Health Care Current: April 8, 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 Bill Copeland, Vice Chairman, U.S. Life Sciences & Health Care Leader, Deloitte LLP
For the most part, the 2014 open enrollment season is now over. With last week’s deadline of March 31, we have reached a major milestone in the implementation of the Affordable Care Act (ACA). Initial estimates suggest that more than 7 million individuals are now enrolled in coverage through the federally-facilitated or state-based health insurance exchanges (HIX). And, that total may rise during special enrollment extensions being granted by some exchanges through the end of April.
Unfortunately, there is little time for executives to catch their breath. While what’s gone right and wrong will continue to be debated in the halls of Congress, discussed in company board rooms and highlighted in the media, stakeholders now need to begin focusing on the future.
The race to the beginning of 2014 open enrollment was an expensive and time consuming marathon, but now the industry needs to consider switching gears and focusing on the long road ahead. There are several short-term deadlines approaching that will likely require stakeholders to think broadly and strategically about their desired long-term positioning (see timeline below).
States: If contemplating a switch in the operational status of its HIX, states should consider not just how important short-term economic and political goals might be achieved with a new exchange model, but also whether that new model will be sustainable given other resource and investment priorities. States that faced challenges are likely to focus on how to make technology better and how to more effectively reach eligible enrollees. In addition, health care stakeholders will be paying increased attention to alternative models of Medicaid expansion that have begun to emerge from states such as Arkansas, Iowa, Pennsylvania, Michigan and, more recently, New Hampshire. As asked in the February 4, 2014, Health Care Current—have these states found a way to reduce the effects of churning by allowing health care consumers a choice in the matter? The result could be more cost savings for states and greater quality for consumers and other states could follow.
Employers: Employers are expected to optimize health benefit packages for their employees in ways that take advantage of developing opportunities and that make sense for their business in terms of the bottom line and attracting and retaining employees. They could be doing this while managing federal requirements for employers that continue to evolve. In February, the IRS delayed again the requirement for mid-sized employers to offer insurance to their employees until January 2016, while keeping the January 2015 deadline for employers with more than 100 employees. Also, Congress continues to wrestle with the definition of “full-time,” as the House of Representatives voted last week to increase the required hours from 30 to 40. These very complex and ever-changing issues are impacting many other operational and strategic choices.
Health plans: In thinking about whether they will participate in the exchanges during the 2015 benefit year, health plans may need to assess whether their products and pricing were on target this year and whether they will modify what they offer and raise premiums in the next go-round—despite having only a few months of data (i.e., spending patterns, disease burden) on their new customers. And, if the health plan still has a significant legacy individual pool of “grandmothered” products, how should the overall portfolio of risk be managed from a risk and pricing perspective? The continued growth in Medicaid and Medicare and the move toward defined contribution plans are prompting many health plans to think more generally about how best to attract, acquire, serve and retain members who can choose among options. This shift in focus is leading them to look closely at whether their current capabilities—designed and optimized to sell and serve group plans—are adequate for business success in the individual market. Lastly, for some plans, the promised performance of their new narrow networks has their group customers asking for a quote.
A new Deloitte report suggests that health plans are focusing on meeting regulatory requirements and strengthening retention capabilities in the near term, but are expecting to widen their priorities in the longer term to address consumer preferences, consumer experience and distribution capabilities.1 Among the 46 health plans surveyed, nine out of 10 said investments in two areas—product development and pricing and consumer experience—will be critical or highly important for improving their company’s competitive position in the commercial individual market over the next three years.
Making these strategic decisions is especially challenging because of new and evolving uncertainties:
- Consumer attitudes and behaviors: Will new enrollees stay enrolled and continue paying premiums? Why are some individuals still uninsured and what might it take to get them to enroll? Are subsidies and penalties sufficient incentives? Did people manage to stay unaware of their options? Is the reluctance to enroll a matter of attitude or affordability?
- Variation across states in operational approaches, eligibility requirements and technical difficulties: How will the various health care stakeholders manage while marketplace characteristics continue to evolve amidst shifting political climates?
- The ever-present possibility of regulatory and legislative changes and the potential for judicial appeals: For example, what will the outcome be if the U.S. Supreme Court rules that individuals in the federally-facilitated HIX do not qualify for subsidies?
- Increased patient load: Will providers be able to handle the increase in patients expected with greater access to insurance coverage? Will narrowing networks have an effect on patient loads or the prices providers are willing to accept?
- Exceptions to drug formularies and increased utilization management controls: What effects might these approaches have on the use and spending on prescription medications for health plans in the HIXs?
- “Copper” benefit design products that would offer less coverage at a lower premium: Are they a good idea? Clearly the uninsured consumer still on the sidelines continues to be the largest individual market segment. A competitor offering a cheaper “copper” product might be successful with this segment.
Though the future ahead is filled with a great deal of uncertainty, it is expected to take shape in part through the cascading decisions that different stakeholders make in response to upcoming deadlines. It’s not yet clear where the future will take us, but, one thing feels certain: turning our attention to preparing for the possibilities that lie ahead seems critical for success. This could mean placing some bets—even if the return is uncertain.
Source: 1Deloitte, “Survey Says...Health Plans Advance Retail Capabilities,” 2013
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Poll results from the April 1 Health Care Current:
Note: answers have been rounded to the nearest whole number
Last Monday, March 31 was the last day of open enrollment for the 2014 HIX plan year. In an announcement from the Administration the next day, federal officials estimated that more than 7.1 million individuals have enrolled through the HIXs as of the end of this first year. However, officials also offered a caveat that these numbers do not include the many individuals who enrolled via the state-based HIXs. This number could change over the next week as the Administration allows individuals who started the application process to continue enrolling through April 15 and as many state-based exchanges have set different final deadlines for their special enrollment periods (see the April 1, 2014 Health Care Current). Throughout the past week, figures continued to roll in. Some highlights include:
- Lower uninsurance rate: According to a survey from the Urban Institute, the uninsurance rate for the U.S. has dropped 2.7 percent since September 2013, the month before open enrollment began. This represents more than 5.4 million newly covered, non-elderly adults. In states that expanded Medicaid, the uninsured rate is even lower, at approximately 12 percent. Note: This estimate does not include the last three weeks of open enrollment, so figures could change.
- Number of paying customers: Many stakeholders have requested figures on the number of individuals who have successfully paid their premiums for their new plans. While figures from health plans have varied, many who are reporting these numbers say that anywhere from 80 to 85 percent of those who have enrolled have paid their first premium. These numbers are not final, as insurers have differing premium due dates.
- Enrollment outside the HIXs: Some insurers are reporting that anywhere from 20 to 30 percent of their new customers have enrolled for health insurance coverage outside of the HIXs. In addition, last week, Blue Cross Blue Shield Association, representing 35 plans on HIXs in 47 states and outside of HIXs in all 50, said that off-exchange enrollment has reached 1.7 million.
- Medicaid enrollment: The Administration estimates that between October 1 and February 28, more than 3 million people enrolled in Medicaid, bringing the total eligibility number to 11.7 million.
Related: On Thursday, lawmakers from the Committee on Oversight and Government Reform asked officials from several states to testify on the roll-out of their exchanges over the open enrollment season. While most of the hearing focused on challenges faced by the states in implementing the HIXs for the first year, a majority of the state officials stated that they will not seek further funding from the federal government, as they will be self-sustaining in 2015.
Last week, Congress passed and President Barack Obama signed the Protecting Access to Medicare Act of 2014 to override the scheduled 24 percent cuts to physician payments in the Medicare program, known as the sustainable growth rate (SGR). Included in the bill was a provision that delays the transition to ICD-10 for at least one year. After the bill passed, stakeholders in the health care industry began releasing reaction statements:
Reaction to SGR patch:
- The American Medical Association disagreed with the patch, arguing that Congress has spent more taxpayer money on these temporary patches over the years than it would have cost to fix the underlying policy. Over the year, the group will continue working to repeal and replace the current formula over the year.
- The American College of Physicians also expressed disappointment that Congress passed another patch instead of repealing and replacing the bill. The group argued that each year the patch comes close to expiration, consumers and physicians are the most affected. The group will continue to push for full reform of the formula over the coming months.
- While the Federation of American Hospitals was strongly in favor of passing a bill that repealed and replaced the SGR formula, the group indicated in a letter to Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell the week before the vote that a patch would be better than letting the 24 percent cut to go into effect.
- The American College of Radiology supports pieces of the bill, especially the provision that helps to raise the quality of medical imaging by requiring providers to consult criteria developed by physicians when prescribing certain procedures for Medicare patients. In addition, the group supported the patch.
Reaction to ICD-10 delay:
- The American Health Information Management Association disagreed with the ICD-10 delay and indicated that the group will continue to give assistance and training to health care stakeholders working to move toward the transition. After the bill passed, the group sought immediate clarification from federal agencies regarding specific technical issues that will be faced due to the delay.
- The College of Healthcare Information Management Executives expressed disappointment at the delay, citing the many hours that stakeholders across the industry have put into preparing for the transition to the new coding system. The group will continue to work with health care stakeholders to ensure the transition date is not further delayed beyond 2015.
- The Medical Group Management Association argued that many groups were unprepared for the October 1 deadline of this year, and said that this timeline now allows CMS more time for providers to test new systems.
Last Tuesday, Families USA, a consumer advocacy group, released suggestions on lessons for the U.S. Department of Health and Human Services (HHS) from the 2014 open enrollment season for improving the next open enrollment period, which begins on November 15. The report includes suggestions such as:
- HHS should increase resources for enrollment assistance, as many enrollees have benefited from having in-person assistance with enrollment.
- HHS should work with state-based HIXs, insurers and other private organizations to increase education around the subsidies that are available to individuals. The report cited a poll suggesting that seven out of 10 uninsured individuals do not know about the availability of financial assistance through the exchanges.
- States should be allowed to continue using for enrollment information about individuals who receive help through the food stamps program (SNAP) or whose children’s are enrolled in other public programs to fast track applications for Medicaid.
- Computer systems should be improved in order to speed the process of transferring application data from HIXs to Medicaid and vice versa. This proved difficult during the first enrollment period, as websites among states and the federal government were not fully coordinated.
- HHS should add models of plan designs, especially for bronze- and silver-level plans, helping to give individuals greater choice for low-cost plans.
- HHS should exclude plans that set premium rates too high for people to afford. Many states use rate reviews to help with this.
(Source: Families USA, “Accelerating the Affordable Care Act’s Enrollment Momentum: 10 Recommendations for Future Enrollment Periods,” April 1, 2014)
According to recent analysis from the Bureau of Economic Analysis, health care spending growth rose in the fourth quarter of 2013 to an annual rate of 5.6 percent, making it the fastest fourth quarter increase in 10 years. Economic experts have been tracking figures such as these in order to determine the reason behind the lull in health care spending over the past few years—many agree that that the weak economy was behind slower spending growth, and some claim that more efficient health care delivery and financing have contributed. An analysis by the S&P Dow Jones Indices found that spending growth among the 60 million commercially insured population in the U.S. slowed, remaining at 3.5 percent during 2013 and down from 4.9 percent in 2012. This was true for spending for inpatient and outpatient hospitalization and professional services. In mid-September of 2013, CMS predicted that health care spending for 2014 would increase by 6.1 percent for the year, mostly due to insurance coverage provisions of the ACA.
Several organizations have recently unveiled plans that could help with care coordination and improve quality of care:
- Aetna and Medical Professional Services, Inc. (MPS): Last week, the two companies announced a new agreement to enhance their current independent practice association (IPA) agreement in Connecticut. Aetna will reward MPS and MPS physicians for meeting quality, efficiency and patient satisfaction standards. Nearly 15,000 Aetna members will be included in the new program. The collaboration aims to improve care coordination between physicians and health plans by rewarding quality of care, which is based on measures like received recommended preventive care, better chronic condition management, reduction of avoidable hospital readmissions and emergency room visits and pharmacy cost reductions.
- Cigna Collaborative Accountable Care (CAC): Building on their current arrangements with large physician groups and health care systems, the new initiative expands the arrangement to include small physician groups, specialist groups, hospitals and other large physician groups. CAC plans to reach and engage all stakeholders to improve personalized connections and drive better health, affordability and patient experience. Previous results of this approach have shown improvements in quality, medical costs, emergency visits, compliance with treatments and gaps in care.
On Wednesday, April 2, the Administration announced that CMS will begin releasing Medicare physician payment information to the public. Specifically, CMS will release data from $77 billion in claims paid in 2012 by Medicare Part B to more than 880,000 medical professionals. The data will cover 6,000 types of services and procedures and will be available as early as this week. In a letter to the Vice President of the American Medical Association, CMS Principal Deputy Administrator, Jonathan Blum, stated that no personally-identifiable information about beneficiaries will be included in the release and that information on groups of beneficiaries smaller than 11 will not be released. This release comes after a federal judge ruled last May that public interest in this information outweighs physician privacy concerns (see more in the January 21, 2014 Health Care Current).
Last Thursday, April 3, HHS, in partnership with the U.S. Food and Drug Administration (FDA), Office of the National Coordinator for Health IT (ONC) and Federal Communications Commission (FCC), released a proposed strategy and recommendations for a risk-based regulatory framework for health information technology (IT). This report comes in response to a requirement in the Food and Drug Administration Safety and Innovation Act (FDASIA). The agencies organize their framework according to health IT functionality by type of platform—administrative, health management and medical device functions. The FDA does not view health IT with administrative functions as a large risk to patient safety nor does it require additional oversight. The benefits posed by health IT with health management functions generally outweigh the risk to patient safety, and the FDA does not intend to focus its oversight on this area. However, health IT with medical device functions presents greater risk to patient safety and will be the focus of oversight from the agency. Four key priority areas were outlined in the report, which include:
- Promote the use of quality management principles: The agencies will work with stakeholders in health IT to increase awareness around safety hazards and risk. Quality management principles can be applied throughout the lifecycle and will help meet customers’ needs and requirements.
- Identify, develop and adopt standards and best practices: In this area, the agencies identified design and development of health IT, implementation, customization and maintenance at the local level, interoperability, and quality and risk management as areas of focus for developing best practices and standards.
- Leverage conformity assessment tools: The agencies will focus on product testing, certification and accreditation in this area, working to ensure that products, services, systems and organizations meet standards and fulfill requirements.
- Create an environment of learning and continual improvement: The agencies will work with private and public sector entities, including vendors, developers, providers and other health care organizations, through a Health IT Safety Center, to convene stakeholders. This entity would serve as a trusted source for creating a learning system that prevents duplicative regulatory efforts and supports existing efforts.
Analysis: The FDASIA Health IT report provides a policy signal to the industry as health IT’s penetration into the delivery of care increases. While it should not be confused with policy, it does help to sharpen the lines of what could be in be in scope for future policy development. It is too early to predict exactly how policy will manifest, as there is much work to be done from here. However, quality management principles have been the keystone to many industries in helping to improve quality and safety, and many in the industry have already embraced these principles of operational excellence. The health care industry has seen that this approach helps produce results and provide a mechanism to identify defects and correct them in an ongoing cycle of improvement. This report is likely to serve as a call to the industry beyond the traditional health IT space as innovation from the consumer health sector continues to grow, becoming a partner with the federal government in the development of many new policies.
Last week, CMS approved Michigan’s demonstration project that will test a new payment model for the dual-eligible population in the state. Through the Financial Alignment Initiative, CMS partners with states using two models—the managed fee-for-service model and capitated model—to offer patient-centered care to this population which is the most costly and unhealthy one in the country. CMS approved Michigan’s waiver to begin testing the capitated model, for which approximately 100,000 individuals eligible. The state will operate the program in four regions and will contract with integrated care organizations (ICO) to deliver health care services to the enrollees in the program. Eligible individuals will able to begin enrolling on January 1, 2015, and those who have yet to enroll by April 1, 2015, will be assigned to an ICO. Beneficiaries will have access to care coordination through a multidisciplinary team to meet medical, behavioral, health and long-term services and support needs and will be ensured continuity of care through various requirements built into the program. CMS and Michigan have partnered to develop quality measures; continuous evaluation and management will be provided by CMS, as is done with all demonstrations.
Related: Last Tuesday, April 1, Michigan began covering individuals in the state through Healthy Michigan, its version of the Medicaid expansion through the ACA. Approximately 470,000 individuals are expected to be eligible for Medicaid via Healthy Michigan. CMS granted the state approval of its waiver for Healthy Michigan in late December 2013 (see January 7, 2014 Health Care Current).
Last week, CMS approved a waiver granting TennCare, Tennessee’s Medicaid program, a partial grant of $80 million to assist financially struggling hospitals. The state’s essential access hospitals will receive payments for uncompensated services in accordance with the waiver request. Unlike other states, Tennessee does not have a Medicaid disproportionate share hospital (DSH) program because, in 1994 when the state created its Medicaid program, the state anticipated that a majority of the uninsured population would be covered through the program. Since then, the state has had to scale back coverage. The partial grant will allow TennCare to assist certain hospitals that are struggling financially. In the meantime, the state’s representatives are working to find a permanent solution for financially struggling hospitals. The grant award comes after the entire 11-member Congressional delegation of Tennessee sent a letter to CMS Administrator Marilyn Tavenner seeking approval for the Medicaid waiver (see the January 28, 2014 Health Care Current).
A report published in late March by Consumer Reports suggests that patient safety varies from hospital to hospital. The report ranks more than 2,500 hospitals across the U.S. on five measures of patient safety, including death rates among heart and surgery patients, readmission rates, overuse of CT scans, hospital-acquired infections, effective patient communication about medications and discharge plans. Hospitals received a score between 1 and 100 based on the five criteria; the average score for patient safety in hospitals was 51. Overall, mortality rates among patients 65 and older are much higher in low-rated hospitals than in high-rated hospitals. Additional results include:
- Pneumonia patients are 40 percent less likely to die within 30 days of hospital admission if they are treated at one of the higher-rated hospitals over one of the lower-scoring hospitals.
- For every 1,000 patients that develop serious but treatable complications such as blood clots in the legs or lungs or cardiac arrest, 87 or fewer died in top-rated hospitals while 132 died in low-rated hospitals.
- Patients treated at top-rated hospitals are 34 percent less likely than those treated at low-rated hospitals to die following surgery.
35 hospitals nationwide received a top score in the measure, while 66 hospitals received the lowest rating. Both high and low-rated hospitals received low scores in some measures and high scores in others, signifying that the overall score is not reflective of patient safety in specific areas. The authors note that hospitals that do more to ensure staff is properly communicating with patients about medication and treatment plans may help prevent medical errors. According to the authors, an estimated 440,000 patients die each year as a result of hospital medical errors.
(Source: Consumer reports, “Survive your hospital stay,” March, 2014)
A new study published in the Journal of the American College of Cardiology suggests that, in combination with an electrocardiogram, a simple blood test measuring high-sensitivity cardiac troponin (hs-cTnT) levels ruled out myocardial infarctions (MI) with high accuracy for patients in the emergency department. The study, conducted in Sweden between 2010 and 2012, examined treatments for more than 14,000 patients age 25 and older who sought medical attention for chest pain in an emergency department. Researchers followed up with patients who presented with hs-cTNT levels of less than 5 ng/l (defined as “undetectable” by the authors) at 30-, 90- and 365-day intervals after the initial test. The findings suggest that a test showing minimal level of hs-cTNT present, combined with an ECG test that was negative for ischemia, has a 99.8 percent negative predictive value for MI and 100 percent negative predictive value of death before 30 days.
Chest pain, a symptom of MI, sends at least 15 million individuals to emergency departments across Europe and the U.S. But, most patients with chest pains symptoms are actually experiencing anxiety, indigestion or another health concern. For these patients, being in a hospital can expose them to other infections and raise the risk of running unnecessary costs and tests. However, doctors want to accurately diagnose patients in the emergency department who are actually experiencing a heart attack; about 2 percent of patients having heart attacks are sent home from emergency care—doubling their chance of death. These results suggest that this simple test could not only rule out MI safely and efficiently, but it could also help avoid serial testing and unnecessary prolonged observation while still providing care to those in need.
(Source: Bandstein Nadia, Ljung Richard, Johansson Magnus and Holzmann Martin J., Journal of the American College of Cardiology, “Undetectable High Sensitivity Cardiac Troponin T Level in the Emergency Department and Risk of Myocardial Infarction,” March 2014.)
On March 24, the Patient-Centered Outcomes Research Institute (PCORI) launched the PCORI Matchmaking App Challenge in collaboration with Health 2.0. The mobile health (mHealth) app competition calls for technology innovators and developers to create a functional app and accompanying website that boosts research partnerships among patients, caregivers, clinicians, policy makers and other health care stakeholders. The entrants are challenged to propose solutions to challenges such as:
- Increasing app feasibility and usability and ability to scale up projects and technology
- Understanding differences among stakeholders such as patients, caregivers and researchers in the way that information is understood and accessed
- Incentivizing patient-centeredness in addition to scientific rigor
- Serving audiences that present difficult challenges such as language barriers, low literacy levels, geographic locations and more
The evaluation criteria for apps will include creativity, user interface and experience, evidence of co-design, sensitivity, incentive and past performance. A review panel of technology experts, PCORI staff and members of PCORI’s multi-stakeholder Advisory Panels, will review apps on their ability to promote research partnerships and facilitate connections from a wide range of stakeholders from diverse demographic backgrounds. Teams have until August 15, 2014 to submit their mHealth app. Winners will be awarded up to $100,000 and will be announced on September 22, 2014 at the Health 2.0 Fall Conference.