late-breaking news from your medical association volume XXII / no. 1 April 2015
local 23andMe Hires ex-Genentech Whiz 23andMe has scored a coup by bringing on former Genentech researcher, Richard Scheller, to lead its effort into the drug development business. Scheller has deep experience translating early research into clinical development at Genentech. He plans to look at diseases—metabolic, immunological, infection, oncology, etc.—and look at specific genes that are potentially involved in disease in all those areas. Human genetics has become so important in determining important drug targets. Much of the cost of drug development is due to the fact that so many projects fail as the initial target selection was incorrect. 23andMe has hundreds of thousands of DNA samples in its database.
state Blue Shield’s Lost Tax Exemption Shines Light on Other Non-for-Profits The California Franchise Tax Board’s ruling that Blue Shield should not be exempt from state income taxes is noteworthy for other not-for-profit heath insurers that may now face increased regulatory scrutiny and could be a catalyst for other states to take similar actions. The revocation may spur Blue Shield to convert into a for-profit entity, which, if followed by others, could in turn drive further industry consolidation. Many of the largest hospitals and health systems are sitting on growing piles of cash, even as they face requirements, both from the Affordable Care Act and state laws, to prove that they are providing enough charity care. In Illinois, Northwestern Prentice Women’s Hospital in Chicago, as well as two other hospitals in the state, lost their property tax-exempt status in 2011 based on their low levels of charity care. Connecticut is floating a bill that would require not-for-profit hospitals to pay property taxes. Blue Shield of California has been criticized for extravagant executive pay and higher-than-necessary reserves to pay future claims. Blue Shield ended 2014 with $4.2 billion in its reserve “stabilization fund.” According to the Insurance Commissioner, Blue Shield has raised its rates by an average of 32.5 percent over the past 24 months. And, let’s not forget the skybox it purchased to view the 49ers at Levi Stadium. Suites start selling for $2.5 million for a ten-year commitment.
state (continued) ACA Plans - Average 2015 Deductibles The March 2015 edition of Insurance News Net Magazine outlined the average 2015 deductibles for ACA Plans: Individual Average Annual Deductible Bronze: $5,181 Silver: $2,927 Gold: $1,198 Platinum: $243
Family Average Annual Deductibles Bronze $10,545 Silver $6,010 Gold $2,626 Platinum $489
national King v. Burwell - Impact on Consumers if SCOTUS Sides with Plaintiffs The Supreme Court is considering a case—King v. Burwell—that challenges the legality of premium and cost-sharing subsidies for low- and middle-income people buying insurance in states where the federal government rather than the state is operating the marketplace under the Affordable Care Act (ACA). According to a recent analysis published by the Henry J, Kaiser Family Foundation, as of mid-February, 7.5 million people have signed up for coverage for 2015 and qualified for a subsidy in states using the federal marketplace. Eighty-seven percent of those who have signed up for coverage for 2015 receive subsidies. The subsidies average $268 per month, per person and cover 72% of the premium. If the Supreme Court sides with the plaintiffs, and the subsidies are eliminated, former recipients will see an average increase of 256% in their out-of-pocket premiums.
Doctors Face Patient Encounters Where Their Conversation is Recorded A recent JAMA article suggests that physicians must accept the possibility that every conversation with a patient may be secretly recorded by the patient. While California law requires the consent of all parties to record a conversation, there is no guarantee you will not be recorded. Physicians are urged to embrace the situation and use it as an opportunity to refine their communication skills and strengthen the patient-doctor bond.
The Resurgence of Prescription Drug Price Increases According to a recent survey by Express Scripts, prescription drug spending in the U.S. rose more tan 12% last year, the biggest annual increase in more than a decade. New specialty medications are the culprit. Diseases like hepatitis C and multiple sclerosis treat relatively small numbers of patients, but can cost between $50,000 and $100,000 annually per patient. Specialty medications rose by an average of 38% across Medicare, Medicaid, and commercial insurance plans last year. According to the survey, price increases, rather than greater patient demand, accounted for most of the overall spending uptick in the past year. Another survey, this one by Buck Consultants, indicated that 77% of employers spent 16% or more of their total healthcare budget on pharmacy benefits for their employees in 2014, up from 71% in 2013.
Leading Health Plans See Aggregate Enrollment Gains But Not Profitability Mark Farrah Associates reports that most of the leading health plans saw aggregate enrollment gains for 3rd quarter 2014 but experienced downturns in profitability. The sight downturn in profitability when compared to 3rd quarter 2013 reflects the following: Aetna’s profit margin was 4.4%, UnitedHealth’s was 5.89%, and Anthem’s was 3.8%, a decrease of 0.7% year-overyear. Kaiser was the only top plan to report improvements in profit for the 3rd quarter 2014 with a profit margin of 7.26%, an increase of 1.9% from the previous year.
Chronic Patients Who are Digitally Active Say They Are in Good Health According to Klick Health, Google, and the Digital Health Coalition, of the 18% of chronic patients who frequently use digital technologies for health reasons, 70% define the state of their health as good, very good, or excellent, even though 43% admitted to visiting a hospital emergency room in the last six months and 32% were hospitalized for at least one night.
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national (continued) Top Five Most Common and Costly Surgeries The Agency for Healthcare Research and Quality (AHRQ) has released a report as part of the group’s Healthcare Cost and Utilization Project on the most common and costly OR procedures in the U.S. in 2011. AHRQ estimates that about 15 million U.S. hospital stays involve OR procedures each year; the average hospital stay with an OR procedure costs $3,300 per day and lasts about five days. AHRQ found that there were 15,662,000 surgical procedures performed at U.S. hospitals in 2011, and the 20 most common procedures represented more than half of all procedures and costs. The five most common OR procedures in 2011 were cesarean section, circumcision, arthroplasty of knee, percutaneous coronary angioplasty, and laminectomy excision of intervertebral disc. Meanwhile, AHRQ found that the five costliest OR procedures—defined as having the highest aggregate hospital costs for the entire stay—in 2011 were heart valve procedures ($53,400 per hospital stay), coronary artery bypass graft ($38,700), small bowel resection ($34,500), procedures related to cardiac pacemakers or cardioverters ($33,200); and spinal fusion ($27,600). Another study, this one by Blue Cross Blue Shield, adds to the evidence of massive disparities between what different hospitals and medical practices charge in the world’s most expensive healthcare system. Hip and knee replacements, two of the fastest-growing U.S. medical procedures, are subject to huge—and apparently random—price variations within the same geographical areas. This study examined claims in 64 healthcare markets over three years and found the biggest price swings for hip surgery in Massachusetts, where the same type of care varied by more than 313 percent, from a low of $17,910 to a high of $73,987. California came in second with a variance of 160%. The biggest gaps in total knee replacement surgery appeared in Dallas, where prices varied 267 percent, from $16,772 to $61,584, according to researchers. These findings are particularly significant given the frequency with which these procedures are performed. A study in the June 2014 issue of the Journal of Bone and Joint Surgery found that the number of knee replacements more than tripled, and hip replacements doubled, between 1993 and 2009.
world Penis Transplant Makes History In December 2014, a team of surgeons from Stellenbosch University in Cape Town completed the world’s first successful penis transplant. The unidentified recipient, age 21, underwent a nine-hour operation. At three months post-op, he has recovered and regained complete urinary and reproductive functions. However, full sensation has not yet been restored. The goal is that the patient he will be fully functional at two years. This type of procedure had been attempted unsuccessfully once before. Three years earlier, the patient had to have his penis amputated to save his life after a botched circumcision. There is a greater need in South Africa for this type of procedure, where an estimated 250 penile amputations are performed each year following complications related to “traditional circumcision,” a rite of passage performed when men are 18 or 19 years of age. The transplant team noted that finding donors has been one of greater challenges. Nonetheless, nine more transplants are planned, the next of which is expected to take place this spring.
medicare Have You Been Reporting PQRS Data to Medicare? If not, you are currently being paid 1.5% less for all of your Part B covered professional services under the Medicare Physician Fee Schedule (MPFS). If you continue nonparticipation with the PQRS System, you will begin seeing payment adjustments increasing to 2.0% for 2016 and subsequent years.
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new venture capital investments San Mateo’s Afferent Pharmaceuticals, with its main drug, AF-219, started to show results of a mid-stage trial of pain and urinary urgency in patient with a form of bladder pain. SSF’s Global Blood Therapeutics is developing a chronic treatment for sickle cell disease. SSF’s Myokardia is in two early-stage trials of its main drug, MYK-461, as a treatment for hypertrophic cardiomyopathy. And RWC’s Revolution Medicines is aiming a molecule-making technique at spinning new medicine from small molecules found in nature. Their initial focus is on antifungal medications. All of these ventures received initial funding from Third Rock Ventures, a venture capital firm that has spent hundreds of millions of dollars over the past few years on startups in the Bay Area, including the bio-tech mentioned above. Two new healthcare startups who has received funding from other VCS are Palo Alto’s Glace, which operated a remote patient monitoring platform for diabetes, and Confers Health, which enables online doctor-patient “visits” between regular check-ups, especially for people with chronic conditions. Amgen, which acquired Onyx Pharmaceuticals, has announced that it is closing down its SSF Onyx operation in order to build on its competitive presence in the rapidly evolving oncology field, and will also consolidate its presence in Thousand Oaks. Amgen intends to reduce Onyx’s workforce by approximately 300 home office and remote workers. 4
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