Health Policy Report (10/7)

President Trump Announces Executive Order to Modernize Medicare

Last Thursday, President Trump issued an Executive Order directing the Department of Health and Human Services (HHS) to advance a series of changes to protect and strengthen the Medicare program. These changes focus on providing more health plan options for Medicare beneficiaries, an opportunity for enhanced benefits, and an opportunity for beneficiaries to share more directly in Medicare program savings. During his announcement at a Florida retirement community, President Trump spoke at length about his administration’s health care efforts and goals for making “Medicare even better.” HHS Secretary Alex Azar noted that the executive order “reflects importance on protecting what works in our system and fixing what is broken,” and will enable providers to practice “at the top of their licensure.”

The administration positioned the new executive order as a contrast to single-payer proposals like “Medicare for All,” and is using it to bolster new HHS efforts as well as initiatives already underway. The order will seek to strengthen private plans under the MA system as a means to appeal to the major senior voting bloc during the 2020 presidential campaign. Domestic Policy Council Director Joe Grogan noted that, “while the Democrats are focused on Medicare for All, which will ultimately deliver Medicare for none, the president is focused on protecting Medicare for our nation’s seniors.”

The order indicated the administration will likely focus on improving the market-based approaches in the current system and directs HHS to issue a series of regulatory reforms and policy updates within the next six months. HHS already has work underway for several of the required regulatory changes, including patient access to their health care data. The Medicare Advantage and Part D Advance Notice and Call Letter for Calendar Year 2021, usually released in January, could serve as the vehicle to advance several of the Medicare Advantage-focused directives.

Trump Previews Health Care Platform in Executive Order Speech

During a speech to announce his newest Executive Order, President Trump offered a glimpse of his health care platform going into the 2020 Presidential election. The president used the opportunity to criticize Democratic proposals for reform and reaffirm his commitment to tackling issues like prescription drug prices and health care affordability. He stated that health proposals from Democratic candidates would “put everyone into a single socialist government-run program that would end private insurance” and “reduce Americans’ household income by $17,000 a year,” then declared Republicans were committed to protecting individuals with preexisting conditions. The president also challenged Congress to pass legislation aimed at curbing surprise medical bills and lauded improvements made to the veterans’ health system.

President Trump also used the speech as an opportunity to criticize the pharmaceutical industry and went as far to imply drug companies could be behind the “hoax” to impeach him. He noted that the administration was “taking on the pharmaceutical companies” and said he wouldn’t be surprised “if the hoax (impeachment inquiry) didn’t come a little bit from some of the people that we are taking on.” President Trump also repeatedly promised to allow states to import drugs from Canada, going so far as to stop his speech and ask HHS Secretary Alex Azar “when are we going to be able to do that?”

White House: Key Economic Indicator Shows Decreasing Drug Costs

The White House Council of Economic Advisers (CEA) released a paper last week analyzing the different measures of prescription drug price changes. After discussing the strengths and weakness of various means of measuring drug cost, the paper concludes that the Bureau of Labor Statistics’ (BLS) CPI Prescription Drug Index (CPI-Rx) is the best available summary measure of the price changes of prescription drugs. According to the CEA, the CPI-Rx shows that drug prices are increasing more slowly than general price inflation. The CEA writes that as of August 2019, the CPI-Rx declined by 0.7 percent over the previous 12 months.

In recent months, the Administration has continued to highlight the decreasing CPI-Rx as evidence that its drug pricing policies are having a significant impact for consumers. The CEA, however, has come under fire for using a formula that measures the pricing of existing products and generic drug entrants, but does not reflect newer drug entrants with relatively higher price points. The report seeks to refute such criticisms and reinforce the impact of the Trump Administration’s policies, however. The CEA makes clear that it will continue to utilize the CPI-Rx measure in its ongoing policy development efforts. Heading into the election year, the Administration also will amplify the CPI-Rx data to demonstrate that its efforts are having an impact on the affordability of medications for consumers.

According to the CEA report, the CPI-Rx has the following three major strengths: (1) it provides a summary measure of how prices are changing in a market with a large number of prescription drugs; (2) it accounts for the fact that lower-cost generic versions of many prescription drugs are widely available and purchased; and (3) it uses transaction prices, which the report states reflect any negotiated price discounts. The CEA writes that the large increase in drug approvals will likely cause an increase in the magnitude of the new goods bias in the CPI-Rx. The Council also identifies two limitations of the CPI-Rx. First, CEA cites sampling and measurement challenges that could cause the sample of items to not be representative of the average household’s purchases. The second limitations exists because the CPI differs from a true cost-of-living index due to variety of complex issues.  

Ways & Means Chair Outlines New Surprise Billing Proposal

A new proposal on surprise billing from House Ways & Means Committee Chairman Richard Neal (D-MA) would cede significant authority to three federal agencies to set out-of-network payment rates, as lawmakers remain stuck at a crossroads over their respective arbitration and “benchmark” proposals. In a letter to Committee Democrats, the Chairman outlined a rulemaking process that would require the Department of Health and Human Services (HHS), the Department of Labor, the Department of Treasury, and key stakeholders to form a committee responsible for identifying payment rate standards on surprise bills.

The proposal laid out by Chairman Neal is a reflection of how difficult it will be for lawmakers to strike a middle ground that will appease both providers and insurers. On one hand, by punting many of the details to the administration, the plan presents a realistic option for Congress to claim a “win” on surprise billing without drawing the ire of either provider groups or insurers. However, the House proposal marks a third way to resolve this issue and could further complicate tenuous negotiations that HELP Chairman Lamar Alexander (R-TN) hopes will culminate in more robust legislative action this year. In addition to setting payment rate standards, the proposed tri-agency committee would determine whether to allow an option for arbitration over payment disputes. The committee would relay its recommendations to the secretaries of the agencies, who would use the recommends to develop and propose a rule for rate standards for surprise bills. Other stakeholders would have the opportunity to provide their input during the public comment period following the release of a proposed rule.

With respect to timing, Chairman Neal expressed his desire to come to a resolution on surprise billing by the end of the year, saying in the letter that committee staff will work over the two-week recess to develop legislative language that “addresses [their] initial goals for stakeholders to work together to find a solution that protects patients.” He added that the Committee expects to consider the proposal this month.

CMS Announces Wellness Program Opportunity for State Exchanges

Last Monday, the Centers for Medicare and Medicaid Services (CMS) announced a new opportunity for states to participate in a wellness pilot program for their individual health insurance markets. The demonstration program is intended to provide states and insurers with flexibility to develop health-contingent wellness programs. In a press release, CMS Administrator Seema Verma stated the program will allow states to innovate in their individual markets and “empower Americans to make the best healthcare decisions for themselves and their families.”

The CMS bulletin outlines the participation requirements, the evaluation criteria for the applications, and the potential for expansion of the demonstration project. According to the guidance there are two approaches states can use to implement health-contingent wellness programs. Under the first option, states may implement a state-designed wellness program (standard demonstration project) and would set the terms and rewards of the wellness program(s). Alternatively, a state may allow issuers to design wellness programs (issuer-based demonstration project). Under this approach, states would provide HHS the parameters the state will use to evaluate insurers’ health-contingent wellness programs. According to the CMS bulletin, HHS will begin accepting applications for wellness projects on September 30, 2019. HHS plans to publish a list of states with approved wellness programs, upon approval. HHS, in consultation with the Department of Labor and the Treasury, will evaluate the programs and the Departments may expand the wellness program if it is found to be effective.

While wellness programs have been greeted as an incentive structure for individuals to take ownership of their own health, researchers have questioned the benefits stemming from their implementation. For example, one recent study headed by a member of the Harvard Medical School faculty found that wellness programs had no impact on costs or outcomes for the population studied. Additionally, some experts on health insurance have commented that implementing wellness programs could be a back door to rate discrimination against individuals with comparatively poor health.

Trump to Nominate Dr. Stephen Hahn as FDA Commissioner

According to administration officials familiar with the selection process, President Trump is set to nominate Dr. Stephen Hahn to lead the Food and Drug Administration pending completion of the vetting process. Dr. Hahn is an oncologist and currently serves as the Chief Medical Executive at MD Anderson Cancer Center in Houston. The president interviewed Dr. Hahn for the position a month ago, and administration officials are reportedly in the process of completing the paperwork and final background checks. The administration is required by law to formally nominate an FDA Commissioner by November 1. The move to nominate Dr. Hahn goes against the recommendations of four former FDA Commissioners and various advocacy organizations to nominate Dr. Ned Sharpless, who has been serving as acting Commissioner since April when former Commissioner Scott Gottlieb departed the position.