WASHINGTON -- "Change is possible, change is necessary, and change is coming."
So said Health and Human Services (HHS) Secretary Alex Azar Monday morning as he laid out his department's agenda. Azar began his speech to the annual policy meeting of the Federation of American Hospitals, a trade group for for-profit hospitals, by describing HHS's relationship to industry.
"One of the key commitments President Trump made across the administration was to see the private sector as our partners, not just entities to be regulated or overseen," he said. "We at HHS see stakeholders as part of the solution to our country's many healthcare challenges."
In addition, "We're unafraid of disrupting existing arrangements just because they are [controlled by] powerful special interests," said Azar.
Although many advancements have been made in medical science, "innovation in payment and delivery systems is simply not proceeding at the same pace," he said. "Today's system is not delivering outcomes consistent with [its] cost."
For example, "the opioid epidemic facing our country is one of our greatest public health challenges, even though we know that addiction is a treatable disease," he said. "On top of that, the current trajectory in health spending is both unsustainable and unmatched by increases in quality ... Since I arrived at HHS in 2001, the budget has expanded from $400 billion to $1.2 trillion today. We're bigger than the entire British Empire."
Change to Value-Based Care Must Accelerate
For more than a decade, the country has been on a journey from paying for sickness care to paying for outcomes and wellness, "but that transition needs to accelerate dramatically," Azar said.
In an ideal system, "consumers would drive quality with information, competition, and genuine choice," he said. "Some argue healthcare is different and should be immune from market forces. I disagree ... Real competition has never been tried in our bizarre third-party payment system."
Azar outlined four priorities for HHS:
- Giving consumers greater control of their healthcare records through health information technology
- Making healthcare pricing more transparent
- Using experimental models in Medicare and Medicaid
- Removing government burdens that impede the transformation to value-based healthcare
Several of these steps involve putting the consumer in charge, "which is a radical reorientation from the way healthcare has worked for the past century," he said. "In fact, it will require a degree of federal intervention. That may sound surprising, but the status quo is far from the free market."
When it comes to health information, although substantial numbers of providers have adopted electronic health records, that often has meant simply transferring what was previously on paper to the computer, said Azar. "Unless we put the technology in the hands of patients themselves, the real benefits will never arrive."
"We've already got the means to empower patients, but it's not yet happened ... the key will be not [to have] the federal government micromanaging things," he said. For example, patients "ought to have their records in a useful format" and they need to be able to bring their records from one provider to another.
Price Transparency Must Increase
To reduce costs in the system, price transparency is necessary, Azar continued. He noted that a few years ago, when he was working in Indiana, his doctor asked him to go to a different office in the medical building to get a stress test, but instead of it being an outpatient procedure, as he had expected, he found himself being admitted to the hospital.
Azar, who had a high-deductible health plan, asked how much the test was going to cost, and was told the information wasn't available. But he persisted, and eventually the clinic manager told him the test would cost $5,500. "The key was what insurance would pay ... [after asking about that] I was told the price was $3,500," he said.
So Azar looked online to find out what the test would cost if done on an outpatient basis. The answer: $550. "There I was, a former deputy secretary of HHS, and it took me that much effort. What if I was a grandmother [trying to find that information]? This isn't right and it must be changed."
HHS also will use Medicare and Medicaid, especially the department's Center for Medicare & Medicaid Innovation -- to test out new payment models -- and they won't just be working around the edges, he said. "Only Medicare and Medicaid have the heft, the market concentration, to be a [real] mover .... We won't spend the next few years tinkering with how to build a better joint replacement bundle."
Right now the department is looking at Medicare's current experiment with accountable care organizations -- groups of physicians, hospitals, and other providers working in collaboration to deliver high quality, low-cost care to a defined group of patients. "It was intended to give providers 3 years to learn how to accept risks and share savings ... but the results have been lackluster," he said. "In retrospect, this is not a surprise ... as a matter of principle, we want to move to a system where we can be agnostic about ownership structures."
In terms of reducing barriers, one area to consider is the data reporting requirements that providers now have, "as well as restrictions in FDA communication policies," he said, without specifying which policies he meant. Current interpretations of anti-fraud law also may be creating problems, he added.
Change Happening in Arkansas
Shortly after Azar finished speaking here, Seema Verma, the administrator of HHS's Center for Medicare & Medicaid Services (CMS) held a press conference in Arkansas to announce that CMS had approved the state's waiver application for adding work requirements to Arkansas's Medicaid program. "We have received an overwhelming response from states wanting to put these programs together," she said.
"As I talk to people on the Medicaid program, folks don't want to be there. ... It's easy to hand them a card but much harder to help them make changes... to move on to a better life."
The program, known as "community engagement," mandates that eligible Medicaid recipients must be employed, training for a job, volunteering, or otherwise engaged in something to get them moving toward employment. It will be implemented fairly quickly, with formal notice of the program issued by March 15th and a computer portal becoming live on March 30th, said Arkansas Medicaid director Cindy Gillespie.
"The first week of April, all individuals in Arkansas who are subject to the requirement will get a letter [about it], and the first group will [be required to report on their work efforts] on June 1. That shows you how rapidly we're prepared to move," she said.
Exceptions to the requirement will be made for Medicaid enrollees with physical disabilities or substance abuse disorders, those who are taking care of children, and those who are older, said Arkansas Governor Asa Hutchinson (R). Arkansas is the third state -- after Kentucky and Indiana -- to get a work requirement approved by the Trump administration for its Medicaid program.