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Remarks on Value-Based Transformation for Post-Acute Care

Alex M. Azar II
American Health Care Association/National Center for Assisted Living
June 5, 2018
Washington, D.C.

As our country ages, the systems we have for caring for older Americans must change. One reason is that the finances simply will not work. We need higher quality, lower-cost settings for caring for older Americans with serious health conditions. But another factor is that our aging generations will have different expectations, needs and capabilities.

As Prepared for Delivery

It’s a pleasure to be here today. I want to thank Tim [Sadler] for that introduction, and thank all of you for inviting me here to share with you some of President Trump and HHS’s vision for the future of healthcare.

It is particularly fitting to be here with AHCA/NCAL because the organizations you run will play a key role in the healthcare system over the next several decades.

American healthcare is changing rapidly, and America itself is changing, too. The number of Americans in need of services to maintain their health and independence as they age is rising, and the number of disabled Americans in need of such services is growing as well.

The demographic data doesn’t lie: In 2000, around when I first arrived at HHS under the Bush administration, there were 46 million Americans over the age of 60. By 2016, there were 69 million Americans over 60—a 50 percent jump.

By 2020, that number will be 77 million—and by 2040, it will be 102 million.

Certainly, this represents an opportunity for those who serve our elderly: It’s much better to be running a nursing home these days in America than to be running a college or university. There are more than a few college campuses around the country now being redeveloped into senior living communities. In fact, some of you might own them.

But as our country ages, the systems we have for caring for older Americans must change.

One reason is that the finances simply will not work. We need higher quality, lower-cost settings for caring for older Americans with serious health conditions.

But another factor is that our aging generations will have different expectations, needs and capabilities. There are interesting differences between the earlier stages of the baby-boom generation, many of whom are already retired, and the later stages of the generation, who are now nearing retirement.

A recent report from Deloitte divided the boomers into two separate waves: leading edge and trailing edge. The leading edge wave has tended to age largely like their parents did: move somewhere else for retirement, make major changes in their lifestyles as they age.

The trailing wave of later boomers has slightly different expectations: Many of them want to age in place, maybe nearer to family. This shift has occurred in expectations around care for Americans with significant disabilities, also. We want them spend as much time as possible in their communities and with their family.

The trailing wave of boomers also has more exposure to consumer-driven elements of our healthcare system, like choosing from a wide array of insurance options from their employer. They have much more experience interacting with healthcare technology. We’ve probably all been impressed by an older relative who’s mastered Google Photos or Skyping with an iPad, but think about the next generation of older Americans: They’ll have mastered technology much earlier in their lives.

The trailing-edge boomers have challenges as well: They have higher rates of diabetes, for instance, than older boomers. They will need more healthcare services, especially for chronic conditions, sooner than the earlier boomers did.

So all of this is reason to believe that change is necessary, but these changes represent an opportunity, too.

I believe we can all agree that a key element of positive transformation for our health system must be moving from the system we have used for decades, paying for sickness and procedures to paying for health and outcomes.

HHS has significant leverage to drive this change by using Medicare and Medicaid. I have identified value-based transformation as one of my four priorities as secretary, alongside combating the opioid crisis, lowering the price of prescription drugs, and reforming the individual market for insurance.

We at HHS know that the idea of value-based transformation is not new. Both the George W. Bush administration, in which I served, and the Barack Obama administration worked to move our system toward paying for value.

But even as progress has been made, including in the area of skilled nursing facilities, our government programs and the private sector have a long way to go.

So, this spring, I laid out four areas of emphasis for building a system that delivers value: maximizing the promise of health IT, improving transparency in price and quality, pioneering bold new models in Medicare and Medicaid, and removing government burdens that impede care coordination.

The common thread for these priorities is the recognition that value is not accurately determined by arbitrary authorities or central planners. The best way to identify and reward value is a marketplace of many players—providers, patients and, where necessary, third-party payers.

This is especially true when it comes to finding long-term care solutions. What makes sense for some patients, what makes the later years of their lives healthiest and most meaningful, or what is the preferred setting for someone with significant disabilities, is not going to be the same for everyone.

Within the world of assisted living and post-acute care, there is a great deal of room for progress on the four areas of emphasis I have laid out.

On health IT, for instance, the federal government has not always paid the same level of attention to advancing electronic health records in your industry as in traditional healthcare settings. But the potential for a truly interoperable health records system, spanning all settings of care, is huge.

We’ve spent more than a decade now talking about the importance of interoperability of health records, and progress has been made. New technology has now made it possible for government to be focused on the what, not the how, of interoperability. We believe patients ought to have access to their data, period—and we won’t try to micromanage how you accomplish it.

I had a recent reminder about why this is a priority and why the benefits and challenges of health IT are not abstract, but real and significant for patients and providers.

Earlier this year, as some of you may know, I spent some time in the hospital—the first hospital stay of my adult life, in fact.

It’s a particularly interesting experience to go through as a health secretary, with the level of attention involved on one man’s digestive infection. My wife got to joking that we practically needed a press secretary just for my colon.

The experience was, first of all, a reminder of how fortunate we are to have access to such high-quality healthcare in our country. But it did bring home for me how challenging it is to be a patient—and just how much information and data are required to deliver the right treatment.

Even though I stayed within one hospital system for inpatient, outpatient, specialist, primary care, and diagnostics, the lack of interoperability between multiple EHR platforms meant that I had to relay my medical history, my medications list, and the like to each new doctor or nurse who attended to me.

Now, consider that I found this a stressful experience when I have years of experience in the healthcare field. I’m active and relatively young. Imagine if I’d been a much older patient, like those so many of you serve, or one who required a caregiver or family member to assist in my understanding of the system.

Today’s compartmented system is a huge burden on these patients and a great risk to patient safety. Imagine if patients arriving at a new facility could share their medication list just once, for example. Think about the opportunities for mistakes and inaccuracies that would eliminate—and think about the burden that would lift from both patients and providers.

We at HHS don’t want to micromanage how interoperability is reached, but we are going to provide the right incentives to make it happen. We have issued an RFI, attached to our new SNF payment rules, regarding interoperability incentives and the administration’s broader efforts to put patients in charge of their own data.

But patients must have access to more than just their own health data. For patients to drive value as consumers, they must have access to data on price and quality.

That is why, for instance, we have proposed making public four key pieces of data regarding SNF quality, building on the important strides that have been made under the IMPACT Act’s quality reporting and standardization requirements.

One key element of quality assessment for post-acute care facilities is cutting down on readmissions, and my recent hospital stay involved a brush with this issue, too.

I actually had to return to the hospital after my first course of care for the infection I had, prompting one Washington tip sheet to call this “the most high-profile hospital readmission in some time.” Apparently, once you tell enough health policy anecdotes, you are bound to become one yourself.

But the issue of readmissions is a tricky one, and it reflects the importance of a coordinated system that works together to deliver value.

We know there can be disagreements among hospitals, payers and post-acute care providers about when it’s appropriate for a patient to leave the post-acute care facility. We understand getting patients the right rehabilitation services helps keep them out of the highest cost settings: hospitals or inpatient rehab facilities.

But a system that pays for value will aim to move patients into the lowest-cost appropriate setting. We are interested in ways that Medicare and Medicaid can better support the kind of coordination and integration needed for these transitions. This will likely involve stronger connections between the healthcare and human services sides of HHS. There may be potential for making more use of community aging and disability networks, which are supported by HHS’s Administration for Community Living.

The final two areas of emphasis for value-based transformation I mentioned are pioneering new models and payment systems in Medicare and Medicaid and removing government burdens. Both of them are reflected in CMS’s introduction of our new proposed payment system for SNFs, the Patient Driven Payment Model, or PDPM.

You can look at the proposal of the PDPM as a model of how we want to initiate change in the healthcare marketplace: We want to work collaboratively and transparently, which is why we issued an advance notice of proposed rulemaking. We will listen to comments from stakeholders. But we aren’t afraid of rethinking a whole model of payment if the status quo could be improved for patients.

The PDPM would be a significant shift in how SNFs are paid, and we believe, a very positive one. It reflects our belief that we should not be paying providers in ways that drive overuse of services. Instead, we should pay providers based on the patients they treat, while assessing quality fairly. We know quality reporting can be a complex task, and we have strived to make SNF quality assessments as simple as possible while still gathering the necessary, meaningful data.

We are well aware of the huge burden that regulation places on so many healthcare professionals. Just so far in 2018, the CMS Patients Over Paperwork Initiative has pared back regulations to save providers more than 4 million hours of paperwork—4 million more hours that can be devoted to better patient care. One of the virtues of the PDPM proposal, as all of you know, is reduced paperwork burdens, to the tune of $2 billion in lower costs over the next decade.

Before closing, I want to touch on the role your organizations can play in another of our top priorities at HHS: combating the opioid crisis. This is certainly an example of how rapidly the healthcare landscape can change. I’m not sure many caregivers for the elderly ever expected to have to tangle with drug addiction.

For instance, one of the most common causes of hospitalization for seniors in America is a hip fracture, and hip fractures are extraordinarily painful. In many cases, treating them with opioid painkillers is appropriate and necessary. But discharging patients from a post-acute care facility while on an opioid regimen can be risky.

Opioids are often not the best long-term pain management option and they carry the risk of creating dependence or addiction. For elderly patients, there is also a real risk of these pills being diverted for others to abuse. We have to do our very best to ensure seniors receive appropriate, effective pain management throughout the continuum of care, and in many cases that means appropriately tapering opioids treatment before discharge.

Here, too, we need better coordination among different care settings. Patients need quality pain management while they are in your facilities, but after discharge, this work has to be coordinated with community supports and prevention measures, including evidence-based fall prevention training and a home assessment.

The opioid crisis has been a top priority for President Trump. Advancing the practice of pain management, in fact, is one of the five pillars of the HHS strategy for the opioid crisis we unveiled under President Trump.

Developing new, effective pain treatments, which are such an important priority for an aging population, is going to be a focus of a new public-private partnership at the National Institutes of Health, funded thanks to the 2018 government funding bill signed by President Trump earlier this year.

This is just part of a much broader set of accomplishments we have seen under President Trump that will benefit the older Americans you serve.

In the first 500 days of this administration, which we marked yesterday, President Trump has taken significant steps to make American healthcare more affordable and our government more accountable.

Last month, the President rolled out the most ambitious plan for reforming drug pricing of any president—a sweeping agenda for boosting competition, expanding and improving Medicare negotiation, creating new incentives for lower list prices for drugs, and bringing down seniors’ out-of-pocket costs. We are proud to have already taken action since then, with the FDA taking new steps to promote generic competition and CMS putting pharmacy benefit managers on notice about gag clauses that could be driving up costs for Medicare Part D patients. These actions follow a record-breaking year for generic approvals at the FDA, as well as a change to how Medicare pays for Part B drugs that will save our seniors hundreds of millions of dollars in out-of-pocket costs each year.

Meanwhile, CMS has been taking action on the broader value-based agenda I’ve described today, putting patients first, reducing paperwork burdens, and promoting transparency. We’ve also proposed to open up new options for more affordable insurance in the individual market. We have taken new steps to protect the conscience rights of religious health providers, so many of whom play an important role in our long-term care system.

I want to conclude today by laying out why I’m so optimistic that there is much more positive change to come.

I believe we will look back on this presidency as an inflection point in the journey toward a system that delivers better, cheaper healthcare, by paying for value rather than procedures.

Why is that? First, the status quo cannot hold. With the demographic shifts our country is undergoing, the way we do business in American healthcare has to change.

We also have a president who is unafraid to drive the changes we need. The President has seen and heard how the high cost of healthcare is burdening so many Americans, especially our seniors, and he has given us a mandate to do something about it.

Some of the necessary changes won’t be so comfortable for entrenched players. But those who are interested in working with us to build a new system will have unprecedented opportunities at hand.

As I said earlier, the changes we are seeing in our country’s demographics represent an opportunity. The same is true of this President’s reform agenda. So I exhort all of you to engage with us on the issues I’ve discussed today and take advantage of the opportunities they represent. Because under this President, in American healthcare, change is coming.

Thank you very much.

Content created by Assistant Secretary for Public Affairs (ASPA)
Content last reviewed on June 5, 2018