CMS has granted Medicare Advantage plans more flexibility than ever to offer non-medical services outside of traditional Medicare
A combination of higher potential payment and fewer restrictions on extra benefits for MA plans next year should lead to greater scrutiny of plans by CMS
The Centers for Medicare and Medicaid Services (CMS) recently made a series of interrelated policy changes to give Medicare Advantage (MA) plans more flexibility than ever to offer additional services outside of traditional Medicare. Known as supplemental benefits, these services have historically included items like dental, vision, and hearing. By allowing plans to offer an even wider and more tailored array of services, CMS expects that plans will be better positioned to attract members and meet beneficiary needs.
In its announcement of rates and policies for 2019, CMS notified plans that it would expand the scope of permitted services to include things like nonskilled in-home workers, portable wheelchair ramps, and other assistive devices. CMS also issued rules that give plans the ability to target supplemental benefits at certain subsets of enrolled populations. Previously, plans were required to offer such benefits uniformly to all plan participants. Under this new category of benefits a plan could, for example, decide to offer enrollees with diabetes more frequent foot exams with lower cost-sharing.
Moreover, beginning in 2020, CMS will create a third category of “chronic” supplemental benefits, allowing plans to focus services like nonemergency transportation toward individual chronically ill beneficiaries. This new category is the result of CHRONIC Act provisions enacted as part of the Bipartisan Budget Act of 2018. In sum, over the next two years, CMS will widen the scope of generally available supplemental benefits, permit benefits targeted at certain enrollee populations, and allow plans to offer a broader range of services to individual chronically ill members under certain circumstances.
How Will More MA Plan Flexibility Impact the Medicare Program?
In addition to these newfound flexibilities around supplemental benefits, MA plans are also poised to receive a substantial increase in revenue next year. The confluence of higher rates and less restrictions on extra benefits should lead to greater scrutiny on plans by CMS. As these benefits are implemented, the agency will need to ensure that new benefits actually improve outcomes and are allocated in an equitable way. For example, CMS’ review of benefit design will need to ensure that high-cost enrollees are not being excluded in favor of healthier patients and that eligibility is based on objective, measurable medical criteria. Another important question is what happens when a patient has begun to rely on these new services if plans encounter a less favorable rate environment and cease to offer them.
At a recent hearing, Senator Ron Wyden (D-Ore.), the Ranking Member of the Senate Finance Committee, lauded the bipartisan passage of the CHRONIC Act, which he said began the transition of Medicare from an “acute care” to a “chronic care” program. The CHRONIC Act reflects an important recognition among policymakers of the changing demographics in the Medicare population and the corresponding need to align federal dollars to best meet evolving beneficiary needs. With roughly 20 million enrollees, Medicare Advantage plans are on the front lines of this transition, and with the newfound freedoms provided by CMS’s recent actions, all eyes will be on them.
Earlier this year, industry titans Amazon, Berkshire Hathaway and JP Morgan Chase (ABC) announced a partnership that would incubate a separate, non-profit entity aimed squarely at healthcare. Given the seed stage of the collaboration, the announcement was necessarily vague but it did reference an intent to address healthcare for their employees, improve employee satisfaction and reduce costs. Earlier this week, the partnership announced the selection of noted surgeon, best-selling author, and public health researcher Dr. Atul Gawande as the CEO of the unnamed entity. It’s a bold marketing step to be sure – and I have nothing but respect and admiration for Dr. Gawande – but whether they’re employers or new ventures, they won’t disrupt the fiscal burden of healthcare.
The trajectory of the ABC entity is still unknown, of course, but like other high-profile announcements before it, I think it’s really targeting a fairly traditional group purchasing business model. At least that was the implication that CEO James Dimon gave to nervous healthcare banking clients at JPMorgan shortly after the press release hit this last January.
In fact, there are a number of these group purchasing entities already in existence – and some have been around for decades. With about 12 million members, Kaiser Permanente is arguably the largest and they often operate as a non-profit because the fiscal benefits should logically accrue to member companies and not the entity itself. As with other group-focused healthcare initiatives, all of this will likely have a positive effect on ABC’s one-million plus employees, but it won’t make systemic changes to our tiered – and expensive – healthcare system as a whole. Here are the top 10 reasons why this latest venture – or really any group of employers – can’t fundamentally change or ‘disrupt’ U.S. healthcare.
Employer Sponsored Insurance (ESI) isn’t the product of intelligent system design. In fact, there’s no clinical, fiscal or moral argument to support this unique financing model at all. It’s quite literally an accident of WWII history and America is the only industrialized country that uses employment as the governing entity for health benefits. We could have changed this accidental system design decades ago, but we never did.
Whatever the business of private industry (either privately held or publicly traded), unless they are literally in the business of healthcare, the vast majority have no specific healthcare domain expertise – nor should they seek to acquire it because it will never be a true focus or core competency. ABC may purchase (or build) component elements of that domain expertise for their employees, but any of those fiscal benefits won’t auto-magically accrue to other companies – and let’s not forget – at least some of those other companies are direct competitors to Amazon, Berkshire and/or Chase.
Unlike Medicare or Medicaid, ESI (and commercial insurance more broadly) supports inelastic healthcare pricing because it is literally whatever the market will bear based on group purchasing dynamics. This is also why Obamacare health plans are entirely dependent on a laundry list of subsidies. As individuals, few Americans can afford unsubsidized Obamacare plans outright. This also makes it entirely pointless to go through a lengthy legislative repeal process because it’s relatively easy to simply cripple Obamacare outright. Just remove the fiscal subsidies – which is exactly what’s happened (or planned).
The larger the employer (or group), the larger the fiscal benefit to the individual employer because of the group dynamic. That’s a compelling argument in favor of merger mania (leading to mega groups of millions of employees), but any of those effects don’t just ‘trickle-down’ to small employers. In fact, new business models (some with enviable ‘unicorn’ status in the ‘sharing economy’) are designed to ignore health insurance or health benefits outright. They may funnel employees to group-purchasing options – but that’s a marketing slight-of-hand to avoid the messy complexities and fiscal burden of managing ESI outright.
Like most other employment functions, ESI — and the employment process known as open-enrollment — is arbitrarily tied to our annual tax calendar, but that has no correlation or applicability to how healthcare actually works. We should all contribute (through taxation) to our healthcare system, of course, but a period of ‘open enrollment’ (with a very specific number of days) serves no clinical or moral purpose (other than to continually monitor for pre-existing conditions and possible coverage denial).
While big commercial titans capture all the headlines for many industry innovations (including high-profile healthcare initiatives like the ABC one), about 52% of private industry (either privately held or publicly traded) are made up of companies with less than 500 employees. Each of these employers is effectively its own ‘tier’ of coverage and benefits. That works to support tiered (highly variable pricing) but the only purpose of that is to maximize revenue and profits for participants in the healthcare industry.
Big employers are notorious for binge (and purge) cycles of headcount that results in a constant churning of employees. Today, the average employment tenure at any one company is just over 4 years. Among the top tech titans — companies like Google, Oracle, Apple, Microsoft and yes, Amazon – average employment tenure is less than 2 years. This constant churning of benefit plans and provider networks is totally counter-productive because it supports fragmented, episodic healthcare – not coordinated, long-term or preventative healthcare. Insurance companies tried to tackle this – only to be penalized when those efforts (which led to healthier members) were delivered straight to their competitors at the next employer.
ESI represents a 4th party — the employer – in the management of a complex benefit over a long period of time. That function is administratively difficult for even 3-party systems (payer, provider and patient) in other parts of the world. So why do we need a 4th party at all? We don’t.
ESI is heavily subsidized through local, state and federal tax exclusions. While this hasn’t been studied at great depth, it’s not a trivial amount. By some estimates, the local, state and federal tax exclusions combined amount to about $600 billion per year – which makes tax exclusions tied to ESI the 2nd largest entitlement behind Medicare. It’s effectively corporate welfare specifically designed to support expensive healthcare pricing.
The employer contribution to ESI is significant – typically over 55% of the cost for PPO coverage (family of 4) – but this also helps employers keep wages artificially depressed. In fact, in recent years, the galloping cost of healthcare has tilted unequally to employees – and shifted away from employers. The days of ‘sharing’ those annual cost increases equally are clearly over.
The combined effect of ESI – again, uniquely American – is the most expensive healthcare system on planet earth and one of the biggest systemic flaws behind this ever-growing expense is ESI. As a distinctly separate flaw (I call it Healthcare’s Pricing Cabal), actual pricing originates elsewhere, of course, but employers really have no ceiling on what they will pay – especially for smaller (under 500) employer groups. This year – 2018 – America will spend more than $11,000 per capita – just on healthcare and the average cost of PPO coverage through an employer for an American family of four is now over $28,000 – per year.
Milliman Medical Index 2018
Employers love to complain openly and often about the high-cost of healthcare, but they also benefit from the corporate welfare of tax exclusions and depressed wages. The only evidence we need to see their reluctance to systemic change is their strong opposition to the Cadillac Tax because it was the one tax proposal (through the Affordable Care Act) that was specifically designed to cap the tax exclusion on very rich (Cadillac) benefits. The Kaiser Family Foundation has a compelling graphic on the long term and corrosive effect of ESI.
Kaiser/HRET Survey of Employer-Sponsored Health Benefits
Don’t get me wrong, employers could band together and lobby to change the tax code to end the fiscal perversion of ESI – but they won’t. They love to complain about high costs – but collectively, they are as culpable as large providers who work jointly to propel prices ever higher – with no end in sight.
Which brings us full-circle back to the announcement of Dr. Gawande as the CEO of the new ABC healthcare (non-profit) venture. As a writer, health policy expert and surgeon, Dr. Gawande’s credentials are impeccable and I’ve faithfully read much of what he’s written for The New Yorker. One of my all-time favorite articles – among many – is the Commencement Address he gave at Harvard Medical School just over 7 years ago. It’s a true classic — and worth reading — often. It was translated for publication in The New Yorker (where he frequently writes) and remains online here: Cowboys and Pit Crews
I’ve often quoted a passage from Dr. Gawande’s address because it encapsulates the very real dilemma faced by practicing physicians and healthcare professionals the world over – from that day to this.
The core structure of medicine—how health care is organized and practiced—emerged in an era when doctors could hold all the key information patients needed in their heads and manage everything required themselves. One needed only an ethic of hard work, a prescription pad, a secretary, and a hospital willing to serve as one’s workshop, loaning a bed and nurses for a patient’s convalescence, maybe an operating room with a few basic tools. We were craftsmen. We could set the fracture, spin the blood, plate the cultures, administer the antiserum. The nature of the knowledge lent itself to prizing autonomy, independence, and self-sufficiency among our highest values, and to designing medicine accordingly. But you can’t hold all the information in your head any longer, and you can’t master all the skills. No one person can work up a patient’s back pain, run the immunoassay, do the physical therapy, protocol the MRI, and direct the treatment of the unexpected cancer found growing in the spine. I don’t even know what it means to “protocol” the MRI. Dr. Atul Gawande – Harvard Medical School Commencement – May, 2011
It would be safe to say — without reservation — that I am a real Gawande fan, but the fundamental question remains. How much can a single private venture – however well-funded or staffed – change a fundamentally flawed system design? In effect – to change our whole system of ‘cowboys’ to ‘pit crews?’
Unless and until Dr. Gawande can change the tax code, any fiscal benefits of the new ABC venture will be nominal – around the edges of healthcare – and not at the core. What fiscal benefits there are will absolutely accrue to the member companies, but Dr. Gawande is no miracle worker and he has no magic wand against the trifecta of accidental system design that keeps pricing spiraling ever upward. That trifecta is actuarial math, ESI, and the transient nature of health benefits delivered at scale through literally thousands of employers. Commercial (or private) ventures of every stripe and size can certainly lobby for legislation to change the moral morass of tiered pricing through employers, but they can’t end it.
The bad things [in] the U.S. health care system are that our financing of health care is really a moral morass in the sense that it signals to the doctors that human beings have different values depending on their income status. For example, in New Jersey, the Medicaid program pays a pediatrician $30 to see a poor child on Medicaid. But the same legislators, through their commercial insurance, pay the same pediatrician $100 to $120 to see their child. How do physicians react to it? If you phone around practices in Princeton, Plainsboro, Hamilton – none of them would see Medicaid kids.Uwe Reinhardt (1937 – 2017) – Economics Professor at the Woodrow Wilson School of Public and International Affairs at Princeton
Food insecurity is high among both working and non-working adults with #Medicaid. Nearly a third (31%) of working and 37% of non-working Medicaid adults say they sometimes or often worry that food will run out.
In January 2018, the Centers for Medicare and Medicaid Services (CMS) issued new guidance for state Medicaid waiver proposals that would impose work requirements in Medicaid as a condition of eligibility. As of June 2018, four states have approved waivers to implement Medicaid work requirements, seven states have waiver requests pending with CMS, and other states are considering or developing work requirement programs. These states are all imposing or seeking to impose work requirements on populations already covered (both expansion and non-expansion populations); however, Virginia passed legislation to adopt the Medicaid expansion that included a provision to submit a waiver to impose a work requirement on a new expansion population. This brief builds on previous analyses to provide data on Medicaid enrollees and some of the policy implications of work requirements. Key findings include:
Most Medicaid enrollees who can work are already working but could face barriers in complying with reporting requirements. More than six in ten adult enrollees are working. Those in excellent/very good health are almost twice as likely to work as those in fair/poor health. Having higher education is also positively associated with whether someone works. However, since one in three Medicaid adults never use a computer or the internet and four in ten do not use email, many enrollees would face barriers in complying with work reporting requirements to maintain coverage.
Paid work can help provide family resources, but low-wage and part-time work may not be sufficient to overcome poverty. Most working Medicaid enrollees are working full-time for the full year and are working in low-wage service jobs with limited benefits such as sick time or health coverage. Most Medicaid workers (78%) are paid hourly, and 36% of these hourly workers earn a wage at or below $10/hour. Even when working, adults with Medicaid face high rates of financial insecurity. In non-expansion states with low eligibility levels for adults, working part time at minimum wage would lead to loss of Medicaid without access to coverage through the ACA marketplaces.
Many Medicaid enrollees who are not working could be exempt from work requirements but would still need to navigate an exemption process. A quarter of non-working Medicaid adults without SSI have mobility or physical limitations such as difficulty going up or down stairs (24%), walking 100 yards (25%), sitting or standing for extended periods (27%), or stooping, kneeling or bending (24%). Many live with daily, activity-limiting pain. Among the “able bodied,” or those in good health or better, most say the reason they are not working is because they are taking care of home or family or are in school.
A small share (6%) of adult Medicaid enrollees are not already working and unlikely to meet an exemption and thus are the stated target of work requirements. However, systems to track work reporting and to process exemptions would apply to much larger shares of enrollees, both workers and those seeking exemptions. States will be required by CMS to describe strategies to assist beneficiaries in meeting work requirements but may not use federal Medicaid funds for supportive services to help people overcome barriers to work.
Are most Medicaid enrollees working?
Most Medicaid enrollees who can work are already working. Overall, more than six in ten non-dual, non-SSI, nonelderly adults with Medicaid work (Figure 1). Adults in excellent/very good health are nearly twice as likely to be working as those in fair/poor health. Not surprisingly, Medicaid adults with higher education levels are more likely to work. Medicaid adults with a high school degree (58%), some college (64%), or a college degree (69%) were significantly more likely to be working than those who did not have a high school diploma (51%). Although “work readiness” encompasses a range of factors, including social/behavioral skills, technical skills, “soft skills,” and others,1,2 having a high school diploma is a basic requirement for many jobs.
The Centers for Disease Control and Prevention’s (CDC) Prevention Research Centers (PRC) is a network of 26 academic research centers across the country that study how people and their communities can avoid or counter the risks for chronic illnesses such as heart disease, obesity, cancer and others.
The 2018 Health Equity Research Snapshot, an initiative of the Association of American Medical Colleges (AAMC), highlights seven videos that feature innovative community-partnered research projects at PRCs housed within AAMC member medical schools with preventive medicine residency programs. As leaders in translating research results into policy and public health practice, the centers work with communities to develop, evaluate, and implement major community changes that can prevent and control chronic diseases and move neighborhoods and the nation closer to health and health care equity.
The UN health agency has for the first time, tagged compulsive video gaming as a mental health condition in its updated classification manual, released on Monday.
“For gaming disorder to be diagnosed, the behavior pattern must be of sufficient severity to result in significant impairment in personal, family, social, educational, occupational or other important areas of functioning and would normally have been evident for at least 12 months,” said the World Health Organization (WHO).
“There are few truer snapshots of a country’s wellbeing than its health statistics,” said WHO. While broad economic indicators such as Gross Domestic Product may skew impressions of individual prosperity, data on disease and death reveal how a population is truly faring.
According to WHO, ICD is the “bedrock for health statistics,” codifying the human condition from birth to death, including all factors that influence health.
These statistics form the basis for healthcare provision everywhere and are at the core of mapping disease trends and epidemics; helping governments decide how money is spent on health services.
Crucially, in a world of 7.4 billion people speaking nearly 7,000 languages, ICD provides a common vocabulary for recording, reporting and monitoring health problems, says WHO.
“Fifty years ago, it would be unlikely that a disease, such as schizophrenia, would be diagnosed similarly in Japan, Kenya and Brazil. Now, however, if a doctor in another country cannot read a person’s medical records, they will know what the ICD code means,” WHO explained.
Without the ICD’s ability to provide standardized, consistent data, each country or region would have its own classifications that would most likely only be relevant locally.
“Standardization is the key that unlocks global health data analysis,” said WHO.
Ready for the 21st century
The eleventh edition of ICD was released on Monday to allow Member States time to plan implementation before it is presented for adoption at the 2019 World Health Assembly.
Noting that it has been updated for the 21st century WHO said: “Over a decade in the making, this version is a vast improvement on ICD-10,” adding that it now reflects critical advances in science and medicine.
Moreover, the guidelines can also be integrated with modern electronic health applications and information systems – making implementation significantly easier, vulnerable to fewer mistakes and allowing more detail to be recorded.
Drug companies enjoy government-sanctioned and -enforced monopolies over the supply of many drugs
As long as pharmaceutical companies have uncontested market power to set prices, those prices will remain a huge problem for Americans
At the core of the nation’s drug pricing problem is one fundamental fact: Drug companies enjoy government-sanctioned and -enforced monopolies over the supply of many drugs.
These monopolies result from patents awarded under federal law for novel molecules. Patents allow manufacturers to prevent competitors from selling the same drug for 20 years from the time the patent is filed. Given that the process of gaining regulatory approval to market their new drug takes time, research suggests new drugs have, on average, 12 to 13 years of market exclusivity.
Once new drugs are approved by the Food and Drug Administration, the monopolies assured by patents enable pharmaceutical companies to charge any price they choose. They generally pick prices that not only cover their development costs, but also generate profits that exceed those of most other industries: for example, the average profit margin for the 25 largest software companies (which are cited as having the same high R&D investment and low production and distribution costs as pharmaceutical companies) was 13.4 percent in 2015, while the average profit margin for the 25 largest drug companies was 20.1 percent in 2015. Drugmakers are also free to raise prices whenever they want at rates they alone determine.
The existence of patents does not totally prevent competition. Often, other companies introduce drugs that are distinct enough to justify their own separate patents and accomplish the same therapeutic goal. This results in competition that lowers drug prices, but often by not enough to make the medications affordable for many patients. In addition, the makers of patented drugs — for example, Mylan’s EpiPen and the weight-loss drug Suprenza — have developed effective mechanisms to extend the lives of their patents beyond 20 years. These approaches include making minor modifications in the formulations or packaging of drugs that have no clinical significance, as well as paying potential generic competitors not to introduce generic drugs.
That said, patents eventually expire, at which point generic drug companies can manufacture the drug and sell it at a much lower price. But even generic drug competition has been weakened recently by generic drug market monopolies, as these manufacturers have bought up their competition. As a result, the prices of old and familiar drugs have risen dramatically. The price of the cardiac drug isuprel has increased more than sixfold between 2013 and 2015, and the price of the antibiotic doxycycline has soared 90-fold over the same period.
As long as drug companies (or a small group) hold monopoly (or oligopoly) power over potent new therapies, there is no free market solution to lowering drug prices. Only a countervailing nonmarket force of equal strength can bring those prices down. Other western industrial countries, recognizing this, authorize their governments to step in and moderate drug prices for the benefit of their citizenry. Some set prices by fiat, while other negotiate with drug companies. In the latter case, the negotiations are sometimes guided by comparative effectiveness analysis that estimates the value of new drugs to patients. Of course, drug companies are free to walk away from such deals, but they generally choose not to, presumably because they still make money from those sales.
Drug companies say their monopoly earnings are necessary to sustain the research and development that produce new drugs. In effect they are saying that they need to be able to charge the very high prices we now see for patented drugs so they can innovate. This raises the questions of how much money society should allocate toward pharmaceutical innovation and who should decide. Setting those questions aside for the moment, we should be very clear about one thing: As long as pharmaceutical companies have uncontested market power to set prices for many patented and generic drugs, those prices will remain a huge problem for Americans and their elected representatives.
When you walk into the Arlington Women’s Center, you see a spacious waiting room with artwork on the wall, maroon chairs, and a friendly receptionist sitting at the front desk.
The obstetrics and gynecology practice serves a high-income suburb of Washington, DC. Framed photographs on the wall advertise the center’s physicians who’ve made lists of the city’s best doctors. It’s a modern, upscale doctor office.
But when it needs to share patient records, it turns to an outdated technology: the fax machine.
“The pages get jammed up so you end up with half-pages that come out at the other end,” says Amanda Rohn, an OB-GYN at Arlington Women’s Center, “or you get blank pages that don’t actually have the information you need.”
“Medical records generally come by fax,” says Amanda Rohn, an OB-GYN at Arlington Women’s Center in Arlington Va. “Sometimes they’re mailed. They almost never come by any other route.”Byrd Pinkerton/Vox
The clinic has digitized its own patient data. But its electronic system can’t connect with other clinics’ records. So when doctors want to retrieve records from another office — an ultrasound for a pregnant patient, for example — they have to turn to the fax.
Most women at the Arlington Women’s Center get their ultrasounds at a radiology office that is in the same building, just a floor below. It also has a digital record. But the two systems don’t connect. So they use a Rube Goldberg-esque analog method for sharing data: Print out pages of one record, fax it, and then scan those pages into the other digital system.
“We have a medical records department who goes through all the incoming faxes, sorts them for which doctor they go to, and then I have a folder where they put my results in,” Rohn says, pointing to a pink file folder on her desk. “If we were all on the same system, I’d be able to see everybody’s results, but since we’re not, there has to be some way they get to me.”
Most industries abandoned the fax machine in the 1990s, and for good reason. Fax machines are terrible at sending data. Busy signals interfere. Printouts are blurry. And sometimes faxes go to the wrong place entirely.
The fax machine at the Arlington Women’s Center is constantly beeping and buzzing with incoming and outgoing patient records.Byrd Pinkerton/Vox
One medical worker recalled a fax fiasco from the 1990s when he practically sent medical records to the moon. “The FBI called about a half-hour later and asked how I got the number,” he said. “I told them that I was faxing Minnesota. They told me I had faxed NASA.”
In the medical sector, the fax is as dominant as ever. It is the cockroach of American medicine: hated by doctors and medical professionals but able to survive — even thrive — in a hostile environment. By one private firm’s estimate, the fax accounts for about 75 percent of all medical communication. It frustrates doctors, nurses, researchers, and entire hospitals, but a solution is evasive.
At Rohn’s obstetrics practice, no one has contacted NASA by mistake, but they’ve had real problems. Lately, doctors have taken to hand-delivering the most important records.
“We used to fax the labor and delivery records, but they didn’t get them or they were misplacing them,” says Hilda Moreno, who manages the office’s medical records. “We kept getting calls like, did you send this? And we’d say we did. So we started printing them out.”
Obama tried to force the health sector to go digital. But he didn’t make the systems talk.
The story of the fax machine’s dominant role in medicine is also the story of a government incentive program that badly misread the economics of American health care.
The Obama administration spent upward of $30 billion encouraging American hospitals and doctor offices to switch from paper to electronic records. The program was a wild success, in one respect. The number of hospitals using electronic records grew from 9 percent in 2008 to 83 percent in 2015, a huge change in less than a decade.
But the program didn’t account for a critical need: sharing. Hospital and doctor offices generally remain unable to transfer electronic information to other hospitals and doctor offices. Billions of dollars later, they are left printing out documents and faxing them. And so the fax machine remains medicine’s dominant method of communication.
Obama officials believed competing health systems would volunteer to share patient data. They now admit that was naive.
“We don’t expect Amazon and Walmart to share background on their customers, but we do expect competing hospital system to do so,” says David Blumenthal, who coordinated health policy for the Obama administration from 2011 to 2013. “Those institutions consider that data proprietary and an important business asset. We should never have expected it to occur naturally, that these organizations would readily adopt information exchange.”
The stimulus package that President Obama signed into law in February 2009 included a 53-page section called the HITECH Act (an acronym for its much clunkier full name: the Health Information Technology for Economic and Clinical Health).
The small part of the massive stimulus bill included more than $30 billion to spend incentivizing doctors to adopt digital records. The law directed a small, little-known government agency — the Office of the National Coordinator for Health Information Technology (ONC) — to develop a program to distribute the money.
“It was quite small and had modest operational responsibilities,” says Blumenthal.
The agency historically subsisted on a meager budget with a few dozen staffers. All of a sudden, it had a multibillion-dollar budget and pressure from the White House to spend that money quickly. The Obama administration hoped this infusion of money would help drag the country out of the 2008 recession.
“The White House looked at these billions of dollars and they saw an opportunity to stimulate the economy,” Blumenthal says. “We did have pressure from the White House to get the money out the door.”
Blumenthal’s team had to move quickly, and decided to focus on getting doctors to adopt electronic records. Once doctors started using electronic records, the thinking at the time went, they would naturally start using more digital forms of communication like secure email.
“Our philosophy was, you’ve got to have the information in bits and bytes before you can start sending those down the internet to someplace else,” Blumenthal says.
Farzad Mostashari, who took over Blumenthal’s position in 2013, recalls the ambitions similarly. “The real goal at the time was, hey, let’s get folks off of paper and onto electronic health records,” he says.
ONC came up with “meaningful use” standards, a checklist of benchmarks that doctor and hospital offices would need to hit in order to receive a small slice of that $30 billion incentive fund. If doctors and hospitals were able to meet these criteria, they’d get bonus payments from the federal government.
All available data suggests that the meaningful use incentives hugely increased the adoption of electronic medical records. A recent paper in the journal Health Affairs compared the adoption of digital records among hospitals (which qualified for these incentive payments) and nursing homes (which didn’t get the bonuses).
It found that the facilities eligible for the bonus payments adopted digital records at a much faster pace than those without much incentive.
“We now have data to suggest the majority of electronic health record adoption was because of the HITECH Act,” says Julia Adler-Milstein, the lead author of that study and an associate professor at the University of California San Francisco School of Medicine. “We would not have seen those double-digit percentage point increases without it.”
If you can now log in to a patient portal at your doctors’ office to schedule a visit, see results of a test, or send a message to your physician, that is likely the result of the HITECH Act.
But if you’ve ever become frustrated trying to get one doctor to talk to another, that is the Obama administration’s legacy too.
“The fax machine is still a major part of medical communication”
Rohn works on that Virginia hospital campus I mentioned earlier. And for years, she’s had a front-row seat to the Obama administration’s struggle to digitize American medicine.
The 36-year-old received an undergraduate degree in engineering and initially planned to pursue a career in programming. “It turned out that I didn’t like spending all my time looking at a computer screen,” she said. “I really wanted to spend my time interacting more directly with people.”
Rohn went back to medical school and in 2013 completed a residency in obstetrics and gynecology at the University of Pennsylvania. She began cold-calling OB-GYN practices that had openings in the DC area, where her husband already had a job.
Office after office told her the same thing: Stop calling us. Just fax us your résumé.
“The fax machine is still a major part of medical communication,” she says. “It’s crazy that I was sending my CV by fax machine in 2013.”
Rohn began sending unsolicited faxes with her résumé to OB-GYN practices, and, amazingly, it worked. One of her faxes went to Arlington Women’s Center, where she works today.
Old paper folders at the Arlington Women’s Center hold records from outside clinics.Byrd Pinkerton/Vox
When Rohn was a resident, she used a lot more paper records. When she saw patients in the hospital after surgery or a delivery, she would handwrite notes in a paper chart.
She started her job just as billions of federal incentive dollars were flowing to get doctors to switch to digital records. Her clinic digitized just before her arrival in 2013. Now, instead of scribbling patient notes in handwriting, she types them into her electronic record.
She can order most lab results through the electronic record, too, after a lengthy effort to connect her office’s digital system with the laboratory they work with most frequently.
“I can see each encounter the patient has had in our clinic, so I can look back and see when my colleague saw this patient last year, read her notes, know what they talk about,” Rohn says.
It’s when she wants to communicate with other offices that things get tricky. The hospital where most of her patients deliver uses Epic, the medical records company with the largest market share in the United States. Rohn’s office uses a smaller company called NextGen.
Each day, Rohn comes into the office to a pink folder on her desk labeled “prenatal labs” that contains a stack of faxes from other offices she needs to enter into the electronic record.
When Rohn’s patients are close to giving birth, at 36 weeks pregnant, she or another doctor hand-delivers their medical records to the labor and delivery department. It’s not a great system.
“Sometimes we can’t find the records because someone has misfiled it or someone never sent it,” Rohn says. “Or they’re not that far along yet in pregnancy if they deliver prematurely.”
Rohn is a highly trained professional. She spent four years at top-ranked medical school and more years after that as a resident learning how to deliver babies, perform surgeries, and help patients through pregnancy.
But because of America’s disconnected medical system, she spends a significant amount of time transcribing medical records and hand-delivering them around her hospital. This is time when she could be using her medical expertise to see more patients or have longer visits. Instead, she’s managing paperwork.
And this wastes her patients’ time too. Sometimes Rohn will have appointments to discuss an abnormal Pap smear but won’t be sent the actual results that show what is abnormal.
“So then I’m seeing someone in consultation for abnormal Pap smear and I don’t know what result was, and we have to decide do we do the test again today when you might not actually need it,” she says.
There are financial incentives to keep using the fax machine
It turns out there are strong economic incentives for doctors to keep patient information to themselves — and even stronger incentives for electronic medical records not to play nicely with each other.
While patients might want one hospital to exchange information with another hospital, those institutions have little incentive to do so. A shared medical record, after all, makes it easier to see a different doctor. A walled garden — where records only get traded within one hospital system — can encourage patients to stick with those providers.
“When you want competing entities to share information, you have to realize that they’re sharing things that could help their competitors,” says Blumenthal.
The program that Blumenthal helped build required hospitals to have the ability to share information, but it didn’t mandate that they do so frequently or make the process especially easy. Most hospitals made a rational business decision and did not invest in technologies that would make it easier for competitors to siphon off patients.
Competitive pressure between the companies that sell electronic record makers themselves only made things worse. The electronic record makers don’t have much incentive to connect well with other records, when they’d rather just convert that hospital on a different electronic platform into one of their own customers.
“If [electronic record vendors] expended all that time and effort to make it so anyone could plug into any other system, it’s reducing the advantage of staying on your particular network,” Mostashari says.
This is especially true for larger electronic medical record companies, which want to sell the advantages of joining a record that is used in lots of doctor offices. “You want to make it easier for people to say, ‘Hey, if you’re on [our electronic record], look how awesome it is! You can talk to any user, anywhere in the country,” he argues.
In short, economics gave hospitals plenty of reasons not to connect their records with other hospitals — to stick with a clunky technology, like fax, that makes it hard to transmit information. And the government didn’t give any incentives to connect — it stopped at digitizing medicine, falling short of the interoperability that patients actually want.
How do you actually kill the fax machine?
Mostashari came away from his time in Washington believing a fix would require more government intervention — namely, outlawing faxing in American medicine. He argues that doctors won’t leave the fax until there is an expiration date, a moment when the government forces them to use secure email instead.
“I think if we want to kill the fax, we need to schedule a funeral,” he says. “I think you need a pull and you also need a push.”
The Trump administration, however, will take a different approach. Donald Rucker now runs the Office of the National Coordinator for Health Information Technology, and did not take kindly to the federal mandate proposal.
“All of the thousands of regulations that have piled on have the net effect of preventing us as individuals from controlling our data, from shopping for care, or having vaguely cost-effective care to shop for,” Rucker said.
He argues that better-designed electronic records will go a long way toward allowing data to transfer more freely. He also cited a new provision in a recent health care law, the 21st Century Cures Act, that requires electronic records to exchange data with other records in a way that requires “no special effort.” What “no special effort” means isn’t yet clear, and will likely be defined in future regulations.
The verdict is still out on whether the Trump administration’s approach can work — or whether, eventually, a more heavy-handed mandate will be needed to actually kill the fax.
But we do know this: As long as the fax sticks around, it is bad for doctors and bad for patients.
What happens in the real world after the government, non-profits, even academic institutions start doing something differently? The Impact looks at policies that work — and policies that need some work — as they make their way out into the real world, with many surprises along the way.
“Medical records generally come by fax,” says Amanda Rohn, an OB-GYN at Arlington Women’s Center in Arlington Va. “Sometimes they’re mailed. They almost never come by any other route.”
The fax machine at the Arlington Women’s Center is constantly beeping and buzzing with incoming and outgoing patient records.
Old paper folders at the Arlington Women’s Center hold records from outside clinics.