HHS Nominee Alex Azar Signals Openness to Mandatory Payment Models

Jan. 9, 2018
During a Senate Finance Committee hearing, HHS nominee Alex Azar made comments indicating his openness to mandatory bundled payment models, which would represent, if Azar is confirmed, a potential shift in the Trump Administration’s policy.

During a Senate Finance Committee hearing on his nomination, Alex Azar, President Donald Trump’s nominee for U.S. Department of Health and Human Services (HHS) Secretary, made comments indicating his openness to mandatory bundled payment models, which would represent, if Azar is confirmed, a potential shift in the Trump Administration’s policy.

Azar is a former pharmaceutical industry executive at Eli Lilly and Company, where he oversaw the company's U.S. operations beginning in 2012 until he left the company in January of this year. Azar also has experience working in the federal government. He served as HHS General Counsel in the George W. Bush administration, and following Bush’s first term, Azar was asked to stay at HHS, serving as Deputy Secretary of HHS, the number two official and chief operating officer of the department. He worked in that role until February 2007.

If he’s confirmed, Azar will replace Tom Price, M.D., who resigned on Sept. 29 following an investigation about his use of private jets for official business. Confirmed as HHS Secretary in February, Price only served that role for about seven months.

During the Senate Finance committee nomination hearing Tuesday morning, Sen. Mark Warner (D-Virginia) brought up the Center for Medicare & Medicaid Innovation (CMMI) and its role in driving healthcare transformation. Warner commented that he believes some payment models piloted through CMMI should be mandatory.

“One of the things that came out of the Affordable Care Act was CMMI. I hope that while it has not been as productive as some would like to have seen it, I think it is a tool that is useful. I would like to hear your comments on what you see as the role of CMMI going forward," Warner said.

Azar replied, “I completely agree with you and believe CMMI is going to be one of the very important ways we have to drive this type of transformation, our healthcare system through Medicare. We need to ideate, to pilot, to test and then generalize.”

Warner then said, “I would hope that we would realize that some of those pilots may, and I know that we might have a disagreement on this one, might include mandatory pilots because too often those who are in the voluntary system are the ones who have already been able to bring about efficiencies and we need to force more into the system.”

Azar then responded, “Senator, we actually don't disagree there. I believe that we need to be able to test hypotheses. And if we need to test a hypothesis, I want to be a reliable partner, I want to be collaborative in doing this, I want to be transparent and follow appropriate procedures, but, if to test a hypothesis there around changing our healthcare system, if it needs to be mandatory as opposed to voluntary to get adequate data, then so be it.”

If he is confirmed, Azar’s views on mandatory bundled payment models signals a different take from the Trump Administration’s policy, to date, given that the Centers for Medicare & Medicaid Services (CMS) back in November cancelled three mandatory bundled payment models and rolled back a fourth.

In late November, CMS finalized a proposed rule that will cancel mandatory hip fracture and cardiac bundled payment models, and while industry observers had mixed reactions, given the current administration’s past sentiments on forcing providers into these initiatives, the rule did not come as a surprise to many.

In that rule, CMS rolled back the Comprehensive Care for Joint Replacement Model (CJRbundled payment model, canceled the mandatory Surgical Hip and Femur Fracture Treatment bundled payment model, canceled the mandatory Acute Myocardial Infarction (AMI) and Coronary Artery Bypass Graft (CABG) bundled payment models, also known as the Episode Payment Models (EPMs), and canceled the Cardiac Rehabilitation (CR) Incentive Payment model.

Although it was just last year when federal officials under the Obama administration announced new mandatory bundled payment models for care for heart attacks and for cardiac bypass surgery, new health officials in the Trump administration were not keen on the “mandatory” aspect of the models. As such, in November’s announcement, CMS Administrator Seema Verma said in a statement, “While CMS continues to believe that bundled payment models offer opportunities to improve quality and care coordination while lowering spending, we believe that focusing on developing different bundled payment models and engaging more providers is the best way to drive health system change while minimizing burden and maintaining access to care. We anticipate announcing new voluntary payment bundles soon.”

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