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New Regulations Are Transforming Healthcare

Dr. Dan Mazanec, MD

Chief Medical Officer, Dorsata

David Fairbrothers

Cofounder & CEO, Dorsata

Healthcare makes up nearly one-third of the United States’ GDP at $2.7 trillion per year. More importantly, much of the industry’s revenue is derived from a single source.

CMS, the Centers for Medicare and Medicaid Services, contributes approximately $800 billion per year to the industry. This positions CMS as the baseline against which the rest of the industry prices services and structures reimbursement.

Needless to say, policy is incredibly important to healthcare innovators and established businesses alike. Position yourself wisely to catch the wave — millions if not billions of dollars can be made. Miss the wave, or pick the wrong spot, and you are in for an incredibly long and painful slog.

The most recent example of this kind of major policy shift was the signing of the Affordable Care Act. ACA opened up countless opportunities for existing companies to accelerate their growth — such as Epic, Athenahealth and countless others.

The Department of Health and Human Services pushed government-driven healthcare reform to the next level with its recent proposal for reorganizing how physicians are paid for providing care to Medicare patients under provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Much more than simply a new reimbursement model, the regulations will accelerate the transformation of medical care in the U.S. by emphasizing:

  • Reimbursement based on value, not volume
  • IT/EMR focused on real clinical performance not process
  • Integrated group practice models not solo providers

The proposal seeks to streamline a patchwork of programs into two paths for value based reimbursement, aligning Medicare payments with cost and quality of patient care. The law is complex — 962 pages — and will affect more than 800,000 eligible physicians.

The newly proposed rules will also address physician concerns about excessively burdensome reporting of quality measures as well as EHR “meaningful use” process metrics of doubtful relevance to patient outcome. While subject to modification and open for comments until June 26, 2016, implementation in 2017 will drive change throughout the healthcare system beyond simply how caregivers are paid.

From accelerating the demise of solo or small group practices to refocusing health IT/EMR on clinician-friendly technology that supports increased patient engagement and caregiver communication, the proposal reshapes how healthcare is delivered in the next decade and beyond.

How can innovators capitalize on major healthcare shifts?

Given the serious implications that MACRA has for healthcare providers across the country, there are numerous areas where innovators — established companies and startups alike — can provide value:

Performance on Quality Measures

In MU, there many quality measures that practices had to report. Now, practices will choose six measures on which their reimbursement will be based. Solutions that help identify the right measures and help providers drive the best performance will be able to deliver a quantitative ROI.

Better Access to Health Data

It’s incredible that I can — in seconds — find the nearest Starbucks, but an emergency room physician is clueless or helpless to figure out what medications I’m taking if I’m not able to tell her. Solutions that drive data portability and interoperability will end up being an essential utility of the healthcare economy.

Cost Control

Ten percent of a practice’s reimbursement will be based on how their cost averages compare with the standard. The better practices perform on this metric, the more they will be paid. This is another example of direct, quantitative ROI for innovators.

Care Coordination & Patient Safety

Fee-for-service in healthcare will eventually be a minority of all dollars that flow through this industry. Therefore, more and more providers across the spectrum of care will be involved with each patient. That means that effective and efficient coordination of care will be key to assuring patient safety.

Shared Decision-Making

Cost transparency trends will continue to drive opportunity in shared decision-making. Patients, due to the rising out-of-pocket burden of their healthcare, will continue to push their healthcare providers on the necessity and value of recommended tests and treatments.

The sheer scale of spending that is allocated by CMS makes understanding these policies vitally important. Innovation must not only create novel products, but must also create novel pricing models and distribution strategies. Only those innovations that align needs across the spectrum — price, quality and efficiency — will sell rapidly. Others will fall into the endless sales cycle for which healthcare is notorious.

For those startups that align these priorities, there are billions of dollars to be made; thousands of jobs to be created; and most importantly, millions of consumers that will receive higher-quality, higher-value healthcare.

Dr. Dan Mazanec, MD

Chief Medical Officer, Dorsata

Prior to joining Dorsata in 2016, Dan Mazanec, MD was the Associate Director of the Center for Spine Health at the Cleveland Clinic. Board certified in internal medicine and rheumatology,…

David Fairbrothers

Cofounder & CEO, Dorsata

David has been involved with or led product development in seven different companies in industries ranging from consumer internet to health IT. He is a full-stack developer on a variety…

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