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Health Care Reform Memo:
June 3, 2013

Deloitte Center for Health Solutions publication


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The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.
 

My take: Patient-Centered Outcomes Research Institute and evidence-based medicine: an update 

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

The least understood and potentially most impactful element in the Affordable Care Act (ACA) is in Section 6301, which created the Patient-Centered Outcomes Research Institute (PCORI). On its website, it provides a succinct summary of its gargantuan task:

Mission
The Patient-Centered Outcomes Research Institute (PCORI) helps people make informed health care decisions, and improves health care delivery and outcomes, by producing and promoting high integrity, evidence-based information that comes from research guided by patients, caregivers and the broader health care community.

Vision
Patients and the public have the information they need to make decisions that reflect their desired health outcomes.

Its 21-member board began work in September 2010 and has, for the most part, stayed below the radar while pursuing its enormous responsibility.

A central focus of PCORI is evidence-based medicine (EBM): “the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients.” In essence, EBM uses a set of analytic tools to assess the strength of the evidence of risks and benefits of treatments (including lack of treatment) and diagnostic tests so clinicians and patients can predict whether a treatment will do more good than harm.

At Vanderbilt, I was Executive Director of the Center for Evidence-based Medicine wherein clinical care teams and patients sought preferred diagnostics and treatments for more than a 100 medical problems. The Center’s role as facilitator was three-fold: 1) to review the science (evidence) and facilitate team decisions about the strength of the evidence using a grading system, 2) to facilitate development of step therapies to hardwire adherence to the evidence in our clinical operating processes and information systems, and 3) to create and capture valid and reliable measures of team and patient adherence to those pathways and procedures. It involved working closely with clinicians, medical librarians, bio-informaticists, and clinical researchers to sort through the science to reach a conclusion. The process was impossible without clinical information technology (IT) systems that allowed us to retrospectively assess our patterns of care and prospectively assess what might happen if we changed treatment paths. And it was a critical skillset for discussions with health plans as we determined how our care aligned with the evidence for the patient populations we served.

I learned some important lessons from that experience, and in that context, regard the task of PCORI as enormously important to our system in the “new normal.” The lessons are applicable to every stakeholder in the system, and merit more open discussion:

    1. The volume of evidence is expanding dramatically. There are more than 20,000 medical journals globally—some online, most weekly, and many narrowly focused on certain medical problems or technologies. Most are allopathically (western medicine) in origin; some are alternative, ayurvedic, or Asian. And just in the U.S., there are more than 100 medical specialties and 130 academic medical centers that pump out evidence.
    2. The strength of evidence about what’s “best” is sometimes hard to come by. Simply put, as more variables are introduced as signs, symptoms, risk factors, and co-morbidities, the less likely there’s strong evidence about what to do. Advanced clinical analytic tools can help sort through the massive data, but it boils down to judgment in many situations.
    3. Much of what’s done in health care is not evidence-based. Where evidence is weak for a certain approach to treatment, one expects wide variation in treatment patterns (appropriate variation). Where the evidence is strong, one expects less variation. Non-adherence to strongly supported evidence for diagnostic and therapeutic interventions is inappropriate variation, or care that’s not necessary based on the evidence. The Institute of Medicine (IOM) and RAND and others have estimated as much as 30 percent of U.S. health spending is for unnecessary care, and the data from Dartmouth Atlas shows there’s no correlation between doing more tests and procedures and outcomes. It simply costs more.
    4. Often the evidence runs afoul of strong opinions among clinicians. Physicians are trained to think of medicine as both art and science; they are dubious of data they don’t understand and studies wherein methodologies or conclusions are inconsistent with their views. And often, a process inclusive of team members other than Ph.Ds in bioinformatics or M.D.s is problematic. Physicians believe it their exclusive domain to review and apply the evidence, and theirs to set aside when they disagree. That physicians are suspicious of evidence is understandable.
    5. Evidence-based care matters to payers and they act on it. Our research confirmed that the medical management processes in most plans use systematic methods for evaluating the evidence for coverage and denial decisions, and for credentialing providers (Source: Keckley, PH. “Evidence-based Medicine in Managed Care: A Survey of Current and Emerging Strategies,” Medscape General Internal Medicine Article 470303 [2004]). The tension between providers and payers is this: where the evidence is inconsistent or weak, the lower cost treatment option may be covered first before others are allowed. The chasm of trust between providers and payers can be mitigated only when both share data about their judicious review of the evidence.
    6. Policies around evidence-based care matter to innovators and investors. The scientific appetite to find better ways to diagnose and treat is strong among clinical researchers and scientists; the substantial financial risk to underwrite those efforts is integrally linked to public policies that encourage those efforts.
    7. Evidence-based care matters to patients, but they’re ill-equipped to navigate it. It’s not surprising that a discussion about evidence quickly migrates to cookbook medicine, rationing, or other explosive rhetoric. Most consumers believe the recommendations they get from their doctors are evidence-based, and rarely challenge them. The rare exceptions are those facing a medical problem that is difficult to treat for themselves or a family member, or a diagnosis with dire outcome. Engaging patients as consumers is a challenge for the system and it’s understandable.
    8. To fully implement evidence-based care as the foundation for the delivery and financing of care in the U.S. system, four things are necessary: 1) an objective process for interpreting the evidence, 2) information technologies with smart clinical decision support tools that clinicians and consumers can share, 3) incentives from payers to apply it consistently, and 4) public demand that care that is evidence-based be provided and paid for. Simply stated, a “tools, not rules” strategy that touches every stakeholder in the system is necessary to align the system’s performance with the evidence.

PCORI’s role in health reform is among the most important changes our system will undergo in coming years. EBM, and comparative effectiveness, are relevant to every sector in the health system seeking to adapt to its transition to value from volume. PCORI’s task is enormous, and its success vital to a transformed health system.

Paul Keckely
Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

Sources:
Sackett DL, Rosenberg WM, Gray JA, Haynes RB, Richardson WS. “Evidence based medicine: what it is and what it isn't,” BMJ 312 (7023): 71–2 (January 1996).
Keckley, PH. “Evidence-based Medicine in Managed Care: A Survey of Current and Emerging Strategies,” Medscape General Internal Medicine Article 470303 (2004).
Keckley, PH, Frink, BB. “Comparative Effectiveness: A Strategic Perspective on What it Is and What it May Mean for the United States,” Journal of Health and Life Sciences Law, Vol.3: No.1 (October 2009).
Dartmouth Atlas
IOM
RAND
2012 U.S. Survey of Health Care Consumers, Deloitte Center for Health Solutions

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Major elements of ACA wherein “evidence-based medicine” is a central feature 

Sources:

    1. CCIIO website: http://cciio.cms.gov/resources/factsheets/ehb-2-20-2013.html
    2. Statereforum, “State progress on essential health benefits,” http://www.statereforum.org/node/10537
    3. ASPE Issue Brief, March 2013
    4. U.S. House of Representatives Committee on Appropriations, HHS Budget Hearing, April 25, 2013
    5. CMS Office of the Actuary Letter to Marilyn B. Tavenner, “2013 IPAB Determination,” April, 30, 2013
    6. CMS website: http://innovation.cms.gov/initiatives/bundled-payments/
    7. PCORI website: Funding Awards: Cycle 1: http://www.pcori.org/funding-opportunities/pfa-awards/
    8. CMMI website: http://innovation.cms.gov/index.html
    9. CMS, “National Physician Payment Transparency Program: OPEN PAYMENTS,” http://www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparency-Program/index.html
    10. CMS, “Physician Quality Reporting System,” 2013
    11. President Obama’s FY2014 Budget proposal
    12. Deloitte Center for Health Solutions, “The new health care workforce: Looking around the corner to future talent management,” March 2012
    13. Healthcare.gov
    14. Kaiser Family Foundation, “Medicare Revises Hospitals' Readmissions Penalties,” October 2012

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Implementation 

Final rule released on employer worksite wellness programs 

Last week, the U.S. Departments of Labor, Treasury, and HHS issued a joint final rule covering employer worksite wellness programs per ACA Section 4303 establishing criteria for programs that that are non-discriminatory and open to all employees.

Two types of wellness programs are covered in the rule: 1) participatory wellness programs, which are non-conditional (e.g., discounts for gym memberships), and 2) health-contingent programs that require participants to achieve a specific health goal before being eligible for an award or incentive (e.g., achievement of weight loss goals). Rewards may be in the form of discounts, premium rebates, or waiver of cost-sharing vehicles such as deductibles and copayments. Negative incentives in the form of penalties may also potentially be used.

Employers are not required to offer both types of programs. Consistent with the earlier proposed rule, the maximum permissible reward (which can be an adjustment to premiums, copayments, or deductibles) for health-contingent wellness programs will increase from 20 percent to 30 percent of the total cost of coverage—and to 50 percent for smoking-cessation initiatives. This rule is effective beginning for plan years beginning on or after January 1, 2014.

Background: employer worksite wellness programs are subject to federal and state laws, including the ACA, Americans with Disabilities Act of 1990 (ADA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA), and the Genetic Information and Nondiscrimination Act of 2008. The ACA outlines a central role for employers in offering incentives to promote wellness and greatly expands employers’ ability to reward their employees with incentives.

My take: per our employer surveys, employers recognize the need to help employees manage chronic conditions and prevent minor medical problems from becoming major. But there are two conundrums: often it’s only the healthiest employees who take advantage of these programs—therefore it does not improve overall company health or provide cost savings to employers; and often it’s years later that a program’s impact on health or costs is realized—often after the employee has moved on to their next employer. As a result, employers are keen to find targeted programs that impact changes in health status and cost reductions that can be realized sooner and apply to those less inclined to participate. And employers are grappling to find the right combination of sticks and carrots to encourage the behavior changes desirable for employees and beneficial to the company’s bottom line. The final rule provides a framework for constructing a wellness program and a modest financial incentive: it leaves employers in the driver’s seat to creatively define and implement programs that impact health and costs. For additional reading, download “Breaking constraints: Can incentives change consumer health choices?” Deloitte Center for Health Solutions, March 2013.

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Small business coverage final rule released 

Friday, CMS released its final rule on the Small Business Health Options Program (SHOP) per Section 1311 of the ACA. Starting October 1, small employers will be able to choose from a range of coverage options through SHOP for coverage beginning January 1, 2014. The agency also released the final SHOP applications on the CMS website.

State-run SHOPs may allow employers to choose from a number of plans or a single plan to offer their employees. The federally-facilitated SHOP will limit employer choice to one health plan in 2014. In 2015, all SHOPs “will allow small businesses to let their employees choose coverage from a number of plans,” the agency said.

Related: last month, HHS granted the state of Utah the right to operate its own SHOP while allowing the federal government to run the state’s individual health insurance market on the HIX. Other states may pursue this option. More to come.

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HIX updates 

Last week, the White House disclosed…

  • 120 health insurance companies across 19 states have indicated interest in participating on the federally-facilitated exchanges.
  • In the majority of states, at least one of the health insurance issuers offering products on the HIX will be new to the state’s health insurance market.
  • 90 percent of individuals who purchase through a HIX will have at least five plan options
  • “About 65 percent of new issuer entrants to the individual market in the [federally-facilitated exchange states] will be in states where only one insurance company dominates the market today.”
  • “An estimated 85 percent of the seven million people that the Congressional Budget Office (CBO) projects will enroll in the [HIX] in 2014 live in the 46 states where currently two insurers cover more than half of all enrollees… About 90 percent of target enrollees will have five or more difference [sic] insurance company choices [on the HIX in 2014].”
  • “Multi-state plans will be offered in at least 31 states nationwide in 2014, with coverage expanding to all 50 states and D.C. no later than 2017. The OPM [Office of Personnel Management] is currently reviewing over 200 proposed multi-state [QHP] options.”

(Source: White House Memo, May 30, 2013)

Related: Thursday, the Government Accountability Office (GAO) reported findings of its readiness assessment for six state-based exchanges (DC, MN, NV, NY, OR, RI) and one state-partnership exchange (IA) concluding potential operational problems around eligibility and enrollment computer systems are likely and, in some states, systems might not be fully integrated with other financial assistance programs, such as food stamps and housing vouchers.

Background: HHS has spent nearly $3.7 billion on grants to the 50 states and $1 billion to the states reviewed by the HHS Office of Inspector General (OIG).

My take: perhaps the most frequent question I get on the road is whether the federal government will be ready October 1, 2013 to operate the HIXs in the 33 states where it is obligated to partner or assume full-time responsibility. My answer is this: HHS officials are insistent they’ll be ready, but no doubt it depends on what “being fully operational” means. In every major implementation, there are surprises and often interim work-arounds are necessary until a permanent fix is ready. I suspect that will be the case with the federal exchange support program. Enrolling new eligibles, checking for their eligibility for subsidies and citizenship, cross referencing their identity against other data to eliminate duplication and detect possible fraudulent behavior, et al are enormous tasks. Not to mention getting the young invincibles to sign up in the first place. So in 119 days, my suspicion is HIXs will be open for business in 50 states and the District of Columbia, but the grand opening may be messy at first.

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Legislative update 

Trustee report: Medicare trust fund solvent through 2026, Social Security through 2033 

Highlights of Friday’s release of the Trustee’s Report:

  • Medicare will be solvent through 2026—two years longer than prior forecasts, largely due to lasting effects from the 2008 recession and various provisions in the ACA that aim to make Medicare a more efficient program.
  • Social Security is solvent through 2033—unchanged from last year’s forecast. The program currently serves 57 million.
  • Medicare and Social Security are 37 percent of the total federal budget, increasing to 42 percent by 2023 per the CBO.
  • MA enrollment is expected to climb from 14.8 million today to 20 million in 2030.
  • Premiums for Medicare enrollee with higher incomes are likely to increase from $335.70 today to more than $500 by 2022.

Treasury Secretary Jacob Lew’s statement: “The projections in this year’s report for Social Security are essentially unchanged from last year, and those for Medicare have improved modestly.”

The six Medicare Trustees noted the “modest improvement” in Medicare solvency reflected lower projected spending for skilled nursing and private MA Plans, noting the number of Medicare enrollees will increase from 50.7 million today to 73 million in 2025. The current Medicare premium paid by most beneficiaries is $104.90/month.

In an Appendix to the report. Medicare Acting Chief Actuary Paul Spitalnic cautioned that costs might exceed forecasts in the Trustee’s 2013 Report due to a 0.4 percent increase in per capita Medicare costs above overall gross domestic product (GDP) starting in 2017, and the likelihood the Sustainable Growth Rate (SGR) cuts in physician pay—25 percent this year—will not happen.

(Sources: The Boards of Trustees, “2013 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” May 31, 2013; The New York Times, “Report Shows Better Outlook for Medicare,” May 31, 2013)

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This week: Congress in session, White House hosts mental health conference 

Congress was on recess last week, but will be in session this week and for the remainder of June. Monday, President Barack Obama, Vice President Joe Biden, HHS Secretary Kathleen Sebelius, and Education Secretary Arne Duncan are hosting the six-hour session at the White House focused on mental health issues.

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GOP Senators seek clarity around HHS fundraising for enrollment campaign 

Thursday, Senate Finance Ranking Member Orrin Hatch (R-UT), Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Lamar Alexander (R-TN), and Senate Homeland Security and Governmental Affairs Ranking Member Tom Coburn (R-OK) sent a letter to HHS Inspector General Daniel Levinson requesting an investigation into HHS Secretary Kathleen Sebelius’ recent fundraising activities for Enroll America.

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CMS to make provider, consumer fraud data available for analytics by health plans 

Tuesday, CMS announced it will disclose provider- and patient-identifiable records to representatives of health plans to detect fraud, waste, and abuse. It identified 23 systems that contain data necessary to disclose to representatives of health plans through its Data Sharing Partnership Group, Center for Program Integrity. The initial dataset will be available this month.

Background: last summer, CMS and large health insurance companies launched a public-private partnership—the National Fraud Prevention Partnership—to collaborate on ways to reduce fraud and abuse in Medicare and Medicaid, which was to include sharing claims data. The idea: a single health plan may not be able to identify fraudulent schemes; collaboration between the private and public sector may help identify inconsistencies in claims data, leading to the identification of fraud.

My take: transparency of data about the costs, outcomes, business relationships, and patient experiences with providers is a tsunami for health doctors, hospitals, long-term care providers, clinical researchers, and others in health care delivery. Not to be left out, the same waves are crashing in other sectors of health care—insurance plans, employer benefits, supplemental coverage, drug and device companies, and others. It’s a new way of doing business for some: operating in the sunshine as never before, and responsiveness to outside parties that have a right to access data and a vested interest in knowing how our system performs. Business analytics applied to our system’s performance is a huge growth engine for investors, and a huge concern to industry insiders who otherwise wish to continue absent the glow of transparency.

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SGR repeal framework to be discussed this week 

Tuesday, the House Energy and Commerce Committee held a recess-meeting and released a draft to repeal the SGR, to be deliberated Wednesday. The proposed legislation sets forth the establishment of a Fee Schedule Provider Competency Update Incentive Program that would include core competency measures for reimbursement (to be determined by the Secretary of HHS and key stakeholders). Providers would be able to propose alternative payment models to be approved by HHS. Like the ACA, considerable deference is given to the Secretary of HHS and a high level of stakeholder collaboration would be required.

For more on SGR, see the May 28 Monday Memo on Health Care Reform.

My take: the SGR fix will boil down to two things: where funds to pay for the $139 billion fix are found, and what the replacement formula for physician pay is. Politics and negotiations will determine the first; the second might be trickier: doctors want a slow phase in over five-plus years as well as a replacement that’s less linked to their performance and more linked to their production. Some legislators and leaders in other sectors of health care favor payments based on outcomes and cost effectiveness. So the SGR discussion will be about two Fs: funding and formula. Stay tuned.

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Hospital readmission rate drops 

The average 30-day hospital readmission rate decreased in 2012, compared with the previous five years. From 2007 through 2011, the national 30-day, all-cause, hospital readmission rate averaged 19 percent, dropping to 18.4  percent, or 70,000 fewer readmissions during 2012. (Source: “Medicare Readmission Rates Showed Meaningful Decline in 2012,” Medicare & Medicaid Research Review)

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Immigrants made 14.7 percent of Medicare contributions and account for 7.9 percent of its expenditures 

Per Harvard researchers, immigrants made 14.7 percent of Medicare contributions and account for 7.9 percent of Medicare expenditures—a net surplus of $13.8 billion. The Medicare expenditure deficit associated with U.S. born individuals is $30.9 billion. The study was conducted using the Current Population Survey from the Bureau of Labor Statistics (BLS), and Medical Expenditure Panel Surveys (MEPS). (Source: Zallman, L, et al, “Immigrants Contributed An Estimated $115.2 Billion More To The Medicare Trust Fund Than They Took Out In 2002–09,” Health Affairs, May 2013)

Related: last week, as part of the immigration reform debate on Capitol Hill, some GOP House members voiced support for an individual mandate requiring immigrants on provisional status to purchase health insurance.

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State update 

State round-up: Medicaid 

To date, 27 states and D.C. have said they will or are in support of expanding their Medicaid programs; 20 states have indicated they are unlikely to expand their programs in 2014:

Announced or Governor in support of expansion Not participating or highly unlikely to participate Undecided or undeclared
AR, AZ, CA, CO, CT, DE, DC, HI, IA, IL, KY, MD, MA, MI, MN, MO, ND, NH, NM, NY, NJ, NV, OR, OH, RI, VT, WA, WV AL, AK, FL, GA, ID, IN, LA, ME, MS, MT, NE, NC, OK, PA, SC, SD, TN, TX, VA, WI KS, WY, UT

Democratic Governor Republican Governor Independent Governor

Sources: NASHP, PoliticoPro, Kaiser Family Foundation. Updated May 27, 2013.

  • An Urban Institute report released last week based on data from eight states concluded that state Medicaid plans will be prepared for expanded enrollment beginning in 2014, but health IT readiness might be an issue in many. States included: Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, and Virginia. Note: Virginia is unlikely to expand in 2014.
  • Last Wednesday, California Governor, Jerry Brown (D), asked the State Association of Counties to return $300 million of state funding to help support Medicaid expansion. The Governor warned that without the extra funding the state would not be able to expand. The executive director of the association is willing to contribute, but indicated that there is not $300 million in the budget to allocate to this initiative.
  • Pennsylvania lawmakers are considering a $28.3 billion budget bill that assumes the state will not expand Medicaid, but Governor Tom Corbett (R) acknowledges this may change.
  • Last week, the Louisiana Senate Finance Committee approved a bill that would spend the state’s $113 million surplus to fill the Medicaid budget gap. To-date, the state has indicated it will not expand Medicaid per the ACA.

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State round-up: HIX 

Seventeen states—12 led by Democratic governors, four led by Republicans, and one Independent—and the Democratic mayor of D.C. have announced plans to operate state-based exchanges. Seven states—five led by Democratic governors and two led by Republicans—will participate in state-partnership exchanges. The remaining 26 states will default to a federally-facilitated exchange.

State-based exchange State- partnership exchange Federally- facilitated exchange
CA, CO, CT, DC, HI, ID, KY, MA, MD, MN, NM, NV, NY, OR, RI, UT*, VT, WA AR, DE, IA, IL, NH, MI, WV AK, AL, AZ, FL, GA, IN, LA, KS, ME, MO, MS, MT, NC, ND, NE, NJ, OH, OK, PA, SC, SD, TN, TX, VA, WI, WY

Democratic Governor Republican Governor Independent Governor

*Utah’s individual market will be a federally-facilitated exchange; SHOP will be a state-based.
Source: HHS

  • Last week, Vermont health insurance cooperative (CO-OP), a model established by the ACA to provide additional health insurance options on HIXs, was rejected a license to operate by Vermont’s Commissioner of the Department of Financial Regulation. The proposal was rejected on the grounds that the rates were too high, not competitive, and that enrollment projections were too optimistic.

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State round-up 

  • Last week, at the National Medicaid Congress in Washington, officials in Kansas, Maine, Massachusetts, and West Virginia voiced concerns about Medicaid expansion capacity issues, specifically whether enough primary care doctors will accept Medicaid as a form of insurance. The managed care dual eligible demonstration projects funded by CMS per the ACA were a prominent topic of the group’s agenda.
  • Maryland is proposing that the state have authority to set prices for hospital procedures and cap the growth rate of overall hospital spending. Currently, the state commission sets the rates for hospitals, which has saved the state around $45 billion over 40 years. However, the state cannot sustain the rapid growth in health care costs with the price controls currently in place.

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Industry news 

Physician data to be released after 33-year protection 

In 2011, Dow Jones and Co. challenged a 1979 injunction that precluded the government from sharing Medicare information about individual physicians. In the ruling Friday, U.S. District Judge Marcia Morales concluded provisions of the Privacy Act no longer covered shielding of the physician data. For journalists or third parties to access the data, a Freedom of Information Act filing would be required.

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FDA official challenges drug class safety 

The FDA’s Tom Marciniak is seeking tougher regulations for angiotensin receptor blockers (ARBs) due to assertion of higher cancer rates but the agency’s Chief of Drug Evaluation Ellis Unger contends the evidence shows no correlation. At issue: the agency’s meta-analysis wherein results from five studies were analyzed, leading to the decision in 2011 to not require additional safety checks or issuance of warnings. (Source: Forbes, “Two FDA Officials Quarrel Over Safety Of Angiotensin Receptor Blockers,” May 31, 2013)

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HIT spending 

BCC Research’s assessment: clinical IT spending will increase from $11.2 billion in 2012 to $26.1 billion in 2017. Frost & Sullivan report: revenue cycle management increase to $3.1 billion in 2017—up 62 percent over 2012 and emergency response systems to $1.9 billion in 2017—up 93 percent over 2012. (Sources: BCC Research, Frost & Sullivan)

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Research snapshots 

New industry and peer-reviewed studies of note to health system transformers…

Dependent coverage costs 

Per the ACA, young adults (19-26) may maintain health insurance coverage through a parent’s health plan. Per the Centers for Disease Control and Prevention (CDC), 3.1 million have received coverage since the enactment of this provision in 2010. RAND researchers examined 480,000 visits to the emergency department (ED) between 2009 and 2011. The control group included individuals between the ages of 26 and 31 unaffected by the ACA provision.

Key findings:

  • ED visits increased among the newly covered young adults by 3.1 percent, but visits by young adults decreased among the uninsured.
  • $147 million in private insurance claims were filed as a result of the expanded coverage that would have otherwise been counted as uncompensated care costs.

(Source: New England Journal of Medicine [NEJM], “Insurance Coverage of Emergency Care for Young Adults under Health Reform,” May 30, 2013)

My take: the study validates the obvious: when people have insurance, they use the health system more readily. But the limitation of the study is this: measuring costs by ED utilization is not a complete picture. The use of the system by the newly covered must be tracked over time, and cost effectiveness gauged against both conditions diagnosed and treated sooner rather than later, and alternative channels for treatment (i.e., office visits vs. ED visits). So knowing 3.1 million are newly eligible and they used the ED more frequently than the control group is interesting, but not surprising.

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Physician interaction with patients and health costs 

Key findings: a Journal of the American Medical Association (JAMA) study last week reported that 71.1 percent of patients would rather leave decision making to their doctors, which might be more cost effective. The patients that preferred to actively participate in their treatment plans had longer hospital stays by 0.26 days and higher hospitalization costs by $865. (Source: JAMA, “Association of Patient Preferences for Participation in Decision Making with Length of Stay and Costs Among Hospitalized Patients,” May 27, 2013) Another JAMA-published study concluded providers were more inclined to explain treatment options than to ask their patients’ preference of treatment (n=2,718 patients):

Characteristics Providers explained choices ( percent) Providers asked patients’ preference ( percent)
Medication    
Blood pressure 66.0% 37.3%
Cholesterol 74.9% 42.7%
Depression 76.7%

66.0%

Cancer screening    
Colon 69.0% 60.8%
Breast 54.4% 39.5%
Prostate 63.9% 60.0%
Surgery    
Knee replacement  85.9% 72.4%
Hip replacement  71.3% 60.2%
Low back 90.4% 78.0%
Cataract 35.8% 69.9%

(Source: JAMA, “How Patient Centered are Medical Decisions?” May 27, 2013)

My take: our consumer surveys since 2008 indicate fewer than 10 percent of patients are comfortable engaging with physicians. “White coat anxiety” is a term used to describe their reluctance. This study concludes doctors can be influential in directing patient care to more efficient use of the system. So not surprisingly, in the ACA Medicare Shared Savings Program (Section 3022) physicians can participate directly in those savings. Perhaps further research is needed to know how best to equip physicians with tools and incentives to drive additional savings through the system.

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Report: barriers to purchasing health insurance for the uninsured in 2014 

Key findings: in a Jackson Hewitt study released in May, researchers found that newly-eligible individuals may encounter barriers to purchasing health insurance because of an inability to pay through a checking account, the most commonly accepted form of payment by health insurance companies. Highlights:

  • One in four (27 percent) uninsured non-elderly Americans eligible for the premium tax credits under the ACA do not have a checking account; there are roughly 50 million Americans who are considered unbanked.
  • Nearly two-thirds of health insurance enrollees indicated they would consider paying their insurance premiums using debit cards; however, “millions of Americans who receive federal benefits on prepaid debit cards may not even be able to use those same cards for premiums on the federal insurance exchanges.”
  • African Americans and Hispanic Americans are more likely to be unbanked than Caucasian Americans.

(Source: Jackson Hewitt, “Uninsured + Unbanked = Unenrolled: How Health Insurance Companies May Exclude 1 in 4 Eligible Americans from ACA Coverage—and What the Federal Government Can Do to Stop It,” May 2013)

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Preventive dental health in kids and overall health costs 

The objective of the study was to determine the association between preventive dental health and health utilization by children. Three-year outcomes data for the period 1998-2010 was captured using the Alabama’s Children’s Health Insurance Program (CHIP) comparing groups: under eight years of age, and above.

Key findings: more preventive visits did not reduce overall dental or medical (inclusive of dental) expenditures.

(Source: Bisakha S, et al, Pediatrics, “Effectiveness of Preventive Dental Visits in Reducing Nonpreventive Dental Visits and Expenditures,” May 27, 2013)

My take: three years is not long enough to gauge the impact of preventive health in most kids, except for diagnostic tests that signal a disease or condition needing urgent treatment. Preventive health programs in dental, eye, mental health, and nutrition are necessary investments with longer term returns.

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Quotable 

“For the most part, the premiums will only increase only slightly or even decrease for individuals and family coverage on the exchanges, electronic marketplaces in which consumers choose among a variety of plans with differing benefits and costs. The reported rates are in states that have elected to run their own exchanges, which are set to start enrolling people in October for coverage that begins in January 2014…The big challenge in all states will be to get people enrolled in coverage.”

—The New York Times, Lead Editorial, “Next Year’s Health Plan Rates: Competition among Insurers shows an ability to restrain premium growth,” June 1, 2013

“Small employers across the U.S. are struggling to get a handle on their health care costs under the Affordable Care Act. Many of them say they expect their operating expenses to jump in 2014, when the law’s employee health insurance requirements take effect. But they acknowledge that their forecasts are back-of-the-envelope calculations based on only partial information.”

—Emily Maltby and Sarah Needleman, The Wall Street Journal, “Sizing up Health Costs,” May 30, 2013

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Fact file 

  • April consumer spending: decreased 0.2 percent vs. 0.1 percent increase in March and 0.8 percent increase in February; the first decline since May 2012. Lower gas prices and home fuel was attributed to lower spending. The inflation rate for the month increased 0.7 percent—the smallest increase in underlying prices since 1960. (Source: U.S. Department of Commerce)
  • D.C. economy: 36 percent of the $450 billion Washington, D.C. economy is based on federal contracting; fourth largest economic market in U.S. behind New York City, Los Angeles, and Chicago; its GDP will increase 3.2 percent annually through 2017 vs. 2.9 percent national; seven of the U.S.’s ten wealthiest counties are in metropolitan D.C. (Source: Center for Regional Analysis, George Mason University School of Public Policy)
  • Medicare spending: increased 4.6 percent in 2012 to $574 billion compared to 3.9 percent overall spending increase for the same period. (Source: CBO)
  • Aging: one of eight Americans is 65+ increasing to one of five in 2030 and one of four in 2050; those 85+ will increase from five million in 2010 to 8.7 million in 2030. (Source: U.S. Bureau of the Census)
  • Health status of seniors: eight of ten seniors have at least one chronic condition, 50 percent have two or more; 25 percent are obese; 20 percent diabetic; 70 percent heart disease; and 60 percent arthritis. (Source: CDC)
  • In-flight medical emergencies: prevalence is one in 600 flights or 4,000/year; pilots divert in 7 percent of cases, 26 percent treated in-flight are admitted to hospitals upon landing. (Source: NEJM)
  • Self-funded employee coverage: 93 percent of companies with 5,000+ employees are self-insured vs. 78 percent between 1,000 and 4,999, 52 percent between 200 and 999, and 15 percent less than 200. (Source: Kaiser Family Foundation)

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