When Payor Innovation is Driven By Government

This tweet from Jamey Edwards, CEO of Cloudbreak Health, inspired a really interesting discussion in a Twitter DM (direct message) group I’m in called Healthcare Disruptors. For those not familiar with private DM groups, in this case, there’s a group of 49 people on Twitter that are part of this group and members of the group regularly share information, events, insights, etc and the group comments on it.

Private Twitter DM groups aside, one of the comments in the group highlighted a concept I’ve heard for years. The government (largely Medicare and Medicaid) is the largest payor and the private sector has been taking its queues from Medicare and Medicaid for years. Is it any wonder that we haven’t seen much evolution in the payor space when we’re waiting on a massive government entity to drive the innovation?

Waiting for government to drive innovation largely explains why healthcare hasn’t evolved.

To solve this problem, there are two options First, the government could evolve more quickly and create new models for reimbursement that change the landscape. Is there anyone holding their breath on this one? Don’t get me wrong. I’m quite intrigued by Medicare’s attempts to push telehealth related reimbursement codes and their decision to try and reimburse based on the time spent with patients instead of how much you document in the record. These are big changes and I’m hopeful that they’ll be good changes. Not to mention ACOs which will hopefully help show us the path to a full value based reimbursement world and get us off the fee for service treadmill.

That said, I’ll never forget a CMS listening session that I went to. Someone asked about a specific policy and when we might hear the details of the final rule. The CMS representative said, “Pretty quickly.” Then, he corrected himself and said, “Government quickly which probably means months, not years.” The government moves slow. That’s just the reality. This is why innovation in healthcare shouldn’t depend solely on the government.

The other way for innovation to occur is for other payors to lead the innovation. When was the last time that payors did something really innovative? When did Medicare take something from the private payor space because it was an innovative solution? I’ll admit that I’m not a complete expert on the payor space, but I asked some friends and so far none of us have remembered a time where this happened.

What’s going to change this? The answer to that is not clear. Do you see something I’m not seeing? The better promise comes from something outside this traditional system disrupting healthcare as we know it. It feels like something like that needs to come, because Jamey is right that this is a big problem for many Americans, both republicans and democrats.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

1 Comment

  • I work with Jamey so may be biased in my views of both his wisdom and is perspective.

    But as an American now living in Canada, and having done work around the world where healthcare is typically fully public (aka: socialized; Canada) or a combination of public-private (e.g., most of Europe, Australia, etc.), I would contend that one needs to also consider the lack of influence CMS has in the American market because of its minority control of things.

    When private payers – who tend to reimburse at a higher level – create a lobby that excludes CMS, I’m not sure CMS has the leverage one would think.
    I’ve seen government led systems innovate, and do it quickly – to great effect – in other parts of the world where they do have leverage.

    I totally appreciate the sensitivities around “socialized healthcare” in the US. But in my opinion they are largely hyperbolic, just as in the rest of the world where they believe the private structure of the US means we let people die of heart-attacks or bleed-out from car-accidents when they don’t have appropriate insurance; mis-information and mis-understanding all around us.

    Personally, I support a single PAYER model (like Canada has), with profit and competition on the PROVIDER side (this is what Canada lacks). We’re seeing this model evolve in Europe, Asia, and elsewhere to great effect.

    When the government is the Payer, as it has no profit motive and there is a massive reduction in administrative overhead for the hospitals and clinics knowing exactly whom to bill and for how much, there is immediately more $ available for actual care. Privatization on the delivery side (again, Canada doesn’t have this, but the US does) supports innovation & efficiency.

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