It doesn?t matter what HHS Secretary (nominee) does once confirmed. Or does it?

Thursday, February 2, 2017 | Larry Sobal

There is a lot of speculation about what Dr. Tom Price, President Trump’s pick to serve as Health and Human Services (HHS) secretary, will do once he is confirmed (assuming that happens). As I recently blogged, many of the recent CMS programs, such as the Episode Payment Models (aka bundled payments) for AMI, CABG and SHFFT are policy decisions, which means he could undo them on his first day in office.

The uncertainty can be maddening for hospitals and physicians, since many of these recent CMS policy decisions have already started, or are starting in 2017, and there are risks to assuming they will disappear. Many of the hospital and physician leaders I talk to describe it as a “damned if I do, damned if I don’t” situation.

Aside from my recent advice to fix the problems you already know you have, I think the decision on what to do is clear, particularly when it comes to Episodic Payment Models (EPM). It’s hard to imagine they are going away. Consider the image below. This shows all the locations where Medicare, Medicaid, Commercial and Employer bundled payments are occurring.

Whether or not Dr. Price stops the current EPM program, or makes it voluntary, the fact is there is a rapidly growing appetite for bundled payments. Considering that there are now over 900 ACOs, and that some major employers have embraced bundled payments through large direct purchasing contracts, and that bundled payments have been tested in one form or another for the past 20 years, it’s hard to see how further expansion of bundled payments won’t occur.

And let’s not forget the Congressional Budget Act. The Congressional Budget Office (CBO) has estimated the 10-year savings associated with CMS bundled payments from 2014 - 2023 to be $47 billion. That means that Dr. Price would have to propose other plans that would generate similar savings. I’m not sure what else there is, other than some other form of Alternative Payment Model, that would generate those numbers.

Hence, these facts make a strong argument for not worrying about what Dr. Price will do as HHS Secretary. They suggest you should keep preparing for a future where bundled payments and other forms of alternative payment models will take off and grow. So if you don’t have your quality and cost act together, and are not currently taking steps to learn how to manage episodes of care, get prepared to be left behind.

This is not to say that the HHS Secretary is an irrelevant position—far from it. Let’s start with what role he will play in regards to current efforts to repeal and replace the Affordable Care Act (ACA). Note that if he is confirmed at HHS, repealing the ACA is something he can’t do alone; it’s a law, and undoing it requires an act of Congress. On the other hand, it’s reasonable to expect that he will be (and likely already is) weighing in heavily on the replacement strategy being drafted. After all, he has been a fierce opponent to the ACA and has previously introduced his own alternative, the Empowering Patients First Act that was the basis for a subsequent health care proposal unveiled by House Speaker Paul Ryan (with Price’s endorsement).  

As HHS Secretary, Price would lead a government agency with a $1 trillion budget, bear responsibility for Medicare and Medicaid, and oversee the Food and Drug Administration, the Centers for Disease Control and Prevention and the National Institutes of Health. The HHS Secretary is one of the biggest jobs in the federal administration. His opinions on all health care related regulations would carry significant weight. As Senator Bob Corker said, “There’s so much [Price] can do with a pen. You don’t have to pass legislation. He can modify how we look at the 10 essential benefits in the ACA. He can give the states more flexibility on the Medicaid program. There’s a lot that he can do to really ease the way for significant health reform.” 

Whether or not Dr. Price stops the current EPM program, or makes it voluntary, the fact is there is a rapidly growing appetite for bundled payments.

Ironically, the ACA, as currently written, would afford Dr. Price significant leverage to make changes to Medicare through the Center for Medicare and Medicaid Innovation (CMMI), which supports pilot programs in Medicaid, Medicare and CHIP to test new payment and delivery models. As HHS Secretary, Dr. Price could use CMMI to experiment with conservative reforms, including possibly some form of premium support. In reality, he would have quite a bit of authority under CMMI to change the way in which services are paid for.

Some have argued that given the limited reach of the CMMI pilot programs, any changes won’t have a broad impact on U.S. health care. But under the ACA, CMMI is also authorized to scale up the reimbursement pilots if they prove successful, meaning any new models could eventually serve as the foundation for much larger health care reforms down the road. Interestingly, Dr. Price has been a vocal critic of CMMI “over stepping their regulatory authority,” so it would be interesting if he did more of the same.

For those reasons it can be argued that it matters quite a bit what Dr. Price, or an alternative HHS Secretary, would do once confirmed. Stay tuned.

 

Illustration: Lee Sauer

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Larry Sobal is Executive Vice President and a Senior Consultant at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and health insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems. His weekly blog post comes out on Thursdays and can be accessed at www.medaxiom.com.

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