Deloitte Center for Health Solutions
August 19, 2013
Monday memo
Health reform update
This week’s headlines: My take: health system transformation is a long journey
Implementation update o $67 million awarded to HIX navigators o Study: average federal tax credit to purchase individual coverage through exchanges $2,672 o Oklahoma challenge to ACA proceeds in court o HIX eligibility update: HHS initiates data sharing with VA, IRS
Legislative update o Meaningful use workgroup releases stage 3 recommendations for comment o AHRQ report: health IT alone won't improve quality in primary care settings o OIG report: majority of critical-access hospitals do not qualify for cost-plus Medicare
reimbursement o CMS miscalculated inpatient rehab compliance, House committee looking at reduction in
post-acute costs
State update o HIX update o Medicaid expansion update
o State round-up
Industry update o Hospital consolidation gets attention o Hospitals at odds with Medicare Advantage plans about 2% sequestration cuts o Hospitals ask CMS to require exchange plans to pay claims during ACA grace period o Health insurers advertising for expanded coverage in 2014 o Technology price index: average price paid for PET/CT systems dropped 21% in last year o Pioneer ACO results update o American Medical News to shut down o CMS physician fee schedule proposal criticized by AMA o Study: behavior changes prompted by lab results problematic for older adults
Research snapshot o Studies conclude that limiting residents' work hours does not hurt patient safety, but results
in less time with patients
Quotable
Fact file
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My take: health system transformation is a long journey From Paul Keckley, Executive Director, Deloitte Center for Health Solutions
In the past week, many Egyptians have died in the conflict over the country’s governance
between the Muslim Brotherhood and the military government that came to power July 3 with
the downfall of the Morsi regime.
Leaders in Iran, Afghanistan, India, and China announced changes in their governments’
policies intended to protect their national interests and control their markets more
autonomously.
Conflicts in at least 30 of the globe’s 192 countries continued—in some cases, civil unrest
that’s seemingly decades old.
And at home, with Congress home for its August recess, coverage focused on mixed signals
about the U.S. economic recovery, and of late, the pending opening of health insurance
exchanges (HIX) for individuals and small businesses October 1.
I am a health care industry guy. My natural appetite is for reading health care journals and
trade publications about how this industry representing 17.9% of our gross domestic product
(GDP) is performing, who its winners and losers will be, and how innovation is changing the
operating models and capital flows into and out of each sector. I easily gravitate to stoic
assessments of its fundamental challenges—labor intensity, capital intensity, regulatory
complexity, structural fragmentation, and costs—because those are my comfort zones. And I
perk up when news reporters cover the industry often taking issue with overly simplistic or
inaccurate coverage.
Global conflicts, poverty that’s standard fare for one-third of the globe’s population,
undeveloped systems of care, and any number of other important topics don’t naturally get my
attention. And studying a piece of legislation, like the Affordable Care Act (ACA), or any other,
is not my idea of fun reading.
The U.S. health care system is in the cross hairs of changes that aren’t comfortable for many.
Each sector is circling its wagons to protect its self-interests and defend its conventional role.
Some efforts require awkward alliances outside the sector: insurers and hospitals, primary
care and specialty medicine, biotech and pharma, and so on.
Here’s what I am learning as I age…
The health system is not the centerpiece of everything that matters in the U.S. It’s an
important part of our complicated society that also requires investments in defense,
agriculture, education, infrastructure, and others, while balancing the needs of those who
have and have not. But events on the world stage and dizzying news cycles mean our
industry must increasingly see itself in the broader context of the global human drama and its
economy.
Understanding the health care system takes effort. Time is precious. Most in the health care
industry are busy, so we default to time-savers—PowerPoint presentations with speaker notes
prepared by others, talking points that make good sound bites, trade associations’ legislative
summaries, and so on. Though helpful, they sometimes mask lack of personal knowledge
about this full scope of this industry—the issues, challenges, innovations, and constraints
facing sectors other than our own. It takes ongoing, persistent personal study, nothing less.
And it requires study outside health care—to world affairs, to other industries, to the lessons of
history—to understand health care in its proper context.
We are prone to live in our comfort zones. Walter Lippman, famed journalist and author, wrote
“When all think alike, no one thinks very much”. That’s a timely message in our industry.
Leaders surrounded by “yes men” enjoy less friction in their role but jeopardize the long-term
viability of their organizations. Listening to the opinions of those with whom we differ, and
engaging with those for whom “health care” is seen through a different lens is necessary to
competent leadership. And as accessible, affordable health care is juxtaposed against other
societal challenges such as hunger, literacy, and poverty, our solutions should be sensitive to
the dynamics of our increasingly pluralistic society at home and complex markets abroad.
There’s a natural tendency for those of us in health care to default to views that support our
strongly held predispositions, especially when under attack. And it’s understandable that with
looming deadlines for compliance with new rules and regulations and ever-present demand
for transparency and cost cutting, we’re always in a rush to hit short-term milestones. The
underlying premise of health reform is that our system is not performing as it should. That
lends itself to defensiveness and short-term strategy for survival or competitive advantage.
Health system transformation is a long journey. As a system, our changes span decades: we
celebrated Medicare’s 48th birthday July 30—one of many trans-generational examples. The
implementation of the ACA, imperfect as it is, spans 2010-2018—yet another.
Health system transformation will come as we think and engage outside our personal and
professional comfort zones. The world is small. Conflicts in Egypt and elsewhere, economic
challenges in China, Japan, and India, populist movements in emerging markets are as
relevant to the future of our industry as are our efforts in basic science toward person-
centered medicines and in integrating the financing and delivery of care more seamlessly.
Our industry’s future is bright, but it is not without challenges that are likely to take us beyond
our traditional comfort zones.
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Implementation update
$67 million awarded to HIX navigators Last Thursday, U.S. Health and Human Services (HHS) awarded grants totaling $67 million to
“navigators” (i.e., community organizations, providers, and businesses) tasked with educating
consumers about how to enroll in health insurance via the health insurance exchanges (HIX).
The grants go to 105 organizations in the 34 states that defaulted to federally-facilitated
exchanges. The $13 million added to the effort came from ACA’s Prevention and Public
Health Fund.
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Study: average federal tax credit to purchase individual coverage through
exchanges $2,672 According to a Kaiser Family Foundation study, the average subsidy will be $2,672 for an
individual purchasing the lowest-cost silver plan, which would lower average individual
premium costs on the HIXs 32%. The average subsidy for a family purchasing the lowest-cost
silver plan would be $5,548, reducing premium costs by 66%. The analysis was based on the
2008 Survey of Income and Program Participation (SIPP), Wave 6 (interview period April to
July 2010) data.
Background: eligible individuals earning between 100% and 400% of the federal poverty level
(FPL) can apply for federal tax credits to assist in the purchasing of health insurance on HIXs.
The tax credits are calculated based on the cost of the second least expensive silver plan in a
person’s living area and family income. For example, a single 27-year-old non-smoker who
makes $28,000 per year (244% of FPL) that has an annual health insurance premium of
$3,163 would qualify for a federal tax credit of $971, which is 31% of the total premium cost.
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Oklahoma challenge to ACA proceeds in court Last Monday, U.S. District Court Judge Ronald A. White granted Oklahoma permission to
proceed with a lawsuit filed in 2011 against HHS’s interpretation of the ACA. The issue: does
the ACA authorize tax credits to be awarded to individuals buying insurance on state-run exchanges and federally-facilitated exchanges? The state’s suit contends eligibility is limited
to state-based exchanges. Note: Oklahoma plans to have the federal government operate its
exchange.
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HIX eligibility update: HHS initiates data sharing with VA, IRS Last week, the Centers for Medicare & Medicaid Services (CMS) issued two notices
announcing the establishment of a computer matching program (CMP) to connect CMS with
the Veterans Health Administration and the Department of Treasury to determine eligibility for
the advance premium tax credit and cost sharing reductions under the ACA. Interested
stakeholders have 30-days to submit comments.
Related: Friday, CMS announced data sharing with the Department of Homeland Security and
U.S. Citizenship and Immigrations Services to allow for the verification of immigrant,
nonimmigrant, and naturalized or derived citizen status to assist HIXs in making premium tax
credit and subsidy eligibility determinations for individuals applying for health insurance
coverage and exemptions. Interested stakeholders have 30-days to submit comments.
Note: “lawfully present immigrants” are eligible for subsidies and tax credits on the HIXs.
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Legislative update
Meaningful use workgroup releases stage 3 recommendations for comment Last week, the Meaningful Use Workgroup that advises the Office of the National Coordinator
for Health IT (ONCHIT) issued draft recommendations for meaningful use stage 3 goals and
criteria. Scheduled for 2016 to 2017, these draft recommendations focus on using technology
implemented in stages 1 and 2 to improve patient outcomes. Highlights:
Stage 3 objectives should be (with the caveat that some might be delayed until after 2016-
2017):
Tracking more than 50% of medication orders electronically
Providing the ability to electronically submit patient-generated data
Tracking medical devices on 80% of implant patients
Ensuring electronic health records (EHRs) can assist with follow-up orders and identify
potentially appropriate clinical trials
Sending electronic notifications to a patient's primary care provider or other member of
the care team following a significant health care event (such as emergency department
admission)
(Source: “ONC Workgroup Releases Meaningful Use Stage 3 Recommendations” by Helen
Gregg, Becker’s Hospital Review, August 15, 2013)
Implementation and oversight should focus on gaps in EHR functionality, simplify meaningful
use reporting requirements so that higher level objective compliance assumes subsumed
process compliance and promotes greater patient engagement.
Related: most physicians believe that EHR systems can improve patient outcomes but half
say the cost of EHRs outweigh the financial benefit, according to athenahealth's Physician
Sentiment Index based on 1,200 physician EHR users polled in March. Highlights:
69% have favorable view of their EHRs opinion vs. 18% unfavorable
55% said patient care benefits of EHRs outweigh the costs
51% said the financial benefits of EHRs do not outweigh the costs
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AHRQ report: health IT alone won't improve quality in primary care settings The Agency for Healthcare Research and Quality (AHRQ) report based on its analysis of 24
primary care health information technology (HIT) projects funded between 2007-2012 found
the use of HIT correlated to increased adherence by providers to processes related to
evidence-based care recommendations, improvements in patients' health status, and
improved clinical outcomes for patients with chronic diseases if coupled with other workflow
changes.
Source: “Findings and Lessons from the Improving Quality Through Clinician Use of Health IT
Grant Initiative” based on 24 projects funded between 2007-2012: 21 in primary-care settings
and 3 in mental health and dental offices. (AHRQ.gov)
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OIG report: majority of critical-access hospitals do not qualify for cost-plus
Medicare reimbursement The HHS Office of the Inspector General (OIG) released a report last Thursday that concluded
that two-thirds of the over 1,300 U.S. critical-access hospitals (CAHs) (rural/remote hospitals
with 25 or fewer beds) that are paid 101% of costs should not receive cost-plus funding since
they are not remote: 846 of the CAHs were less than 35 miles from another hospital and 71
were less than ten miles from the nearest hospital.
Background: Since 1997, CAHs have been paid 101% of their costs to provide services to
residents of remote areas vs. traditional Medicare hospitals that receive payments based on
uniform fees and covering about 93% of costs of Medicare patients.
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CMS miscalculated inpatient rehab compliance, House committee looking at
reduction in post-acute costs This summer, CMS incorrectly calculated that ten inpatient rehabilitation hospitals (IRFs) were
not complying with the 60% rule (60% of the facility’s patients must have one or more of a set
of medical conditions), causing many IRFs to undergo unnecessary medical reviews. CMS is
in the process of rethinking how it calculates compliance with the current threshold but
recently delayed those changes for a year.
The U.S. House Ways & Means Committee is looking to reduce Medicare post-acute
spending in four post-acute sectors, including a 75% rule proposal applied to IRFs. IRFs that
fall below the threshold get paid at lower, acute care hospital rates.
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State update
HIX update Seventeen states have released health insurance premium rate information for plans to be
sold on the HIXs beginning October 1. To see the number of carriers operating in each state,
see Deloitte Center for Health Solutions HIX map, click here.
Sixteen states—12 led by Democratic governors, three led by Republicans, one
Independent—and the Democratic mayor of D.C. have announced plans to operate state-
based exchanges. Seven states—five led by Democratic governors and two led by
Republicans—will participate in state-partnership exchanges. The remaining 27 states will
default to a federally-facilitated exchange.*
State-based exchange State-partnership
exchange
Federally-facilitated
exchange
CA, CO, CT, DC, HI, ID**,
KY, MA, MD, MN, NM**,
NV, NY, OR, RI, VT, WA
AR, DE, IA, IL, NH, MI,
WV
AK, AL, AZ, FL, GA, IN, LA,
KS, ME, MO, MS, MT, NC,
ND, NE, NJ, OH, OK, PA,
SC, SD, TN, TX, UT*, VA,
WI, WY
■ Democratic governor ■ Republican governor ■ Independent governor
*UT: individual market will be a federally-facilitated exchange; small business health options
program (SHOP) will be state-based.
**NM & ID: federal government will help run the individual market. States will continue to
maintain plan management and consumer assistance functions; HHS will operate the IT
system. SHOP will be state-based.
(Source: HHS, KFF, and National Association of State Health Policy)
Last Friday, Massachusetts insurance department announced insurance rates were
projected to increase 2% in 2014.
Oregon announced that its state-based exchange, Cover Oregon, will not be ready for
consumers to sign up for coverage on their own by the October 1 open enrollment
deadline. Individuals will need to sign up for coverage via an insurance broker or state
aide. According to state officials, Cover Oregon will need several weeks to sort out
technological issues, customer support, and internal processes. The U.S. Government
Accountability Office (GAO) and the HHS OIG have acknowledged that all 50 states
may not be prepared for a full insurance marketplace launch by October 1, 2013.
Mississippi Insurance Commissioner Mike Chaney is requesting to run the Small
Business Health Options Program (SHOP) for small employers on the federally-
facilitated exchange. The federal government would continue to run the state’s HIX
individual market. If HHS approves Chaney’s proposal for the SHOP, the state-run
SHOP would be fully operational by June 2014. Currently, Utah is the only other state
that will split individual and SHOP exchange responsibilities with the feds.
Minnesota has applied for a $55 million federal grant to help fund the operation of its
state-based exchange (MNsure) next year. The grant would cover salaries for about 166
full time employees and cover spending on technology, marketing, customer service,
administration, and other items. MNsure is expecting the award on October 1, 2013.
Last Tuesday, D.C. officials awarded $6.4 million in funds to community organizations to
hire over 150 specialists to educate the uninsured and hard to reach populations on
how to enroll in the state-based exchange. Approximately 42,000 people, or 7% of the
District’s population is uninsured—a majority of which are under 35 years old.
(Source: HHS)
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Medicaid expansion update To date, 23 states and DC have announced they will or are likely to expand their Medicaid
programs; 24 states have indicated they will not expand their programs in 2014. Currently, 36
states are out of session, six are in session, eight are in session year-round, and two are in
special session:
Expected to expand
Medicaid
Will not expand at this
time Maybe
AR, AZ, CA, CO, CT,
DC, DE, HI, IA, IL, KY,
MA, MD, MN, ND, NJ,
NM, NY, NV, OR, RI,
VT, WA, WV
AL, AK, FL, GA, ID, IN,
KS, LA, ME, MI, MO,
MS, MT, NC, NE, OK,
SC, SD, TN, TX, UT,
VA, WI, WY
NH, OH, PA
■ Democratic governor ■ Republican governor ■ Independent governor
(Sources: NASHP and Kaiser Family Foundation. Updated as of July 1, 2013)
A New Hampshire commission tasked with studying Medicaid expansion is scheduled to
make a recommendation on whether the state should expand in early September.
State Medicaid spending in Ohio is projected to reach $43.4 billion by 2025 with a growth
rate of 7.2% per year. With Medicaid expansion, the growth rate could be maintained at
3.5% per year, resulting in projected Medicaid costs of $37.2 billion by 2025 per an
analysis from the Health Policy Institute of Ohio and Ohio State University John Glenn
School of Public Affairs. Ohio policymakers are still debating expansion, which would add
366,000 Ohio residents to the program.
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State round-up Last week, a California Senate bill (No. 491) proposing to expand nurse practitioners’
scope of practice was approved by the state Assembly committee. The legislation is
expected to be heard before the Assembly Appropriations Committee this week.
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Industry update
Hospital consolidation gets attention The New York Times front page story August 13 by Julie Creswell and Reed Abelson, “New
Laws and Rising Costs Create a Surge of Supersizing Hospitals” put a spotlight on increased
consolidation among acute care hospitals. America’s Health Insurance Plans’ Chief Executive
Karen Ignagni challenged the reason for the increase in hospital consolidation activity: “The
rhetoric is all about efficiency. The reality is all about higher prices.”
Related: Last week, Representative Jim McDermott (D-WA) sent a letter to the U.S. GAO
requesting the Agency conduct a study about merger and acquisition (M&A) activity among
providers and its impact on Medicare program costs and quality. The report would include an
analysis on hospital-hospital and hospital-physician M&A trends and Medicare service
utilization and spending associated with consolidation.
For background, download Deloitte Center for Health Solutions’ Hospital Consolidation:
Analysis of Acute Sector M&A Activity (www.deloitte.com/us/2013hospitalconsolidation).
My take: The posturing of hospitals vs. health insurance plans is not a new skirmish. Since the
prospective payment system was implemented 30 years ago, each party has sought to gain
leverage at the expense of the other: it’s not a new story, just the latest chapter. And as
budgets for health care face intensified pressures from employers and policymakers, the
tension between the two is likely to intensify. At issue: the role each plays in coordinating care
for patient populations, and the financial incentives supporting those roles. Plans contend their
core competence in care management and historic focus on cost containment is needed as
the hub of local health systems. Hospitals contend their core competence is the domain of
caring for patient populations across the continuum—ambulatory, acute, and post-acute—
given aging of the population and clinical innovation that’s constantly changing. Trust between
the two is guarded, and negotiations increasingly testy. Examples: see the next two items in
this section…
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Hospitals at odds with Medicare Advantage plans about 2% sequestration cuts Last Tuesday, the American Hospital Association (AHA) and 17 state hospital associations
asked CMS to clarify a payment dispute with Medicare Advantage (MA) plans that 2%
sequestration cuts cannot be passed through as in their contracts with hospitals. AHA says
MA organizations have passed along a reduction based on a misinterpretation that Medicare
rates, rather than payments, have been reduced by budget sequestration. The state groups
say that CMS instructed MA plans to review contracts individually to determine whether and
how sequestration might affect an MA plan’s payment to its contracted providers, inferring that
plans could not automatically pass the reduction of premium payments to MA plans on to
providers. They also say it was implicit that plans should not pass along the sequestration
reduction to hospitals where payments to providers use Medicare fee-for-service rates purely
as a reference point as CMS had not changed the published rates for payments.
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Hospitals ask CMS to require exchange plans to pay claims during ACA grace
period Thursday, hospital trade groups asked CMS to reverse its policy on the ACA's mandatory
grace period when subsidized consumers do not pay premiums. The current policy states that
qualified health plans (QHPs) must pay claims for the first 30 days of the grace period but
gives issuers the option of holding claims for the final 60 days. Hospitals believe the services
provided in the grace period might be unpaid services resulting in providers exiting the
program. Under the CMS policy, insurers may retroactively deny all pending claims for
services rendered during those 60 days if the enrollee ultimately fails to pay premiums.
The American Hospital Association, Federation of American Hospitals, and Association of
American Medical Colleges asked CMS to require that QHPs pay for all services rendered
during the three-month grace period. The hospitals say CMS's policy subjects enrollees to
significant liability for services received during the second two months of the grace period, and
the approach also unfairly burdens providers because they will not get paid by the health
plans and will have to wait to try to get paid directly by the patient.
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Health insurers advertising for expanded coverage in 2014 Health insurance companies will invest up to $1 billion for advertising encouraging consumers
to purchase coverage through HIXs over the next two years, with the majority going to local
TV networks. In 2014, this new category is expected to be among the top revenue generators
for TV stations, along with automobiles, political ads, fast food, and medications.
(Wall Street Journal, “Health ads stream in”, August 15, 2013)
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Technology price index: average price paid for PET/CT systems dropped 21%
in last year The average price paid for PET/CT systems dropped 27% from May to June, and 21% in the
last year as hospitals purchased lower cost models according to the most recent Modern
Healthcare/ECRI Institute Technology Price Index.
The Technology Price Index uses monthly and annual price data for about 30 supply and
capital items purchased by hospitals and other healthcare providers, based on three-month
rolling averages. The costs of PET/CT systems used for determining the stages of cancer and
monitoring cancer treatment range from $1 million (64 slice systems) to $2.7 million (128 slice
systems).
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Pioneer ACO results update Of 32 Pioneer ACOs:
18 generated savings (13 of these shared $76.1 million cost saving pool) vs. 14
generated losses for Medicare (2 of these owe Medicare $4.5 million)
32 reported on all quality measures
25 had lower risk-adjusted hospital admissions
Nine are transitioning out of the Pioneer program: seven will transition to the Medicare
Shared Savings Program (Section 3022 ACA) and two will drop out altogether
Source: CMS July, 2013
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American Medical News to shut down Last week, the American Medical Association (AMA) announced it was shutting down
American Medical News and its companion site AmedNews due to growing operating losses.
The publication has a print circulation of about 230,000.
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CMS physician fee schedule proposal criticized by AMA The AMA issued strong criticism of CMS’s proposed 2014 Medicare physician fee schedule,
calling it “an arbitrary new policy” that would lower payment for more than 200 services that
Medicare pays more for when the service is provided in a doctor's office and less when it's
performed in a hospital outpatient department or ambulatory surgery center. The AMA
credited “the ongoing efforts” of the Specialty Society Relative Value Scale Update
Committee, commonly known as the RUC, and the AMA Current Procedural Terminology
(CPT) Editorial Panel, for convincing CMS that current evaluation and management codes “do
not adequately capture the costs of providing care to all Medicare patients”. It goes on to say
that the CPT panel and the RUC will work with CMS to “discourage overly burdensome
requirements and to ensure that all the necessary resources are captured in the payment”.
Responding to criticism of the RUC, the AMA summary noted that, using “objective screening
criteria”, the panel has reviewed about 1,300 “misvalued service” codes and prompted CMS to
redistribute $2.5 billion within the fee schedule between 2009 and 2013.
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Study: behavior changes prompted by lab results problematic for older adults A working paper for the National Bureau of Economic Research found poor results from blood
sugar and blood pressure tests did not prompt healthy changes to diet and exercise among
older adults.
The research analyzed results from the 2006, 2008, and 2010 National Institute on Aging's
Health and Retirement using biomarkers such as blood pressure and blood sugar levels from
randomly selected respondents, who are ages 50 and older. Those with high laboratory
results were notified and instructed to see a physician.
The study found behavior changes among 0.7% of the 2006 survey respondents with lab
results and those with a prior diagnosis of high blood pressure reported less smoking and less
intense drinking, but less light exercise.
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Research snapshot New industry and peer-reviewed studies of note to health system transformers…
Studies conclude that limiting residents' work hours does not hurt patient
safety, but results in less time with patients Background: The Accreditation Council for Graduate Medical Education set an 80-hour weekly
work limit (averaged over four weeks) in 2003 based on concerns that patient safety might be
compromised by longer hours. Further limits, including restricting first-year residents to 16-
hour shifts went into effect in 2011. Two studies in the Journal of Internal Medicine focus on
results.
University of Pennsylvania researchers studied mortality rates within 30 days of admission for
13.7 million Medicare patients admitted for heart attack; gastrointestinal bleeding; congestive
heart failure; and general, orthopedic, or vascular surgery between July 2000 and June 2008.
Heart attack patients had a 16.7% mortality rate during the 2000-01 academic year, but only a
13.9% rate in 2007-08. Mortality rates for congestive heart failure patients fell from 10% to
9.3%; and mortality rates fell from 12.3% to 10.9% for vascular surgery patients.
Findings: mortality rates at teaching hospitals stayed relatively the same in the first three
years after work-hour limits were set and improved in the fourth and fifth years. “These
concurrent changes make it impossible to determine the incremental impact of any single
intervention, but we can clearly say that mortality did not worsen following implementation of
the 2003 duty hour rules.”
A Johns Hopkins University and University of Maryland research team observed 29 first-year
internal medicine residents at two “large academic medical centers in Baltimore” for a total of
873 hours in January 2012 and recorded how they spent their time. The first-year residents,
also known as interns, were observed spending 12% of their time in direct patient care, 64%
in indirect patient care, 15% in education activities, and 9% in miscellaneous activities such as
walking (which accounted for 5.9% of their total time), eating, socializing, and sleeping. In all,
computer use accounted for 40% of their time. The researchers cited 1989 and 1993 studies
that found interns spent 18% to 22% of their time in direct patient care, 42% to 45% doing
documentation, and up to 40% on miscellaneous activities including eating and sleeping.
Findings: time spent on patient care didn't differ significantly between the two institutions, day
and night shifts, or male and female interns.
Citations: “In the Wake of the 2003 and 2011 Duty Hours Regulations, How Do Internal
Medicine Interns Spend Their Time?” Lauren Block, Robert Habicht, Albert W. Wu, Sanjay V.
Desai, Kevin Wang, Kathryn Novello Silva, Timothy Niessen, Nora Oliver, Leonard Feldman J
Gen Intern Med. 2013 August; 28(8): 1042–1047.
“Teaching Hospital Five-Year Mortality Trends in the Wake of Duty Hour Reforms” Kevin G.
Volpp, Dylan S. Small, Patrick S. Romano, Kamal M. F. Itani, Amy K. Rosen, Orit Even-
Shoshan, Yanli Wang, Lisa Bellini, Michael J. Halenar, Sophia Korovaichuk, Jingsan Zhu, Jeffrey H. Silber J Gen Intern Med. 2013 August; 28(8): 1048–1055.
My take: The August 2013 issue of the Journal of General Internal Medicine offers a wide
ranging collection of articles about aspects of medical education including the two above. The
future of medical education in the U.S. is uncertain. Curricular changes that equip students to
embrace technologies that support clinical decision-making, team-based care coordination
and engagement with consumers are underway, but changes in medical education face
enormous resistance. And innovations that disrupt the status quo face huge hurdles, many
considered threatening to incumbents. Medical education is much more than “teaching
doctors”. It is sharing information about the appropriate ways to diagnose and treat medical
problems deploying the full range of professional skills and competencies of the health care
workforce and engaging individuals actively in the process.
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Quotable Re: whether the ACA will require more changes: "I have to believe that’s going to be the case.
Anytime you implement something like this, it’s new and there’s no doubt that it’s complicated,
there will be changes along—there should be changes along the way." —former White House
adviser David Axelrod on Morning Joe, MSNBC Friday, August 16, 2013
"We’re not going to let this dangerous and ludicrous proposal be touted without a response —
we’re going to every state they are [going to], and our presence will be felt,” We’ll hold our
own events in some cases with dozens of concerned citizens, elected officials, doctors,
nurses, students, seniors and people from across the spectrum who are or will benefit from
the law.” —Americans United for Change and Protect Your Care announcement last Friday
about its tour to counteract Heritage Foundation’s August tour of nine cities encouraging
defunding of the ACA
“As lower wage occupations have proliferated in the past several years, Americans are
increasingly unable to make a living at their jobs. They work harder and are paid less than
workers in other advanced countries. Ad their wages have stagnated even as executive pay has soared.”—“Fast Food Fight”, New York Times lead editorial, August 8, 2013
“Accountable care organizations (ACOs) are among the most widely discussed models for
encouraging movement away from fee-for-service payment arrangements. Although ACOs
have the potential to slow health spending growth and improve quality of care, regulating them
poses special challenges. Regulations, particularly those that affect both ACOs and Medicare
Advantage plans, could inadvertently favor or disfavor certain kinds of providers or payers.
Such favoritism could drive efficient organizations from the market and thus increase costs or
reduce quality of and access to care. To avoid this type of outcome, we propose a general
principle: Regulation of ACOs should strive to preserve a level playing field among different
kinds of organizations seeking the same cost, quality, and access objectives. This is known as
regulatory neutrality. We describe the implications of regulatory neutrality in four key areas:
antitrust, financial solvency regulation, Medicare governance requirements, and Medicare
payment models.”—Bacher et al, “Regulatory Neutrality Is Essential To Establishing A Level
Playing Field For Accountable Care Organizations”, Health Affairs August 2013
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Fact file Health spending as share of economy: “health care prices increased 1.1% in July 2013
relative to July 2012, only a tenth above the May rate. The 12-month moving average, at
1.6%, represents a new low for the data. National health expenditures grew 4.3% in June,
and spending growth is averaging 4.1% for the first half of 2013, barely above the record low levels seen annually since 2009.” (Source: Altarum Institute, “Health share of
economy drops due to data revisions: Health price, spending, and jobs growth contained,”
August 16, 2013)
Medicare vs. private insurance: Medicare enrollees more satisfied than those with
commercial coverage: 8% rate Medicare unfavorably vs. 20% who rate their commercial
coverage negatively; access problems are lower for Medicare enrollees vs. commercial (23% vs. 39%) and overhead costs for Medicare are lower (1.4% vs. 12-25%). (Source:
The Commonwealth Fund, “Medicare beneficiaries less likely to experience cost-and-
access related problems than adults with private coverage,” July 2012)
Obesity rates in 2012: “at least 30% of adults were obese in 13 states: Alabama,
Arkansas, Indiana, Iowa, Kentucky, Louisiana, Michigan, Mississippi, Ohio, Oklahoma,
South Carolina, Tennessee, and West Virginia. In 2011, a dozen states reached that
threshold. Louisiana and Mississippi led the list. In both, nearly 35% of adults were obese. Colorado was lowest, with less than 21% obese.” (Source: CDC telephone survey
referenced in Modern Healthcare, “Adult obesity very high in 13 states; many in the
South,” August 16, 2013)
Related: obesity accounts for 18% of deaths among African American and white
Americans between the ages of 40 and 85. (Source: American Journal of Public Health
August 15, 2013)
2012 health costs: hospital readmission rates for Medicare patients dropped to 17.9%
from 19%; health insurance premiums increased 3%. (Source: USA Today, “White House
touts slow increase in health care costs,” July 29, 2013)
340B participation: 14,076 participants in 2009 vs. 16,572 in 2011. (Source: Health
Resources and Services Administration data referenced in Modern Healthcare, “Who
benefits from drug discounts?” July 13, 2013)
U.S. fertility rate: increased from 1.89 per female in 2012 (25 year low) vs. 1.90 in 2013.
(Source: CDC)
Stress: in 2012, 67% of U.S. adults regularly experienced physical symptoms due to
stress. (Source: American Psychological Association)
Retail market for stress reduction: $521 million spent for relaxation drinks in 2011;
massage chairs $250 million; therapeutic massage is $13 billion industry. (Source:
Nielsen data referenced in USA Today, “All stressed out? Businesses will sell you some
peace,” August 5, 2013)
Initial public offerings: up 35% in 2013 year to date, with 116 deals vs. 128 for 2012,
125 in 2011, 154 in 2010, 63 in 2009 and 31 in 2008. (Source: Renaissance Capital
referenced in USA Today, “IPOs returning to Wall Street after deep freeze,” August 4,
2013)
Insurance awareness: 14% of adults understand basic insurance. (Source: Carnegie
Mellon Survey, July 2013)
Avoidable readmission penalties on hospitals: $227 million in fines against 225
hospitals in FY2013 vs. 214 hospitals fined $280 million in FY2012. (Source: CMS)
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Deloitte Center for Health Solutions research To learn more about recent Deloitte thought leadership, please visit Deloitte University
Press at www.DUPress.com.
Coming soon: Physician-hospital employment: This time it’s different
Update: Privacy and security of protected health information: Omnibus Final Rule and
stakeholder considerations
Currently available: Hospital Consolidation: Analysis of Acute Sector M&A Activity—May 2013. Available
online at www.deloitte.com/us/2013hospitalconsolidation
Physician adoption of health information technology: Implications for medical practice
leaders and business partners—May 2013. Available online at
www.deloitte.com/us/2013physiciansurveyHIT
Breaking Constraints: Can incentives change consumer health choices?—March 2013.
Available online at http://dupress.com/articles/breaking-constraints/?coll=3024
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Deloitte contacts
Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions
Jessica Blume, U.S. Public Sector National Industry Leader, Deloitte LLP
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Jason Girzadas, National Managing Director, Life Sciences & Health Care, Deloitte
Consulting LLP ([email protected])
Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology,
Deloitte Center for Health Solutions ([email protected])
Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting LLP
George Serafin, Managing Director, Health Sciences Governance Regulatory & Risk
Strategies, Deloitte & Touche LLP ([email protected])
Rick Wald, Director, Human Capital, Deloitte Consulting LLP ([email protected])
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