Value Based Payment

The Trump Administration’s Approach to Value

June 5, 2018 9:44 am

During his confirmation, Alex M. Azar II outlined four priorities for his tenure as Secretary of the U.S. Department of Health and Human Services (HHS). Among these priorities, Azar aims to accelerate the shift to value. a

In March, Azar provided more insight into his plans for promoting value-based payment by outlining four areas of emphasis: b

  • Giving consumers greater control over their health record
  • Increasing provider and payer transparency
  • Developing experimental payment models in Medicare and Medicaid
  • Removing government barriers that hamper the transformation to value

In confirming that he would prioritize value, Azar left many public and private stakeholders eagerly awaiting additional insight into exactly how the secretary would turn that priority into policy action. 

Inpatient Prospective Payment System Proposed Rule

Some clarity came in late April when the Centers for Medicare & Medicaid Services (CMS) issued the proposed rule for the FY19 Hospital Inpatient Prospective Payment System (IPPS). c Medicare payment regulations allow Azar and the Trump administration to put forth the policies that will help advance the administration’s healthcare priorities. President Trump’s administration views this year as an important time and opportunity to use Medicare payment regulations to try to enact policy that supports its priorities. Moreover, because many providers rely on Medicare to operate their businesses, channeling new policy through Medicare payment regulations is a strategic way to obtain compliance and encourage the rest of the industry to adopt similar practices.

The proposed rule reveals how Azar and the Trump administration aim to increase quality and decrease costs in health care. In particular, the administration is using the proposed rule to advance its agenda to increase price transparency, empower consumers, and reduce regulatory burden on providers. Two components of the proposed rule—improving transparency and focusing interoperability to benefit the consumer—highlight some of the ways the administration is defining value in health care. 

Improved Transparency

The IPPS proposed rule seeks to improve transparency through two main steps. 

First, effective Jan. 1, 2019, hospitals will be required to make their list of current standard charges available on the internet in a machine-readable format. Hospitals can elect to post the chargemaster itself, or a list of standard charges in another form, so long as the machine-readable requirement is met. The prices on the chargemaster are not, of course, what patients actually pay—those prices are determined by whether the patient has insurance and, if so, the type of insurance. But the information does provide more transparency into the range of prices hospitals list. Making these charges more accessible may put more market pressure on hospitals with higher prices to lower their standard charges. Moreover, for many Americans, insurance obscures the true cost of care, and increasing transparency around hospital prices may continue to raise consumer awareness of the broader economic mandate to lower the cost of care.

Second, the proposed rule suggests replacing the terms meaningful use and advancing care information with a new term, promoting interoperability. Under this proposal, to reduce burden on providers, the IPPS rule would eliminate many meaningful use measures on which providers had to report. 

A central component of promoting interoperability is placing the data that are generated around healthcare interactions into the hands of consumers. Previous efforts around interoperability focused on how to ease data sharing among providers. Although that remains a key goal, promoting interoperability also prioritizes how to provide more healthcare data to consumers. CMS will require all providers to move to 2015 Edition electronic health records (EHRs) by Jan. 1, 2019, to ensure that the technology in the physician’s office can accommodate the application programming interfaces that are needed to give consumers more of their healthcare data. However, it is important to note that the reporting period for attesting to usage of the 2015 Edition is only 90 days for reporting years 2019 and 2020. 


CMS acknowledges that simply making the chargemaster more available is not a strong enough means for promoting increased competition and enabling consumers to find the best-value care. The proposed rule also includes a request for information (RFI) on how to effectively empower consumers to compare hospital prices and make more informed decisions about their health care. 

For example, CMS is solicitating comments on understanding what kinds of price information would be most helpful to patients as they make decisions about their health care and ways in which that information can best be shared with patients. Strategies to stop surprise billing by out of network providers—especially anesthesiologists and radiologists—are also being sought by CMS. The RFI asks for comments on the most appropriate ways for CMS to ensure hospitals comply with transparency requirements, including whether CMS should release the complaints against hospitals that fail to comply or what type of financial penalties should hospitals accrue for lack of compliance. Finally, the proposed rule’s RFI solicits comments on how CMS can encourage providers to take additional steps toward interoperability. Comments are due to CMS by June 25, 2018. d  

Summing Up

In his speeches, HHS Secretary Azar has articulated the Trump administration’s vision for advancing value in health care. Through Medicare payment regulation, that vision is turning into policy. Azar and the Trump administration are driving value forward, in part, through policies that enable consumers to have greater control of their medical records and give consumers better tools to make healthcare decisions. The administration also is actively seeking input from the industry as it crafts these policies. Hospital and health system leaders have an opportunity to share their ideas on the best ways to increase transparency, consumer access to information on health care costs, and interoperability.


a. Azar’s other priorities are to address the high cost of prescription drugs, increase the affordability of individual market plans, and tackle the opioid crisis.
b. Azar, A.,  Remarks on Value-Based Transformation to the Federation of American Hospitals, March 5, 2018.
c. CMS,  Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care and Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 RatesFederal Register, May 7, 2018.
d. Comments may be submitted electronically or by mail. Complete information can be found in the Proposed Rule.


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