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Medicare changes fiercely resisted

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The Obama administration is hitting resistance from industry groups as it tries to change Medicare payments before leaving office.  

The administration argues its Medicare proposals will make payments smarter, save money and incentivize quality care. Opposition to the plans, it says, is mainly coming from entrenched interests that are seeking to protect their profits.  

{mosads}But opponents say administration officials are overstepping their authority and rushing to make changes before the clock runs out.

The Centers for Medicare and Medicaid Services (CMS) has put forward several proposals that would change how Medicare pays for care. The plans move away from the old system of paying for individual tests and procedures, instead seeking to reward doctors for delivering healthy outcomes.

The most controversial of these proposals would change how Medicare Part B pays for drugs. While Medicare now pays doctors a percentage of the cost of a drug, the administration wants to shift toward paying a flat fee. 

Industry groups, including the Pharmaceutical Research and Manufacturers of America (PhRMA) and the group representing cancer doctors, have strongly objected, arguing the payment cuts would harm patients’ access to drugs. Members of Congress in both parties have echoed those concerns.  

“The health and well-being of seniors is nothing to be experimented with,” Rep. Joe Pitts (R-Pa.) said at a hearing on the proposal in May.  

Less controversially, the administration is making changes so that hospitals are paid a set amount, known as a bundled payment, for an entire episode of care, like a hip replacement or heart surgery, rather than getting paid individually for each test and procedure. If providers’ costs are below the target and meet quality goals, they get to keep some of the money that is saved. 

The American Hospital Association says the administration is making changes too fast; an expansion of the hip and knee program, for example, was announced just three months after it started. 

“We are nowhere near having any lessons learned, but CMS is already proposing to expand it,” said Joanna Hiatt Kim, a vice president at the American Hospital Association.  

Proponents of the payment changes dismiss such critiques, arguing industries stand to lose money in a more efficient system. 

“No shit, Sherlock,” said Dr. Zeke Emanuel, a former Obama administration health adviser and professor at the University of Pennsylvania, when asked about industry objections. “Who are you taking the money from? You’re taking the money from many of these organizations. They’re going to be resistant. It’s like, duh.” 

President Obama, in a journal article he wrote on ObamaCare in July, expressed his frustration with opposition to the changes, specifically citing the Medicare Part B drug proposal. He wrote that despite being able to work with some health groups, “others, like the pharmaceutical industry, oppose any change to drug pricing, no matter how justifiable and modest, because they believe it threatens their profits.”

Even supporters of the changes acknowledge that there is a sense of urgency to act before Obama leaves office.

“The last few years they’ve been working on them and they’re finally ready for prime-time and there is I think some sense that, you know, we’ve got to push it out now because if we don’t push it out now our work may well go for naught,” Emanuel said.

The drug-pricing proposal has encountered widespread opposition in Congress, including from Democrats.

Every Democrat on the Senate Finance Committee signed a letter to the administration in April expressing reservations about the proposal. They warned that patient access to drugs could be harmed if Medicare payments fall below what it costs to acquire the drug. They called for changes when the rule is finalized, while Republicans have called for the proposal to be scrapped.

Lobbyists expect that the administration will go forward with the proposal, finalizing it in September or October, but make changes to address the issues raised by Democrats. Those changes are expected to include reducing the geographic area that the program affects to exempt rural providers and exempting drugs for which there is no good alternative treatment.

Rep. Larry Bucshon (R-Ind.) has introduced a bill to block the drug-pricing proposal, and lobbyists expect it could move forward in the lame-duck session after the election. 

A Senate Democratic aide said that Democrats are waiting to see what changes the administration makes in the final rule. It is too early to say whether Democrats would support a bill to block the program after the election, the aide said. 

“They kind of want to keep their powder dry,” the aide said.

In an interview, Dr. Patrick Conway, the No. 2 official at CMS, said he is working with Congress on the drug-pricing plan.

“I think we have engaged with members of Congress on the Part B model,” he said. “We’re listening to those members on both sides of the aisle.”

Rep. Lloyd Doggett (D-Texas), one of the few lawmakers to express support for the proposal, said he is disappointed in his Democratic colleagues who have objected.  

“I’ve been disappointed, and there’s no doubt that PhRMA’s influence here in Congress is not limited to the influence it exercises over Republicans,” Doggett said.  

He added that PhRMA has been lobbying lawmakers “vigorously,” both directly and through “every group of individuals with given diseases that they’ve ever contributed to.”

Kelsey Lang, a senior director at PhRMA, countered criticism of her group by noting that opposition to the model is “very broad” and includes provider groups and others as well. 

While controversy has been swirling around some specific proposals, the broader idea of changing the incentives from Medicare payments has bipartisan support. 

The bipartisan “doc fix” bill that Congress passed last year put forward a new system of rewarding doctors for healthy outcomes in patients. CMS has won praise from Republicans for its outreach and openness in implementing that law.

And Dr. Bill Frist, a former Republican Senate majority leader from Tennessee, has praised the administration’s new “bundled payments” and called for more to be implemented. 

“Anytime you are asking people to focus on a broader episode of care, there’s going be a cohort of people that may push back on that,” Conway said. But he said bundled payments have a “long history of success” and expanding them and making participation mandatory is “a very natural next stage.”

He said that payment reforms like these are “a bipartisan issue, and we need to keep it that way.” 

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