Press release

Speech: Remarks by Administrator Seema Verma at the 2019 CMS Quality Conference

Remarks by Administrator Seema Verma at the 2019 CMS Quality Conference
(A
s prepared for delivery – January 29, 2019)

Thank you, Kate.  And welcome everyone to the CMS quality conference.  Today, we are excited to share the many initiatives CMS is working on.

All of our initiatives focus on implementing a vision to transform the healthcare system into one that delivers better value to patients through competition and innovation. To achieve this, we will focus on three main objectives: empowering patients, focusing on results, and unleashing innovation. 

These objectives will be effective because they rely more on the efficiencies and innovation of the private market rather than bureaucrats in DC.  We are prioritizing a well-informed, empowered consumer rather than a government agency to make our health care decisions.  We are repositioning the government’s role from one prescribing processes through heavy regulation to one focused on safeguarding outcomes and taxpayers’ dollars.

This vision is a stark contrast to the problems we faced just two years ago.

When I assumed this post in 2017, I inherited a crisis in the individual market. Regardless of whether you supported the ACA or not, it is a fact that premiums have more than doubled in states using the federal Exchange since its implementation.

Last year, in over half the counties in America, consumers only had access to one insurer. And where there is a monopoly, rates go up as high as 50 percent.

There has also been a mass exodus of some 1.3 million unsubsidized consumers from the market … not because those individuals didn’t need insurance, or that it wasn’t available to them, but because they couldn’t afford it.

These startling facts are why I referred to our individual market as being in crisis … a crisis of affordability for millions of American families.

On day one in office, President Trump issued an Executive Order directing agencies to minimize the burdens caused by the ACA.

Within three weeks, CMS issued a proposed Market Stabilization Rule…and advanced additional regulations to give states new tools to stabilize their markets and offer more affordable options.

There are promising signs that these efforts have helped - for the first time since enactment of the ACA, we actually saw a drop in exchange premiums.

This year, there are 23 more insurers on HealthCare.gov than last year.  But our work to increase competition and choice to lower prices didn’t stop with the Exchanges. In Medicare Advantage and in Part D, premiums are at their lowest in 3 years and plan choices have increased.

This administration is delivering on its promises and improvements are tangible.

However, if health care in America were a patient, we would say it is stabilizing, but it remains in critical condition. That’s because the problems that existed in our health care delivery system long before the passage of the ACA, still remain.  The ACA didn’t fix them, and it certainly didn’t change the trajectory of healthcare spending. Our actuaries predict that if nothing is done by 2026, we will spend one in every five dollars on health care. For millions of families and businesses, and government as well, this is a huge problem. It amounts to a cost crisis.

And while there are discussions about Medicare for All, the reality is we can barely afford the program we have.  The Trustees report that Medicare’s hospital insurance trust fund will run out in 2026, at which point the program won’t be able to pay all of its bills.   And this issue is compounded by the challenge of caring for the baby boomer population, which is contributing more than 10,000 new Medicare beneficiaries every day. Thankfully, because of advancements in medical science, they are living longer. That’s a good thing, but it will create unprecedented levels of demand that our system is ill-prepared for.

Medicaid programs will also feel this pressure, which is compounded by the fact that the program is the largest financer of long-term care services in the country.  Already, Medicaid is the first or second largest item in state budgets. Our actuary projects that costs will nearly double over 10 years.

No wonder, we hear that more Americans than ever are deeply concerned about healthcare. While we have one of the best health systems in the world, we pay more than any other country.  Health care utilization rates are largely similar between the US and other high-income countries, but prices are much higher in America.

And despite ever-increasing spending, we have more avoidable hospital admissions than any other developed country, and our quality outcomes are weak.  

We also see a growing prevalence of chronic disease and poor health across our country.

Seventeen percent of Medicare beneficiaries have six or more chronic conditions, and spending on that group alone is more than half of fee-for-service Medicare spending.

Much of what ails our system can be attributed to the underlying flaws in reimbursement.  The current financing structure treats episodes of sickness rather than promoting a lifetime of health, and it doesn’t reward providers who deliver high quality care, and positive results.

The costs of regulation and administration are also taking a toll on our healthcare system.  A study found that for every hour providers spend seeing patients, they spend nearly two additional hours on paperwork. 

Imagine declaring to your friends and family that you spent years, and hundreds of thousands of dollars on medical school, so you could spend twice as much time on paperwork as you do seeing sick patients.

It’s backwards and it’s wrong! And because of it, the problems of clinician burden, and clinician burnout, are real and alarming.

When you piece it all together - the system we have today is complex, opaque and difficult to navigate for patients. Whether it is tracking down all your records, or just the cost of a procedure, the system is not patient-centric, and patients lack information, and therefore the power, to make decisions that are best for them.

For generations, we have tried to fix our system by regulating its every sector, every provider, every payor.  But, we haven’t unleashed the most powerful force for improving quality and value: our patients.

We all know how difficult it can be to navigate the health care system. We are taking action to create a world where patients have instant information at their fingertips to easily choose a doctor to get the best care at the lowest price. 

You may have heard about our eMedicare initiative. Think about the average senior entering Medicare. They may still be calling their grandchildren for IT advice, but you can bet they use social media and have a cell phone.

eMedicare gives them new online tools, including secure access to their claims information. Our goal is to provide a seamless, online healthcare customer experience.

Yesterday we launched our first mobile app, which quickly shows whether Medicare covers a specific medical product or service. 

Over the next year as part of eMedicare you will see a new mobile comparison tool that allows beneficiaries to compare quality ratings across all types of care settings instead of having to look across 10 different sites that exist today. 

Also critical to patient empowerment is our price transparency initiative.  A key reason health care costs continue to skyrocket is the fact that health care prices are largely hidden from patients.  Simply put, hidden pricing means health care providers don’t have to compete on price.

We demand to know the cost of virtually everything we buy. Why shouldn’t we demand price transparency from the health care system?

This has been talked about for years….but WE are finally taking action. Because transparency creates competition, and competition keeps prices down, because patients can shop.

Starting this year, CMS now requires hospitals to post their standard price information online, in a format that can be electronically accessed, and where people can actually find it.

Now, we recognize that this information doesn’t usually reflect the negotiated price that a person may pay.

But there’s no reason that hospitals have to wait on the government.  They can go above and beyond this basic requirement, as many already have…and they should be applauded. Hopefully they are seeing that providing patients pricing information is a marketing opportunity, not a competitive disadvantage. 

Either way, you can count on CMS taking steps this year to further transparency.  And in the meantime, if you can’t find the price of a procedure at your local hospital on their website, I want to know about it. You can tweet at me with the hashtag “where’s-the-price.”

But price is only part of this equation. It is also critical that we have a meaningful way to measure and understand health care quality.

Once patients are able to assess both cost and quality, providers will have to compete and improve efficiency in order to stay in business. This leads me to our second objective: focusing on results.

In order to focus on results, we have to define what results we want to achieve.  I can tell you that creating hundreds of measures, which evaluate processes not outcomes, which create complex reporting requirements that drive up costs, is not the way.  Those are not the results we want, it’s not helpful to patients and it’s not helpful to providers.

Now, let me be clear, quality metrics are important.  And they can be quite powerful in pushing change.  Case in point.  Today I am pleased to announce the latest patient safety data, which shows a continued significant reduction in the amount of harm experienced in hospitals.

From 2014 to 2017, we have seen a 13 percent reduction in the number of Hospital Acquired Conditions across the nation. This translates to preventing over 20,000 deaths from hospital harm…and a savings of $7.7 Billion to the health care system.

That's incredible and I know many of you in this audience have been personally involved in this important effort.

And while I am so proud of this accomplishment, we are working to get to a smaller set of dynamic measures that patients can use to identify high value providers. In 2017, we launched our “Meaningful Measures” initiative, and we delivered on our promise.  We rolled back nearly 20 percent of measures because they were either topped out, duplicative, or simply overly burdensome to report for little gain.

But our work isn’t done.  CMS is developing the next generation of measures.

First, measures must be patient focused, and easy to understand so consumers can use them to pick high-quality providers. Just like with pricing, when quality information is hidden or indecipherable, providers don’t have to compete on quality. If we expect to harness competition to lower costs and improve quality, patients need meaningful and actionable information.

Second, these measures need to focus on outcomes over process. And for those measures we deem essential, we must align them across all of our programs.

Third, there must be a simplified process for electronic submission so physicians are not weighed down with extra paperwork. In an ideal world we would be able to evaluate quality without providers taking any extra effort, so we are focusing on electronic, registry and claims-based measures, going forward.

But focusing on results is not just for providers, but also health plans, states and all of our contractors. 

Last year, we published our first-ever Medicaid & CHIP Scorecard. The scorecard is based on the premise that taxpayers and beneficiaries deserve to know the performance and results their Medicaid programs are achieving.  Later this year, you will see a newer version that will allow cross-state comparisons and add new measures in areas like cost and program integrity. 

And to obtain better results for the American people, while driving down spending, and continuing to maintain access to world class care, we must unleash innovation in every possible way, to transform our system. 

For CMS that starts with payment innovation to better align financial incentives for providers to deliver efficient, high quality care.

Last year, Medicare introduced new payment policies for home health, nursing homes, and labs, and a new competitive bidding system for durable medical equipment.  We also addressed Medicare’s payment policies that contribute to reduced competition across different sites of care and greater costs for patients. These policies injected market principles and move us towards an outcomes-based system.

And we will go further, as our system needs to realign payment incentives to pay for the results we desire.  When providers have responsibility for managing a budget and their reimbursement is tied to the results they produce, they will be incentivized to find innovative ways to keep people healthy and lower costs.

With the right incentives, our health care system will seek out innovative, cost-effective therapies and consider how to better address factors like the social determinants of health that can drive costs and worsen outcomes.

But our progress has been slow and it needs to speed up.  Today, only 14 percent of providers in Medicare are in value-based agreements. CMS has spent the last year developing a new cadre of models and a strategy to increase provider participation.

First, our new models recognize that not every provider is comfortable taking full risk, but we can still figure out ways to create incentives for providers to deliver the outcomes of low cost and high quality.   CMS will be offering new opportunities for providers to accept higher levels of risk, and also new financial models that ease providers into value-based agreements. The new financing arrangements will be applied to primary care as well as different disease states and types of providers. It will focus on preventing the progression of disease and increasing quality of life. We will start with some of our most challenging, complex areas, like end stage renal disease, cancer and other serious illnesses. 

Our new models offer additional regulatory flexibility as providers take on additional accountability. This was the case with our recent overhaul of the Medicare ACO program.

In order to increase participation into value based reimbursement, we will develop templates for states and other payors to use our models to drive value in their own programs.  Because, ideally, providers that are participating in models are doing so not only for their Medicare patients, but for all of their payors.

As we think about new ways of paying for health care, there are two unique populations which I would be remiss if I did not mention…care for dual eligibles and rural Americans.

12 million Americans are dually eligible for Medicaid and Medicare. Astoundingly, 26 percent of their hospitalizations were potentially avoidable.

Between CMS and the states, we spend over $300 billion each year on this population, but the financial incentives between the two programs are often misaligned. And as a result, we continue to see poor outcomes and poor customer experiences.

We must do better for this extremely vulnerable population.

That’s why we will be opening up our current models to other states and we will support the development of new models and opportunities for additional states to test innovations.

Similarly, CMS is rethinking care for rural Americans.

Roughly 1 in 6 Americans live in a rural area.  And statistically, residents of rural communities tend to have worse health status than those living in urban areas.

One of the biggest challenges rural Americans face is access to adequate health care.

And it’s no secret that many rural hospitals are struggling to keep their doors open. 40 percent of rural hospitals have negative operating margins. And when rural hospitals close, it can be devastating for their communities. That’s why we’re thinking about how we can adjust our wage index formula to avoid exacerbating the already stark disparities between urban and rural providers.

But the problem won’t be solved with more money.  In the advent of new technology that improves access, like telehealth, we are thinking about how health care can be delivered more efficiently in these areas.

We are exploring a new rural demonstration that will assist local communities in designing a better system of care while improving access, quality and sustainability through more value-based payment design. 

But while CMS is advancing innovation on many fronts we must make sure that the agency is not a barrier to innovation.  

Rules and regulations, even though well-intended, can be the greatest obstacle to patient care and innovation. The American Hospital Association has found that providers spend nearly $39 billion a year solely on the administrative actions related to regulatory compliance. That’s about how much the federal government spent on premium tax credits for the whole country in 2017.

As part of our Patients over Paperwork initiative, we received over 3,000 comments, and over 2,000 healthcare professionals attended our listening sessions.

CMS is delivering results.  We’ve addressed nearly 60% of the suggestions and, through regulation changes alone, providers have already saved nearly 5.2 billion dollars and 53 million hours through 2021.  This included our major effort to address the system for physician documentation, which hadn’t been updated in 20 years.  But our work isn’t done, look out for another burden reduction RFI this year as we build on our recent success.

We know how critical it is that CMS staff have a true understanding of the daily experiences of patients and providers, so we have been getting our staff out of the office and into the field to witness firsthand the administrative tasks that providers have to complete due to our requirements.  Our team is starting to think entirely differently about regulation and trying to avoid complexity as we develop new regulations. 

We are also working on changes to our Stark regulation, so we can remove barriers that get in the way of providers moving into value-based agreements while continuing to protect patients.

CMS maintains the health and safety standards for every healthcare facility in the nation.  We partner with state agencies and accrediting organizations, who are responsible for ensuring that all facilities are meeting the minimum health and safety standards. We are taking a hard look at how we oversee these entities, to make sure that they are accountable, consistent and effective in serving this vital public trust role.

Our regulations are critical to ensure safe, high-quality patient care, but over time they have become too prescriptive.

To address this problem, we made proposals last year to streamline our requirements across settings, reduce duplication and focus on outcomes, not process. And you can expect more of these kinds of proposals later this year.

And as we rollback unnecessary or overly-burdensome regulations, we know there remains an important regulatory role to reduce waste, fraud, and abuse.

I have noticed that advocates of “Medicare for All” have cited the low administrative costs of this important program. But that isn’t something to brag about. 

The reality is that the old fashioned way of approaching program integrity has only allowed us to review less than two tenths of a percent of the over 1 billion claims that Medicare processes every year. And as we move towards innovative payment models, we need to adopt a modern, smarter program integrity strategy.

That is why we are looking at how we can use advanced data analytics and new tools to help us review more claims and address high fraud areas.

And technology can help us not only in preventing fraud and abuse, it can also bring greater efficiency and higher quality to health care. CMS is modernizing our policies to support – not thwart – technology innovation.

For the very first time, Medicare is paying for virtual check-ins, meaning patients can connect with their doctors by phone or video chat, similar to how telehealth works.

We are currently undertaking a top-to-bottom review of CMS processes for paying for new technologies, to identify opportunities for improvements.  Today's beneficiaries deserve access to the latest generation of medical innovation.

And while we make strides with medical innovation, health IT is mired in the previous century.

Many of you have heard me tell the story of my husband’s cardiac event, and how we didn’t get access to his complete digital healthcare record, when we left the hospital.

I know that my experience isn’t unique, and that this is happening to patients every day, all over the country.

We are improving the experience of every patient through a White House initiative called MyHealthEData. This initiative will ensure that patients have access to all of their records, that their health record is created at birth, travels with them seamlessly throughout their lives, and through every encounter with the health care delivery system, aggregating data from every source …and creating a truly complete medical record.

Last year, we overhauled the Meaningful Use Program so that it focuses on promoting interoperability, or allowing medical records to be transferred seamlessly through the healthcare system.  For the very first time, hospitals trying to avoid penalties and doctors looking for incentive payments have to meet standards for privacy and security, use the new edition of electronic health records that allow data to be shared electronically with their patients, and ensure that they are communicating seamlessly with other providers about their patients' care – and the fax machine doesn’t count. With this flow of information, we will reduce duplication and harm in the healthcare system and advance coordinated care.  And patients can choose to donate their data to researchers working to develop the next generation of cures and innovative treatments.

And because of our Blue Button 2.0 initiative, over 1,400 app developers are building user-friendly apps that help Americans understand and access their data, like sharing their claims history with their doctor, lists of medications, and reminders for care.

But our support of innovation doesn’t stop with technology.  When we talk about innovation, we’re also talking about unleashing the potential of our laboratories of democracy - the states.

Medicaid is a vital safety-net program that was created to care for society’s most vulnerable.  Let me be clear, this administration is firmly committed to this purpose. We recognize the rising costs of the program threatens its sustainability. It is vital that we work to ensure that Medicaid meets the needs of the people who truly need it.

We believe that states are best positioned to design local solutions to these challenges, free of one-size-fits-all regulations from Washington that impair flexibility.

In the last two years, we have made great strides in changing the reputation of CMS among states – once seen as an obstacle to reform, now a true partner and a catalyst for innovation.

Since taking office, we have approved over 50 Medicaid demonstration projects, including eight community engagement waivers, and 17 waivers to expand substance use disorder treatment.

Late last year, we took a major step toward empowering states to address the problems in their insurance markets caused by the ACA by giving them unprecedented flexibility to create better alternatives through state relief and empowerment waivers.

Under the new guidance, states have tools to design innovative programs to meet the unique needs of their citizens and delivery systems, which will translate into more affordable alternatives in the individual market.  We have gone the extra step of putting out model concepts as well, so that states have some examples of how they may choose to use these new flexibilities. 

Another area where we’re delivering results is in lowering the cost of prescription drugs.

CMS is working diligently to execute the President’s Blueprint on drug pricing, because prescription drugs constitute one of the fastest-growing areas of health care spending.   CMS has already taken steps to strengthen Medicare Part D and Medicare Advantage with new tools to help plans negotiate lower prices. And we have put forth a bold model for Medicare Part B through the International Pricing Index that preserves patient access and choice. 

Transformative technology comes with high costs…new drugs, some curative, have price tags close to a million dollars.  As Secretary Azar has said, "There's little difference for a sick patient between a miracle cure that hasn't been discovered and one that is too expensive to use." Our national conversation on this issue will continue, and you will see more action from us.

As you can see our initiatives apply to the entire health care delivery system. 

We are empowering patients, with better access to better information. Price and quality transparency, choice and competition put patients in the driver’s seat.

We are focused on results. For too long rules and regulations have been focused on process. But bureaucracy doesn’t heal the sick…clinicians do. We are streamlining regulations, and putting patients over paperwork.

And we are unleashing innovation, with a payment reimbursement system that transforms our system of sick care into health care. We are giving states the flexibility to enact innovative changes that are tailored to their Medicaid population and their insurance markets. We are leveraging innovation, ensuring that patients and doctors have access to instantaneous, life-saving patient care information.

We are solving problems to sustain our programs over the long term to make our system more competitive, innovative, and to deliver high quality, affordable, and coordinated care.

The challenges we face are immense. They have confounded past administrations and experts who have relied too heavily on government-centered rather than patient-centered solutions. And we can’t accept the status quo. Because if we do, the best health care in the world will be undermined by an unsustainable, expensive delivery system.

And I know, that by empowering patients, focusing on results, and unleashing innovation, we will move toward a patient-centered health system that delivers higher value.

This is a call to action. It is incumbent upon every American to take control of their health care. To seek out high-value care from providers who are competing for their business. To demand their health care information. And to make the decisions that will lead to better, healthier lives.

All of us have a job to do.

So let’s join together in common cause, to fix what ails the system…to improve the care that touches every American life, for generations yet to come.

Thank you.

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