9/30/21 Weekly Update

Summarizing the week that was in the business of healthcare

Sep 30, 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.

OIG flags potential $5B overpaid to Medicare Advantage plans

The Office of Inspector General (OIG), the federal watchdog office, is again raising concerns about risk adjustment in the Medicare Advantage market and the potential for health plans to game the system to make more money. As a reminder, risk adjustment is essentially a process to modify payments to health plans based on differences in how sick their patient populations are compared to other plans. The idea is that one plan should not be financially penalized for having a sicker patient population than another. Otherwise, all plans would be incentivized to cater more towards healthier individuals and sicker patients would struggle to find a plan that meets their needs.

The report highlights the dubious health plan practice of conducting certain assessments outside of a physician's office to add a diagnosis and accrue the higher risk-adjusted payment by making beneficiaries appear sicker than they actually are. Clearly plans with more robust financial resources for home visits and chart reviews are better positioned to capture more diagnoses and give the impression of a sicker population. In its analysis, the HHS Office of Inspector General found that just 20 of the 162 MA organizations were responsible for 54% of the risk-adjusted payments from these assessments, chart reviews, and health risk assessments, resulting in $5B in potentially inappropriate payments. Furthermore, the largest insurer, which enrolled 22% of MA members in the year of the study, captured 40% of risk adjustment payments from these assessments.

This report comes on the heels of recent findings that MA members cost the government $321 more per person than those enrolled in the traditional Medicare program.

Commentary: Medicare Advantage is a very popular program that continues to attract both more enrollees and more plans. And it clearly has its advantages for enrollees. MA plans are much easier for members to understand and manage compared to traditional Medicare, which typically requires people to maintain separate Part D and Medigap plans. MA plans also typically include extra perks, such as vision, dental, hearing, fitness, transportation, and meal benefits. Having said all that, the MA system is clearly broken. The current system significantly favors larger, resource-rich health plans over smaller insurers and is costing the American taxpayer more than traditional Medicare. We doubt there is much political will for a major overhaul of how MA works, but given the increasing popularity of the program, something must be done to maintain fairness and protect the taxpayer.

The U.S. Health Care System Isn’t Built for Primary Care

Here’s a great piece from Kyna Fong, the CEO of independent primary care EMR vendor Elation Health, detailing her thoughts on the need to reinvent primary care. Fong argues that primary care should be designed and managed differently than subspecialty care with a focus on the doctor-patient relationship over algorithm-driven diagnostic and treatment models. To illustrate her point, she outlines contrasting approaches for addressing lower back pain:

Consider this patient encounter. A patient schedules an appointment for evaluation of low-back pain. At the appointment, the physician delves into the electronic health record (EHR), clicking boxes in a template designed for the symptom of back pain. The physician will rule out anything serious (infection, tumor, and so on), arrive at a diagnosis, and align this with the right billing code so that the documentation will meet billing standards. The patient leaves with a prescription for pain, perhaps an order for imaging, and the physician has ensured that the insurer will pay the bill.
Now consider an alternative scenario. A patient schedules an appointment with her personal primary care physician for evaluation of low-back pain. The physician explores with the patient the “why” behind the complaint. By taking the time to ask open-ended questions and actively listen (to a non-linear narrative), it is discovered that the patient has a sedentary job, has been experiencing high levels of stress and poor sleep, and has not been as active as she previously was — all surreptitious contributors to the symptom of low-back pain. In this scenario, the patient receives education about strategies to improve sleep, discusses with her physician ways to incorporate more physical activity into her life, and receives a referral to a physical therapist and recommendations about self-management techniques to help manage stress.

To achieve this relationship-driven ideal where physicians deeply listen to patients and aim to address root causes, Fong identifies three needs:

Reform payment models to reward physicians for delivering the care patients actually need, e.g. this model based on 11 patient-reported measures
Rebuild the EMR to move away from systems that are designed around billing to systems that better support the patient-physician relationship and coordinate care across the ecosystem
Change medical education to get students out of inpatient settings and into community-based primary care clinics

Commentary: First, we should say that this piece is meant to promote Fong and Elation. That said, she makes some very good points around payment models and the inadequacy of current EMRs. Around payment models, most value-based structures in primary care today are basic and merely require clinicians to check the box around basic healthcare measures such as annual flu shots, appropriate use of statins, etc. They are not aligned to the type of highly personalized primary care Fong describes that could elicit patient behavior change. On EMRs, data silos continue to be a problem, although some new vendors like Health Gorilla are tackling the interoperability challenge. We need to keep making strides here and create technology that surfaces the relevant insights for clinicians. Moving to different payment models should also release loads of innovation in the EMR space as vendors no longer need to prioritize documentation and billing features.

Poll: Majority of U.S. voters approve of giving Medicare drug price negotiation authority

Wading into current political debates, a new poll found that 56% of voters support giving Medicare the power to negotiate for lower drug prices for certain products but only 50% want it to be included in a major infrastructure package. The poll was of 1,999 registered voters and had a margin of error of two percentage points.

The poll comes as Senate Democrats in particular debate the measures with some moderates saying that letting Medicare negotiate drug prices would harm innovation (via lower pharma revenues, i.e. lower financial incentives to develop new therapies).

Commentary: Letting Medicare directly negotiate drug prices would be a major change to the healthcare landscape. Currently, seniors access drug benefits via Medicare Part D or Medicare Advantage plans, with each private payor negotiating against pharma companies on their own. Having Medicare itself lead the way would create a single payor-like dynamic with strong bargaining power and likely significantly reduce drug prices. Indeed, the Congressional Budget Office estimated that the provision could result in $456B of savings over the next decade. We think the debate over innovation is overblown as long as pricing remains fair to the value a therapy brings to the patient and overall system. Negotiated agreements with Medicare would also likely trigger national coverage for drugs automatically, simplifying pharma’s market access pains that currently require going plan to plan and state to state for coverage.

Apple study finds Watch can detect more types of irregular heartbeats

We’ve discussed the concerns around the Apple Watch’s false positive rate for atrial fibrillation several times, but a new study suggests that the device may just be picking up other forms of arrhythmias instead. In the study, 40% of patients who had received an irregular heartbeat notification but did not have atrial fibrillation (tested via ECG) had another form of arrhythmia. The most common arrhythmias detected were premature atrial contractions, premature ventricular contractions, atrial tachycardia, and nonsustained ventricular tachycardia, according to the study.

Additionally, the researchers found that almost a third of participants that were notified of an arrhythmia but did not have atrial fibrillation on the subsequent ECG reading were eventually diagnosed with atrial fibrillation later in the study suggesting that the Apple Watch may be detecting early signs of atrial fibrillation that the ECG patch missed.

For reference, the participants were primarily male (71%) and white (85.2%). The average age was 57.7 years old.

Commentary: It would be very interesting and a great sign for Apple if it turns out that most of the perceived false positives for AFib detection are just other arrhythmias. It would be even more interesting if the Apple Watch is picking up signs of AFib earlier than traditional diagnostic patches. We need follow up studies to confirm these results and expand them to minority populations and women, but if successful it could transform the outpatient cardiac monitoring market and cardiologist workflows and hopefully lead to better management of arrhythmias.

Telehealth companies rake in $15M+ from patients looking for ivermectin, hydroxychloroquine

Only in America, right? This crazy story, which is chronicled in greater detail in The Intercept, details two companies that made over $15M for COVID-related consultations and prescriptions for hydroxychloroquine and ivermectin, according to documents obtained from an anonymous hacker. One company, Cadence Health, is a platform that televisit provider SpeakWithAnMD.com used to power their virtual visits with patients. The other company, Ravkoo, is prescription delivery service. In a further twist, 50% of SpeakWithAnMD.com’s visits came via referrals from America's Frontline Doctors, an anti-vax group that was formed to speak out against the government's efforts to contain COVID-19.

Cadence Health has been shut down and Ravkoo’s CEO said that the company terminated its relationship with SpeakWithAnMD.com and America's Frontline Doctors at the end of August.

Commentary: While depressing, this story is unfortunately not a surprise. Think about all the money wasted on bogus supplements every year. Combine that with the enormous COVID disinformation campaigns around the country and this is what happens. This story is also a good reminder to all that it’s hard to get patients to do the right thing most of the time. You can explain the science behind COVID, the vaccines, and the risks but there will always be people who chase a miracle cure or contrarian treatment.

The Donut Hole