December 19, 2019

The past 10 years have brought so much change to the health care system that it's difficult to keep track of everything that's happened. Therefore, in honor of the end of the decade, Advisory Board experts reflect on the biggest stories and what they'll mean as we move into 2020 and beyond.

1) The Affordable Care Act defined a decade in health care (and, so far, has survived to tell the tale)

Rob Lazerow, Managing Director, Health Care Advisory Board

From my perspective, the most important health care story of the decade was the Affordable Care Act. This is a clear choice for me, since so much of my 13-year career at the Advisory Board has centered on the enactment and implementation of this landmark law—and then the efforts to dismantle it.

I vividly remember the political twists and turns leading up to passage in early 2010, the anticipation of waiting for the Supreme Court ruling, the camaraderie of analyzing ACO and bundled payment rules with my team, and a full summer of discussing every step of the repeal-and-replace debate with hospital leaders. From the House passing the ACA in 2010 to John McCain's famous thumbs down on the Senate floor in 2017 to yet another court ruling this week, this story has been the centerpiece of health care for the past decade from start to finish.

I want to close out the decade of the ACA with four observations on former President Barack Obama's signature health care law:

  1. The ACA is remarkably resilient. This law has faced an onslaught of legislative challenges and judicial reviews—and they're not over as the 5th Circuit Court of Appeals just ruled that the individual mandate is unconstitutional and kicked questions about whether the rest of the law can stand without the mandate back to the lower court. But so far, the ACA has survived the Supreme Court in 2012 and the GOP's repeal-and-replace effort in 2017. Parts of the ACA are gone—such as the IPAB and individual mandate penalty—and Congress is poised to permanently repeal of the Cadillac tax, medical device tax, and health insurance fees. But the journey to value-based care continues, the public exchanges are open for business, the employer mandate remains, and many states have expanded Medicaid eligibility. Despite a decade of obstacles, the ACA has persevered.
  2. States are key players in implementing federal health reform. Speaking of Medicaid, I suspect the landscape looks much different today than what Congress initially envisioned in 2010. Before the Supreme Court ruling in 2012, we were headed toward much more uniformity given the ACA's mandatory Medicaid expansion. But the Supreme Court invalidated that lone provision, which shifted the question of whether to expand Medicaid to the states. While many states embraced unconditional Medicaid expansion, others have proposed work requirements or lifetime limits, and some still largely retain their pre-ACA programs. Beyond Medicaid expansion, states have confronted critical decisions about standing up public exchanges, managing open enrollment, and participating in certain payment programs. Even at the end of the decade, state gubernatorial candidates continue to campaign on their approach to implementing the ACA.
  3. Payment reform is indeed bipartisan. Much of my team's research has focus on the journey to value-based payment, especially the rise of pay-for-performance, bundled payments, and ACOs. While the 2016 election initially raised questions about the future of payment reform, it has continued apace. In some cases, the Trump Administration has even upped the ante, such as overhauling the Medicare Shared Savings Program to accelerate the transition to downside risk. As we said at the outset of the decade, payment reform has bipartisan appeal.
  4. Health reform isn't done—and it's never easy. Finally, the ongoing Medicare for All debate among the Democratic presidential candidates underscores the fact that health reform will continue from this decade into the next. But let's not forget the incredible difficulty of passing major health care reforms. In 2010, the Democrats controlled the White House, House of Representatives, and (at least temporarily) a filibuster-proof majority in the Senate—but the ACA almost didn't pass Congress. If that's any indication of what's to come, we're heading toward another action-packed decade in health care.

2) The unintended consequences of high-deductible health plans set the stage for governmental intervention (shining a spotlight squarely onto hospitals)

Yulan Egan

Yulan Egan, Practice Manager, Health Care Advisory Board

In the past 10 years, the percentage of covered American workers with an annual deductible increased from 63% to 82%. Across that same time frame, the average size of those deductibles doubled—from $826 to $1,655. Nearly a quarter (24%) of workers have annual deductibles above $3,000 as of this year. Clearly, increasing cost-sharing has been the predominant health benefits strategy among employers for the past decade, and the ambition behind that strategy was clear: shift more financial risk onto patients in an attempt to incentivize value-based decision-making and control increases in health care spending. 

To be sure, increasing cost exposure has encouraged patients to shop for some services, particularly imaging. But patients' ability to make meaningful comparisons on the basis of price and quality has remained elusive for most services. So rather than shopping, patients have largely reacted in other ways. Evidence suggests HDHPs decrease utilization across the board; not only for elective procedures but for all types of care, including preventive services. Many patients delay care, knowing they'll be unable to pay their bills at the end of the day. And while few patients report making decisions on the basis of price, the number of individuals who say they attempt to find pricing information has skyrocketed, meaning patients are more exposed to the cost and complexity of the health care system than ever before. As a result, an increasing amount of frustration is being directed at hospitals and health systems—a segment of the industry that has historically enjoyed the public's good favor. 

One could argue that the frustration and financial pain patients have experienced under HDHPs has played a role in the rising public cry for governmental intervention, most notably in the form of a single-payer system, but in other, smaller ways as well (e.g. the bipartisan effort to introduce a legislative fix for surprising billing). Will this anger rise to levels capable of pushing the industry to Medicare for All? Only time will tell. But there is little doubt that the industry will see tighter governmental controls on its spending across the next decade—the only question at this point is how far down that path we will go.  

3) Financial toxicity emerged as one of the most dangerous side effects of cancer treatment

Deirdre Saulet, Practice Manager, Oncology Roundtable

As the cost of cancer treatment has increased over the past ten years and high-deductible health plans have become the norm, patients' financial responsibility for cancer care has skyrocketed. Today's cancer patient not only has to worry about debilitating side effects, coordinating care across multiple providers, and dealing with emotional and psychological trauma—they also have to worry about how they're going to afford it. 

The understatement of the decade: the financial impact of a cancer diagnosis is devastating. Cancer patients are 2.65 times more likely to file for bankruptcy than people without cancer. And filing for bankruptcy puts those patients at a higher risk for early death compared to other cancer patients. The growing evidence linking financial distress to poor mental health, quality of life, and even survival has led to a new term—financial toxicity. Increasingly, the oncology community realizes that, as with any other side effect of treatment, the care team needs to address and help patients manage the costs of their care. 

This idea requires a major cultural shift for both patients and provider organizations to normalize conversations around costs. We've also seen major investments in financial navigation at cancer programs, with the goal to help patients understand their benefits and coverage options, estimate their out-of-pocket costs, and help them tap into available assistance for drug co-pays, lodging, transportation, and whatever else they need. 

While these are admirable investments, they aren't addressing the systemic issues that drive financial toxicity. Let's hope that the next decade is marked by advances that let cancer patients and their families prioritize taking care of their bodies, spirits, and minds—not their pocketbooks. 

4) The decade that drug overdoses killed nearly half a million Americans 

Rebecca Tyrell, Practice Manager, Pharmacy Executive Forum

Nearly half a million drug overdose deaths have been counted so far this decade, making drug overdose the leading cause of accidental death in the country and a key driver of the decline in U.S. life expectancy. In 2017 alone, fatal overdoses (70,237) surpassed the number of Americans who died during the peak of the AIDS epidemic (43,000 in 1995) and in the Vietnam War (58,000). More than half of those overdoses—including those that took the lives of Prince, Tom Petty, and Philip Seymour Hoffman—involved opioids.

But this crisis didn't spring up overnight. It was more than three decades in the making.

Prior to the mid-1990s, physicians typically treated pain when it was severe, usually in acute care settings. Around 1996, however, the health care industry expanded its focus to alleviating all types of pain, even going so far as to launch a campaign for pain to be considered a fifth vital sign. Around the time that pain scales were becoming a standard feature of physician offices, new time-release opioid formulations began to appear on the market claiming to be nearly addiction-proof. This confluence of factors led to high rates of overprescribing, which in turn led to high rates of drug diversion, addiction, and use of less expensive and more dangerous drugs like heroin. 

This decade has been the decade of catching up to all of the problems this unleashed. And fortunately, our efforts to play catch-up are paying off in many ways, though we still have a long ways to go. 

Comparing data from 2017 and 2018, the greatest improvements in opioid stewardship were related to initial opioid prescriptions. Specifically, clinicians at both national and regional levels wrote shorter initial opioid prescriptions (<50 MME/day or less) at lower doses (seven-day supply or less). Additionally, the national data (averages) show improvements in the:

  • Number of new opioid fills (99.8 per 1,000 people, down from 115.8 per 1,000 people);
  • Number of new opioid fillers who avoid chronic use (99%, up from 98.6%); and
  • Avoidance of opioids for new low back pain patients (91.2%, up from 88.5%).

We still have room for improvement in improving ongoing management of patients taking opioids, dealing with chronic pain, or suffering from opioid use disorders (OUD). Two major opportunities are to improve access to evidence-based treatment for OUD and to increase use of non-pharmacological therapy for pain among chronic opioid users.

5) The spate of cross-industry mega mergers shifted our understanding of traditional industry roles

Brandi Greenberg, Managing Director, Life Sciences

It's impossible to reflect on the past few years in health care without acknowledging the many massive cross-industry vertical integration deals recently announced or approved. Between CVS' acquisition of Aetna, Optum's acquisition of DaVita Medical Group, Humana's acquisition of Kindred Healthcare, and Cigna's acquisition of Express Scripts—to just name a few from last year alone—the integration we've begun to experience has been anything but typical.

Arguably, these moves are as potentially disruptive as are the much-hyped entry of Google, Amazon, and Apple into health care. In particular, they reflect the creation of a very different type of integrated delivery network than we've seen in the past. Notably, they don't include hospitals— which unquestionably served as the anchor of the first-generation integrated delivery networks of the 1990's. Rather, these new networks are seeking to build low-cost ambulatory and home health networks aimed at keeping patients out of the hospital. This has already accelerated the outmigration of care, not just to ambulatory sites and medical offices, but to retail, urgent care, home care, and new virtual platforms.

These new networks are already starting to exert their significant market power across the health care value chain. This power will likely allow them to invest in new ventures, dramatically shift local market share, and demand more of the employers, doctors, and other providers they work with. Even more so, they are amassing tons of quality and cost data that, if mined and managed well, could dramatically inform access, coverage, and care pathway decisions. Although the data aggregation advantage received less press than other aspects of these mergers in 2018, it may ultimately prove to be the most transformative aspect of all.

6) Baby Boomers’ shift to Medicare changed the financial game

Ben Umansky, Managing Director, Health Care Advisory Board

In 2011, the first official Baby Boomers turned 65 and became eligible for Medicare. Across the rest of the decade, nearly 15 million more Americans joined the Medicare rolls. This completely predictable, utterly irreversible, and profoundly consequential demographic transition caused or catalyzed changes across health care.

Providers were among the first to notice the impact. As 64-year old patients with employer-sponsored insurance became 65-year old patients with Medicare, the reimbursement hospitals received for their care dropped precipitously. The payer mix shift also magnified the impact of the Affordable Care Act's cuts to Medicare reimbursement, which applied to an ever-growing patient population.

The wave of "Medicare Breakeven" analyses that followed led systems to recognize the inadequacy of at-the-margins cost campaigns. For some, especially rural and standalone providers already on thin ice, recognizing the unsustainable reality of a Medicare-heavy world was the last straw before submitting to merger or acquisition. But for others, the look ahead prompted leaders to reimagine a delivery system built on lower cost sites and pathways, reduced clinical variation, and a top-of license workforce—a constellation of transformation that is still very much in development. Regardless, the frightening mathematics of those analyses are not forgotten today as the Medicare for All debate evolves.

While providers were the first to experience the impact of Baby Boomers, they were not alone. Insurers felt the squeeze, too. In 2011, private insurance paid on average 134.5% of the cost of delivering hospital care, while Medicare, including supplemental payments, paid only an average of 91.4% according to the American Hospital Association. As more patients converted to Medicare, the pressure on the private side to maintain that cross-subsidy grew. In 2016, private payers paid 144.8% of costs.

But insurers and others also saw opportunity in the Baby Boomers's golden years. Insurers investing in Medicare Advantage helped push enrollment from 11.1 million in 2010 to 20.4 million in 2018—and staked a claim to influence patients' care for decades beyond retirement. Models like Humana and Walgreen's joint venture senior health clinic reflect the interest that large private-sector companies have in the continued care of the nation's elderly, but the success of MA-focused disruptors like ChenMed shows that the future is not solely in the hands of incumbents.

The Boomers' story is not over. In fact, the nation's aging will also be one of the most important stories of the next decade. The first Boomers are already in their 70s, and as they age further, the demand profile facing providers will change dramatically. While the leading cause of hospital admission for "young-old" patients aged 65-74 is joint replacement and surgery represents 34% of volume, the leading cause for the "old-old" (over 85) is septicemia. Whether out of moral necessity or financial reality, we are unlikely to be able to avoid much longer serious societal conversations about the delivery and cost of end-of-life care.

7) Theranos became a poster child for the promise, and failures, of Silicon Valley's excitement over health technology

Megan Tooley, Practice Manager, Cardiovascular Roundtable

I followed Theranos' ascent with fascination. With a biomedical engineering background, I couldn't help but be swept up in a health care technology coming out of Silicon Valley that didn't just innovate around the edges, but presented a new-in-kind solution to a widespread patient problem. And with a compelling female CEO, no less.

But with engineering, I also learned to have a reverence for the rigor of the scientific process and evidence, particularly in health care where the difference is patient outcomes. So when initial investigations in 2015 challenged the validity of Theranos' technology—not to mention the unseemly practices of the company and its leaders—I followed with the same rapt attention. As more information, and the eventual novel Bad Blood was released, I became increasingly infuriated. Not just at the injustice and the potential impact on patients, but that the end result could have been avoided—or at least intervened upon earlier. The red flags were abundant. There was a lack of medical experience on the board in favor of powerful political and military leaders, even including Henry Kissinger. The top biotech firms like Venrock passed on investing. And scientists from within and outside the company tried to raise alarms about the scientific feasibility and integrity of the product— to no avail. Nevertheless, concerns from scientists on the ground were overlooked and even silenced in favor of the promise of the company and CEO. Which led to millions of dollars invested, partnerships forged, and patient lives impacted, in support of a technology that never actually worked as claimed.

Despite the articles, books, and movies chronicling the Theranos story, it may not have been early enough to prevent similar scenarios. Recent investigation into companies including UBiome and Outcome Health showcase how investors have been misled by the promise of health technology. Or perhaps how the pressure of meeting the outsized valuations and hype have led to fraudulent behavior.

Health care is obviously an industry that is ripe for disruption, and depends on investors who are willing to take a risk on innovation. But we need to be sure this investment is going toward genuine opportunities. To do so, health technology companies and investors alike must have medical experts at the table to help make decisions and perform due diligence. Google, for example, is engaging physicians in top leadership roles in their health efforts, perhaps presenting a model for others. To that end, I hope that the legacy of Theranos is not to discourage investment in health care, but instead to encourage investors to seek stronger clinical evidence and involve medical experts before investing in the next health care "disruptor".

8) The Ebola outbreak reinforced the domestic consequences of global health

Jackie Kimmell, Senior Analyst

There was a time in 2014 when it was impossible to turn on the news without hearing about Ebola. The disease was exotic, mysterious, and deadly—and that combination sparked a panicked fascination in the United States. But then the first case of Ebola was confirmed in Texas and that fascination turned into pure panic. Suddenly health systems were setting response protocols, states began quarantining passengers returning from the affected countries, and some universities even rejected applicants from West Africa. It was a stark reminder that, in our hyperconnected world, global health could have deadly consequences at home. 

In the end, only 11 cases ended up being diagnosed in the United States—a far cry from the 29,000 cases and 11,300 lives lost in West Africa. But the crisis and the public panic in the United States caused a resurgence of U.S. interest in global health and security. The United States sent more than 1,800 Department of Defense personnel, as well as hundreds of other domestic health workers, to the outbreak and helped escalate the WHO response. The United States also ended up establishing a number of international global health security agreements and bolstering their funding in its wake. 

The Ebola outbreak also led to major changes for U.S. health systems. According to an HHS Office of Inspector General report, 71% of hospitals in the United States reported being unprepared for a patient with an infectious disease like Ebola in 2014. By 2017, this number dropped to 14%. This shift also reflected a change in the public consciousness about the threat of global disease. It likely made Americans take subsequent outbreaks, like Zika, more seriously, and reinforced the idea that health can't be viewed through a national lens in the age of globalization.

9) MACRA brought quality metrics to doctors' pocketbooks

Ye Hoffman, Consultant, Quality Reporting Roundtable and Julia Connell, Senior Analyst, Quality Reporting Roundtable

Changes to physician payment typically elicit strong responses from physicians. But none were as strong as the range of opinions generated by MACRA. When it was first introduced, I remember reactions that described the law as "unnecessarily complex," "doomed to fail," and even "an abomination." Despite the choice words on the piece of legislation, MACRA persisted, and we're now in year four of the Quality Payment Program (QPP) it created.

MACRA fundamentally changed physician payment. Starting in 2016, the legislation repealed the Sustainable Growth Rate (SGR) and made critical updates to how clinicians would be paid. The change was necessary. Despite its name, the sustainable growth rate was unsustainable. While designed to be a control spending, SGR resulted in annual scrambles to produce "doc fix" bills blocking the cuts mandated by the SGR formula. Instead, MACRA replaced the formulaic approach to setting base physician payment rates and created the Quality Payment Program—a pay-for-performance mechanism where providers could increase (or decrease) their payments based on their performance or participation in an Alternative Payment Model. The idea was to convert more Medicare clinicians to value-based care models, saving CMS money over time.

We're still early in the program, but so far we've seen:

  • Clinicians are gradually moving to the APM track. So far, relatively few clinicians have made the move to value-based care. But the number is increasing; 20-23% of eligible clinicians are expected to participate in 2020, compared to 9% in year one, 2017.
  • Pressure to perform in MIPS is intensifying: Starting in 2020, MIPS starts to have some teeth as we see higher penalties (up to -9%) and a higher performance threshold (45 points). MIPS is designed to get harder over time so we will continue to see the performance threshold rise and more physicians facing penalties as time goes on.
  • Small practices are bearing the brunt of MACRA impact. From day one, small practices were daunted by MACRA. While they've done better than expected in early years, due to additional support provided by CMS, they will continue to see the most penalties under MIPS. CMS estimates that nearly 89% of providers who will earn the maximum penalty in 2020 will be in small practices of 1-15 providers. As a result, it's likely some small practices will choose to consolidate to reduce technical and administrative burden as time goes on.
  • Commercial payers follow CMS' lead. A big concern when MACRA was first introduced was that clinicians would simply stop accepting Medicare patients. So far, we haven't seen that trend come to fruition. That's likely for two reasons: first, private payers are moving to value themselves, making avoiding value-based payments impossible, and second, the Medicare population is growing every day as baby boomers age-in, meaning that practices can't afford not to see this sizeable population.

And CMS is still making headlines by changing the program. The agency hopes to further evolve MIPS reporting through the MIPS Value Pathways framework, set for introduction in 2021. This framework is intended to reduce the complexity of MIPS reporting by bundling together measures across multiple categories based on condition or specialty—much like how reporting looks in many Alternative Payment Models. As clinicians prepare for this shift in reporting under MIPS, we expect MACRA's QPP to be a hot topic into 2021 and beyond.

Need to brush up on MACRA and the QPP? Check out our:

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