More About Us, Less About Them

By Kim Bellard, September 1, 2015

Something Amazon just did is worth those of us in health care paying attention to.  It was the layoff of "dozens" of engineers at Lab126, Amazon's hardware development center, as first reported by The Wall Street Journal.  These were the first layoffs in the division's history.

Lab126 is responsible for Amazon's consumer devices, including their very successful Kindle e-reader and the new Fire TV. What makes this is a cautionary tale for the rest of us is that even Amazon -- which is noted for their prowess with their online consumer experience -- can't necessarily get the physical consumer experience right.  I think Wired captured the problem best, asserting that Amazon's consumer devices would have been more successful "if Amazon focused more on consumers, and less on consuming."

Now perhaps the relevance to health care may be clearer.

Consumer devices are all the rage in health care.  The global mHealth market is predicted to be $49b by 2020, with some 73 million units shipped in 2015 and an eye-opening CAGR of 47.9% expected from 2013 to 2020 (although other analysts already see slowing demand).

At the core of Amazon's devices is the goal to, well, get consumers to buy more stuff from Amazon.  
So I wonder: what is the goal of consumer devices in health care?  Are they intended to help us achieve better health -- or to consume more health care services?  I hope for the former but I fear it may end up being the latter.

I was struck a couple of weeks ago by an opinion piece in JAMA: "Obstacles to Developing Cost-Lowering Health Technology."  It's authors, doctors Kellerman and Desai, note that:

The inventor’s dilemma is that creating a product that improves health is not enough; the product must also be able to generate a healthy return on investment. In the United States, the surest way to generate a healthy return on investment is to increase health care spending, not reduce it.

Think about the terminology used in health care.  It speaks volumes about the underlying culture and its attitudes towards us.  Health care providers call us "patients."  Health plans call us "members."  Medicare and Medicaid call us "beneficiaries."    The name for one of the newest fads -- "patient centered medical homes" -- serves to remind us that we're not normally considered the center of our health care, and that the focus is on our medical care, not our health.

At least "consumer-directed health plans" pay lip service to us being in charge.

I'm all for people and organizations making money in health care, but I don't like to be seen as some kind of ATM for them either.  The health care industry needs to realize that we don't really want to be its customers, don't want to need to consume their services, and certainly don't want to have to be unduly patient about it when we do. 

What we want is to be healthy.  Give us the devices, services, and experiences that make that as simple as possible and then you can call us whatever you want.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Independent Pharmacy Accountable Care Organizations

By William DeMarco, August 26, 2015

The competition for Pharmacy Services has become brutal as large chain stores such as Walgreens and CVS, as well as big box stores like Target and Walmart, attempt to develop exclusive service contracts with large insurance carriers and Pharmacy Management Companies (PBMs). At the same time, employers are faced with rapid increases in specialty drug costs for diseases such as Hepatitis and similar chronic illness drugs that may cost as much as $50,000 to $75,000 per year.

For example on July 24th the FDA approved a new class of cholesterol lowering drugs known as PCSK9. Many health plans were anticipating a price point of $10,000 per year, but the approval came with a recommended $14,600 annual price target. This would translate to a $6.71 per-member, per-month (PMPM) for Commercial and a $15.16 PMPM for Medicare, depending on the patients other conditions according to a Prime Therapeutics public analysis released in June.

While the clinical side of this evaluation proves these targeted drugs do work, the cost to public and private payers is changing the landscape of how employers deal with these services.

PBMs initially established a very good solution for a very complex problem by integrating costs, necessity and quality with outcomes. However, the mark up on PBM services and ability for PBMs to buy wholesale and resell retail has made some employers believe there may be better options they should consider.

In addition, the generic substitution strategy that saved employers millions in the early 1970s has worn away and generic prices are climbing - making the spending for both specialty and routine pharmacy a very large concern.

One solutions being attempted in several areas around the country is the development of an Accountable Care Organizations (ACO) like network of independent pharmacists.

In this segment of the delivery system, most pharmacies are owned by one or more families and are often one man drug stores, or represent small chains covering one or more counties. These pharmacies offer personalized service and a tradition of being a patient advocate - often providing answers to their customer's questions regarding medications, looking out for adverse reactions and communicating with the physician when a question of dosage or reaction occurs.

Organizing these smaller entities into a network with contractual obligations to a central agency that acts as a Management Services Organization (MSO), which in turn, contracts with purchasers, has employers intrigued and supportive because many of these hometown stores can also be an advocate for the employer - a resource needed more and more as value based payment emerges.

These independents not only offer dispensing, but also agree to offer Medication Therapy Management (MTM) to help the patient reconcile drugs, vitamins and even nutrition that may be playing a part in their drug therapy. Many of these stores can also offer medical appliance and durable medical equipment at less than the hospital outpatient cost. In addition, as a local provider, they are predisposed to working closely with PCPs to help introduce alternative drug therapies that may be less costly to the patient and the employer, but are just as effective as standard therapies.

Even if this connectivity is missing electronically, one can still work with purchasers to make sure the patient is adherent and getting their 30 day supply refilled on time. This can be a mutual responsibility between payer and pharmacists. The savings of substitution, the ability to control use of specialty drugs as necessary, and the coordination of care to assure adherence are all part of this new model.

Where does the PBM fit? The PBM can still process drug claims for the employer and share this with the pharmacy MSO, but it relinquishes control of the network to the employer. The employer may decide to run two networks—one of independents (the high performance network) and one of the big box and chains (the general network). If the employer really wants to test the effectiveness of the networks, they could also pay 100% of the high performance network prescription and MTM fees and 80% of the non-high performance network. This gives employees the choice but also incents new business to those who have little preference, but want to save money. It secures the patients for the local pharmacy, which creates competition for the chain stores.

Drug stores as care outlets versus retail vendors can make a very big difference in areas of managing drug costs and adherence. The leading cause of readmission to a hospital is non-adherence to drug therapy - which puts people in the ER. This is a classic example of a Preventable and Avoidable Cost (PAC) that could be better managed on an outpatient basis by having care coordinated by the pharmacists and the PCP.

While the cost of pharmacy will continue to rise as medical research promotes more effective drugs, we know employers and health plans can better manage utilization and patient experience at the delivery point of care, and that is, for many, the local home town pharmacist.

The Role of Master Data Management in Health Care

By Claire Thayer, August 25, 2015

Health Market Science tells us that Master Data Management (MDM) in health care encompasses everything from patient data to provider data detailing the treatments, procedures, modalities, products and processes which govern and describe patient interactions and outcomes. A recent KPMG survey finds that a slight 10% of health care organizations are effectively using advanced data collection and analytic tools in this regard.  MCOL’s recent infoGraphoid outlined summary findings from the KPMG survey, along with core customer entity types, key barriers to properly implementing data and analytic tools and primary main drivers to MDM:

MCOL’s weekly infoGraphoid is a benefit for MCOL Basic members and released each Wednesday as part of the MCOL Daily Factoid e-newsletter distribution service – find out more here.

Seven Things to Know About Medicaid Going Forward

By Clive Riddle, August 20, 2015

1. The most current CMS report indicates total Medicaid and CHIP enrollment of 71,637,638; with 509,082 additional people were enrolled during the past 30 days in the most recent reporting month (May 2015.)
2. Total Medicaid spending will be close to $500 billion going into 2016.
3. Since initial Marketplace open enrollment period began in October 2013, more than 12.8 million additional individuals are enrolled in Medicaid and CHIP as of May 2015, more than a 22 percent increase (Among states participating in Medicaid expansion, enrollment rose by 29.2 percent, while non participating states reported an increase of approximately 9.5 percent.)
4. Regarding where states stand on medicaid expansion decisions, 20 states are not expanding Medicaid; 25 states (count includes the District of Columbia) are expanding Medicaid ; 5 states are expanding Medicaid, but using an alternative to traditional expansion; and 1 state is expanding Medicaid; pending federal waiver approval.
5. According to the Center for Health Care Strategies, nine states have an active Medicaid ACO program (Oregon, Utah, Colorado, Minnesota, Iowa, Illinois, New Jersey, Vermont, and Maine) and ten states are pursuing Medicaid ACOs (Washington, Michigan, Alabama, North Carolina, Virginia, Maryland, New York, Massachusetts, Connecticut, and Rhode Island.)
6. The GAO recently listed four key issues facing the Medicaid program, in their brief MEDICAID: Key Issues Facing the Program, including (A) access to care; (B) transparency and oversight (lack of complete and reliable data on states' spending, and need for improved HHS management of state demonstrations; (C) program integrity (the program's size and diversity make it vulnerable to improper payments). ; and (D) federal financing approach (automatic federal assistance during economic downturns and more equitable federal allocations of Medicaid funds to states.)
7. Medicaid Managed Care now involves 39 states that contract with comprehensive MCOs for Medicaid, with around 74 percent of beneficiaries receiving care through these plans. CMS recently issued the first major proposed rule addressed Medicaid Managed Care since 2002, which addresses issues including Network Adequacy; Medical Loss Ratio; Actuarially Sound Capitation Rates; Quality of Care Standards; Appeals and Grievances ; Beneficiary Enrollment Protections; Utilization Management; Managed Long-Term Services and Supports; State Monitoring Standards; and Information Standards.

Examining ACO Makeup Evolution During Past Three Years

By Clive Riddle, August 14, 2015

Compiling Accountable Care Directory Data, we can look at how the makeup of ACOs around the country has evolved from since 2012. MCOL’s HealthQuest Publishers just released version 2 of its 2015 Accountable Care Directory, and has published updated directory twice a year since mid 2012. We’ve compiled data from the directories to provide a look at ACO composition over time.

A few challenges present themselves in considering the data – the biggest one involving commercial ACO reporting. Given there is no uniform standard, or reporting requirement for what constitutes an commercial ACO, there is certainly a disparity as to the national number of commercial ACO arrangements that are reported by various organizations. But at least in looking at the same company’s reporting on commercial arrangements over time, there is at least a relative measure.

Another issue is that the number of Medicare ACOs will be very close, but not exactly match CMS reporting year by year, due to the timing of reporting specific contract cancellations and CMS counting multiple contracts for a few organizations.

But with that said, here’s a snapshot of Accountable Organizations, past and present:

ACOs by top 25 States:

State	Mid 2012	Jan 2013	Mid 2013	Jan 2014	Mid 2014	Jan 2015	Mid 2015
CA	23	34	42	49	51	57	54
FL	17	33	35	46	47	48	48
TX	16	22	25	38	39	41	41
NY	17	19	21	25	25	31	31
NJ	8	14	15	23	23	26	26
IL	3	7	7	11	14	22	22
MA	11	18	18	19	20	22	22
NC	6	9	9	14	17	20	20
GA	10	12	12	16	17	17	17
MD	7	9	10	14	14	18	17
VA	4	6	7	15	16	17	17
MI	5	7	7	13	13	16	16
OH	7	12	12	14	14	16	16
IN	4	7	7	10	10	15	15
TN	7	10	11	13	14	16	15
AZ	5	9	9	12	13	15	14
PA	2	5	6	10	10	15	14
CO	3	7	8	10	10	11	10
CT	2	6	6	7	7	11	10
ME	8	9	10	10	10	10	10
MO	2	5	5	8	8	10	10
KY	5	6	6	6	7	9	9
WI	5	8	8	9	9	10	9
AR	1	1	3	4	4	8	8
MN	5	6	6	8	8	8	8
Others	24	40	41	61	63	74	73
Grand Total	207	321	346	465	483	563	552

ACOs by Medicare vs, Commercial Contracts:

Type	Mid 2012	Mid 2013	Mid 2014	Mid 2015
Medicare Only	126	209	307	346
Commercial Only	59	96	118	130
Both	22	41	59	77
Grand Total	207	346	484	553

Mid 2015 ACO Attributed Patients Per ACO

Patients	Medicare	Commercial
< 10 K	28.8%	38.5%
10K - 24K	42.4%	28.6%
25K - 49K	18.8%	16.5%
50k - 99K	5.9%	9.9%
100K +	4.1%	6.6%
Avg/ACO	33,262	61,209
% Reporting #	40.2%	44.0%

The average attributed patients combined for Commercial and ACO in Mid 2015 was 32,566, compared to 29,584 in Mid 2012.

Mid 2015 ACO Physicians Per ACO

Physicians	Percent
<50	10.5%
50-99	10.8%
100-249	21.7%
250-499	20.4%
500-999	19.2%
1000+	17.3%
Avg	509
% Reporting #	58.4%

The average number of physicians per ACO historically has been:

	Mid 2012	Mid 2013	Mid 2014	Mid 2015
Physicians	620	613	567	509

Pharmaceutical Industry in Transition

By Clive Riddle, August 7, 2015

KPMG has just conducted a survey of pharmaceutical and medical device companies, finding “their biggest commercial challenges coming from payers, surpassing hurdles posed by regulators, declining access to healthcare providers, and the move toward specialty drugs.”

Based on these findings, KPMG’s Bill Shew, Alison Little and Peter Gilmore have released a twelve-page report:  Change in pharma? Not optional; 10 Integrated imperatives for pharmaceutical commercial transformation.  Page two contains just these 35 words, in large font – which sums up the situation for pharma: “The pharmaceutical industry is caught between a blockbuster-driven past and a future  comprising precision medicine, curative therapies, and payment for outcomes. The years of consistent  double-digit growth and unconstrained pricing power are fading into memory.”

Author Alison Little tells us "life sciences companies face increasingly high demands from payers to prove the value of their products in terms of improved patient outcomes and lower costs. This requires not only clinical and analytical rigor, but increased focus on account management and strategy. This is a significant part of the commercial model for the pharma, biotech and medical device sectors, which need to evolve to compete in the future.  These are dramatic changes in bringing drugs to market and are far removed from the blockbuster model of marketing drugs with large direct-to-consumer advertising budgets and extensive physician detailing. Newer brand name drugs are treating much more complex medical conditions and have more stringent handling and administration requirements than those a decade ago. Pharmaceutical and biotechnology companies need to consider 'beyond the pill' services to help with patient engagement and helping them adhere to treatment."

Their report cites challenges for the industry including a paltry one percent annual growth rate for top 25 life sciences companies in 2014, down from double digits five years ago; and that seventy percent of recent brand launches underperformed analyst forecasts.

Without further adieu, here’s The ten “Imperatives for Commercial Transformation” they elaborate on, in their report:

1. Use commercial tactics, not clinical data, to differentiate new products
2. Elevate pricing and contracting within the organization
3. Take a more holistic approach to stakeholder mapping and prioritization
4. Base sales models on a collaborative approach to improving outcomes
5. Play a larger role in the industry transformation from “volume to value”
6. Support providers in improving quality and patient satisfaction
7. Leverage data and analytics to enhance commercial strategies
8. Allocate commercial resources optimally across markets and brands
9. Evolve performance metrics and incentives to reflect new realities
10. Drive the transformation agenda throughout the enterprise\

The author’s sum up where the industry needs go from here:  “Pharmaceutical companies need to transform their commercial models so that they can continue to thrive. In our evolving healthcare ecosystem, power centers are shifting, quantifiable outcomes are expected, and companies must demonstrate value for every healthcare dollar spent. We are approaching a tipping point when pharmaceutical companies, no matter the size or therapeutic focus, will no longer be able to view commercial transformation as an aspiration. Instead, they will need to recognize that it is a critical imperative.”