GENENTECH QUALITY TREND REPORT

Transcription

1 GENENTECH QUALITY TREND REPORT Driving the future of healthcare planning, policy, and innovation 2017

2 SUMMARY Quality has evolved into an integrated and expected component of the holistic healthcare landscape. It first emerged in the mid-1800s to improve patient safety through sanitization and hygiene standards. Now, quality permeates all aspects of healthcare through an expanding, dynamic ecosystem of mechanisms and stakeholders. Quality is now more important than ever before. Cost control was historically considered indicative of value, but a growing emphasis on outcome optimization has led to an increase in quality-driven policy, in turn driving a set of emerging trends, including patient and provider centric systems, alternative payment models, and improved use of data and technology. As the quality landscape diversifies, stakeholders face pressure to adopt an evidence-based approach to provide the highest quality of care to patients. To meet these demands, traditional stakeholders are expanding beyond their typical roles, new stakeholders are finding their niche, and opportunities for collaboration and strategic partnerships are emerging. The critical role that quality plays in the healthcare landscape will only continue to expand, as will its relevance. Quality can no longer be considered a siloed practice; it is an imperative and integral component of healthcare planning, policy, and innovation. METHODOLOGY The 2017 Genentech Quality Trend Report summarizes existing, publicly available research to provide a foundational understanding of healthcare quality and its importance, to raise awareness of external impacts, and to identify key considerations shifting the quality landscape. The report content was guided by an internal advisory committee that comprises cross-functional experts and opinion leaders across Genentech.

3 CONTENTS COLOR KEY INTRODUCTION QUALITY DRIVERS QUALITY IN ACTION QUALITY TRENDS CONCLUSIONS SUMMARY QUALITY DEFINED - STRIVE FOR VALUE Definitions Evolution of Quality in the US MECHANISMS FOR DRIVING QUALITY Quality Measures Accreditation & Certification Pay for Reporting Pay for Performance (P4P) Patient Tools Alternative Payment Models (APM) Pathways & Guidelines Value Frameworks Transparency MEET THE STAKEHOLDERS Patients/Consumers Healthcare Providers Payers Quality Organizations Life Sciences Digital Health Companies Policymakers Stakeholder Maps A Vision of Advanced Quality in Action NOW NEXT Quality-Focused Policy Value-Driven Payments Strategic Partnerships Data & Technology The Empowered Patient & The Transformation Of Provider Engagement WHAT TO WATCH Prevalance of Quality On the Horizon References

4 4 - INTRODUCTION INTRODUCTION Quality of care is a rapidly evolving driver of the complex healthcare ecosystem. This evolution has taken the national quality landscape from patient safety standards, to accreditation and transparency, and now, to the advancement of patient-centricity and beyond. Quality1 is the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge. Health and Medicine Division of the National Academies What can we expect from this evolving network of people, tools, and technology that pushes us to imagine a world where patients are the drivers of their care, and providers, policymakers, payers, life sciences companies, and other critical players, share a common focus on a healthier population? This inaugural Quality Trend Report seeks to enhance the general understanding of quality and highlight key activities on the horizon. The report introduces the fundamental elements of quality, presents quality-related terminology, provides a chronological snapshot of the history of quality in the U.S., and offers an overview of quality mechanisms and select set of stakeholders. This report also highlights the dynamic web of policy, payment strategies, partnerships, data and technology, and the evolving roles of patients and providers that all play into quality s growing prevalence. As the future of the national healthcare system unfolds, we are assured that quality s role will continue to transform and the trends discussed here, will evolve and expand.

5 INTRODUCTION - 5 DEFINITIONS Accountable Care Organizations (ACO) 2 - Group of doctors, hospitals and other health care providers who come together voluntarily to give coordinated high quality care to specific patients, most often Medicare patients. Accreditation 3 - Formal process by which a recognized body, usually a non-governmental institution, assesses and recognizes that a healthcare organization meets applicable, pre-determined standards. Affordable Care Act (ACA) 4 - Health reform legislation passed by Congress and signed into law in March 2010 that includes a long list of health-related provisions intended to extend coverage to millions of uninsured Americans, to implement measures that will lower health care costs and improve system efficiency, and to eliminate industry practices that include rescission and denial of coverage due to pre-existing conditions. Alternative Payment Models (APM) 5 - Approach that gives added incentive payments to provide high-quality, cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population. Clinical Practice Guidelines (Guidelines) 6 - Clinical practice guidelines are statements that include recommendations intended to optimize patient care that are informed by a systematic review of evidence and an assessment of the benefits and harms of alternative care options. Electronic Health Records (EHR) 7 - Computerized medical file that contains the history of a patient s medical care and enables patients to transport their health care information with them at all times. Healthcare Transparency 8 - Access to accurate and comprehensive cost and quality information before medical treatment. Health Insurance Portability and Accountability Act of 1996 (HIPAA) 9 - Legislation that allowed persons to qualify immediately for comparable health insurance coverage when they change their employment or relationships and most notably created privacy standards for protected health information (PHI). Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 10 - Legislation that overhauls Medicare s payments to clinicians by creating strong incentives for them to participate in APMs that require financial risk-sharing for a broad set of health services and that are designed to improve quality. Pathways - Clinical pathways are standardized, prescriptive treatment protocols aimed at reducing treatment variation and managing medical spend through limited treatment options. Patient-Centered Care 11 - Care that is respectful of, and responsive to, individual patient preferences, needs and values, and ensuring that patient values guide all clinical decisions. Patient-Generated Health Data (PGHD) 12 - Health-related data including health history, symptom, biometric data, treatment history, lifestyle choices, and other information, created, recorded, gathered or inferred by or from patients or their designees. Pay for Performance (P4P) 13 - Programs that reward providers for driving high performance in quality delivery and outcomes and incentivize value-based outcomes. Pay for Reporting 14 - Program that provides incentives for reporting, and penalties for not reporting, data on various quality measures. Quality Measures 15 - Tools that help measure or quantify healthcare processes, outcomes, patient perceptions, organizational structure and systems associated with the ability to provide high-quality healthcare. Telehealth 16 - Mode of delivering healthcare services and public health via information and communication technologies to facilitate the diagnosis, consultation, treatment, education, care management, and self-management of a patient s health care while the patient is at the originating site and the health care provider is at a distant site. Value 17 - Outcomes of patient care relative to cost and time. Value Frameworks 18 - Structure that guides assessment of the value of medical services, including drugs, medical devices, and procedures. Wearable Technology 19 - Category of technology devices that can be worn by a consumer and often include tracking information related to health and fitness.

6 6 - INTRODUCTION EVOLUTION of Quality in the US Quality has drastically transformed over the last two centuries. The 19th through mid-20th century was marked by the contributions of individual innovators, who pioneered the early stages of the quality movement and established accreditation and definitions for quality. By the mid-20th century, quality expanded beyond independent experiments to earn its place on the national agenda. Over the last two decades, the quality movement has advanced into an integral component of healthcare planning, policy, and innovation. INNOVATE MID 1800'S - EARLY 1900'S Several medical professionals, such as Florence Nightingale, document their efforts to implement sanitization and hygiene standards to improve patient safety. These records demonstrate early quality improvement exploration. EARLY 1900'S 20 The American College of Surgeons develops the first set of hospital standards. This marks preliminary efforts to structure quality efforts The Joint Commission creates the first accreditation process. Today, The Joint Commission continues as an instrumental driver in the quality ecosystem The Federal Government establishes Medicare and Medicaid programs via the Social Security Amendments of This leads to the creation of what is now known as Centers for Medicare and Medicaid Services (CMS), a quality leader in U.S. healthcare policy, programs, and guidelines The Institute of Medicine (now referred to as The National Academy of Medicine) forms to focus on evaluating, informing, and improving quality of healthcare delivery. Most famously, IOM publishes "To Err is Human" (1998) and "Crossing the Quality Chasm" (2000) Dr. Donabedian introduces the Quality Measurement Framework: structure, process, and outcomes. This framework sets the foundation for gauging healthcare quality and is still regarded as the basis for quality measurement.

7 INTRODUCTION - 7 TRANSFORM The Federal Government establishes the Agency for Health 1973 Care Policy and Research via the U.S. Department of Health The Health Maintenance and Human Services. This new entity focuses on generating Organization (HMO) Act of 1973 evidence and driving quality improvement. passes, serving as the Federal Government's first systematic approach to managing the cost of care The Prospective Payment System (PPS) is implemented. These early days of payment reform compromise quality, which spurs new efforts to improve outcomes and processes National Committee for Quality Assurance (NCQA) is founded as the first accrediting body for health plans and develops The Healthcare Effectiveness Data and Information Set (HEDIS) and Consumer Assessment of Healthcare Providers & Systems (CAHPS) creating new standards for health plans Early quality improvement organizations are established in response to poor outcomes. This movement demonstrates a national, collective response to negative outcomes resulting from PPS implementation IOM moves clinical guideline development forward witih their release of Clinical Practice Guidelines: Directions for a New Program, later updated in The Institute of Healthcare Improvement (IHI) is launched and becomes a global force, viewed as a leader in understanding and driving quality improvement. IHI eventually establishes the Triple Aim, which is regarded as the guiding principle of quality The patient experience becomes a relevant component of quality measurement. For example, Press-Ganey is created to match science of survey design with hospital administration. These surveys help hospitals track their patients satisfaction and compare it with that of similar organizations The Federal Government passes the Health Insurance Portability and Accountability Act (HIPAA) of This is the first federal legislation passed to regulate patient privacy and information access. This is a major step forward in patient empowerment and privacy.

8 8 - INTRODUCTION President Clinton s Advisory Commission on Consumer Protection and Quality in the Healthcare Industry publishes the Consumer Bill of Rights and the following year, Quality First: Better Health Care for All Americans. The Clinton administration s active voice advances the public dialogue around patient experience as an integral component of quality, and is widely regarded as a pivotal force for elevating the role of the patient in their care The National Quality Forum (NQF) is created. NQF develops a set of metrics for quantifying and reporting on national healthcare quality efforts that becomes the gold standard followed by CMS and many other healthcare purchasers. The positive response from purchasers signals consensus on the metrics, which leads to national adoption. NQF also opens the door for multidisciplinary collaboration The Leapfrog Group is founded by a group of business leaders, who pioneer the concept of leveraging transparency to improve quality. The group collects and reports hospital performance data for consumer access via the Leapfrog Group Hospital Survey. Hospitals are assigned letter grades through the Hospital Safety Grade initiative. This is the first widescale instance of consumer access to comparative hospital data CMS and the Agency for Healthcare Research and Quality (AHRQ) create the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. This survey is administered to adult hospital inpatients after discharge. This is the first federal patient experience measurement and reporting initiative IHI develops Triple Aim, which stresses improved patient experience of care, improved population health, and reduced per capita price of care. The Triple Aim approach is globally regarded as a driving force for propelling quality. VS CMS launches the Healthcare Quality Alliance (HQA), a public-private collaboration that develops Hospital Compare website, the first federally-funded website of its kind. Hospital Compare grows from publicly reporting 10 core process measures in 2005, eventually adding consumer satisfaction data (HCAHPS) and mortality outcomes data The country's first Pay For Reporting (P4R) and Pay For Performance (P4P) programs are introduced, and the Medicare Modernization Act (MMA) introduces the first hospital reporting measures. The Joint Commission's Surgical Care Improvement Project (SCIP) and CMS' Hospital Inpatient Quality Reporting (IQR) become the first national P4R programs. The Integrated Healthcare Association (IHA) creates California's first P4P program, which is now the largest P4P program in the country.

9 INTRODUCTION - 9 ADVANCE The American Reinvestment and Recover Act (ARRA) and The 2010 Affordable Care Act (ACA) passes, ushering in a new Health Information Technology for Economic and Clinical Use era for healthcare that puts quality and access to care at the (HITECH) Act Passes. Incentives for the implementation and center. This legislation mandates the development of the Health meaningful use of electronic health records go into effect. Insurance Marketplace, a single place where consumers can This marks the largest push for electronic health records to apply for and enroll in private health insurance plans. It also date, and serves as a foundation for improving data, fosters innovative design of and testing for healthcare payment technology, and quality. and delivery, allows for better alignment between Medicare and Medicaid, and establishes the National Quality Strategy The ACA implements accountable care organizations (ACOs) and releases the National Quality Strategy, which pushes to improve and incentivize coordination of care between providers and payers. Additionally, PCORI begins operations ACA implementation begins, marking the largest expansion of healthcare and social welfare to date. Coverage expands to many Americans who previously did not have coverage. MACRA The Medicare and CHIP Reauthorization Act (MACRA) of 2015 passes, rolling out a merit-based incentive payment system (MIPS) and encouraging participation in advanced payment models (APMs). This sweeping legislation consolidates three reporting programs into one streamlined set of requirements. NEXT

10 10 - QUALITY DRIVERS QUALITY DRIVERS MECHANISMS FOR DRIVING QUALITY As the quality ecosystem becomes more complex, the list of mechanisms for defining, measuring, and delivering quality continues to grow. Many emerging mechanisms reflect a shift from a longstanding focus on cost control to one of quality outcome optimization.

11 QUALITY DRIVERS - 11 QUALITY MEASURES Quality measures 15 are tools that help measure or quantify healthcare processes, outcomes, patient perceptions, organizational structure and systems associated with the ability to provide high-quality healthcare. Quality measures are related to one or more quality goals for healthcare. Quality measures were developed as a solution to drive better approaches to care, and ultimately, to improve outcomes for patients. Measures used by national quality programs such as CMS Merit-Based Incentive Payment System (MIPS under MACRA) undergo a rigorous process of design, testing, submission for endorsement, and open comment before they are incorporated into the program. The process often takes years. Asthma Medication Ratio (AMR) 42 is an example of a measure that is endorsed by the National Quality Forum (NQF) and evaluates the percentage of patients 5 64 years of age who were identified as having persistent asthma and had a ratio of controller medications to total asthma medications of 0.50 or greater during the measurement year. ACCREDITATION & CERTIFICATION Healthcare industry accreditation and certification programs first emerged by way of The Joint Commission in the early 1950s to provide voluntary hospital accreditation. Now, voluntary and mandatory accreditation and certification programs across healthcare serve to ensure provider compliance with industry standards. In addition to The Joint Commission, The National Committee for Quality Assurance (NCQA) 43 has been instrumental in bringing validity to the value of accreditation. NCQA collaborates with stakeholders across the healthcare industry to build consensus on what is important to define quality and how it should be measured. The accreditation process would have little impact on healthcare quality if not for the general consensus that it should be measured, and that the NCQA award scale is an accurate benchmark of it.

12 12 - QUALITY DRIVERS PAY FOR REPORTING Pay for reporting programs provide incentives for reporting, and penalties for not reporting, data on various quality measures. Incentives are tied to the act of providing data, but not to performance. Centers for Medicare and Medicaid Services (CMS) has established multiple pay-for-reporting programs for physicians, hospitals, and clinics for which there are robust quality measure sets that a provider must select from to provide data, or be subject to a penalty. Hospital Inpatient Quality Reporting Program (IQR) 44 is a pay for reporting program established as part of the 2003 Medicare Modernization Act. The program covers more than 80 measures, which are reported on Hospital Compare, accessible to consumers. IQR is one of three key hospital inpatient programs with associated quality measures (the other two are Hospital Value-Based Purchasing Program and Hospital Acquired Conditions Reduction Program). Integrated Healthcare Association s (IHA) 45 Value-Based P4P program in California is an example of an effective P4P implementation. This program spans 10 health plans and over nine million Californians. It leverages an immense amount of reported data to drive quality improvement in collaboration with providers. It also serves as a national model as public and private payers increasingly entertain implementing value-based programs with performance incentives. PAY FOR PERFORMANCE (P4P) P4P programs reward providers for driving high performance in quality delivery and outcomes; P4P incentivize value-based outcomes, rather than healthcare s traditional focus on volumebased care. These programs set incentives beyond whether a provider reports performance; a provider must meet a certain benchmark within reported data to receive financial rewards. Those who do not meet the benchmark receive a performance-based payment adjustment.

13 QUALITY DRIVERS - 13 PATIENT TOOLS Patient tools are a constantly-evolving set of devices, community networks, and information channels used by patients to navigate and understand the healthcare system, their health, and overall wellbeing. These provide insights that empower patients to make more informed decisions about lifestyle choices, healthcare providers, health plans, and therapeutic protocols. Early patient tools were largely focused on provider information portals and public reporting resources, which allow patients to select a provider based on comparative data. Patient tools now provide direct, personalized, real-time information that help make decisions about one s health and healthcare. This is best reflected in the rising prevalence of technology such as wearables, digital patient forums, and pricing transparency tools. This shift has led to increased patient awareness of quality performance and outcomes; patients are now selecting health plans and providers they feel best meet their needs and their expectations for care. As a result, providers are showing greater commitment towards providing high-quality patient experience and outcome optimization. ALTERNATIVE PAYMENT MODELS (APM) An APM 46 is a payment approach that gives added incentive payments to provide high-quality, cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population. These are paths created to allow providers and payers to share in financial risk of, and reap the financial rewards from, better outcomes and efficient delivery of high-quality care. While CMS has formalized APMs through various programs, APMs also exist in private payer contracts. The Next Generation ACO Model 47 builds upon the Pioneer ACO Model and the Medicare Shared Savings Program (MSSP), with 45 ACOs participating in an effort to achieve improved care coordination and overall quality. The program emphasizes collaboration between patients and providers in order to test the hypothesis that: Strong Financial Incentives for ACOs + Tools to Improve Patient Engagement and Care Management = Improved Health Outcomes and Reduced Spending

14 14 - QUALITY DRIVERS PATHWAYS & GUIDELINES Clinical practice pathways and guidelines assist healthcare providers in clinical decision-making. Guidelines are an evidence-based, comprehensive, and multidisciplinary sets of clinical algorithms and supporting documents developed to help providers decide when and how to use health service intervention. Pathways are evidence-based treatment protocols used by payers and clinicians. They are often selections of the most cost-effective treatment options with the greatest efficacy and that minimize toxicities. VALUE FRAMEWORKS Value Frameworks 48 is an emerging field focused on measuring the value of healthcare interventions. The growing number of frameworks assess value differently, and are complicated by varied stakeholder perspectives in the health care decisionmaking process. However, they all work toward a common goal: to better understand and quantify the benefits of a therapy or class of therapies in relation to their costs or affordability. Pathways and guidelines aim to improve quality of care for all patients by mitigating inappropriate variation in care, while maintaining a balance between cost-effectiveness and efficacy. Guidelines are broader and present several options, allowing providers to choose a treatment regimen most suitable for an individual patient. Pathways are more prescriptive and provide limited option. Value frameworks are developed by professional medical societies, cancer delivery centers and the Institute for Clinical and Economic Review (ICER). It remains unclear how value frameworks will guide decision making, as the full maturity of value frameworks has yet to be realized. TRANSPARENCY Providers and payers have historically capitalized on information sharing to compare and improve performance, and to allow for informed decisions when making referrals. Now, transparency is an evolving and valuable tool that empowers consumers to make informed choices with close consideration to patient satisfaction, outcomes of care, and cost of care. Consumer access to quality and cost information is rapidly becoming an expected component of the patient experience. In fact, many low-rated health plans and providers have suffered the effects of the growing emphasis on patient awareness; poor performance in quality and cost has led to lower consumer retention rates. One of the earliest and most prominent examples of transparency in action is the CMS Hospital Compare 49 web site, launched in This was the largest site displaying hospital quality scores, allowing any consumer to review a hospital s performance prior to selecting care at that facility. Another well-known example is the Star Rating System 50 used by Medicare to rate how well Medicare Advantage and prescription drug plans perform. Quality of care is just one of several categories rated. To learn more visit: medicare.gov/hospitalcompare

15 QUALITY IN ACTION - 15 QUALITY IN ACTION MEET THE STAKEHOLDERS The list of invested stakeholders, and their roles within the quality ecosystem, is evolving along with the shift from cost savings to improved patient outcomes. To stay relevant, traditional stakeholders are expanding beyond their typical roles, while new stakeholders are finding their niche.

16 PATIENTS / CONSUMERS A patient / consumer is any person receiving, or registered to receive healthcare services. Traditionally, the role of the patient has been to comply with treatment protocols as directed by providers. Now, patients are taking a proactive role, empowered by information that allows them to make more informed decisions about their treatment options. The healthcare system is shifting to a focus on patient-centered care and outcomes and patients are considered key stakeholders in the development of policies that focus on quality and leverage improvements in quality for financial incentives. Key Challenges 51 Navigating a convoluted network of financial challenges for paying and receiving care Paying rising premiums and deductibles; increased out-of-pocket costs create barriers to care Managing an increasingly complex and self-directed care continuum Improving overall health literacy and maximizing transparency tools The patient voice is now at the forefront of healthcare quality, through patient-reported outcomes, patient advisory groups, patient advocacy groups, and other key patient-focused organizations and efforts. Examples All individuals in need of healthcare services

17 QUALITY IN ACTION - 17 HEALTHCARE PROVIDERS Under federal regulations, a healthcare provider 52 is someone authorized to practice medicine or provide healthcare services by the State and perform within the scope of their practice as defined by State law. A healthcare provider is also any provider from whom the University or the employee s group health plan will accept medical certification to substantiate a claim for benefits. Providers: Care for critical or health sustaining needs through primary care, specialty care and/or services, and mental healthcare, in the form of in-person and/or virtual visits and treatment. Serve as thought leaders and champions for the healthcare community, including academic research and development and testing of treatment options. Healthcare providers have been at the center of the healthcare ecosystem for centuries. Until recently, a provider s role was as an independent decision maker for a patient. Today, providers are one of many stakeholders who collaborate around patient care. Technology, innovation and advanced care models are becoming more important to this evolving role 53. Key Challenges 54 Added administrative burden due to reporting and other requirements Managing new technologies and disruptive innovation that are transforming the healthcare ecosystem Increasing competition due to market consolidation Transitioning from traditional care model to a more patient-centric collaborative model Transitioning to a value-based payment system where providers are assuming greater financial risk, in part due to new government regulations Ensuring the data used to assess quality is an accurate representation of the care that was provided Growing emphasis on population health management Examples Doctor of medicine or osteopathy, podiatrist, dentist, chiropractor, clinical psychologist, optometrist, nurse practitioner, nurse-midwife, clinical social worker

18 PAYERS Payers are entities other than the patient that finance or reimburse the cost of health services. Some examples include government payers, insurance carriers, health plan sponsors such as employers or unions, and other third-party payers. A payer provides health coverage to its members. Specifically, payers: Promote and pay for medically necessary care and services Mitigate risk of misuse or overuse of services Support timely access to high-quality care and services with low-risk providers (i.e. those with high performance and proven outcomes) Seek to facilitate positive member experiences Payers are critical components of the highly-privatized national healthcare system; they can be the reason that providers receive appropriate and timely compensation, and that members receive timely care and have clear expectations on payment for services. Public payers, namely Medicare and Medicaid, help ensure that low-income individuals, seniors, and people with disabilities, receive necessary healthcare coverage. Key Challenges Containing costs amidst growing regulatory pressures to provide coverage for a greater volume of members including high-risk populations, and the increasing cost of medical innovation Reducing rates for public payers and reliance on federal government to estimate the cost of care for populations with growing needs Managing risk associated with federal requirements and increased competition due to an evolving payer landscape (i.e. employers and unions) Predicting needs amidst significant market uncertainty Examples Private health plans, Government payers (Medicare and Medicaid), Employer groups

19 QUALITY IN ACTION - 19 QUALITY ORGANIZATIONS A quality organization is a government agency, nonprofit or educational entity focused on elevating issues of healthcare quality to the national healthcare agenda. Mission and resource allocation are typically geared toward fostering initiatives and policies integral to the future of healthcare quality. Quality organizations develop quality measures, advocate for quality issues, help pass legislation and champion national quality goals. Additionally, quality organizations provide quality-related certification and accreditation, education, and program tracks. Primary functions include: Surfacing quality issues for policy consideration Building consensus around what is important to quality, how to measure it, and how to promote improvement Providing education and facilitating dialogue on guidelines, policies, and trends Developing quality standards and measures to identify opportunities for improvement Key Challenges Maintaining credibility and securing adequate resources to keep up with rapid quality landscape changes and advancements Building consensus among various stakeholders Balancing the needs to improve existing or create new measures, while limiting the burden of reporting and reducing the impact of less meaningful measures Implementing timely quality measurements, and navigating disease-specific measurement challenges Examples National Quality Forum (NQF), Agency for Healthcare Research and Quality (AHRQ), Institute for Healthcare Improvement (IHI), The Joint Commission (TJC), National Committee for Quality Assurance (NCQA)

20 LIFE SCIENCES Life sciences encompasses biotechnology, medical device companies, and the pharmaceutical industry. Life sciences companies seek to research, discover, design, develop, and distribute innovative treatments and products for diagnosing and treating diseases and medical conditions 55. Often, life sciences companies partner with academic institutions and others to fund emerging research. A growing emphasis on quality has led many organizations to focus on patient-centeredness and outcomes throughout the development and commercialization processes. Life sciences is an imperative industry to developing diagnostic and treatment options, as well as emerging as key players in health policy. Traditionally, companies provided feedback to legislators on key qualityrelated policy, but some are now viewed as drivers and facilitators of quality policy discussions, even organizing stakeholders for information sharing to better understand how policy impacts the healthcare continuum 56. Key Challenges Demonstrating product value while combatting increasing public scrutiny around pricing 57 Managing copious amounts of regulations in product development, medical oversight, and commercialization processes Leveraging a limited window of time in which a company can market a product without competition 58 Connecting and leveraging quality in the early stages of product development to improve health outcomes 58 Examples Biotech, medical device, pharmaceutical, and diagnostics companies

21 QUALITY IN ACTION - 21 DIGITAL HEALTH COMPANIES Digital health is comprised of healthcare technologies that leverage a variety of platforms including social media, user-generated content, cloud-based services, and mobile platforms to improve the patient experience. Digital health has recently emerged as an influential healthcare stakeholder, challenging the way traditional healthcare operates and delivers its care using technology to solve the multitude of challenges facing healthcare today. Digital health specifically: Innovates for the way health is managed Seeks to empower patients and providers through ease, convenience, and value Increases the movement toward data collection to inform better decisions Increases patient awareness of quality and cost prior to making care decisions Shifts consumer interactions with providers by improving proactive self care and promoting new ways of care collaboration through connectivity Key Challenges 59 Gaining credibility by developing tools that are meaningful for both patients and providers Meeting expectations to provide a unique service or product in exchange for compensation (e.g. reimbursement, valuebased payments, etc.) Developing and maintaining patient engagement on platforms with limited capabilities and access options Protecting personal health data Connecting with providers using relevant information Examples Wearables and personal health tools, transparency tools for price comparison, data analytic collection and modeling

22 POLICYMAKERS Policymakers work with all groups in the healthcare ecosystem including constituents, pharma, quality organizations, patient advocacy groups, providers, and digital health to understand competing priorities and challenges, find alignment among these groups, and present legislation that creates and funds necessary programs. Key Challenges Advocating for proactive, strategic healthcare planning amidst a reactive policy environment Navigating approval processes and oftendeadlocked partisan politics Planning in an uncertain political landscape Typically, policymakers respond to budget constraints, political party priorities, constituency needs, and well-organized quality and/or advocacy efforts when considering policy. This makes for an extensive process, further challenged by election cycles and changes in leadership. Examples Federal and State Government

23 QUALITY IN ACTION - 23 The healthcare ecosystem was once focused on healthcare providers. Over time, this focus has transitioned to patients. Now, patient-centric care is advancing healthcare policy, planning and innovation. INNOVATE The early healthcare ecosystem placed providers at the center of the ecosystem, where they served as independent decision makers in patient care. The patient s role was passive with a focus on compliance with treatment protocols assigned by a provider. Policymakers, payers, and life science companies, played peripheral yet important roles. TRANSFORM Emerging healthcare technology provided new tools to connect patients to information about treatment and services. This expanded level of information access added to the growing movement to place patients in the center of the healthcare landscape. Eventually, the ecosystem shifted to a more patient-considered model as patient experience emerged as a metric for delivering successful care.

24 24 - QUALITY IN ACTION ADVANCE The new direction of the healthcare ecosystem moves patients to the center of the healthcare ecosystem, and introduces new stakeholders to support new types and modalities of care. The care network consists of providers, payers, life science companies, policymakers, digital health companies, and quality organizations, all driving toward a patient-centered care model.

25 QUALITY IN ACTION - 25 A VISION OF ADVANCED QUALITY IN ACTION Rosalie is 31 years old and the single mother of a six-year-old son, Alex and is a lawyer at a small law firm. Her employer provides health insurance, but in order to keep the monthly premiums affordable, she has chosen a high-deductible health plan. As such, her employer offers employees a health benefits platform that provides information about quality and costs of treatments. Rosalie noticed that Alex had a cough and was not sleeping well. One week later, she was informed by Alex s school that he was wheezing and coughing after physical activities. Rosalie made an appointment with Alex s primary care provider Dr. McKinley, a pediatrician. She conducted a series of tests that showed Alex s symptoms may be indicative of asthma. She recommended that Alex see a specialist. Rosalie remembered the health benefits platform that helps make such care decisions, and immediately called them. The service helped Rosalie identify three options. She then obtained and compared information about the quality of the care each provided including patient satisfaction and outcomes of children with asthma, the cost that she would incur if Alex were treated, and how quickly she could get an appointment. She selected a provider that specializes in pediatric asthma and allergies, had good quality ratings, and offered affordable care. She then contacted Dr. McKinley s office to inquire about her choice and obtain a referral. Unfortunately, the provider s typical wait time for a new patient was weeks out. However, Dr. McKinley informed Rosalie that she is in the same care network as the specialist and would coordinate sharing information and having Alex seen as soon as possible. Dr. McKinley was able to secure an appointment just two days later. After conducting a series of tests and reviewing tests results and notes from Dr. McKinley, the specialist wrote a prescription for a medication that Rosalie had not heard of. The specialist provided Rosalie with information about the treatment provided by the manufacturer that informed her of side effects and potential complications, and encouraged her to also do her own research. Later that day, she turned to social media where she connected with a support group for parents of children with asthma. There, she posted a question about any experiences parents had with this medication. She received several responses, some in favor of the treatment, others opposed. What she found most valuable was the ability to connect with other parents and ask them additional questions about why they made their choices. Ultimately, she and the specialist agreed to try Alex on the medication for two months, with regular monitoring of his progress. One month later, Rosalie and Alex returned to Dr. McKinley. Rosalie was impressed that Dr. McKinley had all of the notes and latest information about Alex s progress as the two providers had a single health record for Alex. Rosalie shared with Dr. McKinley a new mobile application that she was using to monitor Alex s asthma control and provide the data to his school and healthcare providers.

26 26 - QUALITY TRENDS QUALITY TRENDS NOW NEXT Healthcare is adjusting to an emerging emphasis on value-based care. This is reflected through a dynamic national policy conversation, the implementation of experimental payment models, a growing number of strategic partnerships, the evolving role of technology in care and the shift in provider-patient dynamics.

27 QUALITY TRENDS - 27 TREND QUALITY-FOCUSED POLICY Over the last decade, value-driven, patient-centric policy has steadily gained momentum. This is evidenced by three major pieces of healthcare legislation that advance the goals of improving patient access, quality of care, and patient outcomes. However, there are often a variety of strategic approaches employed to improve quality, and thus, the policy landscape, along with federal resources and funding, continue to evolve. Specifically, the Affordable Care Act (ACA), the Medicare Access and CHIP Reauthorization Act (MACRA), and the 21st Century Cures Act have heavily influenced the implementation of value-based healthcare. AFFORDABLE CARE ACT (ACA) 88 The Affordable Care Act (ACA) was President Obama s signature healthcare legislation that expanded access to insurance for many Americans. In addition to coverage expansions, the ACA advanced several quality initiatives: Creation of CMS Innovation Center - where many alternative payment models (APMs) are being tested (e.g., ACOs, Oncology Care Model, Episodic Payment Models) Hospital Value-based Purchasing program - uses data reported under the Inpatient Quality Reporting (IQR) program to increase payments to high performing hospitals Hospital Acquired Condition (HAC) program - reduces payment for the quartile of hospitals performing the worst on the HAC quality measures composite score Value-based Payment Modifier - uses data reported under the Physician Quality Reporting System (PQRS) and claims data to stratify the cost and quality of care provided and adjust payment accordingly (Note: this program will sunset at the end of 2018 and will be replaced by MACRA payment adjustments)

28 28 - QUALITY TRENDS MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT (MACRA) 44 The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was bipartisan federal legislation that replaces the former methodology for paying physicians. MACRA aims to shift Medicare payments to a performance-based payment system with the creation of the Quality Payment Program (QPP) which allows clinicians to choose between 2 tracks: 1. MIPS - Combines the Physician Quality Reporting System (PQRS), Value-Based Payment Modifier, Meaningful Use, and Cost, in addition to a new performance category - Clinical Practice Improvement, under a single program Advanced Alternative Payment Models (APMs) - Give added incentive payments to provide highquality and cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population. In addition to requiring EHR technology and quality measure reporting, clinicians must take on significant shared financial risk of cost and savings ST CENTURY CURES ACT 89 The 21st Century Cures Act was bipartisan federal legislation that reforms how medical advances are discovered, developed, and delivered. 21st Century Cures created several data collection initiatives with the intent of improving patient outcomes and driving patient-centered care, including: Patient Experience Data Collection The Federal Drug Administration (FDA) will create a plan to provide guidance about the collection and use of patient experience data in drug development. The guidance will have to address how the information is collected, submitted, and accuracy is confirmed. The FDA will also submit reports to Congress assessing the use of experience data in 2021, 2026 and Real World Evidence Collection The FDA will create a program to evaluate the use of real world evidence in the drug approval process, which would be defined as data regarding the benefits or risks of using a treatment from sources other than randomized clinical trials.

29 QUALITY TRENDS - 29 BOTTOMLINE While the future of the ACA is unknown, quality initiatives included in the ACA have moved quality and value-based initiatives forward. Progress made under the ACA is unlikely to be rolled back, and some initiatives have already been accelerated under subsequent legislation. While 2017 marks the first reporting year for MACRA, the CMS continues to look for ways to control costs of the Medicare program while improving outcomes; however, changes with CMS Innovation Center could change the pace at which alternative payment models are adopted. As the need for better data and system interoperability grows, 21st Century Cures will bring a greater focus on patient experience and real world evidence, to the evolving healthcare landscape. TREND VALUE-DRIVEN PAYMENTS Value-driven payment models have emerged as a strategy to drive improvements in quality and reduce costs of healthcare delivery. They are growing in popularity among private and public payers due to the rising cost of care, emphasis on patient outcomes and in response to new legislative requirements. Value-based payment models aim to tie a provider s payment to outcomes and rate targets as opposed to the traditional feefor-service model, in which a provider s payment is based on volume of care delivered 60. Whereas traditional fee-for-services models incentivized providers based on volume of care provided, value-based payment models reward improvements in predefined metrics, including patient outcomes, patient satisfaction, readmission rates, clinical processes, and cost per episode of care 61. The overarching goal of value-based payment models is to promote better, more cost-effective care.

30 30 - QUALITY TRENDS PAYMENT MODELS FEE-FOR-SERVICES (FFS) 62 The current, prevailing payment method in which doctors and other health care providers are paid for each service performed. Traditional FFS model creates a platform of pay for volume vs the value-based models emerging. SHARED SAVINGS 63 An alternative payment model (APM) that offers incentives for provider entities to reduce healthcare spending for a defined patient population by offering a percentage of net savings realized as a result of their efforts. This model has gained momentum with the implementation of the Medicare Shared Savings Program and other similar APMs. SHARED RISK 64 An APM whereby providers cover a portion of costs if savings targets are not achieved. Under this model providers take on more risk often with the opportunity for larger financial gain. The passage of MACRA has given significant momentum to this model as well as the two-sided risk models that incorporate shared savings and shared risk. BUNDLED OR EPISODE OF CARE PAYMENTS 65 A reimbursement model aimed at reducing costs whereby a single lump sum is paid to a collective of providers, creating a platform of shared accountability. The Comprehensive Care for Joint Replacement Model, implemented in 2016 is a recent example of this APM implemented by CMS. GLOBAL CAPITATION 66 A reimbursement model whereby whole networks of hospitals and physicians receive a single fixed monthly payment for enrolled health plan members - typically made on a per member per month basis. This payment model requires a significant amount of population management which can drive care improvements and overall quality.

31 QUALITY TRENDS - 31 VALUE-BASED PAYMENT, WHY NOW? Traditional fee-for-service models are heavily entrenched in the healthcare ecosystem, so why are government and private payers now moving toward value-based payment models? Three factors leading to value-based payment models increasing prevalence are high cost of care, patient advocacy, and new legislative requirements. HIGH COST OF CARE 67 The nation s healthcare spending is the highest in the developed world. Fee-for-service payments are considered a primary driver for these costs as they encourage the use of more services, and more costly services, with fee-for-service spending estimated to reach $5 trillion by Moving away from fee-for-service payments is believed to be critical in addressing incentives of volumebased payments. POOR OUTCOMES 67 While the U.S. spends more on healthcare than other developed nations, the country is ranked poorly on several key health outcome measures, including life expectancy and prevalence of chronic conditions. This suggests that cost of care (or volume of care delivered) is not necessarily correlated with quality of care. NEW LEGISLATIVE REQUIREMENTS 68 Over the last decade, healthcare legislation has increasingly incorporated value-based payment models. Since the implementation of ACA, value-based payments make up nearly 20 percent of healthcare payments. This number is expected to climb to 75 percent by 2020, in part due to the recently-passed MACRA. MACRA incentivizes high-quality, efficient care and encourages providers to move into risk-based alternative payment models, further shifting the system to valuebased payments. WHAT TO EXPECT NEXT The transition to value-based care is expected to continue as payers seek ways to address rising health care costs and improve quality. However, value-based payment models are still evolving, and many providers are trying to meet emerging requirements while operating within infrastructure designed for the fee-for-service payment model.