Key Takeaways from Modern Healthcare Leadership Symposium

Last Tuesday, I moderated a panel about the ‘The Future of Health Policy: A Candid Discussion’ at Modern Healthcare’s Leadership Symposium in Scottsdale. My panelists represent four of the most influential trade groups in healthcare:

• Matt Eyles, President and CEO, America’s Health Insurance Plans

• Michelle Hood, Executive VP and COO, American Hospital Association

• Chip Kahn, President and CEO, Federation of American Hospitals

• Ceci Connelly, President and CEO, Alliance of Community Health Plans

On most issues, there was consensus:

• Chances for passage of President Biden’s $3.5 trillion Budget Reconciliation Bill are slim: in all likelihood, the final product will be smaller and certain elements left out. In healthcare, the addition of dental, hearing and glasses benefits to Medicare coverage, and allowing Medicare to purchase drugs directly from manufacturers might be cuts among others as the bill is whittled to a range of $1.5 to 2.5 trillion to gain passage.

• Changing hospital and physician incentives from volume to value are key to lowering health costs: changes to alternative payment models and Medicare Advantage are inevitable to facilitate more risk sharing with providers and lower Medicare spending.

• Reducing prescription drug costs is a priority for all.

• Trust in the health system has eroded despite the pandemic: as Kahn observed “we’ve lost the narrative” even as hospitals struggle to operate in the pandemic’s fourth wave.

• Vertically integrated systems will play a bigger role in the health system: “payviders”* that offer hospital, physician and health insurance will enhance competition based on care coordination, quality and affordability.

• Consolidation within sectors will continue: despite increased vigilance by the FTC and Anti-trust division of the DOJ, insurers and hospitals will continue to diversify in pursuit of scale.

On a couple of issues, there were differences:

• Ownership status: the panel had mixed views about whether investor-ownership of plans and hospitals was an important distinction.

• Hospital price transparency: price transparency is well-intentioned, but hospitals think the current rule neglects technical and practical considerations that should be evaluated.

So, hospitals and insurers appear on the same page about the direction of U.S. health policy and near-term expectations about Biden administration. But two days later, CMS released its Interim Final Rule on “Surprise Medical Billing: Part Two” sparking opposite reactions from these organizations: the rule creates a dispute resolution process (IDR) and designates the “qualified payment amount” (QPA) based on median rates set by insurers. Insurers favor the rule; hospitals and medical groups oppose it arguing insurer rates use to set the QPA do not reflect accurately their costs. In July, the Biden-Harris Administration issued “Requirements Related to Surprise Billing; Part One” which afforded consumer protections against surprise medical bills and balance billing—restrictions opposed by hospitals and medical groups contending other consumer protections are better solutions while acknowledging these rules reduce their revenues.

Thus, hospitals and insurers again on opposite sides of an issue!

MY TAKE

The reality for hospitals and health insurers is they have much in common.

• Both depend on clinically integrated physician organizations to deliver their services.

• Both are being pummeled by employer and consumer frustration about affordability.

• Both are subject to increased competition from well-funded disruptors who want to restructure health delivery and financing. Just this week, for example, rumors of Walgreens takeover of Evolent Health circulated. Walmart announced a deal with electronic health records juggernaut Epic to connect records across all its health care service assets (Oak Street clinics, Doctors on Demand (digital) and others.

• Both struggle to address consumerism in healthcare: enrollee and patient Net Promoter Scores compare unfavorably to other industries.

• Both face market volatility as independent Special Purpose Acquisition Companies (SPAC) acquire medical practices, community health plans and other assets.In the second quarter, 2021, there were 48 deals; in the third quarter, 69 per Pitchbook.

• Both are increasingly dominated by large national systems/plans.

• Both want to own the moral high ground in U.S. healthcare: hospitals as the hub for community-based health and insurers as society’s protector against escalating health costs.

• And both face intensified attention from regulators.

While each has its guns aimed at the other, outsiders want insiders to focus on affordability and value. They’re seeing neither addressed adequately by traditional hospitals and health insurers and looking for alternatives. That’s the bottom line.

Paul

*A “payvider” index developed by Guidehouse is a useful framework for examining market conditions for integration of insurance and delivery “Now is the Time for Payvider Adoption & Growth” Guidehouse Center for Health Insights guidehouse.com/insights/healthcare/2021/payvider-market-index

RESOURCES

“Requirements Related to Surprise Billing; Part II Interim Final Rule with Comment Period”; September 30, 2021; CMS

“Walgreens Said to Weigh Takeover of Evolent Health”; September 29, 2021; Bloomberg

“Uncertainty Clouds Future for SPACs: SPAC market update Q3 2021”; September 27, 2021; Pitchbook

CORONAVIRUS NEWS

Updates

• The Rural Policy Research Institute at the University of Iowa data show that 1 in 434 rural Americans have died from COVID-19 since the beginning of the pandemic compared to about 1 in 513 people who live in metropolitan areas

• For the past week about 727,000 shots have been delivered each day–up from the summer low of about 500,000. There are now 184 million Americans who are fully vaccinated; 2.78 million of these have also had a booster. But there are still some 70 million Americans who are eligible for a shot and remain unvaccinated, putting them at high risk of contracting the virus (CDC)

• A year later, over 130,000 nursing home residents have died, accounting for roughly 1 in 4 of the nation’s coronavirus deaths despite comprising less than 1% of the population. (CDC)

Merck to Seek EUA for its Covid Pill

Merck plans to seek emergency use authorization from the FDA for its new antiviral drug molnupiravir which the company says reduced the risk of hospitalization or death by nearly 50% percent for patients with mild or moderate COVID-19.

At the Interim Analysis, 7.3% of patients who received molnupiravir were hospitalized through Day 29, compared with 14.1% of placebo-treated patients who were hospitalized or died.

“Merck and Ridgeback’s Investigational Oral Antiviral Molnupiravir Reduced the Risk of Hospitalization or Death by Approximately 50 Percent Compared to Placebo for Patients with Mild or Moderate COVID-19 in Positive Interim Analysis of Phase 3 Study”; October 1, 2021; Merck

INDUSTRY NEWS

Wall Street Journal Analysis: Hospital Prices for Covid Inpatient Care Vary Dramatically

The Journal’s reporters compared prices negotiated with health insurers by 624 hospitals collected by Turquoise Health. “The range of prices shows how similar hospital services can generate widely disparate bills. Even during the pandemic, and within the same hospital, the prices often reflect the leverage that an insurer must wrangle discounts, as well as the hospital’s market power to drive up its rates.”

“Covid-19 Charges at Hospitals Can Vary by Tens of Thousands of Dollars, a WSJ Analysis Finds”; October 3, 2021; Wall Street Journal

Medicare Advantage Update: Gilfillan, Berwick Characterize MA as ‘Money Machine’

In a two-part editorial, veteran policy wonks Richard Gilfillan and Don Berwick rip Medicare Advantage as a money machine riddled with flaws and the Direct Contracting Model a concession to business interests at the expense of enrollees and providers. that plan sponsors game to their shareholders’ benefit:

Re: Medicare Advantage: This business model is distorting health care delivery, creating excessive costs for taxpayers and Medicare beneficiaries, draining the Medicare Trust Fund, obstructing the badly needed value transformation of American health care, and diverting the money needed to fund other social services and goods.

Re: MA and Direct Contracting: Risk-score gaming in Medicare Advantage, now encroaching into Direct Contracting, is creating an accelerating immediate threat to our health care system. Traditional health care providers typically have a longstanding commitment to their patients and communities. The large national MA plans have shown a distinctive ability to destroy value by increasing costs, not adding value, with little local community commitment.

Related: Last Wednesday, the Centers for Medicare & Medicaid Services (CMS) released its 2022 premium estimates for Medicare Part C (Medicare Advantage) and Part D (Prescription Drug Discount Program):

• Average Medicare Advantage plan premiums are expected to be $19 per month next year, a slight decline from the $21.22 in 2021.Enrollment will be 29.5 million, up 2.6 million from 2021.

• But Medicare Part D plan premiums will continue to increase by nearly 5% to $33 next year compared to the current premium of $31.47, new federal data show.

Richard Gilfillan, Don Berwick “Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 1: The Risk-Score Game”; September 29, 2021; Health Affairs

Richard Gilfillan, Don Berwick “Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model”; September 29, 2021; Health Affairs

Study: One in Five Healthcare Support Workers Food Insecure

Researchers analyzed data from 5516 healthcare workers in the National Health Interview series. Findings:

• Across health care occupational categories, 6.6% of health care workers reported experiencing food insecurity in the past month: 1.7% for practitioners, 7.3% for health technologists and technicians and 19.7% for health care support workers.

• Food insecurity rates was highest in nursing and residential care facilities for all occupational categories Food insecurity rates were also higher among health care workers with children than among those without, for all occupational categories.

“Food Insecurity Among Health Care Workers In The US”; September 2021; Health Affairs

KFF Study: 12% Experience Housing Insecurity

The Kaiser Family Foundation study released September 22, 2021, found that 57% of Medicaid enrollees lived in inadequate housing in 2019 and 13% lacked internet access in the home.

The survey conducted 12% reported housing insecurity in November 2020. Among participants experiencing housing insecurity: 34% reported being behind on housing payments, 38% reported having little to no confidence in their ability to make the next housing payment, and 28% reported both.

Housing insecurity vs housing security was disproportionately higher among participants who rented their homes 64% vs 27%, earned less than $35 000 in 2019 52% vs 27% lived with children 47%vs [29%]), or resided in metropolitan counties 92% vs 84%.

“Linton et al Association Between Housing Insecurity, Psychological Distress, and Self-rated Health Among US Adults During the COVID-19 Pandemic”; September 30, 2021; JAMA Network Open

Study: Patient Adherence after Telemedicine Visit Lower than In-Person Visit

In a retrospective cohort analysis, researchers compared the percentage of encounters in which recommended hemoglobin A1c (HbA1c) testing5 was completed within the 6 months after an in-office or telemedicine encounter in a large health system.

Rates of office-only HbA1c laboratory test completion decreased from the 3-year historical prepandemic average of 74.2% to 60.2% during the pandemic. There was a 4.2% higher laboratory test adherence for office encounters compared with telemedicine visits during the pandemic (60.2% vs 56.0%).

Baughman et al “Patient Adherence to Hemoglobin A1c Testing Recommendations in Telemedicine and In-Office Cohorts During COVID-19”; September 30, 2021; JAMA Network Open

Medscape: Median Comp for Young Physicians $200K for PCPs, $304 for Specialists

Almost 2,500 “young physicians” — defined by Medscape as under 40 years old — participated in the Medscape Young Physician Compensation Report 2021 survey, published Sept. 24. Data were collected from Oct. 6, 2020, through Feb. 11, 2021. Highlights:

• 14% of physicians under 40 are self-employed vs. 29% of physicians between 40 and 69 years old.

• 21% of physicians under 40 deferred or refinanced mortgages or student loans in 2020.

• On average, specialists reported earning an annual salary of $304,000, compared to $200,000 for primary care physicians. For physicians overall, specialists earn $344,000 and primary care physicians earn $243,000.

• The largest income disparity between male and female physicians occurs at 35 to 54 years old, where men earn $346,000 on average compared to $248,000 for women.

• Early-career physician compensation based on practice situation: Office-based single-specialty group practice ($295,000), hospital ($282,000), office-based multispecialty group practice ($272,000), academic (nonhospital), research, military, government ($268,000), Healthcare organization ($266,000), and outpatient clinic ($200,000)

“Medscape Young Physician Compensation Report 2021”; September 24, 2021; Medscape

Study: 61% of Seniors will Require Long-Term Care

According to the Center for Retirement Research at Boston College using data from the federal Health and Retirement Study:

• 17% of 65-year-olds will need no long-term care. 22% will have minimal needs. 38% can expect moderate needs and 23% will develop severe needs, requiring many hours of help for more than three years.

• People who attended college for some period fare far better than those without high school diplomas, the Boston College team found. Black and Hispanic seniors, reflecting entrenched economic and health inequities, are more apt than older white people to develop moderate or severe needs. And married people are less likely to need extensive care than those who are single.

• 36 % of people in their late 60s could not cover a year of minimal care without exhausting their resources; only 22% could cover severe needs

“What Resources Do Retirees Have for Long-Term Services & Supports?”; September 2021; Center for Retirement Research at Boston College

REGULATORY / POLICY NEWS

Study: Access to Dentists Higher in Medicaid Expansion States

Adult dental coverage in Medicaid remains a state optional benefit and 31 states and the District of Columbia offered dental services to Medicaid nonelderly adults beyond emergency services as of 2020.

In this cross-sectional study of 7637 low-income adults 18-64, the ACA Medicaid expansion in states that expanded Medicaid and offered dental coverage, compared with nonexpansion states, was associated with improved health coverage, increased access to dental care, decreased prevalence of untreated decayed teeth, and improved oral health–related behaviors (i.e., flossing). In states without dental coverage, the expansion was associated with an increase in the mean number of missing teeth and a decrease in the prevalence of functional dentition among low-income adults compared with nonexpansion states.

Elani et al “Dental Outcomes After Medicaid Insurance Coverage Expansion Under the Affordable Care Act”; September 30, 2021; JAMA Network Open

Study: Incidence of Low-Value Care Higher in Hospitals with Low Percentage of Primary Care

Across 556 health systems serving a total of 11 637 763 beneficiaries, the mean (SD) use of each of the 41 low-value services ranged from 0% (0.01%) to 28% (4%) of eligible beneficiaries. The most common low-value services were preoperative laboratory testing (28%), prostate-specific antigen testing in men older than 70 years (27%) and use of antipsychotic medications in patients with dementia (24%).

Health system characteristics associated with higher use of low-value care were smaller proportion of primary care physicians for systems with less than the median percentage of primary care physicians.

Ganguli et al “Low-Value Care at the Actionable Level of Individual Health Systems”; September 27, 2021; JAMA Internal Medicine

BPC: Primary Care Key to Bridging Gap between Health and Human Services

Per “Bridging Health and Health Care,” a report released Thursday by the Bipartisan Policy Center, HHS should:

• Authorize the Health and Human Services (HHS) Secretary to expand Medicaid coverage of non-medical services that address social needs and community-based interventions,

• Require coverage of clinical preventive services without cost-sharing in Medicaid for the non-expansion population, and

• Direct the HHS secretary to provide CMS guidance to states on defining and reimbursing community health workers within their Medicaid programs

“Bridging Health and Health Care”; October 1, 2021; Bipartisan Policy Center

Politico-Harvard Poll: Drug Prices Top List of Policy Concerns

According to a new POLITICO-Harvard poll about the public’s view of the Infrastructure and Reconciliation Bills:

• Even though the congressional debate of these bills has received a great deal of media attention, only 48% of the public reports that they are following the debate closely

• Asked to rate 20 policy priorities as “extremely important”, 39% of respondents picked direct government price negotiations with drug manufacturers first followed by preference by increased federal spending to prepare for pandemics (36%), more resources for long-term and home-based care (32%), expanding Medicare to include dental, vision and hearing care (31%). increasing federal spending on child nutrition for low- and moderate-income families (30%); and increasing federal spending on agriculture conservation, drought, and forestry programs to help prevent wildfires and reduce carbon emissions (30%).

“The American public’s priorities for the $1-trillion infrastructure and $3.5-trillion spending bills”; October 2021; Politico-Harvard