Rethinking CMS Coverage And Reimbursement For The Fourth Industrial (AKA Digital) Revolution
Originally published in “Health Affairs Forefront” — October 23, 2020
By: Robert J. Horne & Lucia Savage
Part 1: Disruptive Innovations in Health Series
Note: This image is the property of FHL and was not included in the original published by Health Affairs.
Introduction
Our society is in the beginning stages of the Fourth Industrial Revolution “a fusion of technologies that is blurring the lines between the physical, digital, and biological sphere.” There is great potential for digital technology to modernize US health care: from increasing the range of delivery modes outside of buildings; to improving the value of existing products such as adding to medications coatings that give off digital signals for medication adherence; to computer-generated clinical decision support and research; and even medical services such as diabetes education or cognitive behavioral therapy. That potential will only increase with the pace of innovation.
The Centers for Medicare and Medicaid Services (CMS) operates coverage and reimbursement through a series of payment systems each governed by a unique set of statutory and regulatory requirements. These payment systems, operated independently of one another, ensure safety, a modicum of fairness, and fortify consumers’ trust in the system. However, they are insufficient to support coverage of innovative technologies in ways that are most conducive to achieving the most value for beneficiaries and the program.
To make the most of the opportunities created by the Fourth Industrial Revolution, policy makers should modernize the statutory and regulatory rules that govern how products and services are made available to Medicare beneficiaries. That means including coverage and reimbursement policies based upon the functional outcome of the care — and viewing digital components as integral to all modes of care, not as stand-alone novelties. Furthermore, such policies should appropriately take into account digital modalities that can replace existing products and services when these hold the best chance to demonstrate greater value. A modern Medicare program is best positioned to realize historic gains on care access, quality, and cost for beneficiaries (and by extension to those with commercial insurance through the outsized influence of Medicare).
Traditional Coverage And Payment Approaches Need To Evolve, But Basic Safety And Fairness Is Foundational
Medicare makes coverage and payment decisions through annual updates to a number of payment systems, each with its own unique set of rules governing coverage and payment for medical products and services, as shown in exhibit 1. Coverage determinations for specific medical products or services that have a digital component are made to a large extent through their relation to historic, pre-digital categories covered by the program.
CMS is trying to bridge the divide between historical coverage categories and digital technologies but with limited success. For example, current Medicare coverage rules have begun to establish new codes with reimbursement for physicians reviewing data collected via digital tools. However, the Office of Inspector General for the Department of Health and Human Services has proposed to exclude from use in value-based care arrangements digital tools that are durable medical equipment, such as smartphones that can track a patients post-knee replacement gait through remote monitoring, even though CMS has paid for the underlying surgery. Such coverage inconsistencies across the payment systems, all too common in today’s Medicare program, can lead to diminished outcomes for patients and increased costs of care.
Medicare, through the Center for Medicare and Medicaid Innovation (Innovation Center), does have processes in place to step outside this categorical approach to coverage for digital tools, services, and procedures that have demonstrated some success in delivering greater value. However, these processes relate only to running and testing discrete pilot projects; they are, therefore, insufficient. For example, the Innovation Center’s remit is limited to testing single models where there is “a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures.” The Innovation Center does not have the remit of testing broad-based coverage approaches to digital, much less innovative digital coverage design, for all Medicare beneficiaries regardless of which payment system they fall under for a given health care need.
Similarly, the coding system used for digital coverage constrains innovation. First, Current Procedural Terminology (CPT) codes are the purview of the American Medical Association and so not amenable to change by congressional policy making. Second, coding is designed as a machine-readable description of what happened in a fee-for-service transaction in a health care specific location such as a lab, a hospital, or a physician’s office. Consequently, it is not flexible enough to necessarily cover reimbursement based on patient function and outcomes. For example, to get paid, a physical therapist (PT) is required to see a patient in-person in a building (because of CPT code definitions or CMS constraints). But what about a clinically effective, protocol-based exercise program that the PT assigns and delivers via an app? Currently, Medicare won’t pay for it. Likewise, Medicare will not cover Centers for Disease Control and Prevention-accredited online Diabetes Prevention Program services — including those provided by Omada Health (whose leadership includes author LS) — despite achieving outcomes similar to those of in-person services.
And so without sufficiently flexible coverage and reimbursement policies in place, access to such digitally supported care is undermined dramatically. Such limits impose lasting costs and represent significant lost value to patients, providers, payers, and society as a whole. To be sure, we do need standard machine readable data, such as CPT codes, to analyze such things as the type of care provided, its cost, and outcome. But the current coding system also needs to be capable of accounting for digitally delivered services that by many measures fall outside of fee-for-service payment methodologies.
The ideal Medicare program would foster safe, efficacious integration of digital technology and health care services — augmented with digital support from secure online platforms — to deliver such things as clinical decision support from artificial intelligence to improve overall patient care. If the pole star is high-quality health outcomes at a reasonable cost, the system should be agnostic to the source or brand of a medical service or product. It should be highly sensitive to what is most beneficial to a beneficiary regardless of the mode used to achieve that benefit. It should have enough resources to establish customized coverage approaches in time frames similar to those used by the Food and Drug Administration to determine product safety and efficacy. (The agency asserts a six-month time frame for a 510(k) clearance). It would properly recognize the value of new and innovative technologies where functions can replicate or even replace existing covered modalities. And it would allow for payment approaches better suited to digital technologies that produce systemwide benefits from coverage and use. If such a system existed, it might be illustrated such as in exhibit 2:
A Modern Medicare Program For The Digital Age
Policy makers interested in advancing legislative or regulatory reforms to modernize Medicare and make the most of the Fourth Industrial Revolution should consider the following three principles:
Design Coverage And Reimbursement Policies Around Functional Outcome
Medicare’s traditional approach to digital coverage is hampering the digital revolution. Existing payment system approaches to coverage still largely adhere to mid-twentieth-century distinctions among prescriptions, equipment, people, and buildings. These distinctions do not account for the computer revolution where in 2020, we carry more computing power in our purses and pockets than was used for Apollo 11’s moon landing. Digital health technologies transcend traditional coverage distinctions, allowing policy makers a unique and historic opportunity to reevaluate the per-unit cost of health care. Upending the costs required to deliver a medical product or service can increase access to care at diverse and virtual locations, and increase coverage options and consumer choice. It can act as a bridge to bring better alignment across traditional categories. Designing coverage policies around individual functions of digital technologies, paired with reforms that better facilitate direct financial relationships with digital health suppliers, could potentially unlock additional value in ways least disruptive to the various payment systems and medical providers who operate through them.
Integrate Digital Coverage And Reimbursement Across Silos
Digital technologies are useful in all historic settings across the various Medicare silos, creating new modalities to achieve fundamental health goals. To better take advantage of digital technologies Medicare needs a functional, integrated approach that allows for the program as a whole to consider digital coverage and reimbursement across the various silos of care. Such a strategy, supported by operational improvements within CMS, can better identify how digital coverage would yield benefits across the entire program. Such an approach would also generate a host of secondary benefits such as improved data integration at the point of care that could advance care management for providers, patients, and caregivers.
Modernize CMS Coverage And Payment Capabilities
Operationally, CMS is not currently capable of keeping up with the pace of digital technology innovation. Since the passage of the Affordable Care Act (ACA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act, increasing demands on staff time and responsibilities have left coverage teams woefully understaffed, underfunded. and not well situated to succeed. On top of this trend, which has built up over decades, there has been no reason for staff to break the habit of thinking in coverage siloes. Together, these undermine the ability of staff to be agile and advance innovation. The silos we illustrated above further frustrate and undercut the ability of the agency to realize the benefits of the digital age. CMS’s coverage division should be reconstituted and empowered to establish financial relationships directly with manufacturers and transition digital coverage down into the various payment systems. This approach offers the best path to expand high-quality care options to beneficiaries at reduced cost. Ideally, this new coverage division would be able to partner with Medicare private plans to augment the program’s testing capabilities in ways that can further drive new value.
Conclusion
Medicare modernization for the digital age is not a new concept. Congress has advanced numerous measures to promote digital and data technology use within health care beginning with HIPAA itself in 1996, through HITECH in 2009, the ACA in 2010, and the 21st Century Cures Act in 2016. But more remains to be done.
We believe that the United States has largely succeeded in its embrace of digital technology through the system of coverage and payment it uses today, and that a reformed Medicare program for the digital age can overcome current obstacles that prevent the program from securing sufficient value from it. A cursory review of the digital technology adoption experience within other sectors of the economy suggests that appropriate adoption and use of digital technologies in Medicare can achieve improvements in care cost, quality, and access.
These experiences have also highlighted the need to proceed carefully with Medicare modernization if we are to minimize negative experiences associated with digital adoption. Implementing a more modern program will cause disruption, and policy makers need to keep in mind that the heavy regulatory nature of US health care is not in and of itself the problem. This increased regulatory scrutiny exists in part to ensure patients and consumers know that a particular product or service is safe, accomplishes what it advertises, and minimizes where possible negative impacts associated with use. Indeed, the need for safety distinguishes the health care system from most other economic sectors that have undergone a digital revolution. Nevertheless, safety should not prevent a digital revolution in health care; we believe the considerations laid out in this post hold hope for a smooth transition.
Our health care system has undergone massive changes in orientation and philosophy since the COVID-19 pandemic. Greater use of digital technologies such as telehealth have been an important component of the Medicare’s response to the crisis, but current approaches to coverage and payment leave many benefits unrealized. In response, policy makers must put in place a modern Medicare program for the digital age to serve as a critically important component of federal efforts to prepare for ongoing and future health emergencies, while ensuring access to an equitable health care system.