“We’re seeing business models predicated on building value”

Dr. Farzad Mostashari helped shape the electronic health record landscape from 2011 to 2013 as head of the Office of the National Coordinator for Health Information Technology. Today, he is CEO of Aledade, a Bethesda, Md.-based startup with 150 employees that manages physician-led accountable care organizations. Editor Merrill Goozner recently spoke with Mostashari about how the coming regulatory and political changes will affect his business, which manages ACOs for over 1,000 primary-care doctors in 15 states. The following is an edited excerpt.

Modern Healthcare: Let’s start with MACRA (the Medicare Access and CHIP Reauthorization Act). Will the new rules affect docs’ willingness to get involved in ACOs?

Dr. Farzad Mostashari: I was at a meeting recently where they went through the requirements and the scoring system under MIPS (the Merit-based Incentive Payment System). Everyone’s eyes were glazed and in shock except our docs, who were giving each other smiles and thumbs up. Why? Because they’re prepared. We’re going to help them do well in this environment.

A lot of independent practices will not by themselves be able to handle the added complexity. They will be looking for consultants; some may look to sell to hospitals. And a lot of others will be looking to join together through their virtual groups, through ACOS or in other ways to come together to take these challenges on so they can give themselves a thumbs up instead of being in fear.

MH: What is the likelihood that MACRA requirements will stay in place?

Mostashari: MACRA was passed with overwhelming bicameral and bipartisan support. I’ve talked to people on the Hill who were instrumental in getting it passed. They are very committed in getting MACRA implemented.

I’ve heard a lot of praise from lawmakers and their staff and doc groups that CMS really listened. The final rule is a pretty good starting point.

Every rule will have its iterations. They excluded a bunch of folks who don’t have much Medicare business. They provided extra flexibility.

There is a deeper sense among physicians— however easy you make it, and it won’t be easy— that they’d rather be focused on outcomes than on check-the-box measures. What we’ll also see is they’ll make it easier to move on to advanced payment models.

MH: Do you still see reluctance among commercial insurers to get involved in ACO contracts?

Mostashari: I see clear receptivity among all payers to the idea of paying more for value and engaging primarycare doctors as being the stewards of the premium dollar. The degree to which payers are prepared to work with physicians in these new kinds of arrangements, which is a cultural as well as contractual change, differs.

This is moving toward collaboration. That is a very transformative change and there are some payers who are more prepared than others to make that shift.

“More revenue for primary care … means fewer (hospital) admissions and fewer procedures. They face demand destruction.”

“Many hospitals are blocking (EHR interoperability) … We still have to decide as a country if that’s OK.”

MH: What is discouraging the laggards?

Mostashari: A lack of familiarity with the model. We’re seeing in the last two years a much greater comfort with risk contracts. We had to help them write their first contracts. They didn’t know what to include or exclude to make it work. Experience is really important.

But there is growing recognition on the part of insurers that they’d rather keep these primary-care practices independent than join a consolidating system. It’s the primary-care physician’s job to manage the referrals.

MH: Are hospital system physician practices receptive to your model?

Mostashari: Many hospital systems that have created clinically integrated networks are able to integrate them into a cohesive unit with their dozen or so different EHRs. Some have asked us to manage them. But to date we have stuck to our knitting and worked only with physician practices that aren’t tied to systems.

MH: Is the independent practice better positioned than a hospital system to get into risk-based contracts?

Mostashari: Definitely. They have less of a capital investment that has to be fed by volume. We need more primary care, which means more revenue for primary care. And for hospitals it means fewer admissions and fewer procedures. They face demand destruction. That’s a fundamental challenge to health systems.

There are certainly some who talk about the commitment they’ve made. They’re prepared to go through the transition needed to turn the hospital from a revenue center to a cost center. That is a very tough, high level of difficulty dive to pull off—to manage that transition well while maintaining cash flow and bond ratings and commitments to department chairs and all the other stuff they have to deal with that primary-care docs don’t.

MH: What’s the state of interoperability, especially as it applies to promoting value-based reimbursement?

Mostashari: When I joined the government, there were no consistent vocabularies for things like medication. Now we’ve standardized every EHR on prescriptions. The same with diagnoses and procedures.

Once you have that, it is relatively easy to have different systems ingest data from other systems. So a lot of progress has been made on the building blocks for interoperability.

However, it’s not all shiny. There are two issues we still struggle with. Many of the EHR vendors undertook the changes not because they wanted to or because they felt it was in their business interest to do so, but because there was a certification requirement. So they made sure they could pass the test in the lab. But they didn’t really push to incorporate it into their product in the field or make it work well for their customers.

The second challenge is it’s not clear the customer has demanded interoperability, which would make it easier for a patient to move to another system. Many hospitals are blocking that information, whether through various excuses, delays, prevarication or they flatout say, “Why should I share it with you because it’s a competitive advantage.” We still have to decide as a country if that’s OK.

MH: How would you describe the environment for disruptive health technologies?

Mostashari: It’s a great time for new innovative solutions that can make use of all this infrastructure that’s been built on the health IT side. We build on top of the EHR. We connect to 49 different EHRs. That’s painful and expensive. But we couldn’t do what we do if we didn’t have that infrastructure in place.

The payment models that were rooted in just fee-for-service documentation and billing stifled innovation and improvements in care. It didn’t matter if you improved care or not. You still got paid. Now we’re seeing business models predicated on building value.

MH: Will the change in administration derail that?

Mostashari: I don’t think so, but there is uncertainty. There’s clearly a commitment on the part of Congress to continue forward. But the administration may be distracted with repeal and replace; with Medicare vouchers; with Medicaid waivers and Medicaid reform. The risk isn’t to roll back, but that the administration may be distracted and won’t push.

The push will have to come from the private sector. The federal government won’t push it ahead. But I don’t think they’ll put it in reverse.

MH: Yet incoming HHS Secretary Tom Price wants to get rid of mandatory bundled payments.

Mostashari: Tom Price voted for MACRA. We’ll find out. What he really objected to was the mandatory nature of the bundles. It should be the physicians’ choice. Thousands of physicians have made the choice to join the voluntary programs. I don’t think he’d be happy if that choice was taken away from them.