Farzad Mostashari: To bend the healthcare cost curve, policymakers need to make the business case for change 

Bending the healthcare cost curve requires stakeholders to ask themselves one question: "Who makes money in America preventing bad things from happening to patients?" 

Farzad Mostashari, M.D., the former National Coordinator for Health IT at the Department of Health and Human Services, said that question is key to establishing policies that will drive the innovation needed to reduce growing healthcare costs. Policymakers should set the rules and "let the players play," he said. 

"You want to align policy so that individual profit-seeking furthers societal goals," said Mostashari, CEO of Bethesda-based Aledade Inc., which offers technology and services to help physicians reduce costs and organize accountable care organizations.

Farzad Mostashari
Farzad Mostashari (Oliver Wyman Health)

Health policy needs to make a clear business case to succeed, he said, speaking at a forum on the cost of healthcare in the U.S. hosted Thursday by the Alliance for Health Policy.

For example, one of the crucial barriers to interoperability and data-sharing is not the tech itself, but that providers and other stakeholders may not see the financial value in sharing the data they have. 

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He said this is why the Centers for Medicare & Medicaid Services' idea of tying participation to mandatory data-sharing could lead to significant change.

An area that's been a breeding ground for innovation in cost-cutting is Medicare Advantage, and what works there could be a model for others to follow, Mostashari said.

The structure of Medicare Advantage incentivizes providers and plan administrators to promote wellness and other preventive care, he said, as they are paid a flat monthly rate for each member's care—regardless of how much he or she uses. If that individual's costs can be cut, the rest is profit, which is a powerful motivator, Mostashari said. 

"This is not an accident," he said. "If you set the right payment policies, opportunities will emerge." 

That means Medicare Advantage is an area ripe for disruption, too, he said. Walmart, for example, is reportedly eyeing a merger with Humana because it sees the potential benefits in jumping into the MA space, he said. 

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Treating fee-for-service Medicare more like MA could lead to innovations that help bend the cost curve, he said. But there is "a fly in this ointment," Mostashari said: growing monopolies. 

Payment policies incentivize this trend, he said, so new payment models need to stop pushing providers into anticompetitive mergers. 

"You're laying the seeds for your own demise," Mostashari said.