"Healthcare is broken" - a cliche investors commonly hear from well-intended founders. Amid the COVID-19 pandemic, the use of this cliche skyrocketed as many helping hands tried to figure out how to relieve the pressure from an inefficient healthcare system. But claiming that healthcare is broken is equivalent to bestowing one star to your neighborhood car repair shop. Which part of the delivered services failed to meet your expectations: the customer experience, service cost, quality of outcome, all of the above?

Customer experience is driving digital disruption across industries. For example, companies like Amazon and Uber redefined what it means to purchase toys and games or hail a cab across the city. In healthcare, customer experience is the next unknown frontier because we don't have a clear sight of how we will get there. Also, we're still experimenting with the contour of the destination.

Fixing the US healthcare system is a challenge greater than life, but it's a top priority on many executive desks. Based on a 2018 PwC study, 81% of executives at insurance companies say their company is investing in technology to improve the member experience, while 49% of provider executives say customer experience is a top strategic priority over the next five years. Venture capital has been fueling healthcare innovation from the sidelines. Amid a global pandemic and a lurking recession, US digital health companies raised $5.4B in venture funding across the first six months of 2020 - a record high.

The path towards value-based care relies on data

Health companies want to deliver value-based care with efficiency and stellar customer reviews. But they lack the data required to meet customer needs and expectations. The customer experience in healthcare is not a one-stop destination but a journey. Diverse stakeholders - providers, insurers, pharma companies - collaborate in delivering value-based care across many touchpoints. But beyond those touchpoints, the customers are on their own. There is no real continuity of care, and each industry stakeholder resides over a siloed and incomplete snapshot of the customer journey. 

Diverse stakeholders ranging from the back-office to the bedside to Capitol Hill rely on health data. These stakeholders seek to inform, monitor, or improve health processes and outcomes. For example, a radiologist relies on data signals from a body scan to accurately diagnose a fractured arm. A pharma company analyses data about treatments and their outcomes to improve the efficacy of its therapeutics. Meanwhile, an insurance company assesses the risk of a patient population based on clinical data, socio-economic indicators, and any other health evidence that might be available from the real world (e.g., data from a fitness tracker). These stakeholders need similar health data for different purposes, and they have to collaborate in an information exchange marketplace. This health data exchange is not all too efficient due to the sheer volume of participants. To put some numbers behind the complexity of the US healthcare system:

• 18M healthcare professionals

• 900 health insurance companies

• 637 health systems

• One government, including several federal agencies such as the Center for Medicare and Medicaid Services (CMS) and the National Center for Health Statistics that roll under the United States Department of Health and Human Services (HHS)

Health insurance in the US: a primer

According to the US Census Bureau, over 92% of the US population had health insurance coverage for all or part of 2019. Private health insurance was more prevalent than public health insurance, covering 68% of the patient population.

Private insurance companies - or commercial insurers - offer both group and individual health insurance plans. Customers purchase private insurance through an employer, from a marketplace, or directly from the insurance company. Some of the largest US private insurers include UnitedHealthcare (48.9M members across the US and its global presence) and Anthem (42.5M members).

The US does not have a global public health insurance program. However, the US federal, state, or local governments run programs where people have some or all of their healthcare costs paid for by the government. The two main types of public health insurance are Medicare and Medicaid. 

Medicare is the primary government payer in the US. It is a federal health insurance program administered by the CMS that provides coverage for people 65 and older, blind or disabled, and people with permanent kidney failure or end-stage renal disease. CMS regulations often influence guidelines for Medicare and non-Medicare insurers alike. Medicare consists of several parts:

• Medicare Part A covers inpatient hospital care, as well as care provided in skilled nursing facilities, hospice, and home health

• Medicare Part B is an optional benefit. To access Medicare Part B, the customer pays a monthly premium, an annual deductible, and generally has a 20% co-insurance except for services covered under healthcare law. Medicare Part B consists of two types of services:

  • Provider services needed to diagnose or treat a medical condition, if the service meets accepted standards of medical practice

  • Preventative services to prevent illness or detect it at an early stage.

• Medicare Part D is a prescription drug program available to all Medicare beneficiaries for a fee

• Medicare Part C - or Medicare Advantage - combines the benefits of Medicare Part A, Part B, and sometimes Part D. Medicare approves private insurers to administer Medicare Plan C via health plans such as Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs).

Medicaid is a health insurance assistance program sponsored by the federal and state government for low-income people - especially children and pregnant women. It's administered on a state-by-state basis, although each state program adheres to specific federal guidelines.

All roads lead to Rome and why providers are the nexus of healthcare.

Healthcare is a data-driven disease management business. Providers perform care services to assess, mitigate, and manage a customer's health risks. With over 92% of the US population covered by health insurance, providers rely mostly on insurance companies for compensation. 

No one can serve two masters, but providers have little choice. Providers must meet customer expectations while also demonstrating to the insurance company that they delivered appropriate disease management services. And insurance companies implement reward-based systems to incentivize providers to report what is going on in their practice transparently. One can say that US healthcare is a reward-based system, where insurers set the rewards and providers strive for these rewards. Specifically, provider (financial) rewards are contingent on the outcomes of care services, cost of health care, or utilization management, aka judicious use of care resources.

By choice or necessity, providers must document all relevant information from their interaction with a patient. This documentation not only facilitates claims review and payment, but also assists in the continuity of care between providers and serves as a legal document. Writing up the patient journey is busy paperwork. But healthcare professionals cannot steer clear of this task. The fact that highly-trained professionals like surgeons spend at least 30% of their time managing paperwork speaks volumes about the importance of recording accurate patient data. 

Healthcare providers document the patient encounter using natural language. Spoken or written language is an obvious communication interface for humans. But knowledge expressed in the ambiguous, creative human tongue can only be processed reliably by other humans. The healthcare industry devised ways to address these data interpretation bottlenecks decades ago. Deliberate conversations between industry and governmental stakeholders led to several standards for translating medical information from text into alphanumeric, discrete codes that machines can interpret. 

What is a medical coder, and why their job is critical to the US industry?

Medical coding = translation of the provider documentation into numeric or alphanumeric codes from a code set. This text-to-code mapping process is mostly manual and carried out by medical coders, billing specialists, or healthcare professionals. Today, an entire workforce of specially trained medical coders is responsible for reading through the medical documentation prepared by a provider and translating medical insights from text into one or multiple code sets. Medical coding ties directly to reimbursement; thus, codes must be accurate to ensure proper payment. Code assignment relies on several factors: the provider documentation, the unique rules that govern each code set, and who is paying for the patient's care. For instance, Medicare may have different guidelines than private insurers. 

Medical code sets describe information like diagnoses, medical and surgical services/procedures, and supplies. Such code sets serve as a universal language to track diseases, evaluate the quality of care, and determine costs and reimbursement. Some commonly used code sets are the International Classification of Diseases (ICD), Current Procedural Terminology (CPT), and Healthcare Common Procedure Coding System (HCPCS). ICD is an international standard for reporting health conditions for all clinical and research purposes. The 2010 edition of ICD (ICD-10) consists of specialized code sets like the one for clinical modification (ICD-10-CM) and the Procedure Coding System (ICD-10-PCS). CPT codes describe tests, surgeries, evaluations, and any other medical procedure performed by a healthcare provider on a patient. Meanwhile, HCPCS helps code medical services and supplies and consists of three levels of codes:

• Level I - maintained by the AMA and used to code services and procedures used by healthcare professionals

• Level II - used to identify products, supplies, and services not included in the CPT code set

• Level III - used for legal purposes

When a patient visits a medical practice, a front desk person typically obtains insurance and demographic information, or this information is entered electronically before the visit. After capturing patient information into the practice management system, the provider sees the patient. The provider documents the visit in the patient's medical record and completes an encounter form. Upon completion of the exam, the patient checks out and pays a co-pay, if applicable.

After the patient leaves the medical office, a specialist codes the provider's documentation of the encounter into procedure or supply codes (ICD-10-PCS, CPT, or HCPCS Level II) and diagnosis codes (ICD-10-CM). A medical coder uses several code sets depending on the setting of care delivery. When coding for patients not hospitalized - outpatient coding - a medical coder uses the CPT, HCPCS Level II, and ICD-10-CM code sets. Inpatient facility coders use ICD-10-CM and ICD-10-PCS code sets. These codes are the foundation of the medical claim submitted to the patient's insurance company for reimbursement. 

In a subsequent step, medical codes are assigned a fee and billed to the patient or payer, as appropriate. The payer uses the codes to identify the services performed and to determine payment or denial. The payer's determination of compensation goes to the provider in the form of remittance advice (RA) or the patient in the form of an explanation of benefits (EOB). If the payer denies a service, the responsibility to validate or appeal the denial often falls on the medical coder or the patient. 

Beyond billing: health data for quality care programs

Quality performance metrics give customers an objective indication of the healthcare experience. Standardized quality measures aggregate how well insurers and providers perform based on the regularity of services performed, patient health improvements, and customer satisfaction. 

Common standardized quality frameworks adopted by insurance companies include Healthcare Effectiveness Data and Information Set (HEDIS), CMS Star Ratings, and Core Quality Measures (CQMs). These quality frameworks measure similar healthcare services and consumer-facing operations. For example, HEDIS is an extensive set of guidelines to determine which healthcare services are performed and if those services are improving customer health conditions. Ninety percent of US health plans rely on HEDIS measures to compare healthcare performance with other health plans. HEDIS measures feed into the CMS Star Ratings - a publicly available insurance rating system that compares the quality of all Medicare-sponsored plans like Medicare Plan C and Plan D. While HEDIS is a performance measure broadly enforced and adopted by government insurers, the Core Quality Measures target both public and private insurance companies. CMQ is a set of eight performance benchmarks intended to hold payers accountable for the quality of general medical care and specialty services. The CMQ measures aim to reduce inefficient quality reporting while providing transparent information about healthcare performance.

CMS also implements a quality payment incentive program for providers, referred to as the Quality Payment Program (QPP). This program rewards value and outcomes in one of two ways: Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). MIPS is a program that will determine Medicare payment adjustments. Using a composite performance score, eligible providers may receive a payment bonus, a payment penalty, or no payment adjustment. MIPS is a budget-neutral list, meaning successful reporters earn positive payment adjustments funded by unsuccessful reporters who receive negative payment adjustments. An APM gives added incentive payments to providers who deliver high-quality and cost-efficient care. APMs can apply to a specific clinical condition, a care episode, or a population.

Empowered customers make informed choices  

Thanks to governmental initiatives, data about the patient experience, cost of service, and quality of outcomes are no longer institutional knowledge but part of the public domain. Through Physician Compare, CMS publicly reports provider performance information submitted under the Merit-based Incentive Payment System and Alternative Payment Models. CMS also created the Five-Star Quality Rating System to help consumers, their families, and caregivers compare care services more efficiently. HealthCare.gov publishes a health insurance plan's quality ratings (or "star ratings"), which accounts for member experience, medical care, and health plan administration. The star ratings give customers an objective way to compare plans based on quality.

The insurer and provider quality metrics are foundational for an outstanding customer experience. This data can also increase brand strength, grow market share, enhance margins, and improve health outcomes. While businesses are just starting to redefine the customer experience in healthcare, they are stepping on solid ground build with data.