Vital financial metrics for docs

By understanding three indices and metrics, physicians can change the financial outcome of their medical practice, according to a report published in Medical Economics.

A collection rate represents the measure of the practice’s effectiveness in collecting reimbursements. A practice can determine how much is being lost to write-offs, untimely filing, non-contractual adjustments, and inferior collection practices by comparing the difference between allowed amounts and actual reimbursements.

A second metric is days in accounts receivable (A/R), which is an industry standard for measuring how many days amounts owed to the practice will take to be paid. The industry benchmark is typically 30 days, with variation by specialty and payer mix. This is one of the best indicators of performance of the revenue cycle; regular monitoring can provide insight into the revenue cycle efficiency. It is important to consider factors that could impact this result, such as carriers that are slower to pay. Finally, the A/R aging analysis compares the actual accounts receivable aging with the expected accounts receivable aging. An inconsistent policy or procedure in collection performance is indicated by disproportionate percentages. Days in A/R and A/R aging show the ability of a practice to turn over A/R and collect money due.

Understanding the importance of these metrics is crucial for discovering the information that will allow movement toward higher medical practice performance.

 Explore further: Seven tips provided for optimizing practice revenue

More information: Abstract/Full Text

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In 2nd Big Dermatology Deal This Week, Almirall Buys 5 Products from Allergan

Almirall, headquartered in Barcelona, Spain, announced it is buying five dermatology products from Allergan. Those include Aczone (dapsone), Tazorac (tazarotene), Azelex (azelaic acid), Cordran Tape (fludroxycortide) and Seysara (sarecycline).

Seysara is a new product, a first-in-class tetracycline-derived antibiotic with anti-inflammatory properties to treat moderate to severe acne vulgaris in patients nine years of age and older. The U.S. Food and Drug Administration (FDA) is slotted to approve the drug in the fourth quarter of this year. The drug, if approved, is projected to have $200 million annual sales at its peak.

“This is a transformational deal for Almirall,” said Peter Guenter, Almirall’s chief executive officer, in a statement. “It will reinforce and consolidate our position in the world’s largest dermatology market and is a well-balanced portfolio of mature and growth brands with a major launch opportunity of an innovative New Chemical Entity (NCE). It is perfectly complementary to our existing platform and will be immediately accretive to our earnings. It offers us medium to long term top and bottom line growth opportunities. Moreover, it will allow for an expanded platform to launch KX2-391, which has the potential to become a new standard of care in actinic keratosis.”

In the first half of this year, the portfolio had net sales of $70 million. The acquisition was for $550 million upfront cash and up to $100 million based on performance. The company stated, “The acquired portfolio entails an excellent fit with Almirall U.S.’s selling capabilities and its current team, which has deep knowledge of the U.S. oral acne market and the acquired products. The four products already marketed generated total sales in U.S. of $70 million in the first six months of 2018. In addition, Seysara (sarecycline) offers strong medium to long term growth potential.”

Almirall also indicates that the acquisition will make dermatology the company’s primary growth driver, increasing its net sales to nearly 45 percent of the group total from 34 percent.

This deal marks the second big prescription dermatology deal this week. Earlier, Dutch company LEO Pharma announced it was acquiring Bayer’s global prescription dermatology portfolio, including Skinoren for acne, Travogen and Travocort for fungal skin infections, Finacea for rosacea, and a number of topical steroids including Advantan, Nerisona and Desonate. It didn’t include Bayer’s over-the-counter products, including Canesten, an antifungal.

PharmaPhorum notes that, “Bayer had attempted to sell its prescription dermatology portfolio in 2016, but struggled to find a buyer willing to meet the $1 billion asking price. No financial details of the new arrangement have been disclosed, but it is likely to be worth considerably less than two years ago, as since then some products have lost patent protection.”

As part of the deal, LEO Pharma picks up the global product rights, except for Afghanistan and Pakistan, and will take over the sales and marketing teams in 14 countries, in addition to Bayer’s factory in Segrate, Italy.

Gitte Aabo, president and chief executive officer of LEO Pharma, stated, “We are very excited about this agreement. With the strong prescription dermatology brands and the new colleagues from Bayer, LEO Pharma advances significantly towards our goal of helping 125 million patients by 2025. We will broaden our treatment range and considerably enhance our size in key markets around the world—underlining our ambition to be a preferred partner in medical dermatology.”

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Health Insurance Innovations target raised to $55 from $38 at Raymond James

Raymond James analyst C. Gregory Peters reiterated his Outperform rating on Health Insurance Innovations and raised his price target on shares to $55 from $38, saying he is encouraged by management’s views that an agreement with regulators related to the multistate examination may potentially be reached in Q3. The analyst added that he believes the company is positioned to handle a potential fine, given its substantial cash position.

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Abiomed: Piper says final reimbursement rule for Impella better than expected

Piper Jaffray analyst Matt O’Brien said the CMS final rule for Impella reimbursement rates is better than expected and “a nice positive” for Abiomed that should ease some investor fears on pricing pressure for the device. He sees the fact that CMS removed a previously proposed cut of 24% to one of the key DRGs – 215 – as the most important piece of information and views the final IPPS as “a nice tailwind” for Abiomed, O’Brien tells investors. He keeps an Overweight rating and $480 price target on the stock.

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One-Quarter of Older U.S. Adults May Be Overtreated for Diabetes

One-quarter of older adults with type 2 diabetes in the United States are tightly controlled using glucose-lowering medications with a high risk of hypoglycemia, according to a study published in the June issue of the Journal of the American Geriatrics Society.

Suzanne V. Arnold, M.D., from the University of Missouri-Kansas City, and colleagues examined the proportion of older adults with diabetes mellitus treated with tight glucose control and the factors associated with this practice. Data were obtained from 42,669 adults aged 75 and older with type 2 diabetes mellitus seen at 151 outpatient sites participating in the Diabetes Collaborative Registry. Patients were categorized according to glycosylated hemoglobin (HbA1c) and glucose-lowering medications. Groups were defined as poor control (HbA1c >9 percent), moderate control (HbA1c 8 to 9 percent), conservative control (HbA1c 7 to 8 percent), tight control with low-risk agents for hypoglycemia (HbA1c <7 percent), or tight control with high-risk agents. Another group was classified as diet control (HbA1c <7 percent taking no glucose-lowering medications).

Based on the 30,696 participants without diet-controlled diabetes, the researchers found that 18 percent had moderate or poor control, 30 percent had conservative control, 26 percent had tight control taking low-risk agents, and 26 percent had tight control taking high-risk agents. Factors independently associated with greater odds of tight control with high-risk agents included older age, male sex, heart failure, chronic kidney disease, and coronary artery disease. The aggressiveness of patient management was similar across practice specialty (endocrinology, primary care, and cardiology).

“These results suggest potential overtreatment of a substantial proportion of people and should encourage further efforts to translate guidelines to daily practice,” the authors write.

The Diabetes Collaborative Registry is funded by AstraZeneca and Boehringer Ingelheim. Several authors disclosed financial ties to these companies.

Abstract/Full Text

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CMS finalizes rule requiring hospitals to post prices online

• CMS on Thursday issued its final rule on the Inpatient Prospective Payment System, cementing the agency’s April proposal to increase transparency by pushing hospitals to post standard charges online in a machine-readable format. The rule doesn’t require posting any more information than hospitals are already mandated to provide to the public, but CMS has issued a request for information seeking input on furthering pricing transparency.
• The final rule boosts payment rates for general acute care hospitals paid under IPPS by about 1.85%, up from the 1.75% bump proposed in April. Payments for long-term care hospitals have been increased 1.35%, up from the proposed 1.15%. CMS estimates the rate hike will increase Medicare spending on inpatient hospital services by about $4.8 billion in 2019, up from the April estimate of $4 billion.
• On the interoperability front, providers will be required to use 2015 Edition certified EHR products in 2019. The rule also eliminates the 25% threshold policy for long term care hospitals, reduces reporting periods to 90 consecutive days and eliminates 18 reporting measures while “de-duplicating” 25 more.

The jump in Medicare’s estimated total spending on inpatient hospital services from $4 billion to $4.8 billion is the result of an increase in new technology add-on payments of $0.2 billion and the projected hospital market basket update, according to CMS. All-in-all, that estimate doubles spending projections made in last year’s final rule.

CMS will also distribute about $1.5 billion more for uncompensated care payments in 2019 than it did in 2018, totaling roughly $8.3 billion. The boost is the result of increases in payments that would have been allocated toward disproportionate share hospitals (DSH). This payment change in part reflects the rising number of uninsured Americans.

CMS will also be starting a full audit process for Worksheet S-10 charity care data this fall in an effort to determine how charity care payments are distributed.

As for pricing transparency, the final rule requires hospitals to “make public a list of their standard charges via the Internet in a machine readable format, and to update this information at least annually.” Patient advocate organizations may find this transparency effort somewhat toothless, as CMS had already required hospitals to make their standard charges public. However, CMS’ supplementary RFI acknowledges swathes of opacity in pricing that need to be addressed.

April’s proposed rule was mostly met with applause from industry associations like the American Hospital Association that had been pushing for reduced reporting periods, the elimination of reporting measures and eliminating the 25% threshold policy for LTCHs. The final rule, which includes all the above, was in turn welcomed by AHA. Tom Nickels, executive vice president for the association, praised most policies included in the final rule in a statement.

“There are a number of policies CMS finalized today that will reduce regulatory burden and help ensure America’s hospitals and health systems can continue to provide high-quality, efficient care for the patients and communities they serve,” Nickels said, noting the association is still studying the rule.

Looking toward the future, CMS Administrator Seema Verma told reporters on a call Thursday evening that the agency is concerned with differentials in the wage index floor that show geographic disparities in payments that favor urban over rural hospitals. This final rule preemptively allows the imputed wage index floor to expire for all-urban states. Nickels said AHA will be analyzing policy changes affecting the area wage index to “determine their ultimate impact.”

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Gottlieb: FDA in new steps to boost novel nicotine replacement drug therapies

As a public health agency, there is no greater impact we can have to improve the health of our nation than to significantly reduce the rate of tobacco-related disease and death. Through the U.S. Food and Drug Administration’s comprehensive framework for regulating nicotine and tobacco, we’re developing policies that support the possibility of a world where combustible cigarettes could no longer create or sustain addiction. A key part of this framework are steps to pave the way for products that help currently addicted smokers move away from the deadliest form of nicotine delivery.

Part of this work requires that we recognize that nicotine, while highly addictive, is delivered through products posing a continuum of risk – with combustible cigarettes at one end, to nicotine replacement therapy (NRT) products at the other. We’re working on multiple fronts to recognize the role that more novel forms of nicotine delivery could play in achieving our public health goals, as part of an appropriately regulated marketplace. This not only includes encouraging innovation of potentially less harmful tobacco products for those adults who still seek to use nicotine (such as e-cigarettes), but also taking a closer look at our overall approach to the development and regulation of NRT products that are regulated as drugs, and designed to safely reduce withdrawal symptoms, including nicotine craving, associated with quitting smoking.

The development of novel NRT products, regulated as new drugs, is a critical part of our overall strategy on nicotine.

We know that about 70 percent of adult smokers in the U.S. want to quit. In fact, nearly half try to quit each year. But few succeed. Use of FDA-approved NRT products is generally considered to double the likelihood of a successful quit attempt (with variations between products). Our ultimate goal is to help more smokers completely quit cigarettes.

But most of the existing NRTs – such as gums, patches and lozenges – have been approved for more than 20 years. With novel forms of nicotine delivery being developed, it’s possible that new kinds of NRTs – with different characteristics or routes of delivery – can offer additional opportunities for smokers to quit combustible tobacco.

We want to explore what new steps we can take using our regulatory policies to enable opportunities for innovation, while making sure these products are demonstrated to be safe and effective for their intended use.

To achieve these goals, the Nicotine Steering Committee that we established last September has been evaluating new, evidence-based opportunities to advance therapeutic nicotine products for combustible tobacco product cessation. We have been examining the types of safety and efficacy studies that we suggest be conducted and the way that these products are used and labeled. This work to re-evaluate and modernize our framework aims to provide clarity for companies seeking to avail themselves of the pathway to market safe and effective smoking cessation products.

Today, and as a result of this work, we’re releasing the first of two draft guidances aimed at supporting the development of novel, inhaled nicotine replacement therapies that could be submitted to the FDA for approval as new drugs, similar to current over-the-counter pharmaceutical NRT products. The guidance, “Nonclinical Testing of Orally Inhaled Nicotine-Containing Drug Products,” focuses on data recommended to evaluate potential toxicities associated with orally inhaled nicotine-containing drug products. This includes products such as electronic nicotine delivery systems like e-cigarettes that are intended for smoking cessation and other long-term uses that would make them subject to regulation as drugs.

This is draft guidance. We’re interested in public comment. We want to strike the right balance between enabling a viable, efficient path for these products to be regulated as drugs – where we have substantial tools to evaluate their safety and efficacy for their intended use as smoking cessation products. At the same time, we want to make sure we’re asking sufficient questions about the long-term health effects of these inhaled products, especially their effect on the lungs, to ensure that they are safe for their intended use. This information will help FDA advance this new guidance.

This draft guidance, when finalized, is aimed at providing sponsors with recommendations on the nonclinical information appropriate to support development and approval of orally inhaled nicotine-containing drug products. It recognizes that a great deal of toxicity information is available for nicotine. But such information may not be available for other compounds contained in e-liquids and delivered by these products. These include the flavorings and heat-generated chemicals. These products can be used for six months or more over the course of a lifetime. So, it’s important to understand the risks to humans from these exposures, including developmental and reproductive toxicity and carcinogenicity.

We anticipate releasing the second draft guidance this fall. This second guidance will help lay out a framework for new potential clinically relevant outcomes for smoking cessation products, such as reducing the chance of a smoker going back to using cigarettes long term and showing a positive impact on certain measures of cardiovascular health.

That future guidance also is expected to address potential alternative treatment regimens like pre-treatment before quit day, quitting by gradual reduction (reduce-to-quit), or using two NRT drug products together.

These guidances are one part of larger policy efforts to address the public health crisis of tobacco usage in this country. Given some of these products are relatively new technologies, or innovations that haven’t yet been through the product development and evaluation process, we’ll be seeking input on these draft guidances and welcome feedback on whether we’ve struck the right balance between innovation and safety; and set the right framework to encourage companies to use the new drug pathway to bring novel NRT products to market, with our public health mission leading the charge.

This work is aimed at creating a more flexible framework that enables the development of safe and effective product innovations that have the potential to be helpful in assisting smokers quit combustible cigarettes and improve their health.

For more information:

Guidance for Industry: Nonclinical Testing of Orally Inhaled Nicotine-Containing Drug Products

Advancing Medicinal Nicotine Replacement Therapies as New Drugs – A new step in FDA’s comprehensive approach to tobacco and nicotine

Protecting American Families: Comprehensive Approach to Nicotine and Tobacco

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