Lessons Learned: Reflections on CMS and the Successful Implementation of ICD-10

by Acting Administrator Andy Slavitt

It was early 2015 and we had just gotten through a second successful season with HealthCare.gov, the turnaround that originally brought me into government, when the articles and letters started flying on our next big implementation – one that would affect nearly every physician and hospital in the country. And, anxiety levels were high.

On October 1, 2015, the U.S. health care system transitioned the way patient visits are coded from ICD-9 to the next version ICD-10, a system which sets the stage for meaningful improvements in public health. If people know about ICD-10 at all – and chances are they don’t – it’s probably from press reports about the more colorful diagnostic codes like “other contact with shark” or “burn due to water-skis on fire, subsequent encounter.” More seriously, for people in the health care industry, it was being compared to Y2K, a transition with the potential to create chaos in the health care system.

One representative from the physician community told me that he was concerned that half of physicians in the country wouldn’t be ready by the October 1 date. The thought of physicians in small, rural practices unable to run their practices had my complete attention. It also brought home that we are responsible for more and increasingly complex implementations – from HealthCare.gov to ICD-10 to new physician payment systems.

As I look to the future, great implementation is even more central to life at CMS.

In my time in D.C., I’ve come to see our role as implementing policies in a way that bring them to the kitchen table of the American family and to the clinics and facilities where they receive care. Implementation in this context is a vital responsibility. And there are millions of Americans that count on us to do it well: the senior filling his prescription; the trustee of the community hospital; the parents of a child with disabilities in need of home resources; the doctor who drives for miles to take care of her patients in several rural communities.

Implementation Success: 4 Lessons

It was clear that CMS had an enormous opportunity – after everything we learned from HealthCare.gov – to take the lead in smoothly implementing this new policy. The ICD-10 implementation had all the hallmarks of how CMS could drive a successful implementation and aim for excellence. The approach we took, which has become our doctrine for getting things done, had four major elements:

Lesson 1: Be Customer Focused

We believe we must always start from the perspective of the real-world needs of the people who live with the results of our implementation at the center of our work. And in the case of ICD-10, listening and learning about the issues small physician practices were facing helped us understand their resource and technical assistance needs, as well as their concerns over claims payment and cash flow.

In response, we launched “The Road to 10” aimed specifically at smaller physician practices with primers for clinical documentation, clinical scenarios, and other specialty-specific resources to help with implementation. CMS also released provider training videos that offered helpful ICD-10 implementation tips and a wealth of other material on CMS.gov/icd10. Finally, Medicare offered an unprecedented level of external testing with its three periods of voluntary end-to-end testing for physicians and other clinicians.

Lesson 2: Be Highly Collaborative

Because health care is still fragmented, CMS can’t work alone in implementing major changes. If it wasn’t for our close partnerships with the American Medical Association (AMA), the American Hospital Association, the American Health Information Management Association, state medical societies, physicians and other clinicians, billing agencies, equipment suppliers, and a variety of stakeholders, the ICD-10 implementation would not have gone as smoothly as it did. Because we listened to and collaborated with our partners, we were able to address concerns and multiply our ability to get resources to physicians. Several physician groups went from being very concerned about our approach to leading the charge on implementation. As AMA said, “We appreciate that CMS is adopting policies to ease the transition to ICD-10 in response to physicians’ concerns that inadvertent coding errors or system glitches during the transition to ICD-10 may result in audits, claims denials, and penalties under various Medicare reporting programs.”

Lesson 3: Be Responsive and Accountable

At CMS, we recognize that challenges happen and our efforts must be to anticipate them, make them visible, and be accountable for solving them. In the case of ICD-10, the potential for challenges weren’t only in our own systems, but in the systems of any physician office, hospital, or state Medicaid plan. At the suggestion of physician groups, we named an ICD-10 Ombudsman. Just as importantly, we committed to a three-business-day turnaround for every question or concern that came in from a provider. In the first month of implementation, we received approximately 1,000 inquiries and responded to 100 percent of them within three business days. We will never achieve perfection, but we will be visible and hold ourselves accountable for solving problems.

Lesson 4: Be Driven by Metrics

It’s not glamorous, but daily spreadsheets and scorecards keep complex implementations on track. Once we hit October 1, there were critical metrics to track. If doctors were sending us fewer claims, more claims than usual were denied, or a particular state was having trouble processing Medicaid claims, we needed to know as soon as possible.

Rather than waiting for the phone to ring, the CMS team created a scorecard and heat map to locate and track issues as they occurred. We launched an ICD-10 Coordination Center to handle any issues as they arose. A few days after ICD-10 launched, I received a call from a large physician organization representative asking me how things were going. I pulled out a version of the table below and read him the data. “This really is a new CMS,” he told me.

Final 2015 ICD-10 Claims Dashboard Medicare Fee-for-Service Metrics

Metrics Historical Baseline Q4 CY 2015
Total Claims Submitted 4.6 Million per day 4.6 Million per day
Total Claims Rejected 2% of total claims submitted 1.9%
Total ICD-10 Claims Rejected 0.17% of total claims submitted 0.07%
Total ICD-9 Claims Rejected 0.17% of total claims submitted 0.07%
Total Claims Denied 10% of total claims processed 9.9%


*NOTE: Metrics for total ICD-9 and ICD-10 claims rejections were estimated based on end-to-end testing conducted in 2015 since CMS has not historically collected this data. Other metrics are based on historical claims submissions.

Moving Forward

For thousands of physicians and other clinicians around the country, the change to ICD-10 was a big undertaking, requiring time, planning, and a period of adjustment. But on October 1, proper execution and good implementation made all the difference. On the big day, the ICD-10 Coordination Center was packed, and the CMS teams and our partners were geared up and ready to make sure that any burden on physicians could be minimized and concerns quickly addressed.

The ICD-10 Coordination Center

blog ICD

With preparation, planning, a focus on the customer, collaboration, clear accountability, and metrics, the dire Y2K fears didn’t come to pass. Instead, ICD-10 became like what actually occurred on Y2K, an implementation and transition most people never heard about.

With good implementations, we never declare victory and are still at the ready to continually improve. For those who still need help, CMS continues to provide technical support and respond to inquiries. For more information, visit www.cms.gov/ICD10.

The magnitude of CMS’s big, complex implementations have accelerated in recent years. And over the next several years, we will be a part of implementing big and important changes that spend our health care dollars more wisely and keep people healthier – from how we pay for care to collecting and publishing data on how care is paid for to building consumer websites evaluating nursing homes to protecting beneficiary privacy and security. Because these changes impact consumers and physicians and other clinicians’ daily lives, CMS is responsible to the American people to make health care work better for the consumer and better on the front lines of health care.

CMS Acting Administrator Andy Slavitt’s Comments before the National Association of Health Underwriters

Below are the comments as prepared for delivery of CMS Acting Administrator Andy Slavitt at the National Association of Health Underwriters 2016 Capitol Conference in Washington, D.C. on February 23, 2016.

Thanks for the introduction. I appreciate the opportunity to be here to talk about the major priorities for the Health Insurance Marketplace in 2016. Kevin Counihan is going to be here tomorrow to talk specifically about the role of agents and brokers. But talking today as I am to many of the builders of this Marketplace, I want to provide my broad reflections on how far we’ve come, take a look at what’s around the corner, and spend a little bit of time on near term steps we will take to get there as we move through the early years of a long-term journey to provide affordable, stable coverage to millions of Americans.

Health care coverage says a lot about who we are as a country and what we want for our people. Covering over 17 million newly insured Americans over the last few years is as profound a change as most of us have seen in our careers. When people have insurance, their lives change in profound ways besides just having a card in their wallets– from being able to afford preventive care to accessing prescription drugs for their chronic condition, or no longer worrying about the financial threat that would accompany a cancer diagnosis. But there are less obvious things that change – parents with insurance coverage who finally allow their kid to play on the sports team because they no longer fear injury and entrepreneurs and contractors who can more comfortably leave their jobs to pursue their passions or a better job. And there are of course the economic effects – like reducing uncompensated care and hospital bad debt – costs that are borne by everyone. Studies have shown no reduction in employer sponsored coverage and that there has been continuous and significant job growth during these early years of coverage expansion. Importantly all of this has been accomplished below the CBO cost estimates. We cannot declare victory – but I would call all of this a good base to build from.

In the last two years, we have participated in the opening of a brand new market for health insurance – one that has added to, not replaced employer coverage. Just like the launch of the Medicare Advantage markets and Part D markets over 10 years ago, the new Health Insurance Marketplace is filling a new need by bringing consumers together with private sector health insurers to create a new affordable set of benefits for consumers – and a new business opportunity for health insurers as the move to make health care more retail business, driven by the consumer, is on. And just like the Medicare marketplaces, the first years of health insurance exchanges are filled with both successes and important lessons. So it’s important that we continually assess the data from the first few years and address and adjust to challenges as they occur. Consumers must do this. Health plans must do this. Insurance commissioners must do this. And those that operate marketplaces must do this.

This assessment informs our 2016 priorities. 1- Continuing to build a market attractive to both consumers and health plans; 2- ensuring market rules are fair and promote rate stability; and 3- looking at the Marketplace not just for what it does today, but how it serves as a stepping stone to what I will call a “fully retail” health care system. 

Marketplace Attractiveness

The Marketplace is still in the early stages. Consumers are still getting educated and health plans are experimenting with the right product and network designs and price points. Even as the market meets today’s needs and signs millions of new consumers up in record numbers, we are starting to move from a startup stage to a more mature stage.

We are fortunate to have an experienced team of operators and actuaries from the exchange world, the private sector and from our Medicare Advantage and Part D operation. The team listens to input, studies the data and meets regularly with stakeholders and takes a strategic view to determine what adjustments are warranted – whether in the form of consumer improvements or the regulations and operations of the Marketplace. Our experience tells us three things are necessary to make any marketplace attractive – it must be an attractive place for consumers to come and shop; it must be attractive to health plans to connect to and build relationships with desirable consumers; and it needs a predictable set of underwriting and other rules that compensate fairly for risk and keep the risk pool stable and balanced.


It would be easy enough to say that the tax credits that have finally made health care affordable to low- and fixed-income individuals have created an attractive market for consumers and it has. Eight in 10 people in the Marketplace can now get covered for $100 a month or less. But it’s more than that. The choice, competition and innovation that make any market work are fueling an attractive market for consumers who are by all accounts satisfied that they now have a market that is set up for them. 90% of consumers have an average of 3 insurance companies to choose from, translating into 50 plan options. And even at this early stage, innovations are taking hold to respond to consumer demands. Consumers can now pick a plan based upon the insurance their doctor accepts or the drug they are looking for. And, in a promising sign of products being designed around market need, the vast majority of consumers are getting direct services like primary care and generic drugs outside their deductible. A truly retail market with these type of organic innovations is important because it should attract even more consumers, including higher income and healthier individuals who will be attracted to better experiences and better services available on the Marketplace.


We are also seeing the characteristics of an attractive market for health plans to serve; a growing market; a growing base of new young consumers; and high levels of consumer engagement and responsiveness to new offerings. Over 12.7 million people signed up for a 2016 health insurance plan in this Open Enrollment period. And we’ve seen a significant influx of new consumers making it clear there is still a large untapped market to serve. There were over 4 million new consumers who gained coverage in this Open Enrollment period just on the Healthcare.gov platform. And the tax penalty is bringing more young and healthy consumers into the market.


We used a large portion of our marketing resources to make sure that consumers were aware of the increasing fee for people that go without insurance and our data tells us that drove significant enrollment – a potentially good sign for the risk pool. And 43% of all new consumers in HealthCare.gov states this Open Enrollment are under 35, compared to 40% a year ago. There are also unprecedented levels of consumer engagement – as 70% of renewing Marketplace consumers returned to make active decisions about their health insurance choices.


From what used to be a slow growing and highly selective individual insurance market before the ACA, competitors can win and grow meaningful market share with the right set of offerings. And while companies will set their own strategies and approaches, we, along with the state departments of insurance, are also committed to making sure there are opportunities for reasonable margins in this market.


Marketplace Rules


With a continually growing membership, a replenished risk pool, and an active set of consumers, this market represents a growing attractive segment for health plans, right alongside Medicaid, Medicare and Commercial segments. Now we know that individual markets are also designed to serve people who have transitional coverage needs as they move between employers. We also know that both healthy people and people with illnesses will enter the market, both during Open Enrollments and Special Enrollment Periods. And that’s OK – so long as the market operates as it’s supposed to, risk adjustment works, and health plans receive the data they need to act on. Based on our first two years of operation, there are three areas where we are taking action.




First, we think it is critical for us to enforce the integrity of the Special Enrollment eligibility process so that it serves those consumers who are eligible for them, not those who want to wait to buy insurance until they’re sick. SEPs play an important role for consumers who lose employer sponsored coverage or have another qualifying event. But, we are both reducing the number of SEPs available and overhauling the process to make sure Special Enrollment Periods meet their intended purpose. We will announce some specific changes later this week, which will include opportunities for market participants, consumer advocates and other stakeholders to have some input into our approach.


Risk adjustment


Next, we are committed to making sure that risk adjustment continues to work as it is intended and improves based on the most recent data and accounts for new trends that emerge like higher cost drugs. Later next month, we will publicly release our newest risk adjustment white paper, in which we will outline a number of topics we’re looking hard at in preparation for a public risk adjustment conference on March 31. At the conference, we will bring together market participants, actuaries and stakeholders to review the risk adjustment methodology so we can build in changes based on the first several years of experience. We have the tools to make certain the proper incentives exist to insure sicker populations.


Better Information


Third, we’re committed to getting health plans better information earlier so that this can inform their care management approach, their network strategy and their pricing. This year, we will be providing early estimates of health plan specific RA calculations everywhere we have enough submissions from health plans. We also launched backend automation functionality and policy specific payments January 1. This should improve decision making and reduce operating costs for plans participating in the exchange and allow them to offer better care management, customer service and the tools to build better relationships with consumers.


We have also announced that the reinsurance program, which paid out $7.9 billion for 2014, at a 25% higher level than expected, will pay out up to $7.7 billion for 2015.  Just as that program has been a stabilizing force to date, the one-year moratorium on the Health Insurance Tax, of $13.9 billion will also help stabilize premiums next year as the transitional reinsurance program phases out.


I’m confident these focal areas – in our SEP approach, our risk adjustment, the technology and information wiring we’ve built, as well as the added stabilization – will lead directly to a lower and more stable rate environment for consumers now and in the future.



Health Insurance as a Retail Market


The launch of the Health Insurance Marketplace is happening at a time when health insurance is finally becoming a true retail market where you must sell, service and renew based on the consumer’s opinion of your value – and this is unmistakably happening across government, individual, and employer markets. I have had a number of conversations with health plan CEOs who see the Marketplace as part of the opportunity to transform for this more retail world, where building a trusted brand with consumers can be expected to extend throughout their health care lives – from Medicaid managed care, to the Marketplace, to Medicare Advantage and Part D – as these worlds become increasingly linked together throughout people’s lives.


Building brand and relationships with consumers is complicated by the fact that the market is new and requires experimentation. Companies are searching for the care management approaches, consumer engagement approaches, network approaches, product designs, loyalty strategies and price points that will work best for them in this Marketplace. We are already seeing companies experiment with innovative new consumer approaches for the exchange – staff model clinics, capitation, telemedicine, medical homes, and intensive case management –  all designed for Marketplace use. Some companies have found niches and strategies that work and others are still adjusting.


But how companies treat consumers in this process is an important part of their ability to build the right brand in a fully retail health care world. Those that treat customers well – and make changes gradually and with clear explanations will build loyalty among consumers that could have lifetime value. Those that make sudden announcements, frequent changes that they don’t explain, or enter and exit markets sporadically will likely find that brands are built by consumers who have long memories. Watch the Health Insurance Marketplace. Great companies, products, consumer successes and brands will be built over the next several years and that holds great potential for how health insurance works for people.




Let me close by recapping the themes in our 2016 Marketplace agenda. It’s an exciting year that will be built on a great start but will continue to improve, with some important areas of focus that I’ve outlined that we are giving near term emphasis to. We think we are at the beginning of a big change in health care where the consumer becomes more and more empowered in a retail world and all of us must pay attention, invest, watch the data, learn and adapt. There will be new challenges and new opportunities as the market changes. It is thanks to you all, the agents and brokers, who take the time to invest in consumer needs and meet people where they live, that insurance coverage is a reality for so many people. I am excited to work with the many people who have gotten this started to see through this continued evolution of the Marketplace as it matures and thrives in meeting the needs of consumers.

CMS Acting Administrator Comments before the American Medical Association

Below are the comments as prepared for delivery of CMS Acting Administrator Andy Slavitt at the American Medical Association’s National Advocacy Conference in Washington, D.C. on February 23, 2016.


Thanks for the introduction and the opportunity to be here. You know, last year I began every speech talking about my first year on the job and our big plans for CMS in playing our part in moving the health system forward. All of the sudden, come January, I find myself thinking that it’s in all probability my last year, and focusing on what that means.

And my reflections aren’t that different than last year. We have a busy year and a lot to do. I think about our agenda not only in terms of how it impacts life for patients and their physicians and caregivers today, but also in how CMS can set a tone to work constructively with you for years to come.

Today, I’d like to lay out our 2016 agenda as it relates to our work with the physician community. And there are really three parts to that agenda that I want to discuss. The first sounds simple enough. It’s how we listen better to physicians, keep lines of communication open, and get a better and more direct feel for what is happening on the front lines of care delivery. The second, which I think follows fairly directly from there, is how we simplify things. And the third relates to our payment reform agenda of improving care outcomes and spending. Throughout the conversation this morning, I will touch on implementation the bi-partisan MACRA and MIPS programs.

We know that new programs bring changes to the real world of medicine. So I will talk a little bit about our philosophy towards payment reform generally and even more about our approach to this very complex implementation.


I always start with our shared priority: your patients, the consumers of the Medicare, Medicaid, CHIP, and Marketplace programs. Our charge at CMS is clear, meeting the evolving needs of 140 million Americans, most with low- or fixed-incomes, whether they are living with a disability, trying to afford a prescription, or are in need of coverage as they look for a better job.

These are the people we serve every day and these are the people I wake up every day thinking about. Since my email address is available to the public, I now know many of them wake up every day thinking about me too.

As I read the many emails beneficiaries send me, I realize that even in a wide diversity of circumstances, everyone is hoping for the same basic things from the health care system: to get care they can afford, to keep their family well taken care of, and when they’re sick, they want nothing more than to get them home and to lead as productive and healthy life as possible.

As society ages with 10,000 people joining Medicare every day, the challenge to all of us increases. We need to invest in all the things that keep people healthy and at home like primary care, prevention, chronic disease management, medication management, care coordination and all the transitions where people get lost. We need to do all of this, while at the same time striving to find new ways to care for and interact with patients we don’t see every day in a world of more information and better technology.

While fostering a future of sharable and wearables and telemedicine is undoubtedly some part of the answer, at its most fundamental level, we cannot devalue the most important and precious element of health care: the time a patient has with their physician. The moments when a patient’s course can be most effectively changed for the better. Getting patients the care they need is why our agenda is so important.


This is why our first priority for 2016 is opening the lines of communication and listening to the physicians and other clinicians who provide care to our beneficiaries. CMS has significant responsibility for implementing new laws which must intersect with an already complex system with many demands. I’m a believer in the maxim that it is almost always 90 percent about implementation.

And so good policy must be ultimately informed by the impact it has at the kitchen table of the American family and in the clinic or office where they seek care. The EHR Incentive Program, ICD-10, MIPS, ACOs and medical homes, bundled payments, 2 Midnights. These are just the recent crop of implementations CMS has been charged with. And it is clear from listening to physicians there is fatigue – with change, with measurement, with new requirements that come from the outside and aren’t simple to implement.

As we hear this feedback, it tells us we must provide more tools and support and be as flexible as possible to the needs of physician practices, even while we push for a health care system that is better connected, more coordinated and produces better outcomes.

Our working relationship with the AMA has been an important and very positive model for us in listening. One of the first rules of building a learning organization is to listen to people most directly impacted by, and sometimes most critical of, our work. In the case of ICD-10, we reached an important turning point when we heard and responded to the very reasonable fears of physicians on their readiness, on cash flows and on potential penalties, particularly for small practices.

We doubled down on technical resources like the “Road to 10” and other support, provided more opportunities to test a practice’s readiness and we made adjustments to reduce needless penalties. And, to provide direct communications with front line physicians, we named an ICD-10 Ombudsman, set up a full-time command center and committed to 3 business day turnaround on any physician question and concern. We used a model for implementation first tested with the turnaround of healthcare.gov that we are now replicating in other implementations. It’s about responsiveness, collaboration, being publicly accountable and transparent, and being metric driven.

We’ve embraced this approach as we’ve implemented new payment models. Our newly launched Next Generation ACO model is a good example. It contains the features physician groups around the country have told us would best enable them to coordinate care, including innovative options like telemedicine, home visits, and direct patient incentive and engagement options. And as I will talk about in a moment, we are soliciting an unprecedented amount of direct physician input as we work to implement the MIPS payment models.

This will be a journey for all of us. One that requires a trusted partnership underpinned by honest, productive dialogue that helps each of us meet our common goal of better patient care.

I’m optimistic that our first objective of listening better to what happens in daily practice is not just a passing idea, but will make real lasting change to how we do things at CMS far beyond my tenure.

When I ask people at CMS to describe their best moments, they haven’t been spent behind a desk making policy in D.C. It is when they are out in communities across the country, helping beneficiaries, meeting with hospitals and physician practices, in nursing homes and PACE centers, talking to innovators, and working with many care providers who are on the front line of improving care for people.

Connecting to what happens in daily patient care is vital to our policy-making as we seek a better, smarter healthier system.


The second agenda item is to simplify. I visited with a physician in suburban Massachusetts a month or so ago. Small busy practice, two docs. I asked the physician to take me through a typical day and his interactions with technology and measurement and how it helped and hindered his interactions with patients.

He was very pleased to have technology in his office, but it didn’t do the thing he needed most like give him feedback on referrals he made, and it required a fair amount of effort from him that took time but didn’t add a lot to patient care. He also discussed his interactions with various commercial health plans and with CMS and with payment model changes and administrative burden. The visit painted a vivid picture of the gulf that can exist between public policy, even good public policy, and what it feels like on the front line of practice.

We must reduce burden and give physicians back more time to spend with patients. Several years ago, we launched an initiative that is reducing regulatory burden and saving hospitals $3.2 billion over five years. But we are barely scratching the surface. We have a strategic effort this year designed to reduce burden and create efficiencies in the physician’s office.

Last week with AMA’s help, we announced the alignment of quality measures used by CMS and commercial payers so that everyone measures quality the same way across many areas of medicine.

Consistency is vital to simplicity. And we have also launched an initiative around the country to streamline how we provide data to physician practices so that CMS and commercial payers can provide it in a form that is practice ready and encompasses all patients the same way.

I visited with a physician practice in Denver where this has been fully implemented and heard first-hand how collaboration and simplicity were allowing them to deliver better care. Patient centered care means being practice centered as well. 

We are also pushing on administrative simplification and standards, and this year will launch a public framework for creating new standards and a tool for physicians to help us enforce health plan compliance with existing standards.

On the technology front, with the passage of the bi-partisan MACRA legislation, Congress has clearly recognized that technology is an important part of the solution. It obviously holds great promise to connect us to one another, to improve our productivity, and to create a platform for a next generation of innovations that we can’t imagine today.

As we move forward and implement MACRA, we must refocus on how to simplify the program so that technology can help get us where we need to go, not slow us down. We will be sharing details and inviting comment as we roll out our proposed regulations, but our work will be guided by several principles:

  • Rewarding providers for the outcomes technology helps them achieve with their patients, not for using technology alone.
  • Allowing providers the flexibility to customizegoals to their individual practice needs. This should cause technology vendors to become more user-centered and support physician needs.
  • Leveling the technology playing field to promote innovation, including for start-ups and new entrants, by unlocking electronic health information through open APIs, technology tools that underpin many consumer applications.  This way, new apps, analytic tools and plug-ins can be connected, and we can address the lock that early EHR decisions have created for some practices.
  • Prioritizing interoperability by implementing interoperability standards and focusing on real-world uses of technology, like ensuring continuity of care during referrals or finding ways for patients to engage in their own care. And we will not tolerate data blocking, business models that prevent or inhibit the data from flowing around the needs of the patient.

As you may know, the MACRA legislation applies to physician office care, not hospital care, so we are also exploring ways to align hospital incentives with these principles as well.

All of these principles won’t change things overnight. It will take physicians and innovators time to build a better future, but this is the right place to start.


The third priority area I will cover is the transformation of how we pay for care to reward for the delivery of high quality care. What we all want is a better system that spends money smarter, and keeps people healthier. How care is paid for is one element of that.

When we announced a year ago that more than 50 percent of our Medicare FFS payments will be linked to quality and value through alternative payment models by 2018, we were sending an important signal that we will soon reach a tipping point.

We know that to do this requires change from many parts of health care, and that actual change is hard. We know the challenge physicians and other clinicians face living in the fee-for-service world today while preparing for a payment system that rewards more coordinated, more value-oriented care that is emerging.

So, we committed to a $650 million-plus investment to over 140,000 physicians to support them in their aim to transform their practices to get paid for quality.  We are partnering with organizations and physician specialty societies across the country to help support these physicians to use data, technology, and quality measurement to improve care for their patients.

I’ve spoken about the implementation of the bipartisan MACRA legislation. It is a major priority for us this year and at its most fundamental level, is a program that brings pay for value into the mainstream through the Merit-based incentive program. The program compels us to measure physicians on four categories: quality, resource use, the use of technology, and practice improvement.

Over the next several months, we will be rolling out details for public comment, but I will say that the team is approaching the implementation by working with front-line physicians from the beginning. We started with a four day session with physicians and technology companies and through an RFI to garner direct feedback on the right measures for each specialty and how to implement the program most simply.

We are now conducting eight physician focus groups in four separate markets – none of them Washington, D.C.  Now everyone in CMS will a chance to hear directly from physicians. The AMA has provided significant input and we will be engaging closely with members of Congress who are also deeply committed to improving value-based care.

We are committed to building a program that is as flexible as possible and adapts around the goals of a provider’s individual practice and patient population. But even with all this work, I expect we will need to rely on significant input into how it works in reality, both positively and negatively so that, within the constraints of the law, we can improve it. If you commit to continually providing the input, we will commit to continually improving it.

I want to mention one other important element in how we are paying for care. Last year, with the active support from the AMA, we began paying for advanced care directive conversations.  While this was seen as big news and a step forward in dealing with an area with lots of strong views, there is other news I hope you take away as well. And that’s the value we place on conversations between the patient and their doctor.

Whether it’s this work, care coordination visits, or models like our oncology payment pilot, we believe we need to move back to a place where we are paying for doctors to talk to patients about their health, not just paying for new technology, devices, surgeries and prescriptions that have certainly been dominant drivers over the last number of years.

We have a ways to go here, but this is a direction that Patrick Conway, our Chief Medical Officer and a practicing physician, and I are passionate and excited about and are pushing to take root across the work coming out of CMS.


Before I close, I want to thank those of you that are demonstrating your commitment to health equity, especially by treating Medicaid patients and the dually eligible. I recognize the challenge this can add to your practices and I want you to know that we have released several proposals both in Medicare and Medicaid intended to focus on improving reimbursement levels for lower socioeconomic status and higher need populations.

But I know, no matter what we do, that our lowest income and hardest to treat citizens won’t get the same high quality of care that others do without your commitment as part of your role in the medical community to provide high quality care for all patients. I thank you for it and I ask that you know our commitment to health equity is primary.

I want to close by repeating the theme I hope you’ve heard from me today: Success for us is helping build a better health care system for all Americans, with smarter spending, and resulting in healthier people.

We are at early stages. I know the challenge of this transformation as it plays out every day in practice creates challenges. All progress does. But the transformation to better care will only come from you and your patients. And as we move forward, we need to listen and stay close to the realities on the ground and work together with you to create new generations of solutions that work better and are simpler.

We thank you for all the constructive engagement and look forward to working with you in the coming months and years.


Data Transparency and the Extension of Temporary Provider Enrollment Moratoria (CMS 6059-N4)

By Shantanu Agrawal, M.D., CMS Deputy Administrator and Director, Center for Program Integrity

As part of our efforts to improve care delivery through the sharing and utilization of information, the Centers for Medicare & Medicaid Services (CMS) has released two new public data sets. A new public file provides information on the availability and use of services provided to Medicare beneficiaries by ambulance and home health agencies (HHAs), a second data set provides the list of all approved providers and suppliers in Medicare’s fee-for-service operations. Both data sets are available at https://data.cms.gov

The Affordable Care Act provided CMS with new opportunities and resources to combat fraud, waste, and abuse in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).  CMS used authority provided by the Affordable Care Act to impose temporary enrollment moratoria for the first time on July 30, 2013 (Phase I) and for the second time on January 30, 2014 (Phase II).  CMS extended these six-month phases of the moratoria on July 29, 2014; January 29, 2015; July 29, 2015 and most recently on January 29, 2016. The moratoria temporarily halted the enrollment of new home health agencies (HHAs) and ground ambulance suppliers in certain geographic areas, and giving CMS the opportunity to analyze and monitor the existing provider and supplier base, as well as further focus additional fraud prevention and detection tools in these areas.

Today, as part of our efforts to share information, CMS released a Moratoria Provider and Supplier Services and Utilization Data Tool. The tool uses ambulance and HHA paid claims data within CMS systems for Medicare fee-for-service beneficiaries. The data, which do not contain any individually identifiable information about Medicare beneficiaries or their providers, cover the period from October 1, 2014 to September 30, 2015, and are updated quarterly.  The tool includes interactive maps and a dataset that shows national-, state-, and county-level provider and supplier services and utilization data for selected health service areas. For this first release, the data provide information on the number of Medicare ambulance suppliers and HHAs servicing a geographic region, with moratoria regions at the state and county level clearly indicated, and the number of Medicare beneficiaries who use one of these services. Users of the tool can also find the degree to which use of these services is related to the number of providers and suppliers servicing a geographic region. Provider and supplier services and utilization data by geographic regions are compared easily using the interactive maps. Future releases may include comparable information on additional health service areas.

CMS’ continued commitment to strengthening program integrity also extends to supporting the provider and supplier community through increased transparency about those enrolled in the Medicare program. As part of this effort, CMS is publishing Public Provider Enrollment Files that list all providers and suppliers enrolled in Medicare. The continued growth of programs that require provider and supplier enrollment in Medicare fee-for-service as a prerequisite has steadily increased, as has the demand for information from the healthcare industry. This public provider data allows users, including other health plans, and researchers the ability to access Medicare data.

The Public Provider Enrollment Files consist of individual and organizational enrollment information on all providers and suppliers nationwide who are approved to bill Medicare. This includes key unique identifiers, enrollment type and state, names, National Provider Identifier (NPI), specialty, and limited address information (City, State, Zip code). This data also identifies reassignment relationships between individuals and groups. The information in the file will be updated quarterly and extracted directly from the Provider Enrollment, Chain, and Ownership System (PECOS), which is the official system of record for Medicare fee-for-service enrollment. The information can only be updated through submission of updates to enrollment information via PECOS. Providers and suppliers will need to make enrollment updates by contacting their respective Medicare Administrative Contractor (MAC), or by going to https://pecos.cms.hhs.gov/. Updates will be shown with the next release of the file.

The long-term goal of this initiative is to continue to expand data elements available in the files, and eventually consolidate other existing public lists of provider information, such as the Ordering and Referring File, Part D Prescribing File, and Revalidation Lists. CMS believes the release of the enrollment data provides a clear and transparent way for providers, suppliers, state Medicaid programs, private payers, researchers, and other interested individuals or organizations to leverage Medicare Provider Enrollment information.

To view a fact sheet on the Ambulance and HHA data set, visit: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-22.html  The utilization tool is available through the CMS website at: https://data.cms.gov/moratoria-data

To view a fact sheet on the Public Provider Enrollment file, visit:  https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-22-2.html   This data set is available through a series of .csv files that will be updated quarterly and published at https://data.cms.gov/public-provider-enrollment.

Questions regarding the Public Provider and Supplier Enrollment files or the Ambulance and HHA data set should be sent to the Office of Communications at the Office of Communication, 7500 Security Blvd., Baltimore, MD 21244-1850.

CMS strengthens provider and supplier enrollment screening

By Shantanu Agrawal, M.D., CMS Deputy Administrator and Director, Center for Program Integrity

CMS is strongly committed to protecting the integrity of the Medicare program, including making sure only qualified providers and suppliers are enrolled in Medicare. The Affordable Care Act provided tools to enhance our ability to screen providers and suppliers upon enrollment and identify those that may be at risk for committing fraud, including the use of risk-based screening of providers and suppliers.  In addition to implementing the tools provided by the Affordable Care Act, we are strengthening our strategies designed to reinforce provider screening activities by increasing site visits to Medicare-enrolled providers and suppliers, enhancing and improving information technology (IT) systems, and implementing continuous data monitoring practices to help make sure practice location data is accurate and in compliance with enrollment requirements.

We have the authority to conduct site visits on all enrolling and enrolled providers and suppliers, and the Affordable Care Act gave us tools to enhance our ability to screen and identify those that may be at risk for committing fraud.  A recent Government Accountability Office (GAO) report, which identified areas for improvement in our Provider Enrollment, Chain, and Ownership System (PECOS) – the IT system for Medicare enrollment – regarding verification of provider or supplier practice locations, helped CMS target our efforts to further enhance our provider screening activities. We appreciate the GAO’s work in this area and are using the GAO’s findings to support our broader provider screening enhancements

When enrolling in Medicare, providers and suppliers (including physicians and non-physician practitioners) are required to supply on their application the address of the location from which they offer services. As a result of our continuous review of policies, we have put into practice four tactics to strengthen strategies designed to reinforce provider and supplier screening activities:

Increase the number of site visits to Medicare-enrolled providers and suppliers. CMS has the authority, when deemed necessary, to perform onsite review of a provider or supplier to verify that the enrollment information submitted to CMS or its agents is accurate and to determine compliance with Medicare enrollment requirements (42 C.F.R. 424.517). Under this authority, CMS has increased site visits, initially targeting those providers and suppliers receiving high reimbursements by Medicare that are located in high risk geographic areas.

Enhance address verification software in PECOS to better detect vacant or invalid addresses or commercial mail reporting agencies (CMRAs). Starting this year, CMS will replace the current PECOS address verification software with new software that includes Delivery Point Verification (DPV) in addition to the existing functionality. This new DPV functionality will flag addresses that may be vacant, CMRAs or invalid addresses. In most cases, CMRAs are not permitted in the Medicare program. These verifications will take place during the application submission process and may trigger additional ad hoc site visits.

Deactivate providers and suppliers that have not billed Medicare in the last 13 months. Beginning March 2016 and on a monthly basis, CMS will run analysis on enrollment data to deactivate providers or suppliers meeting specific criteria that have not billed Medicare in the last 13 months. Providers and suppliers that may be exempted from the deactivation for non-billing include: those enrolled solely to order, refer, prescribe; or certain specialty types (e.g., pediatricians, dentists and mass immunizers (roster billers)). This approach will remove providers and suppliers with potentially invalid addresses from PECOS without requiring site visits. 

Monitor and identify potentially invalid addresses on a monthly basis through additional data analysis by checking against the U.S. Postal Service address verification database. CMS has started to continuously monitor and identify addresses that may have become vacant or non-operational after initial enrollment. This monitoring is done through monthly data analysis that validates provider and supplier enrollment practice location addresses against the U.S. Postal Service address verification database.

If you are a provider or supplier, you can help us protect the integrity of the Medicare program by informing us promptly of any changes to your enrollment, as required.

We are committed to protecting the integrity of the Medicare program. Increasing site visits, improving IT systems, and conducting continuous data monitoring will strengthen the integrity of the Medicare program while minimizing burden on the provider and supplier community.

Making Preferred Cost Sharing Pharmacies More Available

By: Sean Cavanaugh, Deputy Administrator and Director of the Center for Medicare, CMS

The benefits Medicare provides are only as good as the access beneficiaries have to them.  That’s why beneficiary access is a founding principle of our work at CMS.

Last year, we heard concerns that some beneficiaries did not have ready geographic access to preferred cost-sharing pharmacies.  Increasingly, Part D plans are creating smaller networks of pharmacies within their larger networks and offering lower cost-sharing arrangements to beneficiaries who use these preferred cost-sharing pharmacies. Plans market these lower cost-sharing arrangements, which are appealing to beneficiaries looking to save money on their prescription drugs.  However, in some instances, these pharmacies were not geographically accessible to the beneficiaries in the plan.

In our analysis of Part D beneficiary access to preferred cost-sharing pharmacies (https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/PCSP-Key-Results-Report-Final-v04302015.pdf), which was released in April 2015, we analyzed the availability of these pharmacies to Part D enrollees.  We were pleased to learn that most Part D enrollees live in areas where Part D plans provide reasonably robust preferred cost-sharing pharmacy networks. However, some beneficiaries in all areas, but particularly those in urban areas, face limited, or in some instances, no geographic access to preferred cost-sharing pharmacies.

We took action.  In last year’s (2016) Medicare Advantage Rate Notice and Part D Call Letter (https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2016.pdf), we announced that we would: 1) work with outlier plans to address our concerns about access and marketing; 2) require plans whose preferred cost-sharing networks are outliers (i.e., they offer significantly less access to preferred cost-sharing pharmacies) in 2016 to disclose in marketing materials that their plan offers less access; and 3) publish access levels for each plan offering a preferred cost sharing benefit structure.

Plans responded.  We are pleased to share that, based on data we are posting on cms.gov today (https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/index.html), access to preferred cost-sharing pharmacies has improved.  The bottom 10th percentile of plans in 2016 offer access within two miles to 71% of urban beneficiaries, as compared to 40% of beneficiaries in 2014.

This is just one example of ways CMS and Part D sponsors are working together to improve Medicare beneficiaries’ access to benefits.

Open Enrollment Trends: Selected HealthCare.gov Statistics prior to the Final Enrollment Deadline

Data as of February 1, 2016

By Niall Brennan

Open Enrollment ended on January 31 with about 12.7 million Americans having selected plans through Health Insurance Marketplaces, including 3.1 million signed up through State-based Marketplaces and over 9.6 million through the HealthCare.gov platform. This does not include about 400,000 people who signed up on the New York and Minnesota Marketplaces for coverage through the Basic Health Program during this Open Enrollment.

Here’s a look at the progress HealthCare.gov states made during Open Enrollment for 2016 coverage:

The Marketplace continues to grow with more than 9.6 million plan selections for 2016. Over 9.6 million people signed up for health coverage through HealthCare.gov. This includes about 4 million new consumers, which means about 42 percent of those who signed up for coverage through HealthCare.gov for 2016 are new to the Marketplace.

New consumers joined the Marketplace earlier this year. Instead of waiting until the last moment, about 2.4 million or 60 percent of our new consumers signed up for coverage that started on January 1, 2016. Compare that with last year when 1.9 million or 40 percent of new consumers signed up for January 1, 2015 coverage. That means 30 percent more new consumers had coverage that started on January 1 this year compared to last year.

Returning Marketplace consumers are more engaged. Of the 5.6 million returning consumers in OE3, 3.9 million or about 70 percent were active returners. This means that a majority of 2015 consumers returning to the Marketplace actively selected a 2016 plan – either their same plan or a new plan – that met their needs. About 1.7 million or 30 percent of returning consumers were automatically re-enrolled into the same or a similar plan for 2016. At the end of OE2, there were 4.1 million returning consumers of which 2.2 million, or 53 percent, actively selected a plan and 2 million who were automatically re-enrolled.

Chart 1: Marketplace Consumers are More Engaged


*Data compares February 1, 2016 plan selection data with data from February 22, 2015.

The majority of consumers who actively renewed their coverage switched plans. Of the 3.9 million active returners during OE3, 61 percent or 2.4 million switched plans. Last year during OE2, of the 2.2 million active returners, 54 percent or 1.2 million switched plans.

Chart 2: Consumers Who Actively Renewed Switched Coverage

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*Data compares February 1, 2016 plan selection data with data from February 22, 2015.

More 18-34 year olds join the Marketplace. This year, 2.7 million consumers between the ages of 18-34 selected plans through HealthCare.gov compared to 2.5 million during OE2. In addition, 33 percent of new consumers were 18–34, compared to 31 percent in OE2. The overall percentage of those plan selections for those consumers between the ages of 18-34 remained stable.

Nearly all states have more plan selections at the end of OE3 than in OE2: Of the 37 states using the HealthCare.gov platform in both 2015 and 2016, 34 states have more plan selections at the end of OE3 than they had at the close of OE2. Those states with the largest rates of increases in plan selections between OE3 and OE2 are Oregon (31%), Utah (25%), Iowa (22%), South Dakota (22%) and Nevada (20%). The two states that make up a notably smaller share of plan selections this year than last year, Indiana and Pennsylvania, expanded Medicaid at the beginning of 2015. In these states, consumers with incomes between 100 and 138 percent FPL used to be eligible for Marketplace coverage, but now are eligible for Medicaid instead. Since February 2015, people enrolled in M

Chart 3: Plan Selections in 2016 as a Share of 2015 Plan Selections by State


*Data compares February 1, 2016 plan selection data with data from February 22, 2015.

 Plan selections in the top twenty media markets grew by 15 percent or more: Looking at larger local media markets (defined as having more than 25,000 plan selections), Portland, Oregon had the biggest  percentage increase in plan selections between 2015 and 2016, with 24,000 more consumers selecting plans, a 34 percent increase. Salt Lake City also saw a surge in sign-ups, with 35,000 more consumers selecting plans for a growth rate of 25 percent.

Chart 4: Ratio of New Consumer Plan Selections in 2016 to all 2015 Plan Selections in 20 Large Cities


*Top 20 DMAs with over 25,000 plan selections in 2016. Data compares February 1, 2016 plan selection data with data from February 22, 2015.


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