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Health Care Reform Memo:
May 20, 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: Health care through the lens of a governor 

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

As student body president in college, I had occasion to meet Governor Buford Ellington in the Tennessee State House on numerous occasions. I was star-struck. The idea of being governor fascinated me, so much so that a few years later I asked our young governor, Lamar Alexander, how I might be his successor one day. His counsel was wise: it’s not a career for the timid or those who can’t handle controversy and criticism. But it’s the role in government closest to the people governed. A governor’s decision isn’t one among 99 others in the Senate or 434 in the House. It’s a huge role, and health care oversight is a major part of the job. It’s understandable.

According to the National Conference of State Legislators, in the average state, health care is 28-35  percent of the budget. States have authority over the Medicaid, Children’s Health Insurance Plan (CHIP), and state employee benefits. States determine scope of practice and licensing authority for providers, manage homeland security, including emergency preparedness, regulate health insurance operators, distribute disproportionate share (DSH) hospital payments, oversee school and correction facilities’ health programs, and operate a network of clinics and human services programs that are a lifeline to the most disadvantaged in the state. Now add the unique requirements of the Affordable Care Act (ACA): development and management of their state health insurance exchanges (HIX) and the possible expansion of their Medicaid programs are high on every governor’s agenda these days. All these require deliberate analysis and calculated risk, not to mention, managing relationships (and votes) within state legislative bodies.

Last week, I spoke on the topic of health care at the Republican Governors Association in New Orleans and had one-on-one discussions with several members in the course of the two day event. In the recent past, I’ve had similar conversations with several Democratic governors, but my answers to their questions are the same regardless of their party affiliation. Governors across the country are asking good questions…

  • They ask about the ACA: how is implementation going and when will pending rules and guidance be available so states know what to do next? And among the mostly GOP chief executives who have defaulted to the federally-facilitated option: is the federal government prepared to help states with their HIXs this fall?
  • They ask about Medicaid: what are the best practices for managing the health in this population in a cost effective way? They wonder how to connect public health programs serving the poor with health care systems and practitioners who serve those with insurance.
  • They ask about state employee health plans: how can state employees’ benefits more closely mirror private sector plans through defined contribution plans and narrow networks?
  • They ask about the private sector: how are hospitals, doctors, commercial health insurers, and long-term care providers adapting to pressures about waste, fraud, and transparency?
  • They wonder about the health care workforce and jobs in their state: is the system adequate, or is re-training of workers from clinicians to hourly employees necessary to a new system of care? Where are their opportunities to lead in attracting new jobs and new talent to an industry that’s one-sixth of the overall national gross domestic product (GDP)?
  • And they ask about public awareness: does the public understand the health care system, or the ACA, or for that matter their own insurance and the providers they use? And why is public opinion about health reform so divisive and views strongly held on every side of every issue?

This week I will follow-up with several governors who asked to discuss specific matters in more detail. But reflecting on last week, I can’t help but recall those discussions with Governor Alexander and my early impressions of Governor Ellington from my college days. Being governor is a tough job, regardless of political affiliation. And knowing how to navigate the health care system, or lead in its needed reforms, are monumental challenges likely to keep many governors awake at night these days.

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

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Implementation 

CBO updates ACA impact on coverage, costs 

Last week, the Congressional Budget Office (CBO) released its latest forecast of anticipated expanded health insurance coverage and costs associated with ACA implementation compared to its forecast in February 2013.

Highlights:

  • Medicare: net mandatory spending from 2014-2023 is expected to be $7.9 trillion—$85 billion lower than projected in February 2013—due to “a reduction of $143 billion in projected gross spending for benefits, partially offset by reductions of $48 billion in collections of offsetting receipts and $10 billion in Medicare savings as a result of sequestration.”
  • Sustainable Growth Rate (SGR): repeal is projected to cost $139.1 billion vs. the February 2013 projection of $138.3 billion.
  • Medicaid: spending from 2014-2023 is projected to be $4.3 trillion, which is 2  percent lower than February 2013 estimates.
  • Coverage: of the newly eligible Medicaid population, 20  percent will be living in states that will not expand, 70  percent will be living in states that opt to expand, and 10  percent will be living in states that partially extend Medicaid eligibility criteria. 

    Net changes (millions):
      February 2013 Baseline May 2013 Baseline Difference
    Medicaid and CHIP 12 13 1
    Employment-based -7 -7 -
    Non-group and other -4 -5 -1
    HIX 25 24 -1
    Uninsured -27 -25 1
    Source: Source: CBO; staff of the Joint Committee on Taxation, 
    http://www.cbo.gov/publication/44176
  • ACA revenues: “CBO and [Joint Committee on Taxation (JCT)] reduced the estimated amount of penalty payments by employers by $10 billion over the 2014-2023 period. That revision stems from the slight increase in projected employment-based coverage and a regulatory change that reduces the extent of employers’ liability for penalties.” Employer tax on high-cost health plans (known as the Cadillac Tax) is projected to yield $58 billion over ten years.
  • ACA impact on the federal deficit, fiscal years (FY) 2013-2023 (in billions):
    ACA Provisions  Feb. 2013 baseline  May 2013 baseline Difference
    Medicaid and CHIP outlays $637 $710 $74
    HIX subsidies $1,212 $1,075 $(137)
    Small-employer tax credits $24 $14 $(10)
    Gross cost of provisions $1,872 $1,798 $(74)
    Penalty payments by uninsured individuals $(52) $(45) $7
    Penalty payments by employers $(150) $(140) $10
    Excise tax on high premium insurance plans $(137) $(80) $58
    Other effects on tax revenues and outlays $(210) $(171) $39
    Net cost of coverage provisions $1,323 $1,363 $40
    Source: Source: CBO; staff of the Joint Committee on Taxation, 
    http://www.cbo.gov/publication/44176

My take: since passage of the ACA in March 2010, the CBO and JCT have released six baseline updates on costs and anticipated revenues. Per the chart below, all show dramatic increases in deficit impact from 2013 to 2016, leveling out in the last half of the decade and beyond to a net deficit impact of at least $150 billion annually for the foreseeable future.

So here’s the bottom line: health care spending will likely continue to add to the overall deficit of the U.S. unless one of two things happen: 1) government and private payers simply pay less to providers or 2) providers charge less. Still, it does not alter dramatically the underlying math: health care spending is a matter of volume x price. If efforts in the ACA and private sector simply adjust what’s paid (prices) without addressing volume (utilization), deficits associated with health care spending will continue to play a greater role in the federal spending gap between revenues and expenses.

The ACA includes some provisions that try to address volume: it poses demonstrations and pilots involving medical homes, bundled payments, and accountable care to incentivize providers to coordinate care better. But it falls short in accelerating the transition from volume to value. In the next wave of health care reform legislation, attention should be given to reduced volume. Otherwise, costs will continue to exceed government revenues and deficits will soar.

The alternative of doing nothing seems lacking in any sense of fiscal realism as, prior to the ACA, health care costs increased for a decade at 5.9  percent annually. The ACA may reduce the long-term deficit somewhat, but even its strongest proponents acknowledge it alone is inadequate to tackle systemic cost spiraling in health care. I continue to think the solution to long-term systemic cost controls are three: 1) replacing fee-for-service incentives with performance-based payments, 2) paying only for what the evidence says works, and 3) equipping consumers with a full set of tools to know their treatment options, costs, which provider teams deliver the highest value, and which insurance they think appropriate to their own circumstance.

CBO’s estimates of Net Budgetary Impact of the Coverage Provisions Contained in the ACA 2010-2013


Source: CBO; staff of the Joint Committee on Taxation, 
http://www.cbo.gov/publication/44176

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CMS seeks Bundled Payments applicants 

CMS is recruiting acute hospitals to apply for participation in Model 1 (inpatient services) of the Bundled Payments for Care Improvement initiative that began last month (Section 3021 of the ACA). Applications will be accepted until July 31, 2013. Currently, 24 health care facilities in New Jersey are participating in this initiative.

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New funds for innovation available 

Last week, CMS announced $1 billion in Health Care Innovation Awards for projects to test new payment and service delivery models for enrollees in Medicare, Medicaid, and CHIP. Letters of intent will be accepted through June 28, 2013. In 2012, 107 organizations received funding out of the 3,000 organizations that applied. 

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4th Circuit hears ACA challenge 

Last week, the 4th Circuit Court heard Liberty University’s arguments against the ACA’s employer mandate requirement as a Constitutional violation under the Commerce Clause.

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PCIP guidance released as program winds down 

Last week, the U.S. Department of Health and Human Services (HHS) issued an interim final rule setting most reimbursement rates in federally-administered Pre-existing Condition Insurance Plan (PCIP) programs at Medicare levels. The rule also bans “balance billing” enrollees of the federally-run PCIPs to protect them “from having to potentially shoulder significant costs that could be shifted to them as a result of this new payment policy.”

Related: ten of 27 states running their own high-risk pools per the ACA have announced they will maintain control of them before the program sunsets at the end of this year. States were given the option to maintain their PCIP program or transfer oversight to HHS after the department proposed a new contract that would cap the amount of funds states could receive to cover enrollees. Seventeen states chose to let HHS administer the program, fearing future funding shortfalls the states might experience. HHS will administer the PCIP program in 40 states until December 2013.

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CMS proposed rule would separate DSH payments from Medicaid expansion temporarily 

Last week, CMS issued proposed regulatory guidance on Medicaid Disproportionate Share Hospital (DSH) reductions for FY2014 and FY2015 only. Per the ACA, DSH payments are to be reduced incrementally through 2020, but CMS reasoned that the “two-year methodology accommodates data refinement and methodology improvement before larger reductions begin in FY2017.” CMS will not take states’ decisions about Medicaid expansion into consideration during the initial two years, temporarily shielding states that have decided to expand Medicaid from potentially steeper DSH cuts due to those states’ future reductions in uninsured levels. Comments will be accepted until July 12, 2013. This rule will be effective January 1, 2014 unless Congress adopts President Obama’s proposal to delay DSH reductions.

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IRS, HHS release MLR guidance for BCBS, Medicare Part C and Part D plans 

Last week, the Internal Revenue Service (IRS) issued a proposed rule for Blue Cross Blue Shield (BCBS) organizations and certain other organizations on how to compute the medical loss ratio (MLR) requirements to maintain privilege under Section 833 of the tax code. It proposes that BCBS organizations use the definition for “reimbursement for clinical services provided to enrollees” for Section 833 to have the same meaning as under section 2718 of the Public Health Service Act.  However, the proposed regulation does not adopt “activities that improve health care quality” as part of their 85% minimum threshold for reimbursement for clinical expenditures. Comments will be accepted until August 12, 2013.

Background: Section 9016 of the ACA “amended section 833 of the [tax] Code, which provides special rules for the taxation of Blue Cross and Blue Shield organizations and certain other organizations that provide health insurance.”

Friday, HHS issued a final rule on MLR for the Medicare Advantage (MA) program (Part C) and the Medicare Prescription Drug Benefit Program (Part D) to implement Section 1103 of the ACA. The estimated administrative costs related to the MLR reporting requirements as finalized are $9.6 million in one-time costs and $2.8 million in ongoing costs across 616 contracts.

Background: the ACA established the MLR to regulate the amount health plans spend on beneficiaries’ health care costs vs. overhead and administrative costs (i.e. executive salaries). Health plans must spend 80% or 85% of premium revenues on beneficiaries. Beginning in 2012, health plans that do not meet these requirements must issue rebates to health plan participants. For MA and Part D plans, if they fail to meet MLR requirements for three consecutive years, they will be subject to enrollment sanctions; after five consecutive years they will be subject to contract termination.

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Legislative update 

Physician ban on hospital ownership challenged 

Section 6001 of the ACA bans the start of new physician-owned hospitals (POHs) and limits existing ones from expanding. When passed in 2010, there were 265 POHs; today there are 238. In addition, plans for 24 POHs were suspended.

Last week, representatives of Physician Hospitals of America (PHA) were on the Hill asking that Section 6001 of the ACA be repealed. Their claim: POHs provide better care than competing acute facilitates according to data from the December 2012 U.S. Centers for Medicare & Medicaid Services (CMS). According to the data, of 3,000 hospitals, POHs were nine of the top ten and 48 of the top 100 that received a 1  percent Medicare bonus through CMS’ hospital value-based purchasing program.

Opponents including the American Hospital Association, Federation of American Hospitals, and others counter that POHs encourage unnecessary procedures and cherry-picking of commercially insured patients, and point to data from the American Hospital Directory, an independent financial database covering 6,000 hospitals, that showed profits in POHs ranging from 20-35  percent versus 7  percent for non-physician-owned.

(Source: Wall Street Journal, “Doc-Owned Hospitals Prep to Fight,” May 13, 2013)

My take: the bigger issues in this debate are two: 1) does a physician have the right to determine which patients he/she will treat, and 2) is the greater good served when physician self-referral is limited? Both need public debate, and those on both sides of the debate should be transparent in providing data about profit-sharing arrangements with physicians, appropriateness of care, and quality. The issue is not just about POHs. It’s about the larger issue of transparency and the role and scope of legislative oversight of a profession.

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Tavenner confirmed 

Marilyn Tavenner was confirmed Wednesday as the first permanent CMS administrator since 2006. The 91-7 vote followed unanimous endorsement by the Senate Finance Committee co-Chairs, Orrin Hatch (R-UT) and Max Baucus (D-MT). Tavenner has served as acting administrator since late 2011, when Dr. Donald Berwick stepped down.

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House passes legislation to repeal ACA for 37th time 

Friday, the U.S. House of Representatives passed legislation to repeal the ACA (229-195). The vote was along party lines, with the exception of two Democrats, voting in favor of repeal: Representative Jim Matheson (D-UT) and Mike McIntyre (D-NC).

Note: the CBO estimates full repeal would increase federal budget deficits by $109 billion over ten years.

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Report: increases in premium prices due to ACA 

Last week, the U.S. House of Representatives Energy and Commerce Committee released a report on health insurance rates for plan year 2014 based on data provided by insurance companies.

Findings:

  • Individual market: on average, new plans may cost 96  percent more and existing non-grandfathered plans may cost 73  percent more; average yearly cost may increase $1,812 for new customers.
  • Small group market: 50  percent rate increases.
  • Large group market: 15 to 20  percent rate increases.

(Source: U.S. House of Representatives, Committee on Energy and Commerce, “The Looming Premium Rate Shock,” May 13, 2013)

Note: average increases may be offset by subsidies available for individuals and companies with fewer than 10 employees purchasing coverage on HIXs beginning in 2014.

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Track and trace legislation advances in Congress with bipartisan support 

A bill (S. 957) to implement an interoperable, electronic, unit-level tracing system throughout the drug supply chain (i.e. track and trace) is expected to be marked up by the Senate this week. Last week, the House passed a similar bill (H.R. 1919) by voice vote.

Differences:

  • S. 957 transitions to a unit-level system over a ten-year period; H.R. 1919 would not require a unit-level system until 2027.
  • S. 957 would require supply chain entities to pass and retain transaction history information for each drug product for seven years vs. three years proposed by H.R. 1919.

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Health care related legislation introduced last week 

  • Senator Al Franken (D-MN) introduced legislation (S. 935) proposing to prohibit the Secretary of Veterans Affairs from requesting additional veteran medical examinations when sufficient medical records are already provided by non-department medical professionals.
  • Senator Roy Blunt (R-MO) introduced legislation (S. 931) intended to raise awareness among breast cancer patients about the availability and coverage of breast reconstruction, prostheses, and other coverage options.
  • Representative Chellie Pingree (D-ME) introduced legislation (H.R. 1976) proposing to provide women enrolled in Medicaid access to certified professional midwives.
  • Representative John Kline (R-MN) introduced legislation (H.R. 1971) proposing to provide certain TRICARE beneficiaries with the opportunity to retain access to TRICARE Prime.
  • Representative Elijah Cummings (D-MD) introduced legislation (H.R. 1958) proposing to prohibit wholesalers from purchasing drugs from pharmacies, and to enhance information and transparency regarding drug wholesalers engaged in interstate commerce.
  • Senator Charles Schumer (D-NY) introduced legislation (S. 948) proposing to provide coverage and payment for complex rehabilitation technology items under Medicare.
  • Senator Jeanne Shaheen (D-NH) introduced legislation (S. 945) proposing to improve access to diabetes self-management training.

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State update 

State round-up: HIX 

17 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, MI, NH, WV AK, AL, AZ, FL, GA, IN, KS, LA, 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; small business health option program (SHOP) will be a state-basedi>
Source: HHS

  • Chicago, Illinois will phase out its 55  percent subsidy for retiree health care plans in 2014 and encourage the retired population to enroll in health plans on the HIX. Nearly 30,000 retired employees are expected to switch to the state-partnership exchange, which is expected to save the taxpayers $108.7 million in a year.
  • Washington State will not be ready to launch its small group market HIX for small employers (i.e. SHOP) by October 2013, but will implement a pilot program in selected counties in the interim; the state hopes to expand SHOP state-wide next fall.
  • California announced that $37 million will be used to educate its residents about the HIX. The executive director of the state’s HIX stated $34 million of the funds will target consumers and the remaining $3 million will be used to reach out to small business.
  • D.C. anticipates at least four health insurance companies to offer almost 300 different policies on its state-based HIX.

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Medicaid expansion update 

Medicaid expansion is projected to cost the federal government $952 billion between 2013 and 2022 and states $76 billion. To date, 26 states and D.C. have said they will or are in support of expanding their Medicaid programs; 19 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, DC, DE, HI, IL, KY, MA, MD, MI, MN, MO, ND, NH, NJ, NM, NV, NY, OR, OH, RI, VT, WA, WV AK, AL, FL, GA,  IA, ID, IN, LA, ME, MS, MT, NC, NE, OK, SC, TX, UT, VA, WI KS, TN, UT, WY

Democratic Governor Republican Governor Independent Governor

Sources: JAMA, “Medicaid expansion under the Affordable Care Act,” March 27, 2012; Kaiser Family Foundation; PoliticoPro, StateReforum

  • Findings from a study conducted by George Washington University and Robert Wood Johnson Foundation found that individuals churning on and off Medicaid in a calendar year pay $625/month in medical bills, while individuals that remain on Medicaid for a consecutive 12-month period pay on average $333/month.
  • Last week, the Michigan Senate approved a budget bill (Bill 198) excluding funds for Medicaid expansion. Earlier this year, a similar bill was passed in the House. The legislature must reconcile budget bills within the next two weeks. The House will hold hearings on legislation this week that, if passed, would allow the state to expand Medicaid under certain conditions.
  • Last Thursday, the Arizona Senate passed a budget bill that contained an amendment aligning with Governor Jan Brewer’s (R-AZ) Medicaid expansion plan allowing 350,000 people to become eligible for coverage. The bill will move to the House for a vote where passage is unclear. 

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State round-up 

  • Last Monday, Vermont legislators approved a bill (75-65) that would permit doctors to prescribe euthanasia drugs to terminally ill patients. Two other states, Washington and Oregon, have a similar law.
    Background: as of 2011, 935 prescriptions were prescribed since Oregon’s 1998 passage of the law; roughly, two-thirds have been administered.
  • The Oregon House passed (54-4) a reauthorization of a hospital and nursing home tax until 2020. This 4.3  percent tax has generated an estimated $745 million in tax revenue and $1.3 billion in Medicaid matching funds over the last decade. The bill, which raises the tax by 1 percentage point, is set to go to the state Senate next week.
  • Last week, the Delaware House unanimously passed a bill allowing a free standing acute rehabilitation hospital to be built without state review; previously required under state law.

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Industry news 

AMA membership up, revenues down 

Despite a 3.2  percent increase in membership, the American Medical Association's (AMA) operating profit dropped by 33  percent last year due to “a material decline” in advertising revenue and coding book sales.

Note: membership in AMA is open to practicing physicians ($420/year dues), medical residents ($45/year dues) and medical students *$20/year dues). Currently, nearly 225,000 (17  percent) of the nation’s physicians, residents and medical students are members. (AMA Annual Report, May 16, 2013)

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Stem cell cloning promising as Oregon researchers 

News last Wednesday that scientists in Oregon Health Sciences University reported successful harvesting of stem cells from six embryos created from donated eggs. The research was financed by the university and the Leducq Foundation in Paris.

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SEC investigating political intelligence activity 

The Securities Exchange Commission (SEC) has opened an investigation into insider trading involving health insurance industry stocks during the period between March 15 and the April 1 after an announcement by CMS that it would not cut Medicare Advantage payments as earlier thought. At issue: whether Congressional aides might have relayed information about the decision before publicly available, which would be a violation of insider trading rules. If a lobbyist or analyst made a prediction based on publicly available information, it would be not be a violation. Regulators are also investigating the role of political intelligence firms that advise commercial clients about pending government activity to assure no violations of insider trading rules by sources in government.

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Jolie preventive mastectomy puts spotlight on genetic testing for cancer risk 

Actress Angelina Jolie’s double mastectomy in February became a major news item last week after she spoke about it publicly. She made the decision to have the procedure performed after she tested positive for a mutation in the BRCA1 gene. Each year, 232,000 women are diagnosed with breast cancer and 40,000 die. The National Cancer Institute says that the two mutations, BRCA1 and BRCA2, account for 10  percent of breast cancers and 15  percent of ovarian cancers. But women who have both have a 60  percent chance of having breast cancer in their lifetime. A woman choosing double mastectomy reduces her lifetime risk by 90  percent. The tests for both BRCA mutations are marketed by Myriad Genetics Inc. of Salt Lake City and are covered by most insurance plans.

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IOM: salt intake precautions not warranted; American Heart Association disagrees 

Last week, an expert committee appointed by Institute of Medicine (IOM) for the Centers for Disease Control and Prevention issued a report challenging directives to limit salt intake to less than 1,500 milligrams/day—about a half a teaspoon. The group’s report concluded that 1,500-2,300 milligrams/day or below were appropriate and would not raise blood pressure. The average sodium consumption in the U.S. is 3,400 milligrams/day. However, groups including the American Heart Association and Center for Science in the Public Interest challenged the recommendation based on what they deemed flawed methodology.

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Immunotherapy market might be $20 billion annually 

On the eve of the American Society of Clinical Oncology annual meeting in Chicago later this month, Leerink Swann released analysis that the immuno-oncology drug market could reach $20 billion annually. The findings were based on promising studies from Bristol Myers Squibb, Roche Holdings, and Merck.

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Research snapshots 

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

Recent health spending trend might persist to produce longer-term savings 

Citation: David Cutler, Mikhil Sahni, “If Slow Rate Of Health Care Spending Growth Persists, Projections May Be Off By $770 Billion,” Health Affairs, May 2013

Objective: to determine if the recent slower annual growth rate in health spending—3  percent per year for 2009-2011 versus 5.9  percent per year for prior decade is persistent or temporary, and identify causative factors.

Methodology: analysis of the CMS Office of the Actuary data for 2003 to 2012.

Conclusions: “We find that the 2007–09 recession, a one-time event, accounted for 37 percent of the slowdown between 2003 and 2012. A decline in private insurance coverage and cuts to some Medicare payment rates accounted for another 8 percent of the slowdown, leaving 55 percent of the spending slowdown unexplained. We conclude that a host of fundamental changes—including less rapid development of imaging technology and new pharmaceuticals, increased patient cost sharing, and greater provider efficiency—were responsible for the majority of the slowdown in spending growth. If these trends continue during 2013–22, public-sector health care spending will be as much as $770 billion less than predicted. Such lower levels of spending would have an enormous impact on the US economy and on government and household finances.”

(Source: David Cutler, Mikhil Sahni, “If Slow Rate Of Health Care Spending Growth Persists, Projections May Be Off By $770 Billion,” Health Affairs, May 2013)

My take: the health care industry is dynamic and complex. No single factor is the root cause of spending increases. Understandably, this analysis points too many possibilities about future costs and lends to development of alternative models and strategies to contain costs while improving outcomes and safety. It is the 55  percent that should be better understood, while the 45  percent should be validated in continued research.

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Doctors and nurses disagree on their scope of practice, compensation 

Citation: Donelan, DesRoches, Dittus & Beauhaus, “Perspectives of Physicians and Nurse Practitioners on Primary Care Practice,” New England Journal of Medicine, May 16, 2013

Objective: to determine opinions about payment parity between physicians and nurses who provide the same service. 

Methodology: “From November 23, 2011, to April 9, 2012, we conducted a national postal-mail survey of 972 clinicians (505 physicians and 467 nurse practitioners) in primary care practice. Questionnaire domains included scope of work, practice characteristics, and attitudes about the effect of expanding the role of nurse practitioners in primary care. The response rate was 61.2  percent.”

Conclusions: “Physicians reported working longer hours, seeing more patients, and earning higher incomes than did nurse practitioners. A total of 80.9  percent of nurse practitioners reported working in a practice with a physician, as compared with 41.4  percent of physicians who reported working with a nurse practitioner. Nurse practitioners were more likely than physicians to believe that they should lead medical homes, be allowed hospital admitting privileges, and be paid equally for the same clinical services. When asked whether they agreed with the statement that physicians provide a higher-quality examination and consultation than do nurse practitioners during the same type of primary care visit, 66.1  percent of physicians agreed and 75.3  percent of nurse practitioners disagreed…Current policy recommendations that are aimed at expanding the supply and scope of practice of primary care nurse practitioners are controversial. Physicians and nurse practitioners do not agree about their respective roles in the delivery of primary care.”

(Source: Donelan, DesRoches, Dittus & Beauhaus, “Perspectives of Physicians and Nurse Practitioners on Primary Care Practice,” New England Journal of Medicine, May 16, 2013)

My take: there are deep-seated differences in the perspectives of nursing and medical professions, as reflected in this data. Each considers the other essential, but historically, physicians have sought to limit the scope of practices of nurses, often resulting in tension and animosity. Researchers should explore comparative outcomes—safety, outcomes, and patient experiences in subsequent studies to compare and contrast the two based on factual data for uncomplicated conditions where both might diagnose and treat. Only then will the issue be resolved. Survey data will only reinforce the unique and longstanding perspectives that divide the two.

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Quotable 

“In the old days, sales representatives from drug companies would chat up local pharmacists to learn what drugs doctors were prescribing. Now such shoulder-rubbing is becoming a quaint memory—thanks to vast databases of patient and doctor information being used by pharmaceutical companies to market drugs…About 31,650 of the nation’s more than 767,000 practicing physicians, roughly 4 percent, have enrolled in the opt-out program since it was created [in 2006].”

Katie Thomas “A Deep Database on Doctors Now Guides Drug Company Pitches,” New York Times, May 17, 2013

“The huge differences in list prices have been posted on a government Web site. But for consumers to compare one hospital with another in a meaningful way, they need to know a lot more — including the rates that have been negotiated between hospitals and insurers, the listed prices for outpatient treatments, and the quality of care provided, a difficult measurement that is in its infancy.”

The Editorial Board, “The Murky World of Hospital Prices,” New York Times, May 17, 2013

“Releasing prices at hospitals is useful, but why stop there? Patients would also benefit from more information about prices charged by doctors, prices for common diagnostic tests, and the prices that insurers negotiate with hospitals, doctors and testing labs. If nothing else can control health care costs, maybe public embarrassment can.”

The Editorial Board, “Hospital Pricing Practices gouge Patients: Our View,” USA Today, May 16, 2013

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Fact file 

  • Balance of treatment vs. prevention: “in 2012, the segment of global health care expenditure on treatment was 60  percent, which will significantly decrease to 35  percent by 2025…75  percent of those 60 years of age or older are anticipated to have at least one chronic condition. By the time this population is 70 years old or more, 50  percent will have two or more chronic conditions.” (Source: Frost & Sullivan Research, “Will Pharma Survive the Headwinds of Change in the New Healthcare Ecosystem”)
  • Mental health in children: up to one in five children living in the U.S. have mental disorders, costing $247 billion annually; attention-deficit/hyperactivity disorder, or ADHD, was the most prevalent diagnosis ( 6.8  percent); behavioral or conduct problems (3.5  percent); anxiety (3  percent); depression (2.1  percent); and autism spectrum disorders (1.1  percent). About 4.7  percent of children between the ages of 12 and 17 had an illicit drug-use disorder in the past year, and 4.2  percent had an illicit alcohol use disorder. Suicide was the second leading cause of death among children between 12 and 17 in 2010: boys have higher rates of suicide while girls are more prone to alcohol abuse and depression. (Source: CDC, “Mental Health Surveillance Among Children in the United States, 2005-2011”)
  • April 2013 health care consumer price index for all urban consumers: expenditures on medical care services increased 3.4  percent since April 2012; between March 2013 and April 2013, expenditures declined 0.1  percent. Between March 2013 and April 2013 hospital services dropped 0.7  percent; inpatient prices dropped 0.9  percent and outpatient prices declined by 0.5  percent. In the past year, expenditures on physician services climbed 2.7  percent. By contrast: food expenditures increased 1.5  percent in the past year and 0.2  percent between March 2013 and April 2013. Public transportation increased 2.6  percent since in the past year, and decreased 0.4  percent between March 2013 and April 2013. (Source: Bureau of Labor Statistics, Consumer Price Index based on revenues from private insurers, privately insured patients and the uninsured)
  • 2013 nursing home, assisted living costs: national median daily cost for a private room: $230/day, +3.6  percent over 2012 or $6900/month; median annual rate is $83,950 vs. $67,525 in 2008. In assisted living, median monthly cost is $3,450, + 4.55  percent since 2012. (Sources: Genworth Financial; Caitlin Kelly, New York Times, “Covering the Rising Cost of Long-Term Care,” May 14, 2013

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