Why Medicare Is Leading the Way In API Adoption

Competition for customers, and a renewed drive for efficiency, is bringing interoperable patient data to Medicare.

Digital health isn’t just a young person’s game! Medicare, the government health insurance program which serves people aged 65 and older, is leading the way in establishing real-world use of interoperable data.

Medicare’s challenges actually make it a natural testing ground for interoperability, where healthcare data from different sources is combined and put to better use. Strict regulations, vast data stores, and intense competition from new Medicare startups are converging to drive innovation in the space.

Medicare has a legacy of standardized, regulated ways to send claims information. It attracts a vast amount of healthcare spending, and its patients come with lifetimes of encounter data. Financial advisors, caregivers, and high-touch medical providers share the responsibilities of care with patients, whose needs tend to increase with age. Compared to the fragmented healthcare options for people under the age of 65, it’s easier to build solutions for the Medicare population.

How Medicare Payers Must Work With APIs and FHIR

Interoperability is most prominent in Medicare Advantage (MA), the privately-operated and  vertically-integrated plans chosen by 42% of people with Medicare. Last year, the federal government made $316 billion in payments to MA plans, and all that funding has attracted competition.

Buzzy digital health startups - like Oscar, Clover, and Devoted - have tried to disrupt the MA landscape with limited success. Although new companies may be able to find cost savings through technology, getting seniors to switch from legacy companies has been more difficult than these startups projected.

Most recently, a 2019 study found that about 10% of people changed plans each year, even though the government explicitly encourages people with Medicare to save money by comparing plans each year. What’s changed since that 2019 study is far more activity in the space; incrementally more tech-savvy seniors; and payer-to-payer APIs.

From 2021 onward, the Interoperability and Patient Access Rule:

  • has required MA plans to create a longitudinal, or unified, health record that migrates from plan to plan. Now, Medicare Advantage startups can take advantage of API-based data exchange. This makes attracting and onboarding new members less of a hassle. While payer-to-payer APIs can use any format for now, regulators plan to mandate the FHIR data format in the future.
  • prepared payers for a FHIR-based prior authorization rule, which would be integrated with EHRs, reduce timeframes, and pass along denial reasons if applicable. It was drafted by CMS and is under review for further study.

CMS, Medicare’s regulatory agency, also:

  • Expects persons on traditional Medicare (not MA) to be largely treated by value-based care providers by the end of the decade. CMS has determined that the effectiveness of value-based care depends on timely data to take preventive action, and so CMS has made data sharing an organization-wide strategic goal. 
  • Pushed states to play a more active role in maintaining Medicare eligibility rolls by regularly exchanging health information with the federal government and each other.

And the Cures Act Final Rule requires Medicare Advantage plans to:

  • Offer a FHIR-based Patient Access API which lets consumers download their medical data to a third party app. If you asked an insurance plan in 2019 to send your data to a third party app, you’d be met with blank stares. Now, every major payer makes an API available on their website (although some are easier to find than others).
  • Create a FHIR-based provider directory API, with its own potential third party uses. Similar requirements apply to Medicare prescription drug plans.

FHIR can support healthcare operations, like insurance and billing, in addition to medical records. FHIR’s adoption has been relatively fast as measured by the standards of health IT. 

However, many of FHIR’s potential uses have yet to be fully realized. Engineers and decisionmakers lack familiarity with FHIR, which has slowed its adoption. By getting Medicare payers and providers to adopt FHIR in some form, CMS is seeding FHIR expertise throughout the healthcare system and paving the way for interoperability across different healthcare functions.

Payments Depend on Accurate Patient Data

Private Medicare Advantage plans, and some traditional Medicare providers, receive payments as determined by the projected health of their membership. These risk adjustment factor (RAF) scores are a key component of how Medicare Advantage plans are paid.

RAF scores are based on a patient’s medical history and demographic information. In other words, the sicker that a patient is, the higher their score will be. RAF scores are sensitive to detail, as more advanced stages of the same illness contribute to higher RAF scores.

RAF scores make it attractive to get a patient’s entire health picture, as government payments are higher for providers who do a better job at documenting and improving outcomes. Because the plans are responsible for submitting the data that underlies the health projections, they search for data from as many sources as possible.

A criticism of this model is that it incentivizes aggressive tracking of conditions over the provision of care. Proponents say that minimizing those conditions leads to fewer resources to treat sicker patients, and discourages discrimination based on health conditions. In either case, risk management drives Medicare plans and providers to continually learn about their patient population.

Better Outcomes Rely on Interoperability

Consumer protections prevent MA plans from denying many services, so they look to value-based care to reduce costs. Value-based care can be structured in different ways, but it essentially replaces traditional fee-for-service care with disproportionately higher rewards for keeping patients healthier than expected.

For example, the Hospital Readmission Reductions Program adjusts a hospital’s per day reimbursement. If a patient is unexpectedly readmitted, the government will provide less funding per day. Since plans save money by keeping members healthy, plans strategize about how to encourage members to access preventive care. This is less expensive than paying for inpatient services down the road.

Interoperable data drives preventive care by giving integrated care organizations the chance to address health issues in time. Providers can see when a member is due for a wellness check, or even assess when seemingly unrelated indicators point to a potential health risk.

Accordingly, Medicare plans which relied on value-based funding did more to keep their members healthy. Value-based care plans provided up to 27% more depression screenings - and up to 50% more eye exams and flu vaccinations - than plans without these incentives, according to the Better Medicare Alliance.

Plans that aggregate patient information become “a remarkable data source”, and they can “share that data with providers in a nimble way,” Humana's chief medical officer, Will Shrank, MD, said during an interview. “There's a whole array of services that we can and do provide for our members that create an environment that supports wellness, and that will promote successful value-based care,” Shrank added. 

In order to rapidly address care issues - and document proper reimbursement for a range of conditions - healthcare organizations are incentivized to continue tracking their patients’ health. Oak Street Health, an organization of value-based care Medicare providers that searches for patient data, reported that their “proactive approach to integrated and preventive services helps patients avoid the costliest settings of care, reducing patient hospital admissions by 41 percent.”

More Interoperability is Coming to Medicare

Plans for older folks are doing business in newer ways. The vast amount of attention paid to Medicare requires innovative approaches to compete. The revolutionary effects of interoperability might reach seniors first.