VBC, MA, FHIR and Modern Care

We have been talking about value-based care for over 20 years and about interoperability in healthcare for at least as long. We have been talking about having data on care practices for roughly the same amount of time as well.

What is interesting is that these trends and hopes are now becoming real in a very powerful way. Why is that? The fundamental reason is that heretofore clinical and financial data lived in separate worlds. Clinical data has been the domain of the electronic medical record. Financial data has been the domain of revenue cycle processes and claims engines. Obviously, we know from everyday purchasing of goods and services that you have to combine what you’re getting with what you’re paying for that good or service. How does this basic consumer supplier concept play out in US healthcare?

Because we have not had simultaneous access to both clinical data and the financial data associated with that care, we’ve had to make some deep assumptions, maybe the most fundamental assumption being that the cost of that care is somewhat of a given. In a world where prices are administratively set by CMS, that was not an unwarranted assumption. Today many healthcare contracts are negotiated on the basis of some percentage above or below Medicare fee for service prices.

If we assume prices are effectively fixed, then the conversation shifts to looking solely at clinical care. This is, of course, the world we know today with quality measurement as the best-known form of looking only at clinical care independent of the cost. That world where care performance and care cost are separated at birth is rapidly coming to an end.

The elephant in the room is Medicare Advantage. Congress and both parties have implemented policies that effectively drive patients to select Medicare Advantage. Medicare Advantage is now larger than classic fee-for-service Medicare. US healthcare is moving from a volume-driven business to a cost-performance-driven business. Medicare Advantage plans are capitated, which is, of course, their fundamental design concept. In a capitated plan, the ability to control cost is the centerpiece of plan performance. 

What this means is that for the first time nationally, value-based care is the order of the day. We have seen this regionally with most notably Kaiser, but this has not been the case nationally. Now with Medicare Advantage, we see true value as the driver though some of the incentives are muted by traversing through CMS’s Stars program which strongly incentivizes plans to provide solid care.

What does this value-based world look like? In this new world, as with many services we use in our daily lives, data is king. And that data needs to come from as many sources as possible – think of all the data streams that an airline or large online retailer uses to provide their services. In healthcare, this computational opportunity implies that we have to deeply integrate clinical data from the electronic medical record and claims data from the revenue cycle, and we have to do so from every possible source. Finally, interoperability starts to move from something to be avoided so that providers do not lose patients to competitors, infamously known as “leakage”, to something which will be central to both provider and payer success.

As with interoperability in the world outside of healthcare, modern data standards and modern software architectures will start migrating into healthcare. Reflecting on what modern data architectures are outside of healthcare, almost every app on our smartphones uses JSON to communicate with backend servers. JSON and the RESTful API (application programming interface) protocol enable highly efficient communications between the app on your smartphone and app backend services. These backend services are becoming increasingly modern as well. Many firms doing large volumes of computing are moving away from relying purely on the classic enterprise data warehouse to more modern architectures, specifically one known as Lakehouse, as the underpinning of their data platforms. Lakehouse is a blend of “data lake” and “data warehouse.” The underlying purpose of Lakehouse is to be able to blend, structured, loosely structured, and relatively unstructured data to provide richer and real-time products and services.

What are the specific data science tools that we are starting to see in healthcare? First and foremost is the FHIR data standard, which has been promulgated by federal policy over the last 10 years and is the healthcare version of JSON. FHIR is now being written into almost every modern data requirement. Congress passed the 21^st Century Cures Act in 2016, and the healthcare IT provisions of that act are centered on modern freely accessible APIs. ONC’s and CMS’s Cures Act interoperability rules and CMS’s recent 0057 Interoperability and Prior Authorization rule all expand the scope of FHIR-based APIs, now requiring payer-to-provider APIs, payer-to-payer APIs, and prior authorization APIs. ONC’s HTI-1 and HTI-2 Health Data, Technology, and Interoperability Rules double down on this with further refinements of FHIR-based APIs including the evolution of the 2020 FHIR Bulk Data standard allowing API-based access to population data. 

We are increasingly seeing a world where healthcare communications will be done, and data will be shared via the FHIR data standard. This is starting to bring healthcare into the modern programming stack that every modern software developer is highly familiar with. While there are some vestiges of the inefficient and anti-competitive past such as TEFCA, the overall picture is modern APIs and data sharing will be the center point of payer-provider conversations.

In a Medicare Advantage world or in a managed Medicaid world, there is no enduring win unless payers and providers are constantly communicating about the nature, quality, and price of the care they are either paying for or providing. These conversations will increasingly be held in real-time. We are starting to see this with prior authorization rules where prior authorization decisions are starting to be enabled with real-time APIs. Electronically authorized decisions have already happened in writing prescriptions but have not yet entered the broader provision of care as current prior authorization is largely a manual process. That is about to change. What will also change are the related care allocation strategies, such as network design, care coordination, and the underlying payment incentives.

One response to these computational advances is to wait for regulations to require these changes. However, the bigger driving force is actually going to be consumer demand. We know as consumers that we expect answers instantaneously. We are all heads down on our cell phone screens in almost every commercial activity in our lives, whether that is hailing a ride, shopping online, looking at the news, banking, or being entertained. The first movers in healthcare who bring this computational immediacy to payer-provider performance will be the winners. Those who don’t leverage modern computing will be the losers. AI-enabled services will likely accelerate the separation of winners and losers.

The good news is that there are now modern data platforms, often known as Lakehouse platforms, running on cloud services that fully support FHIR, APIs, and all of the other computational tools needed to provide different, better, and more valuable care. A core concept of this care will be the fact that it is continuous, given today’s healthcare is episodic. Today we go from doctor’s visit to doctor’s visit. But most of our illnesses are chronic illnesses which we deal with continuously in our daily lives. Modern healthcare will be real-time and continuous. Every payer and every provider will need to think about whether they have the data platforms and the API capabilities to participate in this emerging world.

Photo: elenabs, Getty Images

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