Consulo Indicium - 3/19/19

Information for your Consideration…

The President’s Budget – As Presidential Budgets go, it is like all of the others that have been submitted in recent years.  Whether the President is Democrat or Republican, the characterization is the same: “Dead On Arrival”.  So, I wasn’t surprised when the Trump Administration recently laid out their FY2020 Budget to hear the same clarion call that Republicans gave to the Obama Administration.  A couple of key points and items of interest should be noted in the President’s Budget; however, including the following:

  • The discretionary portion for the Department of Health & Human Services funding was reduced to $87B (↓12% from FY2019).  That’s a fairly sizeable chunk of change and cuts deeply into the innovation side of DHHS spending.
  • National Institutes of Health (NIH) was proposed at $34.4B or, a reduction of $5B (↓12% from FY2019.
  • National Cancer Institute (NCI) was slotted at $5.2B, a reduction of $900M (↓15%)
  • National Institute of Arthritis & Musculoskeletal & Skin Diseases (NIAMS) – $521M, a reduction of $84M (↓20%).
  • Food and Drug Administration (FDA) – $6.1B or, a $643M Increase (↑12%) 
  • Mandatory Spending for Medicare & Medicaid is project to result in savings or reductions (depending on how you count it) of $1.25 Trillion over the next 10 years.  Now, that will be accomplished primarily through:
  • Modifying payments to hospitals for uncompensated care = $98B in savings over the next 10 years;
  • Consolidating and block granting graduate medical education payments = ($47.9B);
  • Reducing Medicare coverage of bad debts = ($38.5B);
  • Paying on-campus hospital outpatient departments at the physician office rate instead for certain services = ($131.4B); and,
  • Paying all hospital-owned physician offices located off-campus at the physician office rate = ($28.7B).
  • Not to be excluded were Prescription Drug Costs which were slotted for reductions or savings over the next decade with the following proposals:
  • Eliminating cost-sharing on generic drugs and biosimilars for low-income subsidy (LIS) enrollees = ($930M) over 10 years;
  • Excluding manufacturer discounts from calculation of out-of-pocket costs in the Medicare Part D coverage gap to correct misaligned incentive and treat brand and generic drugs the same when calculating out-of-pocket costs = ($74.7B) over 10 years;
  • Eliminating pass-through payments for drugs to lower out-of-pocket costs by making them eligible for the reduced 340B payment level= ($4.3B) over 10 years;
  • Reform exclusivity for first generics to spur competition = ($1.2B over 10 years; and,
  • Establishing a beneficiary out-of-pocket maximum in the Medicare Part D or, a cost of $14B over 10 years.
  • Other items of interest included the elimination of funding for the Agency for Healthcare Research & Quality (AHRQ) where the functions would be moved into a new National Institute for Research in Safety & Quality.

New Interoperability Rules Proposed by CMS – In a move that has been advocated by many of us for some time now, HHS finally proposed new interoperability rules requiring insurers of Medicare Advantage, Medicaid, Children's Health Insurance Program and Affordable Care Act plans to provide electronic health data in a standard format at no cost by 2020.  Kudos to the Office of the National Coordinator (ONC) for Health Information Technology who pushed the requirements forward at the various agencies including CMS. The information included in the rule stipulates that diagnoses, procedures, tests and providers that the patient has seen, and provides insights into a "beneficiary's health and healthcare utilization," according to a summary on the CMS proposed rule. The requirements would be accomplished through the use standard APIs or Application Programming Interfaces which allow disparate software products communication through standard interfaces on selected data. The new rule also stipulates that insurance providers who block the information will be publicly identified with the intent of ending the practice. It will be interesting to see if anyone objects to this portion of the rule.  Now, a final cautionary note.  With the CMS notice running at 251 pages and the ONC notice, at 724 pages – be prepared for a long week of review.  I’ve only glanced at the surface.  The new rules deserved your review, consideration and response. 

Baby Boomers Drive Higher Health Spending Costs in USA – In news that didn’t rock my day – in large measure because it is so obvious – CME came out with a new report citing that the US health spending rate is projected to grow from a current state of $3.6 trillion in 2018 to about $6 trillion by 2027 – or, within the next decade.  That represents about a 5.5% annual growth rate due to primarily Boomers getting older but also the rising costs of medical goods and services.  The growth also means that the percent of GDP devoted to health care is projected to grow from 17.9% (2018) to 19.4% (2027).  The good part – if you can say that increasing our proportion of GDP health care is good – is that the growth rate is far below the 1990-2007 period which experienced an average of annual 7.3% growth rate.  Regardless, the growth does continue and for every point of a percent that we take out of the GDP for health care, there is a reduction in expenditures someplace else.  I won’t go into the litany of reductions but my two favorites are education and infrastructure.  For a complete review of the findings, you should review the recent Health Affairs article which provides an overview of the findings from the US Office of the Actuary. It’s clear to me that a change in our nation’s payment model is moving into rapid focus along with cost management.  Without such change, I keep arguing that we – The Boomers – will bankrupt the nation.  And, I really don’t see that the Millennials and beyond are going to let that happen :-)

But, It’s Not Just The Boomers – One of the more disturbing news items in recent weeks has been the number of outbreaks from measles and other very controllable infectious diseases.  Facts matter here.  The fact is that immunizations save lives.  If there are real, documentable reasons why children (or adults) should not receive immunizations, it should be considered.  But, simply because you read junk information on the web and come to the conclusion that it’s true when it is not – is NOT a good reason to allow parents or others to simply skip out on required immunizations.  Perhaps we should let people forget about stop signs because someone wants to get to their destination quicker or how about just ignoring solid lines on the highway when we are going over a hill.  Perhaps we should do away with hand washing in public restaurants for those that don’t feel it is necessary.  There is a litany of half-baked ideas out there that could support any one of these ideas.  And, they are not facts.  They are not true.  Let’s get serious.  

Reconfiguring Primary Care – The leader of Medicare's innovation center, Adam Boehler, recently unveiled his thinking for a new model for primary care physician payments where he intends to "blow up" how primary care is reimbursed. One of the primary objectives is to adopt telehealth and online consultations.  You can check out the full report at STAT.

The Continuing Disintermediation –While I am an ardent supporter of technology, I’m increasingly concerned with the ongoing disintermediation of health care services.  The splintering is becoming a problem as more and more organizations enter the market by offering up solutions that provide “immediate” care.  The problem is not the solutions.  It is; however, the fact that the solutions are most often totally disconnected from the ongoing “care” of an individual.  It is not only the call-from-anywhere health clinics (e.g. AmericanWell, MDLive, etc.).  The newest one on the block is OnMed which are standalone kiosks where you can get immediate care 24x7 from online physicians.  In addition, you can also get your prescriptions filled right in the kiosk.  Does this mean that CVS and Rite Aid are next in the disintermediation play or will they simply deploy these devices?  While it is absolutely true that about ¾ of primary care can be provided on a virtual basis, the remaining 25% is crucial and requires face-to-face time.  The problem on the horizon is the dropped information, the disconnected virtual care, the miscommunication and other problems that will no doubt arise as more and more players enter the 75% without considering the 25%.  We may be creating more problems than we are solving. What are your thoughts?

In Case You Have Not Heard About Xcertia – On the possibility that you may not have heard about Xcertia, I thought I might include a short piece on it for the blog.  Xcertia is a joint initiative sponsored by the American Medical Association (AMA), American Heart Association (AHA), DHX Group and, the Healthcare Information and Management Systems Society (HIMSS) to focus on mHealth App standards and guidelines. The collaboration is bringing together the independent efforts of each organization to foster safe, effective, and reputable health technologies. Late last year, the organization released its Privacy and Security Guidelines as part of a multi-staged, annual approach toward defining guidelines for mHealth Apps.  The organization has tapped the expertise of members from the AMA, AHA, Partners HealthCare, PCHAlliance, HIMSS, Consumer Technology Association and others.  Check it out.  They are providing a very valuable service to the public and the health care community.  Here are some other issues that have been highlighted of late that need to be considered:


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