|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Further confusion on the coronavirus testing front
With all 50 states now in the process of reopening, data reported by public health agencies on coronavirus testing is under increased scrutiny. The issue is not how many tests are being conducted—that number has dramatically increased nationwide (although experts still caution that total testing should be about three times higher than the current 300,000 per day). Rather, as reported this week, the issue is what kind of tests are being included in public reporting. It emerged this week that several states—including Georgia, Texas, Pennsylvania, Vermont, and Virginia—have been combining statistics on polymerase chain reaction (PCR) tests, used to diagnose current infection, with antibody blood tests, used to detect past infection. More troublingly, The Atlantic reported on Wednesday that the Centers for Disease Control and Prevention (CDC) has been doing the same thing, which artificially inflates the number of tests conducted, and makes the numbers difficult to interpret. Among other experts, Dr. Ashish Jha, director of Harvard’s Global Public Health Institute, was stunned: “You’ve got to be kidding me. How could the CDC make that mistake? This is a mess.”
Accurate testing data is critical to determine the pace and scope of reopening, and to monitor for resurgences of the virus that might necessitate future restrictions. It’s important to know who’s infected now for clinical reasons, and it’s essential to understand who’s already been sick for public health purposes. Combining the two datasets is positively unhelpful, and likely only serves a political purpose. Testing problems have proven to be this country’s original sin in the way the coronavirus pandemic has evolved, but it’s not too late to make sure that we have ample, accurate, and well-reported testing to guide critical public health decisions. US coronavirus update: 1.62M cases, 95K+ confirmed deaths, 12.9M tests conducted (of some type).
Insurers continue to pay rebates while providers struggle
Blue Cross Blue Shield of Michigan became the latest health insurer to announce plans to refund money to its enrollees, as reimbursement for healthcare services dropped in the wake of the coronavirus pandemic, with many hospitals and physicians curtailing operations. The company will return $100M to enrollees, in the form of premium discounts and refunds, and said it might increase that amount later in the year depending on how quickly health spending picks up again. UnitedHealthcare (UHC), Cigna, and Humana are among the other insurers who have recently announced similar plans, with UHC alone slated to give back $1.5B to purchasers. Under the Affordable Care Act, plans must spend between 80 and 85 percent of the premiums they collect on medical care, depending on the segment of the market they cover, and must return excess profits to purchasers if they do not. Insurers are getting ahead of this requirement by returning money now to their employer and individual-market customers.
Meanwhile, some industry observers have begun to question why insurers, who have weathered the pandemic in good financial shape, are not spending more to stabilize the operations of struggling hospitals and physicians in their networks. For instance, Harvard researchers Leemore Dafny and Michael McWilliams proposed this week that insurers extend a “primary care boost” of 50 percent to their payments to doctors through the end of this year. Getting plans to act in concert to support providers will prove to be challenging, of course, and the temptation to free-ride on others’ generosity and instead “spend” excess premium dollars to return cash to customers may prove too strong for its public relations and loyalty benefits. Or perhaps there are more Machiavellian motives at play: allowing physician practices to suffer financially could result in lower practice valuations, as insurers set their sights on further “vertical integration” plays in the months to come.
Optum acquires a postacute care company
In a deal reportedly valued at nearly $2.5B, UnitedHealth Group’s Optum division announced this week that it has acquired naviHealth, a Brentwood, TN-based company that manages postacute care for health systems and health plans through delegated, full-risk arrangements. Using local clinical staff and its proprietary decision support technology, naviHealth directs discharged patients to the most appropriate postacute setting, and guides them through their care to reduce readmissions. NaviHealth is also the largest Centers for Medicare and Medicaid Services (CMS) bundled payment convener, working with more than 140 hospitals in the Bundled Payments for Care Improvement Advanced program. In 2015, the company sold a majority stake in its business to Cardinal Health, which subsequently sold its position to a private equity firm in 2018. The acquisition represents a major expansion of Optum’s care delivery portfolio into the postacute space, and provides a proven mechanism to reduce the high cost of care for seniors in its rapidly growing Medicare Advantage plans. Suggesting that the company’s technology and care model might be applicable to other settings, naviHealth CEO Clay Richards said UnitedHealth’s resources will allow the company to expand its focus to the patient’s journey across the entire care continuum. Given that the risk of COVID infection is especially high in postacute and long-term care settings, it’s worth watching whether naviHealth implements network tiering based on demonstrated “COVID-free” safety measures, or pivots to support increasingly popular home-based care options.