Why CMS is lighting a FHIR under payers to compete on value

There’s nothing new about the quest for value in healthcare. For decades, the healthcare industry – and more particularly, its regulators – have been trying out strategies to make care more efficient, more effective, and less shockingly expensive for the people who ultimately bear the costs. 

While we’ve made some incremental improvements over the years, our progress has been hampered by a lack of insight into exactly what’s going on in the care setting and why we’re paying through the nose for it. 

Only in the last few years, with the emergence of electronic health records built on modern data standards, have we started to get a glimpse into the true nature of the problem and its daunting scale. And it hasn’t taken long for CMS to seize on this opportunity to make some much-needed improvements to the way digital data informs the pursuit of value-driven care. 

Spurred on by the 20th Century Cures Act, the agency has since released a series of landmark rules around data interoperability and price transparency designed to reinvent the way health plans, providers, and patients interact with financial and clinical information. 

The latest is targeted to health plans, and includes requirements for Medicare Advantage, Medicaid/CHIP, and Qualified Health Plans (QHPs) on government exchanges to use HL7® FHIR® as a means to improve data sharing and facilitate prior authorizations. 

“FHIR® is a type of application programming interface (API) that uses modern, internet-based standards to exchange data in a standardized format,” explained Don Rucker, MD, former National Coordinator for Health IT, and current Chief Strategy Officer at 1upHealth, an interoperability service provider. “It helps to create a synchronous stream of clinical and financial data so we can actually understand what we’re getting and what we’re paying for it.” 

FHIR® is one of those rare things that payers, providers, technology developers, and regulators have rallied around fairly readily, at least from a technical standpoint.  

“The beauty of APIs and modern data standards is that they’re pretty straightforward from a technical perspective, which has made them extremely popular with developers,” commented Rucker. “There’s no complexity to them – it’s the same technology that we use every second of the day on the internet, so it’s not hard to understand or implement. The industry has done a fairly good job of integrating these tools into the latest generation of technologies.” 

However, it’s been a little more challenging for stakeholders to adapt to the change in business habits that accompany increased interoperability, and the resulting transparency into previously hidden financial decision-making. Entities that have thrived in a traditionally opaque marketplace may find it difficult maintain their position as FHIR® helps illuminate a different path forward. 

“FHIR® creates the ability to bring financial and clinical data together in a meaningful way so that we can finally draw back the veil on why we spend the most but have some of the worst outcomes in the world,” he said. “We can begin to codify and compute our definitions of value – and start to compete on that value. You can choose to be threatened by that, or you can choose to make it work for you. The organizations that are going to survive are the ones that pick the latter.” 

Proactively embracing standards-based data transparency could be a smart move for health plans, particularly, as the latest CMS rules for payers start coming into effect at the beginning of 2026.  

At that time, plans will need to use FHIR® to establish a Provider Access API to share patient data with in-network providers, add information about prior authorizations to the data available through their Patient Access APIs, and create a Payer-to-Payer API to exchange claims data, encounter data, and other standard elements between health plans. 

“These requirements are part of the continuous tightening of the screws to push health plans and providers into this value framework so we can be more accountable to the ultimate payers, who are the patients themselves,” said Rucker. “CMS has been very clear that the pressure is going to continue, whether that’s through technical requirements or incentive programs like the Medicare Advantage Star Rating system.” 

Ideally, the result will be an ecosystem that fosters high quality experiences and outcomes at an acceptable – and even shoppable – price point. While it will take time and continued commitment to achieve a fully value-based environment, the black box status quo is clearly on its way out. 

“Old business models don’t last forever,” noted Rucker. “There are a lot of big health plans and integrated delivery networks who have enjoyed being the anchor tenants at the mall in their markets for many, many years. But things change.  Being the anchor tenant at the mall in 2024 isn’t such a stable business proposition anymore, is it?  They are going to have to rethink their roadmaps in this new era of data transparency and embrace the value-based principles behind it if they are to survive.” 

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.  She can be reached at jennifer@inklesscreative.com.