The U.S. Departments of the Treasury, Health and Human Services, and Labor issued a proposed regulation that expands the usability of health reimbursement arrangements (HRAs) in late October. If adopted as written, the new rules would apply for most health plans beginning January 1, 2020.

Here are four things healthcare executives should know about the proposal.

If the regulation is passed, HRAs could be used to cover new types of expenses.

 Specifically, the rule creates two new types of HRAs-Individual Coverage HRAs (ICHRA) and Excepted Benefit HRAs (EBHRA). Under ICHRAs, individual coverage premiums would now be allowable expenses under the HRA, says John Barkett, senior director of policy affairs at Willis Towers Watson, which designs and delivers solutions that manage risk and optimize benefits. Under EBHRAs, short-term medical coverage would be an allowable expense.

Under ICHRAs, employees contract directly with a health plan. “The employer provides the funding, but that’s all,” Barkett says. “If an employee wants to keep their plan when they leave a job, they’re free to do so.”

Certain populations would benefit the most. 

Probably the most impacted population segment would be employees who work for employers with less than 50 full-time employees, because these employers aren’t required to offer health plan coverage under the ACA’s employer mandate and cannot under current rules set up HRAs that are not linked with major medical coverage, says Douglas Dahl, an employee benefits attorney with Bass, Berry & Sims. Under current rules, an employer of any size that offers a standalone HRA without underlying major medical coverage would be subject to ACA penalties. The proposed regulations change this for HRAs used to pay for individual health insurance coverage.

Populations that seek greater health coverage or less costly health insurance could also benefit most from the new regulation, says Saeed Aminzadeh, CEO, Decision Point Healthcare Solutions, a predictive analytics management company. An employer-sponsored plan may not be rich enough in terms of benefits for certain populations (e.g., the inclusion of richer, standalone dental benefits). Under the regulation, individuals would have greater flexibility to use an HRA to shop for and fund these types of coverages. Conversely, healthier individuals with limited health insurance needs may not want to share in the cost of a rich employer-sponsored health insurance plan. These individuals can have an opportunity to shop for a less costly, more limited insurance plan.

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The proposal is expected to empower individuals to shop for their own health plans and drive health plans to deliver higher quality coverage at lower cost. 

“The proposed regulation has the potential to spur a truly competitive, value-driven health insurance market, however I don’t believe the impact will be as great as the Administration is projecting,” says Arthur Tacchino, JD, chief innovation officer, SyncStream Solutions, a provider of healthcare reporting and compliance solutions. “There has always been challenges with consumer-driven health plans such as health savings accounts and health reimbursement accounts. These setups are quite complex and many individuals struggle to fully take advantage of them. Furthermore, many Americans are unable to fund these accounts due to a lack of disposable income. Given these issues, I think the success of the extended use of HRAs will be limited in scope.”

The regulation is also touted as one that will improve the overall healthcare system. 

Barkett says one positive outcome could stem from the fact that ICHRAs make coverage portable. “Individuals can take their plan from job to job,” he says. “That gives insurers a chance to keep a customer even though they’ve changed jobs, a feature that’s never been realized in U.S. healthcare. If the model was adopted at scale, this effect could be profound.”

If HRAs are widely adopted by employers and individuals, Tacchino says it could drive more enrollment in individual markets. “This would offset risk of the markets, which have been undermined by the repeal of the individual mandate, and could lead to lower premiums,” he says. “Improvement to the healthcare system will be subject to adoption and education.”

Dahl says the proposed regulations will remove some barriers for individuals who are not currently covered by major medical plans or who currently receive no employer contributions toward healthcare to do so. “The greater the number of people covered by major medical plans, the better it will be for the U.S. healthcare system,” he says.

Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.

Articles

Four things you need to know about the Trump Administration’s proposed regs.

Looser Restrictions on HRAs on the Horizon

As drug costs continue to increase at an unsustainable rate, many industry insiders believe the current trajectory of pharmaceutical expenses will eventually bankrupt the U.S. healthcare system.

Girish Dighe, PharmD, MS, director of pharmacy, business services, at 

, a not-for-profit system of hospitals and healthcare providers in Columbus, notes that there are fundamental flaws within the healthcare system causing vastly complex challenges to drug pricing.

New Drug Pricing Act Could Change Drug Pricing

“The multitude of stakeholders involved in the drug channels for bringing patients access to medications (manufacturers, insurers, pharmacy benefit managers (PBMs), providers, retail pharmacies, wholesalers) revolves around financial incentives driving each stakeholder,” Dighe says. “The growing spread between pharmaceutical list price and net price negotiated by drug channel stakeholders has negatively impacted patients’ out-of-pocket costs.”

 from NORC at the University of Chicago and the West Health Institute, 77% of Americans believe prescription drug prices are unreasonably high. 

President Donald Trump took a big stance against rising drug prices early in his tenure and since then some drug companies-Pfizer, Novartis, Sanofi, Roche, and Merck among them-have announced that they’re freezing or even lowering drug costs.

Alex Azar, HHS secretary, recently announced that the administration is also working to stop drug rebates to PBMs.

The Pharmaceutical Care Management Association (

), which represents pharmacy benefit managers, issued a report recently blaming high drug prices on drug makers, not PBMs.

In the report, Mark Merritt, PCMA’s president and CEO, said the findings supported the belief that drug makers set and raise prices unrelated to the rebates they negotiate with PBMs.

“Drug companies keep raising prices even when rebates go down,” he says. “Simply eliminating plans’ ability to negotiate price concessions would enrich drug makers at the expense of patients, who would not only face higher prices, but also higher premiums and out-of-pocket costs.”

Amy Beatty, PharmD, BCPS, OhioHealth’s clinical director of pharmacy services, says medication shortages are to blame for some drug price escalations. 

“When lower-cost generic medications enter shortage status, providers are faced with selecting more expensive alternatives,” she says. “This pattern of drug shortages has continued to the point where many organizations are now funding positions and teams to manage the fragile supply chain.”

As drug costs continue to escalate, many hospitals feel a challenge will be access to important medications, since they cannot always get what they need when they need it. That’s why many hospitals, such as OhioHealth, have begun rationing drugs in certain situations and some larger healthcare systems have even started producing their own medications to address both cost and supply concerns (see sidebar, “Hospitals Form Own Drug Company”).

Earnest Alexander, PharmD, assistant director, clinical pharmacy services, 

, a teaching hospital for the USF Health Morsani College of Medicine, and co-editor of the peer-reviewed 

, notes that hospitals and pharmacy departments work closely with group purchasing organizations, which negotiate lower drug prices for member organizations, to monitor and attempt to predict inflation trends. This isn’t an exact science and can vary based on several factors, such as changes in formulary and clinical practice, drug shortages, and alterations in competition in the marketplace for drugs.

For example, a decade ago, yearly inflation would range 3% to 5%, he says. In the last five years, this has more than doubled to 8% to 12% increases in cost yearly.

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“Interestingly, the number of drug shortages has skyrocketed in the past five to 10 years, resulting in decreased supply and sharply climbing costs for the remaining drugs available for patient care,” Earnest says. “Challenges exist because there is a constantly shrinking margin, which poses operational issues for facilities.” 

John M. Allen, PharmD, clinical assistant professor, College of Pharmacy, University of Florida, and co-editor of 

, says rising drug costs are certainly not a new phenomenon; however, the price of several medications that have few alternatives and that are commonly used in the care of critically ill patients, including epinephrine, vasopressin, and calcitonin, has risen recently. Historically, these agents had relatively low prices and had minimal cost increases year after year.

“Hospital pharmacies routinely monitor for changes in drug pricing and evaluate different ways to mitigate the impact of increasing drug prices without sacrificing patient care,” he says. “Some strategies may include establishing criteria for using more expensive drugs, development of order sets to drive appropriate use, and prospective drug audits.”

Here are some other avenues that hospitals are exploring to alleviate high costs.

When price simply cannot be negotiated, appropriate use of drugs is the only pathway to manage escalating drug costs, says Linda Huang, PharmD, OhioHealth’s medication utilization coordinator, pharmacy services.

Do Drug Discounts Contribute to Rising Prices?

“First, the [pharmacy and therapeutics] committee must agree upon what appropriate use is,” she says. “The classic use strategies for formulary management are either to deny the drug, deny the drug and use an alternative that provides similar outcomes at a lower cost, or to add the drug but apply restrictions for use around the type of ordering provider, indication, dosing, site of care, and/or other qualifiers in order to guide appropriate use.”

Still, guaranteeing the success of use restrictions can be difficult and labor intensive. It requires a willingness from the providers to agree with these restrictions as well as vigilance from front-line pharmacy staff to uphold restrictions and/or be comfortable with making judgments around use if a scenario occurs outside of the restrictions.

“We have been most successful with use strategies when we can build logic into our EHR to naturally guide physicians toward appropriate use; when we have partnered with our ordering providers to develop accepted restrictions; and when there is transparency and accountability around appropriate use,” Huang says. “Traditionally, monitoring use to ensure a strategy is successful has been a very manual process, but data management tools can help make this process more automated.”

Sentara Healthcare, based in Virginia, saw a significant potential opportunity to increase revenue and streamline services and costs to make high-cost drugs more accessible to patients. It decided to retain specialty pharmacy revenue and margins within the Sentara Healthcare system by creating 

“The program was successfully implemented with an impact of $10.7 million annualized,” says Chris Tagliente, PharmD, system director of pharmacy clinical programs at 

. “During this implementation, they met all operational timelines, and kept clinical patient support and customer satisfaction levels high. They were also able to successfully integrate and train an entirely new set of staff, overcome space availability obstacles, and navigate through several internal transitions and changes in pharmacy state licensure.”

As a result of internally distributing these specialty medications, Proprium Pharmacy has successfully and drastically increased revenue, managed costs, and made these drugs more accessible to patients, he says.

“The Proprium Pharmacy has optimized the patient experience through the integration of clinical activities to help create a better patient experience and reduce overall costs for both the hospital and patient,” Tagliente says. Proprium Pharmacy has also helped to sustain customer satisfaction of greater than 97% with virtually no customer complaints, and improved medication adherence to an overall rate of 93.7%.

Houda Hachad, PharmD, chief science officer at Translational Software Inc., which provides recommendations based on genetic data to more than 20,000 clinicians, says DNA-guided prescribing/pharmacogenomics (PGx) is a great way to improve treatment efficacy and costs.

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“We now have data that shows if you implement pharmacogenetics approaches in different specialties, they result in optimizing different metrics that can be used to assess medication optimization,” Hachad says. “These include fewer emergency room visits and fewer hospitalizations, and some of them have shown reduction in total costs compared to standard approaches.”

She explains that using genetic tests can help healthcare workers ascertain the best medication and appropriate dosage based on a patient’s DNA before prescribing, which not only improves the effectiveness of treatment, but lowers drug costs by identifying the medication that works best for each patient. 

Hachad co-developed a PGx knowledgebase and a drug interaction database that are used by pharmaceutical companies, regulatory agencies, commercial laboratories, and academic healthcare organizations.

Analytics can help healthcare systems monitor their drug costs and find opportunities to reduce their spending without reducing the quality of care. 

 (WMHS), which offers healthcare services to those in Allegany and Garrett counties in Maryland and surrounding counties in West Virginia and Pennsylvania, presents an excellent example.

How Two Health Systems Use Predictive Analytics to Reduce Readmissions

It began using Dimensional Insight’s Diver platform after the cost of the IV form of acetaminophen jumped 250%, to $35 per vial, says George Dealy, vice president of healthcare applications at the analytics company. It used the platform to examine whether the IV drug actually produced better outcomes than the oral version, justifying the increased cost.

After examining various surgical procedures, patient lengths of stay, and number of opiates given, WMHS found no significant difference in patient outcomes with IV acetaminophen, says Dealy. As a result, the health system sharply decreased the amount of the drug it purchased, reducing its spending by 78% over two years, from nearly $250,000 in FY15 to just over $55,000 in FY17.

Alexander says the most critical step to dealing with escalating drug costs is a proactive review of the spend/cost data that can aid in spotting issues and altering purchasing on an ongoing basis.

“For example, identifying the best price available for agents along with benchmarking prices is a critical ongoing step in the assessment,” he says. “Because there is constant fluctuation and changes within the market, this requires increased resources within the pharmacy department devoted to purchasing and business analysis.”

These resources can be leveraged to create competition through comparable analysis of agents and also through contract maintenance, he says.

Allen adds that knowing a facility’s drug spend, particularly those medications that account for most spending, and being aware of recent trends can help facilities develop plans to curb inappropriate or unnecessary drug use.

“Having data for the prescriber level can also help to identify opportunities to engage with individual clinicians,” he says. “Peer institution benchmarking is helpful to gain insight on potential opportunities for reducing drug spend.”

Allen says another proven method shown to improve care, and reduce both drug and overall hospital cost, is a robust antimicrobial stewardship program.

“Many institutions now use electronic surveillance programs to promote streamlined antimicrobial use and reduce the development of antimicrobial-related adverse events such as 

 infection, or multi-drug resistant infections,” he says. “Investment in these types of surveillance programs to strengthen your antimicrobial stewardship program can generate a significant return on investment for some facilities.”

For many hospital and healthcare systems, managing the supply chain of pharmaceutical sourcing and contracting is a key focus area for drug cost savings.

OhioHealth, for example, has found that multiple vendor contracting has demonstrated effective cost management and flexible options for sourcing. 

Payers Spend Now on High-Cost Meds, Save Later

“In today’s environment, drug shortages continue to burden drug channels and access,” Dighe says. “Ensuring a robust supply chain will keep health systems in a strong position to identify the most cost-effective drug sourcing opportunities, while continuing to drive high-quality healthcare delivery.”

Huang also recommends staying current on what is coming down the pipeline in terms of new products, biosimilars, and generics.

“The traditional method of finding this information is by enrolling in multiple listservs and newsletters from the FDA, national group purchasing organizations, wholesale drug distributors, and/or national medical or pharmacy organizations,” she says, warning that a lot of this information is incomplete and requires a lot of labor to piecemeal from multiple sources to understand the changing landscape.

“Our health system chose to subscribe to a third-party market intelligence company that provides a database of pipeline information (i.e., new products or alternatives, projected launch dates and probability, competitive strategies, etc.), as well as medical experts to help digest this into actionable information,” Huang says.

A recent strategy employed at Tampa General is intravenous compounding automation/robotic technology, which allows facilities to move away from more expensive ready-made products and shift toward an internally compounded product that is purchased in bulk.

“There is a learning curve associated with this technology, and it’s a capital expense that requires budgetary approval,” Alexander says. “Also, it is important to note that the return on investment can occur quickly, in a matter of months, due to flexible financing options, such as hardware leases instead of upfront, out-of-pocket hardware purchases.”

How Health Systems are Using AI and Future Predictions

Allen adds that increasingly, hospitals are scrutinizing the use of high-cost biological agents in their outpatient infusion centers. Many of these agents can be administered in a physician’s office, and do not require administration via an outpatient infusion center.

“Completing a profit/loss evaluation on specific high-cost biological agents, with potential re-evaluation of formulary status, may be another way for hospitals to reduce the impact of rising drug costs,” he says.

OhioHealth’s Beatty notes that the healthcare system recognized several years ago that managing medication costs solely through contracting, inventory strategies, and substitutions would not provide the cost-effective care that would be needed in the future. 

“Health systems need to be willing to look at and capture cost-avoidance through medication use initiatives,” she says. “These initiatives should look at the right medication for the right patient for the right reasons; executing on this tactically can take many forms.”

For instance, the electronic medical record can help drive decision making, or focused project groups might dig deep into a specialty area. 

“We have found clinical pharmacists and coordinators to be a key component of our use strategy,” Beatty says. “These pharmacists work alongside prescribers and help manage the medication plan, including evaluating less-costly alternatives that will retain or improve quality. This is especially necessary in complex fields like oncology, critical care, or infectious disease.”

As drug costs continue to increase at an unsustainable rate, some hospitals are finding new solutions.

Nine Ways to Deal with Escalating Drug Costs

In 1975, a cancer diagnosis of any kind meant a patient had less than a 50% chance of surviving more than five years. Today, that five-year survival rate is closing in on 70%. And the rate is much higher for certain cancer sites, so long as the cancer is detected at an early stage.

Clearly, we’ve come a long way in 40 years-but we still have a long way to go. Cancer care needs to be more collaborative and evidenced-based. It needs to be more focused on prevention and psychosocial wellness. And on top of all that, it needs to be more affordable and accessible.  

Opinion: Top Trends Influencing the Future of Affordable Cancer Care

When we speak of “personalized medicine” in the context of cancer care, we’re often referring to next-generation genomic sequencing, data science, targeted therapies, and immunotherapies.

And those are vitally important weapons in our ongoing fight against cancer. But personalized care is much bigger than that-it’s about a holistic approach to multidisciplinary care coordination. From the moment of diagnosis to a patient’s final treatment, at every point along the care continuum-surgery, radiation, pathology, imaging, chemotherapy, dietary, rehab-the care needs to be precisely organized around the patient’s convenience, preferences, and best interests.  

I’ll give you an example: In recent years, some health systems (including ours) have opened after-hours oncology clinics. Many cancer patients experience side effects to their care-nausea, pain, fever and more-and if the symptoms hit after 4 p.m., those patients may require a trip to the emergency room. But an ER is the last place a cancer patient should be, because of increased susceptibility to the types of infections that are often present in a hospital emergency setting.

These after-hour oncology centers are open late (and in some cases, 24/7), and they provide safe care alternatives for cancer patients with urgent symptoms. This leads to better outcomes.

Providing comprehensive cancer care is an all-in effort that, increasingly, requires investment and creative thinking from payers, too. Over the last several years, insurers across the country have become more involved, and it’s a trend that will accelerate.

The partnerships make sense. Insurers have a wealth of claims data that can be beneficial to oncologists, and oncologists possess the clinical data and up-to-date technical knowledge that is required to make timely treatment decisions. Carriers have also developed bundled payment models for clinics that adhere to certain best practices, as determined through real-time collaboration with staff oncology experts. And some insurers are considering payments for remote oncology care and out-of-the-office triage, which allows practices to deploy clinical resources in nontraditional ways.

It’s no secret that cancer care is expensive, in America and around the world. Yes, we’ve made remarkable progress in understanding and treating cancer, but the truth is that our current delivery models provide those treatments at an unsustainable cost.

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A lot of that cost is tied up in the latest oral medicines and cell-based therapies, which can run hundreds of thousands of dollars per year (or per even dose). But there are other, systemic costs that we as providers and insurers must work to address if we want to reduce the budget stress and “financial toxicity” of cancer treatment. Our challenge in the years ahead is to ensure that cost of care reflects the value of care-because when the cost of cancer care is prohibitive, we’re doing a poor job of serving our patients and their families.

 editorial advisor, is president and CEO of Allegheny Health Network (AHN), an integrated healthcare delivery system that serves Western Pennsylvania. AHN is part of the Highmark Health family of companies.

More affordable, more collaborative, and more personalized care is our cancer care challenge. Here’s how we get there.

Time to Address ‘Financial Toxicity’ of Cancer Treatment 

CAR T-cell therapy is a new cancer treatment that’s already saving lives. But it comes with significant costs.

Yescarta (axicabtagene ciloleucel), approved by the FDA for adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy, racks up $373,000 per treatment. Kymriah (tisagenlecleucel), approved for patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia that’s refractory or in second or later relapse, amounts to $475,000 per treatment.

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There’s also additional costs to consider, such as responding to adverse events that can occur, which can include ICU visits to treat symptoms associated with cytokine release syndrome and administering and monitoring treatments. Those costs can reach up to $1 million, according to experts.

Cytokine release syndrome can cause fever, nausea, headache, rash, rapid heartbeat, low blood pressure, and trouble breathing. While most patients have a mild reaction, other patients can have a severe response to the treatment, and some may even die, according to the National Cancer Institute.

Costs aside, Frederick Locke, MD, a medical oncologist and translational researcher at Moffitt Cancer Center in Tampa, Florida, enthuses that, with a single infusion of CAR T cells, 83% of patients in the ZUMA-1 clinical trial for the treatment of patients with chemorefractory-aggressive B-cell non-Hodgkin lymphoma had a measureable response with Yescarta. More than 50% experienced a complete disappearance of their lymphoma. Even more promising, after a median follow-up at nearly nine months, 44% of those patients whose lymphoma had disappeared remained in remission. Locke was a principal investigator for the clinical trial.

The 101 patients included in the trial had tumors that were growing, despite chemotherapy treatments, prior to the new treatment. It’s likely that these patients wouldn’t have lived more than six months, says Locke. And even more remarkable, the patients, prior to the new treatment, stood less than a one in 10 chance of having their lymphoma disappear.

 14-month results from a clinical trial of Kymriah. According to an announcement, “ongoing durable responses are achievable with Kymriah (tisagenlecleucel) when administered to adult patients with relapsed or refractory diffuse large B-cell lymphoma.” The overall response rate was 52% among 93 evaluable patients who had been followed for three months or more or discontinued earlier. Forty percent of patients experienced a disappearance of their cancer, whereas 12% achieved a partial response.

The company highlighted that patients had a 65% chance of being disease-free one year after onset of response; 54% of patients who initially achieved a partial response later experienced a complete response. In addition, response rates remained consistent with previous reports and the safety profile was maintained with no emergence of new safety signals, according to Novartis.

The cost to develop in-house capabilities to administer these immunotherapies can be significant. Providing the therapy requires removing cells from patients and then having them shipped properly to a facility where they can be combined with the CAR T-cell product. Then the healthcare facility needs to be able to receive the final CAR T-cell product, which involves having experts who understand cellular therapy. Preparation of the treatment also requires the ability to properly freeze and thaw cells.

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For this reason, providers of CAR T-cell therapy must make significant infrastructure investments and secure the appropriate clinical and administrative expertise, says Locke. Facilities and physician groups that have similar expertise already, such as with stem-cell transplants, will be able to launch these therapies more quickly and more easily, he says.

Healthcare facilities involved in CAR T-cell therapy also need to invest in the care to treat patients’ side effects. They need physicians who are familiar with the therapy and nurses who know how to manage the toxicities associated with CAR T-cell treatments, says Locke. Facilities also need to be able to retain databases on patient outcomes. Alternatively, they could contract this work out to a blood marrow treatment center, he says.  

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Providers should also recognize the need for accreditation. 

 that the Foundation for the Accreditation of Cell Therapy (FACT) has played a pivotal role in “advancing the safe and effective delivery of immune effector (e.g., CAR T-cell) therapy.” Locke points to FACT accreditation as key to providing the therapy at a provider organization.

Legal and risk-management teams at provider organizations also need to be involved, because delivering this treatment requires risk assessment, he says. Legal teams need to ensure that patient confidentiality is maintained, and that the organization is protected if that information is breached. Issues can also occur when transferring a patient’s cells between a healthcare facility and the facility where their cells are combined with the drug product, or when the product is returned to the facility where the treatment is administered to the patient, says Locke.

Reimbursement and billing of these treatments is complex. “It requires a lot of process development and handling hand-offs [between team members]. It’s more than simply buying and administering a drug,” says Locke. “A lot of engagement needs to [take place] between clinicians, coding, billing, and collections.”

And that’s in addition to engagement with legal teams on negotiating contracts associated with these treatments.

Payer and provider representatives say organizations typically coordinate payment for this treatment with customized agreements on a per-patient basis.

Deirdre Saulet, a consultant at the Advisory Board Company, agrees. “My sense is that the vast majority of private payers are paying for this. It’s just burdensome,” she says.

As CAR T-cell therapy momentum grows, payers are approving the therapy more quickly, says Saulet. When she started talking to providers about their experience with payers in February, it took them many weeks to secure approval; now it’s taking three to four weeks, she says.

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Still Saulet says it could take regional payers-specifically, those without the depth of expertise covering CAR T-cell therapies-longer to negotiate these per-patient agreements with providers.

Providers that have secured timely coverage of this treatment have been transparent about the cost to treat previous patients, she says. But most providers don’t have the volume of patients to provide an average estimate of treatment costs, which include the cost of the pharmaceutical company’s product, in addition to hospitalizations and supportive care. In fact, most of the provider organizations Saulet has talked to have only provided CAR T-cell therapy to between five to 10 patients.

Saulet says one of the provider organizations she works with has been providing the treatment to Medicaid patients free of charge. While she says that’s an admirable thing to do, it’s not sustainable for the long term.

Jennie Crews, MD, a medical oncologist at the 

Seattle Cancer Care Alliance Survivorship Clinic

, says there’s potential for CAR T-cell therapy to expand into treatment of solid cancers, such as lung and breast cancer.

Crews is also interested in the ability to combine CAR T-cell therapy with other expensive treatments, such as checkpoint inhibitors. That’s because combining the therapies would help oncologists engage more effectively with the immune system, she says.

Also on Crews’ radar is efforts to develop 

, such as Allogene Therapeutics’ UCART19, which could be used to produce “universal” T cells, she says. This has the potential to decrease the cost and increase access to this therapy, she says.

The off-the-shelf CAR T-cell product wouldn’t require the use of an individual patient’s cells to tailor the therapy on a per-patient basis. Instead, it would use genetically modified T cells from a healthy donor, which could then be used to treat patients.

This revolutionary therapy raises serious financial questions. Here’s how much it costs, and how payers are responding.

CAR T-cell Therapy: How Payers are Responding to Huge Price Tags

The global medical foods market is expected to be worth $24.4 billion by 2025, according to Grand View Research. Despite its significant size, less is understood about these products than about nutraceuticals, which include dietary supplements, functional foods, botanicals/herbals, vitamins, and minerals.

David Doman, MD, clinical professor of medicine at George Washington University School of Medicine and a gastroenterologist in Silver Spring, Maryland, says medical foods are a gray area when trying to distinguish them from nutraceuticals, creating problems for coverage by insurers, most of whom do not include medical foods as a benefit.

Gayle Scott, PharmD, assistant professor, Virginia Commonwealth University, Medical College of Virginia and School of Pharmacy, says, “Medical foods should be used when regular food does not provide enough nutritional benefit.”

As defined in the Orphan Drug Act of 1988, minimal requirements for a product to be considered a medical food are:

The product is a food specially formulated and processed for oral or tube feeding.

It is used for dietary management of a medical disorder, disease, or condition with distinctive nutritional requirements.

The product should be used under medical supervision, and is primarily obtained through hospitals, clinics, and other medical and long-term care facilities.

Examples include CerefolinNAC (L-methylfolate with B vitamins) for mild-to-moderate cognitive impairment; Limbrel (flavocoxid) for osteoporosis; Vasculera (diosmiplex) for chronic venous insufficiency; and low-protein products for phenylketonuria, an inherited disorder.

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Medical foods are not subject to any regulatory requirements like drugs are; may be labeled for specific conditions, unlike dietary supplements that cannot make claims to treat or prevent a disease; and follow labeling requirements dictated by the Federal Food, Drug, and Cosmetics Act. However, they must comply with applicable FDA requirements for foods and with the Current Good Manufacturing Practice regulations.

The FDA does not require a warning of adverse effects on medical foods nor information on how much of each ingredient is in a product-just the total amount-Scott adds.

Each state can decide how to cover medical foods, placing limits on what kinds of foods fall into the category, the conditions they address, route of administration, and eligibility. The regulations, which vary widely, most often apply to employer-sponsored insurance coverage and less to self-funded Employee Retirement Income Security Act (ERISA) plans that are generally exempt from state-mandated benefits, according to the National Coordinating Center.

A number of national bills have been proposed to provide for the coverage of medically necessary food and vitamins for digestive and inherited metabolic disorders under federal health programs and private health insurance, but none of these bills have come to fruition.

The American Medical Association supports legislation to establish a uniform requirement that health plans-both federal insurance programs and ERISA plans-offer coverage of medical foods and foods modified to be low protein for those conditions recommended by the HHS.

Although most insurers have put medical products on the back burner without coverage, some sponsor programs to address chronic conditions by providing and funding nutritional, specially tailored meals. 

The Metropolitan Area Neighborhood Nutrition Alliance (MANNA), which targets the greater Philadelphia area, serves as a successful model providing nutritious, medically appropriate meals and nutrition counseling to people battling life-threatening illnesses.

Started in 1990 as a community effort to bring donated food from restaurants to patients homebound with HIV/AIDS, today it delivers three daily, medically tailored meals to program participants with 11 different clinical conditions. It has partnered with Medicaid HMOs run by Health Partners Plans (HPP), Aetna, Keystone First, and UnitedHealthcare and advocates for making the meals a covered benefit. Sue Daugherty, CEO of MANNA, calls the organization “a pharmacy for diets.”

“While it might be common practice for a healthcare professional to prescribe a specialized diet, there hasn’t been much thought or attention paid to where an individual would access that diet and who would pay for it,” Daugherty says, outlining one of the reasons MANNA has partnered with MCOs.

In February 2015, as part of a strategy to promote nutrition at its Philadelphia-based, MCO, HPP developed a pilot program with 30 people with diabetes. It proved to be so successful that after a few months, it became an established program. Enrollees receive three medically tailored meals a day delivered weekly to their homes. Case managers support patients through regularly scheduled phone calls.

Although the meal program is not a covered benefit, HPP reimburses MANNA for meals for some of the most chronically ill Medicaid and Medicare members, hoping to reduce emergency room visits and hospitalizations, improve health, and ultimately save money, says HPP CEO and President William George.

George was attracted to the program because of a family history of diabetes and an opportunity for the plan to manage diabetes patients’ diets. HPP is a plan of choice for those with diabetes; more than 13% of the Medicare/Medicaid plan members have the condition, he says.

Must be in active case management for one or multiple chronic conditions and demonstrate willingness to change behavior. â¨

Must be willing to make the appropriate dietary changes to gain control of their medical condition and be committed to work with their HPP care manager.

Must be prepared to understand the necessity of portion control and the role it plays in health outcomes.

As of July 31, HPP has delivered 610,500 meals to more than 2,400 members. Participants enroll for a six-week cycle and may continue for an additional two cycles depending on the severity of their condition and following an assessment by a case manager.

Dependent children of members who are under 18 and spouses with a serious illness who are dependent on a member for shopping and cooking also receive meals.

The pilot studied HbA1c results six months after the program.

The program also measured medical use costs six months before the program, during, and after the conclusion for hospital readmissions, emergency room visits, and appointments with primary care physicians and specialists.

Based on May 2017 data on 194 participants, admissions dropped 27.7%, emergency room visits declined by 6.9%, primary care visits fell 15.9%, and specialist visits decreased 7.08%.

As with most new programs, the pilot is not without challenges. George says that as a government-funded plan, HPP is highly regulated, with limits on what it is allowed to do. HPP also had to train MANNA staff to create and submit claims electronically, something entirely new for MANNA.

Statewide endeavor supports food as medicine

The Food is Medicine Coalition, a California State-funded pilot under the auspices of six nonprofit agencies, including Project Angel Food and Project Open Hand, started in May 2018. Over the pilot’s three years, it anticipates enrolling 1,000 low-income patients with congestive heart failure (CHF). The pilot is modeled after MANNA.

The program, which provides low-sodium meals, will study 30-day hospital readmissions, emergency room visits, and hospital lengths of stay.

“Our goal is to reduce costs for CHF patients by keeping them out of the hospital, and deliver return on investment to the state so that a medically tailored food program could become a covered Medicaid benefit, in which foods could be written as a prescription by physicians,” says Richard Ayoub, executive director, Project Angel Food. “Other states could potentially adopt the program.”

Be covered under Medi-Cal, California’s Medicaid program, for an entire year without interruption. Ayoub says this requirement presents the biggest challenge to the program.

Be considered “frequent fliers,” i.e., have more than two but less than six hospitalizations a year.

In addition, the first meal must be delivered to enrollees within seven days of hospital discharge to measure hospital use.

LA Care Health Plan is participating in California’s pilot under the umbrella of Project Angel Food, with a state directive of serving 60 Medi-Cal patients the first year.

David Kagan, MD, medical director, utilization management for the health plan, outlines the program’s goals:

Change healthcare policy so that meals become a reimbursable expense for insurers; and

Provide all patients discharged from the hospital with daily meals, hoping to reduce readmission rates by 50%.

He sees the $6 million program as a tradeoff between paying $2,000 per day per person for hospital care versus a year’s worth of meals.

Kagan recognizes the challenges associated with eating a proper and nutritious diet. “Most people don’t understand what are the ‘right’ foods, how to cook them, and how important they are,” he says. “They also have to get over the hump that medical foods don’t taste good. That takes education and hand holding by dieticians, who are part of our disease management programs.”

Mari Edlin, a frequent contributor to Managed Healthcare Executive, is based in Sonoma, California.

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Medical Foods Strive for Insurance Coverage

The C-suite at healthcare organization is expanding. New roles, however, do not diminish the more traditional roles of chief financial officer, chief medical officer, chief operations officer, and chief information officer, rather, they augment them. “A chief executive officer must have a more diverse team to address the rising complexity and velocity of healthcare,” says David Gallegos, senior vice president of consulting services at Change Healthcare, a healthcare consultancy.

Here are four positions that managed care organizations may want to seriously consider:

. Traditionally, the human resources function has been distanced from the C-suite and limited to handling the basics of hiring, performance reviews, and benefits. In contrast, today’s CPOs are more closely aligned with talent recruitment, development, and retention as strategies for overall business success. A CPO is data driven, possesses a strategic mindset, and is highly analytical of the organization’s future needs. “They are masterful at developing and implementing a fully integrated, strategically aligned talent plan throughout an organization,” says Mary Herrmann, MS, managing director of executive coaching at BPI group, a leadership, talent, and career transition consultancy.

The best CPOs in the healthcare space are comfortable with ambiguity as they lead employees through instability and make related decisions. “As the demand for great talent continues to grow, they are constantly conceiving of new ways to attract and engage top talent to differentiate the organization and fill future skills gaps,” Herrmann says. They also possess a strategic and highly analytical mindset as they consider their organization’s future direction, and have a strong handle on industry trends so they can stay ahead of competitors.

Chief Digital Transformation Officer (CDTO).

 This person is responsible for bringing together all of sectors of an organization in order to fundamentally change the way the company interacts with consumers and agents, as well automate old-school manual processes, says Bill Fox, JD, MA, chief strategist of global healthcare, life sciences, and insurance at MarkLogic, an enterprise database company. The CDTO needs to ascertain consumers’ experience when using the patient portal, using the company’s website, calling a representative, and using the company’s mobile app in order to increase acquisition and retention, he says.

These individuals also need to be able to relate that information back to the company’s technology and business investments to make sure there’s a return on their investment, which will only happen if they positively affect customers, Fox says. This requires an excellent understanding of technologies, i.e., artificial intelligence, machine learning, and bots, and includes what tools are available in marketing, mobile technologies, the patient portal, and the call center that can be used to transform the consumer experience.

A CDTO also needs excellent networking and cultural skills to bring together executives, information technology, actuaries, agents, and managers and ensure they stick to their mission, he says.

Build a Pipeline of Future Leaders: Tips for Healthcare Organizations

. Increased accountability for customer satisfaction has created the need for this position. A CXO is charged with making every customer's experience positive, and creates new ways to improve customer experience and increase satisfaction scores.

“Today’s customers have choices regarding which health plans they choose to enroll in,” says Diane Doherty, MS, CPHRM, senior vice president of Chubb Insurance, a property and casualty insurer based in New York. Having a dedicated executive who understands the customer experience and exactly what consumers value most is critical to ensuring that the organization designs their services in a way that is user friendly and easy for consumers to navigate. The position also highlights a health plan’s commitment to positive customer experiences.

The typical responsibilities of a CXO may include leading, coordinating, and overseeing a program to improve the customer experience and promote an organization-wide approach to customer-centeredness and engagement, Doherty says. The CXO serves as a change agent and works closely with the executive leadership team in identifying priority areas, developing goals, planning improvement, and measuring effectiveness.

. With the federal government, state regulators, and purchasers of health insurance (including large employer groups or purchasing consortia) pushing for improved health outcomes, health plans can reap benefits by hiring a CQO. “There is renewed emphasis to directly tie quality care outcomes to plan reimbursement as evidenced by the largest payer of all, CMS, and its Five Star Medicare Advantage Plan,” says Dennis Eder, MBA, MA, cofounder and managing partner of Strategic Health Group, a healthcare consultancy.

A CQO is charged with ensuring high-quality standards are maintained and continuously improved through the introduction of new quality-focused programs and the refinement of quality measurement tools, Eder says. In achieving this goal, the CQO heads internal multidisciplinary teams that focus on quality, and he or she interacts with the plan’s chief compliance officer and regulators while working directly with provider partners to maximize the delivery of both clinical care and the overall member experience.

Emerging technologies such as artificial intelligence, data and analytics, telehealth, and robotics are changing the nature of work at all businesses. While this work has traditionally been overseen by a chief technology officer, technologies are now influencing all parts of organizations. As a result, over the past few years, more technology-driven roles are emerging at health insurance companies, such as chief of healthcare informatics officer and chief information security officer. “Executives and managers at all levels need to embrace and adapt to how technology is going to change their roles,” says Ashraf Shehata, MHA, principal at KPMG and a member of the tax, audit, and advisory firm’s Global Healthcare Center of Excellence. “These executives will make decisions regarding the pace of adaptation and how quickly an organization will invest in new technologies.”

A chief executive officer must have a more diverse team to address the rising complexity and velocity of healthcare. Here are four positions that managed care organizations may want to seriously consider.

Managed Healthcare Executive November 2018 Issue

Looser Restrictions on HRAs on the Horizon

Nine Ways to Deal with Escalating Drug Costs

Time to Address ‘Financial Toxicity’ of Cancer Treatment

CAR T-cell Therapy: How Payers are Responding to Huge Price Tags

Medical Foods Strive for Insurance Coverage

New Chiefs at MCOs: 4 Positions You May Want to Add

Eight Predictions for Cancer Care in 10 Years

Eight Top Oncology Drug Approvals

Is Precision Medicine Worth the Hype? Oncologists Weigh In