Life Science Compliance Update

April 05, 2016

2015 Front Line of Healthcare Report – CME and Conferences are a More Frequently Utilized Source of Information

Bain & Company, Inc. has published their Front Line of Healthcare Report 2015, a report that focuses on the shifting United States healthcare landscape by the numbers.

Bain & Company took a natural survey of 632 physicians across specialties and 100 hospital procurement administrators in the United States in an attempt to update their 2011 Physician Attitudes Survey. To highlight the idea that the dynamics of change vary substantially across different regions of the country, Bain oversampled two regions with distinct market characteristics (Massachusetts and Mississippi/Alabama). Bain found that in states like Massachusetts, the pace of change is faster because of several factors in play: more competition among payers and provider organizations, and an activist policy and regulatory environment that promotes change.

Since the report is focused on the shifting United States healthcare landscape, the report opens with a brief infographic that includes a variety of information on just how much the landscape is changing. For example, of physicians who have changed employment in the past five years, almost three-fourths, 72%, now work in large management-led organizations. Additionally, it was noted that in the last three years, the percentage of surgeons who state that procurement officers influence most of the purchasing decisions for devices has more than doubled, and 65% of physicians say that formularies limit their prescribing decisions.

Bain found that CE and conferences were a much more influential to physicians than their interviews in 2011 with a 23% increase in the utilization of CE as a source of information. Physicians are relying more and more on CME to help them figure out what to do next for their patients. Other sources of information that increased included Key Opinion Leaders (16%), Manufacturer Websites (9%) and Academic Journals (7%) big losers included Colleagues (-10%), Pharmacists (-18%) and Sales Reps (-26%). One could hypothesized that systems integration has actually lead to less communication between colleagues and discussions with pharmacists. In large systems physicians have quota's to meet and patient discussions are happening less and less with colleagues. In the same vein sales reps have been continuing to lose access especially to physicians who join integrated health systems as time is a huge commodity in those systems.

Financing and Delivery of Healthcare

Even though healthcare costs have slowed, per capita costs do not seem to have decreased. Organizational shifts and the trend toward consolidation and more professionally managed organizations have produced many changes, including: increasing the use of standardized clinical protocols and electronic medical records, more objective metrics for measuring clinical performance, payment models that put providers at risk for outcomes, and a shift in physicians' perceptions of their own cost responsibility.

When physicians were asked about their change in use of analytic and clinical tools over time, they responded that over the last two years alone, their use of electronic medical records (EMRs) has nearly tripled, and use of treatment protocols more than doubled. Bain also found that physicians who work in management-led systems of care tend to be significantly less likely to recommend their organization to others than those in physician-led organizations. One explanation could be that physicians in management-led organizations also report having less knowledge of their organization's mission and being less engaged in the organization's activities.

Direct Impact on MedTech and Pharma

These changes in healthcare affect the entire supply chain, and as delivery systems continue growing larger and more complex, decisions become more focused on outcomes and economics.

While centralized purchasing in healthcare organizations is not new, Bain found that there is an increasing use of preferred vendor lists by procurement departments, which is quickly reducing the number of available products and putting lower-share players at risk. It is estimated that forty percent of surgeons no longer use a particular product because it is no longer available at their hospital.

The decline in physician autonomy is also affecting the pharmaceutical sector, with the exception of selected specialties that are highly differentiated and require drugs with a high-impact nature (i.e. oncology).

These shifts in decision-making power also have an effect on where physicians and surgeons obtain information about new products. For decades, sales representatives have been a common and highly valued source of information. Today, however, physicians are relying more on manufacturer websites, academic journals, and conferences. In Bain's recent survey, only 41% of physicians reported sales reps as being one of their top three sources of information about a new drug, compared to 56% three years ago. This holds true for medical devices as well, with 48% of surgeons reporting that sales reps are an important source of information, down from 59% three years ago.

However, those figures vary widely from state to state, as well as physician demographics. Of surgeons in Alabama and Mississippi, 69% rate sales reps as one of their top sources of information, compared with only 31% in Massachusetts. More experience physicians, orthopedic surgeons, and cardiologists, also report a higher reliance on sales representatives, as do self-employed physicians.

What Does This Mean?

With the purchase of drugs and devices becoming more competitive and centralized in hospitals and drug benefit plans, it is important for sales representatives to adapt to serve a more complex customer. To meet the likely challenges ahead, manufacturers will need to develop more sophisticated and flexible go-to-market models that reflect both regional and practice differences. The pharmaceutical, device, and MedTech companies that come out ahead will be those that can achieve flexibility while minimizing the complexity of their operating model. Manufacturers should also recognize that category leadership will likely continue to matter more than range in a company's portfolio when it comes to both loyalty and advocacy.

March 01, 2016

Senate Develops Policy Measures to Help Those Battling Chronic Illness

In 2014, the United States Senate Committee on Finance took a step toward improving care for the millions of Americans who are managing chronic illness. During a hearing entitled "Chronic Illness: Addressing Patients' Unmet Needs," Senators heard compelling testimony from individuals who are battling multiple chronic medical conditions, and who are seeking more effective tools to help them navigate the healthcare system. Senators have also heard from providers, employers, and health plans about the unique challenges each of them face in trying to offer quality healthcare at low costs.

The Senators in attendance at the first hearing began to understand the problems faced by many Americans, and they set a second hearing in May 2015, "A Pathway to Improving Care for Medicare Patients with Chronic Conditions." During that second hearing, Senators once again heard testimony, this time from experts at the Centers for Medicare and Medicaid Services (CMS) and the Medicare Payment Advisory Commission (MedPAC). This hearing allowed Senators to better understand how current chronic care coordination programs are working today, the challenges that remain, and possible solutions to improve health outcomes for Medicare beneficiaries.

The May 2015 hearing prompted the creation of the Finance Committee chronic care working group, co-chaired by Senators Johnny Isakson and Mark Warner. The working group studied stakeholder input and comments and conducted 80 stakeholder meetings to discuss various ideas to improve the way care is delivered to Medicare beneficiaries with chronic diseases. After reviewing all submissions and taking into account all meetings, the working group outlined three main bipartisan goals that each policy under consideration should strive to meet. Each proposed policy should:

  1. Increase care coordination among individual providers across care settings who are treating individuals living with chronic diseases;
  2. Streamline Medicare's current payment systems to incentivize the appropriate level of care for beneficiaries living with chronic diseases; and
  3. Facilitate the delivery of high quality care, improve care transitions, produce stronger patient outcomes, increase program efficiency, and contribute to an overall effort that will reduce the growth in Medicare spending.

The working group strives to operate in an open and honest fashion, and as such, has released an options document summarizing key policy ideas they are considering. This document remains a working document, and eventually the Committee and working group realize that they will have to involve the Congressional Budget Office (CBO) in scoring proposals to determine their impact on federal spending. The Chairman and Ranking Member both agree that any future legislation must either realize savings, or be budget neutral.

The policy ideas included in the options document are essentially grouped into six different categories: receiving high quality care in the home; advancing team based care; expanding innovation and technology; identifying the chronically ill population and ways to improve quality; empowering individuals and caregivers in care delivery; and other policies to improve care for the chronically ill.

While the Committee is not endorsing any of the options listed, it is unlikely that they will stray from the list when they eventually move to draft legislation next month. While some of the proposed options are obvious and beneficial, others are innovative and may help to innovate care delivery and advance CMS efforts to improve quality and value payment.

One obvious proposal made is to generally improve the integration of care for individuals with both a chronic disease and a behavioral health disorder. Behavioral health disorders are under-diagnosed and under-treated, and when combined with a chronic disease, make life excruciatingly tough. Members should explore lifting billing restrictions that prohibit qualified non-physicians from treating beneficiaries with behavioral conditions. Currently, clinical psychologists, clinical social workers, and medical family therapists, are qualified but excluded from billing under the chronic care management (CCM) code, evaluation and management codes, and Health Behavior Assessment and Intervention codes.

The Committee also touches upon the hot topic of telehealth by providing several ideas to expand it: permitting MA plans to include telehealth in their annual bid amount; waiving the originating site requirement for at risk ACOs; and expanding its use to encourage home hemodialysis and a more timely diagnosis of stroke.

The Committee proposed that CMS develop a list of quality measures to improve chronic disease care that includes measure for patient engagement, care planning, and shared decision making.

Currently, there is no comparative effort underway in the House of Representatives, and, considering it is an election year, it is uncertain how much work even the Senate will continue to put in on this effort. However, the Committee members and their staff deserve great praise for acknowledging such a serious issue, and working to create bipartisan solutions to solve it.

A list of public comments received on the options document can be found here, including comments from AARP, AdvaMed, American Medical Association, Biogen, PhRMA, and Sanofi.

February 26, 2016

Recent Study on Population Health Sheds Light on Progress

A recent study provides one of the first, if not the first, in-depth, national look at the pace of transition from fee-for-service to models based on fixed payments linked to outcomes. The study reviewed survey responses from over three hundred executives, and interviews with more than one hundred key decision makers across United States healthcare delivery organizations. The study was done by Numerof & Associates, a healthcare strategy consultancy, and found that most healthcare providers continue to lag in implementing population health management, despite the broad agreement that population health management is important to future market success.

Population health management has increasingly become an important topic of conversation, but little has actually been done. More than half of the respondents to the survey rated population health as "critically important" to the future success of their organization, and nearly all believes that it is more than "somewhat important." However, when asked if their organization was in at least one agreement with a payer that includes some form of upside gain or downside risk, respondents said that 20% or less of their organization's revenues flow through them, leaving population health in the realm of "business model experimentation."

According to Dr. Rita Numerof, president of Numerof & Associates, "U.S. healthcare organizations are entering a period of greater change and disruption than any industry this side of taxicabs. However, our study finds that most providers are still just testing the waters with these models and to date there's still far more talk than action when it comes to population health management." Numerof expects that the push to value will continue to accelerate, since the "wait and see" approach that many organizations have chosen to adopt is quite risky.

Michael Abrams, the managing partner of Numerof & Associates, believes that "[t]he traditional players in the payer, provider, and manufacturer spaces are wrestling simultaneously with not just the question of how to change – but how fast. A select set of leaders are making real progress, but overall we're still a long way from where we need to be."

Dr. David Nash, Dean of the Jefferson College of Population Health, collaborated with Numerof, and stated, "Providers cannot wait any longer to implement the basic infrastructure necessary to practice population based care. Payers cannot wait any longer to grasp the lessons from Medicare experiments and prepare for a world where 'no outcome, no income' will reign supreme.

What Does the Study Tell Us?

During the interviews, some participants talked about "bad memories" from previous healthcare reform efforts, and how those memories and previous experiences are impacting organizational receptivity to change. A vice president of a nationally-recognized academic medical center offered the following during an interview, "We're in the early stages of our population health efforts…However, we're hesitant given previous experiences with capitation. In the 1990s, we aggressively pursued capitated payments, resulting in about $200 million in losses."

Further adding to the hesitance based on previous bad memories, the legacy of mutual distrust and antagonism between providers and payers is slowing the transition to new business models. A COO of a major healthcare network was quoted saying, "Most payers we've engaged are not enthusiastic to partner with us on population health." Barely over half of respondents found that payers are more than "somewhat willing" to enter into cost/quality risk agreements.

The economic incentives are measly, and as such, the study found that when providers are willing to move ahead, it tends to be because they are mission-driven and believe that it is the "right thing to do." Respondents who described their mission statement or culture as the primary driver behind their population health efforts reported a larger proportion of revenue under alternative payment models, contrasted to organizations whose primary motivation is financial or market-based.

Lastly, and somewhat surprisingly, differing definitions of "population health" seems to be holding up progress. Some organizations even reported multiple definitions being used internally, leading to confusion across the organization, and hampering any efforts to make real changes. The authors of the study believe that the internal definition of population health has "real implications for the pace at which the organization can move forward on its value-based initiatives as well as what specific initiatives are prioritized over others."

Conclusion

In sum, despite broad support and agreement among healthcare providers that population health management will be important to their success, there is little to no action being taken. Many providers are worried about getting ahead of the market or facing potential losses, which are valid concerns, but by waiting to make decisions and changes, they might be in jeopardy of not being able to keep up with the shift as it continues to accelerate.

However, given the lag in participation rates, it will likely take either a mandatory program from CMS to get wider participation, or strong incentives from CMS to breathe life back into the idea.

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