This January, QURE participated in the JP Morgan Healthcare Conference. As the largest annual meeting in the healthcare industry and investment community, this year’s record attendance of 9,200 reflects the continued growth and power of healthcare investments. Investment in Healthcare IT alone has grown threefold in just the last three years.
This was our third year participating and we are seeing different attendees than in years past with a shift towards focusing on measurement and outcomes. In previous years, JP Morgan attracted the largest producers in healthcare (large pharma and biotech imaging) with concurrent investor interest. We’ve seen attendance at the conference change towards care delivery and efficiency, reflecting a new reality where software service companies, like QURE, suppliers of big-data analytics and a range of other health information technologies are dominating the discussions in San Francisco.
A key provision of the Affordable Care Act ties hospitals’ reimbursement for treatment more closely to patient outcomes, rather than the actual utilization. These pressures from the federal government mean that health-care providers are looking for software and data analytic tools that can help them track treatment efficacy and patient progress for large populations. Ben Loop, senior director, analytics and business intelligence at Siemens Healthcare puts it best in a statement for the American Health Information Management Association:
“As the industry shifts from volume-based to value-based reimbursement, data—and its implications—becomes the hot commodity. Even if the data has been there [to show the efficacy of a particular procedure], now there is accountability for the performance. Now you have to report on performance, and you’re accountable to a performance threshold.”
We noticed the same trends with life science companies. Life science companies we met with at the conference were interested in securing coverage and reimbursement early on in product development and finding new ways of obtaining clinical utility data, rather than a sole focus on garnering investment and capital.
The end of 2013 was busy – the healthcare.gov website stumbled out of the gate, state exchanges were launched, and state Medicaid programs were expanded (See Box). In 2014, now that people are enrolling, the next critical issue will be access and quality. The other thing we are watching for is how enrollment will affect payment reform and if it truly transforms healthcare delivery as so many (including us) have predicted. Massachusetts, which launched its version of the ACA in 2006 is a good place to obtain an early, albeit not exact read.
Massachusetts solved the problem of coverage early on: the number of uninsured residents decreased from 11 percent in 2006 to just 3 percent last year. According to the latest figures, 439,000 more Massachusetts residents have gained health insurance coverage since 2006 and this has increased most significantly for non-elderly low-income adults. The state is now tackling the more difficult task of cost containment, which arguably was never addressed in the initial legislation.
In 2012 Massachusetts first took action through legislation, albeit legislation that is only being implemented this year. The state created a Health Policy Commission in 2013 to identify specific areas for targeting costs. One of the first tasks the Commission undertook was to look into unnecessary utilization. The Commission found that between 21 and 39 percent of all health spending in Massachusetts in 2012 could be considered unnecessary and even wasteful. This was a similar finding to the Institute of Medicine’s 2012 report on waste in the healthcare system. According to the report released by the Commission, there was $700 million in preventable acute hospital readmissions, $550 million in unnecessary emergency department visits, $10 to $18 million spent on healthcare-associated infections, and $1 to $2 million spent on inappropriate imaging.
This however is just the bad news—the legislation has highlighted several areas for further development. Key components of the 2012 law will focus on payment reform to address the cost and quality issues:
- Transparency around health care costs and quality: Massachusetts health plans will be required to offer a toll-free number and a website to allow consumers to obtain information on the estimated price of medical care and out of pocket costs.
- Certification for ACOs and Medical Homes: Establishes a certification process and quality metrics for accountable care organizations and Medical Homes. These ACOs would receive a contracting preference in state health programs. The Health Policy Commission will be responsible for the certification process, including comparisons of the quality of services provided within the ACO or medical home. Certification criteria are still in development, but should be finalized by the end of 2014.
- Physician payment arrangements: Requires that the Medicaid office and other state agencies implement alternatives to the prevailing fee-for-service reimbursement scheme.
|Recent ACA Updates
1. Federal Enrollment Website
In early 2014, the New York Times reported that the healthcare.gov website had finally been fixed following more than a month of frantic repair work. Users report fewer crashes, error messages and speedier page loads.
A number of fixes still need tackling in 2014, including critical back-end components for insurers. One example is “reconciliation,” allowing insurers to verify which plans their enrollees are enrolled in and at what prices. Another critical website fix will be the inclusion of a system that will pay federal subsidies to insurers. This is slated to roll out this month for everyone who enrolled by mid-December. Once in place, the health plans will be able to estimate how much they are owed, and submit that estimate to the government and reconcile payments.
2. Health Insurance Marketplaces
By Oct. 1, 2013, every state had an operating health insurance exchange but most of these (34 states) were operated by the Federal government. Enrollment has also been accelerating – as of January 13, 2014, 2.2 million Americans signed up for coverage on federal and state exchanges. Top state enrollers include California, with almost 25% of the enrollees, surprisingly Florida with 10%, New York at 13%, and Texas at 7% of the total enrollees nationwide. We are eager to see how these numbers unfold over the next couple of months.
3. Medicaid expansion
The ACA was intended to expand coverage with the exchanges and with Medicaid. Medicaid was expected to cover 16 million more people with household incomes up to 133 percent of the poverty line ($14,856 for an individual and $30,657 for a family of four). As of January 2014, only 27 states (including DC) have decided to expand Medicaid coverage with the others still deciding. Missouri, New Hampshire, and Pennsylvania are currently in discussions to expand Medicaid. Several States have opted out altogether including giants like Texas, Florida and Wisconsin.
Massachusetts is an important example because it shows that quickly after enrollment is ‘solved’, access and cost controls become the dominant issue. To avoid a race to the bottom (the lowest cost care) however, quality demonstration has to be the bulwark that creates a value statement and initiates conversations about care coordination for hospitals and providers alike.
Blue Cross Blue Shield of Massachusetts (BCBSMa) has implemented a number of quality initiatives such as the Alternative Quality Contract (AQC) where hospitals and physicians agree to take responsibility for all the care their patients receive—including its cost and quality—regardless of where that care is given. Results here were a start: BCBSMa generated savings of 1.9 percent in the first year and 3.3 percent in the second year. Savings were achieved through lower prices from shifting procedures, imaging, and tests to providers with lower fees, and through reduced utilization among some groups.
Another initiative in Massachusetts, the Hospital Performance Improvement Program (HPIP) is a comprehensive hospital incentive program that rewards hospitals for performance based on absolute thresholds for good performance in three domains of care—clinical outcomes, clinical processes, and patient experience. Similar to AQC and the Pioneer Program at Atrius Health in Boston, the HPIP has had difficulty in generating meaningful savings. Massachusetts has shown there are a number of solutions that are available, but the results are smaller than hoped. As a result we expect further cost reduction legislation to shape markets this year and next.
In 2014 expect to see more national level ACA provisions related to cost and quality; this includes extending incentive payments for quality care and more funding for comparative effectiveness research (CER). A notable example is the Institute of Medicine’s CER on the effectiveness of technology in diagnosing, monitoring and staging cancer patients. This 2013 IOM report has led to multiple efforts to improve the delivery of cancer care in accordance with the recommendations provided. Currently, MD Anderson Cancer Center is developing a learning information technology (IT) system and a quality reporting program as a part of a learning health care system.
The greatest value, however, will come from lowering costs to payors in a clinical setting. Recent statistics indicate that spending on hospital services and now physicians is still increasing. Spending, by volume, on hospital care increased from 3.5% in 2011 to 4.9% in 2012. The underlying drivers of hospital care are both the price and complexity of services.
Experiences of large health systems, and our own work with large health systems using the CPV® system, demonstrates that focusing on both quality and cost reductions is not only an effective way to integrate care, but one that brings substantive partnerships with payors. These partnerships are not always specific solutions but they are essential for experimenting with the types of new payment models and identifying novel arrangements that work best in a competitive market place.
In a press release issued today, QURE and Kaplan announced a partnership to improve medical education and the quality of physician care. As a leading provider of medical education, Kaplan Health will be offering QURE’s system of continuous CPV® vignette measurement and feedback in addition to their suite of medical education tools. As quoted in the press release, “Kaplan has been a leader in medical education for over 40 years, so partnering with QURE Healthcare to offer hospitals this effective, patient-outcome driven product is a natural fit,” said Greg Samios, president of Kaplan Health programs. “We look forward to working with hospitals to reduce their costs, while at the same time improving the quality of care they provide to their patients.”
A recent article from the New York Times brought to light criticism that the CMS Innovation Center is facing regarding the type of projects it has decided to fund. With $10 billion to spend over the next ten years, the center has funded mostly demonstration projects, of which 40 are now in progress. Randomized control trials are considered the gold standard in medical and social science research, often contradicting conclusions from demonstration projects. While there are pros and cons to both randomized controlled studies and demonstration trials, experts view the focus of the Innovation Center as a missed opportunity to at least have a balance of both types of projects.
On December 5th, Dr. Peabody presented at a day-long stakeholder consultation, jointly hosted by the World Health Organization India, the Government of India and the Ministry of Health & Family Welfare. One of the focus areas between the WHO and the Government of India is improving quality and regulation of healthcare services in the country. The consultation on regulation and accreditation of health service delivery institutions in the country was attended by senior level government health officials, identified stakeholders in this area and academia. Dr. Peabody, pictured above, presented on “Quality Improvement in Health Services: Recent Findings from Global Studies on Quality” that was very well received by the attendees.
Yesterday Leading Healthcare Innovation, a collaboration between the New England Journal of Medicine and the Harvard Business Review, published a thought piece on accountable care organizations (ACOs) by QURE President Dr. John Peabody and Dr. Xiaoyan Huang, an attending cardiologist at Providence Heart Clinic, titled “A Role for Specialists in Resuscitating Accountable Care Organizations“. QURE continues to be at the forefront of discussions, jointly with payors and providers to develop frameworks for creating an ACO.
Three of QURE’s abstracts were published last week as part of the American Society of Clinical Oncology’s Quality Symposium, held in San Diego. The abstracts reflect analysis from a quality initiative at Moffitt Cancer Center using Clinical Performance and Value (CPV®) vignettes. Two of the abstracts discussed the Mofffitt-QURE project at Moffitt and the third explored how to build a specialty accountable care organization (ACO). The abstracts are available below:Measuring clinical pathway compliance using a simulated patient approach with clinical performance and value (CPV) vignettes. A provider-payor approach for determining value in the health reform era: Early reports on the M-QURE initiative. Building a specialty accountable care organization (ACO) for cancer: Using cost groupers in breast cancer (BC) and malignant hematology (MH).
A presscast on Tuesday October 30th highlighted the use of CPV® vignettes to improve the quality of cancer care. Three abstracts were presented during the presscast, selected from 280 abstracts accepted for ASCO’s Quality Symposium on November 1-2, 2013 in San Diego. The full release can be accessed here.
In a presscast today, an abstract highlighting QURE’s CPV® methodology with a client in cancer care was highlighted as part of the 2013 Quality Care Symposium and the American Society of Clinical Oncology’s (ASCO) second “Top Five” list of opportunities to improve the quality and value of cancer care. The abstract discusses QURE’s role in improving adherence to internal cancer pathways and the quality of care through repeat measurement and feedback with CPV® vignettes. Stay posted for more updates this week where QURE’s work will be presented at the Quality Care Symposium, which begins on November 1st in San Diego, CA.
QURE’s paper, based on research done in the Philippines, was recently published in Health Policy and Planning: “The impact of performance incentives on child health outcomes: results from a cluster randomized controlled trial in the Philippines“. Pay for performance incentives were randomly introduced with CPV vignettes measuring quality every six months over a total of 36 months. Physicians receiving bonus payments based on CPV scores were shown to improve two important health outcomes.