The nominee, Alex Azar, opposes the individual mandate and instead wants to lure more people to purchase insurance through improved affordability and choice.


Nov. 29—In his first confirmation hearing, the nominee to lead the U.S Department of Health and Human Services (HHS) identified a renewed push for alternative payment models (APMs) as a key priority.

Alex Azar, who was nominated earlier in November as HHS secretary, testified Wednesday before the Senate Health, Education, Labor and Pensions Committee that a renewed APM push will be among his four key priorities if he is confirmed.

“One of the great legacies of [former HHS Secretary Sylvia] Burwell’s tenure was launching so many of the alternative payment models we have out there, and I would like to keep driving that forward,” Azar said. “For those of us who care so deeply about reducing costs in our healthcare systems, integration and coordination, and just thinking about ways to deliver better for our patients and our beneficiaries, there are so many opportunities for bipartisanship here because we share so much of the same goals on this.”

Azar’s praise for APMs followed comments from Sen. Sheldon Whitehouse (D-R.I.) that underscored recent accomplishments of two Medicare accountable care organizations (ACOs) in his state.

Medicare ACOs—specifically—are important tools for testing innovations that can be copied by private payers, Azar said.

“The importance of such payment models is that Medicare is the only payer with enough concentration of lives to change the system,” Azar said.

The commitment to APMs was a somewhat different approach than that of the previous HHS secretary, Tom Price, MD, who during a confirmation hearing underscored his opposition to mandatory payment models implemented by the Centers for Medicare & Medicaid Services (CMS). For instance, Price said the Comprehensive Care for Joint Replacement model would “potentially” cut Medicare enrollees’ promised benefits. After Price took office, CMS drastically scaled back that model, drawing both support and condemnation from hospitals.

“We must harness the power of Medicare to shift the focus in our healthcare system from paying for procedures in sickness to paying for health and outcomes,” Azar said. 

Azar’s other priorities as secretary would include:

  • Reducing drug prices
  • Increasing health insurance affordability and choices
  • Addressing the opioid epidemic

“Under the status quo, premiums have been skyrocketing year after year and choices have been dwindling,” Azar said. “We must address these challenges for those who have insurance coverage and for those who have been pushed out or left out of the insurance market by the Affordable Care Act [ACA].”

Additionally, Azar said Medicaid could be part of the shift to paying for outcomes “if governors are willing partners.”

“If we can make Medicaid better, it will let us serve more people,” Azar said.

The Individual Mandate

Azar said he opposed the ACA’s insurance coverage mandate, which has required the payment of $3.4 billion in tax penalties by 6.7 million Americans, 95 percent of whom earn $75,000 or less.

Democrats pushed back that the mandate was needed to create a sustainable risk pool for the individual-insurance market. But the ability of 22 million people to avoid the risk pool, either by paying a penalty or through exemptions, demonstrates that the mandate is not working, Azar said.

Sen. Patty Murray (D-Wash.) asked Azar if he thought a bipartisan bill that she cosponsored would be sufficient to stabilize the ACA’s individual market even if the mandate is repealed as part of a Republican tax cut package.

On Wednesday, the nonpartisan Congressional Budget Office (CBO) issued a projection that concluded that Murray’s bill would not mitigate CBO’s earlier projection that eliminating the mandate would lead the number of people with insurance to decrease by 13 million over 10 years. 

Azar described Murray’s bill as “an important stopgap” and said some of the flexibilities in the bill—it would allow states to modify certain ACA insurance rules—would help.

“I don’t believe it is a long-term solution to problems that are inherent in the [ACA], and we still need to work to address getting to affordable insurance for people, choice of insurance, insurance delivering real access to health care for people—so it’s not just a card but actual access to physicians,” Azar said.       

Drug Prices

Azar, who previously served in two senior-level HHS posts, spent the last 10 years as a pharmaceutical industry executive. So his calls for action to reduce drug prices elicited bipartisan skepticism.

“You’ve got some convincing to do to make me believe you’re going to represent the American people and not big pharma,” Sen. Rand Paul (R-Ky.) said.

Azar said his plans to tackle drug prices include efforts to reduce “gaming of patents” by drug companies that file multiple patents to extend a drug’s exclusivity and prevent generic competition. His previous effort in this area, when serving in the administration of President George W. Bush, was credited with saving consumers $10 billion.

Sen. Lamar Alexander (R-Tenn.) said he was optimistic that Azar’s deep knowledge about the ways that drug prices are influenced by numerous industry players would give him an advantage compared with previous HHS secretaries who faced a steep learning curve.

“My commitment is to the American people and not to any company where I have worked in the past,” Azar said.

Other Policies

Azar said he supports several changes to federal policy regarding high-deductible insurance and health savings accounts (HSAs). For instance, he said more preventive services need to be covered pre-deductible by high-deductible health plans. Additionally, Azar urged that the limit on HSA contributions be raised.

Needed improvements to federal rules governing electronic health records (EHRs) include requirements for interoperability in conjunction with steps to reduce the burden of those requirements on physicians, Azar said. He called delaying Stage 3 of EHR meaningful use requirements and reducing the average time that physicians spend on EHRs “sensible approaches.”

Azar also said he would review recent Trump administration cuts to ACA outreach and marketing, although he defended some of those steps. For instance, he said the reduction in the advertising budget for federal ACA marketplaces from $100 million to $10 million brought it more in line with federal outreach for the Medicare Advantage and Part D programs, and noted that private insurers also funded advertising.

“At some point insurers need to do their own darn job,” Azar said.

Azar said he did not know the specific reasons for various outreach cuts by the Trump administration because he hasn’t seen the data on which those decisions were based, but he plans to study the issue and “find the most effective outreach programs.”

Sen. Michael Bennet (D-Colo.) criticized the Trump administration’s reduction in funding for navigators and the end to cost-sharing reduction payments, which reimburse insurers for reducing out-of-pocket costs for qualified enrollees. Azar said he will push to enforce insurance choice and access to care in the ACA marketplaces, where about half of counties have only one insurer.

“We want to improve access to affordable insurance,” Azar replied to Bennett. “We may differ on tactics, but we both want solutions to improve affordability.”

Azar will next face a hearing and vote by the Senate Finance Committee.


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

Publication Date: Wednesday, November 29, 2017