9/16/21 Weekly Update

Summarizing the week that was in the business of healthcare

Sep 16, 2021

Welcome to The Donut Hole’s weekly summary. The news doesn’t stop. Lucky for you, we are here to help you take in the week that was in the business of healthcare.

CMS wants to pull Trump-era pathway that speeds up Medicare coverage of breakthrough medical devices

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would withdraw a previous Trump-era regulation that created a new pathway that mandates Medicare coverage as soon as a breakthrough medical device (breakthrough devices get faster Food and Drug Administration (FDA) authorization because they treat an unmet medical need) is authorized by the FDA. CMS said the pathway could lead Medicare to cover unnecessary products and raised concerns about the availability of clinical evidence of breakthrough medical devices for the Medicare patient population. Just because a product meets the FDA’s standards doesn’t automatically mean the product is safe or necessary for Medicare’s patient population, CMS says. The Trump-era rule had been lauded by the medical device industry, and payors are already cheering CMS’ reversal.

Commentary: Both sides of this debate have merit. On one hand, getting novel, beneficial therapies and devices to patients faster is a worthy goal. Medicare coverage not only provides access to therapies and devices for seniors but also serves as a positive signal for other payors (i.e. commercial plans). On the other, there is a clinical and financial danger of prematurely covering new interventions that lack evidence. You can follow a couple of Twitter threads on the topic here and here.

Tia clinches $100M to build out clinics, virtual care as investors bank on women's health startups

Women’s health start-up Tia announced a $100M Series B fundraise to further expand its physical clinic footprint and broaden its services. The company already offers virtual and in-person primary care, mental health, gynecological, and other services to women in New York City, Los Angeles, and Phoenix. The company is also focused on building out partnership with traditional health systems for more complex care as needed. The vision is to address the fragmentation and care gaps many women experience. Per the CEO:

"We aim to be a one-stop-shop, but there are things we don’t do. There's a singular problem we’re trying to solve, and that's fragmentation. Women are often stuck in the middle between seeing specialists and inpatient, outpatient care. Let's look at pregnancy—we’re not in the baby delivery business. By partnering with health systems, we can provide outpatient integrated pregnancy care and integrate that into the inpatient experience."

Commentary: We’ve covered the rise of women’s health-focused clinics previously (here), and this news affirms our previous takeaways. First, these clinics will siphon off patient volumes from traditional practices as they scale. Second, health systems will need to establish referral networks with these new upstarts to maintain volumes for more complex procedures and care. CommonSpirit Health’s partnership with Tia is a perfect example of the moves incumbents will need to make to preserve volumes and the associated revenues.

Telehealth’s Limits: Battle Over State Lines and Licensing Threatens Patients’ Options

Diving into the world of telehealth regulation, the debate over pre-Pandemic cross-state physician licensing is picking back up. At the start of the COVID crisis, states and CMS waived existing rules that requiring licensed clinicians to hold a valid license in the state where their patient is located, allowing physicians to hold virtual visits with patients across state lines. Now, many states are ending those waivers, forcing patients to travel long distances for in-person visits with their current providers or find new clinicians in their home state. The changing rules are causing real disruption. Johns Hopkins, for example, recently scrambled to notify more than 1,000 Virginia patients that their telehealth appointments were no longer feasible. Virginia is among the states where the emergency orders are expiring or being rolled back.

While a permanent repeal of the licensing rules may sound like the logical, patient-friendly thing to do, the issue is complicated with powerful interests on both sides. First, state medical boards don’t want to cede authority, saying their power to license and discipline medical professionals boosts patient safety. Moreover, licensing is a source of state revenue. Some clinicians also oppose repealing the rules, fearing the added competition for patients from physicians in other states.

Commentary: It seems likely that in the long run the regulations will either be removed or at least significantly loosened. Until then, though, clinicians will need to go through the hassle of multiple registrations, fees, and continuing education requirements or face limitations on the patients they can see virtually. We hope change happens sooner than later, but we will need new cross-state and /or federal systems in place to investigate complaints and ensure that licenses are in good standing. There should at the very least be an exception for clinical trials to allow patients anywhere to access potentially life-saving new therapies no matter where the trial site is located.

Telehealth claims drop to lowest level since before pandemic, Fair Health finds

In other telehealth news, a new report from Fair Health detailed a 10% drop in telehealth as a percentage of total claims from May (5%) to June (4.5%). June’s 4.5% was the lowest level recorded by Fair Health since the Pandemic started. These numbers are pre-Delta, so it’s likely that the percentage ticked back up in July and August. Still, it’s clear that practices and hospitals have largely figured out how to bring back in-person visits safely and we are unlikely to see telehealth rising anywhere close to the Pandemic highs for a very long time. Nevertheless, telehealth utilization remains orders of magnitude greater than pre-COVID levels, and that is likely to persist, particularly for behavioral health conditions and simple urgent care needs.

Commentary: This data is not surprising. While a lot of care still needs to be delivered in-person, there are clearly certain conditions and diagnoses that are well-suited to virtual visits. Consumer patterns have also changed in support of virtual visits in select use cases.

Theranos CEO Elizabeth Holmes Trial - Live Updates

For those of you who followed the Theranos story in real time, via podcast, or by book, the big moment is finally here. It’s the trial of Theranos founder and CEO Elizabeth Holmes for 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Here’s a link to The Wall Street Journal’s page following the latest developments. We’ll continue to follow the story but expect the testimony to mirror what’s already been reported around poor lab controls, data manipulation, secrecy, harming real patients, and more.

Commentary: The Theranos debacle is widely known at this point. Clearly, the Board of Directors should’ve exerted more oversight to keep Holmes and others honest about the capabilities of the blood testing device and the whistleblowers should’ve been listened to sooner.

One other impact that’s not as widely discussed is the pall the debacle casted over the diagnostics industry, particularly point-of-care diagnostics. Established players and start-ups who did everything right in the space (robust evidence, peer-reviewed studies, high quality procedures and controls, etc.) still faced a real challenge convincing investors that they were different than Theranos. It seems like the tide is finally turning, which is good news for clinicians and patients who can benefit from improved diagnostics and workflows for sepsis risk, inflammatory responses, dose titration, and more.

The Donut Hole