Getting Quality-based Payment Models Right Means Replacing X12

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Image by seattle municipal archives

The Centers for Medicare and Medicaid Services (CMS) are beginning to implement alternative payment models, fundamentally changing how health care providers are paid across America. The key shift is driving towards payment based on outcomes instead of on simply billing for services provided. Outcomes-adjusted payments are often called “Pay for Performance” as opposed to “Fee for Service”. Some provider interest groups have, perhaps wisely, helped slow down CMS implementation of MACRA. The Community Oncology Alliance appears is presenting alternative payment models of their own. Perhaps a number of alternative payment models for different diagnosis is an ideal final state for provider payment reform. No matter what we end up calling payment reform, one thing is clear; it requires maintenance and analysis of population-level health data. Outcome-based payments are population-based (capitation-based) and hence good population reporting is a pre-requisite to getting alternative payment models right.

Medicare, state Medicaid departments, and private insurance companies could greatly simplify clinical quality measure collection and their overall operations by moving away from antiquated and closed-source X12 transactions to a modern Internet-friendly file format. A new, JSON-based format could carry the necessary data for calculating population-level clinical quality measures. Some benefits of a JSON-based format include:

  1. Human Readability – Although JSON is a machine-readable format, JSON documents are far more human readable than X12 files.
  2. Transparency – Any new transaction format should be open-source and free from the closed-source, pay-to-play nature of X12.
  3. Usability – Just about every computer programming language has tools for working with JSON, but none to my knowledge have built-in ability to work with X12.  JSON is designed for the Internet age whereas X12 was created prior to the proliferation of the Internet.

It’s not just the aforementioned benefits that make this change so important. The complexity and closed sourced nature of X12 greatly contributes to the cost and the complexity of Medicaid Management Information Systems (MMIS), and Medicare’s own transaction processing system. A shift away from the esoteric in favor of the common invites healthy competition into these markets and benefits small businesses as well as the American taxpayer.

Perhaps there is already a contender for an X12 replacement. It is possible that the open-source HL7 FHIR standard could be a suitable basis for such a new transaction format, but further research is needed. HL7 FHIR, to its credit, already has many of the desired characteristics and resources defined that could support business cases currently covered by X12. Some examples of such resources definitions include “Claim”, “ExplanationOfBenefit”, and “ProcedureRequest”. Trying to come up with a suitable replacement for X12 with the goal to simplify reporting of clinical quality measures is a worthy pursuit deserving of further research and consideration. Upsides include lowering the cost and complexity of health care delivery while improving patient outcomes.

Alan Viars is the founder and president of Videntity, Inc., a software company focused on secure health solutions.  He provides NIST systems architecture support for Health IT standards and testing for Meaningful Use with an emphasis on Direct and Transport testing. He manages Direct certificates and cloud infrastructure (EC2) in support of the Meaningful Use EHR certification program. Viars provides subject matter expertise to the Office of the National Coordinator for Health IT (ONC) on provider directory initiatives.  Viars provides technical expertise to the Centers for Medicare and Medicaid Services (CMS) as one of the lead software contributors to the Blue Button API.  Blue Button API will make it possible for Medicare beneficiaries can share their health data with applications of their choosing. Viars was a former HHS external entrepreneur in residence where he was on detail to CMS, where he led the redesign of the National Plan and Provider Enumeration System (NPPES). Prior to founding Videntity, Viars served as the lead architect for the Department of Defense (DOD) Automated Biometrics Identification System (ABIS), an exchange platform based on open standards published by NIST. As the lead author of DOD's Electronic Biometric Transmission Specification 1.0, Viars was responsible for achieving the successful exchange of subject information and widespread interoperability between various DOD agencies, FBI, DHS, and others. Viars represented DOD's interests to NIST for four years, and remains an active participant in NIST's biometrics interchange standards process. He serves as a subject matter expert for U.S. government agencies including the FBI and Special Operations Command (SOCOM) in biometrics, identity management, and related open standards. Viars holds a Masters in Computer Science and a Masters in Business Administration from West Virginia University.

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