Health Care Current: November 26, 2013
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 Sarah Wiley, Director, U.S. Life Sciences & Health Care, Deloitte Consulting LLP
On the last day of school in June, my children went to a park with a number of other families for an end-of-year celebration. While there, my daughter, Fiona, fell and scraped her leg. It was a small scrape and looked like any other minor playground injury by the time she got home. The next morning, our family left on our two-week, three-city summer vacation.
Over the next ten days, however, that tiny scrape came to have a meaningful impact on our vacation. It also highlighted a major challenge that our health care system should address if we are ever going to succeed in bending the health care cost curve.
Roughly 36 hours into our trip, we noticed a rash on Fiona’s leg. It didn’t hurt or itch, but we put an antihistamine cream on it to see if that would help. 24 hours later, the area was still red. We tried a different anti-itch cream and called our pediatrician (who was 2,900 miles away) for the first time. The nurse recommended a topical cortisone cream and oral diphenhydramine; we purchased both.
Another 36 hours passed and Fiona’s leg was not looking good – it was starting to swell. After a second call to our pediatrician, we went to an urgent care center, where they diagnosed cellulitis (a bacterial infection of the skin). We left with a prescription for an antibiotic and a large black line drawn around the rash – if the rash moved beyond those lines, we were to head to the emergency room. Less than 12 hours later, we did. After six hours in a hallway and consults with five doctors, her visibly spreading rash and a warm-to-the-touch shin was judged to be contact dermatitis. They prescribed a steroid crème and continuation of the oral antibiotics. The next morning, we left for city number two.
That afternoon we headed out for a long walk around the city. For the first time, Fiona complained that her leg was “bothering” her. The next morning, the rash had spread to her other leg and her lower leg was very swollen. Our pediatrician advised us to get Fiona to a doctor. We ended up at the city’s children’s hospital clinic.
Within the first 30 minutes of her appointment, multiple physicians had examined Fiona and determined she would need IV antibiotics, an ultrasound and an x-ray.
The wheels of our health care system were in motion.
Fiona and I spent the next 72 hours in the hospital. After 24 hours, she was disconnected from monitors and spent an hour, three times a day on an IV. She saw a resident in the morning and an attending physician once a day. Otherwise, she stayed in her room and we tried to keep her (and ourselves) occupied.
This experience got me thinking about a number of things: the challenges of diagnostics, how to know when trying to be a prudent consumer of health care services may not be the best approach and what I could/should have done differently. But, the thing that I spent the most time thinking about was the value and appropriateness of us being in a hospital after the first 24 hours when it became clear that Fiona’s IV antibiotics were working.
Fiona’s hospitalization resulted in charges of nearly $12,000 (of which roughly $8,000 was paid by our health insurance); our out-of-pocket expenses were $140.00 plus $4.69 for the oral antibiotics that Fiona continued to take for seven days post discharge.
As I reflected on those costs and our experience, it occurred to me that Fiona and I could have stayed in a very nice hotel room, enjoyed room service and had three nurse visits and one physician house call per day, at a significantly lower total cost. And if we had been in our home city, we could have actually been at home, where the only costs would have been the physician and nurse visits. In both cases, we would have been happier, it would have cost less and we would have avoided exposing other sick children to Fiona’s infection and vice versa.
We have an incredibly capable health care system that can deliver some of the most technologically advanced, complex health care in the world. But we also have a system which is fairly limited in its ability to match the level of resources to each of the unique care situations that it encounters, or to adapt once it is clear what level of care is necessary.
How do we, as a system, develop more flexible approaches to care delivery that can provide intensity when necessary, but easily transition to less intensive approaches when possible? And how do we do this on an individual basis that takes into consideration the circumstances, capabilities and resources of individual patients?
The answer may be in “care at home” delivery models that are currently being developed and implemented by government organizations, research hospitals and private provider networks. These models utilize emerging technology such as telehealth and remote monitoring to provide connected care and better patient oversight outside of the hospital setting. Several models allow patients with any one of a specified set of conditions (like Fiona’s skin infection) and who meet certain screening criteria to opt to receive home visits and services (including IV antibiotics like those Fiona received) instead of being admitted to the hospital.
Presbyterian Healthcare Services in New Mexico adopted a care at home model in 2008, initially for Medicare Advantage and Medicaid patients with common acute-care diagnoses, but eventually for commercially-insured patients as well. Patients with one of nine conditions (including cellulitis) are eligible for the program and are treated at home by a physician (at least once daily), nurses (1-2 times daily) and by telehealth nurses. The mean costs for patients receiving care at home were 19 percent lower than those for comparable hospitalized patients, with home-care also delivering higher patient satisfaction ratings and comparable or better clinical outcomes.1 Other studies have shown similar (or even more dramatic) results.
While these programs are not always easy to implement – they require changes in process, staffing models, mind-set and reimbursement mechanisms – they offer a glimpse of a different model of care – one which is more patient-centric, lower cost and delivers as good (or better) outcomes.
As we continue to struggle with health care cost escalation, expanding health care demand and the recognition that hospitals are not always the optimal site of care, it is going to take shifts in care delivery from programs like these to make our system more sustainable.
The potential for the episode to have cost less for my self-insured employer wouldn’t have been a bad thing. And, while Fiona received wonderful care from a dedicated and caring hospital-based team, I know that we would have both been happier if we could have received care in a local hotel, or at home.
1Leslie Cryer, Scott B. Shannon, Melanie Van Amsterdam and Bruce Leff. Costs for ‘Hospital and home’ Patients were 19 Percent Lower, with Equal or Better Outcomes Compared to Similar Inpatients. Health Affairs, 31, no.6 (2012): 1237-1243
Poll results from November 19 Health Care Current:
According to Bloomberg, the U.S. Department of Health and Human Services (HHS) plans to delay the start of the 2015 Affordable Care Act (ACA) insurance open enrollment period from October 15, 2014 to November 15, 2014. This change is intended to give insurers more time to assess their 2014 insurance experience and appropriately set their rates for 2015. HHS sources informed the news source that the agency hopes to give insurers time to account for young adults who may enroll late and give engineers more time to fix any technical issues. This decision would not affect the insurance coverage for 2014, which is slated to begin January 1. Additionally, there are plans to push back the deadline for insurers to submit 2015 health plans to late May 2014. Neither HHS nor the Administration have made an official announcement regarding the planned delay at this time.
CCIIO issues guidance to insurers on the extension of non-compliant individual and small group health plans
Last Thursday, the HHS Center for Consumer Information and Insurance Oversight (CCIIO) sent a letter to state insurance commissioners outlining a transition policy. The guidance is intended for non-grandfathered coverage in the small group and individual health insurance markets in states that will allow issuers to continue coverage and consumers to re-enroll in policies that would otherwise be terminated or cancelled for not meeting the minimum standards set by the ACA. The letter outlined the following:
- Health insurance issuers must send a notice to all individuals and small businesses that received a cancellation notice or send a notice to all those that were scheduled to receive a cancellation notice with respect to the coverage options
- The notice must inform consumers of:
- Any changes in the options that are available to them
- Which ACA market reforms would not be provided in their coverage
- Their right to enroll in a qualified health plan (QHP) offered through a health insurance exchange (HIX) and possibly qualify for financial assistance
- How to access such coverage through a HIX
- Their right to enroll in health insurance coverage outside of a HIX that complies with the specified market reforms
The guidance also includes examples of standard notices that are required to satisfy the previously listed requirements. All notices regarding policy cancelations must be sent before December 31, 2014 in order to qualify for extension.
According to the Centers for Medicare and Medicaid Services (CMS) fiscal year (FY) 2014 scorecard, about half of the hospitals participating in the Value-Based Purchasing (VBP) program will have little to no change in payment. Just under a quarter of these hospitals will receive a payment bonus and just over a quarter of hospitals will receive an overall decrease in Medicare payment. The VBP program ties hospitals’ Medicare reimbursement payment to about two dozen quality measures as an incentive to improve health outcomes and performance. Hospitals that fall short of meeting quality measures could see a pay cut of up to 1.25 percent. FY2014 scorecard highlights:
- 778 hospitals in the VBP program will receive payment reductions compared to 630 hospitals that will receive bonuses
- 1,300 hospitals will essentially break-even; their payment change is between -0.2 percent and +0.2 percent
- 630 hospitals will receive an increase in Medicare payment above +0.2 percent
- 778 will receive an overall decrease in payment between -0.2 percent and -1.25 percent
- In FY2013, two-thirds of high-performing hospitals and three-quarters of low-performing hospitals fell into the same category as the previous year
America’s Health Insurance Plans (AHIP) is seeking changes to the ACA risk corridor program to protect insurers after the Administration’s announcement that consumers may be able to keep their existing individual health plans through 2014 even if they do not meet the requirements of the ACA. The program was designed to protect QHPs in the individual and group market from large gains or losses resulting from inaccurate rate settings by sharing risk (gains and losses) on allowable costs with HHS. Under the current formula, if a QHP’s spending exceeds the target by more than 103 percent, HHS pays plans 80 percent of excess costs. To mitigate adverse effects, AHIP wants HHS to take the additional risk and pay 100 percent of excess costs. Insurers are concerned that the abrupt change would destabilize the market and result in higher premiums.
IMS Health released its annual report on healthcare informatics last week, projecting global spending on prescription drugs through 2017. Highlights:
- Global spending will rise at a lower growth rate between 3 and 6 percent compared to 5.4 percent over the past four years; an increase of $205-$235 billion, totaling $1.2 trillion by 2017.
- In the U.S., the prescription drug market is projected to shrink 1.2 percent in 2013, but growth is expected resume in 2014.
- If the ACA meets its goal of enrolling roughly 30 million uninsured people, prescription drug spending would increase to $420-$460 billion by 2017.
- If the ACA does not meet enrollment goals, the industry would see a decline in demand and drug spending would be $300-$320 billion by 2017.
CMS recently released its 2014 Readiness Checklist, which sums up key operational requirements for Medicare Advantage and drug plans. Starting January 1, Medicare Advantage and drug plans must check with Medicare beneficiaries before prescriptions can be delivered to beneficiaries’ homes. CMS instituted the requirement in an attempt to prevent fraud, waste and abuse. However, several provider groups and the National Coalition on Health Care (NCHC), which includes AARP, asked for a reversal of the policy, contesting that the requirement will undermine the electronic drug prescribing policy. In addition, NCHC said the policy could result in higher costs for beneficiaries and possibly complicate health problems if there are delays in receiving prescriptions. Representative Allyson Schwartz (D-PA) wrote a letter to HHS also asking for a reversal of the policy, stating that it is in direct opposition to the electronic prescribing program Congress had envisioned. Long-term care pharmacy deliveries and dispensing are exempt from the rule. Employer group waiver plans can enroll in an automatic drug delivery program that does not need consent, but must submit a request by December 18.
Last Monday, the American Medical Association’s (AMA) House of Delegates voted to continue support of Congressional efforts being made to repeal the Medicare Sustainable Growth Rate (SGR). The current draft proposal put out by the Senate Finance and House Ways and Means committees last month includes a performance-based initiative program staring in 2017 and a 10-year pay freeze. AMA supports the broader scope of the bill; however, AMA will continue to oppose the 10-year pay freeze on current SGR reimbursement. AMA President, Ardis Hoven, noted that the current piece of legislation is just a draft and AMA will have more opportunities to advocate for changes in the bill. AMA delegates also drafted their own proposal, which includes SGR repeal, pay-for-performance principles and guidelines and the option for Medicare beneficiaries to seek care from non-Medicare providers without incurring a penalty.
States divided on Administration’s policy to give insurers a year to make individual health plans ACA compliant
Last week, in letters to HHS and public statements, several state insurance commissioners rejected the Administration’s offer to allow insurance companies to sell plans in the individual and small-group markets that do not meet the minimum requirements under the ACA through the end of 2014. Joseph Murphy, Commissioner of Insurance for Massachusetts, sent a letter to the Director of CCIIO, Gary Cohen, detailing the success of the state’s own health care reform beginning in 2006. Murphy noted that Massachusetts already has a basic minimum benefit level that all insurance carriers must abide by in order to sell insurance plans and nearly all health plans being offered in the state are at or above the minimum requirements imposed by the ACA. Indiana Department of Insurance (IDOI) Commissioner Stephen Robertson also issued a letter to HHS rejecting the policy and raised concerns with the legality of the proposal in stating: “Such action would seriously destabilize Indiana’s insurance market and create logistical chaos, fueling even more uncertainty for Hoosiers. Furthermore, we do not believe that IDOI has the authority under Indiana law to fulfill the president’s untimely request.” Other insurance commissioners such as Maryland and California took a differing view, issuing letters to state insurers informing them that they will be allowed to renew these policies for 2014 if consumers choose to renew the policy before January 1.
As of Friday, November 22, 11 states have elected not to grant insurers extensions on non-compliant plans and 13 states thus far intend to allow consumers to renew canceled insurance plans:
|States electing not to grant insurers extensions on non-compliant plans||States intending to allow consumers to renew canceled insurance plans|
|Rhode Island||North Dakota|
|West Virginia||South Carolina|
Last week, Indiana Governor Mike Pence (R) sent a letter to HHS Secretary, Kathleen Sebelius, formally requesting a meeting regarding the expansion of the Healthy Indiana Plan (HIP). Governor Pence is seeking approval for HIP, an existing health savings account program in Indiana providing health insurance for uninsured adults, as an alternative for ACA Medicaid expansion. HIP is different than traditional Medicaid, as enrollees are required to pay a monthly fee and are allowed to pay for health care costs upfront with their health savings account rather than at the time of service. The program design, according to Governor Pence, has resulted in a reduction of emergency department visits because members are accessing preventative care services more often. Furthermore, Governor Pence explained that not only are provider reimbursement rates higher under HIP, but member satisfaction is also higher compared to other Medicaid enrollees. CMS recently approved Indiana’s request for an extension of HIP into 2014 for current enrollees. Approval to use HIP as a Medicaid alternative, however, remains pending. HHS had previously expressed concern about HIP enrollee monthly contribution requirement.
Two technology companies have partnered to launch special glasses that enable health care providers to see a patient’s veins through the skin. The eyewear, Eyes-On Glasses, uses multi-spectral 3D imaging to visualize veins beneath the skin, then uses two digital cameras to transmit the images via Bluetooth, 3G data connectivity or Wi-Fi. The images can be transmitted remotely, allowing them to be deposited into electronic health records. Eyes-On Glasses will be the first device to deliver anatomically accurate, real-time data for vein imaging that is both hands-free and wearable. They are intended to help reduce medical errors, speed up the delivery of care and assist medical personnel in locating and accessing veins. Some noted that the device displays all veins, which could be potentially confusing because not all veins are appropriate for catheter insertion and it does not show depth.
Children’s Mercy Hospital in Kansas City, Missouri was recently awarded $5 million in grants from the National Institutes of Health (NIH) to analyze the genomes of hundreds of babies born with genetic disorders. The funding will enable doctors to analyze more than 1,000 infants over the next five years and study the benefits of two-day rapid genomic diagnoses. The development of computational tools has enabled the hospital to more rapidly identify the relevant variations in the genome while reducing cost and improving accuracy. A complete genome rapid analysis test costs around $10,000 per sample, but the hospital also offers a lower-cost and more targeted analysis. Whole genome sequence testing and analyses have been done on tens of thousands of people to date.