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January 9, 2018

HHS Sec nominee signals potential shift on mandatory payment models

Daily Briefing

    Read Advisory Board's take on this developing story.

    During his confirmation hearing on Tuesday, HHS secretary nominee Alex Azar signaled his openness to mandatory payment models—representing what could be a major shift in the Trump administration's policy should Azar be confirmed.

    About Azar

    Azar served as general counsel and deputy secretary at HHS under the Bush administration. He joined Eli Lilly and Company in 2007 as the company's SVP of corporate affairs and communications. In 2012, he began overseeing the company's U.S. operations, which he did until he left the company in January of this year. After resigning from Eli Lily, Azar founded a health care consulting firm called Seraphim Strategies.

    Azar's comments on mandatory models

    In response to a comment from Sen. Mark Warner (D-Virginia) that some payment models under the Center for Medicare & Medicaid Innovation (CMMI) should be mandatory, a point on which he and Azar "might have a disagreement," Azar replied, "Senator, we actually don't disagree there."

    Azar said, "I believe that we need to be able to test hypotheses, and we have 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 to test a hypothesis there around changing our health care system, it needs to be mandatory as opposed to be voluntary to get adequate data, then so be it."

    Advisory Board's take

    Rob Lazerow

    Rob Lazerow, Health Care Advisory Board

    Azar's comments on mandatory models would seem to mark a shift from the Trump administration's policy up to this point. Former HHS Secretary Tom Price, who resigned in September, was supportive of payment reform and CMMI overall, but highly critical of mandatory models. And in November, under acting HHS Secretary Eric Hargan, CMS finalized a rule proposed under Price's tenure to cancel three mandatory bundled payment programs and significantly roll back a fourth.

    We'll certainly have to wait and see whether Azar gets confirmed and how his openness to mandatory models would and wouldn't translate into administration policy. Regardless, even before Azar's comments, it was clear that payment reform was moving ahead under the Trump administration. The below resources can help ensure hospitals and health systems are taking the appropriate no-regrets steps to succeed under any scenario:

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    • Use our research report to create an intentional Medicare risk strategy to continue adapting to the intractably changing payment and delivery system landscape.

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    We'll have more highlights and reaction from Azar's hearing in tomorrow's Daily Briefing.

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