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A Single Blood Test For All Cancers? Illumina, Bill Gates & Jeff Bezos Launch Startup To Make It Happen

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By Matthew Herper  |  Jan 10, 2016  |  This article originally appeared in Forbes

Illumina CEO Jay Flatley

What if a simple blood test could detect any cancer early, when it was still easy to treat?

It sounds like science fiction. But Illumina ILMN +1.20%, the $24 billion (market cap) biotechnology company that has pioneered cheap, efficient sequencing of DNA, says it could be a reality in a few years. It is launching a new startup, GRAIL (because such a test would be a holy grail for cancer doctors), with $100 million in funding. Illumina will hold a majority share. Other backers include Sutter Hill Ventures, ARCH Ventures, Jeff Bezos’ Bezos Expeditions and Bill Gates. The startup could have vast medical, economic and societal implications–if the technology really works.

“Everything here is directed at being a pan-cancer test, something that is a universal test,” says Jay Flatley, who has been Illumina’s chief executive for sixteen years and has improved the power of DNA sequencing at a rate that exceeds improvements in microchips over the same period of time.

“It’s our largest investment ever,” says Robert Nelsen, a partner at ARCH, says of GRAIL. Nelsen helped found Illumina, and, more recently, some of the the most well-funded startups ever, including cancer company Juno Therapeutics, which raised $310 million before its IPO, and Denali Therapeutics, focused on brain diseases, which raised $217 million last year.

“It remains to be proven,” Nelsen asserts, “but it’s likely to be the case that you will be able to know deep and large amounts of information about multiple cancers with a single test.”

Flatley says that the idea for GRAIL was hatched eighteen months ago when Illumina researchers were trying the company’s DNA sequencers out on blood. They found that as the company’s sequencers became increasingly powerful, they were able to detect trace amounts of DNA in those samples.

That got Flatley and another top Illumina executive, Richard Klausner, excited.

“There’s a phenomena that we now know that tumors put out, at very early stages, their DNA into the circulation,” Klausner said at the Forbes Healthcare Summit in Decemebr 2014. “We can now measure that with incredible precision. I think one of the biggest breakthroughs we can see in cancer in the next few years is this possibility that there could be a blood test or a urine test that detects early-stage cancer.”

Cancers start out having the same genetic code as the people they afflict. But what makes them into cancers is a slow buildup of mutations in their DNA. These changes mean that the cells no longer listen to the body’s commands to die or stop growing. They develop cloaking devices to avoid the immune system, and commandeer their host’s energy stores.

But tiny bits of this changed DNA are present in the blood, perhaps from an early stage. Flatley says his researchers think they can find this DNA, and by identifying dozens or hundreds of different genetic mutations, tell with an amazingly high degree of certainty if someone has cancer, without causing scares for healthy people. Right now, though, that’s only a technologist’s guess.

The proof needed for such a test will be vast and expensive to create. Flatley imagines a study that would include tens of thousands of patients, with their genes sequenced hundreds of thousands of times. Instead of sequencing entire genomes thirty times, as is done to look for genetic changes, samples from these patients might be sequenced hundreds or thousands of times to look for changes that might indicate cancer.

Each year, the study might identify small numbers of patients who had cancer. At first, many of them would be in the late stages of the disease, Flatley says. But as time passed, the study should start only identifying patients in the early stages of cancer, because the tumors were always being caught when they are new.

Critics are likely to see problems. Will the test detect small cancers that would be kept in check by people’s immune systems, meaning people would receive treatment who didn’t need it? Will it simply be wrong sometimes? Can GRAIL, even with such a deep war chest, really prove that such a test works? The challenges are vast.

Flatley concedes the company may need to take some smaller steps. One possibility would be to combine the GRAIL test with mammography. Mammograms have a high false positive rate. If a blood test could help point out women who don’t need painful biopsies, or detect cancers the mammograms miss, that would be a big deal on its own.

And for now, this test doesn’t even really exist. Flatley is confident it will within a year. GRAIL has to talk to the FDA. It needs a CEO. Klausner, the former NCI chief, is leaving Illumina, but remaining with GRAIL as a director. For now, this new company will probably be consolidated into Illumina’s financials.

That the effort is nascent isn’t stopping Flatley and Nelsen from dreaming big. They both imagine that maybe someday the test would not only identify cancer, but provide the key to killing it. Maybe the DNA mutations identified by such a test could be inserted in the killer white blood cells being engineered by Nelsen’s other company, Juno, and injected into the patient. Then they would hardly ever know they had cancer.

This dream serves both to show the awe-inspiring scope of their project and how much has to be done. Juno’s first treatments, which indiscriminately kill all of the body’s B-cells, an immune cell type that goes awry in some cancers, won’t hit the market for a few years. Such custom designs are a long way away.

Flatley says he plans to move fast, though. The giant clinical trial of GRAIL’s still unfinished test? He expects to start it next year. One thing Flatley is known for is not missing deadlines.

The cancer world is changing, Nelsen says. “I think these things will converge pretty rapidly. If I was a big pharma with a minimally effective, medium toxicity chemotherapy drug I would be nervous. I think it’s going to be really a fascinating time.”

Investors Bet Big on Apps that Promise to Improve Health & Cut Costs

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By Charles Piller  |  Jan 5, 2016  |  This article originally appeared in STAT

OAKLAND, Calif. — A surge in venture funding for startups working on health apps has sparked a flurry of interest in smartphone tools that help doctors diagnose, monitor, and treat patients from afar.

Venture funding for the industry held steady last year at $4.3 billion, matching the record-breaking investment totals for 2014, according to Rock Health, a Silicon Valley investor that specializes in digital health companies.

Consumers still haven’t completely embraced the category, in part because of concerns about the security and privacy of their health data. Just 17 percent of American adults use a health-tracking app, and just 12 percent own a wearable device to monitor health or exercise, according to a Rock Health survey last summer of 4,000 adults with Internet connections.

Telemedicine — getting care from a doctor at a distance — hasn’t caught on widely, either; only 7 percent of respondents said they’ve used video-based technology to communicate with their doctors, though more than a third were willing to try it.

A cardiologist looks at data on a smartphone that is synchronized to a Fitbit on the wrist of a patient. New smartphone apps are helping doctors monitor their patients from afar.PHOTO CREDIT Associated Press/Mel Evans

Though adoption has been slow so far, analysts see a lot of potential, as consumers become more comfortable with the concept of online medical care. The National Conference of State Legislatures recently estimated that 3.2 million patients will use telemedicine services by 2018, compared with only 250,000 in 2013.

And Greg Caressi, an analyst with Frost & Sullivan in Mountain View, Calif., predicted this will be a big year for providers to adopt data-analysis tools that help them make sense of health information recorded by patients’ apps. Some physicians see the new digital health tools as a key to recruiting new patients and boosting their revenue.

One key to growing the market? App developers must “learn tricks to deepen user engagement levels and prove to their customers that apps can influence consumers’ health choices,” said Harry Wang, an industry analyst with Parks Associates in Dallas.

Here are a few products that have drawn robust support from investors and patients:

CellScope

Any parent knows that sinking feeling: Your toddler is feverish, crying, and seems to be pulling at her ear. A $79 device that attaches to your iPhone will let you take high-resolution photos of the inside of her ear. For another $10, you can send the pictures to a doctor for an online consultation. The device and app (which can also be used to get online advice about skin rashes) both come from CellScope, a startup whose founders came out of a University of California, Berkeley, engineering lab.

Grand Rounds

Need a second opinion? Grand Rounds, accessed from an iPhone or Android app, operates like an electronic medical concierge. It can arrange a visit with a doctor in your area who accepts your insurance, or set up an electronic consultation with a specialist.

The company claims that it works only with top docs, including Dr. Richard Hodin, chief of endocrine surgery at Massachusetts General Hospital, and Dr. Laura Esserman, chief of breast care surgery at the University of California San Francisco School of Medicine. The app also connects you with case managers who coordinate care and specialists who collect, digitize, and encrypt your medical records for future use.

Employers have started subscribing to Grand Rounds for their employees, on the premise that it will cut overall health care and insurance costs by eliminating unnecessary care.

Glooko

Anyone with diabetes understands the endless, vigilant management required. Glooko’s app helps manage all that information. It downloads blood sugar readings from meters and insulin pumps, lets you add food intake and exercise stats from Fitbit and similar devices, and assesses those data over time, even sending you snack and medicine reminders. The program includes more than 200,000 food items from restaurants and stores for easy input.

Glooko lets you share the app’s reports with your health care provider, who can then use a separate app to track your progress or flag potential problems. The company charges providers and offers the product free to patients.

Omada Health

Omada Health offers a 16-week course intended to reduce your risk for heart disease, diabetes, and obesity. Called Prevent, it’s available via computer, smartphone, or tablet.

The program features games designed to reinforce healthy eating and lifestyles; includes digital scales, pedometers, and exercise equipment; and provides an online peer group for social support. Omada also supplies a “health coach” — on-call 24/7 to address questions.

Founder and chief executive Sean Duffy said Omada gets paid by participants’ employers or health plans — but only if a participant loses weight.

Charles Piller can be reached at charles.piller@statnews.com
Follow Charles on Twitter @cpiller

Big Data Fails to Shut Down Medicare Fraud

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The Fight Against Fraud: In October 2010, health-care investigators charged dozens of people with billing Medicare for tens of millions of dollars using stolen identities. (Photo: Hiroko Masuike/The New York Times/Redux)

Glitch in the Machine

The government unleashed Big Data to shut down Medicare fraud. Why isn’t it working?

By Joe Eaton  |  Jan 11 2016 |  This article originally appeared in Pacific Standard

Early on an October morning in 2010, Sergeant Steve Opferman of the Los Angeles County Sheriff’s Department wheeled an unmarked police car up to a nondescript suburban tract home in Montebello and waited.

Opferman, an undercover health-care fraud investigator with long black hair and a passing resemblance to the actor Steven Seagal, had been tailing Arthur Manasarian, a suspected member of an Armenian-American crime ring, since Manasarian arrived in town two days before on a flight from Russia. Agents tracked Manasarian as he walked through the gate at Los Angeles International Airport and follow

ed the Mercedes-Benz sedan that dropped him off at the Montebello house, which was owned by a distant relative. If Opferman’s surveillance team was correct, he hadn’t left. When Opferman’s team of agents from the Federal Bureau of Investigation, local police, and sheriff ’s deputies got the signal to go, they knocked on the door, prepared to bash it open with a battering ram if necessary. Instead, a short, balding man in sweatpants—more accountant than gangster—answered. It was Manasarian. He did not resist, and police found no guns. The team radioed the arrest to FBI agents in L.A., who passed the message to New York, where the agency was tallying the results of a nationwide operation.

Across the country, police and FBI agents were waiting outside the homes and hotel rooms of dozens of other suspects in what at the time was the largest known scam by a single criminal enterprise against Medicare, the public health insurance program for the nation’s elderly. Federal indictments charged Manasarian and 72 others in a scheme as brazen as it was simple. According to the indictments, the group set up more than 100 fake medical clinics from New York to L.A. and billed Medicare using the stolen identities of doctors and senior citizens. The take was at least $35 million.

Before the day was through, the operation netted 52 people, including a high-level underworld enforcer named Armen Kazarian. At a press conference in Manhattan, federal prosecutors and law enforcement officials billed the arrests as a triumph in the fight against health-care fraud.

But for cops like Opferman and other health-care fraud experts, the arrests were just another high-profile example of a failure: the failure of the federal government to protect Medicare from criminals. Fighting fraud with law enforcement is like “dipping a net in a river”—you may catch one big fish but thousands of little fish pass through, says Opferman, who retired in March. It’s everywhere. And by the time police catch up with fraudsters, the money—taxpayer money—is gone.

In the case against Manasarian and the other members of the ring, the government seized houses, bank accounts, and a 2007 Maserati Quattroporte (MSRP: $104,950). But most of the money had vanished, laundered through phony companies held under aliases, poker chips from Las Vegas casinos, and bags of cash smuggled by couriers to Armenia.

No one knows exactly how much money criminals steal from Medicare every year. Since that 2010 bust, the record for the largest-ever Medicare fraud has kept on being broken. The most recent record was set in June, when more than 240 doctors, nurses, and other health practitioners were indicted for billing more than $700 million in false claims.

Medicare fraud happens at every point in the health-care system. Scams are run by organized crime rings with foreign connections, trusted small-town physicians with legitimate medical licenses, labs that run diagnostic tests, and crooked office managers. In September 2015 alone, at least 18 people were indicted, found guilty, or sentenced for defrauding Medicare, including Dr. David Pon, an Orlando, Florida, ophthalmologist who billed $7 million for dangerous testing and laser eye treatments he performed on patients he intentionally misdiagnosed, and Sharon Iglehart, a Houston psychologist who was part of a ring that filed $158 million in false claims for mental-health services. It was not an unusual month.

The scope of Medicare’s fraud problem is astounding, even when compared with other federal programs. According to government data, the program in 2014 made more than $60 billion in improper payments, which include fraud and non-criminal payment errors, seven times the tally of Social Security and more than any other federal program. Malcolm Sparrow, a Harvard professor and leading expert on fraud, calls these government numbers a “massive underestimate.” The Medicare fraud rate, he says, could be as high as 20 percent of the program’s $600 billion in spending—that is, $120 billion, twice the official number.

For the more than 50 million Medicare beneficiaries, fraud can mean receiving unnecessary, and in some cases dangerous, tests and procedures that pad a doctor’s paycheck. For the rest of us, it means wasted taxpayer dollars that could be invested in the program, which is funded in part by a trust fund projected to run out of money in 2030.

Government officials have been looking for solutions to Medicare’s fraud problem for decades. In 2010, Peter Roskam, now a fifth-term Republican congressman from Illinois, offered a Big Data solution. Roskam, a former personal injury lawyer who sits on the House Ways and Means Health Subcommittee and chairs the Oversight Subcommittee, believed Medicare should follow the lead of an industry with a strong record of rooting out fraud: credit cards. Visa, for example, processed more than 66 billion transactions in more than 200 countries last year. Its advertised fraud rate is less than six-hundredths of a percent, or six cents on every $100. That’s less than one three-hundredth of Sparrow’s estimate of Medicare’s rate.

Credit card companies achieve such low rates in part through predictive modeling: analyzing large data sets to spot fraud as it’s occurring, rather than turning criminals over to law enforcement after the fact. This is the technology that flags a credit card when, for example, a flurry of charges pop up in a distant state or foreign country. For every Visa charge, the system evaluates up to 500 unique data elements, including location and the buyer’s and the seller’s transaction histories, and compares them to historical trends to spot aberrations. The system then assigns a transaction risk score. High-risk charges are flagged for denial or investigation. The entire process takes less than a millisecond.

Roskam penned a bill that would require Medicare to use the same digital-age tools wielded so effectively by credit card companies. Like Visa, Medicare collects mountains of data from processed claims. Visa’s algorithms know to deny purchases in Zimbabwe when the card’s owner lives in Wyoming; the idea was that a similar system for Medicare should be able to spot and deny bad Medicare claims—like the Florida ophthalmologist who scheduled 100 patients a day; the physician in California whose medical license was suspended due to sexual misconduct and who later began billing with a Missouri license; and claims for clinics that do not exist, which has been a high-profile problem for more than a decade. Big Data, in other words, would fight big fraud.

The Medicare predictive analytics provisions in Roskam’s bill passed later that year as part of the Small Business Jobs Act. Five years later, however, the government’s attempt at data policing has done little to stem the flow of Medicare dollars to criminals. And the main reason is likely not that the federal government doesn’t have the technical skills to add Big Data to its enforcement tool kit. It’s because the government does not want to anger doctors by increasing scrutiny of their billing.

HOW TO SCAM MEDICARE IN FOUR EASY STEPS

Federal indictments say the 2010 Medicare scam was led by two men—Robert Terdjanian in New York and Davit Mirzoyan in L.A.—who also ran a variety of other schemes, including staging automobile accidents to commit insurance fraud. Muscle was provided by Armen Kazarian, known as a vor, a Russian term that refers to a select group of high-level criminals who receive tribute from other criminals in exchange for protection. (His indictment claimed he once threated to sodomize and kill an associate for not showing proper respect.) Much of the financial work of running the job was done by a loose affiliate of white-collar underlings, including Manasarian.

Their plan to rip off Medicare was simple, with four key steps. First, the group set up ghost medical clinics, businesses that existed in name only. Often they used addresses from empty storefronts, or commercial mailboxes rented at Mail Boxes Etc.

Then they registered the sham clinics as shell companies and opened bank accounts, often in the names of Armenians who left the country soon after opening them.

Next they needed to link real doctors and patients to their fake clinics. With much of a doctor’s personal information online, including medical license and Medicare ID numbers, stealing a doctor’s identity is simple, according to investigators. Naushaun Richards, a special agent with the FBI’s Eurasian Organized Crime Task Force, says that a nurse or other internal source at the Orange Regional Medical Center in Orange County, New York, forwarded the personal information and Medicare numbers of thousands of patients to the group.

Finally, the group registered the fake clinics with Medicare and used billing software to send in swarms of claims in the names of patients and doctors who were none the wiser. Manasarian alone set up five virtual clinics, laboratories, and medical equipment stores in Brunswick, Macon, and Savannah, Georgia, according to a federal indictment.

When banks checked up on the clinics, Manasarian played along, chatting on the phone as if the businesses were real. Later, after the FBI caught wind of the scam, agents tapped members’ cell phones, and interpreters listened in as they discussed business. “By the time they get to the investigation, you know it will be two months too late,” Mirzoyan told an associate as they discussed a fraudulent bank account. “Let them check. So what?”

As the money rolled in, the group laundered it through a series of bank accounts and businesses. Cash was withdrawn. Checks were cashed. And money was sent to Armenia by couriers carrying tens of thousands of dollars in cash.

The fraud worked, according to investigators and fraud experts, because it took advantage of Medicare’s key vulnerability: the government’s trust of doctors who submit bills to the program. When doctors and others file claims to Medicare, the program most often pays the bill without asking questions. Later, if the program uncovers an overpayment or possible fraud, it requests the money back, a system known as pay-and-chase. For legitimate medical providers, Medicare requests for overpayments can be a financial hit. For crooks, they signify a good time to close shop and re-open elsewhere.

Demonstrating that expected trust, Manasarian and the others sometimes did little to make their bills look legitimate. For example, they used the stolen identities of a dermatologist to bill for heart tests and that of a forensic pathologist, who would generally perform autopsies, for office visits. Medicare sometimes detected the group’s fraudulent bills, although often only after paying them. The success of any one clinic didn’t matter. The crooks knew that each ghost clinic had a shelf life before Medicare shut it down. When that happened, they moved on and opened new fake clinics.

By the time Steve Opferman rolled up to the house in Montebello to arrest Arthur Manasarian, the government had discovered 118 sham clinics in 25 states. The group had billed more than $100 million in fraudulent claims, at least $35 million of which Medicare paid. In this environment, the FBI’s Richards says, organized criminals are increasingly moving to Medicare fraud as a safer alternative to more traditional thefts.

WASHINGTON FUMBLES ITS BIG DATA PROGRAM

It was this sort of obvious scam that Congress hoped Visa-style predictive analytics would prevent. Nine months after the Small Business Jobs Act passed Congress, the Centers for Medicare and Medicaid Services, which administers the program and is known in Washington, D.C. as CMS, announced progress on setting up the new fraud prevention system.

Like all large federal programs, Medicare, a public health-care program that serves people 65 and over and the disabled, is operated primarily by private contractors. Although the fraud detection plan was inspired by the credit industry, the contract to build and run the Medicare fraud prevention system did not go to a fraud-detection contractor in that industry. Instead, CMS tapped Northrop Grumman, the aerospace and defense company, which, like other federal contractors better known for producing airplanes and missile defense systems, is increasingly branching out into other sectors, including health and information technology.

As Northrop Grumman worked with subcontractors to develop the system, CMS set up a command center with rows of computers and a digital presentation board a few miles from Baltimore. Here, agency investigators, contractors, and law enforcement could meet to analyze real-time claims data for fraud patterns.

All evidence suggested a new dawn in the battle to shut down Medicare fraud. Donald Berwick, then the head of CMS, called the claims data policing “bad news for criminals looking to take advantage of our seniors.” There was reason to believe that was true. A 2012 study by Stephen Parente, a professor and health information technology expert at the University of Minnesota, found that credit card-style predictive analytics could stop $18 billion in fraudulent Medicare Part B claims each year.

But four years after the agency flipped the switch on the $100 million program, it’s hard to find anyone not affiliated with the fraud-prevention system willing to call it a success. In fiscal year 2014, the third year of the program, Northrop Grumman’s fraud system saved Medicare around $130 million, an almost one-to-three return on investment, according to a June report by the Department of Health and Human Services Office of the Inspector General. The numbers sound impressive, but they’re a drop in the bucket considering the tens of billions of dollars criminals take from the program each year. Broken down further, the numbers are even less inspiring. Among the savings, more than a third came from investigations underway before the medical providers were flagged by the system. In other words, predictive analytics first tipped off the agency to only a portion of the fraud included in the report.

And shutting down claims before they are paid, like Visa, rarely happens. Only $19.4 million was stopped through software instructions that deny or suspend all or part of a claim, according to the report. By contrast, almost $30 million of the system’s savings came from “pay-and-chase” recoveries and law enforcement referrals. The data also shows the inefficiency of those methods. According to the report, that $30 million is what the authors determined can be reasonably expected to be recovered or avoided among almost $277 million in claims flagged after that year by law enforcement and fraud contractors.

Critics note that the system has not even picked low-hanging fruit. A recent report by the Government Accountability Office, a congressional watchdog agency, found Medicare is still paying bills from medical providers who register their business addresses as commercial mailboxes, like the Mail Boxes Etc. boxes used to create sham clinics in the 2010 fraud. In one case, a Five Guys hamburger chain in Dallas was the home of a “clinic.”

In March, Roskam called Shantanu Agrawal, head of program integrity at CMS, to testify in Congress about the failures of the fraud prevention system. Dressed in a dark suit, Agrawal, a former emergency medicine physician with a trim goatee, deflected criticism of the system. Agrawal said Medicare uses advanced analytics to inspect every claim and generates automatic fraud leads that are forwarded to government fraud contractors. The contractors then launch investigations to build cases to deny the claims or refer the billers to law enforcement.

Agrawal suggested that comparisons to Visa are unfair because detecting Medicare fraud is more difficult than catching credit card fraud. While those 66 billion Visa transactions involve little more than a customer buying a product from a business, Agrawal said Medicare systems must monitor 1.6 million health-care providers who use more than 11,000 codes to bill for more than 50 million patients. And because doctors do not send medical records along with claims, it’s difficult to determine whether a service actually took place or was appropriate, he said.

Roskam, and other committee members, were unimpressed. “As I was reading your testimony and then listening to you this morning, I felt like I was the sales manager listening to a salesman who’d been out working hard, making a bunch of sales calls, and was coming in and saying, ‘Look, I called on this customer, and I’ve done this, and I took this person to lunch.’ And I feel kind of like the sales manager that’s saying, ‘Hey, where are the orders? Where is the final product?’”

Roskam called the CMS process of handing out fraud leads to contractors slow, ridiculous, and hamstrung. On an electronic screen, he displayed a graph comparing Visa’s 0.06 percent fraud rate with the acknowledged 12.7 percent payment error rate of Medicare Parts A and B (a 211-fold difference), which includes most physician and hospital claims. “You made the argument, ‘Look, this is different than a Visa bill.’ I accept that it’s kind of different than a Visa bill. But I don’t think it’s this different,” Roskam said. “This has to improve. This is not like a-hope-and-a-dream sort of improvement. This has to improve. Because this amount of money going out … it’s simply unsustainable.”

Agrawal’s testimony pointed to what critics say is the greatest flaw in Medicare’s approach to fraud prevention: its reluctance to anger real doctors who innocently file inaccurate claims. Agrawal told the committee that aggressively denying Medicare claims could cause sloppy but otherwise honest doctors to flee the program, leaving elderly patients without physicians to treat them. “We do have to meet a bar for taking action,” Agrawal said. “We do need to be fair to providers, even the bad actors, to make sure we are doing this the right way. We want to do it in a way that does not victimize the innocent legitimate providers who are just doing their work.”

Peter Budetti, who preceded Agrawal at CMS and was in charge of program integrity during implementation of the fraud prevention system, says the system was designed to minimize the potential for unnecessary hassles for legitimate physicians. He views the system as a success, but said it took time for CMS to integrate predictive analytics into Medicare’s traditional fraud-fighting methods, which included contractors focused on generating leads for law enforcement, not preventing fraud. “It was not enough to identify fraud with the fraud prevention system. CMS needed to use that information effectively,” Budetti says.

But whether CMS has the will to increase scrutiny of claims is an open question. The American Medical Association, the trade association that represents doctors, has called for a fraud prevention system that has a “zero false positive rate,” thereby never flagging as fraudulent claims that are in fact legitimate, and pushed for an ongoing independent review of the system. In a 2012 policy paper, it argued that data analysis of physician claims cannot be done without complex clinical knowledge gained through medical education and training.

Malcolm Sparrow, the Harvard fraud expert, said the government is under intense pressure from the medical industry not to increase its scrutiny of bills. When investigating claims, the agency generally starts with the idea that billers are real health-care providers who made billing mistakes, not fraudsters, Sparrow says. “Traditionally they use aggressive enforcement methods against doctors only in rare and egregious cases. Their default assumption when there is a billing problem is that education will fix it.”

That, paired with poor funding for fraud control, is a major reason the government is losing to fraudsters, Sparrow says. The problem lies not with the computer algorithms used to detect fraud, but with the inability of CMS to cope with the sheer volume of false claims and turn off the spigot of cash. In fact, Sparrow says, the fraud prevention system simply adds more tips to the flood of tips that are already flowing to the small number of fraud investigators. “All you are doing is adding more to the obvious fraud that they do not have the resources to investigate,” he says. “It’s the limited resources available for follow-up that makes better detection only a marginal benefit.”

COULD SMARTER DATA MEAN BIGGER IMPACT?

In 2010, when Roskam was preparing his bill to force Medicare to use advanced data analytics for fraud prevention, pundits were hailing the potential of Big Data to solve many of the world’s most difficult problems. In the half-decade since, however, data experts have warned of the potential for hard facts to get lost in swarms of ambiguous information. The future, some say, is working with smaller sets of valuable or “smart” data.

The small dent Medicare’s fraud prevention system has made in stopping criminals has led some to question whether the agency is investing too much in whiz-bang technology while overlooking quick fixes. Finding fraud in the system, after all, is not that difficult. Law-enforcement critics of Medicare’s big-bite data approach say the agency should target and shut down known fraud schemes. Criminals, they say, are not re-inventing the wheel—they are hammering away at proven scams.

That is the approach taken by what many consider the federal government’s most effective push against Medicare fraud. Launched in 2006 at the Department of Justice by a former federal prosecutor named Kirk Ogrosky, the Medicare Fraud Strike Force identified 20 cities with high Medicare billing rates and began sifting through claims data to find out why.

In Miami, it was astronomical charges for orthotic braces, wheelchairs, and other so-called durable medical devices, and HIV infusion. In Houston, it was orthotic braces and billing for ambulance transport. The team focused on those claims and targeted the top billers, going through their charges with a fine-toothed comb.

More often than not the charges were crooked, says Peggy Sposato, a former nurse practitioner based in Miami. Sposato, who recently retired from the Justice Department, used her nursing experience to spot claims that did not make sense, like medical device suppliers who billed for braces for patients with arthritic joints, which is not the correct treatment. “I could tell right away that this guy is dirty as the day is long,” she says.

A year after the program launched, durable medical equipment claims from services the team targeted in Miami-Dade and Broward counties dropped by 63 percent, or $1.7 billion, as criminals got the word. And the amount Medicare actually paid out fell from $687 million to $334 million, a 49 percent drop. The team launched federal prosecutions, but Sposato says it also worked closely with Medicare contractors to stop payments for obvious fraud schemes before the money was lost. “We would call the contractor and ask, ‘What’s on the floor?’” Sposato says, referring to bills that had not yet been paid. “We had an unusual network. Everyone knew everybody and they knew how hard we were working.”

Ogrosky says the Medicare Fraud Strike Force, which has filed 1,977 indictments since 2006, started with only a few members, who worked with small slices of targeted data on desktop computers. “Nothing we were doing was what you could call Big Data or complicated algorithms,” Ogrosky says. “It was peeling the onion, step by step,” and shutting down “schemes someone learned Medicare would pay that spread through the community.”

Former members of the team say a similar approach, with Medicare simply turning off payments to likely fraudsters, could save as much as $10 billion a year. The approach would probably be met by lawsuits, they say, but most often the crooks just vanish. Others suggest Medicare take a more shoe-leather approach. “This Visa thing would work if Medicare had its shit together,” says Albert MacKenzie—a former deputy district attorney with the Los Angeles County District Attorney’s Office who pioneered a program to try health-care fraudsters for tax evasion in the manner that finally took down Al Capone—“but it doesn’t.”

MacKenzie, who now works as an attorney at the California Franchise Tax Board, suggests Medicare start with easy tasks, like making site visits to every medical office to ensure they are real (which does not happen) and sending patients letters after prescriptions are filled or a wheelchair is ordered in their name (to make sure they actually received what the biller says they received). “If I’m a pharmacist and I’m doing a Medicare prescription, I can say I gave you three pills when I only gave you one. I bill for three, sell two on the street, and nobody is the wiser. That’s how stupid the system is,” he says.

And it would make his job much easier, MacKenzie says, if Medicare reported to the Internal Revenue Service payments to pharmacies, as it does payments to doctors. That way, prosecutors could make tax fraud cases and shut down the fraudsters that Medicare can’t catch. “I’ve been on this Don Quixote donkey for years,” MacKenzie says. “I cannot get it up there to somebody who really wants to make a change, somebody who says, ‘This is horseshit, and it needs to change.’”

In Congress, the senator most focused on changing Medicare’s fraud rates is Tom Carper, an unassuming Democratic and former Delaware governor first elected to Congress in 1982. Together with Tom Coburn, the Oklahoma Republican and physician who retired from the Senate in 2015 due to health problems, Carper has long publicized CMS’s worst failures and wrote bills to fix them. It was Carper’s request to the GAO that launched the report that showed Medicare is paying claims for businesses with addresses at a Five Guys and UPS stores. He requested a 2011 GAO report that showed about 170,000 Medicare beneficiaries received prescriptions for frequently abused prescription drugs from five or more doctors during one year, and that one person received prescriptions from 87 doctors. He was also behind a 2011 Office of Inspector General report that showed Medicare was not checking whether the prescription drugs it paid for were prescribed by real doctors with valid prescriber ID numbers.

In 2011, Carper and Coburn penned the FAST Act, which would have required Medicare to perform pre-payment claims verifications and better protect the federal database of physician IDs to prevent theft. Carper and Coburn’s 2013 PRIME Act, which Carper re-introduced this session and is in the Senate Finance Committee, would provide accuracy incentives to Medicare payment contractors, who are judged primarily on their ability to pay claims on time. The 2015 bill, which has 16 co-sponsors, eight of whom are Republicans, would increase sentences for using or selling stolen Medicare beneficiary IDs to up to 10 years in prison, and require increased data sharing between Medicare and state Medicaid programs.

Carper, who served as a Navy flight officer during the Vietnam War, says changing the culture of a huge program like Medicare is like trying to turn an aircraft carrier. But the dim financial outlook of the program demands action. “Joe Biden has a saying: ‘There is nothing so much as a hanging that causes a man to focus his attention,’” Carper says. “What we are looking at in about 10 years is the Medicare equivalent of a hanging.”

MEDICARE DOUBLES DOWN ON DATA

In the end, it was a lucky law enforcement break, rather than red flags from Medicare, that brought down Manasarian and the national network of sham clinics. It started with cigarettes. In around 2003, Richards and the FBI’s Eurasian Organized Crime Task Force took down a group of California cigarette smugglers. After the bust, they watched the group’s New York connections. In 2009, the task force caught wind that the group was running an automobile leasing scam.

A wiretap in that case revealed the massive Medicare fraud, and the nationwide network of players. Soon after, the feds contacted Opferman at the L.A. County Sheriff ’s Department about Manasarian, who was under investigation by that office for peddling Oxycontin. That’s how Opferman found himself trailing Manasarian from LAX to the house in Montebello.

The takedown sent many of the men to prison, including the leaders Mirzoyan and Terdjanian. In 2012, Manasarian pleaded guilty to racketeering in New York and conspiracy to commit health-care fraud and immigration fraud in Georgia. He is serving a 12-year sentence at Terminal Island, a low-security federal prison in San Pedro, California. During the proceedings, Manasarian’s lawyer presented him as a struggling businessman with debilitating arthritis who fell into crime but saw little financial gain. Armen Kazarian, the enforcer, was sentenced to 37 months after pleading guilty to racketeering. He was released in 2013.

But much like the sham clinics that Medicare shuts down, which are replaced with other sham clinics, Opferman and others familiar with organized health-care fraud say the crime rings themselves prevail, with new recruits. “The big-time guys, the ones who control the money, they don’t get caught. A lot of them are not even in the country,” he says.

To fight them, Medicare, despite critics, is doubling down on Big Data analytics. In December 2014, CMS advertised an upcoming search for contractors to build a second-generation fraud prevention system. Dubbed FPS 2.0, the new system’s goals include using social network analysis and machine-learning techniques, including neural network analysis, to root out fraud.

But some health-policy and fraud experts question whether the second-generation system will do better at rooting out fraud, despite the high-tech data science language. Sparrow, for one, has doubts. Predictive analytics is not as cutting-edge as it sounds, he says, “and even if it were, it might not help them that much given the limited capacity and will for dealing with what they are finding already. I think that’s the heart of the matter, as depressing as it may seem.”

Getting Old? This High-Tech Suit Simulates Aging

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R70i Age Suit, made by Applied Minds and shown at CES, is designed to make you feel 40 years older

By Geoffrey A. Fowler|  Jan 7, 2016  | This article originally appeared in the Wall Street Journal

Can technology teach you what it feels like to be old?

Amid the hype about virtual reality and robotics at CES 2016, I strapped on a headset and exoskeleton designed to make you feel 40 years older. That’s right, older. The R70i Age Suit, made by a tech firm, Applied Minds LLC for Genworth Financial, an insurance company, simulates vision and hearing loss, as well as reduced mobility from muscle deterioration and arthritis.

Robotic exoskeletons can give you superhuman strength, but this one gives you superhuman empathy: WSJ’s Geoffrey A. Fowler learns what it feels like to be a septuagenarian.

Many of the same technologies could be used in exoskeletons that give us superhuman capabilities, but think of this one as a reverse Iron Man.

The unforgettable, and at times distressing, experience shed light not just on aging, but also how virtual reality equipment can teach empathy and shape our perceptions of the world around us. The suit made me feel like I was nearly 80 years old.

“I would like a new dialogue on aging,” said Bran Ferren, a former Disney Imagineer and president of R&D who co-founded Applied Minds. “You can intellectualize these things all day long, but when it becomes an emotional first-person experience, it is very different.”

 

An Oculus virtual-reality visor was fitted with cameras so you can see what’s ahead through a screen. But then, the Age Suit’s augmented-reality software distorts that view, to simulate the effects of vision problems: cataracts, macular degeneration, floaters and more. The glaucoma simulation made my peripheral vision gradually decrease until I was left with tunnel vision of just what’s in front of me.

For hearing, the headphones in the Age Suit added the ringing of tinnitus and raised background noise, making regular conversation far more challenging.

The most shocking part of the experience came from the exoskeleton, which uses sensors to monitor eight joints in my arms, legs and hips, and then apply mechanical resistance to slow me down. The suit doesn’t move your muscles with you—it puts on the brakes.

Ordinary tasks like walking around and lifting my arms became extremely difficult. My heart rate rose, and I was sweating enough that my Age Suit needed a good wash after I was done with it. Mr. Ferren reminded me that I still didn’t have it as bad as someone who really suffers from arthritis: The Age Suit didn’t actually add pain to my joints.

Genworth, which sells long-term-care insurance, plans to tour the U.S. with the suit as part of its “Aging Experience,” which also includes displays that let onlookers glimpse the experience of the person wearing it. The company says it hopes to help caregivers gain a better understanding of their patients—and perhaps get the rest of us to better appreciate our own aging.

“It gives you the ability to look after your future,” says Mr. Ferren.

Write to Geoffrey A. Fowler at geoffrey.fowler@wsj.com or on Twitter @geoffreyfowler

Medicare Proposes to Increase RAC Use

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By Lisa M. Noller | Jan 11, 2016 | This article originally appeared in Health Care Law Today

By now, providers are very familiar with Medicare recovery audit contractors, or RACs – the private companies who have authority to review medical records at a moment’s notice. For every dollar they opine has been improperly billed, the RACs recover a share of the bounty, creating a perverse incentive and an appeal process years behind schedule. So far, the RACs have been limited to a review of Medicare Parts A and B . . . but not for long.

If the Centers for Medicare and Medicaid Services (CMS) has its way, RACs soon will be expanding the scope of their review to Medicare Advantage claims, and it has published a detailed, 58-point work plan to hire a RAC “to identify underpayments and overpayments and recouping overpayments associated with diagnosis data submitted to CMS by Medicare Advantage Organizations.” In sum, the RAC would conduct risk adjustment data valuation (RADV) reviews, to determine whether all criteria were met prior to setting a RADV score to a patient, thereby determining the reimbursement value based on risk.

The notion of RACs is not new. Nor are CMS’ audits of RADV determinations, which it has performed at a relatively slow pace since Medicare Advantage Plans were first approved and implemented. But the scope of work published by CMS over the holidays ensures there will be more audits, more findings, and more demands for repayment. Importantly, under the proposal CMS published last week, the RAC selected by CMS “shall work with CMS and its contractors to update, develop and/or maintain a Coder Guidance document that coders may reference when reviewing medical records . . . .” By giving the RAC a hand in developing review criteria, CMS is virtually guaranteeing bounty payments will ensue. The proposal also tasks RACs and CMS with developing “condition specific RADV audits,” focused on high-risk conditions such as diabetes. The tools for these audits also will be developed in partnerships between RACs and CMS.

CMS is seeking comments on its proposal by February 1, 2016, and has not identified a timeline for implementation. But because RACs have an incentive to find errors, the process is likely to be running before long. Hospitals, physician groups and individual providers who participate in (or were considering joining) the Medicare Advantage program should take matters into their own hands now by:

  • developing coding guidance based on RADV criteria;
  • designing internal audits; training physicians and coders;
  • ensuring ICD-10 is properly applied; and,
  • regularly reviewing risk assessments and your own high risk diagnoses.

By proactively planning for RAC audits of RADV reviews, providers can decrease auditors’ incentives, and even reduce whistleblower risk. After all, bounty hunters often are in competition for their prey.

Aging Gracefully: Graying Japan Tries to Embrace the Golden Years

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Entrepreneurs are exploring robotics and other innovations to unleash the potential of the elderly

By Jacob M. Schlesinger & Alexander Martin | Nov 29, 2015 | This article originally appeared in The Wall Street Journal

 

Tomoyuki Ohashi, 72, is part of a group of senior citizens who work part-time at the Kohitsuji-en nursing home in Kashiwa City, helping fill a labor shortage. “I think I get a kind of advantage,” he says. “Maybe in the future, I’ll be allowed to live here.”
PHOTO: JEREMIE SOUTEYRAT FOR THE WALL STREET JOURNAL

TOKYO—At an office-building construction site in the center of Japan’s capital, 67-year-old Kenichi Saito effortlessly stacks 44-pound boards with the ease of a man half his age.

His secret: a bendable exoskeleton hugging his waist and thighs, with sensors attached to his skin. The sensors detect when Mr. Saito’s muscles start to move and direct the machine to support his motion, cutting his load’s effective weight by 18 pounds.

“I can carry as much as I did 10 years ago,” says the hard-hatted Mr. Saito.

Mr. Saito is part of an experiment by Obayashi Corp. , the construction giant handling the building project, to confront one of the biggest problems facing the company and the country: a chronic labor shortage resulting from a rapidly aging population. The exoskeleton has allowed Mr. Saito to extend his working life—and Obayashi to keep building.

Conventional wisdom says a large elderly population undermines an economy, and that Japan’s unprecedented aging condemns the country to a bleak future. The logic: Old people are an unproductive drain, squandering resources on pensions and health care, while doing little for growth through working, earning, spending or paying taxes.

One in four Japanese is 65 or older, compared with 15% in the U.S. There are now just 1.6 working-age Japanese available to support each senior or child under 15.

That ratio is already considered unsustainably low. By 2050, there will be just one working-age Japanese for every senior or child. During the high-growth 1980s, Japan had more than two, about the same as the current U.S. level.

Pessimists say the only way to keep Japan from inexorably drifting into bankruptcy is radical change, like a sudden, sharp influx of immigrants—an unlikely prospect given Japan’s history as one of the world’s most homogeneous cultures.

But a growing number of Japanese executives, policy makers and academics challenge that proposition. They are exploring whether modest adaptations can ease the woes of an aging society, or even turn the burdens into benefits.

The optimists’ case starts with steering the growing number of healthy 60- and 70-year-olds from retirement into work. That makes them more productive members of society while helping staff jobs that otherwise would be impossible to fill as the population shrinks.

Japan’s ability to craft a successful aging strategy has global implications, since other nations will soon follow its path. The United Nations projects that by 2050, 32 countries will have a greater share of senior citizens than Japan does now.

Some Japanese see opportunity to cash in as aging front-runners, just as earlier generations exported world-beating cars and electronics honed first at home.

For now, though, Japan shows more strain than gain from its demographic shift.

A public works program launched by Prime Minister Shinzo Abe has been constrained by a shortage of young manual laborers. While Japan’s multinationals enjoy record profits—thanks to “Abenomics” policies of easy money and a sharply cheaper yen—they remain hesitant to invest earnings back home, sensing limited long-term growth due to a shrinking population. Looming over all of this are Japan’s heavy debt levels, bloated by pension costs.

Still, the dire predictions rely on a core assumption that may not fully prove true—that once people turn 65, they must lean on the rest of society. Japan is redefining “aging,” as its 60-, 70-, even 80-year-olds prove more vigorous, and less costly, than earlier generations.

While a falling birthrate is one reason for Japan’s graying, another is its remarkable advance in health through good diets, an emphasis on fit lifestyles and a national medical system which experts say saves costs by emphasizing preventive care.

They also point to new aging-related growth engines, including an automation spending boom to stretch Japan’s declining labor force, and a growing “silver market” of elderly consumers drawing down savings from a lifetime of hard work and thrift. Already Japan’s senior consumer market is worth more than ¥100 trillion a year (about $800 billion), and is expected to grow a trillion yen a year.

“We have to change our view from ‘antiaging’ to ‘smart aging,’ ” says business consultant Hiroyuki Murata, author of Japanese best-sellers like “The Business of Aging: 10 Successful Strategies for a Diverse Market.”

Japan’s life expectancy is 87 years for women, the world’s longest, and five years more than in the U.S. For men, it is 81—the third-longest in the world, and four years greater than in the U.S. Japan’s “healthy life expectancy”—an estimate of the age a person can reach and still live independently—is the world’s longest for both women (75) and men (71), according to a study published in the Lancet, a medical-research journal.

A Japanese mountaineer two years ago became the first octogenarian to scale Mount Everest, and Japanese athletes regularly dominate competitions for older athletes.

Japan currently spends 10% of its economy on health care, about average for advanced economies and well below America’s 17%, despite a population skewed toward the most medically expensive age group.

About one in five seniors work, nearly double the average for advanced economies in the Organization for Economic Cooperation and Development. More than half of Japanese men aged 65 to 69 hold jobs, up from about 40% a decade ago.

That, combined with more women workers, means the labor force has shrunk less than 1% over the past decade, even as the traditionally defined “working-age population” aged 15 to 64 dropped 8%, according to a June Barclay ’s report.

The temp agency Koreisha Corp.—a pun meaning both “aging people” and “aging company”—dispatches workers up to 75 years old. Some tasks are menial. An appliance company hires Koreisha temps to ride with repairmen and stay with the car, fending off tickets in parking-challenged Tokyo.

Construction companies added 60,000 senior hard-hats to payrolls over the past year. The transportation ministry in April lifted the airline pilot retirement age to 67.

Off a narrow winding road in Nagano Prefecture, a company called Ogawa No Sho turns to seniors to make dumplings. It used to have a retirement age of 78, but employees can now stay as long as they like.

One recent afternoon, an 85-year-old woman wrapped eggplants and miso paste in dough. Two men—one 76, the other 91—grabbed them with tongs and placed them on a large iron pan hanging from the ceiling, flipping them from time to time.

“Making dumplings only involves using your hands, so it’s easier on the body than farming,” says the woman, Fujiko Matsumoto, who works three days a week.

Elderly workers are also playing a crucial role filling Japan’s biggest labor shortage—nursing care for the still-older elderly. With unemployment already low, the labor ministry estimates one-seventh of Japan’s unfilled jobs are in the nursing-care sector, a gap that will swell as needs expand.

That void could be filled if more unemployed seniors step in. One-third of home-care workers are now over 60, up from one-fifth a decade ago.

Fumio Fujizuka, 73, joined Saint-Care Holding Corp. , a nursing care provider, after his rubber-products company went out of business. He comes to the office five days a week, sometimes as early as 7:30 a.m., then bicycles to nearby homes, bathing and dressing clients in their 80s and 90s.

Japan’s increasing reliance on a silver workforce is a mixed blessing. While many seniors say they happily seek work, others have no choice because of low pension payments or other economic hardships. Nearly one in four Japanese over 65 lives below the poverty line, about 40% higher than the overall population rate.

Employers see the elderly as cheap labor, sometimes hiring back retired full-timers as lower-paid temps. That is undercutting a government campaign to end a destructive decade of falling wages.

“Compared to younger people, we can curb their pay,” says Katsutoshi Sekine, who runs a farm cooperative in Chiba Prefecture and offers his nearly 20 senior fruit and vegetable pickers 80% of the going wage.

Elder workers can only go so far replacing the shrinking number of Japanese half their age. By choice or physical necessity, many put in just a few hours a week. At the Kohitsuji-en nursing home near Tokyo, its director estimates the 40 part-time senior workers there equal “three or four” full-time employees.

Other employers say they are wrestling with complexities such as how to deal with senior employees who suddenly forget vital information, such as numerical codes to enter their work facilities.

In some cases, the solution lies in technologies that help offset senior workers’ deficiencies, like the exoskeletons used by Obayashi at its construction site. The Fujisawa Aikoen nursing home about an hour outside Tokyo started leasing the “hybrid assistive limb,” or HAL, exoskeletons from maker Cyberdyne Inc. in June.

In Hokkaido, 60-year-old potato-pickers use rubber “smart suits” making it easier to bend over. Baggage handlers at Tokyo’s Haneda airport employ similar assistance.

In cases where older people simply can’t do the job or aren’t available, Japanese manufacturers are turning to robots, which help them keep costs down and continue growing.

Bank of Tokyo Mitsubishi UFJ, Japan’s largest bank, employs a small robot speaking 19 languages to greet customers, while a Nagasaki hotel staffed mainly by robots opened in July. Komatsu Ltd. is developing self-driving vehicles for construction sites, while industrial robot maker Fanuc Corp. is designing machines that repair each other.

Toyota Motor Corp. is testing in homes its “human support robot,” a videophone/remote-controlled android that allows family and friends to perform tasks for distant elderly people as if they were in the same home. In one demonstration, a young man uses a tablet to look around a bed-bound older man’s room, then directs the robot to open the curtains and bring the older man a drink.

SoftBank Group Corp. earlier this year drew global attention when it put on sale in Japan an automaton called Pepper, which it called the world’s first robot capable of understanding emotions. One of the earliest uses for the 4-foot-tall white humanoid is as a nursing helper.

In a Kanagawa Prefecture test, Pepper entertained a room of 30 80- to 90-year-olds for 40 minutes. He led them in light exercises and tested their ability to recognize colors and letters. Women patted his head like a grandchild.

Showing a video of Pepper with a dementia patient on another occasion, Shunji Iyama, one of the developers, says the robot may sometimes work better than people. “That man keeps repeating himself over and over again,” Mr. Iyama said. “If Pepper were human, he’d get fed up, but he just repeats the same reaction and doesn’t get tired.”

Mr. Iyama’s company, a three-employee startup aimed at the burgeoning elderly tech market, is called Fubright Communications, a contraction of “Future” and “Bright.” “Japan’s future is considered dark,” he says. “But if you change your viewpoint, this is the only place where we can test such technologies in such an aging environment.”

While new labor patterns and technologies alter the supply side of Japan’s economy, a parallel evolution is changing the demand side, with growth driven by an increasingly prominent “silver market.”

Still less than one-third of the population, Japan’s seniors control about 60% of the country’s $14 trillion in household assets and account for about half of consumer spending, with many no longer saving for anything.

Although consumer spending growth overall is weak in Japan, economists at UBS Securities there say they believe the expansion of the senior market could more than offset any declines that come from a shrinking population, at least for a time.

The elderly are already transforming aspects of Japan’s consumer market. When the government this year reviewed the basket of 588 items in the consumer-price index, it added hearing aids and knee supports, dropping school lunches and tennis-court fees.

Companies, meanwhile, are investing in new products and new marketing strategies to capitalize on senior spending.

Panasonic Corp. last fall launched the “J Concept” line of “easy-to use, light-in-weight” goods for senior consumers, with laundry machines and refrigerators designed to minimize body-bending and with easy-to-read control panels. Earlier this year, Japan’s No. 1 electronics maker said it aimed to expand its “age-free” unit’s workforce as much as tenfold, to 20,000 employees.

Ajinomoto Co. , a food and chemical company, launched in 2013 an “active senior project” with the slogan “successful aging,” with medical tests claiming early detection of ailments, as well as health supplements marketed as forestalling muscle and bone debilitation.

“The domestic market is likely to be shrinking, but we can still find a way to grow,” says president Takaaki Nishii.

The silver market has also sparked a boom in home reconstruction, to make residences easier for the elderly to live in.

Stores emphasize delivery more: 7-Eleven now takes meals to 730,000 homes, and sees the business doubling every year. Japan Post Holdings Co. , which runs the postal service, has teamed up with AppleInc. and International Business Machines Corp. on a “watch” service where mail carriers, for ¥1,000 a month, check on elderly customers, reporting back to family members via customized iPads.

Retailer Aeon Co. two years ago started overhauling shopping centers into “Grand Generation’s Malls” with grocery stores selling extra-small portions for low-appetite seniors living alone, like half-heads of broccoli. The malls have added classrooms for knitting and computer lessons, as well as a recording studio for amateur musicians, to help lure more seniors who want something to do.

Seniors now spend 50% more time in the store—and 40% more money.

There is even a potential market in dating services. For 16 years, Shizuka Koshikawa, a 72-year-old divorced man, has been running the Sanko (Three Happiness) Club matchmaking service for single Tokyo-area seniors as a kind of hobby and low-margin business. Next year he plans to expand to six cities around the country.

As awareness of the market grows, one of Japan’s hottest business buzzwords has become “shukatsu,” or “end of life,” referring to the explosion of products and services aimed at people preparing for their final years.

One September weekend, 50 companies and organizations from jewelers to travel agencies set up booths at Tokyo’s third annual “Shukatsu Festa” festival, as 3,400 customers streamed through. The event’s mascot—a feline-costumed figure dubbed “Shu-Cat-su” with a red headband urging “Be Alive!”—posed for photos.

The Asahi Shimbun newspaper was there explaining its new service helping people compile their life stories: ¥999,000 for a staff journalist to write it from scratch. A kimono maker peddled ¥100,000 garb for people to get cremated in.

A crowd listened to House Boat Club employees describe a cruise where passengers can scatter pretend ashes over Tokyo Bay to see if they would ultimately like to have their remains disposed that way. Nearby were representatives of two competing ash-scattering cruises. For ¥260,000, Balloon Memorial takes ashes into the sky on a brightly colored hot-air balloon.

Companies are pitching such products in part because a falling population has made it harder for families to tend traditional graves.

“Obviously, it’s better for society to have a large population of younger people,” says Yoriko Muto, founder and chief executive of the Shukatsu Association, speaking above the cacophony of hawkers.

“But in reality, Japan is already an aged society and we have to try not to think of this in a negative light…And there may be business chances in the process.”

Smartphone-connected Health Devices Top Healthcare Trends for 2016

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According to PricewaterhouseCoopers annual Health Research Institute report, smartphone-connected health devices, behavioral health are top healthcare trends for 2016

 

By Aditi Pai | Dec 10, 2015 | This article originally appeared in MobiHealth News

Smartphone-connected device use, focus on behavioral health, and better databases for health information analysis, are within the top 10 trends in healthcare for 2016, according to PwC’s annual Health Research Institute report. HRI also released results from a survey of 1,000 US consumers.

“In 2016, millions of American consumers will have their first video consults, be prescribed their first health apps and use their smartphones as diagnostic tools for the first time,” the report reads. “These new experiences will begin to make real the dream of care anywhere, anytime, changing consumer expectations and fueling innovation.”

Health apps and connected medical devices were underutilized in 2015, according to PwC. But this will change next year, in part, because of the move away from fee-for-service care as well as advances in wireless technology. One of HRI’s main findings this year is that between 2013 and 2015, use of health-focused apps doubled. While in 2013, 16 percent of consumers said they had at least one health app on their device, in 2015, that number rose to 32 percent.

The adoption of these smartphone-connected health devices will be led by those using them for primary care and chronic disease management. These departments are already offering connected health devices, activity trackers, connected scales, health apps, and e-visits to their patients.

Cybersecurity concerns for smart health devices and apps will also be a big trend in 2016. Companies will have to take preemptive measures to maintain the trust of consumers. After a hacking incident, 51 percent of consumers said they would be hesitant to use any of the manufacturer’s devices, while a similar number of people, 50 percent, said they would be hesitant to use any connected health device.

Next year, employers will also prioritize behavioral health. According to PwC, mental health conditions cost US businesses more than $440 billion every year. These employers are focusing on issues like stigma and mental health awareness. The reach of behavioral health offerings will also increase. More primary care physicians will start using remote technology to connect with behavioral health specialists, which will ultimately help primary care teams manage routine behavioral health problems. And behavioral health doctors will use remote technology to connect directly with patients.

Patients are also on board with this trend. Some 72 percent of consumers between the ages of 18 and 44 said they would be willing to use video visits services to communicate with a mental health provider instead of going to an office visit. This number decreases to 43 percent with consumers who are 45 or older.

Another trend for 2016 will be the use of population health databases, which enable providers to identify more insights about patients. The survey found that 83 percent of patients are willing to share data with their provider if it helps providers diagnose and treat the patient and a smaller number, 73 percent, are also willing to share this data if it helps providers diagnose and treat other patients.

Doctors Underprepared for Onslaught of Very Sick Patients in US

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By Leah Samuel | Dec 7, 2015 | This article originally appeared in STAT

Dementia and other degenerative illnesses are a challenge for primary care doctors in the US.
Photo Credit: (AP Photo/Charles Dharapak)

Nearly a quarter of primary care doctors in the United States say their practices are not well-prepared to manage patients with multiple chronic illnesses, according to an international survey.

The 2015 Commonwealth Fund International Health Policy Survey of Primary Care Physicians, released Monday, surveyed doctors in 10 countries, including the United States, Canada, Germany, Australia, and Sweden. Doctors in the United States and Canada felt least prepared among the countries surveyed to handle patients with multiple chronic conditions.

These patients are becoming more common. Aging populations mean more people suffering from degenerative conditions such as dementia and physical frailty. And medical advances have resulted in longer lifespans for people with chronic conditions such as diabetes and heart disease.

“This global phenomenon is the fruit of the success of improvements [in] medical technology and public health,” said Dr. Eric Schneider, the Commonwealth Fund’s senior vice president for policy and research, and one of the study’s authors.

American doctors’ confidence was especially low in dealing with mental health issues. Only 16 percent of US doctors felt prepared to treat patients with severe mental health problems.

“Primary health care physicians are simply overwhelmed,” said Schneider.

The survey authors highlight some efforts being made under the Affordable Care Act to improve care for these complicated cases. One promising model is the “primary care medical home,” which coordinates efforts between the primary care physician and other medical professionals to manage a patient’s various needs. The researchers also see promise in improved sharing of electronic medical records among health professionals, and in reforms of payment systems.

“We’re still in early days of the Affordable Care Act,” said Schneider. “But it’s designed to strengthen primary care and the treatment of chronic disease. This survey tells us there’s a lot of work to be done.”

Leah Samuel can be reached at leah.samuel@statnews.com
Follow Leah on Twitter @leah_samuel

ParkinsonNet: Improving the Lives of Parkinson’s Patients

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More than 50.000 people in the Netherlands have Parkinson’s disease. Parkinson-specific and personalized healthcare is essential to improve the daily life of these patients. For over a decade now, ParkinsonNet strives to offer these patients the best possible care needed. ParkinsonNet, established by Dr. Bas Bloem and Marten Munneke in Nijmegen, The Netherlands in 2004, is a nationwide infrastructure consisting of 68 regional and multidisciplinary networks of specifically trained allied healthcare professionals who deliver integrated care to patients with Parkinson’s disease. Almost 3,000 healthcare professionals are part of this network.

ParkinsonNet’s goal: to make sure that every person around the world with some form of Parkinson’s disease receives the best care possible. ParkinsonNet accomplishes this goal by providing training, a yearly congress, developing guidelines, research and connecting patients and healthcare professionals. ParkinsonNet facilitates optimal collaboration between professionals and provides transparency about the quality and costs of healthcare. The result of the ParkinsonNet model is an increase in quality of care, greater efficiency, a reduction in disease complications (including a 50% reduction in hip fractures) and a marked reduction in costs. Because of these marked achievements, ParkinsonNet has received multiple national and international awards, including the prestigious Value Based Health Care Award 2015 by the renowned professor and health economist Michael J. Porter. Dr. Bas Bloem received this year’s Holst Memorial Lecture Award 2015 from Philips Research and Eindhoven University of Technology in recognition of his research and initiatives in Healthcare Innovation.

Financing Long-Term Services & Supports: Options Reflect Trade-Offs For Older Americans & Federal Spending

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Over the past decade, purchases of private insurance for long-term services and supports have declined; a new study proposes three new options and estimates their costs and distributional effects.

Published Nov. 15, 2015 in Health Affairs
by Melissa M. Favreault, Howard Gleckman and Richard W. Johnson

Abstract

About half of older Americans will need a high level of assistance with routine activities for a prolonged period of time. This help is commonly referred to as long-term services and supports (LTSS). Under current policies, these individuals will fund roughly half of their paid care out of pocket. Partly as a result of high costs and uncertainty, relatively few people purchase private long-term care insurance or save sufficiently to fully finance LTSS; many will eventually turn to Medicaid for help. To show how policy changes could expand insurance’s role in financing these needs, we modeled several new insurance options. Specifically, we looked at a front-end-only benefit that provides coverage relatively early in the period of disability but caps benefits, a back-end benefit with no lifetime limit, and a combined comprehensive benefit. We modeled mandatory and voluntary versions of each option, and subsidized and unsubsidized versions of each voluntary option. We identified important differences among the alternatives, highlighting relevant trade-offs that policy makers can consider in evaluating proposals. If the primary goal is to significantly increase insurance coverage, the mandatory options would be more successful than the voluntary versions. If the major aim is to reduce Medicaid costs, the comprehensive and back-end mandatory options would be most beneficial.

Many older Americans need long-term services and supports (LTSS) to help them with basic activities that they cannot complete on their own because of chronic illness or disability. In 2011, 7.7 million adults ages sixty-five and older received help with activities of daily living (ADLs), which include such tasks as bathing, dressing, eating, using the toilet, and getting out of bed. About 6 million adults in the same age group—nearly one-sixth of that population—have severe LTSS needs, requiring help with at least two ADLs for ninety or more days or having severe cognitive impairment.

LTSS needs will grow over time as the population ages. Urban Institute projections indicate that the number of older Americans with severe LTSS needs will increase 140 percent between 2015 and 2055, reaching 15.1 million. Over the same period, there will be an 80 percent increase in the US population ages sixty-five and older and a 190 percent increase in the population ages eighty-five and older.

The average American turning sixty-five today will incur about $138,100 in future lifetime expenses for severe long-term care needs, according to Urban Institute projections. These future expenses could be financed by investing $69,500 at age sixty-five, under the assumption that the investment earns average returns. This average spending estimate masks a large degree of uncertainty, which complicates retirement planning. Forty-eight percent of adults turning sixty-five today will likely never experience severe LTSS needs, while 15 percent will incur more than $250,000 in lifetime expenses. These estimates cover only those costs associated with severe LTSS needs and exclude the often substantial sums spent on coping with less severe disabilities.

Few Americans can protect themselves against this financial risk. Medicare does not provide coverage for extended LTSS. Medicaid does, but only for people who meet state-specific eligibility standards that limit benefits to those who have disabilities and very limited income and wealth. However, because people with LTSS needs may qualify for Medicaid after they deplete most of their resources, Urban Institute projections indicate that Medicaid will pay for about one-third of lifetime costs associated with severe LTSS needs for people turning sixty-five today.

Private insurance could help shield middle-income people from this financial risk. However, the market penetration of private long-term care insurance has been limited because of high premiums, the potential for Medicaid to crowd out demand for private coverage, and adverse selection—which limits the size of the market and drives up premiums. Indeed, sales of private long-term care policies and certificates declined from 528,000 in 2005 to 395,000 in 2012.

In addition, private carriers are no longer selling true catastrophic insurance, which helps protect consumers from financial risk. Instead, most of the carriers limit benefits to five years or less. As a result, private long-term care insurance pays less than a tenth of LTSS expenses for older people with severe needs.

Because private insurance is not widespread and public financing is available only for people who have few financial resources or who have already spent nearly all of their resources, older adults with severe LTSS needs will pay about half of their expenses out of pocket.These expenses impose financial burdens on many older adults with LTSS needs. In 2014, people ages sixty-five and older had median financial assets of only $76,000 and median home equity of only $80,000.

People who lack the resources for LTSS can receive poor or inappropriate care. This care gap can not only harm those who need assistance but also increase costs for Medicare, which pays for the hospitalizations and other medical treatments that often result from acute episodes caused by inadequate assistance.

Insufficient financial resources can also burden family caregivers, the primary support for most frail older adults. One in five family caregivers report high levels of emotional and financial stress, and more than three in five say that caregiving limits their ability to do paid work. The lifetime financial cost for a woman who leaves employment in her fifties to care for a parent may exceed $300,000, and she may be more likely as a result to fall into poverty than someone who did not leave employment to provide care.

Policy makers, advocates, and researchers have tried unsuccessfully for decades to create alternative LTSS financing mechanisms. In 1990, for example, the US Bipartisan Commission on Comprehensive Health Care—also known as the Pepper Commission after its first chair, Rep. Claude Pepper (D-FL)—proposed social insurance for home and community-based care and for the first three months of nursing home care for all Americans, regardless of income.The unsuccessful 1993 health reform plan of the administration of President Bill Clinton included a new state-run home care program for people with severe disabilities, with no restrictions on eligibility based on age or financial resources.

In the most recent attempt, Congress passed the Community Living Assistance Services and Supports (CLASS) Act as part of the Affordable Care Act in 2010, creating a national program of voluntary long-term care insurance. However, the law was never implemented by the administration of President Barack Obama and was repealed by Congress in 2013.

To better understand how policy changes could expand the role of insurance in the financing of long-term services and supports, we modeled several alternative programmatic options and compared likely outcomes under each to expected outcomes under current policies. Building on previous efforts to analyze LTSS financing policy options, we estimated overall costs and benefits and examined how they varied by multiple characteristics, including income. Our efforts represent the first look at some simplified options and highlight both the capabilities of our microsimulation model and its potential to inform the policy debate.

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