May 25, 2018

The Weekly Gist: The Medicare Gold Rush Edition

by Chas Roades and Lisa Bielamowicz MD

Happy Friday! Pools are opening, barbecue grills are heating up, white shoes are coming out, and our hometown Caps will be taking the ice for game one of the Stanley Cup Final this Memorial Day weekend. As any DC sports fan can tell you, our hometown teams are purpose-built to disappoint, and so we’re not holding our breath for a positive outcome against the Las Vegas Knights. (They play hockey in the desert now? Crazy.) But we’ll be rockin’ the red this weekend and cheering on the Great 8.

Meanwhile, we’ve been keeping plenty busy here at Gist Healthcare. Happy for a holiday breather, but before we head out the door, let’s take a look back at what happened this week in healthcare.


THIS WEEK IN HEALTHCARE

What happened in healthcare this week—and what we think about it.

Questioning the pursuit of “network integrity”

A whistle-blower lawsuit filed against Steward Health Care presents a new challenge to the strategy of “encouraging” physicians to keep referrals for specialist consults, diagnostics and procedures within the health system’s network. An article in yesterday’s Boston Globe lays out the case of Boston urologist Dr. Stephen Zappala, who asserts that the Steward attempted to force in-network referrals not only by creating financial incentives for physicians, but also by directly contacting patients and canceling appointments made at outside facilities. Steward has responded that in-network referrals improve care through better data exchange, care coordination and long-term management, and its practices were consistent with those of other systems in the market.

In theory we agree that keeping care within a high-performing network that shares a common IT platform and practice standards has value for patients. Many systems create physician incentives to maximize referral retention; even more share data with doctors on their “keepage” rates. Regardless of the outcome, the case shines an important light on the intent behind policies to mandate in-network referrals. Most have been applied in largely fee-for-service environments where the incentive to capture volume is obvious. Systems who truly believe they deliver the best care would do better to demonstrate their value, earning rather than mandating or forcing referrals. And if they can’t, patients should be able to seek care from other providers who do offer a better value proposition.

Another Medicare innovation pilot comes up short

It’s often taken as fact that more primary care means better care. Proving that proposition turns out to be harder. An article in this week’s Health Affairs evaluates the final results of Medicare’s Comprehensive Primary Care (CPC) demonstration, revealing that the program’s significant funding to provide more primary care had little to no measurable impact on patient outcomes or cost of care.

The 502 practices participating in CPC received care management fees averaging $20 PMPM for over half a million attributed Medicare patients. Providers agreed to augment five primary care functions, including enhanced access, care coordination and planning, chronic disease management and patient engagement. After four years, researchers could demonstrate no significant impact on outcomes apart from a small decrease in ED visit growth. While total cost of care was lower than a control group, the decrease was not enough to offset care management fees.

Some observers have argued that CPC provided a platform for primary care practices to build capabilities, and more time is required to achieve meaningful outcomes. It’s more likely that the upside-only incentives in CPC, including a care management fee and shared savings, did not provide a sufficient level of risk to motivate comprehensive changes in care. CMS might decide that it is worth funding a four-year on-ramp for physicians, but that alone is unlikely to produce any near-term cost savings. It will be worth watching to see if the ongoing CPC+ demonstration, particularly track 2, which provides some capitation-like incentives, is able to move the dial.

Anthem joins the Medicare Advantage gold rush

The insurer Anthem this week announced its plan to acquire Nashville, TN-based Aspire Health, for an undisclosed sum. Aspire, co-founded by former US Senator Bill Frist, is one of the nation’s leading providers of home-based palliative care. The company, which counts Google’s venture arm among its largest investors, works with more than 20 health plans across 25 states to deliver targeted palliative services, using predictive analysis of payer claims data to identify patients likely to benefit. Aspire’s services include round-the-clock nursing care, personalized care planning, and care coordination for patients suffering from serious illness or nearing end-of-life.

The deal comes on the heels of a number of other moves by insurance companies to move closer to the direct provision of care, particularly focused on the Medicare population. Earlier, Humana announced its twin plans to acquire postacute provider Kindred Healthcare and hospice provider Curo Health. And UnitedHealth Group’s Optum division has also been active in acquiring risk-bearing physician groups focused on the Medicare space, including most recently DaVita Medical Group, which includes southern CA-based HealthCare Partners. As we’ve discussed elsewhere, many of these cross-sector deals are aimed at positioning the insurers for growth in the Medicare Advantage (MA) business, giving them assets that enable them to reduce cost of care for the senior population. While Anthem is still a minor player in the MA space, with less than 5% market share, it has recently made moves to grow share in Florida and other MA-heavy markets, and it already owns CareMore Health, a senior-focused integrated physician practice. We’d expect more announcements to come as the healthcare industry readies itself for rapid growth in Medicare Advantage lives.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

Seeking the high ground of Medicare risk

Along those lines, this week’s graphic makes the point that growth in MA—which is expected to account for half of all over-65s in the next five years—is no accident, but rather the result of policies favored by lawmakers on both sides of the aisle. The introduction of voluntary accountable care organizations (ACOs) in Medicare, ushered in by the Affordable Care Act (ACA), was supported by both parties as a way to expand the number of providers capable of bearing risk for populations of Medicare enrollees. It provided a transition path to enable hospitals and physician groups to build the capabilities needed to become integrated, risk-bearing platforms. The recent moves by insurers, retailers, and providers to establish a larger presence in the MA market indicates that the industry is now moving to the strategic high-ground of Medicare risk, and looking to assemble the assets needed (insurance model, drug plan, provider platform, access approach) to manage down the cost of an MA enrollee over the coming decades. Control of this space will drive industry fortunes for years to come, as all parties aim to cash in on the “population health dividend”.


THIS WEEK AT GIST—ON THE BLOG

What we’ve been writing about this week on the Gist Blog.

Our Most Common “But What About…” Questions (Part 1)
This week we launched a new series of posts on the blog, covering the questions we’re most frequently asked in talking to healthcare audiences across the country. We’re calling them the “But What About” questions, because that’s typically how they come to us: “Great talk, but what about…”, followed by the questioner’s personal hobbyhorse topic. As repetitive as these questions can be, we view them as a gauge of the industry’s zeitgeist—how leaders are really feeling about the state of the world.

In this first installment, we cover these commonly heard questions (you may have heard these before):

  • Isn’t this just the 1990s all over again?
  • How can we change if we still get paid for fee-for-service?
  • Aren’t we repeating the mistakes of the past by buying physician practices? 

We provide our take on what the questions reveal and share how we typically respond. In coming weeks, we’ll highlight other “But What About” questions, including:

  • How can we change if we’re still subject to HIPAA, Stark and other dated laws and regulations?
  • Isn’t “defensive medicine” a huge driver of costs? How can we change if we’re still afraid of getting sued?
  • Won’t all of this lead to rationing? Who’s going to say “no”?
  • Shouldn’t individuals be responsible for the impact of their own behavior?
  • Aren’t we really just headed to single-payer healthcare?

Should be a fun series! We’d love to hear your “But What Abouts”—what concerns do you most often hear, and what do you always ask? Drop us a line and let us know, and we’ll include your questions as well.


THIS WEEK AT GIST—ON THE ROAD

What we learned this week from our work in the real world.

Toward a consumer-focused medical group

Lisa:
I spent a day with a health system’s medical group and leadership debating the next phase of their group’s evolution. Inside this large regional system are two distinct regional medical groups with separate legacies. Both are independently “high-performing” by many measures: strong growth and physician engagement, cohesive cultures, and a focus on value-based care. Physicians and the ambulatory care network they lead are lynchpins of consumer value—maximizing access, reliability and quality, affordability and ongoing consumer relationships. The definition of a “high-performing medical group” must evolve to meet those goals and move from merely delivering value to physicians and the health system, to creating “external value” for consumers and the marketIn order to do that, physician leaders realized that there was a need to create a single system medical group, with the goal of creating a single, consistent system approach to care and experience, and maximizing scale and resources across the physician organization. Stay tuned for more on how physicians and systems need to organize to deliver on that vision.

A hopeful voice from the junior ranks of practice

Chas:
I spent an evening at a Physician Town Hall meeting this week, hosted by a large, regional health system in the western US. The audience included leaders from both the system’s employed medical group, as well as independent docs from the local community who work closely with the system. After sharing with them our take on where the industry is going and what the implications are for physician practice moving forward, I opened it up for Q&A—fully expecting to get an earful of “But What Abouts”. And in fact I did get a couple of questions about the malpractice environment and solving the obesity epidemic.

But the most interesting dialogue was sparked by a question from an older department chair, who wondered aloud why any young person would want to become a physician given the worrisome state of medical practice. Almost immediately, a Millennial-aged doctor raised her hand and chimed in to describe her path to practice. We had a spirited discussion of the changes that need to take place in medical education, the preference of younger doctors to practice in a team-based, IT-powered environment, and the potential for a new kind of doctor-patient relationship built around relationship-based medicine. I was struck by the passion of the young doctor, and by her focus on the non-monetary rewards of medical practice. In a room full of long-tenured doctors, hers was one of the more junior voices—but the vision she painted for the future provided a hopeful moment for the future of physician leadership.


ON THE GIST TURNTABLE

Give this a spin, you might like it.

The Australian alt-garage rocker Courtney Barnett is out with her sophomore release, Tell Me How You Really Feel, so let us tell you how we really feel—impressed. Following up on her 2015 debut Sometimes I Sit and Think, and Sometimes I Just Sit, behind which she took the US alternative scene by storm with instant classics like “Pedestrian at Best” and “Depreston”, Barnett returns with another collection of fuzzed-up garage gems. Don’t let the guitar-bass-drum combo and deadpan delivery fool you, though—her lyrics run deep, working through feelings of physical vulnerability (“Nameless, Faceless”) and the isolating impact of sudden notoriety (“Need a Little Time”). There’s not quite as much wordplay here as on her debut release, but Barnett more than makes up for that with the sheer force of her songwriting, delivering her work with the confidence and drive of Chrissie Hynde at the height of her Pretenders power. Barnett will be touring across the summer and puts on an incredible (and incredibly-loud) live show—catch her if you can!


WHAT WE’RE READING

Stuff we read this week that made us think.

Health insurers “make it a bigger bowl”

ProPublica and NPR just launched a new joint reporting series on the economics of the health insurance business, “The Health Insurance Hustle”. It promises to be a really interesting project, judging from today’s first installment. The piece tells the story of a New York man whose hip-replacement surgery resulted in an unexpectedly huge bill—a large chunk of which he had to pay out-of-pocket. Unfortunately for all involved, the man is an insurance actuary himself, and he was surprised to find that his insurer, Aetna, had agreed to a “negotiated rate” of more than $70,000 for the surgery (not including the surgeon’s professional fee), and left the man with a 10% coinsurance payment of more than $7,000. Which led him to ask—why didn’t Aetna get a better deal?

The answer, of course, is that the insurer is simply taking a percentage of the fee as profit, and the larger the fee, the larger the profit. Another term for this is “medical loss ratio”, which the ACA enshrined in law as at least 85% for an insurer. The obvious incentive, which hasn’t gotten nearly enough attention (but which this new reporting series begins to unpack), is for the insurer to agree to a larger rate from the provider, in order to generate a higher dollar amount for the 15% they’re allowed to take off the top. In the words of the article, “It’s like if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, ‘Make it a bigger bowl’.” As much as we assign blame to providers for our high healthcare spending, it’s past time to recognize that the insurance companies—along with many other middlemen (benefit managers, purchasing organizations, distributors)—have been equally complicit in enabling runaway costs. As always, it’s the consumer who gets left holding the bag.

Shave and a haircut, and an ACE inhibitor

The always-excellent Indiana University pediatrician and New York Times contributor Aaron Carroll was out with a piece this week highlighting recent research on community-based management of hypertension. Carroll describes the results of a study conducted by doctors in Los Angeles, which looked at the impact of a barbershop-based intervention program targeted at lower-income, African-American men suffering from high blood pressure. The study built on earlier findings that targeting patients in the barbershop established a level of trust and communication that enhanced compliance with treatment—based on the relationships between patrons and their barbers. The new study went further, finding that coupling the barber-driven program with clinical pharmacist intervention in the barbershop itself, rather than in a clinic setting, yielded even better results in terms of reduced blood pressure. Carroll makes the important point that setting of care matters more than we give it credit for—and that moving care out of traditional settings into community-based venues may be an important approach, especially for populations that either distrust or can’t access clinical careWe know that community-based healthcare workers, and even non-clinical caregivers, can be an important part of improving access and patient engagement—the new study emphasizes the need to widen the definition of “care setting” as well.

Making AI part of the care team

A well-known study (to us care management junkies, anyway) examined the use of a “virtual nurse interface” created to allow patients unlimited, two-way interaction to answer questions prior to discharge. Researchers at Boston Medical Center were surprised to find that 74 percent of patients preferred interacting with virtual nurses “Louise” and “Elizabeth” over their human counterparts; preference for a virtual provider was even higher for patients with lower incomes or poor literacy.

A recent New Yorker article uses this research as a jumping-off point to examine the larger question of artificial intelligence (AI) and its potential to replace—and in some cases, perform better than—“real” providers. When interacting with Louise and Elizabeth, patients found them…more patient. Virtual providers will spend all the time you need and aren’t bothered if they have to repeat themselves over and over. Other studies have shown that patients are more honest with a virtual provider about sexual history, mental illness, substance abuse and other issues they may be reticent to discuss with a doctor. Patients view nurses and physicians as very busy, and frankly, high-status, people. They don’t want to waste their time or embarrass themselves.

The article (correctly) stresses that AI doesn’t replace the human relationship. In its current state, AI is repetitive in providing ongoing support for chronic issues and is a far cry from actual human touch or empathy. But the piece stops short of recognizing that the real question is not whether AI will replace clinicians, but how it can supplement the care team, reduce labor costs, gather detailed information, and create an experience that’s better than human interaction alone.


That’s it, we’re outta here! Hoping you and yours have a great holiday weekend, full of family, fun and relaxation. Thanks for taking the Weekly Gist along for weekend reading, and don’t forget to share it with a friend or colleague and subscribe if you haven’t already.

When you’re back in the office next week, let us hear from you! If there’s anything we can do to be helpful in your work, please don’t hesitate to get in touch. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com