Stakeholders Pick Rx Costs & Pricing as Topic With Greatest Impact This Year

Clive Riddle. February 25, 2019 

MCOL and Healthcare Web Summit jointly sponsored a survey of healthcare professionals on which of three key topics would have the greatest impact, and what stakeholders would be economic winners and losers during this year. Here’s a summary of the findings: 

Participants were asked to respond to three items:

 1.  Which one of these three topics will have the greatest impact on stakeholders in 2019? 

• Medicaid Funding and Eligibility
• Pharmaceutical Costs and Pricing
• Value Based Care Initiatives  

2. Please project who you think the economic winners and losers for 2019 will be. Who do you think will be economically better off, the same or worse off by this time next year: Consumers; Employers; Health Plans; Hospitals; Physicians; Pharmaceutical 

3. Please indicate your perspective 

• Purchaser (Health Plan, Employer, TPA, Agent, PBM)
• Provider (Hospital, Physician, Pharmaceutical, Other Providers)
• Vendor or Other  

Stakeholders overall (51.7%) selected Pharmaceutical Costs and Pricing as the topic having the greatest impact in 2019, compared to Value Based Care Initiatives (31.7%) and Medicaid Funding and Eligibility (16.7%). 

Providers (54.5% and Vendor/Other (52.0%) respondents both selected Rx as the top choice, but Purchasers selected Value Based Care (53.8%) slightly over Rx (46.2%).  More Providers selected Medicaid (27.3%) over Value Based care (27.3%), while Vendors chose Value Based Care (32.0%) over Medicaid (16.0%)

More respondents (45.2%) overall selected Pharmaceutical Stakeholders vs. other categories as being better off in 2019  Health Plans came in second for being better off at 33.9%. Hospitals reflected the least optimism, with just 18.0% viewing them as better off this year. 

Hospitals thus were viewed with the most pessimistic outlook, with 65.2% feeling they will be worse off this year. Physicians were next in line, at 56.5%.Health Plans and Pharmaceutical stakeholders tied for the least pessimism, each with 21.7% viewing them as worse off this year. 

It should be noted that these levels of pessimism have generally declined from last year. The top three choices for being worse off in last year’s epoll all dropped: Consumers from 68.&% in 2018 to 38.7% in 2019; Hospitals from 57.2% in 2018 to 49.2% in 2019; and Physicians from 50.8% in 2018 to 29.0% in 2019. 

Purchasers had a rosier view for Consumers and Pharmaceutical stakeholders, with 46.2% saying Consumers would be better off, compared to 23.7% of Providers and 23.1% of Vendors/Others; and 61.5% of Purchasers saying Pharmaceutical would be better off compared to 39.1% of providers and 42.3% of Vendors/Others. 

Providers saw themselves in a worse position for 2019 compared to other respondents. 65.2% of Providers said Hospitals would be worse off, compared to 38.5% of Purchasers and40.0% of Vendors/Others. 56.5% of Providers said Physicians would be worse off, compared to 30.8% of Purchasers and 34.0% of Vendors/Others.

Speaking Tooth to Power: J.D. Power Releases Dental Plan Satisfaction Report

By Clive Riddle, February 15, 2019 

J.D. Power has released their annual Dental Plan Satisfaction Report for 2018, which finds that “overall dental plan customer satisfaction has improved by 5 points (on a 1,000-point scale) to 775 from 2017.”  

J.D. Power reports that “DentaQuest (805) ranks highest, performing particularly well in the customer service, communication, and cost factors. HumanaDental (784) ranks second and myCignaDental (782) ranks third.” 

And just who is DentaQuest, who has now been ranked first for the third year in a row? They tout that they “manage dental and vision benefits for more than 27 million Americans and provide direct care to patients through our network of more than 85 oral health centers in five states,” and that they provide “dental solutions for Medicaid and CHIP, Medicare Advantage, small and large businesses and individuals throughout the U.S.” 

Steve Pollock, president and chief executive officer of DentaQuest.  Pollock says the company’s continued investment in technology and person-centered care solutions as reasons for the high customer satisfaction. “While it is incredibly gratifying to see the high satisfaction among our members, we know that true success means ensuring everyone has access to quality oral health care,” Pollock said. “Our Preventistry™ platform, which is a prevention-based approach that defines oral health as more than visits to the dentist, will ultimately improve oral health for all.”

Taking a Peek Inside The Profit Margins and Administrative Expenses in BCBS World

By Clive Riddle, February 1, 2019

Mark Farrah Associates has released analysis of major Blue Cross Blue Shield plan profitability performance, comparing year-over-year results as of September 30, 2018. They note that “BCBS plans with over $10 million in revenue at third quarter 2018 include Anthem, Health Care Service Corp. (HCSC), Blue Shield of CA, BCBS of Michigan Group, Guidewell Mutual Holding Group, Independence Blue Cross (IBX), and Highmark.  These industry leaders reported positive, and in most cases, improved profitability between 3Q17 and 3Q18.”

Their findings include:

• BCBS of Michigan’s “profit margin increased nearly 3% from 5.43% in 3Q17 to 8.31% in 3Q18 due to premium growth that outpaced the increase in medical expenses and an income tax credit taken in 2018.” 
• Guidewell’s “profit margin grew to 5.33% from 4.71% in September of 2017, primarily due to increased premium revenue, which outpaced the growth of expenses.”
• Independence Blue Cross (IBX) “reported the largest improvement with a profit margin of 2.29% as of September 30, 2018, up from 0.30% in September of 2017 due in part to increased premium revenue and reduced medical costs per member.”
• Blue Shield of CA “increased its profit margin to 3.36% from 2.81% due in part to lower medical costs per member.”
• Health Care Service Corp (HCSC) “reported the largest profit margin of 14.21% for 3Q18, up from 6.10% in 3Q17 due to an increase in premium revenue and a large income tax credit.”
• Highmark’s “profit margin of 6.62% in 3Q18 fell slightly from 7.11% in 3Q17 due in part to increased administrative spending.” 
• Anthem’s “3Q18 profit margin of 5.66% improved from 4.52% a year ago due in part to a combination of slightly lower medical expenses and higher premium revenue per member.”

Being administrative expenses are such an important factor in plan profitability, it’s worthwhile to examine BCBS performance in this arena. Sherlock Company annually examines BCBS plans with respect to their administrative expenses, with their most recent report published in summer 2018. 

Results aren’t published by plan, but rather are aggregated for the BCBS sector. Overall, administrative costs increased 5.9% for 2017. Their 2017 median benchmark findings include: 

• Sales and Marketing: $8.79 pmpm; 2.0% of premium
• Medical and Provider Management: $4.44 pmpm; 1.3% of premium
• Account and membership Administration: $14.66 pmpm; 4.0% of premium
• Corporate Services: $6.27 pmpm; 1.6% of premium
• Total administration: $34.99 pmpm; 8.9% of premium
• Total administration pmpm by product line:  Commercial HMO $48.87; Commercial PPO $43,85; Commercial ASO $27.13; Medicare Advantage $97.63; Medicaid $43.22
• Total administration % of premium by product line:  Commercial HMO 8.6%; Commercial PPO 10.1%; Commercial ASO 7.7%; Medicare Advantage11.3%; Medicaid 9.3%

Peering Into the Perpetual State of Crisis in Healthcare?

by Clive Riddle, January 18, 2019 

This week, Gallup released data from their annual healthcare poll, which found “Seventy percent of Americans describe the current U.S. healthcare system as being "in a state of crisis" or having "major problems." This is consistent with the 65% to 73% range for this figure in all but one poll since Gallup first asked the question in 1994.” The point out the only time the figure dipped was in 2001, just after the September 11^th attacks, when terrorism was top of mind, and “just” 49% of the public felt U.S. healthcare was in crisis or having major problems. 

The first year Gallup took the poll – in 1994, 69% held we were crisis bound, and 30% said we were just experiencing minor problems. At the end of 2018, the number virtually hasn’t shifted: 70% crisis and 30% minor problems. 

But while U.S. healthcare may have been besot in a crisis-soaked state of affairs during the past decades, it appears that crisis, like beauty, is in the eye of the beholder and the beholder’s lens is shaped by politics.

Democrats were in the 70-84% crisis range in the post 9/11 Bush years. Upon Obama’s election, the Democrat crisis levels dropped  (from 84% to 59% from 2007-2014) and the Republican levels rose (from 58% in 2007 to 80% in 2016); meeting at similar levels as the ACA passed and early implementation rolled out.  Then with Trump, Democrats soared from 63% to 84% while Republicans plummeted from 80% to 56%. 

The prediction for public perception of healthcare crisis entering the next decade and another presidential election year? Perpetual, and Political.

Two New Milliman White Papers On MSSP Pathways to Success:

Final Rule Revisions and Data Mining Tactics to Reduce Population Costs

By  Clive Riddle, January 11, 2019

Milliman's Noah Champagne, Charlie Mills, and Jason Karcher published a white paper on January 7th: “Pathways to Success” MSSP final rule: Key revisions to the proposed rule, which was preceded with a paper on January 4th by Kathryn V. Fitch, Adam Laurin, and Michele M. Berrios: “Pathways to Success” MSSP final rule: Faster movement to downside risk increases focus on reducing population costs.

The final rule isn’t a radical departure from the proposed rule, but as Champagne, Mills and Karcher summarize, these are the key changes from the proposed rule:

• Levels A and B maximum shared savings percentage increased from 25% to 40% while Levels C and D increased from 30% and 40%, respectively, to 50%.
• Less strict definition of low-revenue ACO: Now ACOs are considered “low revenue" if their historical Medicare Part A and B fee-for-service (FFS) revenues are less than 35% of the total historical expenditures for their assigned Medicare beneficiaries. 
• High-revenue ACOs currently participating in MSSP Track 1+ will be allowed an exception to renew for one agreement period in Level E of the BASIC track.
• New, low-revenue ACOs, not experienced with performance-based Medicare ACO initiatives, will be allowed to remain in Level B (one-sided risk) for an additional performance year. 
• The final rule retains the proposed 3% cap on benchmark increases for risk scores. However, ACOs’ benchmarks will be fully adjusted for changes in the relative risk score when there is a decrease from the baseline year to the performance year instead of applying a 3% reduction cap as originally proposed.
• The final rule still uses a maximum regional cost blending percentage of 50%, but finalizes a more gradual phase-in of the maximum blending percentage from the proposed rule for ACOs with historical expenditures above their regional service areas.
• ACOs participating in the July to December 2019 performance period and selecting prospective assignment will be assigned beneficiaries based on October 2017 to September 2018 experience data.

Champagne, Mills and Karcher conclude that “CMS introduced the MSSP with the goal of transitioning ACOs to becoming risk-bearing entities and improving the quality of care provided to Medicare FFS beneficiaries. With the MSSP final rule, CMS has reaffirmed its commitment to these goals while offering greater shared savings potential to ACOs participating in the BASIC track and making the BASIC track available to a broader set of ACOs. The effect of these rule changes on specific ACOs will vary significantly depending on an ACO’s size, region, cost and quality performance, and structure.”

Fitch, Laurin and Berrios remind us that “one of the hallmarks of the new MSSP rule is faster movement to downside risk. Under the current regulations, accountable care organizations (ACOs) can stay in an upside-only track for up to six years. The new rule requires some ACOs in the Basic Track to begin assuming some downside risk in year 3.”  They stat that “under the new rule, there will be a more urgent need for ACOs to reduce population costs,” and that “two major tactics are typically implemented by health plans and ACOs to reduce population costs” are demand management and supply management.

Their report “focuses on supply management and, in particular, data mining tactics that identify medically unnecessary services.” They advocate "several data mining tactics we have seen successful ACOs adopt to effectively guide strategies to reduce medically unnecessary services and in turn reduce the ACO’s total population costs." including:

• "For MSSP participants, the monthly Claim and Claim Line Feed (CCLF) data files provided by CMS should be routinely grouped and summarized into an actuarial cost model in order to evaluate cost drivers, identify potential targets for utilization reduction initiatives, track outcomes expected from key initiatives, and track overall costs compared to the ACO’s PMPY expenditure benchmark set by CMS."
• "After identifying potential services to target from the actuarial cost model, organizations need to evaluate whether the utilization and spend in a service category represents efficient or inefficient care with very little or very large opportunity for improvement."
• "ACOs must be able to target inefficient physician performance, which requires credible provider profiling. As with the benchmarking exercise described previously, physician profiling requires credible risk adjustment."
• "ACO should also consider data mining to identify leakage of services to providers outside of the ACO." 

A Tour of 2019 Healthcare Predictions

By Clive Riddle, January 4, 2019 

We recently released our own 2019 healthcare prognostications, and now it’s time to take a tour of a selected healthcare weather forecasts for the year ahead, on a variety of fronts. 

First for a general overview, we stop at the PwC Health Research Institute’s 13th annual report on the year ahead, with six healthcare trends to watch in 2019: 

1. Connected health devices and digital therapies will become integrated into care delivery and the regulatory process for drug and device approvals, with several new products coming to market
2. Healthcare organizations will have to make major capital and training investments in artificial intelligence robotics, automation and data analytics in order to keep pace.
3. The 2017 Tax Cuts and Jobs Act will continue to create tax savings for healthcare organizations while creating new challenges. 
4. The healthcare industry is ready for a disruptor like Southwest, the budget airline provider was to that industry. 
5. The pace of healthcare private equity investment will accelerate 
6. Republican changes to the ACA will shift the law's winners and losers. Providers are on the losing end of most of these changes.

Also, providing an overall view is CareMore’s Sachin H. Jain in Forbes magazine with these: 10 Healthcare Industry Predictions for 2019:

1. Humanism and humanity in healthcare will make a real comeback.
2. The epidemic of loneliness will take center stage.
3. Medicare Advantage will be seen as a template for the healthcare system of the future
4. Quality measurement will focus on what happens in the exam room.
5. The health care industry will make progress on new models for drug pricing.
6. We will finally learn what Amazon, Berkshire Hathaway and JP Morgan are up to.
7. Tech companies will get into the health care delivery business.
8. More buzzwords: I’m not sure what language mashups we can expect next year, but rest assured they’ll generate plenty of conferences and spam emails.
9. Another unlikely, head-scratching mega-merger will occur.
10. We will all keep our new year’s resolutions: Each of us will lose fifteen pounds. We will all read a book a week. We’ll learn Mandarin, remember to call our grandparents, wash the dog more often and write that mystery novel about the doctor who uncovers a crime syndicate operating out of the hospital cafeteria 

One more overview entry on the tour comes from the 2019 HCEG Top 10 by the Healthcare Executive Group 

1. Data & Analytics: Leveraging data (especially clinical) to manage health and drive individual, provider and payer decisions.
2. Total Consumer Health: Improving members’ overall medical, social, financial, and environmental well-being.
3. Population Health Services: Operationalizing community-based health strategy, chronic care management, driving clinical integration, and addressing barriers to health such as social determinants.
4. Value-based Payments: Transitioning to and targeting specific medical conditions to manage cost and improve quality of care.
5. The Digital Healthcare Organization: HSAs, portals, patient literacy, cost transparency, digital payments, CRM, wearables and other patient-generated data, health monitoring, and omni-channel access/distribution.
6. Rising Pharmacy Costs: Implementing strategies to address growth of pharma costs along with benefits to quality of care and to total healthcare costs.
7. External Market Disruption: New players like Amazon, Chase, Apple, Walmart, and Google.
8. Operational Effectiveness: Implementing lean quality programs, process efficiency (with new core business models), robotics automation, revenue cycle management, real-time/near-time point of sales transactions, etc.
9. Opioid Management: Developing strategies for identifying and supporting individuals and populations struggling with substance abuse/addiction or at risk of addiction.
10. Cybersecurity: Protecting the privacy and security of consumer information to maintain consumer trust in sharing data 

Here’s a venture capital perspective on the healthcare industry from Venrock, featured in Fortune magazine: 10 Health Care Predictions for 2019 From a Pair of Venture Gurus 

1. More payer consolidation
2. Physician-led Accountable Care Organizations will grow rapidly
3. Doctors get less dissatisfied
4. Interoperability becomes interoperable: Five years after being declared successful, forces will finally come together to lead breakthroughs on cross health system and platform interoperability. 
5. Consolidation in digital health
6. We think that we are near peak hype cycle for insurance technology. 2019 is likely to be a year of toe stubbing for many. 
7. Dialysis disrupted: Just as Sears has been replaced by home delivery, dialysis centers will be supplanted too. 
8. Telemedicine takes off
9. PBM disruption talk becomes reality
10. Real progress with new DNA sequencing platforms 

Turning toward technology, CIO Magazine offers Healthcare technology markets: 5 predictions for 2019: 

1. Health systems are investing in specific programs such as telehealth and remote monitoring. While these initiatives gather momentum, other digital health programs are struggling to emerge from pilot deployment and also face competing priorities for discretionary budgets.
2. AI will make steady progress but will struggle with adoption gaps
3. Big tech is yet to figure out its play for healthcare markets, with one possible exception (Apple Watch)
4. Digital health startups will face a continuing struggle for growth and stability
5. Blockchain will remain a solution looking for a problem 

On the policy front, Morning Consult offer thse Top 5 Health Policy Predictions for 2019: 

As cost of health care continues rising, states and industry set to act 

1. Affordable Care Act: A ruling from a federal judge finding the Affordable Care Act unconstitutional has cast uncertainty on the future of the nation’s health care system — and reframed national debate on health reform ahead of the 2020 elections.
2. CMS waiver guidance: Armed with a majority, House Democrats are poised to probe how the Trump administration has handled the ACA during the last two years
3. Drug-pricing policy: Addressing the cost of prescription drugs is sure to continue dominating health priorities in 2019, although there is a long road from bipartisan commitment to reducing prices — to bipartisan consensus on how best to do so.
4. Shift toward value-based payment structures: Increasing pressure on hospitals, which contributed to one-third of total health care spending last year, could drive a shift toward value-based payment models next year — a top priority in the Department of Health and Human Services’ Choice and Competition 2018 report.
5. Digital therapeutics and e-health: After years of being just within reach, digital therapeutics and e-health initiatives stand to finally emerge in in the industry and transform care delivery next year. 

Next, we’ll consider employer benefit trends, with the selections of Mercer thought leader predictions posted here and here: 

1. AI everywhere!  Healthcare will be the next industry to be transformed by AI. 
2. Account-based plans create buzz.  
3. Personalization of health care. 
4. Value on investment: The new yardstick for benefits will be how they affect employees’ perception of their employer. 
5. Transparency in Rx pricing.  
6. Getting family-friendly fast. 
7. Extreme claims get real.   A number of factors are driving an increase in both the prevalence and the size of extreme claims
8. More stop loss. With the severity and frequency of catastrophic claims, employers will up their stop loss insurance levels and those that don’t buy it now will reconsider. 
9. More outsourcing.  HR and health and wellbeing functions will increasingly be outsourced t
10. Midsized employers doing something really different.  While jumbo employers are typically the trailblazers, this year midsized employers will take the lead with a couple of truly radical benefit strategies:
11. Moderate cost growth allows longer-term focus. 
12. Big things for behavioral health Change is happening in the behavioral health care delivery system.
13. Specialty drugs will command attention. 
14. Rx management gets yet more complicated. PBMs, carriers, pharma companies, and wholesalers will continue to face intense scrutiny regarding profits, delivery models and alignment (or lack of alignment) with plan sponsor goals.
15. Employers mix it up with clinical services. 
16. The issue of bill coding will surface. As doctors and hospitals become health systems, they are hiring coding experts at an increasingly rapid rate as a means of maximizing reimbursements. 

Finally, let’s end the tour peeking into pharmaceuticals, as CFO magazine features Deloitte’s Greg Reh in Four Trends That Could Shape Life Sciences in 2019 

1. Greater scrutiny over drug pricing. 2018 was one of the biggest years for policy efforts to reduce drug prices and out-of-pocket expenses for patients. 
2. Increased interest in contracts that demonstrate value. The launch of several gene and cell therapies has been a catalyst to advance the discussion of alternative payment models. 
3. The declining return on investment for R&D. A Deloitte analysis on the ROI of R&D among 12 large-cap biopharma companies portrays a steep decline over the nine years that the analysis has been performed.
4. Evolving regulatory frameworks and collaboration between industry and regulators. The U.S. Food and Drug Administration’s (FDA) pre-certification program, which launched in late 2017, is an example of how collaboration between industry and regulators can drive more self-regulation that is rooted in a culture of quality, organizational excellence, and performance monitoring. 

Nine Healthcare Business Trends for 2019

By Clive Riddle, December 14, 2018 

Here’s nine trends to keep a close watch on as we stand on the precipice of 2019:

1. The Year of SDOH

Health Plans, Health Systems and Public Agencies all will invest more heavily in Social Determinants of Health initiatives for their at risk populations. The number, scope, and resources involved in programs will significantly escalate, using a wide range of approaches. Some will be touted as quite successful, some will be deemed as failures, many will need much more time before conclusions can be drawn.

2. Continued Uptick in Uninsured

The Commonwealth Fund cites “The uninsured rates among lower-income adults rose from 20.9 percent in 2016 to 25.7 percent in March 2018.” The news won’t get better in 2019. The ongoing federal chipping away at the ACA in various forms will continue to yield a rising rate in the uninsured.

3. Much Ado About Prescriptions

PBMs, Specialty Drugs, and Pharmaceutical price hikes have been everyone’s punching bag. And the punching will continue with much noise in 2019. But what further policy changes might one expect out of Washington with the current climate? And just released National Health Expenditure data indicates “per capita prescription drug spending slightly decreased (down 0.3%) for the first time since 2012.” While Rx costs are projected to be troublesome in the coming years, the current stall in costs will likely stall momentum for actual change.

4. Amazon and CVS Will Be Busy Bees

CVS and Aetna are now out of the gate, and have already put forth transformational plans.Amazon isn’t just positioning for the pharmacy arena – they’re into healthcare tech and much more, let alone their venture with their employer driven triumvirate with Berkshire and JP Morgan.

5. Increased Focus on Million Dollar+ Claims

Even though general healthcare costs are increasing in the lower single digits, the real high end is not finding a ceiling. Million-dollar+ medical claims increase 87 percent from 2014-2017. Technological and clinical advances will keep pushing this forward, and an increasing amount of attention will be paid on how to deal with the highest end claims. 

6. EHR: Physician Pushback and Response

A Medical Economics magazine article this month starts off with: “It’s no secret that dissatisfaction with EHR systems has been a major concern for physicians. In fact, several recent surveys report as much as a 25 to 30 percent unhappiness level among doctors and practices.”  The pushback will not subside in 2019, and vendors have a major opportunity to promote how they can make physician’s work lives easier, if they truly can come up with some innovative responses. 

7. Employee Cost Sharing: Large Group and Small Group In Different Directions

The Commonwealth Fund reported this month that “premium and deductible costs amounted to nearly 12 percent of median income in 2017. Added together, the total cost of premiums to workers and potential spending on deductibles for both single and family policies climbed to $7,240 a year in 2017.” While e cost sharing in its many forms just continues to exact a growing burden on employees, large groups are shifting strategies away from increased cost sharing, while the small group market may see no respite in 2019. 

8. Cybersecurity Stakes Rise as Healthcare Data Breaches Continue

Its not very risk to predict high risk of more major healthcare data breaches in 2019. Healthcare cybersecurity investments will continue to grow in 2019.

9. Value Based Healthcare is Everywhere

The challenge in 2019: to find a healthcare organization that doesn’t have the words value-based emblazoned throughout its communications.

Premium and Deductible Cost Sharing: A Dozen Key Findings from the Commonwealth Fund

by Clive Riddle, December 7, 2018 

CMS has just touted the National Health Expenditure growth of 3.9% for 2017 is at historic low levels, with the Office of the Actuary stating “prior to the coverage expansions and temporary high growth in prescription drug spending during that same period, health spending was growing at historically low rates. In 2017, health care spending growth returned to these lower rates and the health spending share of GDP stabilized for the first time since 2013.” 

Meanwhile, The Commonwealth Fund paints a different picture from another perspective, and has just released a 21-page DataBrief: The Cost of Employer Insurance Is a Growing Burden for Middle Income Families, with lead author Sara Collins commenting “The cost of employer health insurance premiums and deductibles continues to outpace growth in workers’ wages. This is concerning, because it may put both coverage and health care out of reach for people who need it most — people with low incomes and those with health problems. Policies that would reduce health care burdens on employees include fixing the Affordable Care Act’s family coverage glitch, requiring employers to exclude some services from the deductible, and increasing the required minimum value of employer plans.” 

The Commonwealth Fund tells us their study uses “the latest data from the federal Medical Expenditure Panel Survey–Insurance Component (MEPS–IC) to examine trends in employer premiums at the state level to see how much workers and their families are paying for their employer coverage in terms of premium contributions and deductibles. We examine the size of these costs relative to income for those at the midrange of income distribution.” 

Here’s a dozen key findings: 

1. Average employee premium contributions for single and family plans amounted to nearly 7 percent of U.S. median income in 2017, up from 5 percent in 2008. 
2. In 11 states (Arizona, Delaware, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, Texas), premium contributions were 8 percent of median income or more, with a high of 10.2 percent in Louisiana.
3. Premium and deductible costs amounted to nearly 12 percent of median income in 2017. Added together, the total cost of premiums to workers and potential spending on deductibles for both single and family policies climbed to $7,240 a year in 2017. 
4. This combined cost ranged from a low of $4,664 in Hawaii to a high of more than $8,000 in eight states (Alaska, Arizona, Delaware, New Hampshire, North Carolina, South Dakota, Texas, Virginia). 
5. In two states, Mississippi and Louisiana, these combined costs rose to 15 percent or more of median income.
6. Premiums for employer health plans rose sharply in nearly every state in 2017. After climbing modestly between 2011 and 2016, overall premiums for employer health plans (employer and employee share) grew more sharply in 2017, by 4.4 percent for single plans and 5.5 percent for family plans. 
7. Annual single person premiums rose above $7,000 in eight states (Alaska, Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island, Wyoming) and family premiums were $20,000 or higher in seven states (Alaska, Connecticut, Massachusetts, New Jersey, New York, West Virginia, Wyoming) and the District of Columbia. 
8. Average premiums for families increased overall in 44 states and the District of Columbia.
9. As employer premiums have risen, so have workers’ contributions. Between 2016 and 2017, employee premium contributions rose by 6.8 percent to $1,415 for single-person plans and by 5.3 percent to $5,218 for family plans.
10. Contributions for single plans increased in 32 states, ranging from a low of $675 in Hawaii to a high of $1,747 in Massachusetts. 
11. Contributions for family plans rose in 35 states and the District of Columbia, with the lowest increase in Michigan ($3,646) and the highest in Delaware ($6,533).
12. The average deductible for single policies rose to $1,808 in 2017, a 6.6 percent increase. Average deductibles rose in 35 states and the District of Columbia, ranging from a low of $863 in Hawaii to a high of about $2,300 in Maine and New Hampshire.

EHR and Patient Self-Pay: A Tale of Two Provider Woes

By Clive Riddle, November 30, 2018

In the provider administrative world, two continuing challenges causing large audible sighs are dealing with EHRs and ever-increasing levels of patient cost-sharing. An 11-page report just released on the annual HFMA/Navigant survey tackles these topics, providing findings from responses of 107 hospital and health system CFOs and revenue cycle management executives.

On the EHR front, we are told that 56% of executives “said their organizations can’t keep up with EHR upgrades or underuse available EHR functions, up from 51% last year. Moreover, 56% of executives suggested EHR adoption challenges have been equal to or outweighed benefits specific to their organization’s revenue cycle performance.”

Timothy Kinney, managing director at Navigant, says “hospitals and health systems have invested a significant amount of time and money into their EHRs, but the technology’s complexity is preventing them from realizing an immediate return on their investments.”

The survey found that 44% quickly adapt to EHR functional release, and the above cited 56% includes 39% that underutilize available EHR functions, and 17% can’t keep up with EHR functions. Regarding adoption challenges and benefits, the also above cited 56% includes 34% stating benefits and challenges are equal, and 22% who feel challenges outweigh benefits.

Regarding patient self-pay, the report tells us that 81% of executives “believe the increase in consumer responsibility for costs will continue to affect their organizations, down from 92% last year. Among them, 22% think that impact will be significant, compared to 40% last year. Executives from health systems and larger hospitals believe their organizations will be more heavily impacted by consumer self-pay.”

Navigant Managing Director James McHugh comments that “the impact of consumer self-pay on providers will only increase with the popularity of high-deductible health plans and negative changes to the economy. Providers must take advantage of opportunities to more holistically educate patients on out-of-pocket costs, predict their propensity to pay as early as possible, and secure alternative payers or financing when needed.”

The survey results seem to indicate self-pay continues to be a big issue, yet is more manageable now than a year ago. Time will tell if that trend continues.

Two Reports on Cost Driven Deferred Medical Care

By Clive Riddle

Two reports were published this week on deferred medical care driven by cost considerations, based on survey findings. Earnin’s report: Waiting to Feel Better: Survey Reveals Cost Delays Timely Care is based on two surveys – a commissioned online Harris Poll among over 2,000 U.S. adults and an Earnin poll of their users, “many of which live paycheck to paycheck.” AccessOne’s report: AccessOne Patient Finance Survey- Analysis on how healthcare costs impact is based on a survey conducted by ORC International of 693 people with at least $35,000 in annual household income, weighted by age, sex, geographic region, race and education.

Earnin tells that 54% of Americans “have delayed medical care for themselves in the past 12 months because they could not afford it, “ with the top three most delayed types of care being dental/orthodontic work (55%), eye care (43%), and annual exams (30%.) Earnin reports that “23 percen) have put off getting medical care for more than one year because they could not afford it. Among those whose household is living paycheck to paycheck or not making enough to get by, the rate of this extremely delayed care averages 36 percent. Nearly half of Americans (49 percent) say their health tends to take a back seat to other financial obligations.”

AccessOne reports that “Twenty-seven percent of households with children are likely to delay care because they can’t afford to pay for it.” Focusing on the dollar amounts involved and financing issues, they tell us that

• 21% of families who had trouble paying their medical bill reported that their accounts had been sent to collections.
• More than half of respondents were concerned about their ability to pay a medical bill of less than $1,000; with 35 percent being concerned about paying a bill that totals less than $500 – 20 times less than the average healthcare balance of a person in the U.S.
• Only 21 percent of respondents said their healthcare providers have spoken to them about available patient financing options in the past two years.
• Fifty-five percent of those surveyed said they prefer to discuss healthcare costs and financing options before care of service is delivered.
• Fifty-four percent of those surveyed said they would use a no-interest financing option for a balance of $1,000 or less, and 57 percent said availability of a no-interest finance option is important or very important in evaluating a provider.

So if the AccessOne report implications bear out that improving financing options up front will reduce deferred medical care, the question is, will our younger generations that have had to assume much greater overall burden of college debt, also assume a growing burden of medical debt?

The State of BPCI

by Clive Riddle, October 12, 2018

CMS announced that “1,299 entities have signed agreements with the agency to participate in the Administration’s Bundled Payments for Care Improvement – Advanced (BPCI Advanced) Model.  The participating entities will receive bundled payments for certain episodes of care as an alternative to fee-for-service payments that reward only the volume of care delivered. The Model participants include 832 Acute Care Hospitals and 715 Physician Group Practices – a total of 1,547 Medicare providers and suppliers, located in 49 states plus Washington, D.C. and Puerto Rico.”

CMS also reminds us that “BPCI Advanced qualifies as an Advanced Alternative Payment Model (Advanced APM) under MACRA, so participating providers can be exempted from the reporting requirements associated with the Merit-Based Incentive Payment System (MIPS).”

CMS further explains these three differences between the new BPCI Advanced Model and the original BPCI Initiative that ended September 30, 2018:

1. BPCI Advanced offers bundled payments for additional clinical episodes beyond those that were included in BPCI, including – for the first time – outpatient episodes.
2. BPCI Advanced provides participants with preliminary target prices before the start of each model year to allow for more effective planning. The target prices are the amount CMS will pay for episodes of care under the model.
3. BPCI Advanced qualifies as an Advanced APM.  Participating clinicians assume risk for patients’ healthcare costs and also meet other requirements including meeting quality thresholds, potentially qualifying them for incentive payments and exempting them from the MIPS program.

CMS has released results of its evaluation of the original BPCI Initiative, Models 2-4 for Years 1 -3 (through 12/31/2016.) CMS notes that “Model 2 episodes begin with a hospital admission and extend for up to 90 days; Model 3 episodes begin with the initiation of post acute care following a hospital admission and extend for up to 90 days; and Model 4 episodes begin with a hospital admission and continue for 30 days. The BPCI initiative rewards participants in Models 2 and 3 financially through reconciliation payments for reducing Medicare payments for an episode of care relative to a target price. Alternatively, when episode payments are higher than the target price, Awardees may have to pay amounts to CMS. Under Model 4, Medicare makes a prospective payment for the episode, so Awardees keep the difference if their costs are below the prospective payment.”

Of all participants, 22% of Model 2, 33% of Model 3, and 78% of Model 4 participants withdrew from the initiative.

CMS evaluation is based on the 169-page study just released by the Lewin Group: CMS Bundled Payments for Care Improvement Initiative Models 2­4: Year 5 Evaluation &  Monitoring Annual Report. Their findings included:

• While BPCI was associated with a decline in episode payments, after considering the reconciliation payments made to participants, BPCI did not result in savings to the Medicare program.
• Across the 67 Model- participant- and clinical episode-combinations analyzed in this report, payments declined for 50 and the change was statistically significant for 27.
• The average Model 2 episode initiator (EI) participated in eight clinical episodes, and the most commonly selected clinical episode was MJRLE. BPCI Model 2 accounted for nearly 90% of the approximately 796,000 episodes initiated during the first 13 quarters of the initiative.
• Episode volume was lower than in Model 2. Skilled nursing facility (SNF) EIs were most likely to participate in MJRLE, where they initiated over 9,600 episodes during the first 13 quarters of the initiative. Congestive heart failure (CHF) had the greatest enrollment of home health agency (HHA) EIs and the largest patient volume, exceeding 4,800 episodes during the same period.
• Participation in Model 4 continued to wane in the third year of the initiative. Only five hospitals participated in Model 4 in 2017 and another three Model 4 hospitals transitioned to Model 2 rather than withdraw entirely from the initiative. At the peak of enrollment, 23 episode-initiating hospitals participated in Model 4. A total of 13,551 episodes, primarily for MJRLE, were initiated under the Model through December 2016.

Eighteen Things to Know from the 2018 KFF Employer Benefits Survey

By Clive Riddle, October 4, 2018

The Kaiser Family Foundation 2018 Employer Benefit Survey, an annual 200+ page definitive report of the state of employer health benefits since 1999, includes these eighteen things to know that KFF highlights:

1.  On average, employees are contributing $5,547 toward the cost of family coverage, with employers paying the rest.
2. Annual premiums for single coverage increased 3 percent to $6,896 this year, with employees contributing an average of $1,186.
3. This year’s premium increases are comparable to the rise in employees’ wages (2.6%) and inflation (2.5%) during the same period. 
4. Since 2008, average family premiums have increased 55 percent, twice as fast as employees’ earnings (26%) and three times as fast as inflation (17%).
5. Currently 85% of covered employees have a deductible in their plan, up from 81% last year and 59% a decade ago. 
6. The average single deductible now stands at $1,573 for those employees who have one, similar to last year’s $1,505 average but up sharply from $735 in 2008. 
7. 26% of covered employees are now in plans with a deductible of at least $2,000, up from 22% last year and 15% five years ago. 
8. Among covered employees at small firms (fewer than 200 employees), 42 percent face a deductible of at least $2,000.
9. 57% of employers offer health benefits, the same as five years ago. 
10. Some employers that offer health benefits provide financial incentives to employees who don’t enroll – either for enrolling in a spouse’s plan (13%) or otherwise opting out (16%).
11. Overall 10% of all offering firms – and 24% of large ones – expect fewer employees and dependents to enroll because of the elimination of the ACA tax penalty.
12. 21% of large firms report they collect some information from employees’ mobile apps or wearable devices as part of their wellness or health promotion programs (14% last year.)
13. Most large offering employers (70%) provide employees with opportunities to complete health risk assessments.
14. 38% of large offering firms provide incentives for employees to participate in wellness programs.
15. 29% of firms that offer health benefits offer a high-deductible health plan with a savings option. 
16. 61% of firms offering HDHPs only this type of plan to at least some of their employees. Overall, 29% of covered employees are enrolled in such plans.
17. 74% of large firms (200+ employees) cover services provided through telemedicine, up from 63% last year and 27% in 2015. 
18. 76% of large firms cover services received in retail clinics.

NCQA Health Plan Ratings: What About the 25% With No Rating?

By Clive Riddle, September 28, 2018

NCQA has released its 2018-2019 Health Insurance Plan Ratings. The ratings are a key tool used by stakeholders in evaluating health plans. NCQA tells us they “studied nearly 1,500 health plans and rated 1,040: 445 private (commercial), 418 Medicare and 177 Medicaid” and that “of the 1,040 rated plans, 85 (8%) received a top rating of 4.5 or 5.0 out of 5. Twenty-five (2%) earned the ratings of 1.0 to 2.0.”

The ratings website is searchable by plan type, state, or plan name and can be sorted by ratings (rated on a scale of 1.0 to 5.0). What isn’t readily available is a summary of the number of plans by each rating category, so we compiled one:

What struck us was the 25% of plans studied that aren’t rated. If you’re a plan that likely would get a rating below 3.0, wouldn’t you be motivated to avoid being rated at all? So let’s look at the ratings methodology.  Here’s a summary of NCQA health plan rating methodology, provided by NCQA: 

“Health plans are rated in three categories: private plans in which people enroll through work or on their own; plans that serve Medicare beneficiaries in the Medicare Advantage program (not supplemental plans); and plans that serve Medicaid beneficiaries. This year’s ratings do not include Marketplace plans because they have not developed sufficient data for analysis. NCQA ratings are based on three types of quality measures: measures of clinical quality from NCQA’s Healthcare Effectiveness Data and Information Set (HEDIS®2); measures of consumer satisfaction using Consumer Assessment of Healthcare Providers and Systems (CAHPS®3); and results from NCQA’s review of a health plan’s health quality processes (performance on NCQA Accreditation standards). NCQA rates health plans that report quality information publicly.”

NCQA provides this explanation of plans listed as having partial data:

“Plans with partial data do not receive a rating, but NCQA lists them in the ratings and shows their scores on the measures they report. A plan is considered to have partial data if it: Submits HEDIS and CAHPS measure data for public reporting, but has “missing values” (i.e., NA or NB) in more than 50 percent of the weight of measures used in the methodology. Plans that fall into this category receive an overall rating status of “Partial Data Reported” and their measure rates are displayed as “NC” (No Credit). Refer to HEDIS Volume 2: Technical Specifications for information about missing values. Submits HEDIS data for public reporting but does not submit CAHPS data, or vice versa. Plans that fall into this category receive an overall rating status of “Partial Data Reported” and their measure rates for the dataset they did not submit are displayed as “NC” (No Credit).  Earned NCQA Accreditation without HEDIS data (health plan accreditation standards only) and did not submit HEDIS or CAHPS data for public reporting. Plans that fall into this category receive an overall rating status of “Partial Data Reported” and their measure rates are displayed as “NC” (No Credit).”

NCQA provides this explanation of plans listed as having no data reported:

“Plans that submit results but do not report data publicly, or plans that report no HEDIS, CAHPS or accreditation information to NCQA, are given a rating status of “No Data Reported” and their measure rates are displayed as “NC” (No Credit). Plans that fall into this category and have fewer than 8,000 members are omitted—they are not rated and are not listed in displays related to ratings.”

Based on these explanations, there are plans that legitimately should not be rated. But some of these aren’t included in the above numbers of plans with partial or no data, such as plans with fewer than 8,000 members with no data reported, or Marketplace plans with not enough data history.

But what about the rest? Could there be plans that avoid full data reporting to avoid potentially low ratings? Certainly the small numbers of plans publicly singled out with 2.0 or lower ratings come across looking far worse that the large number of plans listed with partial data or no data reported.

Perhaps NCQA should come up with a way to make the listings of applicable partial or no data reported plans perceived in a more negative manner?

Post ACA Operating Margins: Health Systems and Health Plans

By Clive Riddle, September 14, 2018

Navigant this week released an eight-page report: Stiffening Headwinds Challenge Health Systems to Grow Smarter, that provides “an analysis of a three-year sample of the financial disclosures of 104 prominent health systems operating 47% of U.S. hospitals,” in which Navigant  “found broad-based and significant deterioration of operating earnings.”

Navigant reports that from 2015 to 2017:

• The average operating margin decline for analyzed systems was 38.7%. Not-for-profit system margins fell 34%, while for-profit margins fell 39%.
• 65% of systems experienced operating income declines totaling $6.8 billion, with the most significant reductions occurring in the U.S.’s fastest-growing regions: West/Southwest and South Central.
• At the root of these declines were multiyear reductions in the rate of topline operating revenue growth, which fell from 7% (2015 to 2016) to only 5.5% (2016 to 2017), and a failure to contain expenses in line with revenue deterioration. 

Navigant cites these drivers of earnings deterioration:

1. Weakening demand for such core hospital services as surgery and inpatient admissions, due in part to rising patient cost exposure from high-deductible health plans;
2. Deteriorating collection rates for private accounts in non-ACA expansion states;
3. Steady erosion in Medicare payment rates due to the ACA and the 2012 federal budget sequester; and
4. Failure of health system value-based insurance contracts to deliver sufficient patient volume to offset steep upfront payer discounts and significant hospital population health investments.

Meanwhile on the other side of the post-ACA equation, Mark Farrah Associates this week “released an analysis brief providing insights into mid-year profitability for commercial and government lines of health insurance business. MFA compared second quarter, year-over-year profitability for the Individual, Employer-Group, Medicare and managed Medicaid segments.”

They found that:

• At the end of second quarter 2018, the average medical expense ratio for the Individual segment was 70.8%, as compared to 77.2% the previous year.
• Growth in premiums pushed the average medical expense ratio for the Employer-Group segment down to 80.9% for 2Q18 from 81.8% in 2Q17.
• For Medicare Advantage, premium growth outpaced increases in medical expenses pushing the medical expense ratio down to 85.3% from 86.1% in 2Q17.
• 2.9% increase in premiums per member per month pushed the medical expense ratio for Managed Medicaid down to 88.6% from 91.0% in 2Q17.

Mark Farrah Associates concludes the current outlook is better than the one Navigant finds for health systems: “At the mid-year point, all four health care segments are signifying improved profitability for health insurers over 2017.  The most significant change is once again in the Individual segment showing improvement over 2017, which ended up being a profitable year for the segment overall.  While this analysis of mid-year segment performance sheds light upon profitability trends for 2018, it’s a wait and see proposition until final financial results are revealed in spring of 2019.”

Out of Network Services: Not Just Surprise Medical Bills, They Also Erode Care Coordination and Patient Retention

by Clive Riddle, August 23, 2018

Last week, Kaiser Family Foundation released a study of medical bills in large employer plans that found "a significant share of inpatient hospital admissions includes bills from providers not in the health plan’s networks, generally leaving patients subject to higher cost-sharing and potential additional bills from providers." The report stated "almost 18 percent of inpatient admissions result in non-network claims for patients with large employer coverage. Even when enrollees choose in-network facilities, 15 percent of admissions include a bill from an out-of-network provider, such as from a surgeon or an anesthesiologist."

 

The focus of the KFF study of course was surprise medical bills. This week, Kyruus released their 12-page 2018 Referral Trends Report: Positioning for Patient Retention which examines out of network services from a different perspective – when referred by an in-network physician, with the issue focus being on care coordination and patient retention.

The report presents physician survey findings that indicate “one-third of out-of-network referrals would be avoidable with more robust information about in-network colleagues," and "while 77 percent of providers surveyed recognize the importance of keeping patients in-network for care coordination, a notable 79 percent say they refer patients out of network."

The report tells us:

• Among those who refer out of network, 45 percent say that it’s difficult to determine who is in the network
• On average, providers that refer out of network send almost 1/4 of patients out-of-network
• 42 percent of patients leave a provider’s office without a necessary referral appointment booked, despite over 60 percent of providers considering point-of-service scheduling extremely or very important.        
• Personal networks drive current referral behaviors: 72 percent of providers say they or their staff usually refer to the same provider for a given specialty
• 40 percent of providers report always knowing whether or not their referral was appropriate for the patient or whether the patient needed to be re-referred, hindering care coordination.       

The report concludes that "providers understand the importance of keeping patients in network to improve care. However, without the right tools to facilitate clinically appropriate and in-network referrals, providers will not necessarily break from familiar patterns."

Healthcare costs – not grandchildren gone wild – the top retiree concern

By Clive Riddle, August 17, 2018

What’s the top concern about retirement years voiced by retirees as well as retirement plan sponsors? Its not grandchildren gone wild, keeping up with new technology, staying ahead of future inflation, or even staying in good health. Instead, its paying for that health.

Results just released from the 2018 TIAA Plan Sponsor Survey of 1,001 plans sponsors from nonprofit and for-profit organizations found that 91% of plan sponsors believe that healthcare costs are the most significant retirement security issue today. 54% answered very significant and 26% said somewhat significant, while 2% were neutral and – the plan sponsors I’m curious about: 3% said not at all significant.) After health care at 91%, the next highest concern of the top six: Ensuring employees are prepared to retire on a timely basis total 81% saying it was very or somewhat significant.

Meanwhile, another new survey tells us even affluent retirees are plenty scared about those retirement costs. A new Nationwide Retirement Institute survey of adults age 50+ with household income exceeding $150k, conducted by the Harris Poll indicates that 73% of affluent, older adults “list out-of-control health care costs as one of their top fears in retirement and 64 percent of future retirees say they are ‘terrified’ of what health care costs may do to their retirement plans.”

Here’s more of Nationwide’s survey findings:

•  72% wish they better understood Medicare coverage
•  42% admit they would give away all their money to their children so they could be eligible for Medicaid-funded long-term care.
•  53% do not know that Medicare Part B is not free even if you have worked and paid Social Security taxes for at least 10 years
•  23% do not know you cannot enroll in Medicare at any time
•  29% do not know Medicare does not cost the same for everyone
•  62% do not know that future changes will impact the ability to sign up for Medigap/Medicare supplement   plans
•  53% are unsure or can't estimate what their annual health care will be
•  65% are unsure what their long-term care costs will be
•  27% of even these affluent, older adults say they couldn't cover more than $1,000 in unplanned expenses:   44% couldn't cover more than $4,000 and 60%couldn't cover more than $5,000 of unplanned expenses
•  50 % have access to a Health Savings Account (HSA) through their employer, with 30% participating in or   contributing to the HSA

25 Things to Know About The CMS Medicare ACO Proposed Rule: Pathways to Success

By Clive Riddle, August 10, 2018

Here are 25 major points to note in the CMS Pathways to Success Proposed Rule introduced on August 9th:

1. The redesigned Medicare Shared Savings program is called “Pathways to Success.
2. There are five stated goals Pathways to Success is intended to advance: Accountability, Competition, Engagement, Integrity, and Quality.
3. The CMS projected financial impact of the proposal would be savings to Medicare of $2.2 billion over ten years.
4. CMS notes that 460 of the 561 or 82% of all ACOs in the Shared Savings Program in 2018 – are not taking on risk for increases in costs.
5. The amount of time that an ACO can remain in the program with upside-only risk  would be limited to two years (or one year for ACOs identified as having previously participated in MSSP under upside-only risk) instead of the current timetable of up to six years.
6. A 6-month extension would be provided for current ACOs whose agreements expire at the end of 2018, along with a special one-time July 1, 2019 start date that will have a spring 2019 application period for the new participation options.
7. The number of tracks would be reduced to two, the “BASIC” track and the “ENHANCED” track, and would allow providers to pick between these two tracks. 
8. The length of ACO participation agreements would expand from three years to five years.
9. The BASIC track would feature a glide path for taking risk.  It would begin with up to two years of upside-only risk and then gradually transition in years three, four, and five to increasing levels of performance risk, concluding in year five at a level of risk that meets the standard to qualify as an Advanced Alternative Payment Model (APM) under MACRA. 
10. Current upside-only ACOs would be limited to one year without risk before being required to transition to the risk level in year three of the glide path.
11. The ENHANCED track would allow providers to take on risk and qualify as an Advanced APM immediately.  This track would offer the same amount of risk for each of the five years of the agreement period, at a level of risk sharing higher than the maximum amount reached in the BASIC track.
12. Eligible ACOs (ACOs that are inexperienced with two-sided risk in Medicare) would be able to enter at any level of risk in the BASIC track’s glide path or go straight to the ENHANCED track.
13. After completing a five-year agreement under the BASIC track, low revenue ACOs would be able to renew for a second agreement period at the highest level of risk in the BASIC track, while high revenue ACOs would be required to move to the ENHANCED track and take on additional risk.
14. Each ACO would provide a standardized written notice to its Medicare beneficiaries, informing them at their first primary care visit of a performance year that they are in an ACO and what that means for their care.
15. CMS would allow certain two-sided ACOs to provide an incentive payment of up to $20 to each assigned beneficiary for each qualifying primary care service that the beneficiary receives, as an incentive for taking steps to achieve and maintain good health. 
16. CMS is seeking comment on an approach that would allow beneficiaries to opt in to an ACO as an alternative to assignment. 
17. CMS would streamline the measures that ACOs are required to report, to ensure that all measures have a meaningful impact on patient care.
18. CMS would require a specified percentage of the eligible clinicians participating in an ACO to adopt the 2015 edition of Certified EHR Technology (CEHRT) as part of the Administration’s MyHealthEData initiative promoting interoperability of medical data and patient control of their data.
19. Physicians in ACOs that take on risk could receive payment for telehealth services provided to patients regardless of the patient’s location.
20. Regional (county-level) spending would be incorporated into ACO benchmarks starting in their first agreement period.
21. Methodology for risk adjustment would more accurately account for changes in beneficiaries’ health status.
22. When calculating and updating benchmarks, CMS would factor in national spending growth rates in addition to regional rates, so ACOs that constitute a large fraction of their local market would not be penalized if they reduce the market growth rate.
23. ACOs in two-sided models would be accountable for losses even if they exit mid-way through a performance year.
24. Termination of ACOs with multiple years of poor financial performance would be authorized.
25. The detailed Medicare Shared Savings Program Notice of Proposed Rulemaking (CMS-1701-P), “Accountable Care Organizations‑‑Pathways to Success,” is available at https://www.federalregister.gov/public-inspection/  and https://www.cms.gov/newsroom/fact-sheets/proposed-pathways-success-medicare-shared-savings-program.

Medicare Part D Premiums and Enrollment by the Numbers

By Clive Riddle, August 9, 2018

CMS this week announced that Part D premiums are expected to fall from $33.59 this year to $32.50 in 2019. Of course it’s not that simple. First of all, $32.50 is the “basic” premium rate. What Medicare beneficiaries actually pay is income adjusted on a sliding scale. Here are the 2019 “income-related monthly adjustment amounts” just released by CMS:

 

CMS informs us that:

• “the base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount”
• "the national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan.. The weights are based on the number of enrollees in each plan."
• “The national average monthly bid amount for 2019 is $51.28.”
• “The beneficiary premium percentage (“applicable percentage”) is a fraction, with a numerator of 25.5 percent and a denominator equal to 100 percent minus a percentage equal to (i) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (ii) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year, taking into account amounts paid by both CMS and plan enrollees.”
• Using the above calculations “the Part D base beneficiary premium for 2019 is $33.19”
• Then the Income-Related Monthly Adjustment Amounts “are determined by multiplying the standard base beneficiary premium by the following ratios: (35% − 25.5%)/25.5%, (50% − 25.5%)/25.5%, (65% − 25.5%)/25.5%, (80% − 25.5%)/25.5%, or (85 – 25.5%)/25.5%.

Clear as mud?

On the enrollment side of PDP world, here’s a look compiled from July 2018 CMS data:

Here are Medicare national drug plan enrollment totals:

• Total PDP Contracts: 63
• PDP Drug Plan Enrollment: 25,459,900
• MA Drug Plan Enrollment: 18,004,980
• PACE/Cost/Dual Drug Plan Enrollment: 689,113
• Total Drug Plan Enrollment: 44,153,993

The top five states for PDP enrollment penetration are:

• North Dakota – 63.9%
• Vermont – 62.6%
• Delaware – 62.6%
• Iowa – 60.5%
• Wyoming – 58.9%

This compares to a national average of 41.2% penetration. As one might expect, the high PDP penetration states have correspondingly lower Medicare Advantage penetration. For example, North Dakota has 2.7% MA penetration. Conversely, Puerto Rico has only 2.1% PDP penetration, but has the highest MA penetration at 71.1%. (national average MA penetration is 33.8%)

There are 114 counties with PDP penetration rates above 70.0%, mostly concentrated in the above states. Leading the pack is Dubuque County, Iowa at 72.3%. The bottom 77 of the 3,218 counties listed are all in Puerto Rico, as mentioned above. The first mainland county just above them is Clackamas County, Oregon with 17.6% penetration.

Consumers and Digital Technology: What’s the Deal With Healthcare?

by Clive Riddle, July 20, 2018 

The Deloitte Center for Health Solutions has just released some preliminary findings from their 2018 Survey of U.S. Health Care Consumers, which will be published in August, on the heels of their recently released Deloitte 2018 Survey of U.S. Physicians. Deloitte shares that “consumers and physicians typically agree that virtual health care holds great promise for transforming care delivery. Yet many physicians remain reluctant to embrace the technologies, worried about reimbursement, privacy and other issues.”

Thus Deloitte found consumers are well ahead of providers on the technology acceptance curve, and many providers are dragging their feet in meeting rising consumer demand in this arena. Dr. Ken Abrams, managing director, Deloitte Consulting tells us "Changes in health care reimbursement models, combined with growing consumer demand, are driving health systems to embrace virtual care, but they are struggling to get physicians on board."

The Deloitte surveys found:

• 64% of consumers and 66% physicians “cite improved patient access as the top benefit of virtual care.”
• “About half of physicians surveyed agree that virtual care supports the goals of patient-centricity, including improved patient satisfaction (52% agree) and staying connected with patients and their caregivers (45%  agree)
• “While 57% of consumers favor video-based visits, only 14% of physicians surveyed have the capability today, and just 18% of the remainder plan to add this capability.”
• “Clinicians worry about medical errors (36%) and data security and privacy (33%) associated with virtual care.”
• “Email/patient portal consultations are the most prevalent virtual care technology used by responding physicians (38%), followed by physician-to-physician consultations (17%) and virtual/video visits (14%).”

Moving beyond just virtual care, and examining the healthcare digital experience as a whole, the global brand and marketing consultancy Prophet has just released a two part report: Making the Shift, Part I Healthcare’s Transformation to Consumer-Centricity (25 pages) and Part II  A Culture Change Playbook for Healthcare Transformation (also 25 pages.) They found that “ healthcare providers, payers and pharma companies are not making significant strides toward consumer centricity despite increasing demands and competition for healthcare dollars.”

Jeff Gourdji, a partner at Prophet, tells us  “consumers want to be treated as powerful participants in their own health.  Increasingly healthcare organizations’ own bottom lines require meeting consumers halfway or more. So, it is increasingly in everyone’s best interests to make sure consumers are empowered, engaged, equipped and enabled so they become what we call the ‘e-consumer.’”

Prophet paints the picture at the start of their report like this: “With the rise of digital technology, consumers have unprecedented power. Consumers expect business categories like retail and consumer goods to provide individual experiences across both the physical and digital worlds. While other businesses are shifting their focus toward delivering meaningful and valuable consumer experiences, healthcare has largely stayed the same. And, until recently, it hasn’t had the imperative to change. However, pressures from governments and employers to lower costs and pressures from consumers to meet ever rising expectations means that driving consumer engagement and redefining how healthcare organizations interact with people is no longer a luxury, but a necessity. While healthcare organizations are feeling pressure to upgrade their consumer experience, with a focus on how to engage and empower consumers, the path to accomplishing this is unclear.”

Immediately below this intro, the next section header asks “What’s the Deal with Healthcare?” They share survey results that “81 percent of consumers are dissatisfied with their healthcare experiences, and the happiest are those who interact with the system the least.”

Some of Prophet's other survey findings include:       

• “Fewer than 10% of all healthcare organizations say they are “most willing” to partner with digital companies     
• Only 21% of respondents believe that ‘practical and important innovation is coming from digital startups’ compared to over 50% of respondents who believe this innovation is coming from providers and medical device companies         
• "Only about a quarter (27%) of surveyed companies measure relationship metrics like Net Promoter Score despite evidence that consumer metrics are critical to driving a commitment to consumer centricity.”
• "Only 15% of respondents reported a willingness to consider adding leadership from outside the industry, even when those leaders would be supported by a healthcare-savvy team.

Prophet goes on to share on elaborate on “five shifts that organizations must prioritize to reshape into more consumer-centric businesses:

1. Moving from tactical fixes to a holistic experience strategy
2. Moving from fragmented care to connected ecosystems
3. Moving from population-centric to person-centered
4. Moving from incremental improvements to extensive innovation
5. Moving from insights as a department to a culture of consumer obsession

The Physician’s Role in Today’s Healthcare Costs

By Clive Riddle, July 13, 2018

Influencing consumer behavior to reduce healthcare costs via cost sharing and engagement strategies, and purchaser cost containment strategies of all stripes have seemingly dominated discussions of regarding the cost of healthcare. So how to physicians feel about their role in the cost equation today?

A new seven page NEJM Catalyst Buzz Survey report sponsored by University of Utah Health has just been released: Cost of Care and Physician Responsibility.   The report presents findings from the University’s survey examining how clinicians view health care costs. They “found that while clinicians feel a great sense of responsibility around keeping costs affordable for patients, they don’t feel they have the tools to know, the time to discuss, or the ability to impact how much things costs,” and furthermore “the survey results show a disconnect: Physicians feel responsible for the cost of care to a patient, but not accountable for it,”

99% of surveyed physicians said that out of pocket costs are important to patients – 62% said extremely important, 32% said very important and 5% said important.  Physicians were asked “Do the following aspects of cost enter into clinical decisions at your organization?” 76% said yes to Cost to practice/system; 72% said yes to Out-of-pocket cost for patients; 68% said yes to Total cost of care; and 36% said yes to Contribution to overall national health costs.

How much impact does each of the following stakeholders have on the cost of health care? The percentage of physicians saying each stakeholders had a strong impact were:

•           Pharmaceutical/biotech companies  - 87%
•           Health plans/HMOs/insurers – 81%
•           Hospitals/health systems/physician organizations – 75%
•           Government/regulators – 67%
•           Individual clinicians – 60%
•           Employers – 28%
•           Patients – 26%
•           Medical device manufacturers – 23%

The percentage of physicians agreeing with the following statements were as follows:

•           Health care costs are too confusing with current payer mix – 90%
•           Physicians aren’t trained to discuss the cost of care – 86%
•           The tools necessary to estimate costs to the patient are not available – 78%
•           Tools necessary to estimate costs to health care delivery system, not available –77%
•           There isn’t enough time in clinic to discuss cost of treatments with patients – 64%
•           Physicians should make the best treatment decisions irrespective of cost – 57%
•           Physicians should be held accountable for the cost of care to a patient – 28%
•           It’s not the physician’s responsibility to educate patients about costs – 18%

Current strategies involving physicians are focused at the organizational level, such as with value based care and accountable care arrangements. When you get at the individual level, these survey results indicate that it would seem there is a reason current cost strategies emphasize purchaser and consumer solutions.