US Markets – November 21, 2017

Healthcare Policy

US Healthcare Policy Highlights

  • US Senate Republicans announced their decision to include a repeal of the Affordable Care Act’s individual mandate in their tax bill to accomplish two of their top domestic priorities in a single piece of legislation. The repealing mandate compels most Americans to buy health insurance or pay a fine and will save more than USD 300 billion in government funding over the next decade that the Republicans could use to finance their proposed tax cuts. This move would result in 13 million fewer people having health insurance according to projections from the nonpartisan Congressional Budget Office (washingtonpost)
  • HHS and CMS released a final Medicare Outpatient Prospective Payment System (OPPS) rule that cuts Medicare reimbursement for separately payable outpatient drugs purchased by hospitals under the 340B (Drug Pricing Program). (healthleadersmedia)
    Important highlights include:

    • CMS will cut the reimbursement rate from the current average sales price (ASP) plus 6% to ASP minus 22.5%, starting January 1, 2018
    • CMS estimates that the change will result in a USD 1.6 billion reduction in OPPS payments to 340B hospitals for separately payable drugs
  • A CMS data reveals that the federal government’s unpaid balance for the Affordable Care Act (ACA) risk corridor program has increased to USD 12.3 billion. The risk corridor program which ended in 2016 aimed to protect insurers from extreme gains and losses while operating on the ACA exchanges.(Modern Healthcare) The break up of the total USD 12.3 billion is:
    • Approximately USD 3.95 billion in payments to cover insurers' losses in 2016
    • The agency owes insurers USD 5.8 billion in risk-corridor payments for 2015
    • USD 2.5 billion for 2014 losses
  • FDA approves Abilify MyCite, a digital ingestion tracking system in the US. Abilify MyCite (aripiprazole tablets with sensor) has an ingestible sensor embedded in the pill that records that the medication was taken. FDA has approved the product for the treatment of schizophrenia, acute treatment of manic and mixed episodes associated with bipolar I disorder and for use as an add-on treatment for depression in adults (FDA)
  • At the interim meeting of American Medical Association (AMA) members approved recommendations on how the genetic tests and other precision medicine treatments should be easily and transparently reimbursed by insurance.(Healthcare IT News) Recommendations include:
    • The policy calls for clarity around how such tests - which are easier to prescribe and perform than ever - are covered and paid for
    • Traditional procedures such as randomized controlled trials may be outmoded and are unnecessarily burdensome
    • The AMA leaders call on payers to work more closely with makers of genetic and tests, clinicians and medical specialty societies to develop specific benchmarks to define the evidence and efficacy necessary for coverage
  • 12 provider groups including Intermountain Healthcare, Geisinger and the American Medical Group Association request the CMS Administrator Seema Verma to add unique device identifiers to Medicare claims forms (Healthcare IT News)

Healthcare Economy

US Healthcare Economy Highlights

  • According to Thomson Reuters Deals Intelligence, acquisition of Aetna by CVS will be the largest healthcare insurance deal on record. The USD 66 billion planned acquisition of Aetna Inc. by CVS Health Corp’s is expected to boost the healthcare sector’s share beyond its current one-third share of the total high grade investment lending M&A (USD122 billion) in US (Reuters)
  • Change Healthcare, an Healthcare IT services company recently concluded a study on Value based payment programs which highlights the following:
    • Alternative payment programs are becoming entrenched in state-level healthcare policy
    • At least 40 states are pursuing value-based payment programs
    • 23 states have value-based targets that payers and providers agreed to achieve, 17 have or are considering adoption of ACOs (accountable care organizations), 12 have or are considering episodes of care programs, 7 states have little to no activity around value-based payment models
    • Many states have used value-based payment reform to engage with healthcare stakeholders in the redesign of the state healthcare system, identifying unique and innovative strategies that work for their state healthcare market
  • Altarum (a nonprofit health systems research and consulting organization) reports the opioid crisis cost the economy USD 95 billion in 2016, including USD 21.4 billion spent on healthcare services to treat patients who suffer from opioid abuse (webcache)

Technology Briefs

  • IDC reports that AI is rapidly growing in the global market.10 Some of the highlights of the report are:
    • At overall industry level in the US, AI business is expected to grow at a CAGR of 49% during 2016 and 2021
    • The global healthcare spending in AI is projected to reach USD 5.3 billion by 2021
    • The use of predictive analytics, NLP and computer vision gaining momentum within Healthcare to help enhance patient care and address needs for accessibility and affordability through machine learning; for examples predicting hospital readmissions, preventing sepsis, augmenting diagnosis, reducing costs and fraudulent claims
    • 38% of the organizations in US (at overall industry level) have adopted AI and 55% (at overall industry level) are expected to adopt AI within 5 years. 77% of the organizations in the US, who have adopted AI, have found returns on existing AI adoptions meeting or exceeding expectations
  • Accenture states: Key clinical health AI applications can create USD 150 billion in annual savings for the US healthcare economy by 2026.Accenture AI applications contributing to total annual savings include:
    • Robot-Assisted Surgery: USD 40 billion
    • Virtual Nursing Assistants: USD 20 billion
    • Administrative Workflow Assistance: USD 18 billion
    • Fraud Detection: USD 17 billion
    • Dosage Error Reduction: USD 16 billion
    • Connected Machines: USD 14 billion
    • Clinical Trial Participant Identifier: USD 13 billion
    • Preliminary Diagnosis: USD 5 billion
    • Automated Image Diagnosis: USD 3 billion
    • Cybersecurity: USD 2 billion
  • KPMG’s CEO Survey reveals that artificial intelligence, cognitive computing and RPA are available to prepare organizations to better adapt to life sciences market from an efficiency and marketing effectiveness standpoint. These technologies when combined with real-world evidence render the organizations more effective to make better products and help them enter the market faster.12 Few highlights of the survey are:
    • Cognitive technologies, including artificial intelligence and machine learning, seem to get stronger endorsement from top executives with 30% seeing a significant investment and 42% planning incremental investment in the next 12 months
    • 43 U.S. life sciences CEOs didn’t seem too interested in investing in robotic process automation (RPA), a technology that can shorten processes and make routine repetitive tasks much more efficient
    • 43 U.S. life sciences CEOs vote digitization of their business as one of the top three strategic priorities
  • The National Institutes of Health with the financial backing of more than USD 1 million is exploring a three-year clinical study whether a chatbot can help terminally ill, geriatric patients with their end-of-life care.13 According to the Center to Advance Palliative Care, today about 90 million Americans live with a serious illness. This number is expected to double over the next 25 years. Key points about the study:
    CNBC

    • Over the next three years, Northeastern University professor Timothy Bickmore and Boston Medical Center doctor Michael Paasche-Orlow will distribute Microsoft Surface tablets preloaded with a chatbot to about 360 patients who have been told they have less than a year to live
    • The study aims to find out if artificial intelligence is better suited to talk death with patients than doctors
      Specially designed chatbots are being used in palliative care to see if patients might be more inclined to share their symptoms or ask questions when no other human is present
    • The interactions of patients these chatbots are monitored continuously by nurses, who can activate care if a patient tells the chatbot they're experiencing symptoms
  • The department of Veteran Affairs in the US published the Tech Insights on Blockchain.oit The report noted:
    • Blockchain can alleviate the issues concerning to ensuring security and streamlining enterprise-wide technology. It can reduce operational costs, increase digital security and instantaneously update systems
    • The governments around the world are exploring uses for blockchain. In the US, security concerns contribute an amount of opacity between government branches. Building on the open data movement, blockchain could introduce opportunities for departments and agencies to securely share information and services
    • Governments foresee internally using blockchain as a database to manage physical and digital assets, record internal transactions, verify identities, reconcile internal databases, and increase interoperability. A registry of all devices connected to the VA’s IoT is a potential beneficial use of blockchain
    • Health researchers are also exploring using blockchain in healthcare records management. Blockchain could be used to securely exchange large volumes of data while ensuring patient privacy and maintaining data integrity
    • FDA cautions the healthcare industry to be vigilant about networked medical devices containing off-the-shelf (OTS) software that can connect to networks because they are vulnerable to cyber breaches. Both healthcare IT professionals and manufacturers are responsible for securing medical devices by performing regular software updates and applying security patches. Stolen medical records are 10 times more valuable to fraudsters than credit card credentials. Even though medical devices don’t house full patient records, they can be targets if they are connected to networkssecurityintelligence
    • As per Politico, a healthcare-specific cybersecurity communication center within the U.S. Department of Health and Human Services (HHS) is now at the center of an investigation into contracting irregularities and possible fraud allegations. (healthcare-informatics) According to the report:
      • An HHS official mentions the agency is investigating irregularities and possible fraud in the contracts signed. The Healthcare Cybersecurity Communications Integration Center (HCCIC), which went live at the end of June, was established to protect the nation’s healthcare system from cyber attack. It focuses on analyzing and disseminating cyberthreats across the healthcare industry in real time
      • Two top officials’ (Leo Scanlon, deputy chief information security officer and his deputy, Maggie Amato) allege they were targeted by disgruntled government employees and private-sector companies worried the cyber center would take away some of their business.
      • Leo Scanlon, who ran the HCCIC, was put on administrative leave in September and his deputy, Maggie Amato, left the government

Market Segments

Oncology/Genomics

  • Syapse raises USD 30 million in Series D financing, which will enable more healthcare providers to use precision medicine to improve care for their cancer patients. The participants include existing investors Ascension Ventures, GE Ventures, Intermountain Healthcare Innovation Fund, Safeguard Scientifics, and Social Capital, as well as new investors Amgen Ventures, Medidata Solutions, Merck Global Health Innovation Fund and Roche Venture Fund (syapse)
  • NantHealth, Inc. announced that it received a rank of 304 on Deloitte’s Technology Fast 500™ a ranking of the 500 fastest growing technology, media, telecommunications, life sciences and energy tech companies in North America (nanthealth)

Life Sciences

  • The Advisory Board Company Stockholders approve merger agreement with Optum. Optum will take over the Advisory Board's healthcare business for an estimated USD 1.3 billion.20 Highlights of the agreement are:
    • The agreement combines The Advisory Board Company’s industry-leading independent research, strategic healthcare advisory services and strong capabilities in analytics with Optum’s complementary products and services for the benefit of healthcare stakeholders
    • Optum’s exceptional data analytics resources, operational expertise in delivering large-scale solutions and services and investment capital will strengthen The Advisory Board Company's offerings and enable it to expand more fully into new health care markets while preserving the autonomy and member-driven nature of its research
  • Oracle Health Sciences identified as a Leader in the top quartile in Everest Group's PEAK Matrix™ Assessment of Life Sciences Clinical Trial Products 2017. Oracle Health Sciences announced that it received superior marks in "clinical trials value chain coverage" which included pre-clinical, clinical trials, pharmacovigilance and regulatory affairs (Oracle)

Imaging

  • At RSNA 2017 (Radiological Society of North America Annual Meeting), Agfa highlights the following on how Augmented Intelligence will be an integral part of the Radiologists' Journey towards Value-Based Care (prnewswire)
    • Cognitive Computing, Artificial Intelligence (AI) and Machine Learning augments visual intelligence thereby addressing the clinical needs of care providers
    • The path to realize value is achieved by embedding intelligence in the clinical workflows to increase productivity, reduce care variance and streamline care delivery.
    • Organically conceived and third-party algorithms embedded within Agfa HealthCare's Enterprise Imaging solution will provide tools to help care providers to accelerate overall throughput and screen for critical diseases
  • London Health Sciences Centre and St. Joseph's Health Care London will implement a single platform approach with Agfa HealthCare Enterprise Imaging and will include other regional hospitals in southwestern Ontario, creating one of Canada's largest integrated digital imaging systems (prnewswire)

Watson Platform for Health

  • Sciformix Corporation collaborates with Oracle Health Sciences to offer full service Validated Argus Enterprise Edition Drug Safety Solutions platform. The collaboration helps Sciformix Corporation in offering a fully automated and integrated safety database solution, allowing easy reporting and analytics for improving the quality and efficiency of drug safety operations
    (dailytelescope)
  • Microsoft uses AI to empower people living with disabilities. Seeing AI is a free mobile application by Microsoft is designed to support people with visual impairments by narrating the world around them. The app is an ongoing research project and brings together deep learning and Microsoft Cognitive Services. It can read documents, making sense of structural elements such as headings, paragraphs and lists, as well as identify a product using its barcode (zdnet)

VBC - Payers

  • Milliman Inc., acquires the MicroInsurance Centre (MIC). MIC is a for-profit consulting firm based in Wisconsin that provides “product development, research, and advocacy” services relating to insurance services to poor people. The terms of the agreement have not been made public26 (Microcapital)

VBC - Providers

  • The VA and Cerner to finalize the contract for the VA's new electronic health record. Dr. David Shulkin (the VA Secretary) assured the House lawmakers that the new system will result in greater interoperability between both the VA and the Defense Department as well as the VA and community providers.27 28 Key updates are:
    • Shulkin predicts that it would take 18 months after the contract is signed for the first site to go live with the new system and eight years after that for it to be live across all VA sites, a project estimated to cost USD 10 billion
    • Shulkin asks the House Appropriations Military Construction-VA Subcommittee to reprogram USD 782 million from its current budget so the agency can get started on replacing its current VistA EHR with Cerner at VA facilities in the Pacific Northwest
  • GE Healthcare and Bernoulli Health, the developer of the advanced Bernoulli One™ clinical surveillance, medical device integration (MDI), and real-time data analytics platform will collaborate on the new CARESCAPE Connect data aggregation solution to enable interoperability. The CARESCAPE Connect vision is to unlock data to enable outcomes research (prnewswire)
  • A Florida whistleblower lawsuit alleges that Epic Systems Corp.'s software, used by four South Florida hospitals and hundreds more across the US, double-bills for anesthesia (dailybusinessreview)
  • Medical records of patients stored using Epic Systems’ software can now share key medical information with any physician or other healthcare provider in the country, or even the world. The feature, called Share Everywhere, will be available this month with an update of MyChart, Epic's online portal that gives patients access to key information in their electronic health records (jsonline)
  • Deloitte receives USD 10 million contract for Medicaid eligibility contract in Nevada. Steve Fisher, head of the Division of Welfare and Supportive Services, states this is the final phase of the Affordable Care Act project and will ensure Nevada meets the requirements of that legislation (nevadaappeal)