care Current: January 7, 2014
This weekly series explores breaking news and developments in the U.S. health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory and legislative changes.
by Mitch Morris, Vice Chairman, U.S. Health Care Provider Leader, Deloitte Consulting LLP
New Year’s resolutions are hard to fulfill. I know, because I tend to make similar resolutions each year: “This year, I’m going to lose weight—that treadmill in the corner won’t be a coat hanger collecting dust any longer,” or “Starting in January, I’m going to stop eating so many carbs”. But, as soon as Valentine’s Day cards hit the shelves, the chocolate is back out and we’re no longer taking the stairs to the fifth floor at the office. Only eight percent of people who set New Year’s resolutions are ever actually successful at meeting them.1
In health care, the same story rings true: each year organizations gather around the table to set new paths and strategies in motion. “We’re going to cut costs!” or “It’s time to trim the fat” are phrases repeated in boardrooms across the industry. But, often these new resolutions can fall short of expectations—sometimes only months into the year when other challenges arise and the focus shifts to other areas.
So what do the eight percent of people get that the rest of us don’t? And how can the health care industry emulate their success?
Making 2014 the year that resolutions are met could become a reality if stakeholders across the spectrum—health care providers, life sciences and health plans—all set goals that align with these three principles:
- Keep the goals realistic and achievable. Don’t shoot for the moon if a low Earth orbit will do for now.
- Set some real incentives for the team responsible for leading to the goal. It sends an important message to the organization that you are serious and focused.
- Focus on a limited number of issues that are most impactful in our changing environment. As the Affordable Care Act (ACA) sets in and organizations come to grips with the fact that their existing models may no longer work in 2014, each stakeholder could look to its New Year’s resolution to embrace the challenges ahead:
Health plans: “Make new connections”
2014 will be a pivotal year for health plans as we see how health insurance exchange (HIX) enrollment issues are resolved, how many people enroll, what those new enrollees’ risk profiles are, what types of plans people choose, as well as how many people will be added to Medicaid rolls. There are already indications that the HIX enrollees are older, indicating a higher level of use of resources. As purchasing decisions for health plans are shifting from employers to consumers, health plans will need to connect with newly insured individuals who want transparency, value and convenience. In addition, health plans that focus on making new connections with providers through convergence could be better positioned to provide innovative solutions to population health, wellness and prevention.
Health care providers: “Try something new”
As value-based care programs take the center stage in the New Year, health care providers will likely experiment with new business models. Business models that allow provider groups to take on more risk while managing costs could become more attractive as the health care industry focuses more on quality and value throughout the system. Clinical efficiency and effectiveness will be critical as providers continue to invest in this area. And, we could see more organizations engage in horizontal integration (hospital-hospital acquisitions) and vertical integration (owning or relating with the entire health care value chain) These much larger entities may be better equipped to collaborate, prioritize programs, increase purchasing power, consolidate services and cut costs.
Life sciences: “Learn a new language”
A number of reform-related initiatives will play a key role in shaping life sciences companies’ short- and long-term planning. As the health care industry makes a general shift toward value-based care, life sciences companies will need to begin focusing their business strategy around comparative effectiveness and real-world evidence. But, more importantly, those business strategies must then be communicated to health plans and providers in those organizations’ “native languages”—a product’s clinical, safety and economic impact will become the focus of these new conversations as purchasers face pressure to keep spending in check and show quality improvements and better health in their patient populations.
Even though the coming year is likely to be bumpy and unpredictable—the industry can’t go through this much change and not experience some hiccups and unintended consequences along the way—the outlook for health care providers, health plans and life sciences companies remains positive. With the New Year, there will be opportunities to make new connections, try new things and learn new languages. But, the status quo is not an option. Those companies that embrace change, remain open to new approaches and business models and look for opportunities to innovate in new and exciting ways could find success in a transformed marketplace.
So, as we start a New Year, I will be interested to see how our industry manages these changes. I think many know where they want to be but it sure is difficult to get there.
PS – Read the Deloitte’s practice leaders’ predictions on challenges, trends and strategies that may shape health plans, health care providers and life sciences in the coming year in the 2014 Industry Outlooks
1Auld Lang Syne: Success predictors, change processes and self-reported outcomes of New Year's resolvers and nonresolvers, by John C. Norcross, Marci S. Mrykalo, Matthew D. Blagys , University of Scranton. Journal of Clinical Psychology, Volume 58, Issue 4 (2002).
Poll results from December 17 Health Care Current:
The number of people who signed up for health insurance through the state and federal HIXs reached approximately 2.1 million in 2013 due to a surge in health care sign-ups in December. Between December 1 and December 24, 975,000 people signed-up through the Federally-facilitated exchange, HealthCare.gov, compared with 137,000 in November and 27,000 in October. The surge in enrollment was facilitated by improvement made to HealthCare.gov, where the site was able to support 83,000 concurrent users on December 23 alone. Those who signed up by December 24, 2013 and paid their first premium started receiving insurance coverage on January 1, 2014. The Centers for Medicare and Medicaid Services (CMS) administrator, Marilyn Tavenner, stated that she expects to see higher enrollment numbers as the six-month open enrollment period continues, similar to the patterns seen with the implementation efforts of Medicare Part D and Massachusetts health reform.
Select pharmacies have announced the extension of prescription coverage through January 30, 2014, with no upfront costs in an attempt to mitigate the disruption of health services that individuals who enrolled through a HIX may face. Since consumers and health insurance providers are still waiting on plan identification numbers or accurate enrollee data, pharmacies are bridging the gap by providing generic brand medication to patients to ensure treatment adherence and continuity of care. Walgreens and Walmart are among the pharmacies participating in the extension of prescription coverage.
Last week, the U.S. Department of Health and Human Services (HHS) and CMS released a new rule amending the safe harbor provision and Stark law exceptions that protect the donation of electronic health records (EHRs) from hospitals to physicians. The new rule:
- Extends the expiration of the rule from December 31, 2013 to December 31, 2021
- Clarifies the ban against actions that inhibit the interoperability of donated EHRs
- Bans laboratory companies from subsidizing EHR systems or services
- Removes the electronic prescribing capability mandate due to alternative policy drivers supporting the adoption of these capabilities
The amendments were put in place to promote physician adoption of costly EHR systems and prevent companies from donating to secure referrals. The rules help facilitate programs established in 2004 by President George W. Bush, who set a goal that most Americans have access to EHRs by 2014.
Accountable Care Organizations (ACOs), which focus on patient outcomes and cost control, are expected to double in number by the end of 2014 according to a report released by Premier. Premier surveyed 115 C-suite hospital executives in 35 states in August 2013 and found that:
- There are an estimated 500 ACOs currently in operation
- The majority (76.5 percent) of survey respondents report that their hospitals plan to participate in ACOs sometime in the future
- Non-rural hospitals, as well as hospitals in integrated delivery networks (IDNs), are more likely to participate in ACOs
- Large hospitals are making the leap faster to participate in ACOs than small hospitals
Despite the increase in ACO participation, the report shows that the adoption of ACOs has been slower than previously expected. Fifty-two percent of executives surveyed for the spring 2012 Economic Outlook C-Suite Survey predicted their hospitals would have already created or joined an ACO by 2013, yet only 23 percent of those hospitals are expected to meet that projection.
The U.S. Preventative Services Task Force (USPSTF) has recommended the use of CT scans for high-risk current and former smokers to detect lung cancer as a preventative service. If this draft recommendation becomes final, the annual scans will likely be reimbursed by insurers with no co-payment under the ACA. The American Lung Association has endorsed the decision, but the recommendation remains controversial due to the false positive results and cost burden of the scans. However, the physicians appointed by HHS to the USPSTF found that CT scans "reduced lung cancer mortality by 20 percent and all-cause mortality by nearly seven percent” from a study sponsored by the National Cancer Institute.
In late December, President Obama signed the Bipartisan Budget Act into law. The law provides an outline for the federal budget through 2015 and amends certain sequestration cuts. The bill adds $63 billion in discretionary spending to the Defense Department and various domestic agencies in 2014 and 2015 and contains $85 billion in deficit reduction. For more highlights of the budget deal, see the article from the December 17, 2013 Health Care Current.
A new bill introduced in the House of Representatives, H.R. 3750: The Telehealth Modernization Act of 2013 by Representatives Doris Matsui (D-CA) and Bill Johnson (R-OH), would provide a federal definition of telehealth and regulation guidelines to states. Matsui and Johnson based their bill on legislation that became law in California in 2012 and combined components from a variety of federal telehealth legislation proposals. Currently, there is no federal definition of telehealth and each state has different regulations (or no regulations at all) regarding the technology. The telehealth definition was broadened to include at-home patient monitoring and store-and-forward technology. H.R. 3750 would require providers of telehealth to:
- Generate medical records of patient visits and record the evaluation and treatment given to the patient
- Access and review the medical history of patients being treated
- Abstain from giving patients a guaranteed outcome regarding the visit, including receiving a prescription
- Offer patients a diagnosis based on suitable interaction and conversation
- Issue prescriptions for legitimate medical purposes
- Refrain from prescribing controlled substances based solely on telehealth visits
CMS approved Michigan’s request to expand its Medicaid program, Healthy Michigan, which will increase Medicaid eligibility by 470,000 residents. Healthy Michigan requires cost-sharing, which is an uncommon feature in a state Medicaid program. Nearly all Michigan Medicaid beneficiaries are required to participate in cost-sharing, yet those who cannot pay co-pays will still get medical care. In addition, the majority of new Medicaid beneficiaries in Healthy Michigan that make between 100-133 percent of the federal poverty level must deposit up to 2 percent of their income into a health savings account, which will be administered by the state and can be applied to out-of-pocket medical expenses. Eligible Michigan residents are expected to be able to start applying for coverage in late January or early February and the program is expected to be up and running by April 1, 2014. Currently, Michigan has almost 1.9 million residents eligible for Medicaid.
The Patient-Centered Outcomes Research Institute (PCORI) approved $93.5 million to support 29 clinical research data networks that together will form an ambitious new resource known as PCORnet, the National Patient-Centered Clinical Research Network. PCORnet is designed to be a secure, collaborative, national data network that will improve the speed, efficiency and use of patient-centered comparative effectiveness research and provide access to a large amount of diverse, nationally-representative health information from both patient communities and health systems that can support a full range of study designs. This interaction of patients and clinicians to determine research priorities aims to advance the shift in clinical research from investigator-driven to patient-centered studies – and to serve as a foundation for more efficient comparative effectiveness research.
PCORnet will include 11 Clinical Data Research Networks (CDRNs), which are partnerships among health clinics, hospitals and other hospital systems with the ability to share data from multiple resources such as EHRs. PCORnet will also support 18 Patient-Powered Research Networks (PPRNs), created by patients to exchange information on specific diseases/conditions. Each of these CDRNs and PPRNs will be designed to preserve and share a collection of robust “real-time” clinical data to be securely exchanged through the network.
A new screening method that combines brain imaging analysis with a neuropsychological assessment can predict, at a rate of 90 percent accuracy, whether someone will get Alzheimer's disease within two years. Sylvie Belleville, PhD, Director of Research at the Institut universitaire de gériatrie de Montréal (affiliated with Université de Montréal), published her team’s research in the Journal of Alzheimer’s disease in December. Her study looked for the development of dementia in patients with mild cognitive impairment. Measurements included MRI readings of hippocampal volume, cortical thickness and white matter hyperintensities, in addition to episodic memory and executive control functions. Belleville noted that this discovery is enormous because researchers can now evaluate the effectiveness of therapies administered in patients who received an earlier diagnosis.
More than 400 physicians joined the first cohort to be board-certified in the subspecialty of health care informatics by the American Board of Preventative Medicine. Health care informatics has long been practiced by physicians in hospitals and ambulatory practice settings and its role was reinforced by the passage of the American Recovery and Reinvestment Act of 2009. Board certification in the field of health care informatics affirms the growing centrality of health care information technology (HIT) in the practice of medicine. More universities are supporting this subspecialty training by including options for students to earn a master’s degree in health care informatics.