Deputy Secretary of HHS Speaks at Health Datapalooza

Eric D. Hargan, Deputy Secretary of the Department of Health and Human Services (HHS), spoke at Health Datapalooza. Below are his prepared remarks:

Good morning, and thank you for inviting me to speak to you all today. It’s always an honor to speak at Datapalooza, but especially this year, when this gathering marks its tenth anniversary.

We’re all here, just like we were last year, because we care about data, and we like talking about the technology we can develop with it. But I want to think about how data and technology fit into the bigger picture: Why is data important? Why are we all at a conference devoted to it?

It’s not only so all of us have an excuse to get in touch with our inner nerds—although that’s an important part of the appeal for me.

But simply having a lot of data doesn’t, in and of itself, equal success. We always need to ask, what can this data help us do? How can we better utilize data to help achieve our mission?

That mission, for HHS, is to enhance and protect the health and well-being of every American—and I suspect many of you share that mission. We must always keep the mission in mind.

Today, I want to give you a sense of how new levels of data and new technology fit into one key priority Secretary Azar has selected as part of HHS’s overall mission. That priority is transforming our healthcare system from one that pays for sickness and procedures to one that pays for health and outcomes, a transition often known as going from volume to value.

We’ve laid out four particular areas for driving this transformation, 4 Ps: patients who are in control as consumers, physicians who work as accountable navigators of the health system, payments based on outcomes, and prevention of disease before it occurs or progresses.


I’ll start with patients, because they are, or ought to be, at the center of our healthcare system and all our thinking around improving healthcare.

To the greatest extent possible, we want to put patients in control of their own health, and we want to be learning from their experiences to develop new, patient-centered approaches to treating disease.

Even though all of us work in healthcare in some form or another, many of you likely know how disempowered our healthcare system can make American patients feel. I’m sure almost all of you have experienced times when you were the patient, or a loved one was, and you felt like you were at the mercy of a healthcare system that viewed you more like a number, than a real human being who is capable of making informed decisions for yourself.

One key piece of addressing this challenge is making sure you have access to all the relevant information about your health. Earlier this year, the Trump administration took a major step in this direction with the release of two draft rules, from CMS and the Office of the National Coordinator for Health IT, aimed at ensuring patients and providers have access to interoperable health information. Our proposals are centered on one goal: getting patients access to their records, period. As you can tell from the relative simplicity of that statement, if not from the actual length of the draft rules we’ve put out, we do want to make these regulations as simple as possible.
We want to dictate the what, not the how, in health IT. We aren’t going to micromanage exactly how providers, payers, and innovators make health IT interoperable and patient-accessible—we’re just going to say it has to happen, and let private actors determine the best way to do it.

We believe the potential here is huge, not just to put patients in better control of their own health and their own healthcare, but also for private innovators to create new tools that empower patients in doing so.

Interoperability of health data is complemented by work we’ve done across HHS to improve the availability and usability of the huge amounts of data the department has. Under President Trump, CMS has taken historic strides toward making Medicare and Medicaid data more accessible to researchers and entrepreneurs. Specifically, I know many of you in this room, strange as it may seem to many outside this room, salivated for years over the idea of CMS releasing its Medicare Advantage claims data, and we were pleased to start making that data available last year.

Better coordination of data efforts is also key to the initiative that President Trump announced in his State of the Union address around pediatric cancer, which will involve a strategic effort to gather more data on pediatric cancer, an under-researched area, and break down silos between existing data sources.

Data availability is one of the major areas of discussion for an initiative my office has undertaken, called the Deputy Secretary’s Innovation and Investment Summit. The goal of the summit is to examine the innovation and investment landscape within the healthcare sector, emerging opportunities, and the government’s role in facilitating more investment and accelerated innovation, and we were struck by how much discussion there was among investors and innovators around the importance of data.

One particular area where we’ve worked with the private sector is what, in my office, we’ve dubbed PETs. No, not your cat or your dog, though those can be great for your health too—really, science shows they can alleviate stress.

But here, we’re talking about pets as in PETs, which stands for “patient empowering technologies.”

As Deputy Secretary, I’ve launched an effort to understand how we can use these technologies to empower patients in improving their own health and, especially important, avoiding costly, inconvenient trips to the doctor’s office or hospital.

Really, from a value-based care perspective, it would have been even better to have a cute acronym for “technologies that keep you out of the doctor’s office,” but turning TTKYOOTDO into a usable title that was beyond even our truly elite acronym makers—I mean, our TEAM—at HHS.

One place we’re examining PETS deals with an often-neglected, under-treated challenge: serious mental illness. About 100,000 American adolescents and young adults experience a first episode of psychosis each year, and we know that an early, comprehensive intervention in individuals experiencing their first psychotic episode can significantly increase their quality of life.

We have an intervention that works: Coordinated Specialty Care, or CSC, which is an evidence-based, multi-component team intervention that has been shown to improve outcomes, shorten inpatient stays, and reduce costs among young people with psychotic symptoms. Currently, almost every state has at least one CSC program, with a total of more than 260 nationwide. But people in need of this intervention may live some distance from the CSC program, which means there may be an opportunity to use technology to expand the reach of these programs.

So, I’m pleased to announce to all of you for the first time today, the National Institutes of Health and the Substance Abuse and Mental Health Services Administration will begin to explore technology-assisted implementation of these programs, including input from providers and patients on how PETS can be integrated into the existing care pathway.

I think that example goes to show that patient-centered technology is far from just a novelty or a fad—it can offer real opportunities to improve care for patients, including for illnesses that, like serious mental illness, have been stubborn challenges for too long.


We’re also exploring how technology can drive progress on our second P: providers as accountable navigators of our health system.

We want to help determine, for instance, what are the best ways to keep patients digitally connected to their providers. Is it a text message from their doctor? A phone call? An e-mail? A wearable that sends information directly? Data can help give us the answer to these questions—data that some of you may be gathering already in your work.

Technology can also help physicians work better with their patients to identify the lowest cost, most appropriate treatments. As one example, earlier this year, we proposed that every Medicare Part D plan make available a real-time pharmacy benefit tool. These tools, already used in the commercial market, can provide instant electronic access to a wealth of information for both patients and physicians.

We’ve heard from physicians that, when they’re prescribing a drug, they often are blindly picking a drug without knowing how much it will cost their patient, or whether it’s even covered by insurance.

With a real-time pharmacy benefit tool, the provider and patient can sit there and instantly find out which drugs are covered by insurance, how much they cost, how much they’ll cost the patient, and more. With these tools, the doctor can not only find out what kind of authorizations might be necessary for a particular drug—often, they can get started on the authorization right then and there.


The real-time pharmacy benefit tools are just one piece of efforts we’ve undertaken to make payments in healthcare, our third P, more transparent and more empowering for patients and providers. We know we need to take steps on our side, at HHS, to ensure that we’re paying for the right treatment, in the right setting, at the right time—and technology can help make that happen. In 2018, for instance, we created two new ways for Medicare to pay providers specifically for forms of “virtual care,” delivered remotely.
Providers can now be reimbursed for remote patient monitoring visits and for assessments of electronically transmitted images. Previously, Medicare could not pay for a physician’s phone or video check-in with a patient separately from an in-person visit.
I think we would all agree, if we’re trying to get the best out of modern communications technology, only paying for remote interactions that involve someone having to go into the doctor’s office isn’t going to do the trick. So we’ve started paying separately for physicians to consult with their patients remotely, using technology, without the patient being in a doctor’s office or other health facility. In many circumstances, patients can just now check in with their doctors from home.
One of the popular points of discussion among participants in our innovation and investment summit that I mentioned was just how crucial CMS reimbursement and FDA approval policies are for driving investment in the healthcare space. Now, this isn’t exactly earth-shattering news: Investors in healthcare want to be approved by the world’s gold standard drug safety agency, and they want to get reimbursed by the single biggest healthcare payer on the planet.

But still, it was a reminder about just how much our decisions at HHS drive where private markets go—and we want to ensure we’re driving innovators toward the development of newer technologies that can deliver us better, lower cost care.


One area where we believe we are making important improvements is how FDA looks at medical devices, which brings me to our fourth P, preventing disease. The use of more sophisticated software in and as medical devices offers tremendous promise to monitor patients’ health, diagnose, inform treatment, and improve outcomes, but it also poses new challenges for FDA’s work.
Over the last two years, FDA Commissioner Scott Gottlieb has laid out ambitious plans for modernizing how the agency looks at medical devices, including those that are digital health technologies, and FDA has been hard at work on implementing a huge array of changes.
For example, we’re looking at how to modernize the traditional 510(k) pathway for medical devices—an approval pathway that will turn 43 this year, which I think among Datapalooza attendees is considered practically geriatric.
One step in this effort is establishing an alternative 510(k) pathway to allow manufacturers of certain well-understood device types to rely on objective safety and performance criteria, rather than the typical approval pathway of comparing their product technologically to an already marketed device, known as a predicate. We’ve also taken major steps toward more incorporation of real-world evidence into safety reviews of medical devices, leveraging the wealth of data collected as a part of routine clinical care and from devices themselves.
FDA’s staff has laid down an incredibly strong foundation for this work under Commissioner Gottlieb, and the commitment to modernizing our approach to medical devices, including digital health, will continue long after he leaves FDA.
Really, modernizing our work around devices is just the beginning. To unlock the next generation of medical advances, we have to look at how to monitor the safety and effectiveness of software in or as devices that don’t rely on a static algorithm, but instead leverage artificial intelligence to constantly adapt and learn. Dealing with technology that’s constantly changing itself, like AI can, is a challenge for the traditional regulatory framework Congress has created. But that’s not holding us back. In January, the FDA took new steps toward developing a pilot program to test new approaches to reviewing digital health devices, including those that use AI.
The potential for better treatment of costly chronic conditions here is huge: Imagine how smart technology can help patients with diabetes, or heart conditions, or so many other challenges.

We are paying special attention to the potential for new technologies to treat or prevent one of our country’s most costly health conditions, kidney disease.
We believe there has been too little innovation and investment in the kidney care space for too long, and we’re well aware that HHS payment policies may bear a share of the blame here.
Essentially, we begin paying for kidney patients once they’re already quite sick—spending $34 billion on patients with end-stage renal disease alone in 2016. The problem is, this $34 billion in spending pays not for outcomes, but for services. We then negotiate hard over those services, and we carefully specify what we pay for. This sounds logical, and it is, but it also means that we may be leaving so little margin and being so specific on services that we leave little incentive for providers to innovate in treatment. So they don’t.
If we reorient our incentives to pay for preventing kidney disease, and for providing patients with what may be more convenient options, like at-home or peritoneal dialysis, we believe we’ll not just see better care—we’ll also see technological advances too.
HHS resources can also spark new innovation in this area, which is why last year, HHS’s Office of the Chief Technology Officer launched KidneyX, a public-private partnership with the American Society of Nephrology, to spur development through prize competitions of transformational products like wearable or implantable artificial kidneys.
In our first competition, “Redesign Dialysis,” we’re encouraging and supporting innovators to develop new technologies and approaches that could usher in the next generation of dialysis products. We received 165 submissions for this round, including a number of proposals that could help advance an artificial kidney. Submissions came not only from the kidney community but from engineers, medical device companies, and many others.
We’re thrilled with this level of interest, and it shows what a prize competition can drive in an otherwise neglected investment space.
You’ll be hearing more about this topic tomorrow from Adam Boehler, the Secretary’s senior advisor for value based transformation and the director of CMMI, and Ed Simcox, our chief technology officer. On many of the other areas I’ve discussed today, we’re pleased that everyone at Datapalooza will get to hear from many other HHS leaders, including Gopal Khanna from AHRQ, Don Rucker from ONC, Amy Abernethy from FDA, and more.
So, what I’ve laid out for you today are just some of the exciting areas where technology is helping to put patients in control, help providers work as navigators of the health system, pay for the right treatments and the right outcomes, and help prevent or cure disease.
These efforts to move to a system that pays for health and outcomes rather than sickness and procedures will mean better care for Americans at a lower cost.

But, when it comes to a lofty goal like lowering the cost of care, we’re often told that there is no silver bullet. I’ve been to my share of healthcare conferences, and “there’s no panacea” becomes one of those phrases that starts to just roll off the tongue.

And it’s true: there are no easy answers in healthcare. Any ambitious goal like moving to value-based care is going to require a comprehensive approach—that’s why we’re focused on patients, providers, payments, and prevention.

But in each of these areas, we do have a special tool on our side: the incredible advances we’re seeing in data and technology.

New technology and better use of data will make the transition to a value-based, more affordable, higher quality healthcare system a lot more feasible.

But we’re not going to continue these advances without the entrepreneurial spirit and creativity of everyone in this room.

That means all of you have a vital role to play in moving toward a healthcare system that provides better care at a lower cost.

We, and American patients, need you to play a key role in thinking about how we can move to a value-based healthcare system.

In return, at every step of the way, HHS will take every possible measure to empower you with the data you need, and unleash the technology you are developing to help the patients we all want to serve.

Together, I believe we can deliver remarkable advances in terms of both quality and cost of American healthcare in the years to come.

Thank you so much for your time today, and I wish you a great rest of Datapalooza.

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