By Susan DeVore, CEO, Premier Inc.
In 2020, the Affordable Care Act will turn 10 years old. Since it became law and ushered in sizable reforms across our industry, some aspects of health care have improved dramatically, while new problems have emerged that require remediation. In other words, health care reform has been neither the catastrophe, nor the cure-all, that the pundits predicted.
As we step into a new decade, it seems fitting to take some stock of where we’ve been and where we’re likely headed. While this year’s election does make prognostication difficult, not every policy is polarizing and not every shift ahead is being led by the federal government. At this point, the private sector is poised and ready to implement many sweeping changes; employers, payers, disrupters, and consumers alike are aligned on the need to fundamentally change the way that health care is provided and paid for.
Looking to 2020, there are some clear trends on the horizon that could fundamentally alter the health care narrative well into the next decade. What follows are the five main trends that are most likely to herald that change.
Medicare (Advantage) for All?
There is broad, bipartisan agreement on the need to shift federal reimbursement away from fee-for-service and toward two-sided, risk-based contracts that hold the private sector accountable for the ultimate costs, quality, and outcomes of their services. Despite rhetoric advancing models such as Medicare for All, bipartisan realities will keep us on this path.
Consequently, no matter who takes office in November, providers can anticipate aggressive moves in this direction, with a proliferation of new contracting options that require risk as a baseline for participation, as well as a switch over from voluntary options to more mandatory tests of change, particularly for proven concepts like shared savings and bundled payments. This is already proving out with new approaches like direct contracting, which blend program aspects of the Medicare Shared Savings Program, Next Generation Accountable Care Organizations (ACOs), and risk-sharing models prevalent in Medicare Advantage to expand capitated and global payment options that will require providers to manage and innovate care delivery.
When the dust settles, we see the table set for a push toward more Medicare Advantage-style payment across federal reimbursement programs, where capitated payments are provided to the private sector and, in turn, those managing the money leverage risk-based contracts with networks of high-value providers to offer the highest-quality, lowest cost outcomes. While the movement to more global, capitated payments is settled business in the federal programs, there are a few outstanding questions in the market.
First is the fight over who leads the inevitable change: the payers or the providers. Historically, fee-for-service sharply defined roles and responsibilities, with payers managing payment and financials while providers manage patients. But in a world where global budgets require capabilities that span multiple roles, the lines are blurring. This is borne out by payers like UnitedHealthGroup snapping up primary care clinics and ambulatory surgery centers, intending to manage costs and outcomes with an owned, narrowed network where the providers work for the payer. On the other side of the equation, more providers are now managing the total costs of care, either through their own, competing insurance products or by directly managing the total costs of a defined employee population.
This means that provider organizations can essentially take one of two paths. They can develop and manage an integrated, high-value network of their own, like Advent Health, Banner Health, Texas Health Resources and Geisinger Health have done. Or they can be ready to make the case for their inclusion in an insurance company’s network with demonstrable results related to cost and population health outcomes. Regardless of the path, systems will need sophisticated contracting abilities, experience managing risk, care management expertise, and analytics to evaluate cost and quality performance in real-time.
The second, interrelated question in this area for 2020 is whether these new payment models actually work to shift risk to providers and usher in more collaborative and aligned working relationships with payers, or whether they are used as weapons to keep providers in fee-for-service, at a much lower rate and with confused incentives and overlapping roles, in order for insurance companies to keep the profits. The outcome here is completely market dependent and largely linked to payer willingness to engage. In markets such as North Carolina, payers are planning to provide Medicare Advantage-style payments to providers for stem-to-stern management. As a result, that market will have to rapidly transform. In markets where payers yield disproportionate influence and want to retain control, the terms of the relationship and the adversarial nature of traditional rate setting continues unabated.
Getting more uptake will require demonstrable returns by the early adopters, templates for overall model success that can easily be replicated in the private sector, and, ultimately, public policies that force action.
Healthier Pharma Markets
Drug shortages continue to plague healthcare providers and patients, particularly for generic injectable medications. These shortages take an immense toll on patients and the health care system. In fact, according to a JAMA study just one shortage of norepinephrine, a drug used to treat septic shock, resulted in a nearly 4 percent increase in deaths with a cost to society of $13.7 billion.
As with many issues, the private sector is moving faster than policymakers to solve the drug shortage problem, as well as the high prices that often accompany them. Action, however, is still needed.
Persistent issues called out in the Food and Drug Administration’s (FDA’s) drug shortages report include market factors: Off-patent, low-cost generic drugs just aren’t financially attractive investments for manufacturers in need of blockbuster revenues to satisfy Wall Street. In these cases, provider-led organizations, including Premier, are stepping up and creating incentives to make these drugs a financially viable option, aggregating the demand of hospitals and approaching manufacturers with a guaranteed buyer base if they enter a new market or increase production of shortage products. This creates a predictable sales channel for the manufacturer. In exchange, health systems get a guaranteed supply at a guaranteed price and, most importantly, patients get access to the medications they need in a timely manner.
These efforts now have us on a track to solve shortages, but policy steps are still needed. The U.S. Food and Drug Administration (FDA) has made great strides in expediting review of new competitors’ applications to produce shortage products. However, regulatory bottlenecks still cause or exacerbate shortages. For example, if a manufacturer experiences an FDA citation for quality manufacturing violations, that can trigger a shortage, particularly in categories where there are two or fewer existing suppliers. Remediating that shortage can be a lengthy process of FDA follow-up inspections and recertification, a process that must be accelerated to avoid compromising patient care.
In other cases, FDA requires additional information. Today, manufacturers are required to report impending drug shortages to the FDA, but not raw material sourcing locations or potential challenges that can lead to shortages across the industry. The result is a regulatory blind spot, where advanced notice could enable FDA to immediately begin prioritizing new drug applications in the category, or securing international sources of supply, as appropriate.
These policy issues – among others – are all addressed by the Mitigating Emergency Drug Shortages (MEDS) Act, introduced in October by Senators Susan Collins (R-ME) and Tina Smith (D-MN). Given the bipartisan nature and broad support for the legislation, we think prospects for passage look very promising for passage in 2020. The combined result of these regulatory and market solutions will significantly reduce drug shortages in 2020.
While solving shortages is a net positive for patients and providers, it’s impossible to talk about healthy pharma markets without getting into the bigger issue of branded drug prices. After more than a year of debate, we are likely to see only modest branded drug pricing reforms. The good news, however, is that FDA has made big strides in streamlining the new drug approval process, and reforms that are likely this year should address some of the obstacles slowing the introduction of generics and biosimilars.
With the rhetoric and policy proposals becoming more extreme around controlling drug prices, we remain hopeful that a renewed focus will unleash competitive forces and create more optimal pricing. We also hope that novel efforts by pharmaceutical manufacturers to address the high cost of medications, like those used to address drug shortages, will succeed. Finding a way to preserve market-driven innovation in an internationally price regulated world will be one of the biggest debates of the 2020 election.
Who’s the Boss?
Frustrated with ever-escalating health care costs that do not add value to the bottom line, employers are taking a much more active role in directly negotiating and contracting for better, more reliable services at a predictable rate of spend.
This diverges from past cost-containment strategies, such as higher deductibles and increased employee cost-sharing. Instead, employers are taking stock of their purchasing power and increasingly negotiating direct contracts with provider groups that can demonstrate differentiated performance in terms of cost and quality. According to a 2019 survey conducted by the National Business Group on Health, 11 percent of large employers now have such arrangements in place, contracting directly with a narrow network of ACOs, centers of excellence, onsite clinics or direct primary care options, steering employees toward these providers in order to manage costs and improve health outcomes. This is up from 3 percent at the top of 2018.
For 2020, the question will be how to get these efforts to scale beyond the 11 percent to a much larger proportion of employers, some of whom have geographically diverse workforces that can’t necessarily be served by regional ACOs or onsite clinics. Doing so will require a distributed national network of providers with differentiated cost and quality outcomes, as well as a centralized contracting mechanism to reach across geographies. But equally important, spread requires a willingness to change and a greater sense of urgency.
According to a recent Towers Watson survey of employers, this is an area of innovation that is ripe for growth in 2020, as nearly two-thirds of employers plan to steer their beneficiaries to a differentiated center of excellence for high-volume, preference-sensitive conditions, and another 22 percent plan to establish direct contracting networks. Not only does this further indicate the overall movement toward two-sided, risk-based contracting, but it signals a new business opportunity for health systems that are selected to participate in these high-value networks. Smart health systems with a background in managing risk through the Medicare Shared Savings Program, commercial risk-based contracts, or bundling programs may be able to leverage these new models as a core expansion strategy that not only puts them into a more sustainable reimbursement model, but also locks in volume necessary for growth.
Down With “Data Blockers”
In 2018 at the HIMSS national meeting, former Alphabet Executive Chairman Eric Schmidt remarked that unlocking the true value of the electronic health record (EHR) required the development of a “killer app” for health care. During my own HIMSS keynote address in 2019, I respectfully disagreed. I said then and still believe that the problem has less to do with innovation on the part of app developers and is more about enabling a robust marketplace for value-added apps that work with the EHR platform and within the clinician workflow.
This is an issue that persists today, as developers continue to encounter challenges accessing and using the application programming interfaces (APIs) necessary to write for the various EHR platforms, as well as obstacles in getting those apps certified, listed in EHR app stores, and in the hands of the providers who wish to use them.
To put the issue into perspective, developers creating consumer-facing apps for the very smart phone you may be reading this from have free and open access to the APIs necessary to enable their product to work on the major operating systems. Most apps submitted for listing in an app store are generally approved within a couple of days. In contrast, learning how a health care app will work in an EHR environment is decidedly more challenging, with apps taking months or even years to make functional and available to providers. Because virtually no business can afford to wait years before commercializing their products in the market, and even fewer startups have the sales force to sell one-off point solutions by practitioner, the health care market is struggling, with coding talent choosing other verticals out of sheer frustration. And this is borne out in the existing app stores, where there are generally just a few hundred health care apps for the EHR space, as opposed to millions in the consumer smartphone market.
These limitations are all the more painful considering that the federal government injected $36 billion in taxpayer dollars to jumpstart EHR adoption, coupled with penalties for providers who failed to “meaningfully use” them. The net result is less innovation and competition for clinical decisions support, electronic prior authorization, and other innovative apps that would reduce clinician time, improve evidence-based health care and reduce costs.
Legislation passed in 2016 set in motion a process to change this model, and the dam is just starting to break. In 2020, we expect new rules from the Office of the National Coordinator (ONC) to mandate open APIs that would enable a much more streamlined process for developing and bringing apps to the market. If done correctly, these new rules could replace today’s “walled garden” mindset with a race to cultivate and curate value-added apps that unleash the innovation potential of the developer community, enabling providers to pick and choose any app they want. In doing so, the true value of the EHR will become more apparent, overcoming some of the persistent complaints about usability, safety and return on investment.
While that is a bright spot on the horizon, there remains a data access problem that still needs to be overcome. To date, the government has been progressive in giving app developers and consumers greater access to Medicare claims data. But providers and app developers still need access to large scale Medicare Advantage, Medicaid, and commercial claims data to produce new solutions that better enable population health. The unavailability of such data represents a lost opportunity that not only fails to capitalize on taxpayer investment, but also fails to promote efficiencies and competition in health care. This year, we expect the government to take a host of actions that will begin to advance greater access to claims data, giving the government a return on its massive investments and ensuring that developers can effectively harness data to create innovations that improve patient care and efficiency.
From #MeToo to #MomsToo: A New Maternal And Infant Health Bundle
If 2018 was the year of the woman, consider 2020 to be the year of the mom. Spurred by reports finding that the United States has the worst maternal health outcomes in the developed world, there is newfound interest in government, on the campaign trail and among providers to improve the overall cost and quality of maternal health care.
To date, however, much of the debate has been more political positioning than a real attempt to get at the root causes of the issue. Effective, accurate, cross-continuum data on maternal health outcomes is sorely lacking, so quantifying the problem has largely been guesswork. However, new scholarship on hospital-based outcomes has been able to pinpoint where some of the problems originate, as well as the root causes of gaps in maternal care.
Armed with this data, we now know that maternal health care is subject to wide variations in cost and quality, with disparities across age groups, races and payer status. Equally important, we also know that maternal deaths are occurring much less frequently in the hospital setting, and when they do, they are usually the result of complicating factors that are present before or exacerbated by pregnancy, such as advanced maternal age and comorbidities such as hypertension, diabetes and/or obesity. These factors, more than anything else, can add risks to pregnancy and can result in complications that continue to affect a new mother’s health after giving birth.
All this points to a need for a new care model for maternal and infant health. In a perfect world, providers would participate in alternative payments that incent total wellness for all women of childbearing age, regardless of pregnancy status, rather than treatments in the event of a problem. But short of that, we can start to take a bite out of the problem with a long-term bundled payment that would cover primary and obstetric care at the beginning of pregnancy, all the way through 60- or 90-days postpartum. With childbirth ranking as the number one cause of hospitalizations, maternal health initiatives have historically been myopic in nature, focusing largely on the acute care setting, ignoring health conditions that affect pregnant women before and after labor and delivery. A maternal care bundle would better encourage providers to collaborate across settings and stages of women’s health care and to proactively manage conditions that could lead to dangerous complications and unnecessary costs. A bundle inside of an ACO also aligns the incentives to help Americans achieve better health even before they become pregnant.
Commercial insurers like UnitedHealthcare, Humana, and Cigna have already announced programs to test maternal health bundles in certain markets. State Medicaid programs that pay for about half of all U.S. births are also experimenting with the approach, with Tennessee, Ohio, New York, and Arkansas testing bundles for their maternal populations. However, efforts to date have been limited in size and scope.
For 2020, we see real potential to launch a national demonstration of maternal bundles through the Center for Medicare & Medicaid Innovation, leveraging the work that’s already been done by forward-thinking organizations to define the episode, affected providers, and cost and quality targets. For health systems, this underscores a need to optimize acute care delivered in the maternal health service line, and to prepare for the potential financial impact of a major spread of value-based payment across one of the top sources of inpatient revenue.
Considering all the changes we’ve experienced over the course of the last decade, including new payment models, technology innovations, medical cures and evolving care delivery standards, it can feel as though the sands beneath us are constantly shifting. However, the next decade needs to be less about wholesale change and more about perfecting strategies to integrate, coordinate, and simplify care delivery leveraging data science, technology and new models in the market. In 2030, hopefully, we’ll look back at the progress we made towards creating a sustainable, clinically effective, and cost-effective health care system.
This article ran in the Health Affairs Blog on January 13, 2020 10.1377/hblog20200110.65292
Copyright © 2020 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.