Approaches that could involve cutting provider rates were consistently among the most popular actions to reduce costs or fund reforms among respondents to a national poll.


July 25—The administrator for the Centers for Medicare & Medicaid Services (CMS) said she is likely to reject an expected single-payer proposal from California. Her position echoed the sentiments of a national poll released this week.

“I don’t think a single-payer system is going to work—number one,” Seema Verma, administrator for CMS, said in an interview July 25 at the Commonwealth Club of California. “A lot of the analysis has shown that it is unaffordable and it would put many people in the situation where the government is making decisions about their health care.”

Her comments came in response to a question about an expected request from California for a Medicaid and Medicare waiver to use federal funding as part of a single-payer plan for the state. Such a proposal was blocked by state legislative leaders in 2017. However, the two candidates—both Democrats—in the ongoing California gubernatorial contest back single-payer proposals.

Verma was asked why she wouldn’t support single-payer waivers for California given that she has emphasized the need for flexibility with other state waiver requests.

“We’ve been consistent that we support flexibility,” Verma said. “But when we look at proposals, we evaluate them to see, ‘Are they fiscally sustainable?’ Are they fiscally sustainable for the federal government, as well as the states? We’re looking to see whether the proposal falls within the confines of the law. But it doesn’t make sense for us to waste time on something that’s not going to work.”

The California single-payer legislation did not identify a source of funding, and it is estimated to cost $400 billion annually.

Verma’s lack of support for the California single-payer initiative echoed results from a national poll released this week by the Bipartisan Policy Center (BPC).

Only 17 percent of the 2,200 respondents in the nationally representative poll supported moving to a Medicare-like single-payer system, including only a quarter of Democrats. That compared to 29 percent of all respondents who backed the most popular healthcare policy approach: reforming the Affordable Care Act (ACA).

“I think in some ways the public would be relieved if someone came in and just said ‘Medicare-for-all’ because it resonates,” said Jim Capretta, a fellow at the right-leaning American Enterprise Institute.

However, the survey indicated the public doesn’t want to pay the taxes that a single-payer program would require, he said.

Provider Impacts

Respondents also opposed most funding mechanisms for single-payer, with the exception of support by 66 percent for government price limits on providers and drugmakers and by 59 percent for a “substantial increase in taxes” on those earning at least $250,000.

Approaches that could involve cutting provider rates consistently ranked among the most popular actions in the poll. For instance, 25 percent supported increasing the government’s role in “establishing payment systems for healthcare providers.” Additionally, 47 percent supported reliance on competition among providers to control costs, rather than doing so through government regulation.

Respondents also supported giving patients more choice to shop among providers based on price and quality. For instance, a plurality of respondents (48 percent) preferred a healthcare system that operates more like other markets, with patients choosing how much they pay based on the provider.

Similarly, 54 percent supported giving patients more responsibility to choose among providers, with patients responsible for the additional cost of more expensive providers.

The emphasis on competition and choice was echoed in the policy priorities that Verma discussed in California. She said coming incentives will encourage Medicare beneficiaries to shop among providers, with those that have the lowest prices and deliver better-coordinated care gaining a competitive advantage.

“We must cater to the needs of the patients, not the providers,” Verma said. “Patients are the most valuable force in our healthcare system to create value.”

Verma said CMS plans to use “every lever” the agency has to drive a system where providers compete for patients.

To achieve that system, Verma said more transparency in pricing and clinical outcomes is needed to allow patients to shop. Toward that end, she cited a recent CMS proposal for hospitals to post online their full chargemaster price list, and she said additional transparency requirements are coming.

Another way to help patients “seek providers that are best serving their need” is by allowing patients to access and share their electronic health record (EHR), which providers are “holding hostage.” CMS has suggested requiring providers to share all patient EHRs as a condition of participation in Medicare. Similarly, CMS has “put Medicare Advantage [MA] plans on notice that they will need to give patients access to their data,” Verma said.

President Donald Trump “believes competition is the key ingredient to drive down healthcare spending,” Verma said.

She cited MA plans as the best example of healthcare entities that drive value. The plans are provided a fixed amount to care for each enrollee. They must provide quality data to help patients select among plans, and they compete with each other through variations in premiums, provider networks, and benefit structures.

Given such market mechanisms, Verma said there was little surprise that MA enrollment has risen to 30 percent of all Medicare beneficiaries.

To further encourage the MA market, Verma said the administration has offered more flexibility for plans to offer more choices, eliminated “burdensome reporting requirements,” and allowed plans to expand their offerings. In 2019, plans can start to cover more supplemental benefits, such as home modifications meant to keep enrollees out of institutional care settings.

In contrast, the rest of the Medicare program encourages volume and thwarts competition, Verma said.

New Value Focus

Verma does not intend to rely on patients to drive value among healthcare providers. She plans to double down on value-based payment models—with some important departures from the past.

Verma identified three shortfalls with the Obama administration’s approach to value-based care  models.

First, they generally overlooked the patient.

“All of the incentives are for the providers, and we really want to empower the patients so that they can be a part of this as well,” Verma said.

Second, a lot of the payment models were set up “in a way that encourages consolidation in the marketplace, and that actually is reducing competition.”

Third, they did not do enough to make providers responsible for their budgets.

“What we see in our results is that when providers are responsible for managing the entire budget, we get better results,” Verma said.

Specifically, she was critical of one-sided risk models, in which provider earn bonuses for obtaining savings but face no penalties for failing to do so.

“After examining those programs we think those are not the most effective way, and we need to think about models that are going to encourage the provider to take responsibility for the budget,” Verma said.

Only 11 percent of Medicare providers are participating in value-based payment arrangements, she said. To increase that, she plans to waive more program integrity rules and offer new models for primary care physicians.

Her plans come as physician advocates have voiced increasing concerns that a growing obstacle to participation in advanced alternative payment models is the lack of new physician-led models.

“We want to focus on upstream providers—not hospitals—to prevent downstream costs,” Verma said.


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

Publication Date: Thursday, July 26, 2018