Anticipating the impact of sequestration on mHealth policy decisions


[Editor's note: This article originally appeared on mHIMSS.org, a sister site of PhysBizTech, on Dec. 31. Since the article's posting, congressional negotiators averted the fiscal cliff and delayed sequestration, a series of automatic cuts in federal spending that were previously scheduled to take effect Jan. 2.]

Is there a spark waiting for mHealth in the current sequestration standoff?

Couple the emerging role of the Independent Payment Advisory Board (IPAB) with the need to aggressively  --  and on short notice  --  reduce spending. In addition, there are aggressive movements on the accountable care organization front to embrace mHealth technologies.  Furthermore, traditional health information technology (HIT) payments via the HITECH Act enjoy bipartisan support but still remain focused largely on the role of the EHR in healthcare, and not necessarily how to improve access to data or leverage "newer" technology. HITECH still remains focused on tethered systems, but the real value proposition of access to information lies in the untethered systems for the foreseeable future. Future objectives of meaningful use seek to leverage and harness patient engagement, a major opportunity for the mHealth space over the coming years, but policy-makers remain diverted in the short-term debate.

In the next few days, a combination of policymaking or policy acquiescence may provide the jumpstart for mHealth in 2013.

I'll preface some of my assumptions based on the nation's underlying economic condition.  Policymakers continue to project labor and capital-based policy decisions and directions. Productivity growth remains positive  --  1.7 percent in CBO predictions  --  but wage stagnation since 1973 remains a persistent challenge in establishing effective long-term fiscal policies. In addition, there is declining labor force participation  --  down from 67 percent in 2002 to 63 percent in 2012  --  resulting in a need to consider how a shift from labor- and income-based decision-making to innovation and capital-based decision-making. I have a Mark Twain saying on hand, but I digress. 

One of the challenges of the underlying fiscal policy discussion is how long-term decision-making can be achieved in light of rapid advances in technology that dramatically affect productivity  --  especially in healthcare, where the successful adoption of HIT remains challenging in a broad sense. The inability to reconcile many of these underlying challenges led to the Sequestration Act, passed last year and which, under the current trajectory, will go into effect in 2013.

How will the Sequestration Act impact healthcare, and is there opportunity for mHealth as a result of sequestration or a new budget?

There will be a 2 percent sequestration to Medicare, and the White House has outlined a plan to implement sequestration here. If sequestration occurs, all non-exempt programs must be reduced by a uniform percentage. The largest contributions to the 2 percent sequester come from the various trust funds that enable the provision of health insurance, namely the Federal Supplementary Medicaid Insurance Trust Fund and the Federal Hospital Insurance Trust Fund.

From the Congressional Research Service Report on Sequestration: "For payments made under Medicare Parts A and B, the percentage reductions are to be made to individual payments to providers for services (e.g., hospital and physician services). In the case of Parts C and D, reductions are to be made to the monthly payments to the private plans that administer these parts of Medicare."

Sequestration specific to Medicare has also has largely ignored to role of the nascent IPAB yet to be fully established and seated in 2014. The role of the IPAB is to update payments to Medicare, largely a result of Congress foregoing updates to payments on a regular timeframe.

As I mentioned in the mHIMSS and mHealth year in review, 2013 will be a busy year for policymakers, especially in how they approach the potential sequestration of finances related to the provision of healthcare in the United States. There is an underlying urgent need to harness new technology to increase productivity, while establishing and maintaining quality healthcare, to reduce costs. In addition, there is a need to understand the role of IPAB in the sequestration process, should it occur. The potential exists for the IPAB panel to look to new technologies  -- especially mHealth technologies  --  with the potential to shift costs and improve care, which could be implemented on short notice.

Tom Martin is the manager of mHIMSS and a doctoral student at the University of Delaware School of Public Policy and Administration. His research is focused on the adoption of technology in healthcare, the use of incentives, and the valuation of public goods. Follow him on Twitter @tommartin3.