HHS Changes Incentivize Value Driven Care, But What About Device Interoperability?

Last week, the Department of Health and Human Services (HHS) set ambitious goals on a series of healthcare reforms including new Medicare payment models and a proposed deadline for interoperability. These are two bold steps that can incentivize quality care and help bring smart technologies into our healthcare system that enable more connected, coordinated and cost-effective healthcare.

Monday’s announcement by HHS  that half of all Medicare payments would move to alternative payment models like accountable care organizations (ACO) and bundled payment programs by 2018 potentially changes how healthcare will be reimbursed. The focus on value was made clear by the commitment to have 90% of all traditional Medicare payments linked to quality or value by 2018 as well. Shifting the incentive for care providers from doing more to doing better will ultimately result in a more effective healthcare delivery system.

We need to ensure that value is outcome-based and patient-centered, not focused on process measures. We’ve all seen the rampant waste that can happen when the only incentive is to provide more care, not better care, or checking-off a certain set of boxes versus meeting the patient’s needs. Executed correctly, these changes have the potential to realign our healthcare delivery system to be smarter, more cost-effective and more coordinated, and we all need to get behind them.

However, moving to value-based healthcare can be challenging, and ACOs have had a spotty history. Medicare Advantage plans have had the authority to manage volume and the incentive to take a holistic approach to coordinating care but they haven’t necessarily taken full advantage of it.

Despite these hurdles, initial responses from industry have been encouraging. The news last Wednesday regarding a new task force of the nation’s leading providers, insurers and employers was particularly welcome. They have committed to shift 75% of their members’ business into contracts withincentives for health outcomes, quality and cost management by January 2020, which is very promising to healthcare consumers around the country.

These changes to reimbursement could open the door even wider for innovation in patient care delivery via new technologies, policies and practices such as patient-centered medical homes, telehealth and other forms of technology-enabled care. But there’s a big stumbling block to connected care, which is what made us so excited about the week’s other big announcement in healthcare delivery.

On Friday, HHS’ Office of the National Coordinator for Health Information Technology’s (ONC) said it would require initial interoperability of healthcare data by 2017, facilitating the true Meaningful Use of our system of electronic health records. ONC head Dr. Karen DeSalvo says it would allow “… more seamless, yet appropriate, sharing of electronic health information for ‘small’ (individual patient), ‘big’ (population level and beyond) and ‘long’ data (wrapping around the individual and telling their health story over time).” All of these are critical to moving quality patient care out of the hospital, the most expensive site of care.

The President’s budget clearly reflects support for this work, requesting $91.8 million in funding for ONC – an increase of almost 50 percent from earlier years. It also includes $33.7 million for the development of an EHR certification program that focuses on ensuring information sharing.

While device interoperability does come up in ONC’s roadmap, this is a unique time in history for ONC and policymakers to take the next step and seize this opportunity to save time, money, and lives with functional medical device interoperability. Device interoperability has to be achieved if we are going to get the full benefit of the interoperable healthcare environment Medicare’s value-based reimbursement enables. Especially when considering the hundreds of billions in waste associated with missed prevention opportunities and fraud, unnecessary hospital readmissions, as well as medical mistakes, errors and preventable complications – all which could potentially be reduced by medical device interoperability.

As with any advancement, there are challenges. And we may have a long way to go to see these changes implemented. But at this moment in history, we have a tremendous opportunity to pursue policy options that will help our nation realize transformational healthcare reform, and usher into our healthcare system many of the smart technologies we already enjoy in almost every other aspect of our lives. And to do so, we must incorporate medical device interoperability as we shift to value-based healthcare.


Nick Valeriani is chief executive of West Health. He previously served as worldwide chairman of medical devices and diagnostics at Johnson & Johnson.


Morning Consult