October 4, 2019

The Weekly Gist: The October Rivalries Edition

by Chas Roades and Lisa Bielamowicz MD

It’s that time of year again…October baseball! While our hometown Washington Nationals are in the mix this year, thanks to a heart-stopping turn of events in the NL Wild Card game this week, the truth is our loyalties lie elsewhere. With one of us a lifelong Astros fan, and the other a longtime Dodger supporter, our new annual ritual has become eyeing the progress of both of our teams toward a much hoped-for World Series matchup. Off to a good start for both teams! If nothing else, it’s a welcome distraction from what’s otherwise been a headache-inducing week in our nation’s capital.

THIS WEEK IN HEALTHCARE

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

President Trump vows to protect Medicare from “socialist destruction”

In a fiery speech in Florida on Thursday, President Trump unveiled a new Executive Order on “Protecting and Improving Medicare for Our Nation’s Seniors,” aimed squarely at staking out his position on healthcare, which has emerged as a centerpiece of the 2020 Presidential campaign. The order was original titled “Protecting Medicare from Socialist Destruction”, and Trump’s remarks, delivered to a group of retirees, matched the tone conveyed by that line. Painting “Medicare for All” (M4A) proposals, favored by some Democratic candidates, as an existential threat to the viability of the existing program, Trump called for measures to inject market forces into Medicare, in particular looking to bolster private Medicare Advantage (MA) plans. Among other elements, the Executive Order instructs the Department of Health and Human Services (HHS) to devise new regulations to encourage MA insurers to offer supplemental benefits such as telemedicineallow MA enrollees to share in savings generated from cost-savings initiatives, and bring innovative care models to market with fewer regulatory constraints. Notably, the order instructs HHS to propose measures to use MA-negotiated rates to set provider prices in Medicare fee-for-service, and to encourage more value-based insurance design in the Medicare program. The order also revisits site-neutral payments as a policy objective, despite a recent court decision that held that HHS’s latest attempt to move to site-neutral payments amounted to regulatory overreach. On the whole, the order reads as more of a political document than a policy proposal, largely composed of a grab-bag of existing efforts already ongoing across HHS. The President clearly intends to position himself as a defender of the Medicare program against “radical” Democratic coverage expansion ideas, a stance made possible by some Democrats’ decision to frame their universal coverage proposals as “Medicare for All” (which is inaccurate—the M4A proposals currently on the table would largely replace, not extend, the existing Medicare program). Look for more fiery healthcare rhetoric on the campaign trail in the months ahead.

Sanders pauses campaign events after cardiac procedure

On Wednesday, Bernie Sanders was rushed to a Las Vegas hospital after experiencing chest pain during a campaign event. Sanders reportedly underwent a cardiac catheterization, which found a blocked artery that was treated with two stents. As of Friday, Sanders was still in the hospital. Cardiologists on Twitter observed that a stay of this length is unusual for a routine stent placement, raising speculation of whether Sanders experienced a heart attack or had other complications. The campaign has been tight-lipped about the status of the 78-year-old candidate, not revealing details or allowing the media to interview his doctors. Given that the President and the three leading Democratic candidates are all over 70, Sanders’ procedure will surely raise questions about his fitness for office and draw additional scrutiny to the health of other candidates. It will also bear watching whether Sanders’ health scare (and likely VIP treatment) affects his healthcare campaign message and “Medicare for All” policy proposals, which are the most aggressive of the Democratic field.

Walmart building low-cost provider networks for its employees

This week Walmart announced yet another new plan to encourage its employees to get lower-cost care. It will send employees to so-called “featured providers”, primary care and specialist doctors who have been identified as providing better care, with the goal of lowering overall employee health benefit spend. Kaiser Health News reported that in return for using those physicians, employees will get a discount on out-of-pocket expenses. The retailer is partnering with startup Embold Health, founded by Dr. Daniel Stein, former Chief Medical Officer of Walmart Care Clinics, to analyze claims data to determine which doctors provide the most “appropriate, effective and cost-efficient care.” According to the company’s website, employers can tailor their networks to meet specific care and cost needs. It’s not clear what metrics the company is using to evaluate doctors, or how Embold’s proprietary algorithms prioritize cost versus quality, or whether providers are evaluated at the individual or group level to form the “bespoke” networks. To begin, the program will be limited to 60,000 Walmart employees in Northwestern Arkansas, central Florida and Dallas-Fort Worth.

Walmart also announced other initiatives this week, including a healthcare “assistant” program to help employees find a provider or understand a diagnosis, and expanded telehealth services, including behavioral health, preventive care, and chronic care management. These announcements come on the heels of the company’s launch of an expansive new clinic model to provide comprehensive primary care and other services in standalone retail locations. Given that Walmart is pursuing both internal, employee-focused and external, consumer-driven healthcare strategies, the provider networks it establishes for employees today will likely be used down the road for referrals from its clinics, and as the network for any future, low-cost insurance offering.


GRAPHIC OF THE WEEK

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

Confronting the limits of consumers’ ability to pay

It’s become commonplace to observe that many Americans are just one bad diagnosis away from financial ruin. We all know the data on rising deductibles, coinsurance levels and out-of-pocket maximums that tell the tale of a population more directly exposed to the cost of care than ever before. A report from the Commonwealth Fund adds to the picture. The report shares survey data indicating that Americans’ confidence in their ability to pay their healthcare bills is falling. A quarter of those surveyed said healthcare has become less affordable over the past year, and healthcare bills now rank among the top four financial worries of most Americans (after housing, college costs, and retirement). But most striking is the finding that nearly half of Americans feel that they would be unable to come up with sufficient cash within 30 days to pay a medical bill of $1,000 (as depicted on the graph below). That’s a startling reality, given the size of deductibles faced by many Americans. For those with employer-sponsored insurance, the average individual deductible is now north of $1,500, and deductibles for those buying insurance on the Obamacare exchanges can be four times as high.

And the “safety net” doesn’t provide much comfort either. Among Medicaid enrollees, the survey found just a fifth of respondents could foot a $1,000 bill—not surprising. But Medicare enrollees face their own financial worries, given the high level of cost sharing in the Medicare program. On top of a $1,300 annual premium and $147 deductible for Medicare Part B coverage, enrollees in traditional Medicare are on the hook for 20 percent coinsurance for physician visits and other outpatient services. And for hospitalization, enrollees have a nearly $1,200 deductible for each admission. Drug coverage brings its own cost-sharing, and—most critically—there is no out of pocket maximum for traditional Medicare beneficiaries.


THIS WEEK AT GIST—ON THE ROAD

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

Weaning ourselves from “pockets of profitability”

Lisa:
With the Trump administration reaffirming its intention to move site-neutral payments this week, I was reminded of a discussion with a health system’s physician leaders where the issue was front and center. For part of our day together, I led doctors through an exercise to brainstorm solutions the health system and its doctors could pursue to increase value to consumers and patients. Two small groups zeroed in on eliminating hospital-based billing for outpatient diagnostics and procedures as a top consumer need—which was then voted by the group as the highest-priority consumer solution. As the vote unfolded the system COO leaned over and whispered, “I agree with the perspective of the docs, but just know that if we went to site-neutral payment today, we’d lose $40M this year. That’s essentially our entire system margin.”

While I sympathize with their financial predicament, it’s difficult to argue against site-neutral payment from the patient’s perspective. And the issue resonates deeply with doctors—and is being trumpeted by the growing number of independent physician “aggregators” looking to court doctors away from health system employment as a prime example of low-value care strategies that benefit neither physicians nor consumers. They’re not wrong. Health systems need to quickly wean themselves from these “pockets of profitability” in the payment system. Any strategy built on them is surely time-limited and sends a questionable message to patients regarding the system’s understanding of value.

Hiring for fit, or fitting to new hires?

Chas:
For better or for worse, there’s a great deal of executive-level turnover happening in US health systems. Part of it is generational—many senior leaders are in their late 50s or 60s, nearing retirement. Part of it is environmental—new market pressures and industry consolidation have changed the needs and configuration of many senior teams. And some of it is a combination of both—tenured executives looking at what lies ahead and deciding that they’d rather not deal with (yet another) upheaval in healthcare. The upshot? Many systems find themselves bringing in new executives from other markets and other organizations, just at a time when big, strategic decisions are on the table. We’ve seen this play out in different ways among the organizations we serve, mostly for the good; bringing in new perspectives and fresh eyes can serve as a “transmission belt” of strategic and cultural renewal. But there can be challenges as well. It’s easy to bring in a junior hire and get them to adapt to the organization’s culture, but it’s hard to teach old dogs new tricks. Something I encourage our members to do when considering bringing in new senior leaders is to recognize that cultural adaptation will work in both directions—your system will have to adapt to the new leader, not just the reverse. It’s worth thinking about how the new hire’s experience, and existing perspectives and biases, will cause your organization to change before bringing a new executive on board. Food for thought.


ON THE GIST TURNTABLE

Give this a spin—you might like it.

With little advance notice and almost no fanfare, the legendary Australian post-punk godfather Nick Cave released his 17th album with his band The Bad Seeds last night. Ghosteen is an astoundingly beautiful and wrenchingly sad meditation on grief, and despite coming late in Cave’s storied career, is possibly the best work he has ever produced. Still grappling with the tragic 2015 accidental death of his 15-year-old son, Cave has assembled a bleak collection of eleven tracks, combining probing, somber lyrics with a dreamscape of electronic sounds that emphasize the Romantic elements of his usual Gothic aural vocabulary. “I’m speaking about love now/And how the lights of love go down,” he intones on the album’s title track. The theme of ghostly presence, a spinning spirit world inhabited by lost loved ones, pervades the album, and Cave’s raw emotion is almost unbearable as he contrasts the physical absence and metaphysical presence of his own “ghost teen”. Now in his early 60s, Cave has somehow developed even more vocal range and power, which, coupled with the lyrical wisdom he brings to the project, makes for a shattering and breathtaking listening experience. Best tracks: “Ghosteen”; “Waiting for You”; “Hollywood”.


WHAT WE’RE READING

Stuff we read this week that made us think.

Trumpeting the (still relatively small) gains made by Medicare ACOs

Medicare’s new “Pathways to Success” initiative, which redesigned the Medicare Shared Savings Program (MSSP) to encourage participating accountable care organizations (ACOs) to move more quickly into “downside risk” arrangements, launched just this past July. Judging from Medicare’s latest report on the results achieved by MSSP participants, the new push to more aggressive forms of ACOs should bear fruit. That, at least, is the assessment of Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, writing on the Health Affairs blog this week. According to Verma, MSSP generated nearly $740M in savings for Medicare in 2018, with 548 ACOs participating. ACOs taking downside risk outperformed their “upside only” peers, generating 40 percent higher savings per beneficiary. Further, physician-led ACOs (which the Pathways initiative dubs “low-revenue ACOs”) outperformed hospital-led (or “high-revenue”) ACOs as well, generating nearly seven times more savings per beneficiary. Verma pointed to these results, along with growing MSSP participation, as a sign that her agency’s focus on accelerating the transition to full-risk accountable care is a step in the right direction. While it’s encouraging to see the ACO program generate positive savings for Medicare for the second year running, it’s worth putting the scale of savings in context: total Medicare spending amounted to $731B in 2018, meaning that savings from Medicare ACOs were about 1/1000th of the total Medicare budget. Clearly, we’ll need the program, and other payment reforms, to achieve much greater scale before declaring victory in the effort to bend the Medicare cost curve. Still, it’s a start.

Rethinking the ramifications of cancer screening

This week an NEJM special report looks back at over 40 years of cancer mortality and incidence data to better understand the population-level impacts of advances in cancer diagnostics and screening. The great news: a steady decline in cancer death rates, driven in large part by success in smoking cessation and resulting declines in lung cancer. There have been transformative improvements in outcomes for some cancers. For instance, some leukemias and lymphomas, which were death sentences a few decades ago, are largely treatable. And the incidence of certain cancers, including stomach, colon and cervical cancers, is declining. But this decline has been more than offset by increases in a large group of malignancies—breast, prostate, thyroid, kidney and melanoma—that the authors posit are rising largely because we may be over-diagnosing disease. They describe a flywheel of more aggressive screening, leading to earlier diagnosis, which then improves survival rates, since very early disease is more easily treated—all of which increases the enthusiasm for more screening. What is less clear is the degree to which this has benefitted patients, and one author questions whether we are buying more health, or simply more testing and treatment. A separate study this week recommends taking a risk-based approach to colon cancer screening, weighing an individual’s risk of disease versus the potential complications of invasive screening—which could lead to a “seismic” reduction in the number of colonoscopies if applied broadly. For hospitals, doctors, and medical technology companies, that aggressive screening provides billions of dollars in additional revenue from cancer diagnostics and intervention. Redefining what is in the patient’s best interest with regard to cancer screening could have broad implications, and dramatically reshape the oncology business model.


That brings us to the end of another edition of the Weekly Gist. Time to hit “send”, then flip on the TV and catch the highlights of game 1. Here’s hoping you have an enjoyable weekend, and thanks so much for taking time to read our work. If you’ve found it worthwhile, please don’t forget to forward it to a friend or colleague and encourage them to subscribe. And for more updates and commentary on the world of healthcare, be sure to check out our daily podcast—you can find the link on our website.

Most importantly, please be sure to let us know if we can be of assistance in your work. 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