December 20, 2017

The 10 top health care stories of 2017—and what to expect next

Daily Briefing

    From the Congressional debate over repealing the Affordable Care Act (ACA) to the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA), Daily Briefing's coverage in 2017 focused on topics that most affect providers and patients.

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    But what were the biggest stories of the year? The Daily Briefing editorial team breaks down its top 10 picks below.

    1) After health reform fumble, House and Senate vote to repeal ACA's individual mandate: After months of false starts and negotiations, the House on May 4 advanced legislation (HR 1628) that would repeal and replace large portions of the ACA and significantly cut Medicaid funding. Senate GOP leaders in July brought three different health reform bills to the floor—all of which were defeated. A fourth health reform bill—the Graham-Cassidy bill—also failed.

    Without an agreement on health reform, GOP leaders shifted their attention to another priority: tax reform. Although the House initially advanced its tax reform bill without revisiting the ACA debate, the Senate on Dec. 2 passed a tax reform bill that would eliminate the ACA's individual mandate penalty. The Senate's individual mandate provision was included in a final bill negotiated between the House and Senate. On Dec. 20, Congress voted to approve that measure, sending it to Trump for his signature.

    What to watch for in 2018: President Trump has indicated that the push for a bill to fully repeal and replace the ACA is not dead and that Republicans will pick up the torch in 2018. But industry experts note that the individual mandate was a driving force behind Republicans' campaign to repeal the law, so having eliminated the mandate's penalty, lawmakers may have little appetite to dive back in to health reform.

    2) Health care's merger mania: Health care industry mergers and acquisitions have been on the upswing in recent years, and 2017 saw the rise and fall of key megamergers. Two proposed megamergers—the $54 billion Anthem-Cigna deal and the $48 billion Aetna-Humana deal—fell through over antitrust concerns, while Walgreens and Rite Aid abandoned a $9.4 billion merger proposal. However, new vertical merger proposals now have the potential to reshape health care delivery in the United States. Industry experts say two of the latest proposals—a $69 billion deal between CVS Health and Aetna and a $4.9 billion deal between UnitedHealth Group's Optum and DaVita's physician group—suggest health care stakeholders are looking for novel ideas to lower costs. Daily Briefing is published by Advisory Board Research, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group.

    What to watch for in 2018: The CVS Health-Aetna deal and the Optum-DaVita deal are subject to regulatory approval and are not expected to close until 2018. However, industry experts expect these types of mergers and acquisitions to continue as providers and insurers look to lower spending, adopt new technologies, and implement alternative payment models.

    3) Amazon eyes big moves into health care: Amazon appeared to be testing the health care industry waters in 2017: The company obtained wholesale pharmacy licenses in 12 states and teamed up with the Mayo Clinic on a new health-focused Alexa feature. While Amazon has yet to make a splash in the industry, those early movements have set off a ripple effect: The company's purported moves into the pharmaceutical market have fueled new partnerships and mergers in the pharmaceutical industry. For instance, analysts often cite Amazon as a key driving force behind the CVS-Aetna merger, as well as a partnership between Walgreens and FedEx to turn Walgreens locations into pickup and drop-off locations for packages.

    What to watch for in 2018: Amazon's technology-driven business and success in other markets suggests it would be a major disruptor if the company enters the pharmaceutical industry. With that in mind, we expect to see more pharmaceutical companies seeking out innovate partners or mergers to better position themselves to compete.

    4) The United States' opioid misuse epidemic rages on: Perhaps the biggest public health threat facing the country in recent years is the U.S. opioid misuse crisis, and on Oct. 27, HHS declared the epidemic a public health emergency. While public health officials have continued to fund new programs to crack down on opioid misuse and treat individuals with opioid use disorders, in 2017 local and state officials added a new tool to their arsenal: taking opioid manufacturers and distributors to court. Law enforcement and public health officials also shined a light on prescribers' and insurers' roles in the epidemic and sought to increase access to non-opioid pain medications, new medical devices, and medication-assisted treatment.

    What to watch for in 2018: The Trump administration's emergency declaration opened up new resources to combat the epidemic, but experts generally agree that a surge of new funding and a coordinated, concentrated response will be needed to stem misuse. As such, we expect federal agencies to continue announcing and rolling out new initiatives to spur the development of new treatments and non-addictive pain medications, increase individuals' access to treatment, and crack down on drug trafficking.

    5) CMS revamps its approach to value-based care: CMS in 2017 finalized two rules that have significant implications for providers' shift to value-based care models. On Nov. 2, CMS unveiled a long-awaited final MACRA rule that details policy updates for the Quality Payment Program's second year—the 2018 reporting year—which will affect providers' payments in 2020. The biggest updates included expanding the number of providers who are exempt from the program; assessing providers subject to the Merit-based Incentive Payment Program on cost measures (a significant change from the proposed rule, which initially delayed the cost measures until 2019); and creating new avenues for solo practitioners and small practices to participate under MIPS. That same month, CMS in a widely anticipated final rule eliminated three mandatory bundled payment models for heart attack treatment, bypass surgery, and hip and femur fracture treatment billed through Medicare, and significantly scaled back the Comprehensive Care for Joint Replacement (CJR) model.

    What to watch for in 2018: All signs suggest CMS will continue to advance value-based payment models—just on a voluntary basis. CMS said its Center for Medicare and Medicaid Innovation expects to develop new voluntary bundled payment models for calendar year 2018 that would qualify as Advanced Alternative Payment Models under MACRA. In the meantime, providers participating in MACRA's QPP for the 2017 reporting year must submit all data to CMS by March 31, 2018, and the agency will use those data to levy penalties or bonuses of up to 4% beginning in 2019. The policy changes included in the final rule take effect Jan. 1, 2018, and CMS has estimated that 621,700 clinicians will be subject to MIPS and that between 185,000 and 250,000 clinicians will be eligible for the Advanced APM track.  

    6) CMS plans to slash 340B hospital payments: The controversy surrounding CMS' 340B Drug Pricing Program reached new heights in 2017, when CMS announced that it would cut Medicare Part B drug payments to providers enrolled in 340B by 28%, or $1.6 billion. The program requires drug manufacturers to provide outpatient drugs to hospitals with disproportionately low-income patient populations at discounts ranging from 20% to 50%. However, the program has come under scrutiny in light of growing drug costs, with some questioning the amount of charity care participating hospitals are providing. CMS said the payment cuts would address rising costs under the program, but the move prompted a lawsuit from a half-dozen health care organizations alleging that the cuts pose a "serious threat … for millions of Americans" and would "dramatically threaten access to health care for many patients."

    What to expect in 2018: The outcome of the health care organization's lawsuit is far from certain, but a Moody's report estimated that not-for-profit hospital margins would be harmed in 2018 if the cuts take effect. Drugmakers also will prepare for the July 1, 2018 effective date of a final rule that would penalize drugmakers that deliberately overcharge providers for drugs purchased under the 340B drug discount program.

    7) Health care systems fight against tight margins: Cost control was top of mind for hospitals and health systems in 2017. Tighter margins prompted several hospitals and health systems—including Mayo Clinic, Cleveland Clinic, and Brigham and Women's Hospital—to launch significant cost-saving initiatives. For instance, Mayo Clinic via its Mayo Clinic 2020 initiative has saved about $900 million in costs over the past five years by overhauling how the system provides care, Cleveland Clinic launched a cost control initiative that generated $90 million in savings between 2010 and 2016, and Brigham and Women's Hospital found $41 million in savings for fiscal year 2018 by offering a voluntary retirement buyout for nurses and adopting a new approach to change.

    What to expect in 2018: Early data suggests operating cash flows at nonprofit and public hospitals will continue to decline over the next 12 to 18 months, forcing hospitals and health system leaders to identify areas where they can not only reduce costs but streamline and improve patient care.

    8) FDA approves first-ever gene therapies to treat cancer in the US: Gene therapies, which genetically modify a patient's own cells to target and fight diseases, have been under development for several years, but this year, FDA approved the first two gene therapy drugs to treat cancer. Novartis' Kymriah in September became the first gene therapy drug to receive FDA approval; it treats B-cell acute lymphoblastic leukemia in children and adults up to age 25 for whom other treatments did not work. In October, Kite Pharma's Yescarta became the second approved gene therapy; it treats certain adults with aggressive forms of the blood cancer non-Hodgkin lymphoma.

    What to watch for in 2018: FDA Commissioner Scott Gottlieb has signaled his intent to bring more gene and cell therapy drugs to the U.S. market. Gottlieb in September said the agency had about 626 active investigational applications for new drugs related to cell and gene therapy and that the agency is looking to streamline the process of evaluating applications for such drugs.

    9) Providers respond to mass casualties: Across 2017, hospitals relied on their preparation and training to quickly respond to mass shootings and prepare for impending natural disasters. For instance, hospitals in the Las Vegas area sprang into action to treat an estimated 527 people injured on Oct. 1 by a gunman who opened fire on a music festival, University Hospital in San Antonio treated nine people injured on Nov. 5 after a gunman opened fire at a Texas church, and clinicians at Bronx-Lebanon Hospital Center on June 30 provided immediate medical care for six victims after a doctor and former employee opened fire at the hospital. Health care providers in Florida, Georgia, South Carolina, Texas, and Puerto Rico took life-saving measures to prepare for a trifecta of hurricanes that struck the states. In the aftermath of the hurricanes, some providers waded through floodwaters to treat patients requiring time-sensitive care, while in Puerto Rico providers battled crippled infrastructure to keep electricity running and provide care despite dwindling medical supplies. 

    What to expect in 2018: When disaster strikes, people will always flock to the nearest hospital or ED, and hospitals in 2018 will need to continue to review, practice, and refine emergency response plans. Efficient training and well-honed plans are the backbone to any hospitals response efforts, allowing providers to appropriately triage patients and save lives.

    10) Trump's travel ban sparks uncertainty in the medical field: President Trump on Jan. 27 issued an executive order seeking to block many individuals—including doctors, researchers, and medical residency applicants—from seven countries from entering the United States. The order, which eventually was put on hold by the 9th U.S. Circuit Court of Appeals, caused some U.S. providers and medical researchers who were travelling overseas to be detained at airports or stranded abroad. In March, Trump issued a slightly scaled back executive order that prohibited the issuance of new visas for 90 days to individuals from six countries, posing an obstacle for many medical residency applicants. That ban expired Sept. 25, at which point Trump extended the ban via a proclamation, but according to the Association of American Medical Colleges (AAMC), the proclamation created an exception for medical education and health care providers.

    What to expect in 2018: While Trump's latest proclamation suggests future immigration-related policy will include exceptions for individuals seeking visas for medical education and foreign-born providers who practice in the United States, AAMC is urging "the administration to make categorical exceptions for medical students, medical residents, physicians, and scientists as well as those attending medical and scientific conferences in the United States." Under the latest proclamation, AAMC warned that aspiring or practicing providers and researchers could still "face barrier to entry" as result of "inconsistent waiver decisions."

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