More waivers and some legislative changes to both Medicaid and the individual-insurance markets also have drawn Azar’s support.


Jan. 11—Mandatory Medicare payment pilots could return under the leadership of the nominee to direct the U.S. Department of Health and Human Services, he said this week.

Alex Azar II testified before the Senate Finance Committee this week about his priorities and policy preferences for federal healthcare programs.

In a stark contrast from his predecessor, Tom Price, MD, Azar said he could support the return of mandatory payment models, which are opposed by many hospital leaders and advocates.

Sen. Mark Warner (D-Va.) said Medicare pilots requiring providers to participate are needed “because too often those who are in the voluntary system are the ones who’ve already been able to bring about efficiencies, so we need to force more into the system.”

 Azar responded that “we don’t actually disagree there.”

“I believe we need to be able to test hypotheses,” Azar said. “If we have to test a hypothesis, I want to be a reliable partner, I want to be collaborative in doing this, I want to be transparent and follow appropriate procedures. But if to test a hypothesis around changing our healthcare system, it needs to be mandatory—as opposed to voluntary—to get adequate data, then so be it.”

The comments caught the attention of many working on Medicare payment models.

“It’s significant in the attitude in the way he may be approaching these programs,” said Darcie Hurteau, senior director of informatics for DataGen, a healthcare data analytics and policy firm that advises about 200 providers in various CMS payment models.

The return of mandatory Medicare pilots “is definitely a possibility, whereas before we didn’t think it was,” Hurteau said.

The position of Azar, a former HHS executive under President George W. Bush, would be a shift from current HHS policy. In November, HHS’s Centers for Medicare & Medicaid Services (CMS) canceled mandatory bundled payment programs for cardiac care and surgical hip and femur fracture treatment (collectively known as episode payment models). The agency also canceled the cardiac rehabilitation incentive payment model.

The mandatory models were scheduled to start for providers in certain markets on Jan. 1.

Nearly two years into the Comprehensive Care for Joint Replacement (CJR) model, CMS also switched participation from mandatory to voluntary for hospitals in 33 of the 67 selected geographic areas.

The move away from mandatory bundles was urged by many hospitals and their advocates over concerns that the models left inexperienced or under-resourced providers at a disadvantage, and were too complex.

Top Priorities

Shifting Medicare from paying for procedures to paying for outcomes was one of four primary focus areas that Azar said he plans during his tenure.

The federal government “must harness the power of Medicare to shift the focus in our healthcare system from paying for procedures and sickness to paying for health and outcomes,” Azar said. “We can better channel the power of health information technology, and leverage what is best in our programs and in the private, competitive marketplace to ensure the individual patient is at the center of decision making and his or her needs are being met with greater transparency and accountability.”

His other stated focus areas included addressing high drug prices, increasing the affordability and availability of health care, and fighting the opioid epidemic—all similar goals to those of Price.

One effort that could combine several of Azar’s priorities is a shift toward value-based payment for drugs.

“Value-based contracting or outcome-based contracting—around first generally within the healthcare system, but especially with medicines—can be vitally important,” Azar said. “There are some issues with the approaches and regulations that we have within Medicare that actually get in the way of that.”

Among the barriers are federal rules around government price reporting, he said.

“There is actually fairly broad bipartisan support to address those [rules] to try to open the door to that so we could get real value-based [care], paying for value and outcomes on these medicines,” he said.

However, Azar, who helped launch the Medicare Part D drug benefit and served as a pharmaceutical executive, balked at the suggestion of Democrats that Medicare should negotiate prices directly with drugmakers.

He highlighted the low drug prices that Part D has been able to achieve through negotiations by pharmacy benefit managers “that get the best rates of any commercial payers.”

Such an approach might be beneficial for Part B medications, he said.

“I want to look at anything that helps us with drug pricing,” Azar said. “So, in Part B we should be looking at those approaches.”

Direct federal negotiations would require the creation of a single national formulary for Medicare, which would create “restricted access for all seniors to medicines,” he said. “I don’t believe we want to go there in restricting patient access.”

ACA Policies

Azar supported changes to two central pillars of the Affordable Care Act (ACA): the Medicaid expansion and the individual-insurance market.

Azar was especially critical of the ACA’s individual health insurance markets.

“What we have now is not working for individuals,” Azar said. “It’s not working for the 10 million who are in that market fully. So, for many of those, it could be a false insurance card. It could be insurance but a very high deductible or not having access to providers, so it’s unaffordable use of care. I want to solve the program for them.”

Changes also are needed to attract into the market the 28 million people who have opted not to participate by either applying for waivers or paying the individual-mandate tax penalty.

“And by not being in that market, [they] are actually causing the premiums to go up for the 10 million in it,” he said. “So can we create more choice and make those offerings more attractive to create a better risk pool?”

Azar said he plans to support states’ use of 1332 waivers “to make that health insurance more affordable, make it real insurance, and make it tailored to what they feel they need.”

The waivers allow states to bypass certain ACA requirements governing the individual and small-group markets.

On Medicaid, Azar also promised more waivers and expressed support for legislative changes.

“Right now, the way we run our Medicaid system, for instance, is the matching system, so if the state comes up with more money, things just increase from the federal government,” Azar said. “But it also means in running that program it’s not always their money, so they don’t always exercise the level of creativity or fiscal fraud, waste, and abuse stewardship over it as [they would] if they owned 100 percent of that money.”

He praised Republican legislation that failed to clear Congress in 2017 and would have reduced future growth in Medicaid spending through block grants or per-person caps.

Hospitals and many Democrats have opposed such financing changes for Medicaid.

“My providers have been very clear—it is no innovation, it is simply a budget mechanism to cut Medicaid,” Maria Cantwell (D-Wash.) said to Azar.

Ten states have submitted waivers that critics contend aim to reduce their Medicaid rolls.

“I want to make sure in working with the states, who have the on-the-ground responsibility, that we are being a responsible and responsive partner of theirs in looking at flexibility, trying new things,” Azar said.

Despite those positions, Azar said he was committed to implementing the ACA and wants “to make this program work.”

Other Policies

Azar said he supported the expanded use of telehealth, “especially in rural communities.”

Senators urged him to examine the Connect for Health Act, which would expand telehealth and remote patient-monitoring services under Medicare. The legislation has garnered 19 bipartisan cosponsors in the Senate.

Azar also voiced continued support for Medicare Advantage.

“I want to make sure we are doing everything we can to make sure it is a strong, robust alternative for our seniors there,” he said.

The physician shortage—quantified in a study commissioned by the Association of American Medical Colleges at between 40,800 and 104,900 physicians by 2030—is an important need. However, Azar said he didn’t know of any immediate solutions.

The nominee also voiced support for a faster shift from institutional to home-based care.

Azar said he was surprised such a shift has not come already, and was confused about what has prevented it.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare 

Publication Date: Thursday, January 11, 2018