Deloitte Center for Health Solutions

August 19, 2013

Monday memo

Health reform update

This week’s headlines: My take: health system transformation is a long journey

Implementation update o $67 million awarded to HIX navigators o Study: average federal tax credit to purchase individual coverage through exchanges $2,672 o Oklahoma challenge to ACA proceeds in court o HIX eligibility update: HHS initiates data sharing with VA, IRS

Legislative update o Meaningful use workgroup releases stage 3 recommendations for comment o AHRQ report: health IT alone won't improve quality in primary care settings o OIG report: majority of critical-access hospitals do not qualify for cost-plus Medicare

reimbursement o CMS miscalculated inpatient rehab compliance, House committee looking at reduction in

post-acute costs

State update o HIX update o Medicaid expansion update

o State round-up

Industry update o Hospital consolidation gets attention o Hospitals at odds with Medicare Advantage plans about 2% sequestration cuts o Hospitals ask CMS to require exchange plans to pay claims during ACA grace period o Health insurers advertising for expanded coverage in 2014 o Technology price index: average price paid for PET/CT systems dropped 21% in last year o Pioneer ACO results update o American Medical News to shut down o CMS physician fee schedule proposal criticized by AMA o Study: behavior changes prompted by lab results problematic for older adults

Research snapshot o Studies conclude that limiting residents' work hours does not hurt patient safety, but results

in less time with patients

Quotable

Fact file

Subscribe to the Health Care Reform Memo

Deloitte Center for Health Solutions research

Deloitte contacts

My take: health system transformation is a long journey From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

In the past week, many Egyptians have died in the conflict over the country’s governance

between the Muslim Brotherhood and the military government that came to power July 3 with

the downfall of the Morsi regime.

Leaders in Iran, Afghanistan, India, and China announced changes in their governments’

policies intended to protect their national interests and control their markets more

autonomously.

Conflicts in at least 30 of the globe’s 192 countries continued—in some cases, civil unrest

that’s seemingly decades old.

And at home, with Congress home for its August recess, coverage focused on mixed signals

about the U.S. economic recovery, and of late, the pending opening of health insurance

exchanges (HIX) for individuals and small businesses October 1.

I am a health care industry guy. My natural appetite is for reading health care journals and

trade publications about how this industry representing 17.9% of our gross domestic product

(GDP) is performing, who its winners and losers will be, and how innovation is changing the

operating models and capital flows into and out of each sector. I easily gravitate to stoic

assessments of its fundamental challenges—labor intensity, capital intensity, regulatory

complexity, structural fragmentation, and costs—because those are my comfort zones. And I

perk up when news reporters cover the industry often taking issue with overly simplistic or

inaccurate coverage.

Global conflicts, poverty that’s standard fare for one-third of the globe’s population,

undeveloped systems of care, and any number of other important topics don’t naturally get my

attention. And studying a piece of legislation, like the Affordable Care Act (ACA), or any other,

is not my idea of fun reading.

The U.S. health care system is in the cross hairs of changes that aren’t comfortable for many.

Each sector is circling its wagons to protect its self-interests and defend its conventional role.

Some efforts require awkward alliances outside the sector: insurers and hospitals, primary

care and specialty medicine, biotech and pharma, and so on.

Here’s what I am learning as I age…

The health system is not the centerpiece of everything that matters in the U.S. It’s an

important part of our complicated society that also requires investments in defense,

agriculture, education, infrastructure, and others, while balancing the needs of those who

have and have not. But events on the world stage and dizzying news cycles mean our

industry must increasingly see itself in the broader context of the global human drama and its

economy.

Understanding the health care system takes effort. Time is precious. Most in the health care

industry are busy, so we default to time-savers—PowerPoint presentations with speaker notes

prepared by others, talking points that make good sound bites, trade associations’ legislative

summaries, and so on. Though helpful, they sometimes mask lack of personal knowledge

about this full scope of this industry—the issues, challenges, innovations, and constraints

facing sectors other than our own. It takes ongoing, persistent personal study, nothing less.

And it requires study outside health care—to world affairs, to other industries, to the lessons of

history—to understand health care in its proper context.

We are prone to live in our comfort zones. Walter Lippman, famed journalist and author, wrote

“When all think alike, no one thinks very much”. That’s a timely message in our industry.

Leaders surrounded by “yes men” enjoy less friction in their role but jeopardize the long-term

viability of their organizations. Listening to the opinions of those with whom we differ, and

engaging with those for whom “health care” is seen through a different lens is necessary to

competent leadership. And as accessible, affordable health care is juxtaposed against other

societal challenges such as hunger, literacy, and poverty, our solutions should be sensitive to

the dynamics of our increasingly pluralistic society at home and complex markets abroad.

There’s a natural tendency for those of us in health care to default to views that support our

strongly held predispositions, especially when under attack. And it’s understandable that with

looming deadlines for compliance with new rules and regulations and ever-present demand

for transparency and cost cutting, we’re always in a rush to hit short-term milestones. The

underlying premise of health reform is that our system is not performing as it should. That

lends itself to defensiveness and short-term strategy for survival or competitive advantage.

Health system transformation is a long journey. As a system, our changes span decades: we

celebrated Medicare’s 48th birthday July 30—one of many trans-generational examples. The

implementation of the ACA, imperfect as it is, spans 2010-2018—yet another.

Health system transformation will come as we think and engage outside our personal and

professional comfort zones. The world is small. Conflicts in Egypt and elsewhere, economic

challenges in China, Japan, and India, populist movements in emerging markets are as

relevant to the future of our industry as are our efforts in basic science toward person-

centered medicines and in integrating the financing and delivery of care more seamlessly.

Our industry’s future is bright, but it is not without challenges that are likely to take us beyond

our traditional comfort zones.

return to top

Implementation update

$67 million awarded to HIX navigators Last Thursday, U.S. Health and Human Services (HHS) awarded grants totaling $67 million to

“navigators” (i.e., community organizations, providers, and businesses) tasked with educating

consumers about how to enroll in health insurance via the health insurance exchanges (HIX).

The grants go to 105 organizations in the 34 states that defaulted to federally-facilitated

exchanges. The $13 million added to the effort came from ACA’s Prevention and Public

Health Fund.

return to top

Study: average federal tax credit to purchase individual coverage through

exchanges $2,672 According to a Kaiser Family Foundation study, the average subsidy will be $2,672 for an

individual purchasing the lowest-cost silver plan, which would lower average individual

premium costs on the HIXs 32%. The average subsidy for a family purchasing the lowest-cost

silver plan would be $5,548, reducing premium costs by 66%. The analysis was based on the

2008 Survey of Income and Program Participation (SIPP), Wave 6 (interview period April to

July 2010) data.

Background: eligible individuals earning between 100% and 400% of the federal poverty level

(FPL) can apply for federal tax credits to assist in the purchasing of health insurance on HIXs.

The tax credits are calculated based on the cost of the second least expensive silver plan in a

person’s living area and family income. For example, a single 27-year-old non-smoker who

makes $28,000 per year (244% of FPL) that has an annual health insurance premium of

$3,163 would qualify for a federal tax credit of $971, which is 31% of the total premium cost.

return to top

Oklahoma challenge to ACA proceeds in court Last Monday, U.S. District Court Judge Ronald A. White granted Oklahoma permission to

proceed with a lawsuit filed in 2011 against HHS’s interpretation of the ACA. The issue: does

the ACA authorize tax credits to be awarded to individuals buying insurance on state-run exchanges and federally-facilitated exchanges? The state’s suit contends eligibility is limited

to state-based exchanges. Note: Oklahoma plans to have the federal government operate its

exchange.

return to top

HIX eligibility update: HHS initiates data sharing with VA, IRS Last week, the Centers for Medicare & Medicaid Services (CMS) issued two notices

announcing the establishment of a computer matching program (CMP) to connect CMS with

the Veterans Health Administration and the Department of Treasury to determine eligibility for

the advance premium tax credit and cost sharing reductions under the ACA. Interested

stakeholders have 30-days to submit comments.

Related: Friday, CMS announced data sharing with the Department of Homeland Security and

U.S. Citizenship and Immigrations Services to allow for the verification of immigrant,

nonimmigrant, and naturalized or derived citizen status to assist HIXs in making premium tax

credit and subsidy eligibility determinations for individuals applying for health insurance

coverage and exemptions. Interested stakeholders have 30-days to submit comments.

Note: “lawfully present immigrants” are eligible for subsidies and tax credits on the HIXs.

return to top

Legislative update

Meaningful use workgroup releases stage 3 recommendations for comment Last week, the Meaningful Use Workgroup that advises the Office of the National Coordinator

for Health IT (ONCHIT) issued draft recommendations for meaningful use stage 3 goals and

criteria. Scheduled for 2016 to 2017, these draft recommendations focus on using technology

implemented in stages 1 and 2 to improve patient outcomes. Highlights:

Stage 3 objectives should be (with the caveat that some might be delayed until after 2016-

2017):

Tracking more than 50% of medication orders electronically

Providing the ability to electronically submit patient-generated data

Tracking medical devices on 80% of implant patients

Ensuring electronic health records (EHRs) can assist with follow-up orders and identify

potentially appropriate clinical trials

Sending electronic notifications to a patient's primary care provider or other member of

the care team following a significant health care event (such as emergency department

admission)

(Source: “ONC Workgroup Releases Meaningful Use Stage 3 Recommendations” by Helen

Gregg, Becker’s Hospital Review, August 15, 2013)

Implementation and oversight should focus on gaps in EHR functionality, simplify meaningful

use reporting requirements so that higher level objective compliance assumes subsumed

process compliance and promotes greater patient engagement.

Related: most physicians believe that EHR systems can improve patient outcomes but half

say the cost of EHRs outweigh the financial benefit, according to athenahealth's Physician

Sentiment Index based on 1,200 physician EHR users polled in March. Highlights:

69% have favorable view of their EHRs opinion vs. 18% unfavorable

55% said patient care benefits of EHRs outweigh the costs

51% said the financial benefits of EHRs do not outweigh the costs

return to top

AHRQ report: health IT alone won't improve quality in primary care settings The Agency for Healthcare Research and Quality (AHRQ) report based on its analysis of 24

primary care health information technology (HIT) projects funded between 2007-2012 found

the use of HIT correlated to increased adherence by providers to processes related to

evidence-based care recommendations, improvements in patients' health status, and

improved clinical outcomes for patients with chronic diseases if coupled with other workflow

changes.

Source: “Findings and Lessons from the Improving Quality Through Clinician Use of Health IT

Grant Initiative” based on 24 projects funded between 2007-2012: 21 in primary-care settings

and 3 in mental health and dental offices. (AHRQ.gov)

return to top

OIG report: majority of critical-access hospitals do not qualify for cost-plus

Medicare reimbursement The HHS Office of the Inspector General (OIG) released a report last Thursday that concluded

that two-thirds of the over 1,300 U.S. critical-access hospitals (CAHs) (rural/remote hospitals

with 25 or fewer beds) that are paid 101% of costs should not receive cost-plus funding since

they are not remote: 846 of the CAHs were less than 35 miles from another hospital and 71

were less than ten miles from the nearest hospital.

Background: Since 1997, CAHs have been paid 101% of their costs to provide services to

residents of remote areas vs. traditional Medicare hospitals that receive payments based on

uniform fees and covering about 93% of costs of Medicare patients.

return to top

CMS miscalculated inpatient rehab compliance, House committee looking at

reduction in post-acute costs This summer, CMS incorrectly calculated that ten inpatient rehabilitation hospitals (IRFs) were

not complying with the 60% rule (60% of the facility’s patients must have one or more of a set

of medical conditions), causing many IRFs to undergo unnecessary medical reviews. CMS is

in the process of rethinking how it calculates compliance with the current threshold but

recently delayed those changes for a year.

The U.S. House Ways & Means Committee is looking to reduce Medicare post-acute

spending in four post-acute sectors, including a 75% rule proposal applied to IRFs. IRFs that

fall below the threshold get paid at lower, acute care hospital rates.

return to top

State update

HIX update Seventeen states have released health insurance premium rate information for plans to be

sold on the HIXs beginning October 1. To see the number of carriers operating in each state,

see Deloitte Center for Health Solutions HIX map, click here.

Sixteen states—12 led by Democratic governors, three led by Republicans, one

Independent—and the Democratic mayor of D.C. have announced plans to operate state-

based exchanges. Seven states—five led by Democratic governors and two led by

Republicans—will participate in state-partnership exchanges. The remaining 27 states will

default to a federally-facilitated exchange.*

State-based exchange State-partnership

exchange

Federally-facilitated

exchange

CA, CO, CT, DC, HI, ID**,

KY, MA, MD, MN, NM**,

NV, NY, OR, RI, VT, WA

AR, DE, IA, IL, NH, MI,

WV

AK, AL, AZ, FL, GA, IN, LA,

KS, ME, MO, MS, MT, NC,

ND, NE, NJ, OH, OK, PA,

SC, SD, TN, TX, UT*, VA,

WI, WY

■ Democratic governor ■ Republican governor ■ Independent governor

*UT: individual market will be a federally-facilitated exchange; small business health options

program (SHOP) will be state-based.

**NM & ID: federal government will help run the individual market. States will continue to

maintain plan management and consumer assistance functions; HHS will operate the IT

system. SHOP will be state-based.

(Source: HHS, KFF, and National Association of State Health Policy)

Last Friday, Massachusetts insurance department announced insurance rates were

projected to increase 2% in 2014.

Oregon announced that its state-based exchange, Cover Oregon, will not be ready for

consumers to sign up for coverage on their own by the October 1 open enrollment

deadline. Individuals will need to sign up for coverage via an insurance broker or state

aide. According to state officials, Cover Oregon will need several weeks to sort out

technological issues, customer support, and internal processes. The U.S. Government

Accountability Office (GAO) and the HHS OIG have acknowledged that all 50 states

may not be prepared for a full insurance marketplace launch by October 1, 2013.

Mississippi Insurance Commissioner Mike Chaney is requesting to run the Small

Business Health Options Program (SHOP) for small employers on the federally-

facilitated exchange. The federal government would continue to run the state’s HIX

individual market. If HHS approves Chaney’s proposal for the SHOP, the state-run

SHOP would be fully operational by June 2014. Currently, Utah is the only other state

that will split individual and SHOP exchange responsibilities with the feds.

Minnesota has applied for a $55 million federal grant to help fund the operation of its

state-based exchange (MNsure) next year. The grant would cover salaries for about 166

full time employees and cover spending on technology, marketing, customer service,

administration, and other items. MNsure is expecting the award on October 1, 2013.

Last Tuesday, D.C. officials awarded $6.4 million in funds to community organizations to

hire over 150 specialists to educate the uninsured and hard to reach populations on

how to enroll in the state-based exchange. Approximately 42,000 people, or 7% of the

District’s population is uninsured—a majority of which are under 35 years old.

(Source: HHS)

return to top

Medicaid expansion update To date, 23 states and DC have announced they will or are likely to expand their Medicaid

programs; 24 states have indicated they will not expand their programs in 2014. Currently, 36

states are out of session, six are in session, eight are in session year-round, and two are in

special session:

Expected to expand

Medicaid

Will not expand at this

time Maybe

AR, AZ, CA, CO, CT,

DC, DE, HI, IA, IL, KY,

MA, MD, MN, ND, NJ,

NM, NY, NV, OR, RI,

VT, WA, WV

AL, AK, FL, GA, ID, IN,

KS, LA, ME, MI, MO,

MS, MT, NC, NE, OK,

SC, SD, TN, TX, UT,

VA, WI, WY

NH, OH, PA

■ Democratic governor ■ Republican governor ■ Independent governor

(Sources: NASHP and Kaiser Family Foundation. Updated as of July 1, 2013)

A New Hampshire commission tasked with studying Medicaid expansion is scheduled to

make a recommendation on whether the state should expand in early September.

State Medicaid spending in Ohio is projected to reach $43.4 billion by 2025 with a growth

rate of 7.2% per year. With Medicaid expansion, the growth rate could be maintained at

3.5% per year, resulting in projected Medicaid costs of $37.2 billion by 2025 per an

analysis from the Health Policy Institute of Ohio and Ohio State University John Glenn

School of Public Affairs. Ohio policymakers are still debating expansion, which would add

366,000 Ohio residents to the program.

return to top

State round-up Last week, a California Senate bill (No. 491) proposing to expand nurse practitioners’

scope of practice was approved by the state Assembly committee. The legislation is

expected to be heard before the Assembly Appropriations Committee this week.

return to top

Industry update

Hospital consolidation gets attention The New York Times front page story August 13 by Julie Creswell and Reed Abelson, “New

Laws and Rising Costs Create a Surge of Supersizing Hospitals” put a spotlight on increased

consolidation among acute care hospitals. America’s Health Insurance Plans’ Chief Executive

Karen Ignagni challenged the reason for the increase in hospital consolidation activity: “The

rhetoric is all about efficiency. The reality is all about higher prices.”

Related: Last week, Representative Jim McDermott (D-WA) sent a letter to the U.S. GAO

requesting the Agency conduct a study about merger and acquisition (M&A) activity among

providers and its impact on Medicare program costs and quality. The report would include an

analysis on hospital-hospital and hospital-physician M&A trends and Medicare service

utilization and spending associated with consolidation.

For background, download Deloitte Center for Health Solutions’ Hospital Consolidation:

Analysis of Acute Sector M&A Activity (www.deloitte.com/us/2013hospitalconsolidation).

My take: The posturing of hospitals vs. health insurance plans is not a new skirmish. Since the

prospective payment system was implemented 30 years ago, each party has sought to gain

leverage at the expense of the other: it’s not a new story, just the latest chapter. And as

budgets for health care face intensified pressures from employers and policymakers, the

tension between the two is likely to intensify. At issue: the role each plays in coordinating care

for patient populations, and the financial incentives supporting those roles. Plans contend their

core competence in care management and historic focus on cost containment is needed as

the hub of local health systems. Hospitals contend their core competence is the domain of

caring for patient populations across the continuum—ambulatory, acute, and post-acute—

given aging of the population and clinical innovation that’s constantly changing. Trust between

the two is guarded, and negotiations increasingly testy. Examples: see the next two items in

this section…

return to top

Hospitals at odds with Medicare Advantage plans about 2% sequestration cuts Last Tuesday, the American Hospital Association (AHA) and 17 state hospital associations

asked CMS to clarify a payment dispute with Medicare Advantage (MA) plans that 2%

sequestration cuts cannot be passed through as in their contracts with hospitals. AHA says

MA organizations have passed along a reduction based on a misinterpretation that Medicare

rates, rather than payments, have been reduced by budget sequestration. The state groups

say that CMS instructed MA plans to review contracts individually to determine whether and

how sequestration might affect an MA plan’s payment to its contracted providers, inferring that

plans could not automatically pass the reduction of premium payments to MA plans on to

providers. They also say it was implicit that plans should not pass along the sequestration

reduction to hospitals where payments to providers use Medicare fee-for-service rates purely

as a reference point as CMS had not changed the published rates for payments.

return to top

Hospitals ask CMS to require exchange plans to pay claims during ACA grace

period Thursday, hospital trade groups asked CMS to reverse its policy on the ACA's mandatory

grace period when subsidized consumers do not pay premiums. The current policy states that

qualified health plans (QHPs) must pay claims for the first 30 days of the grace period but

gives issuers the option of holding claims for the final 60 days. Hospitals believe the services

provided in the grace period might be unpaid services resulting in providers exiting the

program. Under the CMS policy, insurers may retroactively deny all pending claims for

services rendered during those 60 days if the enrollee ultimately fails to pay premiums.

The American Hospital Association, Federation of American Hospitals, and Association of

American Medical Colleges asked CMS to require that QHPs pay for all services rendered

during the three-month grace period. The hospitals say CMS's policy subjects enrollees to

significant liability for services received during the second two months of the grace period, and

the approach also unfairly burdens providers because they will not get paid by the health

plans and will have to wait to try to get paid directly by the patient.

return to top

Health insurers advertising for expanded coverage in 2014 Health insurance companies will invest up to $1 billion for advertising encouraging consumers

to purchase coverage through HIXs over the next two years, with the majority going to local

TV networks. In 2014, this new category is expected to be among the top revenue generators

for TV stations, along with automobiles, political ads, fast food, and medications.

(Wall Street Journal, “Health ads stream in”, August 15, 2013)

return to top

Technology price index: average price paid for PET/CT systems dropped 21%

in last year The average price paid for PET/CT systems dropped 27% from May to June, and 21% in the

last year as hospitals purchased lower cost models according to the most recent Modern

Healthcare/ECRI Institute Technology Price Index.

The Technology Price Index uses monthly and annual price data for about 30 supply and

capital items purchased by hospitals and other healthcare providers, based on three-month

rolling averages. The costs of PET/CT systems used for determining the stages of cancer and

monitoring cancer treatment range from $1 million (64 slice systems) to $2.7 million (128 slice

systems).

return to top

Pioneer ACO results update Of 32 Pioneer ACOs:

18 generated savings (13 of these shared $76.1 million cost saving pool) vs. 14

generated losses for Medicare (2 of these owe Medicare $4.5 million)

32 reported on all quality measures

25 had lower risk-adjusted hospital admissions

Nine are transitioning out of the Pioneer program: seven will transition to the Medicare

Shared Savings Program (Section 3022 ACA) and two will drop out altogether

Source: CMS July, 2013

return to top

American Medical News to shut down Last week, the American Medical Association (AMA) announced it was shutting down

American Medical News and its companion site AmedNews due to growing operating losses.

The publication has a print circulation of about 230,000.

return to top

CMS physician fee schedule proposal criticized by AMA The AMA issued strong criticism of CMS’s proposed 2014 Medicare physician fee schedule,

calling it “an arbitrary new policy” that would lower payment for more than 200 services that

Medicare pays more for when the service is provided in a doctor's office and less when it's

performed in a hospital outpatient department or ambulatory surgery center. The AMA

credited “the ongoing efforts” of the Specialty Society Relative Value Scale Update

Committee, commonly known as the RUC, and the AMA Current Procedural Terminology

(CPT) Editorial Panel, for convincing CMS that current evaluation and management codes “do

not adequately capture the costs of providing care to all Medicare patients”. It goes on to say

that the CPT panel and the RUC will work with CMS to “discourage overly burdensome

requirements and to ensure that all the necessary resources are captured in the payment”.

Responding to criticism of the RUC, the AMA summary noted that, using “objective screening

criteria”, the panel has reviewed about 1,300 “misvalued service” codes and prompted CMS to

redistribute $2.5 billion within the fee schedule between 2009 and 2013.

return to top

Study: behavior changes prompted by lab results problematic for older adults A working paper for the National Bureau of Economic Research found poor results from blood

sugar and blood pressure tests did not prompt healthy changes to diet and exercise among

older adults.

The research analyzed results from the 2006, 2008, and 2010 National Institute on Aging's

Health and Retirement using biomarkers such as blood pressure and blood sugar levels from

randomly selected respondents, who are ages 50 and older. Those with high laboratory

results were notified and instructed to see a physician.

The study found behavior changes among 0.7% of the 2006 survey respondents with lab

results and those with a prior diagnosis of high blood pressure reported less smoking and less

intense drinking, but less light exercise.

return to top

Research snapshot New industry and peer-reviewed studies of note to health system transformers…

Studies conclude that limiting residents' work hours does not hurt patient

safety, but results in less time with patients Background: The Accreditation Council for Graduate Medical Education set an 80-hour weekly

work limit (averaged over four weeks) in 2003 based on concerns that patient safety might be

compromised by longer hours. Further limits, including restricting first-year residents to 16-

hour shifts went into effect in 2011. Two studies in the Journal of Internal Medicine focus on

results.

University of Pennsylvania researchers studied mortality rates within 30 days of admission for

13.7 million Medicare patients admitted for heart attack; gastrointestinal bleeding; congestive

heart failure; and general, orthopedic, or vascular surgery between July 2000 and June 2008.

Heart attack patients had a 16.7% mortality rate during the 2000-01 academic year, but only a

13.9% rate in 2007-08. Mortality rates for congestive heart failure patients fell from 10% to

9.3%; and mortality rates fell from 12.3% to 10.9% for vascular surgery patients.

Findings: mortality rates at teaching hospitals stayed relatively the same in the first three

years after work-hour limits were set and improved in the fourth and fifth years. “These

concurrent changes make it impossible to determine the incremental impact of any single

intervention, but we can clearly say that mortality did not worsen following implementation of

the 2003 duty hour rules.”

A Johns Hopkins University and University of Maryland research team observed 29 first-year

internal medicine residents at two “large academic medical centers in Baltimore” for a total of

873 hours in January 2012 and recorded how they spent their time. The first-year residents,

also known as interns, were observed spending 12% of their time in direct patient care, 64%

in indirect patient care, 15% in education activities, and 9% in miscellaneous activities such as

walking (which accounted for 5.9% of their total time), eating, socializing, and sleeping. In all,

computer use accounted for 40% of their time. The researchers cited 1989 and 1993 studies

that found interns spent 18% to 22% of their time in direct patient care, 42% to 45% doing

documentation, and up to 40% on miscellaneous activities including eating and sleeping.

Findings: time spent on patient care didn't differ significantly between the two institutions, day

and night shifts, or male and female interns.

Citations: “In the Wake of the 2003 and 2011 Duty Hours Regulations, How Do Internal

Medicine Interns Spend Their Time?” Lauren Block, Robert Habicht, Albert W. Wu, Sanjay V.

Desai, Kevin Wang, Kathryn Novello Silva, Timothy Niessen, Nora Oliver, Leonard Feldman J

Gen Intern Med. 2013 August; 28(8): 1042–1047.

“Teaching Hospital Five-Year Mortality Trends in the Wake of Duty Hour Reforms” Kevin G.

Volpp, Dylan S. Small, Patrick S. Romano, Kamal M. F. Itani, Amy K. Rosen, Orit Even-

Shoshan, Yanli Wang, Lisa Bellini, Michael J. Halenar, Sophia Korovaichuk, Jingsan Zhu, Jeffrey H. Silber J Gen Intern Med. 2013 August; 28(8): 1048–1055.

My take: The August 2013 issue of the Journal of General Internal Medicine offers a wide

ranging collection of articles about aspects of medical education including the two above. The

future of medical education in the U.S. is uncertain. Curricular changes that equip students to

embrace technologies that support clinical decision-making, team-based care coordination

and engagement with consumers are underway, but changes in medical education face

enormous resistance. And innovations that disrupt the status quo face huge hurdles, many

considered threatening to incumbents. Medical education is much more than “teaching

doctors”. It is sharing information about the appropriate ways to diagnose and treat medical

problems deploying the full range of professional skills and competencies of the health care

workforce and engaging individuals actively in the process.

return to top

Quotable Re: whether the ACA will require more changes: "I have to believe that’s going to be the case.

Anytime you implement something like this, it’s new and there’s no doubt that it’s complicated,

there will be changes along—there should be changes along the way." —former White House

adviser David Axelrod on Morning Joe, MSNBC Friday, August 16, 2013

"We’re not going to let this dangerous and ludicrous proposal be touted without a response —

we’re going to every state they are [going to], and our presence will be felt,” We’ll hold our

own events in some cases with dozens of concerned citizens, elected officials, doctors,

nurses, students, seniors and people from across the spectrum who are or will benefit from

the law.” —Americans United for Change and Protect Your Care announcement last Friday

about its tour to counteract Heritage Foundation’s August tour of nine cities encouraging

defunding of the ACA

“As lower wage occupations have proliferated in the past several years, Americans are

increasingly unable to make a living at their jobs. They work harder and are paid less than

workers in other advanced countries. Ad their wages have stagnated even as executive pay has soared.”—“Fast Food Fight”, New York Times lead editorial, August 8, 2013

“Accountable care organizations (ACOs) are among the most widely discussed models for

encouraging movement away from fee-for-service payment arrangements. Although ACOs

have the potential to slow health spending growth and improve quality of care, regulating them

poses special challenges. Regulations, particularly those that affect both ACOs and Medicare

Advantage plans, could inadvertently favor or disfavor certain kinds of providers or payers.

Such favoritism could drive efficient organizations from the market and thus increase costs or

reduce quality of and access to care. To avoid this type of outcome, we propose a general

principle: Regulation of ACOs should strive to preserve a level playing field among different

kinds of organizations seeking the same cost, quality, and access objectives. This is known as

regulatory neutrality. We describe the implications of regulatory neutrality in four key areas:

antitrust, financial solvency regulation, Medicare governance requirements, and Medicare

payment models.”—Bacher et al, “Regulatory Neutrality Is Essential To Establishing A Level

Playing Field For Accountable Care Organizations”, Health Affairs August 2013

return to top

Fact file Health spending as share of economy: “health care prices increased 1.1% in July 2013

relative to July 2012, only a tenth above the May rate. The 12-month moving average, at

1.6%, represents a new low for the data. National health expenditures grew 4.3% in June,

and spending growth is averaging 4.1% for the first half of 2013, barely above the record low levels seen annually since 2009.” (Source: Altarum Institute, “Health share of

economy drops due to data revisions: Health price, spending, and jobs growth contained,”

August 16, 2013)

Medicare vs. private insurance: Medicare enrollees more satisfied than those with

commercial coverage: 8% rate Medicare unfavorably vs. 20% who rate their commercial

coverage negatively; access problems are lower for Medicare enrollees vs. commercial (23% vs. 39%) and overhead costs for Medicare are lower (1.4% vs. 12-25%). (Source:

The Commonwealth Fund, “Medicare beneficiaries less likely to experience cost-and-

access related problems than adults with private coverage,” July 2012)

Obesity rates in 2012: “at least 30% of adults were obese in 13 states: Alabama,

Arkansas, Indiana, Iowa, Kentucky, Louisiana, Michigan, Mississippi, Ohio, Oklahoma,

South Carolina, Tennessee, and West Virginia. In 2011, a dozen states reached that

threshold. Louisiana and Mississippi led the list. In both, nearly 35% of adults were obese. Colorado was lowest, with less than 21% obese.” (Source: CDC telephone survey

referenced in Modern Healthcare, “Adult obesity very high in 13 states; many in the

South,” August 16, 2013)

Related: obesity accounts for 18% of deaths among African American and white

Americans between the ages of 40 and 85. (Source: American Journal of Public Health

August 15, 2013)

2012 health costs: hospital readmission rates for Medicare patients dropped to 17.9%

from 19%; health insurance premiums increased 3%. (Source: USA Today, “White House

touts slow increase in health care costs,” July 29, 2013)

340B participation: 14,076 participants in 2009 vs. 16,572 in 2011. (Source: Health

Resources and Services Administration data referenced in Modern Healthcare, “Who

benefits from drug discounts?” July 13, 2013)

U.S. fertility rate: increased from 1.89 per female in 2012 (25 year low) vs. 1.90 in 2013.

(Source: CDC)

Stress: in 2012, 67% of U.S. adults regularly experienced physical symptoms due to

stress. (Source: American Psychological Association)

Retail market for stress reduction: $521 million spent for relaxation drinks in 2011;

massage chairs $250 million; therapeutic massage is $13 billion industry. (Source:

Nielsen data referenced in USA Today, “All stressed out? Businesses will sell you some

peace,” August 5, 2013)

Initial public offerings: up 35% in 2013 year to date, with 116 deals vs. 128 for 2012,

125 in 2011, 154 in 2010, 63 in 2009 and 31 in 2008. (Source: Renaissance Capital

referenced in USA Today, “IPOs returning to Wall Street after deep freeze,” August 4,

2013)

Insurance awareness: 14% of adults understand basic insurance. (Source: Carnegie

Mellon Survey, July 2013)

Avoidable readmission penalties on hospitals: $227 million in fines against 225

hospitals in FY2013 vs. 214 hospitals fined $280 million in FY2012. (Source: CMS)

return to top

Subscribe to the Health Care Reform Memo

Health Care Reform Memo — The weekly Health Care Reform Memo is available for

subscription. Please visit http://www.deloitte.com/centerforhealthsolutions/subscribe. return to top

Deloitte Center for Health Solutions research To learn more about recent Deloitte thought leadership, please visit Deloitte University

Press at www.DUPress.com.

Coming soon: Physician-hospital employment: This time it’s different

Update: Privacy and security of protected health information: Omnibus Final Rule and

stakeholder considerations

Currently available: Hospital Consolidation: Analysis of Acute Sector M&A Activity—May 2013. Available

online at www.deloitte.com/us/2013hospitalconsolidation

Physician adoption of health information technology: Implications for medical practice

leaders and business partners—May 2013. Available online at

www.deloitte.com/us/2013physiciansurveyHIT

Breaking Constraints: Can incentives change consumer health choices?—March 2013.

Available online at http://dupress.com/articles/breaking-constraints/?coll=3024

Read the blog

To stay up-to-date, check out the Center for Health Solutions’ blog:

A view from the Center—where policy, innovation, and industry meet

http://blogs.deloitte.com/centerforhealthsolutions/

Upcoming life sciences and health care Dbrief webcasts Anticipating tomorrow's complex issues and new strategies is a challenge. Stay fresh with Dbriefs – live webcasts that give you valuable insights on important developments affecting

your business.

August 20: Trading rulers for calculators – Upgrading performance measurement. To register, click here.

return to top

Deloitte contacts

Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

(pkeckley@deloitte.com)

Jessica Blume, U.S. Public Sector National Industry Leader, Deloitte LLP

(jblume@deloitte.com)

Bill Copeland, U.S. Life Sciences and Health Care National Industry Leader, Deloitte LLP

(bcopeland@deloitte.com)

Jason Girzadas, National Managing Director, Life Sciences & Health Care, Deloitte

Consulting LLP (jgirzadas@deloitte.com)

Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology,

Deloitte Center for Health Solutions (hgreenspun@deloitte.com)

Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting LLP

(mitchmorris@deloitte.com)

George Serafin, Managing Director, Health Sciences Governance Regulatory & Risk

Strategies, Deloitte & Touche LLP (gserafin@deloitte.com)

Rick Wald, Director, Human Capital, Deloitte Consulting LLP (rwald@deloitte.com)

To receive email alerts when new research is published by the Deloitte Center for Health

Solutions, please register at www.deloitte.com/centerforhealthsolutions/subscribe.

To access Center research online, please visit www.deloitte.com/centerforhealthsolutions.

To arrange a briefing for your team, contact Jennifer Bohn (jebohn@deloitte.com).

return to top

Deloitte.com | Security | Legal | Privacy

30 Rockefeller Plaza New York, NY 10112-0015 United States

About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Disclaimer This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Copyright © 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

To unsubscribe, reply to this message and add “Unsubscribe” in the subject line.