US Markets – January 30, 2018

Healthcare Policy

US Healthcare Policy Highlights

  • VA partners with CMS to detect medical claims fraud, abuse with data analytics. CMS will share its data analytics tools and best practices for preventing medical claims fraud, waste and abuse with the U.S. Department of Veterans Affairs (Becker’s Hospital Review)
  • According to the Government Accountability Office (GAO), CMS needs more data to manage Medicare opioid risks and has recommended CMS to collect more overprescribing data from payers and providers to identify potential Medicare beneficiary opioid risks. In 2016, CMS started to gather information through the OMS about its patient safety measures and the number of beneficiaries that use high-dose opioids for 90 days or longer (HealthPayer Intelligence)
  • The Senate confirms Azar as the new head of The Department of Health and Human Services (HHS). Azar, a former pharmaceutical executive, won by a 55-43 vote. Azar replaces Tom Price, who resigned in September after Politico detailed repeated trips he took on private and military jets, costing taxpayers more than $1 million (The Hill)
  • The Trump administration renews the declaration categorizing opioid epidemic as a public health emergency shortly before it was set to expire (Fierce Healthcare)
  • The Drug Enforcement Administration (DEA) begins granting waivers making it easier for nurse practitioners and physician assistants to administer a drug designed to wean people off prescription painkillers and heroin without inducing withdrawal. The new rule allows them to give patients the drug—buprenorphine—in outpatient settings without requiring that care providers register as narcotics treatment programs. If the state where they practice allows it, nurse practitioners will also be allowed to administer the drug without a physician on the premises. Currently, the states hit hardest by opioids do not allow nurse practitioners this independence (Reason)
  • CMS to form interagency group to review Stark Law. 4 things to know:
    • The step taken is in response to the physicians’ requests for information on how CMS could reduce regulatory burden two years
    • The need to update the Stark Law to accommodate for the broad reimbursement changes taking place in healthcare
    • Full relief from Stark Law may require congressional intervention
    • In July 2016, Chairman Orrin Hatch (R-Utah) said Stark Law has become too complex, creating obstacles in the transition from the fee-for-service model (Becker’s Review Hospital)
  • By 2020, the US Food and Drug Administration (FDA) wants to make the US more appealing to medical device makers. Currently, many device manufacturers target Europe as their initial product launch market before taking on the mammoth task of getting enough evidence to receive FDA approval to market in the US. The FDA will boost its employee engagement by 10 percentage points, streamline 80% of its processes, and form 10 collaborative communities by the end of 2020 (Business Insider)

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Healthcare Economy

US Healthcare Economy Highlights

  • U.S. biotech giant Celgene acquires cancer drug maker Juno Therapeutics in a $9 billion deal. Through this deal, Juno will gain access to a giant firm and the various resources that come with it, including a more experienced management team. Celgene will get access to a new kind of cancer treatment space that promises to bring in billions in sales down the line while revolutionizing the way certain cancers are treated (Fortune)
  • 12 US healthcare providers pledge support for Apple's Health Records in iOS 11.3, including Johns Hopkins & Cedars-Sinai. With iOS 11.3 will give hospitals and clinics can share data and results with patients more easily. In turn, consumers will be able to see available medical data from multiple providers in one place (Apple Insider)
  • Implementation of the Affordable Care Act was associated with reduced out-of-pocket spending for US medical care, particularly among those with lower incomes, but not with reduced premiums. Out-of-pocket spending decreased by 11.9% in the first 2 years after the insurance expansions, driven by reductions among persons eligible for the Medicaid expansion and those eligible for cost-sharing and premium subsidies on health insurance exchanges. Premium contributions increased by 12.1%, mainly owing to large increases in the higher-income group (The Jama Network)
  • French healthcare group Sanofi agrees to buy US haemophilia specialist Bioverativ for $11.6 billion. The deal is expected to boost earnings and strengthen its presence in treatments for rare diseases. The deal is also being marked as a Sanofi’s successful return to deal-making after a series of failure post its 2011 takeover of US biotech company Genzyme for around $20 billion (Firstpost)
  • According a report by Politico Morning eHealth newsletter, technology companies poured millions into lobbying efforts in the last quarter of fiscal year 2017 to address issues related to health IT. Here is what a few of them spent:
    • Google spent $4.42 million on lobbying efforts for health data policy and opioid crisis response
    • IBM - $1.75 million for health IT and other issues
    • Apple - $1.61 million to address issues such as regulating mobile medical applications and privacy
    • Athena Health - $190,000 with a chunk of the funds on behalf of topics related to ONC's role "in the marketplace pertaining to programs that impede private sector innovation”
    • Cerner - $50,000 for health IT issues; $70,000 for "Department of Veterans Affairs health IT issues
    • Monument Policy Group - $30,000 on lobbying related to "healthcare, IT and medical records (Becker’s Hospital Review)
  • According to Healthcare Growth Partners report, in 2017, US health IT investment shattered prior records and IT M&A and valuations were at all-time highs. U.S. health IT investment increased from $2.8 billion in 2013 to $7.1 billion in 2017. The bulls expect mega-mergers such as the proposed $69 billion deal between CVS and Aetna to continue to get scale and reduce cost. The bears say the inflow of capital doesn't change the fact that payers and providers are historically not early adopters of cutting-edge technology (Healthcare Finance News)

Technology Briefs

  • According to the ECRI Institute's 2018 Top 10 Hospital C-suite Watch List, apps for addiction, direct-to-consumer genetic testing, acuity-adaptable rooms, and virtual reality for pediatric patients are among the topics poised to affect healthcare during the next 12 to 18 months. Topping the list is the first US Food and Drug Administration (FDA)–approved prescription mobile medical app to help treat substance use disorders (SUDs) involving alcohol, cocaine, marijuana, and stimulants, but not opioid dependence (Medscape)
  • Apple will soon allow people in certain hospital systems to tether their medical records to their iPhones, getting easy access to seven categories of information, including immunizations, lab results or allergies. The medical records capability will roll out through a beta available to the general public and will aggregate information and update it as a person's medical record evolves (Washington Post)
  • According to an Impact Advisors survey, despite growing interest in blockchain deployment in healthcare, almost half of hospital CIOs cite the technology as the most "overhyped" health IT trend
    • 50 percent of CIOs think Fast Healthcare Interoperability Resources and application programming interfaces have the most potential to make a "tangible, positive" impact on healthcare within the next two years
    • 48.2 percent CIOs think blockchain is the most overhyped IT trend in terms of its potential to make a "tangible, positive" impact on healthcare within the next two years (Becker’s Hospital Review)
  • At Davos, globally minded leaders, thinkers, builders, connectors, and teachers discussed healthcare:
    • According to Kaiser Permanente CEO Bernard Tyson, in nearly a third of primary care visits for patients presenting with physical symptoms, the underlying cause appeared to be related in some way to a mental health issue. Add to this the coming deluge of age-related disorders like Alzheimer’s and other forms of dementia, as populations around the world age, we have a fast-growing burden of mind and brain disease that will fall heavily on both national healthcare systems and family caregivers
    • As the world moves toward AI, robotics, and digi-everything, it is important to figure out what to do with our people
    • Everyone is excited about blockchain technology
    • Use of sophisticated precision data tools can help eliminate malaria by 2040 by helping understand how, where, and why infections are spreading, where mosquito populations are thriving, whether prevention strategies are working or not, and where we’re making progress or backsliding
    • Companies large and small are putting environmental sustainability at the forefront of their strategic business planning (Fortune)
  • According to a recent JASON report, crowdsourcing is becoming a growing success for AI in Health algorithm development via online competition. The crowdsourcing competitions can engage top data scientists and programmers who are not healthcare domain experts. By bringing together data scientists who are not developing healthcare-specific solutions, organizations can take advantage of technology that has not been presented to them yet. Entities can then use that technology to improve their health IT solutions via crowdsourcing and open source code (HIT Infrastructure)
  • According to HIMSS, NIST CSF can improve healthcare cybersecurity infrastructure. HIMSS leaders specifically noted the Implementation Tiers section in the Framework and explained that NIST should include more guidance on how organizations move from one tier to the next. Other comments include:
    • Important to analyze how tiers are implemented because cybersecurity is increasingly complex, and the nation continues to rely on information technology and operational technology (OT) assets
    • Assessing and managing risk with information technology and OT assets will be essential. IT assets tend to be better secured that OT assets, but compromised OT assets “may have cyber-physical consequences” (Health IT Security)
  • Recent FDA activity demonstrates the regulatory landscape for digital health products is evolving. Presently, the Agency seems open to stakeholder input regarding software regulation. This period of transition provides a great opportunity to engage FDA to help shape the future of digital health. Three key takeaways:
    • The Cures Act recently amended the FDCA to exclude certain types of medical software from the definition of "device.“
    • Artificial intelligence-based health products may fall within an excluded category if, among other things, the software enables the health care practitioner to independently review any clinical recommendations it provides
    • For software remaining under FDA's purview, the Agency is actively working with industry and other stakeholders to develop a new, more efficient regulatory paradigm (Lexology)

Market Segments

Oncology/Genomics

  • CancerLinQ LLC and the American College of Medical Genetics and Genomics (ACMG), the medical specialty society for clinical and laboratory genetics professionals, enter a programmatic collaboration. Through this collaboration, CancerLinQ®, the American Society of Clinical Oncology’s (ASCO) health information technology platform designed by oncologists for oncologists to leverage the power of big data to help improve the quality of care for patients with cancer, will benefit from the knowledge and expertise of ACMG leadership and members (ASCO)

VBC - Providers

  • Allscripts sued over ransomware attack. The lawsuit alleges Allscripts failed to secure and audit its system, which caused the system outage for about a week, causing “significant business interruption” for its clients. Boynton, Beach, Florida-based Surfside Non-Surgical Orthopedics is suing Allscripts on behalf of all clients impacted, as the system outage resulted in canceled appointments, care disruptions and "significant business interruption and disruption and lost revenues.” (Healthcare IT News)
  • According to a U.S. Department of Defense official, the agency's Cerner EHR rollout is on schedule, despite recent media reports that the effort had been paused. A few things to know:
    • The rollout for the DOD’s EHR marked the fourth and final pilot site for the project
    • The report that the DOD and Cerner planned to halt the agency's EHR rollout for roughly eight weeks is for evaluating the four pilot implementations
    • While a spokesperson for the MHS Genesis project says the pause would allow the rollout to get back on track, physicians and IT experts familiar with the matter told Politico some clinicians using MHS Genesis cited workflow problems, such as issues with lab report requests
    • According to Stacy Cummings, program executive officer for Defense Healthcare Management Systems, the DOD's EHR rollout was not paused. It is a pre-scheduled period to process user feedback prior to its full deployment phase (Becker’s Hospital Review)
  • Timothy G. Ferris, MD, Chairman and CEO of Massachusetts General Physicians Organization (MGPO), joins Health Catalyst’s board of directors, replacing Penny Wheeler, MD, the CEO of Allina Health, whose board term is now completed. Dr. Ferris was previously the medical director of the MGPO, and the senior vice president for Population Health at both Mass General and its Boston-based parent organization, Partners HealthCare, an integrated healthcare delivery system that includes community hospitals, primary care and specialty physicians, specialty facilities, community health centers and other health-related entities.
    Since 2012, Dr. Ferris has led the design and implementation of system-wide care delivery changes at MGPO and Partners HealthCare to respond to the changing healthcare environment, enhancing care delivery, increasing access to care, and reducing the healthcare cost burden. He has successfully turned new laws, regulations and payment policies into opportunities to provide better care for patients (Health Catalyst)
  • Practice Fusion, a medical records start-up, sold to AllScripts for $100 million. Documents show the company was looking for a buyer and that bids were a fraction of that price. Only two years earlier, their stock in the company was reportedly worth 15 times the purchase price. Executives pulled in millions as part of a pre-arranged deal, while common shareholders were wiped out. (CNBC)
  • BlueCross BlueShield North Carolina CEO Patrick Conway comes out against the merger between UNC Health Care and the Carolinas HealthCare System. The health systems touted the benefit of better leverage to negotiate deals with insurers when the proposed merger was announced in August. According to Conway, the proposed merger would only increase the cost to consumer (Healthcare Finance News)