What Should Payers Do to Prepare for 2018, Cover Story Part 2

For Part 1 of this story, click here. 

NEW HHS LEADERSHIP

Most agree that the departure of former HHS secretary Tom Price, MD, and the vacancy left since his exit, has had a minimal impact one way or the other. Reactions to Dr Price’s potential replacement are mixed. Trump nominee Alex Azar, JD, is a former pharmaceutical executive who says he wants to lower drug prices, a message that resonates with many. Mr Smith called him “clearly qualified,” citing his experience running Eli Lilly and his stint at HHS under George W Bush. He has “a ‘real-world’ understanding of drug pricing, and an appreciation for the nontransparent system of drug pricing that we have in the United States,” Mr Smith added.

However, Dr Sinha advised reading between the lines.

“He says he wants to lower the prices consumers pay for drugs, but he is not likely to limit the prices that drug companies set,” he said.

Some believe such an approach still hits consumer pocketbooks as payers pass along price increases in the form of higher insurance premiums. He added that Mr Azar oversaw “drastic price increases” on certain drugs while at Lilly.

“Stabilizing the exchanges is simply not a component of this Administration’s agenda, nor will it be a priority for the next HHS secretary,” Dr Sinha said.

Mr Marcus agreed, but noted that the motive is in line with what Republicans have been planning for years.

“Trump and the next HHS secretary will continue to chip away at the ACA’s requirements in an effort to give states greater flexibility,” he said.

“If Mr Azar can convince the administration to resume the health care subsidies, it would help lower costs in the public exchanges,” added Mr Smith.

Dr Vogenberg said he does not see that happening. “The exchanges are not a primary interest [of the Trump administration], so stability is not a front-line issue now. Introducing free-market commercial dynamics into public programs is a goal”

Mr Smith said that if Mr Azar does become secretary of the HHS, he should limit the ability of hedge fund managers to manipulate orphan drug prices, curtail patent abuses, and rationalize the drug approval process. This would “relieve some of the pricing pressures felt by the industry, while not damaging incentives [built into the] drug discovery process.”

What About Value-Based Care?

Speaking of front-line issues, where does value-based care stand? A year ago, Mike Leavitt, who served as HHS secretary under George W Bush, told us that in the midst of many questions, migration away from fee-for-service medicine remained a certainty. Has that changed? Dr Vogenberg does not think so.

“Value-based care and all its iterations are a hotter issue than ever,” he said. “The bigger question is defining value and who benefits from that approach along with its impact on total costs of care or insurance premiums.” 

Mr Marcus said that value-based care has momentum that will continue “despite the lack of legislative and regulatory developments with respect to health care reform.”

Meanwhile, Dr Spivack reminded us that while the Trump administration holds some sway over value-based care and bundled payments, “this has been in motion before Trump and will continue to evolve, although perhaps with less of a regulatory bent.”

For example, the CMS Innovation Center’s impact may be curtailed under Republican leadership. “Still, given the increasing recognition of the unreasonable high costs of care and a need to alter the delivery system [and] ‘demand’ side of care, there will likely be continued movement to ensure that targeted outcomes are appropriately designed, measured, and reflected in pricing decisions,” Dr Spivack added.

Mr Smith pointed out that Dr Price was against bundled payments when he began steering the current course for the HHS.

“While his tenure was short, he set a tone that moved CMS away from initiatives [that focused on] value-based care,” Mr Smith explained. In late November, CMS eliminated two bundled payment models, and curtailed a third. While this is not likely to significantly slow down the move to value-based care, it shows that the administration appears to believe that there are too many pilot programs in the offing—and that it may be time slow down.

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WILL THE ACA EVER BE REPEALED?

What else should payers and other stakeholder expect out of Washington in the coming year? And will Republicans ever achieve their goal of getting rid of the ACA?

Mr Marcus said he wants what many centrists in both parties appear to want: improvements to the ACA, a law that is now seemingly ingrained into US society’s fabric, and one that lawmakers’ constituents have come to rely on.

“Pushing for legislation to improve the current health care system would be a good first step,” he said. “Once that has been completed, perhaps comprehensive health care reform can be considered.”

Dr Sinha agreed. “We need to be discussing how to improve the American health care system in a truly bipartisan manner, focusing on quality, access, and affordability.”

But in his next breath he conceded that Washington is too polarized at the moment to get those changes made. Bipartisan bills, such as the one introduced in October that would fund ACA subsidies, appear to go nowhere and die. “The inability to reauthorize CHIP [Children’s Health Insurance Program], a program that has significant bipartisan support, is instructive.”

Dr Spivack concurred, noting that the “lack of bipartisan potential [means that] there is little chance for meaningful reform over the short term.”

Added Mr Marcus: “The fact is that centrist Republicans in Congress have very little influence compared to conservatives who want large-scale changes.”

Mr Smith explained that he “would like to see exposure of PBM [pharmacy benefit manager] contracting and pricing policies. Medicare Part D members should have access to close to net prices when obtaining their chronic use prescriptions.” He added that the so-called ‘donut hole’—which leaves many Medicare beneficiaries on the hook for medication expenses after reaching a coverage limit and before hitting a yearly cap—“should be eliminated as soon as possible.”

Meanwhile, Dr Vogenberg pointed out that partisanship has not led to total paralysis. “By default, and through nonlegislative action, more has been done quicker [bypassing] Congress.”

Still, it is reasonable to wonder what might have been accomplished through bipartisanship—and the kind of openness and transparency that has all but disappeared from our nation’s capital. While some fault Republicans for the dysfunction, Ms Andel said there is plenty of blame to go around. “Both parties have been promising voters [the] unachievable: as much health care as they want, whenever they want it, for free. That is impossible, but no one seems to have the guts to force the hard conversations.”

She goes back to 2009 when the ACA was drafted, noting that Democrats had a chance “to open a dialogue with the American people and explain, ‘If you want community rating, guaranteed issue, and a broad benefit package, that is going to be expensive.’” But no one had that value conversation, and the result was consumer sticker shock, explained Ms Andel. As she sees it, marketplace plan premiums are similar to the premiums that large employers negotiate on behalf of their employees. The difference is that employer plans are less expensive for covered individuals because employers pay part of the premium. All else is pretty much equal. “But the American people were not prepared for how much it costs to have access to those types of benefits” without employer subsidies.

Ms Andel’s criticism crosses party lines. “The Republicans have compounded the problem by saying that we can keep [the elements that] everyone likes and [do away with what] everyone hates,” she said. “That’s like saying you can lose weight, but you don’t want to diet or exercise.”

Going forward, Ms Andel said that payers should expect to see proposals that (1) continue Medicare’s migration toward the look of a commercial health benefit and (2) attempt to inject as much flexibility as possible into the marketplaces. This will occur, she explained, either through delegating power to the states, or through use of the State Innovation Waiver provision.

How Should Payers Prepare?

What should payers be doing to prepare for year 2 of the Trump Administration?

Dr Vogenberg said he is not sure there is much insurers can do. “The marketplace is at a standstill. While there is a lot of trial program activity along with merger or acquisition interest, there will likely be no dramatic changes by payers or purchasers in the commercial market for patients or purchasers.”

For that reason, Dr Spivack sees opportunity in the Medicare Advantage channel, which has grown significantly and will continue to present opportunity. “Payers [still] need to figure out how to utilize their resources in more effective and coordinated ways, and to continue to understand how to do more with less.” He suggested that insurers develop “whole person” coordinated approaches to care, increase enabling technology, and foster evidence-based approaches to behavior change.

In the end, payers must wait for Washington to act before figuring out what else to do next.

The Administration is lacking a trusted leader in the health care area,” noted Mr Smith. “Until one comes along, there will be few positives.” 

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