Picking up the pace on Rx pricing reform
Re-establishing Congress’s proper role in Medicare decision-making
When I was named director of the Congressional Budget Office (CBO), I tried to explain my new job to my parents in South Dakota. Proponents of legislation, I told them, want it to appear that their bills will save the world and cost nothing. Opponents of that same legislation want to make the case that it will cost a fortune and leave the world no better off. CBO's role is to evaluate these contrasting assertions and make an informed estimate on what the final costs and effects will be.
In so doing advocates of at least one, and usually both sides of the debate are less than satisfied. Historically the dissatisfaction is particularly acute with legislation concerning health care. CBO must estimate the outlook of our complex system of health care over at least the next 10 years, both with and without proposed legislation. The Affordable Care Act (ACA) and CBO's scoring of certain provisions has produced a more intense debate and, in some cases shifted significant powers from the legislative to the executive branch.
For example, an important, and somewhat controversial provision of the ACA involved the creation of the Center for Medicare and Medicaid Innovation (CMMI), an entity charged with developing and testing new health care delivery and payment models. CMMI made headlines in 2015 when it launched a "demonstration project," ultimately withdrawn, that would have reduced Medicare payments for physician-administered cancer drugs throughout most of the country.
Congress's ability to intervene in an episode like this one became limited when CBO initially scored the ACA and assumed - without having any specific regulation, policy or project to analyze - that CMMI would deploy Medicare reforms that would successfully reduce federal spending. With that presumption as a baseline, any congressional action to repeal or limit CMMI actions would be scored as lost savings and would require lawmakers to either increase federal revenues or find alternative budget cuts to compensate.
With CMMI, in the latter years of the Obama administration, taking an expansive view of its authority and adopting large-scale "demonstrations" that had the impact of wholesale policy changes, and Congress hindered by CBO scoring, there was a significant shift in Medicare decision-making authority from the legislative branch to the executive.
Now it is incumbent upon the current administration to use the tools, and there are several of them, at its disposal to place reasonable limits on the way an executive branch agency like CMMI should operate and the way such activities are analyzed by CBO.
For example, the incoming Secretary of Health and Human Services (HHS) could incorporate safeguards in the text of proposed regulations, creating a new Medicare demonstration project, indicating the administration's intent and direction for the experimentation. HHS has, for instance, already delayed implementation of a CMMI proposal that would test a new bundled payment approach for cardiac care. The project could be changed by including text clarifying the scope and breadth of CMMI's authority for all current and future demonstrations.
Another less formal approach employed by HHS is the issuance of policy statements that are directives that guide the agency. The list of issues subject to policy statements is very broad, and could clearly include scope and ground rules for CMMI demonstrations. CBO will likewise be guided by such publicly-issued policy.
At a minimum, the secretary could make a public statement that clarifies the scope of CMMI's demonstration authority. Such a public statement would provide strong reason for CBO to revise its CMMI-related baseline and eliminate the scoring of hypothetical savings from these pilot projects.
Suffice to say, there are means and there is a necessity to erect guardrails to prevent expansive interpretation and therefore alter CBO assumptions so that Congress can fulfill its constitutional responsibilities. Clearly, CMMI has an important role to play in testing innovative models in health care delivery that can improve care quality without raising costs, but it is also Congress's role to evaluate CMMI's work and act on Medicare policy accordingly. Not only would this help build the trust and confidence needed to move the Medicare program forward, but it would also restore the proper separation of powers.
Dan Crippen Ph.D. is a former director of the Congressional Budget Office and was previously executive director of the National Governors Association.