Want to Know the Future of Health Care?
What CMS & HHS Are up to
Why You Should Care
It’s no secret there are crazy things going on in the health care space. Accountable Care Organizations (ACOs) for sure, but that’s just a piece of the puzzle, part of a major change to the whole system and how people are measured and compensated. Medicare, especially the Medicare Advantage (MA) plans are part of that, but it’s larger, will move to all Medicare, Medicaid and Commercial as well (cf. ACOs). You hear a lot of hyperbole out there. Game-Changing. Paradigm-Shift. Once-in-a-Lifetime. This time it’s real.
The Segway, a ‘Once-in-a-Lifetime’, ‘Game-Changer’ for polo horses everywhere
Way back when, we were fortunate enough to get in on the ground level of the very beginnings of Disease Management – this crazy idea of mining hundreds of millions of record and building predicative models (using some unwarranted variation research) to identify folks about to fall off of the medical cliff, then set them up with an intervention, often a nurse or health coach, in order to prevent them from falling off said cliff. Today this is the industry norm – albeit the industry is in the process of major transformation (story for another time).
The point is 15 years ago that was radical stuff. Had all the game-changing, paradigm-shifting, once-in-a-lifetime-ing labels applied. But that’s small potatoes compared to what’s going on now. And no, I don’t mean mobile devices or new 2.0 apps or even nano-tech. I mean something much less sexy, but many times more important.
We do things with Department of Health and Human Services, the Centers for Medicare and Medicaid Services, the Office of National Coordinator, etc. but most of the time we can’t talk about it.
CMS and HHS are very cloak and dagger. Like James Bond, but without all the tuxedos and martinis. (well, on occasion…).
Health Data Initiative (HHS/CMS) after party
But this time we can talk – it’s public.
Recently we served as a public adviser to National Committee on Vital and Health Statistics in a joint shindig with CMS and HHS.
Now this wasn’t pointy-headed geeks discussing how to raise the predicative value of a given measure. This was a grand reveal – a multi-agency show-and-tell – think Detroit Auto Show or Oscars without all the sequin gowns (okay, there were some).
It was also an industry-wide engagement with representative industry leaders giving analysis, recommendations and general feedback and suggestions both at the strategic and the tactical levels.
The lineup was:
- Todd Park, Chief Technology Officer, Department of Health and Human Services [cf. the martinis]
- Niall Brennan, Acting Director, Office of Policy, Centers for Medicare and Medicaid Services [cf. the sequins]
- Kerry Hicks, CEO, Healthgrades (physician quality measures for public uses)
- Brian Kelly, Chief of Health Informatics, Aetna informatics architecture and CMS data to support ACO enablement (provider services, care improvement technologies)
- Harley Geiger, Center for Democracy and Technology (privacy & security)
- Bill Davenhall, ESRI (geospatial tools to enhance care delivery services)
- Joshua Rosenthal, RowdMap (data & analytics)
Audio and slides of all the presentations can be found HERE.
But listening to the podcast and viewing the slides won’t give you the context – and it’s the context that’s crucial to figuring out what’s going on.
If that’s what you’re after, keep reading.
I won’t try and summarize Todd Park’s remarks. It wouldn’t do them justice. There’s a reason why he’s featured in the Atlantic, Wired and the like.
In a nutshell, it’s about data and the government’s vision of how markets can use it to create public good. The government doesn’t do some things well. But what they do well, as in what they have successfully done to stimulate positive change, innovation and improve social and public good and stimulate markets, is liberate data.
Maybe it’s the weather data that serves as the foundation for computer and smart phone apps that helps folks make better decisions, not just about what to wear, but how to travel, when to take cover, and even save lives – and created a nice little niche market.
Maybe it’s geo-location data. Here, it’s not just the navigation and tracking services/product/apps but the data framework that supports the location capabilities of almost every consumer technology (or soon to be thereof – the venture trend on location is likewise a subject for another time).
Thank you, Government!
The plan is to do the same thing with the health care data.
The health care system is tricky and laden with perverse incentives, often immune to good ideas and even profitable ones. It’s a tricky, complex systems problem (all subject for another day – but see here for a taste [insert link to previous post]).
One way to tackle such a tricky problem is with a clever solution, decentralized and viral by nature. Release the data. Let the market make it applicable to consumers and watch the improvement. Lest this sound naïve there are great examples of this working. A given community seeing that they are ranked the lowest in a given metric, and that serving as motivation for them to improve (note – basic gamification type dynamics in play here – likewise a subject for another time).
That’s the pure data response, applied to healthcare. But as we mentioned, healthcare is tricky, often immune to things that work in other verticals.
The rest of the story is in the payment, the profit, the reason for status quo and start up entities to get involved, use the data and make improvements to clinical outcomes and member satisfaction.
Note – to do a systemic change, you need the data, but you also need the incentives, not feel-good, but market-based incentives like profit and the threat of consolidation.
This is the fundamental change in the way folks make money. A change from a Fee-for-Service paradigm (I make profit from doing more stuff – and all the slop, unwarranted variation, etc. it brings) to a Pay-for-Performance paradigm (I make profit from doing well on various metrics, clinical, satisfaction, etc, compared to my ‘peers’).
Now Pay-for-Performance (P4P) isn’t new. Old hat with providers (doctors, hospital, etc.). This time it’s with the payers (insurance plans). Whereas previously a plan could absorb/neutralize/front-load P4P by “passing it on” to the providers (e.g. “value-based-purchasing,” “benefit/product/premium configuration or optimization”) this time it’s different.
It’s different in two ways.
First, it changes what a payer does – and even what they are. Whereas some payers were basically claims processors and risk brokers, they are now moving to active participants in the health care delivery system.
Second, it changes the definition of a “profitable life.” Whereas before a profitable life was someone at the low end of a clinical risk stratification (someone who was not sick, or was less sick/less costly than predicted/planned) in the old paradigm, now a profitable life is someone under the Pay-for-Performance rubric.
Again, this is already in effect with Medicare MA plans, but the general paradigm is coming to all Medicare, Medicaid and even Commercial. This New York Times article overstates things (and misses other major points), but the basic idea is that there’s fundamental changes.
WRONG – IT’S NOT THE END, BUT JUST THE BEGINNING
You’re already seeing the effect, not just in the ACO clamor, but in payer identity, most clearly seen in the M&A activity of payers buying MA plans, providers (a means to improve the metrics), hybrids (MA plan/ provider networks) and the means to control or manage them (portals and pipes). As in a half dozen billion dollar transaction in the past few months (often cash). This isn’t just an attempt to unload coffers, diversify, improve PR. It’s to transform to the new paradigm and gain an advantage. Specifically to gain “profitable lives” and to gain the means to make them more profitable (integrated provides and systems to manage providers).
Obviously this is a bit of a simplification and there are a host of qualifications and nuances. Integrated provider/payer networks offer benefits to commercial populations. Acquiring MA plans ensure mass and prevents consolidation (profit is calculated against ‘peers’ and repeat low performance is cause for canceling the contracts/consolidation). You don’t need to own lives and providers but could simply control them through products/services/pipes and you could always try and brute force a preferred network or value-based-purchasing or benefit/payment configuration. You could try a risk/profit/performance share with a provider network. Some payers might even embrace the claims processing and risk underwriting only role, even attempting to carve out niche and spin out an “insurance-in-a-box” product for large employers that are already Administrative Services Only (ASO). But this narrative gives you a good sense of the general direction of the overall movement in the space.
Also note, we’re not even touching on what this means for intervention vendors. In a nutshell, it allows them to create specific, hard ROI from their programs/products/services, by tying the outcomes to these Pay-for-Performance metrics, where Star metrics or specific provider/hospital/long-term care facility or even ACO counterparts. That’s very good news.
One of the things necessary for a system to work is not just the data, but the ability to use it to tie an intervention to hard ROI.
In the old world Disease Management had an aspect of being a bit ‘actuarial-ally difficult’, in attempting to show a counter hypothetical example (our intervention saved costs that otherwise would have been spent). That doesn’t means it’s not valuable, just that the reconciliation got difficult, even contested (these are now examples in actuarial textbooks).
This time we have clear metrics, a bridge from intervention vendors’ actions to outcomes. Every intervention vendor, needs to build not only their intervention but their organization for this – whether a start up from day one, or a status quo retooling their core infrastructure.
Typical Health Care ROI Plan
Atypical CFO Reaction
All this not only means fundamental market changes in the space, it also means infrastructure changes, especially for CMS/HHS.
To support the old world of Fee-for-Service, you need to spit out data, often transactional. Basically what someone did and how much it costs. Not unlike getting a bill at a restaurant – what you ate and the price for each thing.
This means challenges have been around privacy and scalability (access, cutting custom files, etc.).
But now the move to Pay-for-Performance is a business challenge, a business change that breaks historic infrastructure.
It’s one thing to give data designed for fees for specific services as the basic business transaction.
Another thing to support P4P. Telling payers, providers et al that they need to be performance based, and necessarily data-driven, means that they need that data rolled up into meaningful information from which they can manage their performance.
Essentially CMS needs additional resources to ensure this. But it’s a good bet. A few more chips on the table gives them the infrastructure to run this system, now that the incentives have been aligned.
It also allows for real innovation.
Very few researchers or groups of folks can build cool new things, tapping all the way down to the data, whether member-level or business entity level (note each type has different biz challenges), then up through some sort of system to access and serve it up including some sort of data structuring to make it meaningful.
That’s one reason why when starting out so many groups end up simply going Direct-to-Consumer and slapping up an app in the Apple store. And hence the massive failure rate of ‘2.0’ start-ups in the space.
So building an infrastructure will support the new profit system and serve as a foundation for start-ups to build on top of, spurring innovation.
Well, that happens to be exactly CMS’s plan, creating a business division dedicated to information products and services.
Please see Niall Brennan’s slides and listen to his audio HERE to hear it straight from the horse’s… mouth (mouth, guys, horse’s mouth).
Just because it’s necessary doesn’t make it any less brilliant. Folks public and private, status quo and start up, fail to do what they need to do all the time – can see things coming but fail to act, to pull the trigger. Not this time. Good news. Big change. Real, positive change.
Now to do a good job at creating all this you need to do two things.
First you need to make the data meaningful. Then you need to get people to use it.
First, meaning. To make it meaningful you need to structure it around business questions. Business this time also lines up nicely with social good – positive clinical outcomes and positive patient/member/consumer experience.
Taxonomy is the key. Not just metadata in a conceptual or entity diagram but structuring the information in a way not only that users can understand it but one that is purpose-built for the business goals (in depth subject for another time). And taxonomy is the key to turning data to information – and everyone does taxonomy, either unintentionally and poorly or intentionally (and even then, most often poorly).
Second thing is getting folks to use the stuff. This is all about good access – learning center type stuff. Putting the information in an environment where people can share, collaborate and learn. Basic documentation as well as interpretation (not just the definition of a given piece of data mean, but what it means, how to interpret it. E.g. What does it mean when such and such payer is performing well compared to their peers in clinical outcomes only in areas that are affluent and have good provider access but poorly in… Same thing for intervention providers whose programs/products/services improve member satisfaction only in ABC but not in XYZ. (Again, subject for another time.)
The long and the short is this. The beauty of this Pay-for-Performance system is that the shared metrics allow folks to answer the questions and take specific tactical actions, and having real money tied to it provides the incentive (meanwhile allowing researchers to determine the characteristics of successful payers and interventions, providing the framework to policy makers to stimulate their drivers with specific policies).
Furthermore, an information infrastructure (biz division, platform, etc.) allows the government to improve security while automating access (credential-based data enclave, etc.) while monitoring the usage of data/info as content allows them to do data-driven information product development.
But like the old adage says, the best idea in a drawer full of ideas is that plan for the cabinet that holds the ideas.
(Hint: the cabinet that holds the ideas actually exists.)
Buy this book: “Whatever You Think, Think the Opposite” by Paul Arden (seriously)
This time around, happy to report (and able to publicly do so) that the HHS/CMS plans are not only great, they exist and they’re taking the necessary action and committing the resources to turn this tremendous opportunity into something real.
Hard to get a sense of how big the change is while living in the midst of it. But we’ll look back and wonder.
Today, it’s public. They’re officially building printing presses and setting up the print shops to run the information revolution.
(Todd Park right, Greg Downing center, Niall Brennan left)
Kudos, guys. Well done.
One last thing. Why are we telling you this, not just sharing the information but our analysis?
First, we’re no doubt wrong in some places and on key issues.
We would love to hear about it.
Second, that’s not what we’re about.
This change is a big deal. Too big for anyone or any group to figure out on their own, much less to own.
One of the really great things about HHS/CMS is that they recognize this – one of the chief reasons they invite industry folks in to discuss, share, give their takes, and hopefully jointly learn.
In the old world, folks often hid their ignorance, buried their mistakes. This time it’s better to acknowledge what we don’t know, where we can fall down, and to fix it, and build it together. No shame in it – it’s too tough, too tricky – and that old way of handling things was one reason why we’ve had less than stellar results in the space trying things like this before.
Todd Park started off the entire session explaining this eloquently. I won’t do his remarks justice, so check the audio HERE.
While you’re there, check the public slides from Niall Brennan of CMS, you’ll find an example that they go out of their way to highlight.
This sort of approach isn’t just honorable; it’s smart – the only way forward.
It will take a village.
The smartest and most action oriented folks across the space, working together benefits everyone.