Azar indicates commitment to value and outcomes-driven health care

Azar indicates commitment to value and outcomes-driven health care
© Greg Nash

During his recent Senate confirmation hearing, Department of Health and Human Services (HHS) nominee Alex Azar was unflinching in his support for value-based care, listing it among his four core goals should he be confirmed. “We must harness the power of Medicare to shift the focus in our healthcare system from paying for procedures and sickness to paying for health and outcomes,” he said.

This is welcome news that should come as no surprise. Azar served as HHS general counsel when federal policy planted the roots for today’s shift in payment and delivery models in the Medicare Modernization Act of 2003.

Ever since, through Republican and Democratic administrations, federal policy has advanced an ambitious transformation of the way health care is financed. The more recent Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) creates strong incentives for healthcare providers to take on payment risk over the next several years.


Major medical groups and integrated care systems support this approach. As part of the transition towards a more accountable care delivery system, it is important that the financing recognizes and supports a value-based approach to care delivery.

AMGA members have been at the forefront of this transition and are pleased that Azar not only recognizes the need for the transition to continue, but embraces the importance of recognizing and rewarding value in health care delivery.

However, there are several roadblocks on the road to value-based care. Over the past few years we’ve identified many of the critical barriers by surveying members about their transition to value. The findings from our most recent survey, published in December, were consistent with the obstacles identified in earlier surveys.

Chief among the barriers is a lack of access to administrative claims data, which providers need to fully understand and proactively manage a patient population. Data submission and reporting is also a problem because providers are required to submit and receive data in different formats for different payers. This lack of standardization results in inefficiency and added costs for providers.

The needed investments in infrastructure, including electronic medical records and analytics software, and the skilled clinicians needed to coordinate care, also represent a serious obstacle to assuming financial risk. Of course, access to capital is also a barrier to risk. This includes not only the financial reserves to assume risk, but also the capital to invest in the above-noted infrastructure needs.

These barriers must be addressed now for value-based care to succeed.

Azar has the opportunity to address a number of roadblocks on the path to value. First, HHS could encourage Congress to pass legislation regarding access to data, data standardization, and access to capital.

Specifically, HHS’ support for legislation requiring federal and commercial payers to provide access to all administrative claims would signal not only to Congress but also to commercial payers how vital access to timely and actionable administrative claims data is to managing a patient population.

In the meantime, HHS could direct Medicare to make such data available to all Medicare providers. Regarding data standardization and reporting, HHS recognizes the need to shift toward outcome measures.

This means focusing on measures readily available in claims data that reflect patient outcomes, such as readmissions or infections. As part of this process, HHS should engage with Congress on the need for standardizing the quality data submission and reporting process so providers aren’t reporting data to different payers in different formats, which would enable them to direct more resources toward patient care.

We welcome the prospect of committed leadership from the top. For too long the perverse incentives created by the fee-for-service payment system have led health care astray. Azar has the endpoint of policy right, “a system that rewards health and outcomes.” We are ready to help him clear the roadblocks to that destination.

Jerry Penso, M.D., is the president and chief executive officer of AMGA, which has 175,000 physicians practicing in its member organizations, delivering care to one in three Americans.