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According to a Centers for Medicare and Medicaid Services (“CMS”) study reported in Health Affairs on March 24, 2020, national health care spending reached $3.81 trillion in 2019 and is projected to increase to $4.01 trillion by the end of 2020.  CMS also projects that by 2028, health care spending will reach $6.19 trillion, and will account for 19.7% of GDP, up from 17.7% in 2018.
Continue Reading Venture Capital And Private Equity Investors Take Note: Primary Care May Be The Next Behavioral Health

The Supreme Court issued a long-awaited ruling on April 27, 2020, directed at a more than $12 billion challenge related to the temporary risk corridors program established by the Affordable Care Act (the “ACA”).  Challenges were brought under multiple consolidated cases, Maine Community Health Options v. United States, Moda Health Plan v. United States, Land of Lincoln Mutual Health v. United States, and Blue Cross Blue Shield of North Carolina v. United States (the “Consolidated Cases”).  In its decision, the Court reversed the decision of the United States Court of Appeals for the Federal Circuit and remanded the case for further proceedings.
Continue Reading Supreme Court Issues Long Awaited Ruling on Affordable Care Act Risk Corridors Program

The Wall Street Journal’s Health Forum convened—virtually—on March 24th during an extraordinary period in global health: the novel coronavirus is threatening populations, overwhelming provider systems, and sending economies into uncharted territory. The interactive event assembled executives, investors, health professionals, industry experts, and leaders in health policy to provide insight into managing the crisis.

Sheppard Mullin attended the Forum and has summarized below some of the outstanding content covered throughout the day.
Continue Reading Highlights From The Wall Street Journal’s Health Forum

CMI, CMMI, and Changing the Consumer Experience in the U.S. and China

Case Mix Index: Sitting in multiple hospital, payor and physician organization presentations at the J.P. Morgan healthcare conference this year, it is clear that the healthcare market continues to move ahead with the shift toward value and risk-based reimbursement. But, the number one target for healthcare savings in a value or risk-based reimbursement model is the reduction of hospital inpatient admissions and bed days where clinically appropriate, which likely will reduce hospital revenue and perhaps profitability unless proactive responses are taken. Yet, at this year’s conference only a minority of the hospitals presenting spoke to a critical indicator for their financial wellbeing that will become even more important for hospitals’ survival in a risk-based environment.
Continue Reading Day 3 Notes at the 2020 J.P. Morgan Healthcare Conference

The Big Cost; Cancer is the Answer; and SDOH Evolves

The Big Cost: You’re okay today, and then tomorrow you’re not. Life has changed and there’s a new reality. Whether it’s an acute event – an accident, a heart attack, a bad diagnosis (I’m sorry, you’ve got….) – or the beginning of what will be a life changing chronic condition, we each day are living our lives, making unconscious calculations about our risks and our choices that can lead to these risks. The easier ones are things like “do I want to wear that seatbelt,” “what will eating that (fill in your favorite comfort food) do to me,” or “I know I need to exercise, but…”

The more interesting risk choices – and that’s what we’re talking about, the fact that every day each and every one of us, and every business that provides healthcare insurance to its employees, is making choices as to what risks are tolerable, foreseeable or not acceptable – are those that are not clearly foreseeable but definitely will have consequences in the foreseeable future. For example, if you’re an employer or an insurer, you know that a significant portion of your employees or members have either genetic disposition to certain diseases or are more likely to suffer from certain diseases due to social determinants of health. We also wonder at the development of new drugs that can cure or successfully treat conditions that never before could be addressed successfully, like childhood leukemia, sickle cell anemia, hemophilia, spinal muscular atrophy or inherited retinal dystrophy – many of which wonder drugs also carry eye-watering prices in the millions per treatment. Families can’t afford those costs, nor can individual employers.
Continue Reading Day 2 Notes at the 2020 J.P. Morgan Healthcare Conference

If I printed a tee shirt for the 2020 J.P. Morgan Healthcare Conference, what would it say? In past years, it would have been “Big Data,” Analytics, Artificial Intelligence, ACA, Risk, Medicare Advantage or Quality. This year, I’d have to say it was: diversification, organic growth and scale. Almost every presentation we attended used those terms, to the point where I wanted to jump up and yell “Bingo! I got it already.” But the message that came through loud and clear this year is that the healthcare industry has figured out what it needs to do and where it needs to go – and that it is creating positive impact for patients while generating good profits by doing so.
Continue Reading Day 1 Notes at the 2020 J.P. Morgan Healthcare Conference

Laguna Niguel, California. Another wild year in healthcare is upon us and another insightful and inspiring week of discussions at the 2019 Health Evolution Summit (HES) has just wrapped up in California. HES, which many refer to as “Baby JP Morgan” (a reference to the annual JP Morgan Healthcare Conference in San Francisco, California), brings together some of the most influential minds and leaders in healthcare in an intimate setting offering the opportunity to participate in frank and detailed discussions regarding the healthcare industry, what we’re doing right, what we can do better, and what we envision for the future. Healthcare thought-leaders focused on disruptive technologies and Artificial Intelligence (“AI”), managed care, legislation and policy and virtually all other aspects of the healthcare system all participated in lively discussions throughout the week and we were privileged to join the fun.

Health, Not Healthcare. There was a true focus on consumerism, patient experience, and the delivery of “health, not healthcare” at the conference with an interesting dichotomy among companies focused on engagement of the portion of the population that does not take an active role in managing their own health (i.e., healthy people) and companies focused on those suffering from chronic conditions that require more hands-on involvement to manage a completely different set of challenges.
Continue Reading Notes from the 2019 Health Evolution Summit: Promoting Quality Healthcare and a Quality Healthcare Experience

The 2019 JP Morgan Healthcare Conference did not see multiple blockbuster announcements like in some earlier years but instead showcased an industry hard at work calmly and meaningfully trying to address and innovate to solve the industry’s structural, systemic and demographic challenges. We saw some companies trying to respond to the current fragmentation of healthcare delivery and financing through expansion of their vertical continuum, while others continued to strive to use technological solutions to shift behaviors and close gaps. There frankly was little question that the industry is continuing to move toward value-based and risk-based reimbursement – the challenge now is building or buying the necessary infrastructure, educating stakeholders and obtaining commitment and engagement, and structuring appropriate partnerships and relationships with other industry participants. We expect the pace of acquisitions and alliances to continue at current or higher levels as the industry repositions for this reimbursement shift. Similarly, the industry appears ready to innovate with artificial intelligence and machine learning, as incumbent technology providers develop new products and strategy and disruption is expected from new market entrants.

There also was no panic nor concerns voiced in the presentations we attended about the Affordable Care Act or the other possible results of the current political situation. Rather, several presenters noted that the exchange population relatively is minimal in size as compared to the commercial and Medicare/Medicaid markets. With exchange enrollment holding relatively steady and many plans reaching profitability with their exchange products, plans and providers are looking instead to the coming massive transformation of the commercial and federal products markets as risk further proliferates.
Continue Reading Day 3 Notes from the 2019 JP Morgan Healthcare Conference

What is Quality Anyways?: James Hinton, the CEO of Baylor Scott and White, got a good laugh from the audience when he said that he was proud to be one of the five or six hundred hospitals in the nation’s top 100 hospitals. And looking at the multiple “ego wall” slides we saw in day one and day two of the conference, all of which systems or companies were recognized for their outstanding quality and achievements, it brings to mind the old Lake Woebegon comment by Garrison Keillor that their town is a place where all of the children are above average. As some/many may ask, if everyone is doing so well per the awards, then how is it that we as a nation are not doing well with our health and our healthcare system? Is it just “those other guys” who are not winning those awards that are so far below average and dragging us all down in quality and exceeding in costs? Perhaps there is a place for some new thinking on measuring quality based on meeting patient goals, rather than third party quality organization goals. Put another way, healthcare today still is focusing more on process than results. Did you get your mammogram is the question, rather than did you make it another year without succumbing to a major disease.
Continue Reading Day 2 Notes from the 2019 JPMorgan Healthcare Conference

Please Don’t Poke the Baby – Sharing a best practice and talking about taking a local hospital learning and turning it into a systemwide approach, Mark Harrison of Intermountain Healthcare shared the fact that taking fewer blood samples from neonatal intensive care unit (NICU) babies was shown to lead to less infections in the NICU and on average a two week earlier discharge from the NICU. Who knew?

Drug Pricing – Drug pricing was on many lips today. Intermountain Healthcare launched Civica to address generic drug pricing and reported that it had approximately 500 hospital members now. More than one-third of US hospitals (!!) have inquired about joining Civica, which provides an exclamation point on the issue of generic drug pricing and availability. Mark Harrison of Intermountain said that products would start being available in 2019. He also noted that Civica doesn’t have to produce pills if the generic manufacturers will engage appropriately. Teva predicted generic drug market stabilization in their presentation today, which was also noted in the Walgreens Boots presentation as well. Walgreens Boots thought that the pace of cost reduction has slowed though. Let’s see who wins this game of “chicken.” Also today, Northwell announced that they were launching their own pharmacy benefit management (PBM) operation. We expect to see a lot of realignment and new entries in the PBM space, given the recent mergers and other activity (CVS/Aetna, Cigna/ESI, Anthem/IngenioRx). Much of the PBM space is being rethought now as its scope can expand to chronic condition management (an objective highlighted by Cigna today) or to medical benefits management as ESI is hoping with its recent acquisition of eviCore.
Continue Reading Day 1 Notes on the 2019 JP Morgan Healthcare Conference

As you may have seen in our recent article on the Labor and Employment Law Blog, the California Supreme Court recently issued a landmark decision in the case of Dynamex Operations West, Inc. v. Superior Court. (The full text of the Dynamex decision can be found here.) In its ruling, the Court establishes a standard that makes it extremely difficult for companies (or individuals) in California to properly classify their workers as independent contractors.
Continue Reading Healthcare Industry Companies Must Be Wary of Classifying Any Workers As Independent Contractors, In Light of the California Supreme Court’s Dynamex Ruling