Prepare for disruption is the message Health and Human Services (HHS) Secretary Alex Azar is sending to every player in the U.S. health care industry.

Noting that innovations in paying for care and delivering it are not keeping pace with advances in technology, personalized medicine and cell therapies, Azar said it's time to change the equation to pay for outcomes and wellness rather than procedures and sickness.

"This administration and this president are not interested in incremental steps. We are unafraid of disrupting existing arrangements simply because they're backed by powerful special interests," he told the Federation of American Hospitals Monday.

"Simply put, our current system may be working for many. But it's not working for patients and it's not working for the taxpayer," he added.

Azar's idea of disruption is to put the patient at the center of the health care system – something he said "won't be the most comfortable process for many entrenched players." Pointing out the need for such a change, he compared the current system with expecting people to order at a restaurant before showing them a menu or prices, and then adding on fees for an off-site pastry chef.

He acknowledged that putting patients in charge by letting them determine value, as opposed to the current "what-the-market-will-bear" pricing strategy, is a "radical reorientation from the way that American health care has worked for the past century." As a result, it will require some federal intervention, he said.

Azar's plan has four prongs to bring down costs and increase quality:

• putting patients in charge of their own data, including diagnostic and imaging results;

• providing them with useful, transparent price and quality information for drugs, providers, procedures and services;

• using the weight of Medicare and Medicaid to shift toward a value-based system;

• getting government out of the way of the changes that must be made.

Patients in charge

When it comes to data, "patients ought to have control of their records in a useful format, period. When they arrive at a new provider, they should have a way of bringing their records, period," Azar said. "That's interoperability."

Putting legs to those words, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma Tuesday unveiled the MyHealthEData initiative, which is intended to help break down barriers that prevent patients from having electronic access and true control of their own health records from the device or application of their choice.

The goal is to enable patients to choose the provider that best meets their needs and then give the provider secure access to their data, according to CMS. The end result should be greater competition among providers and technologies, as well as reduced costs through the elimination of redundant tests and procedures.

Along with the initiative, Verma announced the launch of Medicare's Blue Button 2.0, which will allow beneficiaries to access and share their health care information, previous prescriptions, treatments and procedures with a new doctor, leading to less duplication and providing better continuity of care.

"Putting patients in charge of this information is a key priority," Azar said Monday, ahead of Verma's announcement. "But if we're talking about trying to drive not just better outcomes, but lower costs, we also have to do a better job of informing patients about those costs," especially when they're expected to pay more through high deductibles and other out-of-pocket costs.

Azar called on everyone in the health care system to be transparent with patients about the true cost of services and products. The current "thicket of negotiated discounts makes it impossible to recognize and reward value, and too often generates profits for middlemen rather than savings for patients," he said.

If stakeholders don't embrace transparency voluntarily, Azar warned, "we have plenty of levers to pull that would help drive this change."

The message appears to be sinking in with some players. Unitedhealthcare, one of the largest insurers in the U.S., announced Tuesday that it will start sharing the rebates and discounts it gets from biopharma companies with patients. The move is expected to reduce drug costs for about 7.5 million people covered by the payer, with savings ranging from a few dollars to more than a thousand dollars per prescription, according to the Pharmaceutical Research and Manufacturers of America.

Azar welcomed the news Tuesday, citing it as an example of the "type of innovation in the private sector that will be an important part of the value-based transformation that is coming to America's health care system."

Using the weight of Medicare

HHS' third prong in disrupting the way health care is delivered in the U.S. rests on the market concentration of Medicare and Medicaid, which together accounted for more than $1 trillion in federal spending in 2016 – or one-third of the country's total health care spend. Given that heft, Azar envisions Medicare and Medicaid as a first mover toward a transformation.

But rather than spending years "tinkering with how to build the very best joint-replacement bundle, we want to look at bold measures that will fundamentally reorient how Medicare and Medicaid pay for care and create a true competitive playing field where value is rewarded handsomely," Azar told the hospital group Monday.

As part of the change, he said CMS will work to make reporting as easy as possible since no one benefits when outcomes measures create burden instead of value. "It's the patient who suffers when a provider spends more time reporting quality measures than delivering quality care," he said.

That goes along with getting government out of the way of disruption. Azar recognized that there are many regulations impeding a value-based transformation, including certain Medicare and Medicaid price reporting rules and FDA restrictions that may inhibit innovative ways for biopharma and payers to work together. Current interpretations of well-intentioned anti-fraud protections also could be impeding better coordination and integration of services, he said.

Despite the discomfort of disruption, Azar encouraged all the players in the health care system to be part of the solution. "I assure you: Change is possible, change is necessary and change is coming," he said. It has to, he noted, because "the current system simply cannot last."