Date

Press release

Speech: Remarks by Administrator Seema Verma at the Federation of American Hospitals 2019 Public Policy Conference

Remarks by Administrator Seema Verma at the Federation of American Hospitals 2019 Public Policy Conference
(As prepared for delivery – March 4, 2019)

Thank you, Chip (Chip Kahn, President & CEO of the FAH.) I am honored to be with you. As the head of an agency that oversees the care of 130 million Americans, I can tell you that a lot of what I learned about health care, I learned at a hospital.

I am coming up on my two-year anniversary as Administrator, so I thought I would reflect back for a moment on the accomplishments of the last two years.

We came into office knowing the status quo isn’t working for too many Americans and so we went to work to tackle health care’s most difficult problems.

The most stark example of this was the crisis we inherited 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.

On day one, the president issued an executive order to minimize the burdens imposed by the ACA. Within three weeks, we issued a market stabilization rule to provide more affordable options.

We also eliminated the individual mandate that served only to punish Americans who couldn’t afford the high premiums on the exchanges.

And the results show our efforts have been successful… for the first time ever, after a history of double digit increases for years, premiums have declined.

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

Additionally in Medicare Advantage, we are providing increased flexibility to plan sponsors so they can now offer innovative benefits and services, like wheelchair ramps, meals, rides to the doctor, and other benefits that will keep our seniors healthy and out of the hospital. And, as a result, we also now have 22.6 million seniors enrolled in MA, our highest enrollment in history.

In addition we have sought to modernize Medicare by adding telehealth, making benefits more widely available to all beneficiaries, not just those living in rural areas, so that patients can communicate with their doctors over text and video chat.

And we have fought to fulfill the President’s commitment to lower drug prices and increase access for patients. Already, our actions have saved seniors over $320 million in drug costs, while giving Medicare Advantage and Part D plans, historic new opportunities to negotiate lower costs for prescription drugs.

When it comes to Medicaid, our nation’s promise to take care of the poorest among us, we have worked proactively to make reforms.

That is because Medicaid is a vital safety-net program that was created to care for society’s most vulnerable, and we are working to ensure that it can continue to care for the people who truly need it, for generations to come.

To do this, we have ushered in a new era in Medicaid by restoring balance to the state and federal partnership that governs the program.

Our commitment to flexibility has allowed us to approve eight groundbreaking demonstrations designed to connect able-bodied adults to new opportunities that lead to better health and financial independence through community engagement.

And that’s important when you consider the opportunities that exist now: under President Trump’s leadership, the U.S. economy is thriving. In January we added over 300,000 jobs, nearly double expectations. Wages are up - and we now have 7.3 million open jobs across the nation.

Giving states the flexibility to connect those that need jobs with employers that need workers not only helps the state’s economy but it also helps raise their citizens out of poverty so that they no longer need government assistance.

And with the publication of the first ever CMS Medicaid & CHIP Scorecard we are bring unprecedented transparency to how Medicaid dollars are being used and what kind of outcomes they are achieving.

And while this administration has made significant changes, our challenges remain. By 2027 our actuaries predict Americans will spend more than 19 out of every hundred dollars on health care. For millions of families, businesses, and particularly the federal government - this amounts to a cost crisis that could destroy our economy.

No wonder we hear that more Americans than ever are deeply concerned about healthcare. While we provide access to the best treatment in the world, we pay more for that care than any other country. 

Despite this, we have a greater number of avoidable hospital admissions than any other developed country and Americans are experiencing a growing prevalence of chronic disease. 

And too many of them face even greater challenges based solely on geography.

One of the biggest issues that the roughly 1 in 6 individuals who live in rural America face is access to adequate health care.  40 percent of rural hospitals have negative operating margins. Rural hospitals closures 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 money alone.  In the advent of new technology like telehealth, remote monitoring and other advances, we are thinking about how health care can be delivered more efficiently.

But rural health, like all of our healthcare challenges, cannot be solved by mere government decree.

Instead, our vision is to transform the healthcare system into a patient centered, consumer driven model where providers compete for patients on the basis of lower cost and quality.

To achieve this, we are focused on three main objectives: empowering patients, focusing on results, and unleashing innovation. 

These objectives rely more on the efficiencies and innovation of the private market, rather than a government run system.  

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 process through heavy regulation to one focused on driving competition, safeguarding outcomes and taxpayers’ dollars.

Our current healthcare system is complex, opaque, and difficult to navigate for patients.

So empowering patients starts with giving them better access to their own personal health data…and to price and quality information about the care they need. 

Let’s start with medical records.

Accessing and putting your health information to work should be as simple as mobile banking is today. Sharing my lab results with my primary care physician should be as easy as sending my kids money on Venmo.

With interoperability and the seamless flow of data, we can change the way health care in this country operates. Patients can have access to their health information to understand and engage in their health care to make the best and most informed decisions possible. Providers can provide high-quality, coordinated care for their patients without repeating tests and ensuring safety and quality, resulting in better care and improved outcomes. And researchers can access complete and more robust data than ever before that will allow them to open new doors on treatment, and new windows on prevention, leading us to more personalized health care and evidenced based treatment guidelines.

We have taken steps to ensure patients have access to their health information and we will continue driving this effort with every lever we have. Last year we finalized a significant overhaul to the Meaningful Use programs to focus those programs on interoperability and patient access to data. 

In fact, the changes were so significant it warranted a name change. In our new Promoting Interoperability Programs, clinicians and hospitals are no longer incentivized or penalized based on just using an EHR.

We eliminated thresholds and removed check-the-box measures in favor of scoring based on performance and results around interoperability and giving patients their data. We meant what we said about putting patients at the center of the system; nearly half of a hospital or clinician’s score in these programs is now based solely on sharing data with patients.

Last year, we also launched Blue Button 2.0, a developer-friendly, standards-based API that enables Medicare beneficiaries to connect their claims data to secure applications, services and research programs that they trust.

Because of Blue Button 2.0, over 1,500 app developers are now building user-friendly apps that help seniors understand and access their data, like sharing their claims history with their doctor, and generating medication lists and reminders for care.

Now, we are requiring that other insurers follow our lead.

Through the Interoperability and Patient Access proposed rule, for the first time, we are proposing that all health plans doing business in Medicare, Medicaid, and through the federal exchanges share health claims data and other important information electronically with their patients. 

With all of those plans on board, by 2020, 85 million more patients will have access to their health claims information, in addition to the 40 million who already have access through Blue Button 2.0.

Patients should own their data and it should be able to move seamlessly with them as they move throughout the healthcare system—from doctor to doctor and plan to plan, over the course of their lifetime. Just because a patient changes plans or providers, that shouldn’t mean that they lose access to their health history. 

Another key proposal is to require hospitals, through the conditions of participation in Medicare, to send electronic notifications to doctors and caregivers when a patient is admitted, discharged or transferred from the hospital. This proposal ensures that the patient’s entire care team has the information they need to better coordinate care for the patient. And we are seeking ways to further enhance our efforts in this arena, so stayed tuned on this.

As we focus on empowering patients, however, we must also address price transparency.

Some believe that the solution to the cost problem is to empower government to set prices. But with government set prices, there is no motivation for providers to compete for patients on price or quality and therefore the system just continues to pay more, without driving better health outcomes.   

So as we work towards creating a more competitive private market that drives value and lowers prices, we must have transparent pricing. I believe that 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 cost. Transparency creates competition, and competition keeps prices down, because patients can shop.

As you all know, 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. Also, price is only part of the equation – just as important is empowering patients to understand health care quality.

But there’s no reason hospitals have to wait on the government to make this happen.  You can and should go above and beyond the basic requirements. Many of you already have…and I applaud you for your forward thinking efforts.

Even as we continue our work to improve price transparency, surprise billing persists as a related but separate problem.  I was pleased to see the hospital industry come together to help define the problem as we all work to find solutions – and it is important that all parties contribute to the solution. 

It is my hope you see price transparency and interoperability as marketing opportunities, not a competitive disadvantage.

I ask you, as hospital providers, to set the bar…don’t make us do it. Be a leader in empowering patients through interoperability and transparency in price and quality information. That way, if we ultimately reflect best practices in law or regulation, they will be the ones you have employed. Don’t be one of the stragglers caught flat-footed when it becomes required.

Our next main objective in transforming our healthcare system is to focus on results. As we build a competitive system, we have to be able to evaluate providers based on the outcomes they achieve.

In the past, government created complex requirements to report hundreds of measures, often evaluating processes over outcomes. And what did that get us? High burden and costs for providers and poor information for health care consumers.

 

Those are not the results we want--it’s not helpful to patients and it’s not helpful to providers. That’s why we launched our “Meaningful Measures” initiative in 2017.  We rolled back nearly 20 percent of measures because they were either topped out, duplicative, or simply overly burdensome to report for very little gain.

I visited a hospital in Ohio that had 18 staff members working in a basement room doing nothing but compliance paperwork all day. After that, we focused on hospitals because, I think we can all agree that needing so many people just to deal with paperwork isn’t enhancing patient care.

Last year, we finalized changes to reduce the number of measures acute care hospitals are required to report and to streamline reporting across the four hospital quality programs. In all, these changes removed a total of 18 measures from the programs and de-duplicated another 25 measures while still ensuring meaningful measures of hospital quality and patient safety.

Our efforts are not a retreat from quality accountability. Well-crafted quality metrics can be powerful in pushing change.  Case in point:  Last month I was pleased to announce that 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 is a tribute to the hard work of the men and women in this room…..and the teams behind you.

While I am so proud of this accomplishment, we are continuing our work toward reaching a smaller set of high-quality, dynamic measures that impose less burden on providers and that help us obtain information patients can use to identify high value providers.

Because we are focused on quality, and empowering patients with data, we have updated the Hospital Star Ratings system. We consider the Hospital Compare website, and the Star Ratings System, to be essential consumer tools to measure the quality and safety of area hospitals as they seek life-saving care. We also consider these specific performance ratings to be essential in raising the quality of care in hospitals across the country.

Now we recognize there is work to do and we continue to work with hospitals and the healthcare community to explore ways to improve Hospital ratings the agency’s many other consumer decision-making tools. Ultimately, our top priority must be to ensure that patients have the right information to select the best provider for them.

Now to our final objective, unleashing innovation.

While other countries have relied on the government to control costs through rationing - creating long wait times and restricted access to life saving treatments - this Administration is focused on driving competition and unleashing the forces of innovation to help us drive down costs and improve health outcomes. 

This starts with payment innovation to better align financial incentives for providers to deliver efficient, high quality care.  When providers have responsibility for managing a budget and their reimbursement is tied to the results they produce, they will be incentivized to find innovate 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 across provider types and disease states, and 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.

The rule strikes a balance between encouraging participation in the ACO program and advancing the move to value, ultimately protecting taxpayers and patients.

Prior to our overhaul, provider systems could participate as ACOs without taking any risk for healthcare spending for up to six years, while still receiving waivers from CMS.  Medicare can no longer afford to support programs with weak incentives that do not deliver value, so in our new Pathways to Success program, we have reduced that period of time down to two years, while simultaneously offering providers more flexibility once they take on risk.

This includes the flexibility to offer beneficiary incentive programs that reward patients for taking steps to achieve good health.  These types of programs – which engage patients directly – are a prime example of the kinds of innovations that will be needed to move to a value-based system.

In addition to encouraging new care delivery models, we must also modernize Medicare’s payment policies to ensure our beneficiaries get access to the latest treatments. Around a year and a half ago, the FDA approved the first ever gene therapy, which is an entirely new approach to treating diseases in which a treatment modifies a patient’s genetics.  The therapy is known as CAR-T, and there are now two manufacturers that have CAR-T products available for certain forms of advanced cancers.

The approval of the first gene therapy was a milestone in biomedicine, and it was great news for patients, but it also highlights the problems with Medicare’s payment policies that are enshrined in the law.

Hospitals administering CAR-T in the inpatient setting were taking a loss of tens of thousands of dollars or more each time they administered the therapy, while hospitals administering the therapy in the outpatient setting could get paid more than their costs to deliver it.  This was happening because Medicare’s payment systems are different for inpatient and outpatient care.  For inpatient care, we pay an overall bundled payment amount per admission, but the payment amount takes several years to adjust to accommodate new technologies.  For outpatient care, we pay for medicines at their sales price plus an additional fee.

As a result of this fragmented and convoluted process, there were concerns that CMS payment policies were influencing clinical decision-making about whether patients received care as inpatients or outpatients.  Some providers even expressed concerns that patients who needed the therapy were not getting it at all.

The CAR-T story is an example of how government programs often fail to keep pace with innovation. CMS’s payment systems are locked into place by law.  We are limited in our ability to adjust and modernize these policies without an act of Congress.  And the changes that we can make take a substantial amount of time to implement – nearly a year for our entire process to unfold from start to finish.

We are continuing to take a close look at payment for new therapies, as we want to ensure access to these therapies while rewarding and encouraging lifesaving innovation. 

But as we focus on unleashing innovation, we must not let the government itself be a barrier to innovation.

Studies have 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.

Recognizing this, President Trump directed the entire administration to find ways to cut unnecessary and overly burdensome regulations through his “Cut the Red Tape” initiative.

I came to CMS after working on the front-lines of our healthcare delivery system, so I knew it was important for us to hear from those providers and patients living under our regulations to help us determine which were valuable and which were unnecessary.

We launched our Patients over Paperwork initiative in 2017 to focus all of CMS on finding opportunities to modernize or eliminate rules and requirements that are outdated, duplicative or getting in the way of good patient care.   

As part of Patients over Paperwork, we actively solicited feedback from the medical community through requests for information, listening sessions, and onsite engagements with front-line clinicians and staff to learn how our administrative requirements and processes affect their daily work and ability to innovate in care delivery.

Over 2,000 clinicians, administrative staff and leaders, and beneficiaries have participated and this work is changing the culture at CMS, and how our team develops regulations.

One of the top complaints we heard was the about the challenges associated with complying with the Stark law.

When enacted in 1989, the Stark Law rightfully addressed the concern that inappropriate motives could distort decision-making in healthcare. It recognized a worry that some physicians might order services based on their financial interest in service providers, rather than the good of the patient. In a largely fee-for-service context, you could see why that would make sense.

In a system where we’re paying for value, where the provider, ideally, is taking on some risk for outcomes and cost overruns, we don’t have nearly as much need to interfere with who’s getting paid for what service. The government and the patient are paying for outcomes, not individual services.

Most of the commenters we heard from believed that regulatory changes are needed to support the move to where we want to be on value-based payments. But, of course, there was also recognition—a recognition that we share—that the potential for program integrity vulnerability or other abuses continues to be a significant threat that cannot be ignored.

We are actively working on an update to our Stark regulations to be issued later this year. Some of the changes include clarifying the regulatory definitions of volume or value, commercial reasonableness and fair market value; addressing issues such as lack of signature, incorrect dates or other areas of technical noncompliance; and updating the regulation to address a world in which there are cybersecurity and electronic health records requirements, 

This will represent the most significant changes to the Stark law since its inception. It is our hope that these changes will help spur better care coordination and help support our work to remove barriers to innovation while continuing to provide appropriate safeguards for our programs.

And on the subject of safeguards - we have also revamped everyone favorite program, the Recovery Audit Contracts – or RAC audits.

When I first came to CMS, I heard constant complaints about the RAC program and how it was interfering with providers’ ability to focus on their patients.

So this administration has worked to award new contracts and have streamlined the review process and documentation requirements.

I hope you are feeling the impact, because I know I am enjoying the reduction in complaints on this issue. I even had a member of Congress call me recently to express their surprise that their phone had stopped ringing on the issue. He wondered what had happened. We got there by making several changes that made a big difference.

For example, instead of treating all hospitals the same, now we conduct fewer audits of providers who have been in compliance. We also allowed 30 days for providers to submit additional documentation before needing to repay an improperly paid claim.

And even with these changes, the program still recovered $73 million in overpayments for our trust funds last year, but with far less burden on providers.

The results of our Patients Over Paperwork Initiative are impressive, as of this month, we have resolved or are actively addressing nearly 2/3 of the provider burden topics that we’ve identified. Through President’s Trump’s leadership, these actions are projected to save the medical community at least $5.4 billion dollars and at least 40 million hours through 2021. That is truly putting Patients Over Paperwork.

This administration is committed to transforming our health care system to one where providers compete to provide affordable, high quality care, empowering patients, with better access to information, price and quality transparency. We are about expanding choice and competition to lower costs.

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

And we are unleashing innovation, transforming our system of sick care into health care through smarter payment incentives.

We are also 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.

Before I go, I would be remiss, as the person charged with strengthening and protecting Medicare, if I didn’t take a moment to talk about the greatest threat to the American healthcare system, and that threat comes from proposals to expand the program to cover everyone.

Let me be clear, expanding Medicare will ruin the program for the seniors it was created to serve, and it would decrease the quality of care that we, as Americans, have come to expect as the world’s leader in innovative health care.

Medicare for all is, in reality, Medicare for none. This isn’t hyperbole. As the Administrator of one of the largest Government-run health care programs in the world, I see first-hand its shortcomings.

Government-run healthcare means taking years to change rules that force patients to use less advanced medical equipment, even when newer technologies can save lives and lower costs.

Government-run healthcare means having bureaucrats dictate decisions about your care….even things like how often you have to see your physician in order to receive treatment.

Government-run healthcare means being forced to accept reimbursement rates calculated by rigid formulas set by Congress – that don’t consider the outcomes that a provider achieves.

Those aren’t hypothetical examples- those are realities we struggle and fight against today. Right now Medicare requires 3 days in a hospital before paying for nursing home stays, creating extra hospital stays and increasing costs whether the patient needs it or not. And if a Medicare patient is not well enough to go to a doctor or clinic, but a nurse visit to their home would keep them out of the hospital, Medicare will pay for their eventual hospitalization but won’t pay for the home visit.

 

These are just some of the examples of the inherent inefficiency with a system that needs an act of Congress in order to make changes.

It is true that our present system needs improvement, however doubling down on government and mimicking the failed socialist healthcare systems of Europe that ration and restrict care, where patients face long periods of time for care, is not the answer.

Rather than debating who pays for our care, we have to do the hard work to address the underlying issues that are driving the cost of our care up.  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 system.

I believe the answer to what ails the system is to unleash competition and choice to control costs….to empower patients with access to price and quality information…to make the system less bureaucratic, not more, reducing paperwork requirements while increasing time spent by providers with patients…to foster innovation in the system through both technology and payment reform so we transform our system of sick care into health care.

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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