In the News: Apr 12–19

States Gain Power to Define Individual and Small-Group Insurance Markets

Last week, CMS issued a final rule allowing states to determine which essential health benefits individual and small-group insurers must offer beginning in 2020. States will have the option of adopting another state’s 2017 benchmark plan, replacing some benefit categories with those of another state or building a new essential benefits package. Plans still must offer the 10 essential benefits required by the Patient Protection and Affordable Care Act.

For 2019, CMS is changing the rate increase threshold for premium hikes reviewed by state regulators from 10% to 15% and is eliminating standardized plan design options from the federal marketplace. States will also be allowed to request changes to the minimum individual market medical loss ratio determining how much of an insurer’s premium income must be spent on medical claims.

While these regulatory changes may be an effort to increase flexibility for payers and consumers, their impact on providers, payers and patients can be difficult to predict. Sg2 believes that federal deregulatory actions and subsequent states’ actions will create vastly different economic and policy landscapes for hospitals and health systems. For more information on how health systems may respond to further regulatory changes, read the Sg2 Expert Insight, 2018 Policy Landscape: Federal Deregulation Sparks State Regulation.

Health System Expansion May Create Risks to Patient Safety

According to a recent Journal of the American Medical Association article, the financial focus on mergers and acquisitions activity may negatively affect clinical quality and patient safety. The authors analyzed patient safety risks for Harvard-affiliated institutions, finding consolidation creates 3 kinds of safety risks related to changes in patient populations, infrastructure and clinician practice settings. They recommend health systems undergoing going expansion actively plan for and manage patient safety risks as part of a comprehensive strategy.

As health systems continue to look for savings tied to economies of scale, it’s important for organizations to acknowledge and understand possible implementation challenges. Sg2 believes there are untapped emerging sources of scale that can allow health systems to maximize scarce resources and specialized expertise. To learn more about creating lasting value from economies of scale, check out the Sg2 report, Economies of Scale: An Untapped Opportunity in Health Care.

FDA Approves First Autonomous Artificial Intelligence (AI) Medical Device

This week marked the first FDA approval given to an autonomous AI-powered medical device. Created by Iowa-based IDx, the technology uses artificial intelligence to analyze images and screen for diabetic retinopathy. Notably, the device does not require clinician interpretation of results and can be used by non-eye specialist providers for diabetic retinopathy screening.

Sg2 believes embracing AI technology will position organizations to delve into the promising new world of precision medicine. Our experts have been closely watching the use of AI and big data—particularly in imaging, where vendors have demonstrated interest in applying AI to multiple modalities, including ultrasound, MRI, computed tomography and molecular imaging. To learn more about the application of AI, read the Sg2 Expert Insight, Beyond Imaging: The AI Will Read Your Images Now.

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