Watch This Space: 3 Phenomena That Will Drive Health Care Innovation in 2019

By REBECCA FOGG Rebecca Fogg

Back at their desks after the holidays, health care payers, providers and policymakers across the country are staring down their list of 2019 priorities, wondering which they can actually accomplish. Innovation to improve care quality and reduce costs will top many lists, and progress on this front depends, in no small part, on conditions for such innovation in the health care marketplace. Here are three phenomena unfolding there that I’ll be following closely this year to understand what innovators are up against, and how they’re responding.

  1. The legal battle over the Affordable Care Act (ACA). Over 20 million previously uninsured Americans acquired health insurance between 2010 and 2017, many due to the ACA’s premium subsidies, ban on pre-existing condition restrictions, and Medicaid expansion. At the most fundamental level, this coverage expansion has vastly improved one of the most important conditions for a healthy population—access to health care. But it also supports innovation toward better, more affordable care.Coverage expansion means providers get reimbursed for more of the care they deliver to patients who are unable to pay, which strengthens their financial position. It also enables some patients to maintain more continuous health insurance coverage, hence see a doctor more regularly over time. This, in turn, facilitates providers’ development of more effective approaches to management of long-term, chronic disease, which causes untold suffering and costs the U.S. hundreds of billions in direct medical costs.

    But Texas federal court judge Reed O’Connor’s December 2018 ruling on the case Texas vs. Azar jeopardizes all those benefits. In it he asserts that the entire ACA became invalid when a portion of it—the tax penalty for individuals who do not acquire health insurance as mandated—was eliminated in the Tax Cut and Jobs Act of 2017.

    The ACA remains in force, and Timothy Jost argues persuasively in a Commonwealth Fund analysis that the ruling is rooted in faulty logic, and will likely be overturned. Mere uncertainty or confusion about the law’s fate, however, could still undermine its positive impact on innovation. For instance, payers and providers could reduce investment in innovation in anticipation of a reversal in coverage gains, or consumers might abstain from seeking care in the belief they’re no longer covered for it.

    So I will not only be waiting for an ultimate decision on the law’s validity, but also watching for industry players to tip their hands regarding possible post-ACA strategies, in order to anticipate the effects of the drama on innovation in care delivery.

  2. The industry shift toward value-based payments. The health care industry’s dominant, fee-for-service payment model reimburses providers for discreet care services delivered, and has been linked to unnecessary and ineffective care. Value-based payment models, by contrast, reimburse providers on the basis of care quality and cost-effectiveness, rather than just volume delivered. Value-based payments are thus an essential driver of innovation toward better, more affordable care.Provider adoption of value-based payments has been accelerating over the last decade. For example, the Healthcare Transformation Task Force (HTTF), a non-profit consortium of leading payers, providers and patient groups, estimates that 47% of its payer and provider members were operating under some form of value-based payment model in 2017, up from 30% in 2015.

    Increasingly, payers striving to improve their return on investment in care have been driving the trend. The U.S. Centers for Medicaid and Medicare Services (CMS), accounting for a whopping 37% of all national health expenditures, has been particularly influential on this front. And the agency’s new Medicare Shared Savings Program rules, which compel participating providers to take on financial risk of care much sooner than in previous years, strongly suggests it will continue to support value-based payments under the Trump Administration. However CMS has also cancelled some Obama-era initiatives aiming to drive adoption of value-based payments, such as the mandatory hip fracture and cardiac bundled payment models, hoping to inspire voluntary participation in bundled payment models instead.

    The latter may indeed prove effective, but it is too early to tell. So, I’ll be watching closely to see if the agency stays its historic course in favor of value-based payments, and whether its strategy for promoting the models actually impacts their uptake by providers.

  3. Big-name partnerships promising innovative health care solutions. Historically, merger and acquisition activity in health care delivery has mainly involved payers and providers. But 2018 saw the blossoming of M&A and partnerships between traditional health care players and businesses with origins outside the industry, including hook-ups between Aetna/CVS, Humana/Walgreens, and Amazon/JP Morgan/Berkshire Hathaway (led by renowned physician Atul Gawande). Tech giants also advanced into the industry on their own, with Google, IBM, Microsoft and others joining forces to break down barriers to data interoperability in health care.In forging such unions, these companies aim to tackle America’s crisis of care cost and quality, and they have ample profit motive to do so. Given that a number of them have already transformed the way Americans live and spend, they might just have the innovation chops for the job, too. But none of them is much beyond pilot stage with their partnerships, and others have been stubbornly tight-lipped about their plans. I’ll therefore be following closely for any scraps of news they let fall about how they’re approaching the problem, whether they’re seeing success….and whether Dr. Gawande will finally name his enterprise, so that we industry analysts can refer to it in fewer than 33 characters.

Conditions have never been more compelling or, in many respects, favorable, for innovation toward better, more affordable health care in America. But they are constantly changing. So innovators have to closely monitor trends in their operating environment, and bet on the best way to shape their enterprises and strategies to navigate through the inevitable uncertainty. I’ll be keeping a keen eye on the market and their efforts, too, and hoping for the best.

Rebecca Fogg is a senior research fellow at the Clayton Christensen Institute, where she studies business model innovation in health care delivery, including new approaches to population health management and person-centered care.

from THCB

Health in 2 Point 00, Episode 67 | uBiome, Planned Parenthood and Lively

On Episode 67 of Health in 2 Point 00, Jess is appalled at the CDC’s salmonella warning for hedgehogs. But in other news, Jess asks me about uBiome, which has raised over $100 million, laying off over 50 people; Planned Parenthood’s new chatbot that helps answer teenagers’ questions about sexual health; and Lively’s recent $16 million raise for their telehealth hearing assessment platform. Don’t forget to stop by our booth at HIMSS in 2 weeks! —Matthew Holt 

from THCB

Overprescribing Is a Key Component of the Opioid Crisis — Here’s How to Stop It


Today’s opioid crisis is one of the most dire side effects driven by our dysfunctional U.S. healthcare system. A recent JAMA Surgery report found that many surgeons prescribe four times more opioids than their patients use. This opens the door for misuse and abuse later on. In fact, the total combined cost of misuse, abuse, dependence and overdose is about $78.5 billion.

Unfortunately, there’s a direct connection between the low-quality care many patients receive, and the astounding rates of opioid addiction. Often, insurance plans offer access to high-cost, volume-centric physicians and include high deductibles — creating an expensive cycle that doesn’t focus on patient outcomes. Instead of taking the time to figure out what is actually ailing a patient, these overworked and nearly burnt-out doctors get them in and out the door with a referral and a prescription for more pills than they could ever need.

What may surprise you is that employers play a large part in setting the stage for addiction. Millions of Americans get their health insurance from their employer, and a majority of those plans are fully-insured. To determine what insurance plan they offer, employers work with a benefits broker to purchase one from a carrier like Aetna or Cigna. Each year, employers and their broker join together for an annual dance — the broker tells them that healthcare costs are rising so their insurance rates have gone up, usually by 5-20 percent. The employers don’t know better than to accept these increases, filtering them down to employees in the form of higher premiums. Despite costs constantly going up, the quality of care does not follow.

The reality is, cash prices for healthcare services haven’t actually gone up by much. Employers have been asleep at the wheel — but they can begin to enact change immediately. By working with a transparent benefits advisor, employers can design health insurance plans that incentivize their employees to visit high-quality, value-based primary care providers and Centers of Excellence: organizations with proven records of positive patient outcomes that are less likely to overprescribe unnecessary, addictive drugs.

Most employers trust that their broker has done their research, shopping around for the most affordable and effective health plans. Unfortunately, some benefits brokers don’t have their clients’ best interests at heart. They may be following hidden financial incentives to keep employers on expensive plans with poor offerings because they receive commissions and bonuses from certain carriers. Employers should ask their brokers to disclose this information (it should include whatever bonuses their office receives from carriers, which heavily influences what they present to clients), and also see how quickly they are willing to meet. The sooner they are able to, the more time they can go through the pros and cons of multiple plans before making a final decision.

When comparing plans, it’s important to keep in mind that high cost does not mean high quality. And further, most status quo plans cover the same low-quality care that has largely led to the opioid epidemic. Poor primary care is a product of the fee-for-service model under which most primary care practices operate. In this system, the more tests, procedures, scans, and other services a physician orders, the more money their organization makes — and employers and patients pay for. Many of these are unnecessary and often require follow-up or referral appointments. More people needing to see a doctor means it takes longer to make an appointment, waiting rooms are crowded, and the appointments themselves are usually ten minutes or less.

Short appointments prevent physicians from having enough time to get to the root cause of a patient’s problem. And because lower back pain (LBP) is a common issue, especially among older and working adults, physicians hoping to satisfy patients quickly prescribe them painkillers like hydrocodone, oxycodone, morphine or benzodiazepines. This, despite the fact that we know these drugs aren’t effective in treating pain, only masking its symptoms.

By comparison, in a value-based primary care setting, doctors are incentivized to spend more time with patients because they are rewarded for positive outcomes. These physicians have a better chance of getting it right the first time – reducing the need for follow-ups, unnecessary tests, and patient costs. For a patient with LBP, a value-based primary care physician may find out that the patient is sitting too much or isn’t educated on the proper exercises to prevent or relieve back pain. Rather than write an opioid prescription (likely including too many pills), a physician focused on value may show the patient how to change their technique to prevent further damage, plus recommend a physical therapy or stretching program. In my book on the employer role in the opioid crisis, nothing created more fertile ground for the opioid crisis than an undermined primary care model. It’s just one of the twelve major drivers of the opioid crisis, but it’s a particularly critical element to preventing addiction upstream.

This kind of care better employees’ health and for employers’ bottom lines because in order to provide access to value-based primary care, employers can cut ties with their old fully-insured health plans and instead work under a self-funded health plan. This type of plan is one in which an employer pays for their employees’ healthcare using their own money. This may sound risky, but that’s why such employers purchase stop-loss insurance – coverage that kicks in after certain claims thresholds. And for those employers concerned about this being too much work, a third-party administrator (TPA) will process claims and provide administrative support for a monthly fee.

Under a self-funded plan, employers will no longer have to budget for those annual 5-20 percent premium increases. Plus, employers can have more control over the quality of care their employees receive. In addition to encouraging their employees to visit the value-based primary care providers they’ve identified, they could also send their employees who need high-cost, high-risk surgeries to Centers of Excellence, which are often recognized for their high success rates for certain procedures. Employees who go there are likely to save money in the form of fewer complications, readmissions and prescriptions. Boeing did this for its employees, sending those in need of cardiac or spine care and hip or knee replacements to Mayo Clinic in Phoenix and Scottsdale, Arizona.

The health plans employers offer, and the low-quality, status quo care that they provide, have all contributed to today’s opioid crisis, including rampant overprescribing. Fortunately, a solution exists: health plans that provide access to value-based primary care. All employers have to do is put it in motion.

Dave Chase is co-founder of Health Rosetta, which aims to accelerate the adoption of simple, practical, non-partisan fixes to our health care system, and the author of “The Opioid Crisis Wake-Up Call: Health Care is Stealing the American Dream. Here’s How We Take it Back.” 

from THCB

Radiology Firing Line | Meet the Patients


Should Radiologists talk with Patients? In this episode of Radiology Firing Line Podcast, Ian Amber MD, assistant professor of radiology at Georgetown University advocates for patient interaction.

Listen to our conversation here.

Saurabh Jha is a contributing editor to THCB and host of Radiology Firing Line Podcast of the Journal of American College of Radiology, sponsored by Healthcare Administrative Partner

from THCB

AHA’s FutureScan Publication Available Now

Out this week is the AHA (or more precisely their SHSMD division’s) Futurescan publication. This year it’s edited by futurist Ian Morrison @seccurve and it features a bevvy of forecasting articles including one called “Flipping the Stack: Can New Technology Drive Health Care’s Future?” by Indu Subaiya and Matthew Holt (i.e. me)

To take a look at the listing and perhaps even buy a PDF or hard copy (yes, it’s not free, remember that whole capitalism thing, but it’s the cheapest thing you’ll ever get from a hospital!) follow this link  — Matthew Holt


from THCB

Health in 2 Point 00, Episode 66 | Ciitizen, Limelight Health, The Pill Club, and ADURO

On Episode 66 of Health in 2 Point 00, Jess and I talk about money, money and more money. For one, Ciitizen, a health records company focusing on cancer patients, just closed a $17 million round. Limelight Health, which helps employers put together quotes for employee benefits, raised $33.5 million, and The Pill Club, an online birth control prescription and delivery service, raised $51 million. Jess also asks me about ADURO’s $22 million raise and why the employee wellness space is continuing to get so much funding. And again, be sure to find us at our booth at HIMSS! —Matthew Holt

from THCB

The Future of the Affordable Care Act: Unscathed by Attacks from the Right, Overtaken on its Left?

By ETIENNE DEFFARGES Etienne_Deffarges

Having survived years of attacks from Republicans at the federal level, will the surviving ACA be rendered obsolete by Democrats’ local and state efforts towards universal health care? This could be an ironic twist of fate for Obamacare. Conceived out of the conservative Heritage Foundation’s ideas and an early experiment in Massachusetts under a Republican governor, President Obama’s signature legislative achievement could very well survive its most recent judiciary challenge. But over time the ACA is susceptible to obsolescence, because of the many universal health care solutions being pushed at the state level.

Let’s start this brief outlook for Obamacare by reviewing how it has played defense, quite successfully thus far: During most of 2017 and 2018, the future of the ACA was always discussed in the context of Republican efforts to repeal it. After all, the GOP controlled the White House and both Chambers of Congress. Hadn’t Republicans spent the last four years of the Obama administration promising to repeal Obamacare the instant they could? And so they went after the ACA in 2017 with all the levers of Washington power. But repealing is one thing, legislating another: We know what happened in July 2017, when the last “repeal and replace” effort was defeated in the U.S. Senate by the narrowest of margins, because three Republican Senators, Susan Collins, Lisa Murkowski, and the late and much regretted John McCain, voted against the repeal. With their December 22 tax law, Republicans did succeed in eliminating the ACA’s individual mandate tax penalty owed by individuals failing to maintain “minimum essential coverage.” Most medical plans qualify for this, as long as they meet a number of requirements, such as not charging more for pre-existing conditions. For good measure, the Trump administration used executive orders in 2018 to allow low-cost plans not meeting these ACA guidelines to be offered by employers. Twenty state attorney generals from Republican states, led by Texas and Wisconsin, also initiated litigation against the ACA, arguing that without the tax penalty the law had become unconstitutional.

On November 6, after having campaigned heavily on health care and the protection of pre-existing conditions, Democrats won control of the House of Representatives, making further legislative challenges to the ACA very unlikely. The Midterm elections also saw three newly elected Democratic governors in Kansas, Maine and Wisconsin promising to bring to their constituents a key provision of the ACA, Medicaid expansion. The citizens of Idaho, Nebraska and Utah will also get Medicaid expansion, following the success of local ballot initiatives. In total, around 800,000 people are poised to gain access to Medicaid for the first time in these six states: Obamacare is on the march! Not so fast. On December 14, 2018, U.S. District Judge Reed O’Connor ruled for the twenty Republican states and against the ACA, arguing that once Congress repealed the tax penalty that enforced the individual mandate, the whole legislation became invalid—everything within the ACA, protections for pre-existing conditions, children under 26 insured within their parents’ plans, Medicaid expansion, etc. A lot of voices, not all of them from Democrats, criticized the ruling as stretching a legal principle called “inseverability” far beyond reasonable boundaries—how could for example the ACA Medicaid expansions be bundled with the individual mandate tax penalty? Legal scholars argued that Judge O’ Connor’s ruling ignored settled law, i.e. that Congress had refused to repeal the entire ACA in the summer of 2017, striking down only a portion of the legislation under the December tax law, and leaving the rest of the ACA standing. This ruling is being appealed by sixteen other states supporting Obamacare, joined in January 2019 by the newly installed Democratic House. After the appeal, will the U.S. Supreme Court have to rule (for the third time) on the constitutionality of the ACA? If this becomes the case, one has to remember that the Court affirmed twice the constitutionality of the ACA, in 2012 and 2015, with Chief Justice John Roberts voting with the majority on both occasions.

Despite this judicial development and the Trump administration slashing advertising and promotional budgets for ACA enrollments, the law remains very popular: After its six annual enrollment season, the ACA federal insurance marketplace proved again to be very resilient, with the number of Americans signing up for 2019 ACA health plans down only 4% relative to the prior year. Not surprisingly, Americans are interested in good health care coverage at affordable prices.

But what if good and affordable health care coverage came from sources other than the ACA? The Democrats’ success in campaigning on health care for the recent midterms did not go unnoticed, and 2019 opened up with a flurry of new local and state universal health care proposals. If successful, these initiatives would represent a new front, on the left of the political arena, in the health care battles unleashed by Obamacare. Mayor Bill De Blasio has just mandated universal health care for all New Yorkers, even undocumented ones, bringing coverage for the first time to about 600,000 people. Newly elected Governor Gavin Newsom promised in his inaugural speech to enact full access to health care for all Californians. His first $209 billion budget blueprint, of which health care accounted for close to 30%, included a state health insurance mandate (to restore the repealed federal ACA mandate); increased insurance subsidies for Californians under the ACA (bringing them to individuals making between 400 and 600 percent of the federal poverty level); and access to Medical for undocumented immigrants up to 26 years of age. (One of Newsom’s first executive orders was to direct Medical to negotiate directly with pharmaceutical companies to demand lower priced drugs for its 13.5 million enrollees.) Not to be outdone, Washington State Governor Jay Inslee proposed a public option for those who do not qualify for Medicaid but cannot afford health coverage from private markets in his state. Similar efforts to help uninsured people who earn too much to qualify for local Medicaid plans are underway in half a dozen states, Colorado; Connecticut; Illinois; Minnesota; Nevada; and New Mexico.
Many states will not wait for the end of paralysis in Washington DC, and policies pioneered in the states often lead to fundamental changes at the national level. As mentioned above, the comprehensive Massachusetts health care legislation signed by Republican Governor Mitt Romney in 2006 became the blueprint for Obamacare. Similarly, the ACA employer’s mandate, enrolling private businesses to increase access to health care, has its roots in long-enacted legislations in Hawaii and San Francisco. This means that during the two years leading to the 2020 presidential elections, there could be many state and local health care initiatives granting health care to millions of people, people who no longer would have to look for insurance in a ACA health exchange. Enrollment in these exchanges could then plummet. Medicaid expansions are likely to be the longest lasting component of the ACA…until some form of federal universal health care legislation (in 2021? 2025?) replaces the landmark legislation.

Author of “Untangling the USA: the Cost of Complexity, and What Can Be Done About It,” Etienne Deffarges has counseled, created, and invested in countless organizations during his professional life as a management consultant, business executive, and entrepreneur.

from THCB