Is 2016 the year meaningful use's omnipresence begins to dissipate within the industry? Most industry experts agree Stage 1 Meaningful Use was successful in that adoption rates soared, thanks to “achievable standards,” according to a blog written by Dr. Robert Wachter, a professor and associate chairman of the Department of Medicine at the University of California, San Francisco. The number of hospitals with EHRs jumped from 10% in 2008 to 70% in 2014.
However, things started to get rocky by November 2014 when CMS released data revealing only 2% of physicians and only 17% of hospitals attested to Stage 2 MU. Top personnel, including National Director Dr. Karen DeSalvo, had announced they were leaving HHS’ Office of the National Coordinator for Health IT (ONC). (However, DeSalvo did not end up leaving the position at the time.) The remaining $30 billion in ONC’s budget was running out. Providers and hospitals were bracing for Medicare cuts being imposed for EHRs that didn’t meet MU standards in 2015, on top of Medicare cutting payments via value-based purchasing, readmission penalties, no pay for errors, amongst other penalties.
Medical groups take action against Stage 2
The American Medical Association (AMA) along with several other healthcare groups called the Stage 2 MU results, “disappointing yet predictable,” and requested CMS to take “immediate action.” Dr. Steven Stack, the then-AMA president elect said, “In addition to a shortened reporting period, CMS must end its one-size fits all approach to achieve the goals of the meaningful use program, which are to create a secure and interoperable infrastructure.” The AMA created a list of 8 priorities to improve the MU program and pushed for a shorter reporting period from one year to 90 days, ways to simplify Medicare quality reporting requirements, and revisions to no longer require physicians to meet 100% of the MU requirements to avoid penalties. One of the eight AMA recommendations was to promote interoperability and data exchange. The agency said, “EHR systems should facilitate connected healthcare across care settings and enable both exporting data and properly incorporating data from other systems. The end result should be a coherent longitudinal patient record that is built from various sources and can be accessed in real time.”
Dr. John Halamka, CIO at Beth Israel Deaconess Medical Center and chairman of the New England Healthcare Exchange Network, wrote in his blog last January, “By the end of Meaningful Use Stage 2, hospitals and eligible professionals will have reached a breaking point in their capacity to absorb regulatory burdens, so we have to progress beyond 2017 very thoughtfully. If our policy goals are outcomes based, then we should offer a Stage 3 regulation, which enables organizations to qualify for incentives if outcomes are achieved using IT as an enabler. We should not prescribe specific functionality for the EHR other than interoperability and security.” He also noted, “We should eliminate penalties for non-compliance with Stage 3 and return EHR innovation to customers and vendors.”
Mixed reactions for Stage 3
After several delays, the Stage 3 MU final rule was released in October with a 60-day comment period. As previously reported by Healthcare Dive, HHS stated the rules “will ease the reporting burden for providers, support interoperability, and improve patient outcomes.” The final rule allows providers to apply for hardship exceptions if they have technical issues with their EHR vendor. However, since it is optional for 2017, vendors only have one year to make the required software changes and certification by 2018, which Halamka said in his blog could be “very difficult.”
Dr. David Kibbe, president and CEO of DirectTrust, a non-profit group of participants in the Direct community, told Healthcare Dive via email that most EHR vendors “would like to see MU continued…but have recently asked that the requirements and metrics be substantially changed.” Several IT vendors and health organizations wrote a letter to Congress on December 7 urging it not to delay Stage 3 MU and providing a list of 10 points to achieve interoperability.
Kibbe said he agrees with “everything these vendors are saying, and I believe that they honestly want to improve interoperability because their customers are starting to demand it as a necessary condition for care coordination.” He added, “Now the expectations are greater that interoperability between EHRs must actually work in the real world, not just in a testing environment.” Those expectations are regarding real demands imposed by value-based purchasing payment models set by the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, which established the Merit-based Incentive Payment Systems (MIPS).
DirectTrust stated in a recent press release that although the MU program has accomplished significant EHR adoption, it has “alienated many stakeholders within the healthcare provider community by expanding its final, Stage 3 version of its regulations,” and that the “Meaningful Use programs face a potentially uncertain future in 2016 and 2017...Some have speculated they could be delayed or phased out, although how that would occur is open for discussion.”
Halamka’s "2015 in Review" blog leans towards returning the IT agenda back to customers – "patients and providers – who want improved quality, safety and efficacy." He says Stage 3 is too early to propose since “we do not really know what has worked in Stage 2." Halamka emphasizes outcomes may be improved by allowing providers to create their own way to better health. “The tactics should be up to patient-centered medical homes and ACOs, not regulation writers.”
He adds, "My secret hope is that CMS decides to remove the penalty phase of MU, enabling every EHR vendor to ask their customers 'should we spend the next three years implementing the certification rule (which is voluntary) or just ignore the entire Meaningful Use program and innovate to accommodate the needs of alternative payment models?' My guess is the majority of hospitals and professionals would tell vendors to abandon the certification effort and focus on value-based enhancements. At that point, the MU program could be considered a success and be moved into historical status; still on the books, but not pursued by most.”
How will the pending insurance megamergers affect the market?
PricewaterhouseCoopers' Health Research Institute’s “Top Ten health industry issues of 2016” report says 2016 "is the year of merger mania." Pointing to the ACA’s focus on value and outcomes, aligned with low interest rates, the institute predicts, “In 2016, high-profile mergers and acquisitions are likely to continue, with attention focused on insurers as they work to assure regulators that consolidation will benefit consumers.” With potential megamergers between Anthem and Cigna, and Aetna and Humana waiting for approval from the Department of Justice (DOJ), many experts say consolidation on this level raises many concerns because healthcare cost control depends on competitive markets at the payer and provider levels.
The DOJ has previously challenged only four health insurance company mergers, according to a Health Affairs blog, and all were settled by consent decree. The insurers agreed to divest overlapping plans and the mergers were approved. The blog also mentioned the DOJ’s analysis of the pending megamergers may be complicated if the government finds a competitive harm resulting from a merger’s effect on providers. The increased market power of the newly merged company might enable it to “unduly reduce” payments to physicians.
Currently, insurers are willing to enter new markets via the exchanges and to develop new delivery systems, such as accountable care organizations (ACOs) via partnerships with hospitals and physicians. If consolidation reduces the number of players, there will be less risk taking and innovation, the blog argues. Another stance is that only large payers can bargain prices down from large providers, saving customers money. But, “there is no compelling economic evidence that 'bilateral' monopoly produces better results for consumers; and even if a dominant payer succeeds in bargaining successfully with providers it has little incentive to pass along the savings to its policyholders.”
ACA co-ops closing
In addition, this year saw a dozen of the 23 co-ops created under the Affordable Care Act to increase competition in the insurance market, shut down. According to an Associated Press article, a review of financial statements from 10 of the 11 surviving co-ops found they lost, on average, more than $21 million in the first nine months of this year. Increasing medical and prescription drug costs, while building a network of providers and negotiating rates proved too much and most co-ops received considerably less federal funding than expected. Deep Banerjee, a Standard & Poor’s analyst told the AP, “It is probably impossible for a startup in the health insurance space to make any significant money in the first couple of years.”
However, as previously reported by Healthcare Dive, UnitedHealth Group recently announced big losses from its exchange business and said it would decide next year whether it would remain in the exchanges in 2017. Maine’s Community Health Options lost $17 million in the first nine months of this year, but made $10.9 million in the same time frame last year, citing higher than expected medical costs. “Clearly, the remaining healthcare co-ops are in dire circumstances,” Robert Laszewski, a healthcare consultant, told the AP. “I don’t know how any of them can survive another year.” As co-ops close, there will be fewer insurance choices for customers shopping on the exchanges.
More record deals in 2016?
If the mega-mergers are approved, says the Health Research Institute’s report, it could prompt more mergers and consolidations among hospitals and physician groups. Healthcare deals reached almost $400 billion in agreements by mid-2015, breaking records set in 2014. The report concludes, “Expectations are high for 2016. As industry alignment leaves fewer dominant players, the pressure to differentiate in the market will mount. Success will come through tactical growth delivering what consumers value – greater access, improved outcomes, and lower costs.”