State of Healthcare in Kansas and Missouri€¦ · The Value of Kansas and Missouri Hospitals From CVS’s 2018 Q1 Earnings Report Describing its Preliminary Strategy with Aetna Transaction

State of Healthcare in

Kansas and MissouriJanuary 24, 2019

Thomas L. Bell

President

Kansas Hospital Association

Herb B. Kuhn

President and CEO

Missouri Hospital Association

The Value of Kansas and Missouri Hospitals

Agenda

Overall Trends in Health Care

Trends in Health Policy – Federal Level

Trends in Health Policy – Kansas and Missouri

Looking Around the Corner:

Emerging Issues in Health Care

2

Overall Trends in

Health Care


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Source: CNBC, Dec. 4, 2017.

“It’s the perfect time to bring [CVS

and Aetna] together to create a new

healthcare platform that can be

easier to use, less expensive for

consumers, and create a new front

door to healthcare in our country.”

—LARRY MERLO, CEO, CVS

HEALTH

Traditionally, Health Care Change Has

Been Incremental.

But New Entrants Are Thinking Big.

9


From CVS’s 2018 Q1 Earnings Report

Describing its Preliminary Strategy with Aetna

Transaction creates opportunity to rethink and reinvent U.S. health care

We have begun to identify populations and intervention tools for first programs

Primary patient populations:

– Those with one of five chronic diseases: diabetes, hypertension, hyperlipidemia, asthma, depression

– Patients undergoing transition in care

– Broader focus on managing high-risk patients

Initial tools in four major categories:

– Interventions in stores

– Activities in patients’ homes

– New digital tools and capabilities

– Data and advanced analytics

This combination will create an innovative, new health care platform that will be easier to use, less

expensive for consumers, and integrated broadly within the marketplace to deliver superior,

coordinated care

Source: CVS Health: First Quarter 2018 Earnings Conference Call. Presentation, May 2, 2018.

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The Competitive Landscape

Early entrant

Approved

In Conversation

Constant

Speculation

Action and Speculation

Powerful outpatient footprint

Aggressive strategic plan

Walmart: 5,000 stores, especially in rural America;

140 million in-store and online customers per week

Humana: 14 million members

Joint venture with Berkshire

Hathaway and JPMorgan Chase

Announced employee clinics;

CEO Tim Cook says health care is a

“big area for Apple’s future”

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• 115 announced hospital

transactions in 2017

(compared with 74 in

2010)

• 16 transactions involved

organizations with

revenues between

$500 million and

$1 billion (compared

with 2 in 2010)

Dec. 4, 2017

Dec. 7, 2017

• 10th largest U.S. health system

• 27 hospitals

• 3 million patients per year

• Largest U.S. hospital system

• 140 hospitals

• 700 care sites in 28 states

$200 Billion $240 Billion $540 Billion

Getting Bigger, but Relatively

Speaking, Not Big

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Vulnerability: Digital

Sources: Salesforce: 2016 State of the Connected Patient,; Rock Health: “50 Things We Now Know about Digital Health Consumers,” Jan. 9, 2017; Ripton, J.T.: “Five Ways Millennials Are Changing the Healthcare

Industry,” Becker’s Hospital Review, March 1, 2017; Koren, D.: “What Millennials Want When It Comes to Healthcare.” Media Post, Dec. 23, 2016; Kaufman Hall: 2017 State of Consumerism in Healthcare. August 2017.

However, hospitals are still largely analog

• Only 14% offer digital tools and

information to enable consumer

engagement

• Only 23% offer a range of

virtual/telehealth access points

• Only 20% have an online price

estimation tool

• Only 43% provide messaging between

patients and providers

Millennials especially are

demanding digital health care

• 71% want to book appointments

with mobile apps

• 74% would prefer to see a doctor

virtually

• 75% look at online reviews before

selecting a physician

• 42% have used synchronous video

telemedicine

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Vulnerability: Access

Contemporary access is still a work in progress for traditional health

systems

• 89% offer no access or limited access through retail clinics

• 77% offer no access or limited access through virtual visits

• 52% offer no access or limited access through urgent care centers

• A key value proposition for CVS, Optum, and others is conveniently

located and operated facilities and 24/7 access to virtual care — this is the

expectation of today’s health care consumer

Source: Kaufman Hall: 2017 State of Consumerism in Healthcare. August 2017.

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Vulnerability: Convenience

Health care consumer interactions are among the least convenient of any

industry

• Health care consumers face inconvenience in appointment scheduling,

communication with providers, wait times, wayfinding, repetitive

paperwork, confusing billing, and lack of digital options

• Companies like Amazon take experiences that consumers don’t even

perceive as problematic and transform them into something actionable,

appealing, and engaging

• These companies are never satisfied with the level of convenience and

engagement for consumers

Source: Kaufman Hall: 2017 State of Consumerism in Healthcare. August 2017.

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What These Observations Show About the

Business of Health Care

Far more resources are needed to be a leader in health care

A huge investment of financial and intellectual capital is needed to

transform health care

A new level of competition is entering health care

New entrants are large, highly capable, and highly competitive

companies

Becoming a commodity is a real—and a really bad—possibility

Any organization—provider, insurer, pharmacy—that focuses on a

single business line is in danger of being commoditized

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Current Missouri Hospital

Operating Margins

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Current Kansas Hospital

Operating Margins

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LOSS GAIN

Percent of hospitals operating at a loss/gain

Based on 2017 AHA Data

Trends in Health Policy

Federal Level

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Holy Grail of Health PolicymakingFind a model that aligns the interests of health care providers and patients.

Healthy Consumer

Continued Health Preventable Condition

No Hospitalization Acute Care Episode

High Cost and Successful Outcome

Efficient and Successful Outcome

Complications, Infections,

Readmissions

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A Strategic Journey

Integration

PopulationHealth

Fee-For-Service

Fragmentation

Current Model

Fee-for-ServiceIllness and cureVolume incentiveFragmentation

New Model

Population HealthIntegrationValue-base payments

Accountability

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The Challenge of Managing in Two Worlds

Pay for value

Accountable care

Coordinated care across

the continuum

Global payment

Right care, right setting,

right time

Triple Aim metrics

Fostering wellness

Payer partners

Fully wired systems

Pay for volume

Fragmented care

Fee-for-Service

Treating sickness

Adversarial payors

Little HIT

Lack of outcome

based metrics

Duplication and

waste

Source: Premier, Inc.22


Third year of Trump Administration

Several cabinet positions changing

Health care positions stable, but changes at OMB

House

Democratic control

New leaders on key health committees

Senate

Slight improvement in GOP control

Some changes on key health committees

Supreme Court

More conservative

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Alex Azar – HHS Secretary

“One of my top 4 priorities … will be to use the

power of Medicare and Medicaid to drive

transformation of our healthcare system from a

procedure-based system that pays for sickness to

a value-based system that pays for quality and

outcomes.”

Four Priorities:

1. Private insurance market competition (Medicare Advantage, other plans)

2. Increase drug market competition

3. Move to value-based payment models

4. Increase price and quality transparency

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Still defining what Medicare for all

means?


Cost AnalysisRecent study from George Mason University

$32.6 trillion over 10 years

Starts at 10.7 percent of GDP and moves to 12.7 percent of GDP

“Doubling all currently projected federal individual and corporate income tax

collections would be insufficient to finance the added federal costs of the plan.”

Health care providers asked to do the heavy lifting

Medicare hospital payment rates are 62 percent of private insurance

Medicare physician payment rates 75 percent of private insurance

MedPAC shares that hospital Medicare margins were -9.6 percent in 2016

Health care providers will be reimbursed at rates that are 40 percent lower than those

currently paid by private insurance

“Perhaps some facilities and physicians would be able to generate heretofore

unachieved cost savings that would enable their continued functioning without

significant disruption. However, at least some undoubtedly would not, hereby

reducing the supply of healthcare services at the same time Medicare for all

increases healthcare demand.”

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Estimated Ideology of House Democratic Candidates

28Source: Washington Post, May 16, 2018

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Baby Boomers’ Aging Contributes to Rapid

Population Aging

Source: U.S. Census Bureau, 2010 Census, 2012 National Population Projections and MedPAC.

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2.0

2.5

3.0

3.5

4.0

4.5

5.0

1970 1990 2010 2030 2050

Workers per HI beneficiary

Projected

0

20

40

60

80

100

1970 1990 2010 2030 2050

Medicare enrollment (in millions)

Projected

Historical

Historical

Note: HI (Hospital Insurance, otherwise known as Medicare Part A).Source: Boards of Trustees 2014 and MedPAC.

Medicare Enrollment Projected to Grow Rapidly

Workers per HI Beneficiary Projected to Decline

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How Spending Growth is Impacted by the “Silver Tsunami”

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23 3 3

9

6

6

1

43

0

2

4

6

8

10

12

1980s 1990s 2000s 2010-2014 Trustees CBO

Ave

rag

e a

nn

ua

l ch

an

ge

(in

pe

rce

nt)

Enrollment Spending per beneficiary

Historical Projections, 2015-2025

7

8

4

76

11

Note: CBO (Congressional Budget Office), Trustees (Boards of Trustees of the Medicare Trust Funds). Values are rounded to the nearest one.Source: 2015 annual report of the Boards of Trustees of the Medicare Trust Funds and CBO report Updated Budget Projections: 2015 to 2025, released March 2015.

Spending

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340B Drug Discount Program

The 340B Drug Pricing Program is a critical program to

Kansas and Missouri hospitals.

77 Kansas hospitals have signed up to participate

69 Missouri hospitals have signed up to participate

ACTIVITY ON MULTIPLE FRONTS

1) Addressing the Final OPPS Rule

– Reduced payments for 340B drugs from ASP+6% to

ASP-22.5%

– Exemptions for CAHs, rural Sole Community

Hospitals, Children’s Hospitals, and Cancer Hospitals

2) Lawsuit - Original lawsuit filed on Dec. 21stt

– Court ruled in favor of HHS

– Lost Appeal…Suit Refiled

3) Congressional Hearings and Bills

4) President’s Blueprint for Reducing Drug Pricing

– Feedback provided on 340B program

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Drug Price Frustration

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Actions being take by Trump Administration and

Congress to Reduce or slow the increase in drug prices

Administration

Dept. of Justice expanding investigation of possible generic drug-price fixing

HHS releases series of memoranda, white papers, tweets and official

statements on topics related to containment of drug prices

New policy – use of step therapy for Medicare Advantage plans ad

prohibition of pharmacy gag clauses

Proposed policy – change Medicare Part B prices, pegging them to an

“international price index” as a means to align the U.S. with other countries

Congress

Senator Sanders/Representative Cummings – legislate international price

index for Medicare Part B drugs; permit Medicare to negotiate Medicare Part

D prices; permit U.S. residents to purchase medicines directly from Canada

and other countries

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“For decades, other countries have rigged the system so that American patients are charge much more – and in some cases, much, much more – for the exact same drug. In other words, Americans pay more, so that other countries can pay less.” President Donald Trump


Unique Alignment among Democrats,

Republicans and Stakeholders

The beginning of 2019 ushered in new price increases for nearly 300

medications. Pharmaceutical companies are boosting their prices just as the

new Congress is setting its agenda. These 2019 changes have once again raised

the ire of Democrats and Republicans.

Republicans and Democrats committed to hold hearings on the issue – drug

company CEOs to be hauled before Congress

Same goals, different ideas? Sec. Azar meets with Republicans and

Democrats. After meeting with House Oversight Chairman Elijah

Cummings, there were hopeful feelings of common ground. “We are

headed for the same goals, but not necessarily the exact same legislation,”

Cummings said.

A new survey from the American Hospital Association says that price hikes

and continuous shortages of basic medicines continue to add pressure,

leading to staff reductions and delay in investments.

Trends in Health Policy

Kansas and Missouri

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Current Status of State Medicaid

Expansion Decisions

Source: Status of State Medicaid Expansion Decisions. KFF State Health Facts


Medicaid Expansion Ballot Initiatives

Result % “Yes” % “No”

Idaho Approved 61 39

Montana Defeated 45 55

Nebraska Approved 53 47

Utah Approved 53 47

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Medicaid: Culprit for Budget Woes

“It's one of the largest budget items in the

state of Missouri. And when you start

talking $300 or 400 million every year, you

can't sustain that.” -Governor Mike Parson

“If we do nothing to shore up and to

improve the sustainability of our Medicaid

program, it will continue to strain nearly

every other area of the state budget.”

-Medicaid Director Todd Richardson

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States with More DRUG-INDUCED Than

Motor Vehicle-Related Deaths

2003

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC

Source: Centers for Disease Control and Prevention, National Center for Health Statistics. Underlying Cause of Death 1999-2016 on CDC

WONDER Online Database, released December, 2017. Data are from the Multiple Cause of Death Files, 1999-2016.46




2004

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2005

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2006

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2007

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC


WONDER Online Database, released December, 2017. Data are from the Multiple Cause of Death Files, 1999-2016. 50




2008

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2009

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2011

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2012

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2013

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2014

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC






2015

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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2016

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Washington DC




Addict?

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Opioids and Substance Use Disorders

KHA/KMS Committee on Opioid Use

Focused on provider led initiatives to address opioid and substance use disorders

Committee comprised of representatives from KHA and KMS

Governor’s Task Force on Substance Use Disorders

Focused on developing policy recommendations for the Governor and the 2019 Legislature

Committee comprised of a variety of stakeholder groups

K-TRACS

Kansas Perinatal Quality Collaborative

Kansas Partnership for Pain Management

Project ECHO

KHA/KMS Joint Committee on Opioid Use

BlueCross BlueShield of Kansas

Governor's Substance Use Disorder Task Force

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Missouri Government Action

Senate Bill 501, signed into law

Grants immunity from arrest, prosecution or other penalties for certain drug-related

crimes if seeking medical assistance for a drug or alcohol overdose

Permits the director of the Missouri Department of Health and Senior Services or

physician designee to issue a statewide standing order for Naloxone

Revises standards for medication-assisted treatment of substance abuse

Allows the Board of Pharmacy to allocate funds for drug “take-back” programs

Executive Order 17-18: “Multi-phase PDMP”

Retrospective data mining for prescribing variance from pharmacy benefit manager

organizations and dispensers and through use of technology and software

2018 Legislation

Prescription drug monitoring program – no bill proposed

Needle exchange programs

Expanded take-back programs

Governor’s Budget

Fund Executive Order 17-18

Expand community treatment services to support medication-assisted treatment

Multi-agency prescriber letter initiative

Targets Medicaid prescribers

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Policy and Advocacy

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Hospital Closures in Missouri

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Rural Emergency Medical Center LegislationH.R. 5678

HIGHLIGHTS OF THE LEGISLATION

• Establishes a new rural facility designation under the

Medicare program: Rural Emergency Medical Center

(REMC)

• Allows CAHs and prospective payment system hospitals

with 50 or fewer beds to convert to a 24/7 emergency

department.

• REMCs would provide 24/7 emergency care and other

outpatient services (e.g., observation, diagnostic and

telehealth).

• Post-acute care could be provided in a separately licensed

SNF unit

• REMC reimbursement would be the combination of the

Medicare OPPS rate for services and a fixed facility fee

payment.

• REMCs would be required to provide transportation to an

inpatient hospital, when needed.66


Why An Alternative Model for Kansas?

Kansas 2013 Acute Patient Data

18 hospitals </= 1

15 more </= 2

19 more </= 3

13 more </= 5

Others 5+

Kansas 2013 Swing Bed Patient Data

All hospitals: Highest ADC = 10

Hospitals <5 acute ADC: Highest SB ADC = 5

</= 1

</= 2

</= 3

</= 5

5+

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Principles for a Sustainable

Rural Health System

Improve Health

Provide Access

Encourage Collaboration

High Quality

Promote Efficiency and Value

Embrace Technology

Financed Fairly to Address Population Health

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Governor’s Rural Health Summit

Presentations addressed a variety of rural health topics.

Don Babb was the keynote speaker, describing the evolution of Citizens Memorial Hospital.

Governor Parson hosted a Rural Health Summit in Bolivar on December 3.

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MHA Rural Health Initiative

MHA Rural Health initiative focuses on 10 policy issues taken from the Governor’s Rural Health Summit.

The 10 issues and related policy proposals are posted on MHA’s website.

Weekly promotions highlight an issue and its policy proposals, targeting a broad coalition and social media.

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Extensive outreach with Reimagine Rural Health

Initiative

Distributed to more than 800 lawmakers and

opinion leaders across Missouri ― many from

nonhealth care groups (agriculture, banking, etc.)

Extensive use of social media

Op-eds and letters to the editor

Meetings with state legislators

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Thank YouQuestions?

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Documents

State of Healthcare in Kansas and Missouri€¦ · The Value of Kansas and Missouri Hospitals From CVS’s 2018 Q1 Earnings Report Describing its Preliminary Strategy with Aetna Transaction