Senate finance approves Azar to lead HHS

On the Hill:

On Jan. 17, the Senate Finance Committee advanced the administration’s nominee for Secretary of Health and Human Services (HHS), Alex Azar, generally voting along party lines (15-12). The full Senate vote could now take place by the end of the month. Azar was an HHS official under President George W. Bush and worked in the pharmaceutical industry as the president of pharmaceutical giant Eli Lilly. Republicans favor his industry and policy expertise as well as his knowledge of the agency. Democrats worry about his ties to the drug industry and his opposition to the Affordable Care Act (ACA). If confirmed, he will continue Republican efforts to curb the ACA through regulatory changes. He has also promised to tackle rising drug prices, though some are skeptical since he oversaw increases in drug prices while at Eli Lilly. While opposed to government intervention in drug prices, he has said that he supports private negotiation of drug prices in (Medicare) Part B, was in involved in some value-based contracts while at Eli Lilly and could be open to mandatory demonstrations.

Congressional Medicare advisors are considering increasing payments for primary care services as a way to address pay imbalances and the shortage of primary care doctors. This would require cutting rates for other services, which specialty physicians oppose. Medicare Payment Advisory Commission (MedPAC) commissioners believe that ambulatory evaluations and management services are under-compensated, which worsens the shortage of primary care physicians. Researchers believe that reimbursement for specialty procedures should fall as technological advances make them more efficient, even though these advances do not make primary care services less time or labor intensive. Changing the distribution of physician pay is complicated by the fact that primary care doctors are increasingly employed by health systems, so there is no guarantee that the increased pay would be passed on to the doctors. Some also posit that medical school debt relief could provide bigger results quicker.

MedPAC voted to recommend replacing the Merit-Based Payment Program (MIPS) with a voluntary system in which doctors could form groups and earn bonuses for positive outcomes within fee-for-service Medicare. The MIPS recommendation was not unanimously favored by commissioners, nor is it popular with providers. The group also recommended changes to Medicare Advantage contract consolidation, changes to biosimilar reimbursement that would require discounts in the Part D coverage gap and exclude them from counting as out-of-pocket expenses and changes to provider pay. The recommendations for fee-for-service payment updates are the same as in the December draft. These recommendations will appear in a March report to Congress.

At the agencies:

A Congressional Budget Office (CBO) analysis of 2014 payment data shows that doctors were paid more for treating patients with private insurance than those with Medicare fee-for-service (FFS). Rates for those enrolled in Medicare Advantage were generally similar to those in traditional Medicare. The analysis used claims data from three major insurers and looked at the prices paid for 20 common services. It then compared those prices to the estimates for Medicare’s FFS program. CBO found that commercial prices were significantly higher than Medicare FFS prices and almost three times higher out-of-network than in-network. Medicare advantage prices were roughly the same and varied minimally in- and out-of-network. Similarly, Medicare Advantage prices remained stable across geographical areas when compared to Medicare FFS, while commercial prices varied widely. According to the CBO, these results suggest that statutory limits on out-of-network prices allow insurers to negotiate lower in-network prices, which would be much higher without those limits.

HHS informally requested information from stakeholders pertaining to federal and state laws and policies that might be hampering competition and choice in the healthcare system, including those related to Medicare, Medicaid and other pay systems. The inquiry for reform ideas comes as House Republicans hint at taking on entitlement reform this year. This request for information (RFI) goes beyond the administration’s earlier information-gathering efforts on how to make exchange regulations less burdensome. It is the latest effort by HHS to implement the Oct. 12 executive order that promoted associated health plans (AHPs), allowed longer short-term health plans and requested a report on barriers to competition. The RFI also notes that HHS expects feedback from the public on the various aspects of the October executive order, such as the promotion of AHPs.

Seventeen new health systems have joined the Next Generation accountable care organization (ACO) program. Medicare’s most advanced and highest-risk ACO program now includes 58 organizations, up from 44 last year and serves about 2 million patients. CMS announced earlier in January an increase of 124 shared savings ACOs from last year; 561 shared savings ACOs now serve 10.5 million Medicare patients. Next Generation allows providers to earn more money back from Medicare for keepings costs down and improving quality, while requiring them to pay more if they fail to meet CMS targets. Next Generation ACOs have more flexibility for services such as telemedicine, post-discharge home visits and exceptions from certain CMS rules.

In the courts

Now that reimbursement cuts for 340B drugs have gone into effect, hospital groups will appeal a district judge’s dismissal of their lawsuit over these cuts. The judge had dismissed the lawsuit, saying it was premature since the cuts had not yet begun at that time. The hospitals are suing CMS over the 27 percent cut in reimbursements for Part B drugs that hospitals buy through the 340B program, arguing that CMS does not have the authority to cut the reimbursements. The $1.6 billion in pay cuts would be distributed equally to hospitals for other services, including to hospitals that do not qualify for the 340B program.

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