Value-Based Care News Digest - February 2019

Every month, Evolent Health rounds up some of the latest value-based care news from the previous month spanning policy, research, innovations, payers and providers. 

Top Trending Topics

1. CVS and Walmart briefly split over pharmacy deal, then reconcile.
   After a three-day separation, Walmart and CVS patched up disagreements over reimbursement, and Walmart has moved back into CVS Caremark’s pharmacy benefit management commercial and managed Medicaid network. Analysts said a long-term split would have resulted in more than 50 million CVS plan members no longer having access to fill prescriptions at Walmart. One can surmise the reasons for both sides to patch things up:
   • For Walmart, consumers will largely follow where their insurance is accepted, so the company would have lost out on the prescription revenue from CVS members.
   • For CVS Caremark, some employers and payers would be less interested in contracting with them for pharmacy benefits without access to Walmart’s 4,700-plus pharmacy locations.
2. Provider merger activity continues at the health system and physician group levels.​
   • Health System M&A
     • Dartmouth-Hitchcock Health and GraniteOne Health signed a letter of intent to merge, which would create an eight-hospital not-for-profit system spanning New Hampshire and Vermont.
   • Primary Care M&A
     • Paladina Health is acquiring Activate Healthcare. Together, they will serve more than 170,000 patients across nearly 100 clinics in 18 states.
     • Cano Health acquired six new medical centers and more than 5,000 managed care lives to expand its footprint in Florida.

Industry Spotlight

Each month, we highlight new or novel steps being taken toward value-based care.

1. Advocate Aurora Health is partnering with Oak Street Health to open a primary care center in Northwest Chicago focused on Medicare patients. This news comes a month after another health system, OhioHealth, announced its partnership with value-based clinics company, ChenMed, to build three primary care medical centers for seniors in Columbus, Ohio. The new Oak Street Health center will be co-branded with Advocate Aurora and will cater to the more than 25,000 Medicare-eligible people in the surrounding area.
2. Blue Cross NC announced a new statewide initiative with health care technology company Quartet that will work to integrate mental health into primary care. The companies will jointly engage primary care physicians and mental health providers to build a robust treatment network for addressing whole health across North Carolina.
3. CVS CEO Larry Merlo outlined how newly combined CVS/Aetna will provide health care differently, in a presentation at the J.P. Morgan Healthcare Conference in San Francisco. A big component of the strategy is providing more health care in CVS stores, both at the pharmacy counter and via the company's MinuteClinics. To make space for its new "health hubs," CVS is removing some products from the front of the stores where it is piloting the new approach.
4. Extending prior strategic partnerships, leaders of St. Joseph's Health in Syracuse, NY, and the University of Rochester Medical Center announced the formation of Concordia Healthcare Network LLC, a super-clinically integrated network, created to help other health systems, hospitals and provider groups transition to value-based care. Three health systems have already committed to participation in Concordia: Family Health Network, Lourdes Hospital and its physician network, and Innovative Health Alliance of New York.
5. Kaiser Permanente announced its first investment of the $200 million it pledged last May for initiatives targeting housing insecurity and homelessness: the $5.2 million purchase of an affordable housing complex in Oakland, Calif. The purchase was made through a fund in partnership with Enterprise Community Partners and the East Bay Asian Local Development Corporation.

Government, Regulatory & Industry Pulse

1. The CMS Center for Medicare and Medicaid Innovation announced a new model to try to lower Medicare Part D drug spending. Under this optional model, Part D plans will shoulder more of the financial risk once members reach the catastrophic phase of their Part D benefit, and they would share in the savings if the total spend comes in under the target set by the CMS. Part D plans will be at risk for any spending that exceeds the target. Government spending for the catastrophic phase has spiked from $9.4 billion to $37.4 billion over the past decade, averaging a 17 percent increase annually. Agency officials project roughly $2 billion in savings for Medicare from the new model.
2. Arizona became the eighth state to receive CMS approval for a waiver to establish a Medicaid work requirement. Starting as soon as January 1, 2020, an estimated 120,000 low-income non-disabled adults ages 18 to 49 will be required to report at least 80 hours per month of employment, educational activity, job search or training or volunteer community service to keep their Medicaid coverage. That's a far shorter reporting time frame than in Arkansas, the first state to implement a work requirement, where more than 18,000 people were disenrolled from Medicaid due to failure to report or meet the work requirement for three months.

Evolent in the News

1. How can software tools help community organizations coordinate care when it comes to social determinants of health? Anita Cattrell, Evolent's Chief Innovation Officer, shared her thoughts in this Modern Healthcare piece.
2. In early January, CMS released new guidance that makes it easier for accountable care organizations (ACOs) to apply for Skilled Nursing Facility (SNF) waivers. Evolent’s vice president of health policy, Ashley Ridlon, and Mara McDermott, vice president of McDermottPlus Consulting and executive director of the Next Gen ACO Coalition, spoke with Modern Healthcare on what the new rule may mean for ACOs applying for and receiving SNF waivers. 
3. Evolent was named by Becker's Hospital Review as a population health company to know in 2019. Read the full list.    

Survey Says/Studies Show

1. When urgent care centers are closed, nearby EDs see an uptick in visits, a multistate study by the National Bureau of Economic Research discovered. The results showed a 1.4 percent increase in ED visits after the last center in an area closed for the day, or about 2.4 million ED visits annually. Given that a non-emergent case costs about $414 more in an ED than an urgent care center, those 2.4 million visits total about $1 billion.
2. Prices continue to drive the gap in health care spending between the U.S. and other industrialized countries, according to a study by the Organization for Economic Cooperation and Development (OECD). The findings mirror what the OECD researchers found in a 2003 study. In 2016, the U.S. spent $9,892 per capita on health care, a number 25 percent higher than that for the next-highest country, Switzerland, which spent $7,919 per person. Though prices remain the primary driver in health care spending, the study found that a significant change over the past decade is the widening gap in spending by public and private payers. At the time of the original study, Medicare and private insurers paid similar rates. At present, the difference is about 50 percent nationwide, and in some regions private payers pay 100 percent more than Medicare.
3. A survey from consulting firm Kaufman Hall asked senior financial executives from more than 160 hospitals, health systems and other health care organizations about their priorities and challenges last fall. Among them, only 13 percent of CFOs said their organizations are very prepared to manage evolving payment and delivery models using their existing financial planning processes and tools, compared with 15 percent in the last survey, conducted in fall 2017 and released last year. Only 23 percent said they were very confident in their team's ability to quickly and easily adjust strategies and plans, down from 25 percent in the last survey.
4. A study published in Health Affairs questioned the impact of top-funded digital health companies on high-burden, high-cost conditions. Based upon available data, the authors concluded that leading digital health companies have not yet demonstrated substantial impact on disease burden or cost in the U.S. health care system. One problem: Of the 104 published studies on digital health products and services, the majority enrolled healthy subjects rather than high-cost individuals.

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