By Clive Riddle, December 1, 2011
Alliteration abounds inside the MCOLBlog crystal ball. What trends and issues will significantly shape the business of health care in 2012? The MCOLBlog crystal ball knows all, sees all, and now tells all:
Supreme Court Affordable Care Act decision and presidential election will either cause chaos, or be impetus to for those waiting on sidelines to get moving
If the Supreme Court knocks down just the Insurance mandate, a mess will ensue. If the Supreme Court knocks down the entire Affordable Care Act, supreme chaos will ensue. How to handle all the midstream programs and initiatives, how to undo some things that perhaps can’t be undone? Confusion will reign for awhile in this event, as detailed guidance won’t be handed down the same day as the court’s decision. To whatever degree stakeholders perceive the outcome of the presidential election will change - or keep - the administration, Affordable Care Act implementation activities could grind to a halt or hasten the pace. Should the Supreme Court validate the Affordable Care Act, and should the current administration be re-elected, the stakeholders who have chosen to sit on the sidelines will be pushed to get more than their toe in the water of the deep end of the pool.
Attempts to dodge the bullets of Automatic Medicare Payment Cuts will consume Providers lobbying resources
So the SuperCommittee failed. HFMA cites that as result, and barring a subsequent agreement, “Medicare provider payments would be reduced by up to 2 percent, while Medicaid would be spared. Hospitals would likely see an estimated $63 billion in Medicare cuts through 2021, while physician reimbursements would be reduced by $25 billion, according to forecasts by the Centers for Medicare & Medicaid Services.” Conventional wisdom is that some agreement will be reached in 2012 to avert a Medicare provider disaster, but this will be at the expense of consuming the waking hours and legal & regulatory budgets of hospital, physician and related providers and their industry associations.
Significant resources will be allocated towards the holy grail of reducing preventable hospital readmissions
Purchasers, whether they be Medicare, Medicaid or Commercial, are driving the readmissions train through hospitals in the form of value based payment arrangements, compliance requirements, and other structures. Hospitals are generally onboard, but the question remains where the train is headed. Can- and will - true improvements in quality and utilization be achieved; and how will this be accomplished? A lot of money and resources will be spent by hospitals, medical groups, vendors and purchasers in this pursuit. The jury is still out on the ROI – MCOL’s own October 2011 stakeholder e-poll asked “do you feel the current level of national attention and initiatives regarding hospital readmissions will ultimately result in significant reductions in avoidable readmissions?” 40% answered yes, 49% maybe and 11% no. The same e-poll indicated “Identification and Case Management of High At-Risk Patients” as the top choice as the single most important factor in reducing overall hospital readmission rates. The problem for 2012 is in identifying the high risk patients. A recent JAMA article by Devan Kansagara MD et.al. concluded that “most current readmission risk prediction models that were designed for either comparative or clinical purposes perform poorly.”
Hospital Systems will ramp up physician integration initiatives
Many hospital systems are already at various points down this path. 2012 will see them taking steps forward, not backward, and increased traffic from new travelers. Nearly three-fourths of physicians surveyed by PwC “are already in financial relationships with hospitals, and more than half said they want to move closer financially.”
The shift to Value Based Provider Payments will be in full swing
It isn’t just about ACO payment arrangements. Value based provider payments are to officially be named the flavor of the year at all employer, health plan, government and provider network restaurants in 2012.
ACO progress will occur in Commercial health plan initiatives
ACO development slowed in 2011 until the Medicare Shared Savings Program Final Rule was issued, and offered somewhat more favorable conditions for at least some stakeholders, and now the brakes have been lifted from a number of provider Medicare ACO initiatives. But the timetable for these programs is longer, and the real hub of ACO activity in 2012 is in commercial health plan partnerships, which continue to spring up. An increased number of commercial ventures will appear in 2012, and results (good and bad) from early adopters will become more apparent.
Accelerated demise of the small physician practice
The list of woes for a small physician practice is long, growing, and facing a number of impending deadlines and other “shoes” to drop. Pick your poison: Meaningful Use compliance; ICD-10 conversion; increased overhead costs in an economic downturn; the specter of Medicare and other program payment cuts (see above); increased difficulties in recruiting junior partners to a small practice; increased patient expectations for ehr, patient portal and other technological capabilities; increased purchaser compliance requirements; value based provider payment arrangements that require greater infrastructure to succeed; and purchaser initiatives and market forces to drive patient populations into more integrated networks.
“Retailization” of health care will advance more than ever
There are so many marketplace, health reform and other forces converging to fuel the” retailization” of health care beyond its current orbit. Medicare, and increasingly – Medicaid, offer selection choices at the individual level. Public and numerous private health insurance exchange initiatives are in full swing (with private initiatives immune from any Supreme Court or election-day mood swings) that offer significant potential to drive a material portion of commercial health plan offerings into a full retail venue. Consumer driven plans still continue to grow, which nudge the health care consumer into more of a retail mode. Generic drugs (see below) are now often priced below health plan copayment levels, meaning consumer can shop on a retail basis for applicable generics regardless of health insurance restrictions. Employer and health plan continue to expand initiatives to further empower consumers, such as with wellness initiatives, or to offer new direct access choices such as on-site clinics. Furthermore, technology enhancements and expansion, via web portals, mobile pda apps, consumer ehr interfaces, and much more, continue to facilitate this retail environment.
Implications of Consumers’ further embrace of generics will be far reaching
What was innovative several years ago when Walmart introduced national flat copayment-0like retail pricing for their generics, is now mainstream with major pharmacies. Generics accounted for 78 percent of retail prescriptions in 2010, up from 63 percent in 2006. Health plan and employer initiatives to drive consumers further towards generics were taken up a number of notches by these pharmacies’ retail pricing programs. Beyond increased use of generics, there are a number of implications for 2012 and beyond. Pharmacies will continue to enhance and shift their retail marketing efforts and channels for these package priced generics. Consumers are now increasingly purchasing their generic drugs outside of their health insurance because the price is below the cost sharing requirement (see above). This could ultimately drive even more health plan prescription benefit designs into deductibles (to pull these outside prescriptions back into the fold – as the consumer would need to meet the deductible requirement.) In the short term, the situation will cause an increasing vexing problem for providers and health plans trying to maintain a complete ehr for a patient, and prevent data loss for analytics staff trying to manage these patient populations
- Health Plan M&A Activities will continue to concentrate in government sector
Many health plans are strategically trying to increase their member mix with program patients (vs commercial.) 2011 witnessed a number of such national health plan acquisitions of companies serving these populations: Cigna acquiring Healthspring; AmeriGroup acquiring Health Plus (Medicaid); WellPoint acquiring CareMore; and UnitedHealthGroup acquiring XLHealth. 2012 should witness additional acquisitions, including more Medicaid in addition to Medicare. As Medicaid has a large presence of non-profit and publicly owned plans, such ventures may also be in the form of management contracts and other structures.