Retail makes its case, telehealth and voice tech dominate: 6 takeaways from HLTH19

https://www.healthcaredive.com/news/retail-makes-its-case-telehealth-and-voice-tech-dominate-6-takeaways-from/566548/

Headlines at HLTH 2019 included a peek behind the curtain at the secretive healthcare division of tech giant Google from ex-Geisinger CEO David Feinberg, Uber’s newly inked deal with Cerner and a preventive health push by Facebook sparking renewed data privacy concerns.

On the government side, outgoing head of CMS’ innovation center Adam Boehler suggested industry will be pleased with his replacement and CMS Administrator Seema Verma promised further Medicaid deregulation and “humility” in government.

But the four-day conference last week also covered some broader themes, including retail’s presence in the industry, the rise of telehealth and voice tech and the challenges of interoperability. Here are six of the biggest takeaways from Las Vegas.

Retail still defining its role in healthcare

Executives from Walmart and CVS taking to the main stage at HLTH to tout their initiatives.

Walmart’s VP of transformation, Marcus Osborne, talked up the company’s first health superstore in Dallas, Georgia, which opened this fall. The center provide patients with primary care, dental care, vision care and psychiatric and behavioral health counseling, with the goal of providing an integrated healthcare experience in the traditionally underserved area. Lab services and imaging are available on-site, as are nutrition and fitness classes.

“When you give consumers options, they engage more,” Osborne said. “The healthcare system is designed to be complex when it should be simple.”

A primary care visit at Walmart Health Center costs a flat fee of $40. For an adult, getting a dental checkup and cleaning costs $50, and an eye appointment is $45. Therapy services are $1 per minute.

The store pits the Bentonville, Arkansas-based retailer directly against CVS Health, which is expanding its own health-focused clinics, called HealthHUBs, to 13 new markets by the end of next year.

Brick-and-mortar behemoths’ attempts to position themselves as the front door to healthcare are spurred by the increasing push of consumerism in healthcare.

“With the emergence of this retail health consumer, we’ve got to make healthcare more integrated than it’s been for several years now,” CVS CEO Larry Merlo said.

Limits of consumerism

But engagement is notoriously tricky, and consumerism can only take the industry so far. Healthcare startups providing a new way of accessing or managing care, like digital chat startups allowing consumers to talk via text with a remote physician or chronic care management companies, are struggling to establish trust with the consumer.

Hank Schlissberg, president of care manager Vively Health, a subsidiary of DaVita that assumes full risk for its population, compared the sea change in the industry to what’s happened with companies like AirBnB.

“I sleep in someone else’s bed. I shower in their shower. And we’ve convinced ourselves that’s totally normal,” he said. “All I want to do is provide people with free healthcare. And convincing people of that is much harder than we expected.”

Natalie Schneider, VP of Digital Health for Samsung, agreed, telling Healthcare Dive consumers are “routinely irrational” and don’t act in their own best interests. But “we’re seeing policyholders, health plans and others in healthcare not only account for this irrationality, but also capitalize on it” through incentives like providing a reward immediately following a healthy behavior.​

The wearables trend is a key example, experts said. Payers and providers alike are increasingly turning to the tech in an effort to engage consumers in wellness, fitness and preventive care activities. However, the ROI of trackers, whether from Apple Watch, Fitbit, Samsung or others, is still unproven.

“We’ve seen a lot of technologies and they’re often not that smart and very rarely wearable,” Tom Waller, who heads up the R&D lab of athleisure retailer lululemon, said. “We’re still patiently waiting for that perfect contextualization of data that will give us both a physical and emotional insight, and that we can use to augment an existing behavior to nudge someone in the right way.”

“At the end of the day, these patients are consumers, and consumers have been trained over the last 10 years to decide what quality they want, to decide when they want it and how they want to get it,” Robbie Cape, CEO of primary care startup 98point6, said. “Healthcare hasn’t caught up to that.”

Execution could stymie looming interoperability rules

Two rules to halt information blocking from HHS are expected to be finalized any day now. Despite the regulatory pressure, industry is “still a ways from true interoperability,” said Ed Simcox, CTO and acting CIO of HHS, due to a slew of factors like a lack of economic incentive for EHR vendors.

The rules would impose a slate of new requirements on healthcare companies. Payers in federal programs would have to provide their 125 million patients with free electronic access to their personal health data by the end of next year; healthcare companies would have to adopt standardized application programming interfaces allowing their disparate software systems to communicate; and any player found information blocking could be fined up to $1 million per violation.

Google Cloud’s director of global healthcare solutions, Aashima Gupta, warned that although the government might mandate new standards, that doesn’t mean industry will be able or willing to immediately adhere to them.

Additionally, the government is still playing catch-up to technology, and interoperability is no different, Pranay Kapadia, CEO of voice-enabled digital assistant Notable, told Healthcare Dive. The rules are the “right thing to do, and then there’ll be an evolution of it, and then there’ll be another evolution of it.”

​”This problem is much bigger than big tech or government or health systems or innovators,” Gupta said. “It’s an ecosystem problem. No player can do it alone.”

Despite the private sector’s uncertainly, Don Rucker, the head of the Office of the National Coordinator for Health IT, said interoperability had fostered price and business model transparency in every other U.S. industry over the past few decades.

“Healthcare is just about the last one to resist,” Rucker said. “I don’t think that will be much longer.”

Telehealth and voice tech: the belles of the ball

Telehealth was unsurprisingly a big focus at HLTH, with themes touching on expansion to complex care needs, followup visits and chronic care management and barriers like state physician licensure.

It’s an “efficiency mechanism” that can help a lot in areas like primary care, Teladoc COO David Sides told Healthcare Dive.

Voice-enabled tech was another focus of chatter in Las Vegas. The technology, which allows physicians free use of their hands while enabling them to take notes or write a script, for example, is currently experiencing heavy hype from industry and Silicon Valley as a way to streamline the heavy EHR and documentation requirements on physicians.

Talking is an “important element to how people interface with things,” Notable’s Kapadia said. “You have to think of things from a human perspective.”

Suki also announced at HLTH it expanded its relationship with Google’s cloud computing business. The digital assistant’s CEO, Punit Soni, told Healthcare Dive industry could expect to hear about two “very, very large deployment announcements” with health systems in the near future as providers become more comfortable levering the software to cut down documentation time for clinicians.

Solving for social determinants, preventive health

A slew of players rolled out initiatives targeting social determinants of health in Las Vegas.

​Uber Health is now available for providers to schedule non-emergency rides for their patients via Cerner’s EHR platform in a bid to provide better access to transportation for underserved populations. The one-year-old NEMT division of San Francisco-based Uber has roughly 1,000 partnerships across payers, healthcare tech companies and providers such as Boston Medical Center.

“You need to develop a benefit that serves the needs of your distinct population,” Jami Snyder, director of Arizona’s Medicaid and CHIP programs, said. The state recently partnered with ride-hailing company and Uber rival Lyft to provide rides for eligible Medicaid beneficiaries.

Kaiser Permanente rolled out a food insecurity initiative to connect eligible California residents with CalFresh, the state’s supplemental nutrition assistance or food stamp program. The integrated, nonprofit health system plans to reach out via text and mail to more than 600,000 Kaiser Permanente health plan members with a goal of getting 100,000 enrolled in CalFresh by spring 2020.

If the program is successful, Kaiser plans to expand it to the rest of the country, CEO Bernard Tyson, noting “healthcare across the ecosystem of health plays a very small part” in outcomes. “Things like behavior, genetics and where you live has a bigger impact.”​

On the preventive health side, Facebook launched a consumer health tool. Users plug in their age and sex in return for targeted heart, cancer and flu prevention measures, with information supplied by healthcare groups like the American Cancer Society.

The pilot for the $7 billion tech behemoth will be evaluated for six months to a year before being expanded to other preventable conditions to make consumers their “own health advocates,” Freddy Abnousi, Facebook’s head of health research, said. “The lion’s share of health outcomes is driven by social and behavioral variables.”

CVS is similarly working to combat SDOH factors by leveraging its reams of consumer data, Firdaus Bhathena, the retail pharmacy giant’s CDO, told Healthcare Dive. If someone doesn’t pick up their prescription, “there’s a number of ways we can engage with them,” including by text message or speaking to services in the local town, to see if transportation to the pharmacy, a lack of funds or some other issue is stopping the person from receiving the medication they need.

Funding disruption

Much of the industry runs today like non-healthcare companies ran 50 or 60 years ago, according to entrepreneur Mark Cuban.

“For that reason, they’re ripe for disruption,” Cuban said at HLTH.

Investors and startups alike are taking note. Venture capitalists, eager to fund new medical solutions and methods of care delivery, pumped $26.3 billion into more than 1,500 healthcare startups in just the first 10 months of 2018.

Providers looking to invest in new solutions or acquire startups are looking for a relatively mature corporate structure and an alignment with existing priorities in-house, according to Dan Nigrin, SVP and CIO at Boston Children’s Hospital.

“It starts with our organizational strategy,” agreed Rebecca Kaul, VP at the MD Anderson Cancer Center. An attractive startup presents “something that really drives change,” she said. “If you’re pitching a solution that isn’t at a given time part of our strategy, it may not be the right time for us to connect.”

Highmark Health CEO David Holmberg told Healthcare Dive its physicians lead system-wide conversations in what areas need investment. “Ultimately, that’s how you’ll get things to scale.”

Intermountain Healthcare is similarly interested in ways to manage and inject value into its operations. “We’re not interested in point solutions,” Dan Liljenquist, SVP of the Salt Lake City-based nonprofit provider said, adding he deletes and blocks emailed pitches he receives. “We’re interested in technologies that obviate the need for clinical interventions, that help people solve their own problems, and the way to do that is not a point solution but in a systemic, creative way.”

Payers have similar priorities and seek out companies to invest in that could provide value down the road. Cigna Ventures, which recently invested in precision medicine company GNS Healthcare, looks for new tools across the areas of insight and analytics, digital health and retail and all-around care delivery and enablement, for example.

“We’re looking for companies that are innovative and looking to solve important problems,” Tom Richards, global strategy and business development leader at Cigna, told Healthcare Dive, noting most companies start with a more focused solution and then expand.

For example, chronic disease platform Omada Health, which raised $50 million in a 2017 funding round led by Cigna Ventures, started with diabetes, but has since expanded its care management services to hypertension, Type 2 diabetes and behavioral and mental health.

 

 

 

 

 

NY Local employers predict 3.6% increase in health benefit costs in 2020

https://www.crainsnewyork.com/health-pulse/local-employers-predict-36-increase-health-benefit-costs-2020?utm_source=health-pulse-tuesday&utm_medium=email&utm_campaign=20191028&utm_content=hero-readmore

Image result for chronic care management

Employers in the metro area expect their spending on benefits to rise 3.6% next year after accounting for changes designed to hold down costs, according to an analysis by Mercer.

That trend would be lower than the 3.9% increase employers experienced this year, with local organizations spending $16,059 per active employee. That’s more than 20% higher than the average cost per employee nationwide.

The benefits consultant broke out the responses of 170 employers in New York City, its surrounding counties, northern New Jersey and southern Connecticut for Crain’s from its 2019 National Survey of Employer-Sponsored Health Plans.

In the area, the average contribution to premiums for an individual employee is $199 a month in a PPO plan, $169 a month in an HMO and $107 a month in a consumer-directed health plan, which tends to have a higher deductible.

The median deductible for members in a PPO plan was $500 locally.

Nationwide, there was a split, with the average deductible for businesses between 10 and 499 employees increasing nearly 13%, to $2,285, while employers with 500 or more workers raised the average deductible in a PPO plan just $10, or 1%, to $992.

Companies are looking to telemedicine and management programs for their highest-cost members as ways to keep fees down, said Mary Lamattina, a senior consultant at Mercer. She said most clients she works with have at least one beneficiary with $1 million in annual medical expenses.

“Employers are getting away from cost shifting and looking at other ways to tackle affordability,” she said.

Nationwide, employers spent 3% more on health costs this year, driven in part by specialty drug spending. Costs for specialty drugs rose 10.5% this year.

Ninety percent of employers with 500 workers or more said they viewed monitoring or managing high-cost claimants as important or very important. One strategy companies reported using was introducing a tech-enabled chronic care management program for conditions such as diabetes.

About 88% of large employers said they offer telemedicine as an option, but only 9% of eligible employees had taken advantage of the programs.

Lamattina pointed out that utilization was nearly four times higher at organizations that waived a copay for telemedicine use, compared with employers that charged a $40 copay. “

“Utilization can be driven by the cost,” she said. “Convenience is really key to getting people to use the benefit.” —Jonathan LaMantia

 

DOJ breaks up alleged genetic testing fraud scheme estimated at $2.1 billion

https://www.healthcarefinancenews.com/news/doj-breaks-alleged-genetic-testing-fraud-scheme-estimated-21-billion?mkt_tok=eyJpIjoiWkdNMU56WmxabVl3TWpRMSIsInQiOiI0dlhaYUJpT2xBU0FqeDNmWkRlZHVZYnRsZ2xBK3pxMmN6RG5kS3Q1UWgrWFYyNllIK2lLZEYzclRDWUYyTFwvOGdhUzRVSnlscG5MQjBtY0NwT2d1TjZHdXJYRUlYRGszVEhrQmY5b0xhRDlFTWNTNUEwWnVvWGUwZXE3ME9kdGgifQ%3D%3D

The defendants ordered unnecessary tests that were reimbursed by Medicare, with laboratories sharing the profit, DOJ says.

The U.S. Department of Justice has charged 35 people with unlawfully charging Medicare $2.1 billion in what it said is one of the largest healthcare fraud schemes in history.

The 35 alleged offenders were charged in five separate federal districts, and were linked to dozens of telemedicine firms and laboratories focused on genetic testing for cancer. The people charged, including nine doctors and one other medical professional, cumulatively billed Medicare billions for cancer genetic tests, the DOJ said in a press release.

The charges were a culmination of coordinated law enforcement activities over the past month that were led by the Criminal Division’s Health Care Fraud Unit, resulting in charges against more than 380 individuals who allegedly billed federal healthcare programs for more than $3 billion, and allegedly prescribed and dispensed approximately 50 million controlled substance pills in Houston, across Texas, the West Coast, the Gulf Coast, the Northeast, Florida and Georgia, and the Midwest.

These include charges against 105 defendants for opioid-related offenses, and charges against 178 medical professionals.

The investigation targeted an alleged scheme involving the payment of illegal kickbacks and bribes by CGx laboratories in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for expensive, and medically unnecessary, cancer genetic tests.

According to the DOJ, the targets of the scheme were primarily seniors, who were approached at health fairs, at their homes during door-to-door visits, or through telemarketing calls. The “recruiters,” as they were called, would approach seniors about supposedly free cancer screenings or generic cheek swab tests, and the recruiters would then obtain the seniors’ Medicare information for the purposes of fraudulent billing or identify theft.

The recruiter would then get a doctor to sign off on a genetic so a lab would process it, and then pay a kickback in exchange for ordering the test. The lab would process the test and bill Medicare, and once it was reimbursed, would share the proceeds with the recruiter, according to the charges.

Often, the test results were not provided to the beneficiaries, or were worthless to their actual doctors. Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that affected victims across the U.S.

The defendants allegedly paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief phone conversation with patients they had never met or seen.

WHAT’S THE IMPACT

In addition to the DOJ charges, the Centers for Medicare and Medicaid Services, Center for Program Integrity said it took adverse administrative action against cancer genetic testing companies and medical professionals who submitted more than $1.7 billion in claims to the Medicare program.

The DOJ Criminal Division, along with the U.S. Department of Health and Human Services Office of Inspector General and the FBI, spearheaded the investigation.

The DOJ calls the scheme one of the largest it has ever handled.

THE LARGER TREND

Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $16 billion.

In addition, CMS, working in conjunction with the Health and Human Services Office of the Inspector General, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The newest Medicare fraud scheme is the second to be uncovered in the last month. Earlier in September, a telemedicine CEO pleaded guilty to one count of conspiracy to defraud the United States and pay and receive healthcare kickbacks and one count of conspiracy to commit money laundering in a scheme estimated at $424 million.

ON THE RECORD

“Unfortunately, audacious schemes such as those alleged in the indictments are pervasive and exploit the promise of new medical technologies such as genetic testing and telemedicine for financial gain, not patient care,” said Deputy Inspector General for Investigations Gary L. Cantrell of HHS-OIG. “Instead of receiving quality care, Medicare beneficiaries may be victimized in the form of scare tactics, identity theft, and in some cases, left to pay out of pocket.  We will continue working with our law enforcement partners to investigate those who steal from federal healthcare programs and protect the millions of Americans who rely on them.”

“Healthcare fraud and related illegal kickbacks and bribes impact the entire nation,” said Assistant Director Terry Wade of the FBI’s Criminal Investigative Division. “Fraudulently using genetic testing laboratories for unnecessary tests erodes the confidence of patients and costs taxpayers millions of dollars. These investigations revealed some medical professionals placing their greed before the needs of the patients and communities they serve. Today’s law enforcement actions reinforce that the FBI, along with its partners, will continue to pursue and stop this type of illegal activity.”

 

Telemedicine CEO pleads guilty in $424 million Medicare fraud scheme

https://www.modernhealthcare.com/legal/telemedicine-ceo-pleads-guilty-424-million-medicare-fraud-scheme?utm_source=modern-healthcare-daily-finance&utm_medium=email&utm_campaign=20190909&utm_content=article1-readmore

The owner of telemedicine company Video Doctor Network on Friday pleaded guilty for his role in what the Justice Department is calling one of the largest healthcare fraud schemes prosecuted to date in the U.S.

Lester Stockett, 52, a resident of Colombia, agreed to pay $200 million in restitution to the U.S. as part of his plea agreement.

The Justice Department in April brought charges against 24 defendants including Stockett for their role in a $424 million conspiracy to defraud Medicare and receive illegal kickbacks. Stockett’s company allegedly received kickbacks from brace suppliers in exchange for arranging for physicians to order medically unnecessary medical equipment, such as back, knee and shoulder braces.

Stockett, owner of the Video Doctor Network and CEO of one of its subsidiaries, AffordADoc, on Friday pleaded guilty to one count of conspiracy to defraud the U.S. and pay and receive healthcare kickbacks, as well as one count of conspiracy to commit money laundering. His sentencing is set for Dec. 16 in New Jersey.

As part of his guilty plea, Stockett said he and others had solicited and received illegal kickbacks and bribes from patient recruiters, pharmacies and brace suppliers. In exchange, he said he and other Video Doctor Network employees bribed healthcare providers to order medically unnecessary orthotic braces for Medicare beneficiaries.

These Medicare beneficiaries were contacted through an international telemarketing network, which identified hundreds of thousands of elderly and disabled patients.

“This CEO and his co-conspirators lined their own pockets with hundreds of millions of dollars by exploiting telemedicine technology meant to help elderly and disabled patients in need of healthcare,” Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division said in a statement.

Brace suppliers, which were co-conspirators in the scheme, submitted more than $424 million in false and fraudulent claims to Medicare for these orders, Stockett said.

Medicare paid brace suppliers more than $200 million for these claims, according to the Justice Department.

Stockett said he and others hid illegal kickbacks and bribes by having them paid indirectly through nominee companies and bank accounts, both in the U.S. and in other countries.

Between March 2016 and April 2019, Stockett said he and other Video Doctor Network executives transferred more than $10 million in illegal kickback payments to a bank account in the Dominican Republic. They then transferred more than $9.8 million from that bank account in the Dominican Republic to bank accounts of AffordADoc in the U.S.

Stockett and other Video Doctor Network executives had also defrauded investors by claiming the company was a legitimate telemedicine enterprise that made $10 million in revenue annually, while revenue was obtained through illegal kickbacks and bribes, according to the plea agreement.

 

 

 

 

FCC moves forward with $100 million Connected Care proposal

https://www.modernhealthcare.com/information-technology/fcc-moves-forward-100-million-connected-care-proposal

The Federal Communications Commission on Wednesday unanimously voted to move forward with plans for a $100 million pilot program to promote telemedicine services.

The FCC voted to adopt a notice of proposed rulemaking for a program dubbed the Connected Care Pilot.

“The future of healthcare is connected care, and this is the future that I want the FCC to support,” agency Chairman Ajit Pai said at an open meeting Wednesday. “The $100 million budget we propose for the Connected Care Pilot program is a smart investment for us and for the country.”

A year ago, FCC Commissioner Brendan Carr unveiled plans for a program that would allocate up to $100 million to support telemedicine projects. The three-year program, dubbed the Connected Care Pilot, would support a limited number of projects, focusing on pilots that help providers “defray” the broadband costs of bringing telemedicine to low-income Americans and veterans.

Unlike existing FCC healthcare programs, such as the agency’s Rural Health Care Program, the proposed pilot would focus on projects that connect patients with healthcare services directly and outside of a hospital.

With the vote, the FCC formally proposed the Connected Care Pilot and said it plans to seek public comment on what kinds of healthcare and broadband service providers should be eligible for the program, as well as what goals and metrics the program should set and how the agency should gather data during the program.

Telemedicine has provided benefits for patients with diabetes, opioid dependency and post-traumatic stress disorder, among other conditions, Carr said during the meeting. He cited data from the U.S. Veterans Affairs Department, which found a remote patient-monitoring program had reduced days of inpatient care by 25% and hospital admissions by 19%.

The VA’s remote patient-monitoring program cost $1,600 per patient, compared with $13,000 per patient for traditional care, Carr said.

“Given the significant cost savings and improved patient outcomes associated with these pilots, we should align public policy in support of this movement in telehealth,” Carr said, adding that data from the FCC’s Connected Care Pilot will likely be able to help inform future policies to promote telemedicine. “It’s the healthcare equivalent of moving from Blockbuster to Netflix.”

Providers largely expressed excitement about the program last year, though some warned the FCC needed to establish more detailed metrics for success. The FCC is seeking feedback on what metrics and data to collect as part of its upcoming request for comment on the program, according to its notice of proposed rulemaking.

“There are many ways to pitch the benefits of broadband, but (I’m) hard-pressed to think of one more powerful than telemedicine,” Pai said at the meeting.

Despite the unanimous vote, commissioners did raise some concerns.

FCC Commissioner Michael O’Rielly questioned budgeting for the program. As written, the proposed Connected Care Pilot would be funded by the Universal Service Fund, a fund managed by the FCC that collects fees from telecommunications companies. The FCC uses these contributions to subsidize services for low-income and rural areas.

O’Rielly said that the FCC has not proposed including the Connected Care Pilot within any of the Universal Service Fund’s existing programs.

“However, $100 million in funding must come from somewhere,” he said, suggesting the program will result in telecommunications companies being asked to pay larger contributions to the USF. “I appreciate Commissioner Carr for the work on the (Connected Care Pilot), and look forward to more discussions raised in context of the larger USF.”

 

 

 

Medical costs projected to increase 6% by 2020, says PwC

https://www.healthcarefinancenews.com/news/medical-costs-projected-increase-6-percent-2020-says-pwc?mkt_tok=eyJpIjoiWldZeVlXTm1aVEF6TVdKbSIsInQiOiJjbWFzeVA2TGlWZkNkXC9odGxcLzdLczFZSDYxd1hoYW04b0wxY0ljQ25zblpYN1VWc2FMWFFCQWpmc2tCYmE4d1Z3eVdMd2htY3JiSjZ3N2Urek43SHFJbWFsckdRbUNycFJoQjhzZm5VcGpJUUhKUDlBMWF2eGJzRUhmZGFlUUx0In0%3D

Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction.

Medical costs are rising, and by this time next year costs will likely show a modest increase of about 6% over the past two years, according to a new report from PwC, PricewaterhouseCoopers.

After figuring in health plan changes such as increased employee cost sharing and network and benefit changes, PwC’s Health Research Institute, which conducted the study, projects a net growth rate of 5 percent. Even with employers’ actions, market forces likely will still overrun the efforts to quell them.

Prices, not utilization, are continuing to fuel healthcare spending. Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction with their health plan. In response, employers are inserting themselves more forcefully into the healthcare delivery equation.

WHAT’S THE IMPACT

Beyond market forces, HRI identified three “inflators” that will, influence the medical cost trend.

One is that drug spending will grow faster. Between 2020 and 2027, retail drug spending under private health insurance is projected to increase at a rate of 3 percent to 6 percent a year as the impact of generics on spending plateaus, biosimilars continue to see slow uptake, and costly new therapies enter the market.

Chronic diseases will also be a major issue. Obesity and Type 2 diabetes continue to produce high rates of hypertension and cardiovascular disease. Sixty percent of adults have a chronic disease, with 40 percent managing two or more. For employers, per capita health spending on someone with a complex chronic illness is eight times that of a healthy person.

Lastly, employers are beginning to recognize the importance of helping their employees manage their mental health and wellbeing. Nearly 75 percent of employers offer mental health disease management programs, the report found. Anytime access is expanded, costs will go up in the short term, though it may have the opposite effect long-term.

And speaking of the opposite effect, there are a few “deflators” HRI recognized that will likely slow down the medical cost trend.

HRI predicts that in 2020, more companies will take action to make sure healthcare is accessible to their employees, opening and expanding clinics as a strategy to control the cost trend. Thirty-eight percent of large employers offered a worksite clinic in 2019, up from 27 percent in 2014.

Also, payers are designing plans to encourage members to choose free-standing facilities and in-home care rather than more expensive sites. How those benefits are designed, and how employees perceive the costs, will shape the effectiveness of site of care strategies. Payers and employers are aiming to grow the role of telemedicine as employees grow more comfortable with it, especially if out-of-pocket costs are lower and the quality doesn’t suffer.

WHAT ELSE YOU SHOULD KNOW

The trend has implications for employers, payers, providers and even pharmaceutical and life science companies.

For payers, it becomes important to  benchmark the prices paid commercially against a common reference point such as Medicare. With this information it’s possible to pursue value-based arrangements with high-performing and lower-cost providers, in addition to negotiating better contracted rates on existing fee-for-service arrangements.

For providers, a value line strategy is necessary as employers and consumers look for high quality care for a low cost. Providers armed with a value line strategy are more likely to be included in health plans’ high-performance networks, and are better positioned to directly contract with employers.

Providers should also understand what risk they can take on to guarantee a health outcome, and the cost structure needed to make them profitable in doing so. Providers should understand and manage both the risk inherent in their ability to deliver care and the risk of the population they’re managing — from health status to the social determinants impacting their health — to help them design appropriate clinical interventions and non-clinical support services.

For employers, it becomes imperative to understand their role as the purchaser of healthcare for employees and join the ranks of employer activists, pursuing new solutions to lower costs, improve access and enhance quality. Pharmaceutical and life science companies, meanwhile, should go beyond the basic outcomes-based arrangements currently in place and consider exploring and expanding alternative financing arrangements, such as subscription models for unlimited access to a product for a set period of time, or a mortgage model to finance expensive specialty drugs over time.

THE LARGER TREND

The PwC study loosely mirrors the findings of an October report from the Altarum Center for Value in Health Care, which found prices and spending in healthcare growing steadily, but at a moderate pace.

The country’s healthcare spending habits are at a level nearly double that of similar countries. Spending per capita in the U.S. is more than $9,000, compared to just over $5,000 in other Western nations, and because prices are growing slowly but steadily, spending is doing the same.