3 lessons from HHS' latest healthcare initiatives

Three recent announcements from the U.S. Department of Health and Human Services have major implications for the agency's strategy going forward, writes health economist and policy expert Paul Keckley, managing director at the Navigant Center for Healthcare Research and Policy Analysis.

In the past week, HHS announced a major reform of how it pays Medicare providers. Soon after, the Center for Medicare & Medicaid Services truncated the meaningful use reporting period, followed by HHS' Office of the National Coordinator for Health Information Technology (ONC) unveiling its Interoperability Roadmap for public comment.

These announcements, Keckley writes, indicate:

  • HHS will give providers incentives to assume more risk: Over the next 10 years, healthcare costs are projected to increase 6 percent annually, meaning the pressure is on for the Medicare and Medicaid programs to find a way to maintain their solvency. The crux of HHS' strategy to achieve this is offering incentives to providers for value of care over volume and encouraging more providers to assume financial and clinical risk, Keckley writes. The Affordable Care Act has already begun the process of incentivizing this transition, he writes, but the latest payment reforms reaffirm the government's commitment.
  • HHS counts on cooperation from employers and payers: For the above to work, Keckley writes, payers and employers must be part of the shift of risk to providers, with employers currently paying for most of the Medicare program's deficit. Some employers and payers are even more aggressive than HHS about realigning incentives, using strategies such as reference pricing, carve-outs and narrow networks.
  • HHS aims to nullify common provider complaints: The HHS announcements, according to Keckley, address several frequent clinician excuses to avoid assuming more risk. For example, clinicians frequently note that the bulk of their revenue derives from fee for service, leaving little incentive to transition, but the Medicare announcement will incentivize value-based care. While clinicians often see health information technology as overly expensive without improving quality, risk-sharing arrangements make interoperability IT a "necessary investment." And despite complaints that the programs focus on cost reduction at the expense of quality, he says to qualify for shared savings and risk-based payer arrangements, clinicians must achieve specific quality and safety milestones.

To learn more:
- read Keckley's piece