Spoiler: They’re nearly all about cost

by Kate Alfano, CMS Communications Coordinator

The Colorado Medical Society contracted with the Colorado Health Institute (CHI) to develop a comprehensive environmental scan of significant state and national drivers of change for the medical community to help inform the development of the 2019-2020 CMS operational plan.

Over the summer CHI staff conducted primary research into emerging trends that affect physicians. Leveraging their understanding of upcoming state legislative policy impacting health care in Colorado, CHI also conducted a qualitative review of emerging trends in Colorado’s health care system, as well as national trends that will impact the state. The CMS Operational Plan Committee offered input and helped refine the scan.

Paul Presken, CHI senior consultant, presented the final scan during the July 12 meeting of the CMS Board of Directors, summarizing the top nine emerging themes in health care and answering questions from the board. Throughout them all, he explained, is a recurring theme of cost.

1. Health care costs for consumers have reached a tipping point.

The most obvious example of increased attention on health care costs is Gov. Jared Polis’s Office of Saving People Money on Healthcare, headed by Lt. Gov. Dianna Primavera, Presken said. “This is an intense focus for him that we haven’t seen in any other administration.” Another example is the slate of bills passed by the 2019 Colorado General Assembly that aims to reduce health care costs for consumers.

  • Health care facilities and insurance carriers must now provide better disclosures about possible out-of-network billing situations.
  • A reinsurance program aims to reduce premiums on the individual market by covering the highest-cost claims for insurers.
  • Health care cooperatives are now permitted in Colorado, allowing people in a region to band together to negotiate rates with providers.

“The idea is that it’s time to make sure there is tangible legislation at the state Capitol to control costs for Coloradans,” Presken said.

2. Prescription drug costs are increasing and legislators are crafting bills to control them.

Prescription drug costs continue to outpace inflation at a rate of two to nine times for brand-name oral drugs and generic oral drugs, respectively. The highest-cost drug ever was announced in May, Zolgensma, a gene therapy from AveXis and Novartis designed to treat spinal muscular atrophy in one dose, but at a cost of $2.1 million. The 2019 legislature passed laws allowing for the importation of prescription drugs from Canada and capping insulin copy or coinsurance prices at $100 for a 30-day supply. A bill that failed but that will likely be revived in the 2020 legislature, Preskin said, would have required significant prescription drug transparency.

3. Hospital costs are in the crosshairs.

The tone on hospital costs was set in January when the Colorado Department of Health Care Policy and Financing released a study contradicting the theory of the “cost shift” – that hospitals charge higher prices to people with private insurance to make up for the losses they take on Medicare, Medicaid and uninsured patients – and illustrating that policies intended to address hospital cost-shifting have had little impact on the high price of insurance. The Colorado Hospital Association disputed the findings.

With hospital costs in the crosshairs, several laws were passed in 2019 to provide more transparency and control.

  • The very first bill introduced in the 2019 session requires hospitals to disclose data annually to HCPF on expenditures and uncompensated costs.
  • Another bill requires nonprofit hospitals to submit data on community benefit activities to the state instead of just the IRS.
  • And yet another bill creates new licensure requirements and new rules for freestanding emergency departments.

4. Payment reform is affecting physician payment.

Health plans are increasingly moving from up-side risk only to up-side and down-side risk arrangements, Presken said. And government programs like the Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) are starting to have an impact: 2019 is the first year physicians are seeing payment affected by MIPS and 2021 is when more Colorado Medicaid quality measures will affect payment for primary care physicians.

“We’ve been talking about this for a long time,” Presken said. “The private plans are not far behind. They look to the government to take the lead on these things. We’re seeing a lot of ACO [accountable care organization] expansion, most driven by Medicare advantage plans. Colorado is at the top of the list for the most ACO-covered lives. Private insurance, public insurance, this is going to have an increasing impact.”

5. The physician workforce is shifting.

The American Medical Association recently announced that the year 2018 marks the first time there were fewer physician owners than employees in the United States: 45.9 percent vs. 47.4 percent, respectively. This has been slowly changing over time and it looks like the trend will continue, Presken said. At the same time, physician burnout is higher for employed physicians as illustrated in two studies: Physicians working in small, independent primary care practices report less burnout than the national average, and physicians employed by hospitals and corporations are more dissatisfied and burned out than those who work independently and in physician-owned practices.

6. Colorado has expanded substance use and regulation and is seeing the effects.

Colorado continues to “experiment” with legalization, Presken said, citing actions by the 2019 legislature to expand who can sell cannabis and where it can be offered, and the Denver law de-criminalizing hallucinogenic mushrooms. Colorado now has some of the highest rates of substance use in the country, with the third-highest rate of illicit drug use in the country, the nation’s highest rate of youth vaping, and a three-fold increase in cannabis-related ER visits, according to a UCHealth study. Overdose deaths from opioids have declined significantly in the past year but deaths from cocaine and methamphetamine have risen.

7. Investments in technology and disruption of current models are growing.

Presken reported that venture capital firms invested record amounts in health care technology in 2018, and investment focused on “disruptive” technologies that hold significant promise: telehealth, robotics for surgical and non-surgical applications, artificial intelligence to analyze electronic medical records and medical imaging data, immunotherapy in cancer care, genetic sequencing to diagnose disease, and 3D printing for organ transplants and tissue repair.

8. The business community is and will continue to be engaged.

Pressure from the business community is increasing and specific to Colorado, Presken said. From 2008 to 2017, Colorado families with employer-sponsored insurance saw their premiums rise by more than 60 percent to nearly $20,000 per year. In 2020, national private employer medical costs are projected to increase by an average of 6 percent, up from the average of 5.5 percent annually over the past three years.

Locally, employers in Summit County “finally had enough,” Presken said, and they formed Peak Health Alliance to negotiate lower insurance premiums directly with providers. They will offer a new plan in 2020. This is the first time in Colorado that employers can negotiate directly with providers, thanks to the law allowing health care cooperatives to operate in the state. According to Presken, employers throughout the state and community are exploring reducing premium costs by negotiating with employers.

“We think this will be pretty significant. It can bend the cost curve and it won’t be as expensive. It is changing the whole dynamic of who is negotiating with whom.”

9. The government has an increasing role as a payer.

Since 2016 the Kaiser Family Foundation has found that the majority of the U.S. population has favored moving to universal health insurance. While it’s unclear whether consumers know what they’re being asked, it’s clearly a trend, Presken said. Another recent statistic from Reuters News shows that 70 percent of Americans now favor a “Medicare for All” program, though support fades when respondents are told this might mean that most private insurance plans will be eliminated.

The 2019 Colorado legislature passed laws exploring options for increasing the state’s role in providing coverage. State agencies are currently researching and developing a proposal for an option for a state-sponsored health care plan. And another new law creates a health care cost analysis task force to look at costs and other impacts of various health care financing systems. “We’re inching closer to this but it is unclear as to when this is going to come to fruition,” Presken said. In the national debates for the democratic primary, government-sponsored coverage has been a big topic of discussion but positions run the gamut of elimination of private health insurance to expanding Medicare.

Watch for more from the Colorado Medical Society on these trends in 2020, and read more about current work in this issue of Colorado Medicine.

Categories: Communications, Colorado Medicine, Cover Story, Resources, Practice Evolution, Practice Management