HHS Secretary Alex Azar has thrown down a passionate—and personal—challenge to healthcare providers and drugmakers, demanding they tell patients what a service or product will cost before they receive it.
“Especially if we want to move to a system where we put patients more in charge of their own healthcare dollars, providers and insurers have to become more transparent about their pricing,” he told the Federation of American Hospitals on March 5. “There is no more powerful force than an informed consumer.”
“And if that doesn’t happen, we have plenty of levers to pull that would help drive this change,” he warned.
Increasing price transparency was part of a “four shifts” agenda Azar laid out for transforming U.S. healthcare into a more competitive, value-based system that costs less. But he faces a hard slog to make prices and out-of-pocket costs public, particularly since many providers and pharmaceutical companies have resisted even while saying they support the concept. They argue it’s the job of health plans to tell their members how much they will owe.
In addition, experts say the cost-reduction potential of greater price transparency is limited because only a small percentage of total U.S. healthcare spending is on services for which patients truly can comparison shop.
The HHS secretary offered no details on how his agency will promote this goal. Healthcare industry leaders were left to guess how he would tackle this complex issue, which policymakers and stakeholders have been struggling with for years and on which progress has been slow.
“It was just an outline and clearly wasn’t even in a formative stage,” said Chip Kahn, CEO of the Federation of American Hospitals. “We’ll have to see what he decides to come up with.”
The CMS did not respond to questions about when and how it planned to move forward on Azar’s price transparency goal.
Still, transparency advocates were encouraged by Azar’s clear commitment to the issue, illustrated by his personal tale of how hard it was for him to find out the price of a stress echocardiogram.
“I certainly believe that the HHS secretary putting energy behind the movement toward greater transparency will make a difference,” said Suzanne Delbanco, executive director of Catalyst for Payment Reform, whose 2017 report card on price transparency initiatives gave 43 states a failing grade.
Some question, however, whether the federal government is the appropriate player to drive price transparency, rather than letting states and the private sector take the lead. “It’s hard to come up with a federal solution that applies to 50 states when healthcare looks so different everywhere,” said Joe Fifer, CEO of the Healthcare Financial Management Association.
Nevertheless, Delbanco and other experts said there are steps HHS could take to advance price transparency, such as making it easier for states and private organizations to incorporate Medicare payment information into transparency tools for consumers. That data could help consumers compare individual hospitals’ and physicians’ average total cost for treating patients with particular conditions such as diabetes.
Or, as a condition of Medicare participation, HHS could require hospitals to disclose costs upfront and take steps to protect patients from surprise bills from out-of-network providers. In addition, the CMS could publish cost and outcome results for individual providers’ bundles of care for services such as total joint replacements. It also could require health plans on the Affordable Care Act exchanges to give members pre-service estimates of out-of-pocket costs.
But the experts questioned Azar’s heavy emphasis on price transparency as a way to bring down healthcare costs. For one thing, the Health Care Cost Institute found that less than 7% of total U.S. healthcare spending was for “shoppable” services, meaning those that can be scheduled in a market with some competition.
“It’s a necessary but not sufficient component,” said Niall Brennan, president of the Health Care Cost Institute, which offers a consumer-focused website with price information for nearly 300 healthcare services. “Consumers are the weakest actors in the healthcare ecosystem. Every actor needs to work together to reduce costs.”
In his speech, Azar described his frustrating experience in Indiana a few years ago trying to price-shop for an echocardiogram stress test when he had a high-deductible health plan. Initially he was told the list price at a hospital was $5,500, then he was told his insurer’s negotiated price was $3,500. Finally, after considerable difficulty, he found out it would cost him just $550 at a physician’s office.
“Now, there I was, the former deputy secretary of Health and Human Services, and that is the kind of effort it took to find out how much I would owe for a procedure … That is simply wrong.
“I believe you ought to have the right to know what a healthcare service will cost—and what it will really cost—before you get that service … We’ll work with you to make it happen—and lay out more powerful incentives if it doesn’t.”
But Azar will face opposition from providers and drugmakers, who have raised administrative concerns about transparency efforts.
For instance, the Ohio Hospital Association won a court injunction blocking implementation of a 2015 state law requiring providers to give patients a “good faith” estimate before treatment of how much non-emergency services would cost out of pocket. That law remains on hold while providers are supporting more limited transparency requirements.
The Affordable Care Act already requires hospitals to publish a list of their standard charges for items and services, including Medicare DRG charges. But neither the Obama administration nor the Trump administration has made any move to implement that provision. Critics of the provision say it wouldn’t be helpful to patients because charges represent inflated retail rates that almost no one actually pays.
The CMS did not respond to a question about whether it would propose a rule to implement the ACA charge-disclosure provision.
Price and quality transparency tools introduced by states and private insurers have faced lots of growing pains. Only a few of these tools provide comprehensive information on quality, price, patient experience, network providers and benefit design, according to Catalyst for Payment Reform. Maine, Maryland, New Hampshire and Oregon offer the best consumer websites, featuring all-payer claims data on individual hospitals and physicians, the group found.
Among the hurdles, third-party vendors typically lack access to real-time data, and insurers generally don’t want to share their proprietary data. Plus, the U.S. Supreme Court ruled in 2016 that self-insured employers can’t be required to turn over their claims data for state cost-transparency data bases.
As a result, most states currently do not publish the actual amounts providers receive from payers for individual services.
But some providers are working on offering patients pre-service estimates of their out-of-pocket costs, even though there’s evidence that only a small percentage of patients use price-shopping tools. Geisinger Health System has an online estimator that Geisinger Health Plan members can use to calculate their costs for 300 of the most common services. The calculator doesn’t work for patients in other health plans.
“The idea of sharing our pricing structure with patients makes perfect sense,” said Karen Murphy, Geisinger’s chief innovation officer. “But will price transparency in and of itself completely bend the cost curve? Probably not.”
Despite such industry caveats, Azar last week sounded determined to push ahead. “This administration and this president are not interested in incremental steps,” he said. “In fact, the only option is to charge forward—and for HHS to take bolder action, and for providers and payers to join with us.”
As part of its FY19 budget request, the agency is looking into how to leverage PDMPs to track prescribing histories, as well as reporting suspected abuse to the DEA.
President Trump’s proposed FY19 budget for the U.S. Department of Health and Human Services stresses the need for the agency to make the opioid crisis a top priority.
While HHS’ budget would be slashed by 21 percent, Trump would give the agency $10 billion in new discretionary funding for both the opioid epidemic and mental illness. To accomplish this, HHS wants to track high prescribers and utilizers of prescription drugs within Medicaid.
HHS Secretary Alex Azar told the House Energy and Commerce Subcommittee on Health that the agency would “require states to monitor high-risk billing activity to identify and remediate abnormal prescribing and utilization patterns that may indicate abuse in the Medicaid system.”
HHS could leverage data from the Centers for Medicare and Medicaid Services to help “identify a practitioner who is writing an inordinate number of prescriptions,” Rep. Michael Burgess, MD, R-Texas, told Azar. And those trends could be easy to spot within those databases.
In addition to leveraging Medicaid data, HHS could potentially look to state PDMP data to identify bad actors, Azar testified. The agency could also use its “authority to make sure that whenever we exclude a provider, it will automatically lead to transmission of that information [to the Drug Enforcement Administration].”
The DEA would have the authority to yank a provider’s ability to prescribe controlled substances, Azar said.
Further, PDMPs are already helping states track opioid prescriptions, as they flag patients with suspicious prescribing history, said Azar. But as part of the HHS budget proposal, the agency asks Congress to “require states have effective programs for this type of risk identification.”
At the moment, all states except Missouri currently have PDMPs in place, with varying degrees of use. After Trump declared the opioid crisis a public health emergency, many states have sought changes to laws to increase PDMP efforts and data sharing among states.
While Azar supports the continued interoperability efforts between state PDMPs, “there is a resource and burden question about forcing that interoperability to be nationwide.” Azar told the committee data sharing between bordering states might be more realistic.
The committee also noted that past PDMP efforts by federal agencies to integrate data within EHRs had slowed five years ago. The effort, Burgess told Azar, is “one of the opportunities to reduce the burden on practicing physicians is a way to seamlessly integrate” EHR and PDMP databases.
However, there are states currently sharing data between PDMPs. Just last week, North Carolina became the 46th state to sign onto the PDMP data sharing collective, which is designed to give providers the full prescribing history of patients across state lines.
Less than a week after Congress passed and President Donald Trump signed a two-year budget deal into law, the administration proposed to slash the budget for HHS to $68.4 billion, a $17.9 billion or 21% decrease from the 2017 enacted level.
The document calls for repeal of most of the Affordable Care Act, modifications to the 340B program and new funding to fight the opioid crisis.
In total, the budget proposal for HHS lays out $95.4 billion in discretionary budget authority and $1,120 billion in mandatory funding for programs like Medicare and Medicaid. It also eliminates the Agency for Healthcare Research and Quality.
Newly-minted HHS Secretary Alex Azar said the document backs the administration’s four priorities of “addressing the opioid crisis, bringing down the high price of prescription drugs, increasing the affordability and accessibility of health insurance, and improving Medicare in ways that push our health system toward paying for value rather than volume.”
The budget calls for $5 billion over five years in new resources to fight the opioid epidemic, which claimed the lives of about 64,000 Americans in 2016. Specifically, the budget request asks for $1 billion in funding for 2019, including: $50 million for a national media campaign, $625 million in funding for states, $50 million to provide first responders with overdose-reversal drugs and $100 million for surveillance and opioid abuse prevention like investments in state Prescription Drug Monitoring Programs.
Affordable Care Act and Medicaid
The ACA is back in the administration’s crosshairs: the budget calls for the passage of legislation based on the Graham-Cassidy-Heller-Johnson bill as soon as possible. The crux of the proposal seeks to repeal and replace the ACA by taking federal dollars and block granting the money to states. In addition, it calls for the repeal of the ACA’s Medicaid expansion.
“National healthcare spending trends are unsustainable in the long term and the Budget includes additional proposals to build upon the GCHJ bill to make the system more efficient, including proposals to align the Market Based Health Care Grant Program, Medicaid per capita cap, and block grant growth rates with the Consumer Price Index (CPI-U) and to allow States to share in program savings,” the budget proposal states.
Recent CMS efforts to allow states to implement Medicaid work requirements will continue. “The Budget would give States additional flexibility around benefits and cost-sharing, allow States to consider savings and other assets when determining Medicaid eligibility, and reduce waste by counting lottery winnings as income for Medicaid eligibility,” the proposed budget states.
Notably, in a footnote, the budget proposal calls for mandatory funding for certain ACA stabilization efforts. “In addition to the proposals listed, the Budget requests mandatory appropriations for the Risk Corridors program and for Cost Sharing Reduction payments. These proposals have no deficit effect,” the footnote states.
According to the HHS budget-in-brief, the proposal would fully fund the ACA Risk Corridors Program and exempt the program from sequestration.
340B drug pricing program
The proposed budget also targets 340B hospitals by “rewarding hospitals that provide charity care and reducing payments to hospitals that provide little to no charity care,” and states that “beginning in CY 2019, this proposal allows CMS to apply savings from a reduction in payment to hospitals for drugs purchased under the 340B program in a non-budget neutral manner.”
“Under this proposal, the savings from hospitals that provide uncompensated care equaling at least one percent of their patient care costs are redistributed based on their share of aggregate uncompensated care. Hospitals not meeting that threshold are not eligible for the redistribution, and the savings from their payment reduction will be returned to the Medicare Trust Funds,” the HHS budget-in-brief states.
In addition, the budget proposal pushes for a requirement that hospitals report how they use savings from the 340B program. The recommendations come days after the White House Council of Economic Advisers suggested that more oversight of the 340B program is needed.
“The administration’s interest in examining the integrity of the 340B drug pricing program mirrors our years-long investigation, which will help inform upcoming legislative efforts. Many of the administration’s other proposals to lower health care costs complement our continued commitment to addressing the cost drivers across every facet of our nation’s health care system,” House Energy & Commerce Committee Chair Greg Walden, R-Ore., said in a statement.
The budget makes a few notes regarding value-base payment reform. It says it will eliminate “low-value metrics” in performance-based payment models and change incentives to participate in alternative payment models by altering how the 5% bonus is paid out. Providers would be glad to see more upside to engaging in APMs, as many worry about taking on too much risk as they experiment with different models. As for metrics, it’s hard to argue against eliminating those that don’t accurately convey quality care that is efficient, but there are numerous disagreements about which metrics that might include.
The budget document also suggests HHS could work with the Drug Enforcement Agency to revoke the ability to prescribe certain controlled substances from providers with a pattern of abusive prescribing. It also proposes allowing Medicare to cover methadone treatment.
The budget lays out a plan to “prioritize funding” for programs that focus on meeting the needs of older Americans. It mentions providing assistance with transportation, nutrition and respite care for caregivers.
It also includes a proposal to remove uncompensated care payments from the Inpatient Prospective Payment System and create a new process that makes those payments based on hospitals’ share of charity care and non-Medicare bad debt reported on S-10 worksheets.
The budget claims its Medicare changes would produce more than $490 billion in savings over 10 years and extend solvency of the program by eight years.
The budget proposal also:
- Creates one payment system for all post-acute care systems and provide payments based on episode of care instead of site of care.
- Reduces Medicare reimbursement of bad debt from 65% to 25% over three years.
- Eliminates exemptions for site-neutral payment policy for off-campus hospital outpatient facilities.
- Establishes a prior authorization program for practitioners with high use of radiation therapy, therapy services advanced imaging and anatomic pathology service.
- Changes MIPS to assess clinician performance on the group level only.
The bottom line
The massive budget proposal is likely to largely be dead on arrival in Congress. But that doesn’t mean that it have no impact, one expert says.
“This year’s budget comes on the heels of a major Congressional agreement that explicitly funded many specific healthcare priorities, including $6 billion to fund responses to the opioid crisis and mental healthcare, $4 billion for Veterans Health, and $2 billion for the National Institutes of Health,” said Dan Mendelson, president at Avalere. “This budget discussion is meaningful in implementing these changes, as well as in proposing new policies that could potentially be pursued without Congressional approval.”
Alex Azar, President Donald Trump’s pick to lead HHS, was confirmed by the Senate Wednesday in a bipartisan vote, 55 to 43, with six Democrats and one independent voting for the Republican nominee.
The former Eli Lilly executive has caught some criticism that he is too cozy with the pharmaceutical industry, but has insisted he sees bringing down drug costs as a top priority. He’s also expressed a willingness to consider some mandatory bundle programs.
Azar previously served as general counsel for HHS under former President George W. Bush, and has held other leadership positions at the department.
The next leader of the health department has largely echoed conservative ideas, calling increased generic competition as a way to drive down prices, while remaining opposed to allowing Medicare to negotiate drug prices and to drug importation.
Just one Republican, Sen. Rand Paul of Kentucky, voted against the nomination, presumably for Azar’s unwillingness to consider a plan to import drugs from other countries during Azar’s HELP Committee hearing.
Azar has said the government needs to reverse the incentives for high-list prices for drugs and appears to be open to the idea of mandatory Medicare pilots.
Azar’s willingness to consider mandatory programs is good news for those concerned the private sector needs a push from CMS to fully embrace value-based care. Prior HHS Secretary Tom Price strongly opposed the mandatory nature of the projects.
Backers of value-based reimbursement models were disappointed last year when CMS canceled some mandatory bundled programs and rolled back others. The agency has also signaled a new approach to pilot programs in the Trump administration. CMS did, however, recently move forward with the Bundled Payment for Care Improvement Advanced model, but it is voluntary.
Azar is taking the helm at HHS well into the administration’s efforts to hobble the Affordable Care Act. Republicans in Congress have floundered in their attempts to fully repeal the law, but they did succeed in axing the individual mandate penalties in their tax cut bill late last year.
The executive branch has also taken steps to weaken the law, including stopping cost-sharing reduction payments and slashing advertising for open enrollment.
Like nearly every Republican, Azar has frequently criticized the ACA and would be unlikely to oppose more attempts to repeal or roll it back. He did however tell senators he would implement the law so long as it remains on the books.
The nominee has noted that pharmacy benefit managers already negotiate Medicare Part D prices, and has suggested that the government should explore allowing them to play a similar role in Medicare Part B.
Consumer group Public Citizen argues Azar’s pledge to tackle drug prices is an empty promise.
“There is no reason to expect him to hold prescription corporations accountable, and every reason to anticipate that his tenure will enable Big Pharma to continue and worsen its blatant rip-offs of American consumers and taxpayers,” Peter Maybarduk, director of Public Citizen’s Access to Medicines Program, said in a statement.
Azar is set to replace Price, who resigned after news reports discovered he spent more than $1 million of taxpayer money on private air travel for himself and other HHS staff. Eric Hargan led the department in the interim after being appointed as acting HHS secretary.
HHS on Thursday announced the formation of a Conscience and Religious Freedom Division, to be housed in the Office for Civil Rights.
OCR Director Roger Severino said, “No one should be forced to choose between helping sick people and living by one’s deepest moral or religious convictions, and the new division will help guarantee that victims of unlawful discrimination find justice.”
Reactions were swift with some critics worried the unit will give clinicians cover to refuse to provide abortions, for example, on moral or religious grounds.
The Trump administration posits the move will allow for greater religious freedom but some providers are skeptical and worried the move will block care services to vulnerable populations.
The division will “provide HHS with the focus it needs to more vigorously and effectively enforce existing laws protecting the rights of conscience and religious freedom, the first freedom protected in the Bill of Rights,” the agency announced.
The announcement follows an executive order signed by President Trump last May, dictating the executive branch will “vigorously enforce federal law’s robust protections for religious freedoms.”
The executive order calls on HHS to consider amended regulations to address conscience-based objectives.
The division’s establishment is a reversal of a policy from former President Barack Obama’s administration, which prohibits healthcare workers from refusing to perform “medically necessary” services on transgender individuals. The measure, implementing Section 1557 of the Affordable Care Act, also prohibits refusal to care for those who had or are seeking an abortion.
Section 1557 was challenged in court by the Franciscan Alliance, a religious hospital system. At the end of 2016, the U.S. District Court for the Northern District of Texas issued an opinion in the case, placing an injunction on the enforcement on the regulation implementing Section 1557 regulation’s prohibitions against discrimination on the basis of gender identity and termination of pregnancy on a nationwide basis while the injunction remains in place.
OCR continues to enforce protections against discrimination on the basis of race, color, national origin, age or disability.
The latest move is likely to be challenged in court as well.
American Nurses Association President Pamela Cipriano in response noted nurses have a duty to care but also are justified in deciding to refuse in morally objectionable actions, as long as the decision is consciously-grounded and not stemming from a personal preference or prejudice.
“Nurses who decide not to participate on the grounds of conscientious objection must communicate this decision in a timely and appropriate manner, in advance and in time for alternate arrangements to be made for patient care,” Cipriano wrote. “Nurses should not be discriminated against by employers for exercising a conscience based refusal.”
She added discrimination in healthcare settings “remains a grave and widespread problem for many vulnerable populations and contributes to a wide range of health disparities. All patients deserve universal access to high quality care and we must guard against erosion of any civil rights protections in health care that would lead to denied or delayed care.”
The Trump administration plans to form a group with representatives from CMS, HHS’ Office of Inspector General, HHS’ General Counsel and the Department of Justice to look at the Stark Law and determine ways to potentially remove regulatory barriers.
CMS Administrator Seema Verma said providers are asking for the agency to reduce the burden of the regulations, in particular to allow exceptions to the anti-kickback law for alternative payment models.
She said revamping the regulations could also help quicken the move from fee-for-service to value-based payments, though she acknowledged Congress may need to step in to remove barriers to such care. The CMS chief made the comments on a webcast with officials from the American Hospital Association this week.
“I think that Stark was developed a long time ago … and the payment systems and sort of how we are operating is different, and we have to bring along those regulations and see what we can do,” Verma said. “I’m not sure that this isn’t going to require some congressional intervention as well. Right now we are committed to looking at the issue, responding to the very specific challenges cited by the providers and are working through it.”
The Trump administration is far from the first in Washington to seek to revamp the rules. The Senate passed a bill in July, “Medicare Part B Improvement Act of 2017,” which included changes to the Stark Law.
The House also has a bill that would change the Stark Law. The House Medicare Care Coordination Improvement Act of 2017 would give the HHS Secretary the option to allow exceptions for alternative payment models and allow the HHS Secretary to determine ways in which some compensation arrangements could bypass the law.
Health leaders have been pushing to revise the anti-kickback law for years, especially in light of changes to physician compensation, such as the move to value-based contracts.
Stark Law opponents say the law prohibits doctors from referring Medicare patients to other healthcare entities if they have a financial relationship.
It also creates barriers for providers to move into value-based care systems, by not allowing hospitals to pay providers more compensation if they meet quality measures compared to their peers.
Both the CMS and payers are pushing providers to move into value-based care, which they believe will cut costs and improve outcomes.
The Trump administration touts its regulation-cutting agenda, and with Republicans controlling the White House and both houses of Congress, the chances for changes to the Stark Law may be rising.