HHS to pursue Medicare payment reforms that past Republicans spurned

By | November 8, 2018

The Trump administration will pursue more experiments to reshape how it pays for healthcare services through Medicare, even though Republicans in Congress pushed back on making similar experiments mandatory during the Obama era.

Health and Human Services Secretary Alex Azar said during a speech in Washington Thursday that the department is going to expand some of the experiments that tie Medicare reimbursements to doctors to the value of the care they provide rather than a general fee for services.

“Imagine a system where physicians and other providers only had to worry about that outcome, rather than worrying about their staffing ratios and the individual reimbursements for every procedure they do and every drug they prescribe,” Azar said.

But he added that we need “results, American patients need change, and when we need mandatory models to deliver it, mandatory models are going to see a comeback,” Azar said.

The statement is the latest sharp break from GOP orthodoxy for HHS. The GOP railed against the Obama administration for making similar experiments mandatory.

Azar’s predecessor, former House lawmaker Tom Price, was also an opponent of mandatory models. Price resigned last year after a scandal erupted over his rampant use of private jets.

Currently, Medicare works by giving a doctor or hospital a flat fee for a service provided. But in recent years the government has tried to shift payments to a “value-based” system that provides reimbursements to healthcare providers based on the health outcome of the patient.

For instance, Medicare is currently doing an experiment that bundles together payments for joint replacements. The payment includes a single price for all related care for a joint replacement, including the anesthesia, the procedure and any post-surgical care.

The model is meant to incentivize hospitals and doctors to care about every aspect of care, including what happens after a patient is discharged.

“It’s a pretty simple measure,” Azar said. “You ought to get paid more if you get [the patient] back on his feet. That’s what value-based care means to me, what it means to a patient.”

Last year, the administration decided to not conduct certain experiments on cardiac healthcare, but Azar has changed his mind.

“We intend to revisit some of the episodic cardiac models that we pulled back, and are actively exploring new and improved episode-based models in other areas, including radiation oncology,” Azar said.

This is Azar’s latest break with the GOP’s past positions on healthcare. Republicans were reticent to support his proposal to tie Medicare payments for certain drugs to the price paid overseas.

Republicans traditionally favor improving market forces to lower prices rather than having the government set a price.