Monthly Archives: July 2020
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Covid-19 has decimated independent US primary care practices—how should policymakers and payers respond?
The coronavirus pandemic has torn through the global economy, suppressing consumer demand and industrial production. As countries look to an eventual recovery, but in a very different environment characterized by continuing distancing measures and loss of public confidence, businesses in many sectors, such as hospitality and retail, are asking how they can adapt to survive these new economic conditions. Yet perhaps surprisingly, those feeling threatened include independent primary care practices in the United States. Despite the USA being one of the most expensive healthcare systems in the world, many primary care practices are now facing financial collapse. Some estimates suggest that primary care practices will lose up to $15 billion during 2020 as a consequence of the coronavirus pandemic.
Covid-19 has highlighted a fundamental weakness in how primary care is paid for in the USA. Many practices are financed by fee-for-service (FFS) reimbursement. Put bluntly, providers make money from office visits, diagnostic tests, and procedures. This has long been criticized for encouraging an expansion of what is considered disease and overtreatment, contributing to the high cost of the American health system. However, it can only work as long as patients keep coming, and they are no longer doing so, at least not in sufficient numbers for many primary care practices to remain viable. The imposition of social distancing policies has seen a severe reduction in office visits, and with it a substantial decline in revenue. The pandemic has taught Americans that the financial model that underpins primary care needs to be reformed. It needs to move from a per-visit reimbursement to a per-patient reimbursement, in other words primary care capitation, as used in many other countries, including the UK.
If the existing reimbursement model is not reformed, the clinical and financial implications for struggling primary care practices, which could play a key role in the continuing coronavirus pandemic, will be far-ranging. From a clinical standpoint, primary care practices that need to lay off staff or close will not be able to respond effectively to an influx of patients who have been delaying care since the pandemic began. Given that primary care is often the entry point into the healthcare system, this could lead to severe reductions in access to routine health care as well as referrals to specialty providers for advanced complaints. From a financial standpoint, many of these independent practices may consider consolidation with larger health systems, something that has been shown to increase prices without improving quality in the long run.
To overcome these issues, insurers and primary care practices could work together to construct capitated payment models. In capitated contracts, providers are paid a risk-adjusted sum for each patient enrolled in the practice. Payment to providers is not reliant on volume of office visits, but rather delivering cost-effective care focused on the health of primary care patients.
As we noted above, this system is already widely used internationally, but there are also good examples in the USA. For example, Iora Health is a venture-backed primary care company that partners with insurers to obtain a flat $150 per-member-per-month (PMPM) fee for taking care of its patients. They also receive bonuses for reducing total cost of care (TCOC). As a result, they have been able to use their dollars for health-related interventions, such as hiring health coaches. They have also demonstrated significant reductions in hospitalizations and health spending along with high patient satisfaction scores. Most importantly, they were able to quickly adapt to the needs of their patient population in the pandemic using alternative models of care, such as online consultations, without the added stress of losing revenue.
There are also many other promising examples of both public and private payers designing capitated contracts for independent primary care practices. In the public sector, the Centers for Medicare and Medicaid Services (CMS) introduced the multi-payer Primary Care First (PCF) Model. Under PCF, primary care practices will receive a risk-adjusted population-based payment for patients as well as a flat fee for any office visits performed. In addition, there are bonuses for practices to limit hospitalizations, an expensive component of delivering care. However, this is still an experimental program that is supposed to begin in 2021, which may be too late for primary care practices that are already facing financial strain from the pandemic.
In the private sector, Blue Cross Blue Shield of North Carolina (BCBS NC) has created the Accelerate to Value program for independent primary care practices. Through this program, BCBS NC is offering independent primary care practices a supplemental stabilization payment, based on the number of members a particular practice serves. In return, it is asking them to remain open for patients and deliver care appropriate to the circumstances created by the pandemic. In the longer term, it also asks them to join an accountable care organization (ACO) and consider accepting capitation for future reimbursement.
While CMS and BCBS can offer blueprints for a path towards primary care capitation, there will be challenges to implement capitation at scale across the nation’s primary care system. A key defining aspect of the US healthcare system is its multitude of payers, from commercial to Medicaid to Medicare. For primary care capitation to succeed, practices will need to pursue multi-payer contracts that cover a critical mass of the patients they serve. Independent practices will also have to adapt to a fixed budget model where excess healthcare utilization could actually lead to financial losses, unlike in fee-for-service.
Ultimately, it is important to recognize that no payment model will be a panacea for healthcare providers during the pandemic and afterwards. However, the coronavirus pandemic has highlighted clear deficiencies in the American fee for service system that have existed for almost a century. Covid-19 has created an opportunity for policymakers and providers to look anew at a model that is already implemented widely in other countries, and in parts of the US. At some point there will have to be an inquiry into the many failures that have characterized the American response to covid-19. Given the magnitude of the catastrophe that has befallen the US, in stark contrast to the relative successes achieved in many other countries, it will be essential to challenge many things once taken for granted. One must be the fee for service system that has so clearly undermined the resilience of the US health system. Covid-19 has provided an almost unprecedented opportunity to create a healthcare system that rewards providers caring for patients in a coordinated manner, rather than prioritizing expensive and often wasteful healthcare provision.
American patients can’t shop their way to a low cost healthcare system
American patients can’t shop their way to a low cost healthcare system
Hospital price transparency is a distraction from policies that could reduce costs without burdening patients, say Jamie Daw and Adam Sacarny.
The prices that hospitals charge privately insured patients in the US have long been shrouded in secrecy. These prices—which are negotiated between hospitals and private insurers—vary widely: the price for the same blood test could vary 39-fold within Tampa, Florida and the cost of a cesarean delivery varies by up to $24 000 in San Francisco, California.
A recent federal court decision stands to shine a light on opaque hospital pricing in the US. In a lawsuit brought forward by the American Hospital Association, a federal judge upheld a regulation issued by the Trump administration that will soon require hospitals to post a wealth of information on payment rates online.
This policy seems intuitive: in other sectors of the economy, consumers usually know the price of a service or product before they purchase it. By comparing prices, consumers can shop around and save money. In turn, sellers anticipate that behavior and are incentivized to keep prices low. Who wouldn’t want a virtuous circle like that in healthcare?
The Trump administration argues that hospital price transparency will encourage value in healthcare by helping patients and employers find lower prices, while pressuring hospitals to cut them further. However, the potential effects—and who stands to benefit—are not so straightforward.
Firstly, giving consumers information on prices doesn’t necessarily mean that they will respond by seeking lower cost services. Studies have consistently found that patients tend not to use price transparency tools, and their effects on healthcare spending are small or nonexistent. Why? Shopping for healthcare services is often complicated or impossible.
Many of the most expensive services are for emergencies where there is little scope for patients to shop.
Even when a patient has time to compare prices for non-urgent procedures or tests, the complexity of healthcare payment systems and insurance products makes it next to impossible for a patient to preemptively calculate what they would personally pay for an encounter. Establishing that amount requires patients to know the cost-sharing parameters of their insurance plan, the set of services they will use during the encounter, and how aggressively the hospital will bill for those services.
Insurance also obscures patients’ incentives to shop by insulating them from healthcare prices.
While patients can be given strong incentives to shop—and an increasing number of American workers are enrolled in high deductible health plans with this aim—these incentives are created by hoisting financial risk on patients. This financially burdens American families and can result in patients forgoing appropriate care.
Beyond the challenges posed by patient shopping, the empirical evidence supporting price transparency is weak.
It could even backfire. Economists have pointed out that in sectors with low competition, price transparency can facilitate collusion and lead to higher prices. This fear was borne out in Denmark when authorities began publishing the prices of ready-mixed cement. Prices proceeded to converge and rise, and the authorities eventually abandoned the idea. The most hopeful evidence in the US healthcare system comes from New Hampshire, where prices for medical imaging fell by 3% after the state established a price transparency website. But even effects of this magnitude, while beneficial, would only make a tiny dent in lowering US healthcare costs.
Price transparency efforts reflect a broad trend for American policy makers to turn to consumer-driven strategies to reduce healthcare costs.
These strategies are built on the assumption that patients ought to be responsible for navigating their way to high quality, low cost healthcare. However, the challenges faced by patients in assessing the complex cost-quality tradeoffs in healthcare limit the potential for price transparency to have the impact that the administration advertises.
Perhaps more troubling is that these efforts could distract policy makers from addressing the main drivers of US healthcare prices, such as rapid and ongoing consolidation. Concentrated hospital markets are becoming the norm in the US and are strongly associated with higher prices. Antitrust actions, such as preventing hospital mergers, could reduce and reverse consolidation, likely leading to lower prices.
Another option for policy makers is to assume a greater regulatory role over healthcare prices, including introducing price caps and an all-payer rate setting. A Supreme Court decision made it much more difficult for state governments to collect the data that would undergird these efforts. As a result, the information released under the transparency rule may end up being more useful for states considering new price regulations than for patients shopping for healthcare services.
If we want to reduce prices without burdening patients with financial risk, then policy makers need to address the emerging causes of rising healthcare costs directly. Efforts to control costs are most likely to succeed when policy makers tackle the structural drivers behind the most expensive health system in the world.
More young people are getting — and spreading — the coronavirus
https://www.axios.com/coronavirus-young-people-spread-5a0cd9e0-1b25-4c42-9ef9-da9d9ebce367.html
More young people are being infected with the coronavirus, and even though they’re less likely to die from it, experts warn the virus’ spread among young adults may further fuel outbreaks across the United States.
Why it matters: Some people in their 20s and 30s face serious health complications from COVID-19, and a surge in cases among young people gives the virus a bigger foothold, increasing the risk of infection for more vulnerable people.
- “We may see a pattern of younger people being affected initially, but then, in a number of weeks from now, we’re going to see a more deadly pandemic spreading to elderly people,” says Alison Galvani, an epidemiologist at Yale University.
People can transmit the virus without knowing they have it, and younger people, in particular, could be unknowingly spreading the disease.
- A study in Italy, yet to be peer reviewed, found the probability of having symptoms increased with age and that among 20–39-year-olds only about 22% had a fever or respiratory symptoms (compared to about 35% of 60–79-year-olds).
- About half of the clusters in a study in Japan were traced back to people ages 20–39 at karaoke bars, offices and restaurants — and 41% of them did not have symptoms at the time.
- “Younger people are at lower risk for serious COVID outcomes but are disproportionately responsible for asymptomatic transmission,” says Galvani, who published a study earlier this week that found the majority of COVID-19 transmission is from silent carriers who are pre-symptomatic or asymptomatic.
By the numbers: From Arizona to Allegheny County, Pa., young people increasingly account for COVID-19 cases.
- In the county of Los Angeles, nearly 50% of cases are now in people under 40 (compared to about 30% in April), per the LA Times.
- In Harris County, Texas, home to Houston, 43% of the 40,000 cases are in people ages 20–39, as of yesterday.
- In Florida, the median age of confirmed cases is hovering in the mid- to late-30s, compared to age 65 in March.
And the proportion of young people hospitalized for COVID-19 has also grown.
- 40% of hospitalizations for COVID-19 at the end of June were for people 18–49-years-old, compared to 26% at the end of March, according to the COVID-NET database of hospitalizations in 14 states that represent about 10% of the U.S. population.
Between the lines: Yes, young people are going to bars and parties — but also to work.
- 42% of people ages 18–39 said they had socialized without social distancing compared to 26% of people over 40, in a survey last month from the Democracy Fund + UCLA Nationscape.
- 64% of frontline workers (grocery store clerks, health care workers, delivery drivers and other essential workers) are under 50.
- There’s a need for better education so that young people choose to take steps to prevent infection, says Lauren Ancel Meyers, a mathematical epidemiologist at UT Austin.
- “But it also might come down to policies or regulations that get employers to ensure they are providing a safe workplace or resources to protect 20, 30 and other age groups that are working for them.”
Where it stands: Young people are still much less likely to be hospitalized or die from the virus than people older than 60.
- Yes, but: They can and do get very sick with the disease — from dangerous blood clots in their lungs to inflammation of the heart, lungs and even brain.
- And the long-term consequences are unknown.
- The risk is higher for young people of color: For example, the majority of coronavirus hospitalizations among Latino/Hispanic Americans are in people ages 18–49, my Axios colleague Caitlin Owens reported.
“The death rate among the young is not zero, and it is particularly not zero for people who have at least one co-morbid condition. This is not a completely benign disease of the young.”
— Joshua Schiffer, of the Fred Hutchinson Cancer Center
What to watch: “If hospitals are strained now dealing with younger cases, they are going to be all the more taxed when the age distribution of infections shifts to the elderly,” Galvani says.
- Already hospitals in some states are hitting their capacity of ICU beds, indicating more vulnerable people are being infected with the disease, and the death rate is climbing in hot spots.
Our new default coronavirus strategy: herd immunity
By letting the coronavirus surge through the population with only minimal social distancing measures in place, the U.S. has accidentally become the world’s largest experiment in herd immunity.
Why it matters: Letting the virus spread while minimizing human loss is doable, in theory. But it requires very strict protections for vulnerable people, almost none of which the U.S. has established.
The big picture: Cases are skyrocketing, with hospitalizations and deaths following suit in hotspots. Not a single state has ordered another lockdown, even though per capita cases in Florida and Arizona have reached levels similar to New York and New Jersey’s in April.
- Most states never built up the testing, contact tracing and isolation systems it would take to prevent the virus from spreading widely.
- The Trump administration is generally ignoring or downplaying soaring caseloads across the South and West, and is pushing schools to fully reopen in the fall.
- In Florida, where infections, hospitalizations and deaths are surging, Gov. Ron DeSantis “has repeatedly ruled out a sweeping mask mandate or taking the state back into a lockdown to stem the virus, although local governments have acted on their own,” per Bloomberg.
Between the lines: Separating older, sicker people from younger, healthier ones while the virus burns through the latter group could be a way to achieve herd immunity — assuming immunity exists — without hundreds of thousands of people dying.
- But the U.S. hasn’t adopted such a strategy with any planning or foresight. Although younger people make up a larger portion of coronavirus cases now than they did earlier in the pandemic, vulnerable people still go to work or live with non-vulnerable people.
Yes, but: Some cities and states, particularly in the Northeast, are focused on containing the virus rather than living with it.
U.S. sets one-day record with more than 60,500 COVID cases; Americans divided
More than 60,500 new COVID-19 infections were reported across the United States on Thursday, according to a Reuters tally, setting a one-day record as weary Americans were told to take new precautions and the pandemic becomes increasingly politicized.
The total represents a slight rise from Wednesday, when there were 60,000 new cases, and marks the largest one-day increase by any country since the pandemic emerged in China last year.
As infections rose in 41 of the 50 states over the last two weeks, Americans have become increasingly divided on issues such as the reopening of schools and businesses. Orders by governors and local leaders mandating face masks have become particularly divisive.
“It’s just disheartening because the selfishness of (not wearing a mask) versus the selflessness of my staff and the people in this hospital who are putting themselves at risk, and I got COVID from this,” said Dr. Andrew Pastewski, ICU medical director at Jackson South Medical Center in Miami.
“You know, we’re putting ourselves at risk and other people aren’t willing to do anything and in fact go the other way and be aggressive to promote the disease. It’s really, it’s really hard,” he said.
Stephanie Porta, 41, a lifelong Orlando, Florida, resident, said only about half the shoppers at her grocery store wore masks, though that was more than she saw two weeks ago.
“They’re trying to make everything seem normal, when it’s not. People are dying, people are getting sick. It’s insane,” she said.
Florida on Thursday announced nearly 9,000 new cases and 120 new coronavirus deaths, a record daily increase in lives lost. Governor Ron DeSantis called the rising cases a “blip” and urged residents not to be afraid.
“I know we’ve had a lot of different blips,” DeSantis said. “We’re now at a higher blip than where we were in May and the beginning of June.”
Florida is one of the few states that does not disclose the number of hospitalized COVID patients. But more than four dozen Florida hospitals reported their intensive care units reached full capacity earlier this week.
In Texas a group of bar owners sued Governor Greg Abbott, a Republican, saying his June 26 order closing them down violates the state constitution, the Dallas Morning News reported.
Dr. Robert Redfield, director of the U.S. Centers for Disease Control and Prevention, said Thursday that keeping schools closed would be a greater risk to children’s health than reopening them.
California and Texas, the two most populous states, announced record increases in COVID deaths on Wednesday.
California has seen cases and hospitalizations surge, even though it imposed one of the strictest lockdowns. After several lawmakers and staffers at the state Capitol in Sacramento were infected, lawmakers said the legislature would not return from summer break until July 27.
Riverside University Health System, east of Los Angeles, expanded its 44-bed intensive care unit after it filled up with patients.
“It’s been very consistent every day in the last couple of weeks. Every day has been like a full moon,” Riverside emergency room physician Stephanie Loe said, referring to doctors’ beliefs that a full moon brings more patients to the emergency room.
Governors in California, Florida and Texas have either ruled out forced business closures and quarantines or called them a last resort. But Los Angeles Mayor Eric Garcetti warned he would impose a new stay-at-home order in two weeks if the latest surge did not ease.
The rise in infections also weighed on the stock market Thursday on fears of new lockdowns, which would take a toll on the economic recovery. The Dow .DJI and the S&P 500 .SPX ended down about 1%.
Sutter loses bid to delay $575M antitrust settlement approval
Dive Brief:
- A San Francisco Superior Court judge on Thursday denied Sutter Health’s request to delay preliminary approval of a $575 million antitrust settlement with California amid the uncertainty and financial upheaval of the COVID-19 pandemic.
- The approval process and settlement agreement are flexible enough to continue as scheduled and the needs of the plaintiffs — a union that operates a trust for employee healthcare benefits and California Attorney General Xavier Becerra — to see the health system’s behavior change are pressing, Judge Anne-Christine Massullo wrote in her order.
- In a statement Thursday, Becerra applauded the court’s decision. “Sutter’s practices harmed California’s healthcare market by charging higher prices unrelated to quality or cost of care,” he said. “They did that long before the COVID-19 pandemic. There is no period of time that medical providers, like Sutter, should be able to carry out such destructive market practices.”
Dive Insight:
Sutter, like health systems throughout the country, has taken a significant hit to its bottom line as the pandemic forced lucrative elective procedures to be put off for weeks earlier this year. The company posted a net loss of more than $1 billion in the first quarter of this year.
It said the financial losses from the COVID-19 crisis could force it to close or divest hospitals. In its June argument to delay the settlement approval, Sutter said the agreement’s cap or chargemaster prices could be too low “to cover the unprecedented and unforeseeable increases in expenditures to respond to COVID-19 particularly given declining revenue.”
But the judge did not agree, saying the court is “not persuaded that the proposed injunction will interfere with Sutter’s ability, or the broader healthcare system’s ability, to provide patient care during the COVID-19 pandemic.”
Massullo continued: “To the extent that a provision of the proposed injunction poses a threat to patient care or the public interest during the COVID-19 pandemic, or as a result of some other presently unforeseen circumstance, any party may seek a modification of the offending provision if and when such a modification becomes appropriate.”
The preliminary approval hearing is now set for Aug. 12 and Aug. 13, according to multiple news reports.
Sutter avoided a jury trial late last year by agreeing to the settlement, which in addition to the $575 million payout includes stipulations like ceasing contracts that require all of its facilities be in an insurer’s network or none of them. The system, however, did not admit guilt as part of the agreement.
HENRY KOTULA 