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Category: The Business of Health Care

Bad Blood & Mad Love at Theranos—Psychopaths at Work

I’ve been kidding John Carreyrou on Twitter that I was going to give Bad Blood, his tale about the Theranos fraud, a one star review because he never sent me a preview copy. But it’s a barn burner, and I can’t recommend it enough, even though I spent my own $13.95 on the Kindle version!

By now the story is well known. The young blonde Stanford drop out with the baritone voice says she’s going to change lab testing forever, then hides in stealth in Silicon Valley. I caught a few whispers over the years that this company was doing something but as lab testing was a little away from the mainstream of health tech, I didn’t ever bother to look for more. And then in 2014 Holmes gets into Fortune and from a distance we are all cheering her on because she’s figured out a new way to disrupt a stodgy industry. The first Carreyrou piece is published in the WSJ in late 2015—even though Murdoch was a huge investor–and over the next 2 years massive fraud is exposed.

About when Holmes was starting to talk about stuff, and after the Walgreens deal eventually went live (mid 2014) there was the very odd series of events when Holmes appeared to agree to come talk at Health 2.0 but shortly afterwards she and her PR team went totally radio silent on us. I was told by one PR flack that he’d heard that another conference had told her to choose between us and them (TedMed? I’m guessing) but who knows. She appeared at TechCrunch in September 2014 and had the interviewer Jon Shieber’s blood drawn with his results coming back while she was on stage—clearly faked we now know. I saw her interviewed by a fawning Toby Cosgrove at Cleveland Clinic, where she said that Carreyrou was lying. I stood at the end of a receiving line full of people asking her to sign things for their daughters as she was such an inspiration. When I got to the front I asked her why she didn’t come to Health 2.0 and invited her to come the next time. With me in line was Medcity News Editor Chris Seper who asked for an interview. After about 15 seconds of her not saying anything, a PR flack jumped in, pulled us away from her, got our cards and said she’d get back to us. I’m still waiting

But what is just remarkable about this whole thing is how little due diligence was done by investors who plunked down hundreds of millions.Continue reading…

So, You’re a Next Generation ACO …

Screen Shot 2016-01-14 at 5.45.59 PMCMS recently announced the inaugural class of Next Generation ACOs – the latest accountable care models which includes higher levels of financial risk and greater opportunity for reward than have been available within the Pioneer Model and Shared Savings Program. CMSs goal is to test whether these greater financial incentives, coupled with tools to support better patient engagement and care management, will improve health outcomes and lower costs for Medicare fee-for-service (FFS) beneficiaries.
One of the most exciting opportunities for these ACOs is the ability to leverage telehealth above and beyond what is currently permissible in fee-for-service Medicare.

Since section 1834(m) of the Social Security Act was codified well over a decade ago, telehealth has only been able to serve Medicare recipients when they got in their cars and drove to a clinical site, in a rural area of the nation. Simply translated – no homes or cities count. With the lightning speed of telehealth advancement, this structure is archaic, limiting, and frankly at this point, senseless. Now, with this Next Gen designation, these “Next Gens” will be able to offer care through telehealth technologies regardless of the patient’s location.

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Changes In Work Hours and Employer Insurance Not Borne Out

Today, two AHRQ-sponsored studies were released that conclude that the Affordable Care Act (ACA) has not reduced the availability of full-time work or the work incentive for low-wage workers.

In the first study, researchers examined the effects of the requirement in the ACA for employers to provide health coverage to employees working at least 30 hours a week or pay a penalty. Using data from the Census Bureau’s Current Population Survey, an interview of approximately 60,000 households monthly, researchers did not find increases in the frequency of working either 25-29 hours weekly or fewer than 25 hours weekly in 2013, 2014 or the first half of 2015. Researchers also did not find a reduction in 2014 or 2015 in the frequency of working 30-34 hours, further demonstrating that employers have not reduced employee work hours below the 30-hour threshold to avoid the requirement to provide coverage.

In the second study, researchers assessed the impact of the expansion of Medicaid coverage on low-wage workers by analyzing job loss, job switching, and full- versus part-time status. Based also on data from the Census Bureau’s Current Population Survey, researchers compared states that had not expanded the program to states that have done so. The researchers found no statistically significant changes in labor market behavior as a result of Medicaid expansion, contrary to claims that the law would substantially reduce labor supply.

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The Network You May Not Like

Paul Levy 1This has been my week to discuss networks (Internet and electricity), but I would be remiss if I didn’t spend a few moments on the networks that are most likely to rob us of personal choice and increase costs: Health care networks.

Wait, didn’t President Obama promise us that the new health care law would preserve choice for us? Didn’t he promise us lower costs?  Well, in spite of much good that the law accomplished in terms of providing access to health insurance, these are two areas that have gone awry. For a variety of reasons–most of which have little to do with providing you with better care–the hospital world has grown more centralized. It’s done so to reduce competition and get better rates from insurance companies. It’s done so to create larger risk pools of patients under the “rate reform” that incorporates more bundled and capitated payments. It’s done so to keep you as a captive customer for your health care needs. It’s been aided and abetted by electronic health record companies that find a mutual advantage with their hospital colleagues in minimizing the ability of your EHR to be easily transferable to other health systems. As I’ve noted, we truly have created “business cost structures in search of revenue streams,” rather than a vibrantly competitive system focused on increasing quality and satisfaction and lowering costs.

Many people don’t even know they are part of a health care network until they discover its limitations. It might be that the insurance product they bought has different rates for in-network doctors and facilities from out-of-network doctors and facilities. It might be that their primary care physician subtly or not so subtly directs them to specialists in his or her network because they share in the financial reward of eliminating “leakage” to other systems. It might be that they discover that an MRI or other image taken in one health system cannot be transferred electronically to another, perhaps necessitating a second image and its accompanying cost.

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To Make Hospital Quality a Priority, Take a Page From Finance

Optimized-pronovostWhen you are a patient at a hospital, you want to know that the executives who run that facility put the safety and quality of care above all other concerns. Encouragingly, more of them are saying that safety is indeed their number-one priority—a fitting answer given that preventable patient harm may claim more than 400,000 lives a year in the United States.

Yet when you look at the way that most hospitals and corporate health systems are organized, weak infrastructure exists to support that priority. True, some hospital boards of trustees have made safety and quality their first order of business. At meetings, they might hear directly from a patient who suffered a medical error, sit through a case study of a unit that reduced complications, or get an overview of various efforts to boost the patient experience and improve outcomes.

Stories can inspire culture change. Sustained improvements, however, require health care organizations to institute top-to-bottom accountability for performance.

What would it look like if safety and quality truly were addressed this way? It might be something like how most hospitals’ finances are managed, from the board level to the smallest unit.Continue reading…

The White Paper Isn’t Dead. It’s On Life Support.

flying cadeuciiThe original purpose of white papers as a B2B marketing tactic was to produce objective information, packaged as quasi-academic research, to validate a company’s or product’s value proposition. White paper sponsors sought to educate, inform, raise comfort levels and eventually initiate sales conversations with prospective customers.

White papers gained significant adoption as a content marketing tool concurrent with the rapid growth of new technologies that often required detailed explanation or context for non-technical buyers. Over time, however, the market education function was largely assumed by research firms such as Gartner and Forrester, whose opinions carry greater credibility than self-publishers of white papers.

Unfortunately, what began as a legitimate and sometimes helpful marketing tactic has morphed into poorly disguised sales promotion, packaged in a plain vanilla wrapper. The evolution of white papers from bona fide content into self-serving advertorials has been validated by vertical industry trade publications, in which companies, for a fee, are permitted to “feature” their white papers in a special section. White papers jumped the shark when they became paid content.

The outcome of widespread abuse of white papers – driven by marketers grasping for new ways to put lipstick on a pig, or too lazy to produce rigorous research that might empower customers to draw their own conclusions – is that the tactic has lost its franchise as an effective B2B marketing asset class. Increasingly, prospective customers do not believe white papers will be helpful or credible, and as a result, they often no longer play a critical role in their decision-making process for purchasing products or services.Continue reading…

Medicare Advantage Round Two: Negotiation Will Not Be the Same

Late last Friday after the financial markets closed, the Centers for Medicare and Medicaid Services (CMS) issued its annual notice of 2015 payments to private insurers who sell Medicare Advantage plans to seniors. Its determination that a 3.55% cut is in order was spelled out in a complicated 148-page explanation of its methodology.

The net impact of changes to “coding intensity” adjusted for geographic variation essentially means insurance companies would see a 1.9% cut in their payments per Avalere’s calculations.

But there’s more to the story than the Medicare Advantage payment adjustment. The difference between last year’s Round One rate negotiation and this year’s Round Two is significant.

Background

Medicare Advantage (MA) plans enroll 28% of seniors. It is popular: enrollment increased from 5.3 million in 20104 to 16 million today—a 9% increase last year alone.  MA plans are required to offer a benefit “package” at least equal to Medicare’s covering everything Medicare allows, but not necessarily in the same way.

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Is Obamacare Unraveling?

Rumors have been circulating in the marketplace all week that the administration was thinking of extending the individual health insurance policies that Obamacare was supposed to have cancelled for as much as three more years.

Those rumors have now come out into the open with Tom Murphy’s AP story on Friday.

That the administration might extend these polices shouldn’t come as a shock. My sense has always been that at least 80% of the pre-Obamacare policies would ultimately have to be canceled because of the administration’s stringent grandfathering rules that forced almost all of the old individual market into the new Obamacare risk pool.

But with the literal drop dead date for these old policies hitting by December 31, 2014, that would have meant those final cancellation letters would have had to go out about election day 2014. That would have meant that the administration was going to have to live through the cancelled policy nightmare all over again––but this time on election day.

The health insurance plans hate the idea of another three-year reprieve. They have been counting on the relatively healthy block of prior business pouring into the new Obamacare exchanges to help stabilize the rates as lots of previously uninsured and sicker people come flooding in.

With enrollment of the previously uninsured running so badly thus far, getting this relatively healthier block in the new risk pool is all the more important. The administration’s now doing this wouldn’t just be changing the rules; it would be changing the whole game.

Republicans, and a few vulnerable Democrats, had essentially called for this last fall when legislation was floated in both the House and Senate with the “If You Like Your Policy You Can Keep It,” proposals. At the time, the administration and Democratic leaders rightly said if this sort of thing would have been made permanent it would have a very negative impact on what people in the new pool would pay––and on their already high deductibles and narrow networks.

At the beginning of this post I asked, Is Obamacare unraveling?

First, as I have said before on this blog, the law’s reinsurance provisions will mean Obamacare can keep limping along for at least three years. And, even making this change won’t alter my opinion on this. It will just cost the government more reinsurance money to keep the carriers whole.

By asking if it is unraveling, what I really wonder about is the whole sense of fairness in the law and the expectation that everybody needs to get the Democrat’s definition of “minimum benefits” whether they want them or not.

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The Fine Print: In Which We Go over the SGR Fix Line by Line with a Yellow Highlighter

The Sustainable Growth Rate mechanism creating a zero-sum game for Medicare Part B reimbursement rates (dropping rates as volume picks up) has long been unsustainable, and so Congress has been messing around with short-term SGR fix legislation for years now. Every six to twelve months we’ve been hearing about the impending 20% or 30% Medicare pay cut about to hit physicians’ pocketbooks, and the likely exit of physicians from the rolls of participating providers.

However, the stars are now aligned in such a way that real progress seems likely: multiple powerful Congressional committees have signed off on a deal to replace the SGR rule with something more workable: A unified approach to financial incentives to physicians and other medical professionals who are Medicare participating providers intended to promote quality and enrollment in alternative payment arrrangements.

The full text of the bill will be available here: It’s H.R. 4015. Check out the SGR fix section-by-section-summary and the websites of the House Energy & Commerce Committee and the Senate Finance Committee too. The substance of the proposal is discussed below.

How has this happened?

One of the sticking points involved in fixing this problem is that the price tag for a permanent SGR fix has long been seen as too high. How do we know the price? and How high is too high? you may ask. Well, Congress looks at CBO projections of the cost of implementing legislation over a ten-year planning horizon. When physician cost trends are on a steep increasing slope, that ten-year budget number looks bigger. When the trends flatten out a bit, the big number gets smaller. At present, that ten-year cost projection is “only” $125 billion, and Congress has spent over $150 billion on short-term fixes. So the time is right.

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MOOCs Ain’t Over. Till They’re Over …

Over the last month, journal headlines have been heralding the death of massive online open courses (MOOCs). You could almost hear the sigh of relief from the academy. With Sebastian Thrun himself acknowledging the “lousy” quality of the MOOC product, told-you-so skeptics have been giddily pointing out that Udacity, in its failure to disrupt higher education, is now moving on to vocational training.

Sadly, what audiences are missing is that Thrun’s shift to workforce training is precisely what has the potential to disrupt and severely impact traditional postsecondary education. We at the Christensen Institute have already written extensively about how MOOCs were not displaying the right markers for disruption (see hereherehere, and here), but we became more hopeful as they started to offer clusters of courses. Coursera announced Foundations of Business with Wharton, while edX and MITX introduced the Xseries in Computer Science as well as Supply Chain & Logistics.

These moves appeared to map better to employer needs and what we describe as areas of nonconsumption. In their turn away from career-oriented training, colleges and universities have unwittingly left unattended a niche of nonconsumers—people over-served by traditional forms of higher education, underprepared for the workforce, and seeking lifelong learning pathways.

What most people forget when they bandy about the term “disruptive innovation” is that disruptive innovations must find their footholds in nonconsumption. McKinsey analysts estimate that the number of skillsets needed in the workforce has increased rapidly from 178 in September 2009 to 924 in June 2012. Unfortunately, most traditional institutions have not adapted to this surge in demand of skillsets, and as a result, the gap has widened between degree-holders and the jobs available today.

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