Healthcare Hunger Games #3: Consumer-driven Healthcare a la the Administrative State

‘- By Ryan Sprinkle

The “deconstruction of the administrative state” as been widely reported to be one of the key objectives of the Trump Administration. While early actions from the White House certainly suggest this is a true objective, the failure to garner the necessary political support to repeal and replace the Affordable Care Act means that, for the time being, the White House must turn to the administrative state to realize any changes in federal healthcare policy.

Over the coming months, hospital leaders should monitor the modifications that the Department of Health and Human Services and the Centers for Medicare and Medicaid Services make to various rules and regulations that have been promulgated since the ACA’s enactment. Specifically, HHS and CMS have indicated that they will be open to states seeking section 1115 Medicaid waivers and section 1332 Innovation waivers. Each of the respective waivers would permit individual states to make broad reforms to either its Medicaid program (section 1115) or to various aspects of its private health insurance market (section 1332).

HHS and CMS have suggested that these waiver applications should encourage healthcare reform at the state level that promotes “consumer-directed healthcare” or that would otherwise “increase consumer choice” in each state. In a joint letter to state governors, HHS Secretary Tom Price and CMS Administrator Seema Verma advised that state 1115 Medicaid waivers could include features likes health savings accounts. While these waiver applications are not submitted and approved overnight, this policy change presents real implications for hospitals leaders and how they relate to their patients.

This policy focus on more “consumer-directed healthcare” represents a fundamental change in the way most hospitals relate to their patients. With the rise of high-deductible health plans and the increase in patient responsibility for first-dollar financing of healthcare services, patients are behaving more like consumers. With this greater personal financial responsibility comes the expectation of greater transparency from providers in terms of outcomes, cost, and alternative treatment options.

An increase in consumer-directed healthcare presents many opportunities for providers. With patients bearing more financial responsibility for their healthcare decisions, providers should look to best practices from leaders in the retail sector. Retail giants spend significant resources studying their consumers, segmenting their markets, and applying specific strategies to appeal to the needs and desires of those consumers.

The movement from healthcare patient to healthcare consumer is only poised to accelerate in the coming years. As this change starts among Medicaid-enrolled patients and accelerates among private plan patients, it is essential that hospital boards periodically assess brand perception in their service area, understand projected demand for specific clinical services, and master the patient experience. The market and the administrative state will demand it.

Past Healthcare Hunger Games Blogs

#1: This Week in Washington and Your State Capital

#2: The Art of the Deal Attempts Herding Cats

Ryan Sprinkle is a consultant at Stroudwater and a licensed (but recovering) attorney. He invites you to send him questions or topics related to federal and state healthcare policy to be discussed in this ongoing blog series. He can be reached via email at or by phone at (770) 913-9046.