Healthcare Architecture: Information Sharing and

Interoperability

Perspectives from CMS CTO

Henry Chao

March 18, 2008

Providing Appropriate Care for Every Medicare Beneficiary and Manage Cost

• Medicare fee-for-service (FFS) spending is concentrated among a small number of beneficiaries. In 2002, the costliest 5 percent of beneficiaries accounted for 48 percent of annual Medicare FFS spending and the costliest quartile accounted for 88 percent. By contrast, the least costly half of beneficiaries accounted for only 3 percent of FFS spending.• Costly beneficiaries tend to include those who have multiple chronic conditions, those using inpatient hospital care, and those who are in the last year of life. Source: MedPAC data book, June 2007

Explosive Growth in Beneficiaries

• The total number of people enrolled in the Medicare program will nearly double between 2000 and 2030, from about 39 million to 79 million beneficiaries.• The rate of increase in Medicare enrollment will accelerate around 2010 when members of the baby-boom generation start to become eligible and will slow around 2030 when the entire baby-boom generation has become eligible. Source: MedPAC data book, June 2007

Medicaid Costs & Shift to Managed Care• Payments Under Medicaid, state payments for both medical assistance payments (MAP)

and administrative (ADM) costs are matched with Federal funds– FY 2006, State and Federal ADM gross outlays are estimated at $17.9 billion, about 5.5 percent

of the gross Medicaid outlays– State and Federal MAP gross outlays are estimated at $306.4 billion or 94 percent of total

Medicaid gross outlays, an increase of 1.5 percent over FY 2005– State and Federal MAP and ADM outlays for FY 2006 totaled $324.3 billion– CMS share of Medicaid outlays totaled $184.9 billion in FY 2006

• Medicaid enrollees– Children comprise nearly half but account for only 18 percent of Medicaid outlays– In contrast, the elderly and disabled comprise 29 percent of Medicaid enrollees, but accounted

for 65 percent of program spending– Elderly and disabled use more expensive services in all categories, particularly nursing home

services• Many States are pursuing managed care as an alternative to the FFS system for their

Medicaid programs– Managed health care provides several advantages for Medicaid beneficiaries, such as

enhanced continuity of care, improved preventive care, and prevention of duplicative and contradictory treatments and/or medications

– Most States have taken advantage of waivers provided by CMS to introduce managed care plans tailored to their State and local needs, and 48 States now offer a form of managed care

– The number of Medicaid beneficiaries enrolled in managed care has grown from slightly under 15 percent in 1993 to 63 percent in 2005

Medicaid Program Payments

Technology is Critical to CMS’ Strategic Goals

Mission: To ensure effective, up-to-date health care coverage and to promote quality care for beneficiaries.

Vision: To achieve a transformed and modernized health care system.

Technology is also Critical to Meeting Broader Trends in Healthcare and Medicare

Trend Impact on CMS Business Operations

Larger and more sophisticated group of beneficiaries demanding greater choice in Medicare, more control over their healthcare information, and more visibility into treatment options

Continuing advancement in medical technology and pharmaceuticals

Greater diversity of Medicare benefit packages.

More flexibility in enrollment process that allows beneficiaries to select from among several benefit packages.

More direct and transparent interactions with external stakeholders.

Continuing rise in health care costs Continuing pressure to prevent fraud, waste, & abuse.

Greater frequency of medical policy changes intended to improve health outcomes while controlling costs.

Quality and cost transparency initiatives, such as pay-for-performance, will continue to mature

Increased demand for more sophisticated payment methods that incentivize quality healthcare delivery and healthier behaviors.

Increased demand on CMS to collect and analyze clinical information as well as financial information.

More pervasive use of health IT across provider and payer communities.

A more technology savvy beneficiary population

Increased pressure on CMS business operations to offer more self service tools for beneficiaries.

Increased requirements to adopt clinical standards (e.g., HL7, SNOMED) in addition to administrative standards (e.g., x12).

We must supply the systems to support these business needs in an environment of scarce resources

CMS Technology Journey• CMS has been on a long journey to mature its architecture and

IT governance to support the CMS business components and the broader healthcare community . . .

• Key accomplishments:– Application and data projects

• Reduced number of claims processing applications• Prescription Drug Implementation• Financial Accounting System Implementation• Customer Service – 1-800-MEDICARE and Medicare.gov• First phases of enterprise warehouse

– Infrastructure projects• Data center modernization and consolidations

– Governance and standards• CMS Technical Reference Architecture• Improved governance and contracting

Current Activities and Priorities

• We still have hard work to do to accomplish our mission

• Key CMS technical priorities– Executing projects and implementing systems that help improve:

• Quality of Care

• Program Integrity

• Payment Accuracy

– Maturing business, data, and technical architecture– Maturing the governance and quality assurance processes for

systems development and integration efforts– Modernizing the systems that support the Part A, B, C, and D

benefits

Continuity Assessment Record & Evaluation (CARE) System• Problem:

– Transitioning patients from acute care to post-acute care facilities (e.g., nursing facilities) creates opportunities for quality of care, continuity of care, and cost problems.

• Business Goals:– Develop a uniform Post Acute Care assessment instrument that measures patient

health and functional status across provider settings, over time.– Beginning in 2008, use the instrument in a Post-Acute Care (PAC) Payment Reform

Demonstration whose outcomes will guide quality and payment policy development

• Mandate:– Deficit Reduction Act of 2005 (Section 5008)

• Results:– Web-based tool for collecting patient assessment information in various provider

settings (March 2008):• Can serve as a continuity of care record by allowing secure visibility to patient records across

providers• Has potential for being the foundation of an Electronic Health Record• Employs national E-Health standards

– Data import capability that will allow providers to automatically insert information from their medical management systems into CARE (August 2008).

CARE System

Assessment Data

Beneficiary Data

Verify Beneficiary

Provider Settings

Executive Order 13410Section 1.• Purpose. It is the purpose of this order to ensure that health care programs

administered or sponsored by the Federal Government promote quality and efficient delivery of health care through the use of health information technology, transparency regarding health care quality and price, and better incentives for program beneficiaries, enrollees, and providers. It is the further purpose of this order to make relevant information available to these beneficiaries, enrollees, and providers in a readily useable manner and in collaboration with similar initiatives in the private sector and non-Federal public sector. Consistent with the purpose of improving the quality and efficiency of health care, the actions and steps taken by Federal Government agencies should not incur additional costs for the Federal Government.

Sec. 3. Directives for Agencies. Agencies shall perform the following functions:(a) Health Information Technology.• (1) For Federal Agencies. As each agency implements, acquires, or upgrades health

information technology systems used for the direct exchange of health information between agencies and with non-Federal entities, it shall utilize, where available, health information technology systems and products that meet recognized interoperability standards.

• (2) For Contracting Purposes. Each agency shall require in contracts or agreements with health care providers, health plans, or health insurance issuers that as each provider, plan, or issuer implements, acquires, or upgrades health information technology systems, it shall utilize, where available, health information technology systems and products that meet recognized interoperability standards.

Creating a scaleable, sustainable architecture that meets the needs of the Medicare and Medicaid

programs in the coming decades?

• Invigorate the Enterprise Architecture program for business owners—business drives technology

• Utilize a business-focused framework for technology selection and implementation

• Drive business process integration• Create and govern a model of enterprise systems integration• Create a R&D practice• Maintain a security framework as we create more e-Gov services for

citizens, providers, plans, and partners• Create IT strategies that leverage maximum efficiencies through use

of CMS-domain relevant HIT standards• Create agency position with specifics in HIT adoption• Embrace and propagate proven industry solutions for HIT adoption

The CMS of today will lay the foundation for making the Medicare and

Medicaid programs sustainable and available in the coming decades