This week’s regulatory and legislative news:
- Health industry still waiting on myriad rules under federal review
- For-profit hospitals get Wall Street approval
- OIG sets its sights on a wide range of medical services, providers
- FDA plans extensive review of premarket approval pathways for medical devices
- Mobile technology program leads to improved outcomes, decreased costs among diabetics
After a busy fall, the Office of Management and Budget (OMB) has a full plate again with a number of rules on the docket. The office is an interim review stop for federal regulations before they are released to the public. One key regulation under review is a blueprint for the Basic Health Program, which allows states to offer subsidized coverage to low-income individuals who would otherwise be eligible through public health insurance exchanges. Also up: proposed updates to exchange eligibility and appeals, which the OMB notes, “may be necessary based on our experience with the initial open enrollment.” Several FDA rules also are under review, including updates to food and dietary supplement labeling standards and an extension of tobacco regulations to additional products such as electronic cigarettes.
HRI impact analysis: Health insurers will need to gear up for the final rule on the Basic Health Program. This could be a victory for Medicaid Managed Care companies because states planning to implement the program may look to these plans to form the delivery system based on their previous experience with low-income populations. The proposed updates to eligibility and appeals may be one of several more exchange-related tweaks as the administration continues to deal with the aftermath of rollout glitches, and could lead to more compliance issues for insurers. Drug, supplement, food, and tobacco manufacturers, meanwhile, must prepare for new labeling and product regulation as the federal government expands its oversight authority. Healthcare providers, on the other hand, may see a relative lull over the next few months after the storm of payment regulations issued late last year, with legislative activity focused primarily on the expiring Sustainable Growth Rate fix in April.
A key Wall Street ratings board said it is bullish on for-profit hospitals—especially as core parts of the ACA go into effect. Last week, Moody’s Investors Service upgraded its outlook for for-profit health systems to “positive” from “stable,” citing earnings growth and a reduction in bad debt as more people gain coverage under the health law. The upgrade comes despite overall declining patient admissions, shifts in care to outpatient clinics, new Medicare payment challenges related to the “two-midnight” rule, and federal deficit reduction efforts. Conversely, Moody’s said it would continue its negative outlook for not-for-profit hospitals based upon shrinking patient volumes and slow revenue growth.
HRI impact analysis: Moody’s has been cautious in its assessment of how the ACA will impact the health sector, and last month downgraded insurers to a negative outlook. Even so, the rosier outlook for for-profit hospitals underscores the positive impact of the ACA’s coverage expansion. As the number of insured increases, hospitals will treat more patients who can pay for their care. Moody’s outlook also hints at continued growth in outpatient medical services, which many health systems have relied on to make up for lost revenue from declining admissions.
Federal investigators plan to examine everything from employee salaries to hospital quality and safety this year under a far-reaching agenda that impacts nearly every corner of the US health sector. Released earlier this month, the OIG’s fiscal 2014 Work Plan outlines 215 projects—about 57 of which are new—that affect hospitals, post-acute care providers, physicians, insurers, and drugmakers. On tap this year are new reviews of inpatient admissions criteria, payment rates for outpatient evaluation and management services, Medicare reimbursement for compounded drugs, and a range of studies regarding the security of electronic medical devices. The OIG oversees Medicare and Medicaid, as well some 300 other programs under HHS.
HRI impact analysis: The OIG’s examination of Medicare and Medicaid payments reflects some of the more controversial billing and reimbursement policies initiated by CMS. But the agency also has expanded its scope, looking into how hospitals conduct background checks on physicians, emergency preparedness and indirect medical education payments. Medicare and Medicaid pharmacy rebates will go under the OIG’s microscope, as well as FDA inspections of generic drug manufacturers. Overall, the work plan offers a roadmap of potential compliance issues that providers, insurers, and pharmaceutical companies face this year, and it spotlights future areas that will come under scrutiny by federal regulators.
In its 2014-2015 Strategic Priorities report, FDA’s Center for Devices and Radiological Health announced its plan to strengthen clinical trials, reassess the balance between pre- and post-market data collection, and prioritize customer service. The center also announced a reduction in approval time for the investigational device exemption. This exemption allows devices to be used in clinical trials prior to pre-market approval. The center also plans to conduct a comprehensive review of devices, such as hearing implants, prostheses, and most devices used in blood collection and processing, to determine when data is safe for collection.
HRI impact analysis: By streamlining the approval process, the FDA estimates it can cut the number of device review cycles in half by June 2015. Combined with the review of premarket approval devices, this could significantly shorten the time it takes for medical devices to enter the market. The FDA’s challenge will be striking a balance between collecting the appropriate amount of data to ensure the safety of devices and the expense and risks associated with delaying potentially life-saving devices as a result of collecting data that could be gathered post-market.
New mobile technologies are improving chronic disease treatment and outcomes. A University of Chicago study found that diabetic patients who participated in a mobile health monitoring program, CareSmarts, experienced improved HbA1c results, reported more healthy eating days and 8.8% net cost savings for the hospital compared to the control group. Study participants spent a minimum of 10 weeks in the diabetes self-care program focused on medication adherence, glucose monitoring and nutrition. CareSmarts sends patients questions via automated text messages; answers are monitored by nurses and other healthcare professionals.
HRI impact analysis: Often, health professionals are only able to monitor their patients’ chronic diseases periodically, leaving the burden of disease management on the patients themselves. In the changing healthcare environment, consumers are increasingly turning to technology to help manage their health needs. Due to its widespread use, mobile technology in particular is a promising platform to better engage patients. The FDA estimates that by 2015, 500 million smartphone users worldwide will be using a healthcare application in what is projected to be a $700 million market for health-related apps.
Upcoming events & deadlines
- February 28 – Deadline for eligible professionals to demonstrate meaningful use under the Medicare EHR incentive program.
- March 3 – Start of CMS testing week for ICD-10, a new, more detailed set of diagnosis codes that CMS is requiring all providers and insurers to adopt.
- March 7 – Deadline to submit letter of intent for latest round of PCORI funding opportunities.
- March 31 – Deadline for drug and device makers to report payments made between Aug. 1, 2013 and Dec. 31, 2013 under new sunshine rules.
- March 31 – Open enrollment in health insurance exchanges scheduled to end for 2014.
Quote of the week
"If you pick a bad restaurant, you may not enjoy your meal, but if you pick a bad doctor, that may affect your health," said Dr. David Hanauer of the University of Michigan medical school. Dr. Hanauer is the lead author of a report published by JAMA which found that the use of physician rating websites is increasing, and that 59% of patients reported those ratings were at least “somewhat important” when choosing a doctor.
In the news
Value-based insurance design (VBID) has been found to increase medication adherence, according to a study published by the journal HealthAffairs. The study found that medication adherence for patients in VBID plans was significantly greater than for those with traditional coverage. Value based plans, which encourage the use of services in which clinical benefits outweigh cost, have been gaining popularity among employers, and are incentivized by the ACA.
73% - The percentage of Americans who have visited a retail health clinic and say they would return again in the future, according to HRI’s Top Issues report.