With a new Congress, health care is once again an issue of tremendous scrutiny and debate. Many of the federal policy debates in 2015 will be largely symbolic, resulting in little more than tweaks to existing law.
However, health care policy is not just a matter for Congress to consider. A range of issues will play out in the states and the private sector, effectively shaping the future. Below are the top trends we’re watching this year.
The Year of Living Interoperably
From electronic health records (EHRs) to clinical measures and decision support tools, providers are inundated with new technologies that automate processes and capture new types of data. However, these systems are limited in their potential because they don’t all “talk” to one another. They’re locked away within proprietary technologies that render them the equivalent of an email account that only sends messages to people in your company, or a phone that only makes calls in your house.
As long as data remains captive behind proprietary walls, we can’t unlock its true potential, which helps explains why widespread dissatisfaction exists among providers. According to a recent survey conducted by Premier and the eHealth Initiative, 95 percent of providers say interoperability challenges limit their ability to exchange data across care settings, a problem that becomes an even greater issue as providers expand their IT with data warehouses to pull granular health information from a wide variety of disparate sources. The ability to seamlessly integrate this data into a single repository is essential for providers to be able to mine information, spot community health needs, improve population health management, reduce costs and improve quality.
Health care’s interoperability revolution of 2015 will likely bring renewed pressure on proprietary systems. On one hand, the government’s Office of the National Coordinator will push for interoperability as a core requirement of Meaningful Use stage 3. At the same time, providers will push for application programming interfaces (APIs) and open source tools that developers can use to design new applications that make sense of all the data, and that turn it into something clinicians can truly leverage. Taken together, these pressures signal that this year could be a turning point for interoperability.
What Goes Up Must Come Down
It’s rare to see the insurance industry, patient groups, employers, providers and pharmacies all aligned on a single issue. But the high cost of new specialty drugs has raised fears across the industry. Specialty drugs are expensive to develop and target a very small subset of the population. To recoup research and development costs on therapies for a small pool of users, specialty drugs tend to carry very high price tags that can range from $30,000 up to $1 million over the course of treatment. Just 1-3 percent of the population uses specialty drugs, yet spending for these therapies will account for 50 percent of total U.S. drug expenditures by 2018.
While specialty drugs have the potential to reduce the total health care bill as patients are cured of chronic illnesses and avoid costly complications, the near-term cost problem is hard to overcome. Some state Medicaid programs estimate that specialty drug treatments could increase their budgets by nearly 15 percent, prompting them to ration the drug to all but the sickest, most in need patients. Moreover, Senators Ron Wyden (D-OR and ranking member of the Finance Committee) and Charles E. Grassley (R-IA and chairman of the Judiciary Committee), have launched an inquiry into the pricing strategy behind these types of drugs, which will keep pharma costs in the news and the crosshairs of consumer groups.
In Congress, we can expect the Democrats to push for laws that would enable Medicare to enter into price negotiations with drug makers. On the other side, Republicans are likely to advance private sector solutions, such as a streamlined process for the Food and Drug Administration to approve generic specialty drugs or competing products in the same treatment category, in the interest of healthier, more competitive markets.
Although almost all attention has focused on federal programs designed to incent greater care coordination, disease management and preventive care, innovations are starting to take root in the states, too. This trend is being driven by two factors: 1) the strain on state budgets, particularly as they absorb the cost of the newly eligible Medicaid population, and 2) the need to align with federal programs that push providers toward more coordinated, accountable care.
Oregon provides a great example of early Medicaid innovation with its Coordinated Care Organizations. This model provides a fixed monthly payment to providers and community groups to deliver comprehensive care for Medicaid recipients. These organizations are incented to change health care from the inside, controlling costs by working directly with patients and the community to improve the health status of the population.
Early results from the Oregon program are encouraging: providers in the state report a 21 percent drop in the use of emergency department services, a 9.3 percent decline in hospitalizations for diabetes and a 48 drop in hospitalizations for chronic obstructive pulmonary disease or asthma. These results were not the outgrowth of care rationing, as spending for primary care increased by 18 percent over the same time period. In other words, patients are either getting healthier or receiving the care they need in more appropriate settings.
Encouraged by the Oregon example, 10 other states have enacted similar programs, and many more can be expected to follow in 2015.
Let The Sun Shine
More and more health care data will be made available to public scrutiny in 2015. The newest area of transparency is financial, with Medicare’s release of physician procedure charges across the nation, as well as new data comparing insurance plan premiums and benefits through the health insurance marketplace. Also new this year is the Open Payments website, allowing anyone to see payments of value made by drug and device manufactures to care providers. In 2015, look for this debate to continue to expand as individuals become more receptive to pricing information now that many are facing higher co-pays, premiums, deductibles and high-value networks.
Perhaps even more important than the financial aspect is the increasing prevalence of quality and performance measures data. Medicare got into the transparency game with its provider star rating website, which has expanded in the last few years to include data on hospitals, physicians, nursing homes, home health providers, and dialysis centers. A spate of private sector firms also provide quality data, including groups such as Consumer Reports, Leapfrog Group, Consumer’s CHECKBOOK, and more.
But transparent quality data is still very much in its infancy, and can be based on disparate, complicated measure sets that aren’t usable by consumers interested in making meaningful comparisons. Watch for continued developments in this evolving sector.
Bundled Payment Takeover
Along with all the attention on accountable care organizations (ACOs) as the leading model for care transformation, this year will see a rapid expansion in bundled payment. Bundled payments group all the services patients receive during an episode of care — including for conditions that require pre- and post-hospital care, such as heart surgery or hip and knee replacements — under a single target fee; if providers are able to provide necessary services more efficiently and with a higher quality outcome, they keep a portion of the savings generated.
Paying for care across the whole episode, rather than paying for each service separately, has advantages that directly benefit patients. For one, a bundled payment incents physicians, nurses, specialists and post-acute providers to collaborate to ensure the best outcomes – they are all equally responsible for controlling the quality and cost of services, as well as costs associated with preventable complications. For another, it mirrors how patients envision their care. A knee replacement patient thinks of the totality of their care and the outcome of the procedure, not all the individual aspects that went into providing it.
Although the voluntary federal bundled payment testing program was slow to get off the ground, it could have thousands of participants in 2015, making it the most popular value-based payment program in the country. And bundled payments are also taking off in the states. Today, the Arkansas’ Medicaid program has a mandatory bundled payment program in place for 10 different conditions, with additional procedures coming into the program each year. Tennessee and Ohio will introduce similar programs in 2015. Employers are also jumping on the bundled payment bandwagon, with Wal-Mart and Lowes offering no-cost knee- and hip-replacement surgeries for more than 1.5 million employees who seek treatment from facilities participating in a bundled payment program. Kroger has a similar program in California for orthopedic procedures, as does Boeing in Illinois for cardiac care.
With all the experimentation going on, 2015 could be the year that we prove the merits of the concept and diffuse best practices for success in the new model. Going forward, it is highly possible that bundled payment will become a mandatory program in additional states, and at the federal level soon thereafter.