Macro Healthcare Trends Make FHIR Interoperability an Absolute Necessity 

At 1upHealth, we often talk about FHIR interoperability offering a strategic advantage to those organizations able to achieve it. FHIR empowers organizations to share, manage, exchange, analyze, and compute on health data. With data standardized on FHIR, organizations are able to better manage risk, run value-based programs, and plan for the future (among many other use cases). Previously manual, time-intensive, and costly processes become automated, efficient, and less expensive – offering an edge over competitors that aren’t operating on FHIR. 

What shouldn’t get lost in all this “competitive advantage” talk is the fact that FHIR interoperability is an absolute necessity. In fact, interoperability is required to overcome the challenging macro trends impacting the healthcare industry – and healthcare consumers – right now.

Medicare Advantage utilization is up – and so are costs

With Medicare Advantage (MA) enrollment climbing to nearly 34 million people, the program serves as an excellent proxy for what’s happening in the health insurance industry overall. In recent Q1 earnings calls, many of the nation’s largest insurers reported a large uptick in Medicare Advantage utilization. As a result, they also reported a large uptick in costs and a corresponding drop in profits and stock prices. Humana, the insurer with the second largest Medicare Advantage enrollment base, reported a $541 million loss in Q4 of 2023. Its stock was down 16% before the market opened the next day. 

Prior to the recent Rate announcement, Medicare Advantage plans effectively told CMS they needed more money to run these programs and pay providers for the increased care they’re delivering to Medicare Advantage members. How did CMS respond?

CMS finalized their rate changes for 2025 and are saying “no more”

On April 1, CMS finalized the 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Rate Announcement). The announcement, which featured a slight decrease in MA benchmark payments for fiscal year 2025, surprised many in the industry. With these rates, we believe CMS is effectively signaling they aren’t going to bail out these insurers anymore, and that Medicare Advantage plans will need to figure out how to run their businesses more efficiently and effectively.

Providers are feeling the pain and opting out of Medicare Advantage

Many healthcare providers see themselves on the losing end of Medicare Advantage. They want to continue delivering care, but are often not getting reimbursed for the care they’re delivering. According to data from a joint American Hospital Association and Syntellis report, Medicare Advantage denials increased almost 56% for the average hospital from January 2022 to July 2023. In turn, denials and inconsistent reimbursement led to a 28% drop in hospital cash reserves.

The recent “HFMA Health System CFO Pain Points Study 2024” found 16% of systems are planning to stop accepting one or more Medicare Advantage plans in the next two years. Another 45% said they’re considering the same but haven’t made a final decision. Finally, the report found 62% of CFOs believe collecting from Medicare Advantage is “significantly more difficult” than it was two years ago.

From a supply and demand perspective, this is very concerning. If you have upwards of 60% of providers pulling out of Medicare Advantage, the system will certainly collapse. Nevermind the impact on Medicare Advantage members who will be left on the sidelines – without access to providers and expected to pay more for less.

Consumers face increased cost-sharing and cost burden 

Massachusetts, often at the forefront of healthcare innovation, put out a recent study that highlighted a “particularly concerning” 5.8% growth in premiums in 2022 and a 26% increase in patient cost-sharing combined over 2021 and 2022 (the highest shift in the 11 years it’s been tracking statewide trends).

The state’s report also pointed to a decade-long rise in the number of commercially-insured residents enrolled in high-deductible plans, from 16% in 2013 to 42% in 2022. The study also noted that these enrollees were twice as likely to go without care or prescriptions due to cost. According to a recent KFF poll, one in three insured patients are putting off or postponing care due to the cost and one in five (21%) aren’t filling prescriptions or they’re rationing or skipping their medications because of costs. These are insured Americans who aren’t getting the care or the prescriptions they need.

These are the dynamics of the US healthcare system in 2024. Providers are losing faith in – and in some cases are no longer willing to put up with – Medicare Advantage plans. Medicare Advantage payers are saying the financials of these programs aren’t adding up. CMS is saying we’re not going to bail you out anymore. And you have the consumer saying I probably can’t get the care I need even though I pay for it – and have paid for it – for years. The system can’t continue this way. This is urgent. Action is necessary. Enter CMS with a solution.

This January, CMS announced new interoperability regulations (Patient Access, Provider Access, Payer-to-Payer Data Exchange, Prior Authorization) for plans running Medicare Advantage and other government-sponsored programs. At 1upHealth, we see this as CMS giving everyone a bit of a life raft – a tool – we can all rally around to collaborate better and start solving these problems using technology in a cohesive, thoughtful, sustainable, scalable way. CMS is effectively saying, interoperability, data availability, and data exchange, as has happened in other industries in this internet economy, needs to take shape faster in healthcare. We couldn’t agree more.

Share with your community

Sign up to get the latest insights and updates from 1upHealth