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Disruption in HealthcareWho, What, and How!
Marylou Buyse, MD, MSVP, Integrated Health SolutionsPrecision Value & [email protected]
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Agenda
What Changes Can Be Anticipated?
The Harbingers of Change
Value-Based Reimbursement (VBR): Progress Report
Forecasting the Future!
The Evolution of Healthcare? Where, When and How?
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The Harbingers of Change
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The Triple Aim: The Holy Grail
3. Quality1. Access 2. Affordability
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3. Quality – more important, but United States still lags most other developed countries!
1. Access is highly variable. Delivery system consolidation: improving access or not?
2. Affordability challenges are large and unsustainable
The Triple Aim: Deconstructed
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WHY IS HEALTH CARE RIPE FOR DISRUPTION?
COSTS ARE UNSUSTAINABLY HIGH AND THERE IS LITTLE TO SHOW FOR THIS
SPENDING IS DRIVEN BY MANY FACTORS:Administrative costs; aging population, fraud, waste and abuse; inefficiencies;regulation and compliance; reimbursement model; defensive medicine; insurance benefit design; salaries; scope of practice; technology; utilization; lack of accountability; lack of care coordination and communication across systems and sites of care; lack of focus on wellness and prevention; social determinants of health are not addressed; health literacy issues; supply chain inefficiencies; and manymore….
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WHY IS HEALTH CARE RIPE FOR DISRUPTION?
We are close to a tipping point for value-based care (VBHC). Government and private sector initiatives have tipped the scales!
US Healthcare is failing too many:Low value for care delivered; personal debt and medical bankruptcies; impact on economy and corporate performance; poorly managed chronic conditions;underspending on social determinants of health; overreliance on expensive technology; lack of population health, accountability and care coordination; unhappy stakeholders: patients, caregivers; employers and providers;and manymore….
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§ Potential disruptors, such as Amazon, Berkshire Hathaway, and JP Morgan, will further drive stakeholders to innovate for better outcomes and lower costs
§ Alternative Care Delivery Models§ Technology: HIT; Telehealth§ Advanced analytics: Real World Evidence (RWE); Prescriptive and predictive analytics; Patient
Reported Outcomes (PROs)§ Innovative and Personalized Therapies and Tools: Biologics, Digital Therapeutics; Biomarkers; Gene
therapy§ Cost/Trend Control Approaches: New generic not for profit company; Value based- contracting (VBC);
Merger driven integration of medical care and benefits§ People: developing effective teams and leaders; Health plans and IDNs need to implement population
health and value-based care; patient and care giver experience needs to be addressed effectively
New Trends, Entrants and Developments (TEDs)
TEDs will Focus on transforming healthcare and bringing value
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What Is Important to Know?Consolidation and Vertical Integration
§ In October 2017, Anthem BCBS announced the 2020 launch of its new PBM: IngenioRx− Anticipated to net more than $4 billion in savings annually
§ December 2017: CVS announces plan to purchase Aetna for $69 billion− Focuses include expanding medical care access in clinics and site of care for infusions
§ Express Scripts purchases eviCore in December 2017− eviCore is leading provider of medical benefit management services
§ March 2018: Cigna announces plan to purchase ESI for $67 billion§ January 2018: Intermountain and other systems, representing 450+ hospitals,
plan a not-for-profit generic drug company
Consolidation allows payers to expand risk pool and leverage manufacturers and provider/health system network for larger discounts
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What Is Important to Know?The Heavyweights: Retail, High Tech, and the Government
§ Amazon, Berkshire Hathaway, and JP Morgan: Announce New Health Insurance Approach
§ Walmart§ Google§ Apple§ Microsoft
CMS is a disruptor in a different way from other potential disruptors.
All want to change healthcare; each can disrupt it
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1. Kaufman Hall. https://www.kaufmanhall.com/sites/default/files/2017-in-Review_The-Year-that-Shook-Healthcare.pdf. Accessed July 12, 2018. 2. Kaufman Hall. https://www.prnewswire.com/news-releases/2018-hospital-merger-and-acquisition-activity-continues-rapid-pace-with-30-announced-transactions-in-the-first-quarter-300637467.html. April 26, 2018. Accessed July 12, 2018. 3. Sanborn BJ. http://www.healthcarefinancenews.com/news/merger-and-acquisition-activity-has-record-breaking-first-quarter-2018. Accessed July 12, 2018. 4. Shinkman R. https://www.fiercehealthcare.com/hospitals-health-systems/ascension-presence-health-complete-merger. March 6, 2018 Accessed July 12, 2018. 5.Ellison A. https://www.beckershospitalreview.com/hospital-transactions-and-valuation/hca-goes-on-acquisition-spree-looks-to-m-a-for-more-growth.html. May 2, 2017. Accessed July 12, 2018. 6. Ellison A. https://www.beckershospitalreview.com/hospital-transactions-and-valuation/hca-looks-to-expand-into-north-carolina-with-acquisition-of-mission-health.html. March 22, 2018. Accessed July 12, 2018. 7. Steward Health Care. https://www.steward.org/1/article/steward-health-completes-acquisition-iasis-healthcare. September 29, 2017. Accessed July 12, 2018.
115 transactions announced in 2017—up almost 13% from 20161
30 transactions announced in Q1 2018—up 11% from Q1 201722018: CareGroup and Lahey Health merge in greater Boston area3
HCA (with 177 hospitals) added hospitals in GA and TX in 2017 and will add Mission Health (NC) in 20185,6
2017: Steward Health CareIASIS Healthcare7
Largest private for-profit hospital operator with 36 hospitals in 10 states
2018: AMITA HealthPresence Health4
Largest Catholic health system grows in Illinois
2018: Jefferson Health and Einstein Health agree to merge in greater Philadelphia area3
2017: Dignity Health and Catholic Health Initiatives1
Signed an agreement to form the largest nonprofit health system in the United States (combined revenue = $28B)
Continue to monitor the growing influence of large regional and national health systems, as hospital M&A is unlikely to slow down
2018: Merger of Baylor Scott & White announced with Memorial Hermann to create a 68 hospital system with $15 billion in revenues and 10 million patient visits a year.
2018 Hospital M&A Activity Continues to Accelerate After a Record 2017 Increase
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Legislative and Regulatory Environment
3. CMS is driving change
Objectives
1. The impact of American Patients First on the healthcare landscape
2. Review how ACOs and APMs are designed to accelerate change
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Drug Costs Demand Payer Action With Focus on Specialty Drugs
§ More than 40% of spend is attributed to specialty drugs§ Payer management techniques in specialty are expanding− Exclusion lists− Indication-based formularies− Site of care− Mandatory SPP− High patient cost share− Accumulator programs
PBM 2017 Specialty Trend
Prime 15.2%
ESI 11.3%
CVS 12.9%
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The Trump Administration Has Released a Blueprint to Lower Drug Prices, Focusing on 4 Key Strategies for Reform
ImprovedCompetition
Immediate Actions
Prevent manufacturer gaming of regulatory processesPromote competition for biologics
Soliciting Feedback
Encourage sharing of samples needed for drug developmentPromote use of biosimilars
Better Negotiation
Immediate Actions
Experiment with value-based purchasingAllow flexibility in formulary/benefit design to address single-source generics in Part DProvide plan sponsors more negotiating power in Part D, including protected classesUpdate Part D Star Ratings methodology for plans, appropriately managing high-cost drugsEvaluate indication-based pricing in Part DAssess which drugs or classes could generate savings by moving from Part B to Part DLeverage Competitive Acquisition Program in Part B to reduce physician burden of managing drug acquisition and lower government spendingAssess problem of foreign free-riding
Soliciting Feedback
Consider further value-based purchasing, including long-term financing optionsRemove government impediments to value-based purchasing by private payersRequire site neutrality in paymentEvaluate accuracy and usefulness of current national drug spending dataLaunch of a working group on short-term importation of drugs could address price spikes
Source: US Dept Health Human Services. 100 Days of Results: President Trump’s American Patients First Blueprint. https://www.hhs.gov/sites/default/files/100DaysofResults_AmericanPatientsFirstBlueprint.pdf. Accessed September 12, 2018.
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The Trump Administration Has Released a Blueprint to Lower Drug Prices, Focusing on 4 Key Strategies for Reform (cont’d)
Incentives for Lower List Prices
Immediate Actions
Evaluate potential requirement for manufacturers to include list price in advertising
Make Medicare and Medicaid prices more transparent
Soliciting Feedback
Implement measures to restrict the use of rebates and consider reforms of the rebate system
Use incentives to discourage price increases in Part B and Part D
Assess fiduciary status for pharmacy benefit managers
Reform the Medicaid Drug Rebate Program and 340B Program
Promote use of biosimilar
Lowering Out-of-Pocket Costs
Immediate Actions
Prohibit pharmacy “gag” clauses
Improve Part D explanation of benefits (EOBs)
Soliciting Feedback
Implement measures to inform beneficiaries on lower-cost alternatives
Provide more frequent information on costs to Part D beneficiaries
Source: US Dept Health Human Services. 100 Days of Results: President Trump’s American Patients First Blueprint. https://www.hhs.gov/sites/default/files/100DaysofResults_AmericanPatientsFirstBlueprint.pdf. Accessed September 12, 2018.
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ACOs represent a changing dynamic in the US healthcare system, where providers will increasingly be paid to effectively manage the health of populations as opposed to basing payment on the volume of services they provide. Many ACOs have expanded the number of contracts in which they participate.
ACOs: Trending Up—Other Alternative Payment Models Evolving
Source: http://healthaffairs.org/blog/2017/06/28/growth-of-acos-and-alternative-payment-models-in-2017
Need to continue to focus on how product value proposition relates to ACO metrics and business incentives
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§ CMS is now focusing on voluntary participation models with recent request for information for new models, including Physician Specialty Models and Prescription Drug Models
§ CMS is seeking increased participation in Advanced APMs, with new models being proposed to accelerate risk assumption
§ In August 2018, CMS issued a proposed rule that could significantly alter the Medicare ACO programs. Proposed changes include – Accelerating the pace at which ACOs assume risk– Collaboration arrangements between Medicare Part D sponsors and ACOs to enhance coordination
of pharmacy care to potentially reduce costs and avoid errors– Enhanced telehealth coverage
§ Potential disruptors, such as Amazon, Berkshire Hathaway, and JP Morgan, will further drive stakeholders to innovate for better outcomes and lower costs
Alternative Payment Models
Seek strategic opportunities to influence model development aligned with portfolio and to support performance of models within key therapeutic areasIDNs and ACOs adapt to 2019 changes
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Value-Based Reimbursement (VBR): Progress Report
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VBR: Progress Report
3. Identify ways plans and IDNs are adapting to VBR
1. Continued expansion of VBR
2. Trends in value-based contracting
4. Future opportunities
Objectives
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§ Higher expenditures but comparatively poorer outcomes drive strategic changes in the healthcare landscape
§ Medicare making significant effort to combine medical care quality and efficiency by rewarding value rather than volume
§ Health plans, employers, and the federal government prioritizing market incentives that promote both quality and value of healthcare services
An industry consortium of patients, payers, providers, and purchasers aligning private and public sector efforts to produce the Triple Aim, with a goal of 75% under value-based payment arrangements by 2020
Public and Private Sector Stakeholders Are Continuing to Align With VBR
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Payers and IDNs Are Adapting to VBR
Evolution of VBRIntensified Focus on Quality and Value
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Impact of Pharmaceutical Value-Based Contracts on Cost Control
Q7: What impact do you believe value-based contracting with pharmaceutical manufacturers would have or has had on your organization’s ability to control costs?Q9: For each of the options below, please indicate the status of your engagements/collaborations with pharmaceutical manufacturers to transition from a pure fee-for-service paradigm to value-based healthcare.
Health Plans (n=11)Mean cost control: 3.73
IDNs/ACOs (n=17)Mean cost control: 4.06
9%
18%
91%
18%41%
64%
41%
9%
35%
0%
20%
40%
60%
80%
100%
VBC: Cost control impact/potential
% Health plans with VBC currently in place or
planned within 12 months
VBC: Cost control impact/potential
% IDNs/ACOs with VBC currently in place or
planned within 12 months
Significantly impede our ability to control costs Slightly impede our ability to control costs No effect our ability to control costsSlightly improve our ability to control costs Significantly improve our ability to control costs
6%
Key Data FindingBoth health plans and IDNs/ACOs anticipate value-based contracting with pharma will deliver a slight or significant improvement in their ability to control costs. Most health plans have VBC or plans for VBC.
October 2017 survey of 28 US market access decision makers representing ~151M covered lives
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Population Health Management Programs Are Developingin Response to VBR, but Components Are Still Evolving
Q2: How far along is your organization in developing the following population health management components?
Plans and IDN/ACOs With Completed Components Health Plans IDN/ACOsWellness and prevention programs 9% 12%
System of population identification and stratification 0% 24%
Framework to evaluate your population health program 0% 18%
Delivery system supports (eg, registries, P4P, care management) 9% 18%
Comprehensive description of population health strategy 0% 12%
Complex care management 9% 18%
Plans and IDNs/ACOs are evolving toward the Triple Aim: Most surveyed health plans and IDNs/ACOs are developing key population health components, but few have completed them
October 2017 survey of 28 US market access decision- makers representing ~151M covered lives
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Most Healthcare Entities Are Aligning to Become Triple Aim Winners
APM, Advanced Alternative Payment Model; MACRA, Medicare Access and CHIP Reauthorization Act; MIPS, Merit-Based Incentive Payment System.
Individual Physicians or Group Practices/Specialty Practices (eg, Oncology Care Model)
Hospitals
Accountable Care Organizations (ACOs)
Medicare Advantage Health and Drug Plans
Health Plans
Quality Payment Program (MACRA:
MIPS/APMs)
National Hospital Inpatient Quality Measures
Medicare Hospital Readmissions Reduction Program
Medicare Shared Savings Program
Medicare Advantage 5-Star Rating Program
HEDIS
Quality Measure Set Measured Entity
INTE
GRA
TED
DELI
VERY
SYS
TEM
Payers are becoming more strategic, focusing on measures that maximize gains and minimize losses
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There Is Interest in Future Collaborations and Engagements With Pharmaceutical Manufacturers
Q8: For each of the options below, please indicate the status of your engagements/collaborations with pharmaceutical manufacturers to transition from a pure fee-for-service paradigm to value-based healthcare.
27%
65%
36% 41% 36%47%
18%
53%
64%
35%
36%47% 55% 41%
64%
41%
9%27%
12% 9% 12% 18%6%
40%
20%
0%
20%
40%
60%
80%
100%
Health Plans IDNs/ACOs Health Plans IDNs/ACOs Health Plans IDNs/ACOs Health Plans IDNs/ACOs
Currently in place or planned in 12 mo Willing to consider Never
Health plans (n=11); IDNs/ACOs (n=17)
Key Data FindingMost health plans and IDNs/ACOs are at least willing to discuss working with pharmaceutical manufacturers on multiple quality and population health improvement initiatives. Some already are engaged in collaborations or in pending collaborations.
October 2017 survey of 28 US market access decision makers representing ~151M covered lives
Clients, payers, providers, and patients stand to benefit from tools addressing the importance of adherence, patients at risk, and tips for better adherence
Medication adherence / side effect management
Development of remote care delivery (eg, telehealth,
virtual care, apps)
Real-world evidence demonstration projects
Patient-reported outcomes initiatives
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Practice transformation will continue…and new alliances will be forged in population health.
§ Plans and providers will look for partners to better manage costs and quality
§ Collaborations will accelerate to improve outcomes for high-risk populations and subpopulations, including addressing social determinants
§ Use of patient engagement (hi-tech and hi-touch) will form multiple connections with patients and caregivers
How Will VBR Impact Healthcare Evolution?Practice transformation
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Health System transformation will continue…and new alliances will be forged in population health.
§ Plans and providers will look for partners to better manage costs and quality
§ Collaborations will accelerate to improve outcomes for high-risk populations and subpopulations, including addressing social determinants
§ Use of patient engagement (hi-tech and hi-touch) will form multiple connections with patients and caregivers
How Will VBR Impact Healthcare Evolution?IDN/Health System transformation
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Pharmaceutical manufacturers will…increasingly engage in value-based alliances.
§ Demonstrate real-world value§ Collaboratively manage adherence and mitigate
medication-related adverse events§ Share meaningful risk linked to clinical outcomes
and costs
How Will VBR Impact Healthcare Evolution?Pharmaceutical manufacturers
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What Is Important to Know?Where Will Disruption Lead Healthcare?
Transition from volume to value is a major trend. Expect this to continue; speed and successful execution are the unknownsDelivery system consolidations have yet to truly deliver value–that needs to change
§ Technical breakthroughs are needed and could revolutionize healthcare delivery–MAYBE!§ Healthcare has many inefficiencies and waste–disruption these will save money§ Patient safety and accountability for outcomes needs to move front and center
Scientific breakthroughs are likely–can they lower the cost of care? They haven’t yet!Breakthroughs in patient engagement and experience could be big game changers
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The Evolution of Healthcare–Where, When, and How?
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Exclusion Lists Are Targeting Rare and Sensitive Diseases
§ In 2017, CVS began excluding oral cancer agents in CML and prostate cancer
§ In 2019, Express Scripts will exclude certain drugs that treat HIV, hemophilia, and hereditary angioedema
§ Other payers/PBMs will likely follow the lead of CVS and ESI if they are successful
§ Rare disease manufacturers can no longer assume their disease is too small to manage
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ICER and HTA in the United States
§ ICER influence is growing rapidly− Nearly $20 million in grants from the Laura & John Arnold Foundation− Partnership with VA in formulary and cost-effectiveness determinations− Sanofi’s contract sets a new precedent payers can use in negotiation− CVS program allowing clients to exclude me-too drugs with a QALY >$100,000 as established by ICER− According to PFV research, more than 80% of surveyed payers use ICER analyses in drug management
and evaluation§ Our point-of-view on a value-based marketplace− Healthcare continues to move from volume to value− ICER analyses may present a threat or opportunity, depending on how ICER frames a drug’s value− Manufacturers need to be able to tell a strong, transparent, cost-effectiveness story or risk access− ICER has numerous points of engagement that manufacturers can take advantage of (and PFV can help!)
Cost-effectiveness tools are growing in influence; FAQs and response guides can help a client be prepared
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Forecasting the Future!!!
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Building the 21st Century Healthcare
§ Technology and market transformation will continue to drive greater use of big data, apps, and AI – Data will be used by plans to better discern efficacy of therapies for better management of
their populations– The big tech companies will disrupt healthcare in any number of ways; which will make the
most difference in transforming healthcare?– How will robots and drones be used?– Banks have figured out interoperability when will healthcare get it done?
§ Managing chronic diseases: scientific advances have turned many killers into chronic diseases. Chronic diseases are now the bulk of healthcare utilization. Better management with attention to outcomes is sorely needed
§ Improving the patient experience of care is new frontier and technology will drive this!
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Summary
The legislative and regulatory climate is increasing pressure to contain costs and expand transparency
Payers continue to shift risk to patients and providers
Risk-bearing entities are adapting to VBR with quality improvement, population health management, and value-based contracting strategies—offers opportunities to forge strategic alliances for mutual benefit
Technology will drive change and is likely to be a game changerTEDs will disrupt by building a product or service offering that customers will want to use or experience over and over again!
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Final Thoughts
We need a crystal ball to predict what will actually happen? What does yours show?
Technology will drive change–will it lower cost?
Marylou Buyse, MD, VP, Integrated Health SolutionsPrecision m
Marylou Questions and Discussion, MD, MSm
