Tomorrow ends the formal election cycle though votes in several states will be counted until November 12. But regardless of the election outcome, the coronavirus and its handling by public officials and the healthcare industry will dominate attention.
The CDC issued a sober warning last month: Covid-19 deaths will reach 273,000 this month and perhaps 400,000 by the end of the year. Last week, all-time records were set for positive cases averaging 90,000/day and hospitalizations spiking in several upper 14 states. Public health officials warn that the confluence of the coronavirus and seasonal flu could overwhelm the health system, especially if pandemic fatigue prompts neglect of masking and social distancing.
It’s hard to look beyond the pandemic for most hospitals and provider organizations but it’s necessary. Looming large are mounting Federal and state budget shortfalls forcing tough choices by elected officials: the national debt is $26.9 trillion and going up fast while GDP is slowly recovering reaching $18.4 trillion last week). And a number of important healthcare industry-related initiatives are continuing:
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Implementation of President’s Executive Orders (193 to date:) that address price transparency for hospitals, drug pricing and insurance coverage
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Implementation of health information technology regulations that enable patient access to their medical records (i.e. The Information Sharing Rule), protect against hacking and ransomware attacks and facilitate interoperability.
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Continued scrutiny of Medicaid and Medicare managed care plans, state 1115 waiver programs and alternative payment programs to assess their effectiveness in slowing health spending by the government.
And all eyes will be on the Supreme Court that will announce its California v. Texas ruling next year which will determine the fate of the Affordable Care Act for years ahead.
Regardless of SCOTUS’ ruling, who sits in the White House, Congress, Governors’ offices and legislatures, or how fast vaccines and drugs become available, changes in the U.S. health industry in the next few years will be its most consequential in decades. At the top of the industry’s punch list are two issues certain to get immediate attention:
(1) Closing the Gaps in Primary Care; and
(2) Re-thinking Consolidation in Healthcare.
CLOSING GAPS IN PRIMARY CARE: THE ISSUE
There are three noticeable and remediable gaps in primary care:
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Funding: We spend 5% on traditional primary care services and an additional 2% on public health aka “social services programs for the poor”. By contrast, other developed systems of the world spend at least 12-14% producing better outcomes and lower costs.
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Clinical Focus: Whole person care extends well beyond physical medicine to include mental health, dentistry, vision, hearing, nutrition, prescription, and over-the-county remedies and more all connected digitally to support individualized whole person care. The status quo is inadequate and especially problematic to underserved populations.
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Socioeconomics: What’s calcifying in U.S. market for primary care services is a red line between private primary care services for employers, managed care enrollees and those insured individually and the rest. “Public health”, by default, has become the safety net provider for primary care services and preventive health services for those unable to afford care elsewhere. It is extended through faith-based clinics run by schools and churches, community and federally qualified health clinics and safety net hospital emergency rooms. It is underfunded and under-appreciated.
The adverse impact of the pandemic is directly related to gaps in primary care in the U.S. system. What to expect from each administration:
The Trump administration will:
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defer to the states for primary care and public health oversight,
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increase participation in their Primary Care First alternative payment model (in CMMI) to encourage risk-sharing with primary care practitioners and
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encourage private equity and strategic investors to create high value primary care models vis a vis protection of tax concessions.
The Biden administration will:
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increase funding for primary and preventive health services through state and federal appropriations,
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prioritize its primary and preventive care investments in underserved populations,
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encourage expansion ofprimary care pilot programs like Oregon’s requirement levels of primary care expenditures in the state be at least 12% of total spending and 4-evaluate enhancements to alternative payment models overseen by the CMS Center for Medicare and Medicaid Innovation and changes in Medicare Advantage overseen by CMS to strengthen their primary and preventive health elements.
RE-THINKING HOSPITAL CONSOLIDATION: THE ISSUE
According to the CMS Office of the Actuary, hospital spending grew by an average annual rate of 5.1% in 2019 to $1.3 trillion. The growth rate is expected to remain the same in 2020 but increase at an annual rate of 5.9% from 2021 to 2023, before rising slightly to an annual average of 6% from 2024 to 2028. It represents 33% of U.S. health spending—the biggest single category.
But hospital spending does not translate to hospital solvency and sustainability. As a result, hospital consolidation has increased steadily for 40 years. Studies by academics and consulting firms have shown modest cost savings of 4-7% as a result of local combinations, but in most cases, these savings are not passed on to local employers and consumers through their insurance premiums and out of pocket costs. Critics assert these efforts have been more about gaining leverage in negotiations with health insurers than enhancing services in communities. contracts. Hospital defenders argue below-cost reimbursement by Medicare and Medicaid and escalating costs for their workforces and technology force consolidation. And antitrust overseers have accepted that consolidation makes sense in most cases, even permitting monopolies via “certificates of public advantage” for petitioners.
Using the Herfindahl-Hirschman Index, hospital concentration is significant in 75% of U.S. markets. Recent data show that horizontal consolidation among hospitals (mergers and acquisitions) is accelerating with fewer but bigger deals in tandem with vertical consolidation by hospitals who are acquiring/partnering to offer office and retail-based medical services, in-home and digital services, remote telehealth and health insurance.
Hospital consolidation is slowing because only a handful of non-rural hospitals remain independent today. The likely stream of mega-mergers among not-for-profit systems (aka Intermountain-Sanford announced last week) and the proclivity of some investor-owned systems to buy and sell hospitals like trading cards while achieving eye-popping profit keeps hospitals in the news.
The hospital consolidation is a 40-year trend in healthcare. It’s likely to get fresh attention in the next term:
The Trump administration will:
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review anti-competitive impact and benefits of hospital consolidation and Certificate of Public Advantage (COPA) mergers by ordering a review by the U.S. Department of Justice and the Federal Trade Commission.
The Biden administration will:
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force immediate suspension of all pending hospital-hospital combinations,
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direct HHS to review recent M&A and COPA approvals; and
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develop comprehensive recommendations to enhance competition, protect consumer safety, affordability, and accessibility protections; reduce/eliminate conflicts of interest and quantify socially responsible behaviors across every industry sector.
MY TAKE
The consequence of this election to the healthcare industry is more significant than any in my lifetime. These two issues—closing gaps in primary care and hospital consolidation—will get attention in DC early next year but waiting in suspense is risky.
Out-of-the-box thinking in organizations is needed now more than ever. From every economic downturn and public health attack in our nation’s history, winners have emerged. But also losers.
Paul
P.S. Today is the first day that patients have immediate access to nearly all clinical notes in their electronic health records as part of a federal mandate, although enforcement won’t start until February. The “Information Blocking” rule of the 21st Century Cures Act aka “Open Notes” rule, passed in 2016, allows patients to access eight types of clinical notes on request. To date, more than 250 healthcare organizations have granted access to more than 53 million patients. Be prepared.
RESOURCES
Amy Gearan, “How Trump learned to embrace the executive order, which he once called an ‘easy way out’”; October 30, 2020; Washington Post
Kristina Fiore “Patients Gain Access to Clinical Notes Next Week”; October 29, 2020; MedPage
Furukawa et al “Consolidation Of Providers Into Health Systems Increased Substantially, 2016–18”; August 2020; Health Affairs
Short “Weighing the Effects of Vertical Integration Versus Market Concentration on Hospital Quality”; February 9, 2019; Medical Care Research and Review
Schmitt “Hospitals Claim Their Mergers Reduce Costs, Disputing Other Studies”; September 5, 2019; Health Leaders Media
“Nearly 75% of US Hospital Markets Highly Concentrated”: September 17th, 2019; American Journal of Managed Care; Health Care Cost Institute
Gammon “The accuracy of hospital merger screening methods”; November 13, 2017; Rand Journal of Economics
Fulton “Health Care Market Concentration Trends In The United States: Evidence And Policy Response” September 6, 2017; Health Affairs
ELECTION NEWS
Study: Physician Voting Lower than General Population
Based on voting records from 2006 to 2018:
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Physician voter participation and registration were lower than the general population for all elections from 2006 through 2018
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Eligible physicians voted 9% less than the general population
Lalani et al “Trends in Physician Voting Practices in California, New York, and Texas, 2006-2018”; October 22, 2020; JAMA Network
Gallup: Trump Approval has Slipped in 2020
Based on Gallup polling data from January 2, 2020 to October 15, 2020:
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Donald Trump’s approval rating has dropped significantly this year among some key demographic groups of Americans who helped propel him to victory in 2016. This includes suburbanites (both men and women) and residents of the Southwest, Great Lakes and Rocky Mountain regions, all of whom now register approval of the president below the majority level.
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Trump maintains majority-level approval ratings among his base, including Republicans, conservatives, rural residents, white men, and white adults without college degrees
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The demographic groups registering the lowest approval ratings of Trump include Democrats, liberals, Black adults, non-White older adults, and LGBTQ Americans
“Suburbanites Show One of Largest Drops in Trump Approval”; October 28, 2020; Gallup
CORONAVIRUS NEWS
Physicians Push Back on Trump Claim they Profit from Covid
At a Wisconsin rally last weekend, President Trump said: “If somebody’s sick with a heart problem, and they die of COVID they say they die of a heart problem. If somebody’s terminally ill with cancer and they have COVID, we report them [as COVID-19] …. doctors get more money and hospitals get more money… think about this incentive.”
The accusation provoked an immediate response from key professional organizations including the American Medical Association (AMA), the American College of Physicians (ACP), the American College of Emergency Physicians, the Council of Medical Specialty Societies, the Society for Hospital Medicine, and the American College of Obstetricians and Gynecologists.
Amanda D’Ambrosio “Physicians Push Back on Trump’s Claim of Inflated COVID Deaths”; October 27, 2020; MedPage Today
Study: Disease Burden in U.S. Higher than Other Developed System, Contributes to Two-Thirds of Covid-19 Deaths that have been Avoidable
An analysis published this week by researchers at Columbia University’s National Center for Disaster Preparedness found at least 130,000 of America’s 212,000 COVID-19 deaths so far would have been avoidable had the U.S. response been in line with that of other wealthy countries. Highlights:
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Mortality for mothers and children under 5 is 6.5 per 1,000 live births in the U.S., compared to 4.9 for other wealthy countries.
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Overall life expectancy in the U.S. hasn’t risen since 2010, in part because of a 16.7% increase in the number of deaths due to cardiovascular disease since that year.
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Without dedicated interventions, the overall U.S. disease burden is expected to increase by 20% as an older population becomes more vulnerable to age- and lifestyle-related diseases
Global Burden of Disease, October 17, 2020; The Lancet
Study: Consumers Trust Physicians More than Health Officials for Information about Virus
Key findings from the 2020 State of the Facts poll, conducted with The Associated Press-NORC Center for Public Affairs Research:
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57% of people pay extremely or very close attention to information about the virus. Another 33% say they are somewhat closely following information about the virus.
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45% of people get information from the news media at least once a day. However, just 18% of Americans trust the news media a great deal or quite a bit.
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53% trust physicians, 36% say they trust health officials’ information at agencies such as the Centers for Disease Control and Prevention and the Food and Drug Administration “a great deal or quite a bit” vs. 26% who trust state or local governments 16% who trust President Donald Trump.
“2020 State of the Facts poll” October 20, 2020; AP-NORC Center for Public Affairs Research
INDUSTRY NEWS
CMS Issues Final Coverage Transparency Rule
Thursday, CMS issued the final rule on insurer price transparency requiring private group health plans and individual health insurance market plans to disclose pricing and cost-sharing information in “real time” in a consumer-friendly format. Key elements of the rule:
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The mandate requires payers to provide personalized estimates of patients’ out-of-pocket cost for 500 of the “most shoppable items and services,” along with the costs for the remaining procedures, drugs, durable medical equipment and any other item or service they may need for plan years that begin on or after Jan. 1, 2023. Insurers will be required to provide cost information for additional items and services for plan years that begin on or after Jan. 1, 2024.
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Insurers that offer plans that encourage the use of lower-cost, higher-value providers can take credit for “shared savings” payments in their medical loss ratio calculations.
“Transparency in Coverage Final Rule Fact Sheet (CMS-9915-F)”; October 29, 2020; CMS
CMS: Alternative Payment Models Deliver Disappointing Results
In a Modern Healthcare editorial last week, CMS Administrator Seema Verma said results from the alternative payment models (APMs) have been disappointing based on its analysis of results for 54 models involving 450,000 provider participants and 26 million patients. Only 5 models have shown statistically significant savings, and only 3 have met the criteria for national expansion.
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Verma said three flaws have limited their impact:
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Participation is voluntary favoring organizations with managed risk experience.
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Methodology errors in setting Medicare benchmarks are too low resulting in over-payments to providers for shared savings.
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The timeliness of data used by CMMI to assess the effectiveness of APM’s has hampered timely changes to the models.
Seema Verma “Correcting the course of value-based care models”; October 27, 2020; Modern Healthcare
ONC Releases 2025 Strategic Plan to Digitize Health System, Standardize Access and Increase Competition Among Solution Providers
Last week, the Office of the National Coordinator for Health Information Technology (ONC) in HHS in collaboration with 25 other federal agencies including the Veterans Affairs released its 2025 strategic plan focused on the use of IT to 1-Promote Health and Wellness; 2-Enhance the Delivery and Experience of Care; 3-Build a Secure, Data-Driven Ecosystem to Accelerate Research and Innovation; and 4-Connect Healthcare with Health Data
As of 2017, 80% of physician offices and 96% of acute care hospitals use ONC-certified health IT Information exchange among healthcare providers, patients, and public health and research organizations is increasing rapidly. But only 51% of individuals were offered access to their online medical records by their providers or payers in 2018. This percentage is even lower among people who have no insurance and lower-income and education levels
“2020-2025 Federal Health IT Strategic Plan”; October 2020; Office of the National Coordinator
Report: Section 1115 Medicaid Waivers to States Under-Evaluated
Under Section 1115 of the Social Security Act, the Secretary of Health and Human Services may waive Medicaid requirements and permit states to pilot experimental models of health care delivery. In 2015, these programs accounted for more than $100 billion in federal expenditures. To date, 43 states have secured 55 active waivers to test various Medicaid program changes, including work requirements, benefit restrictions, or managed long-term services and support systems. Researchers analyzed the results of these waiver programs:
“Despite an increase in the public availability of annual reports for Section 1115 demonstration programs after the ACA and CMS’s evaluation guidance, more than 40% were not publicly available. Moreover, when demonstration program evaluations were made publicly available, they consistently failed to report key evaluation components.”
Lopez et al “Transparency and Accountability of Medicaid Section 1115 Waiver Demonstration Programs Under the Affordable Care Act”; October 26, 2020; JAMA Network
