February 16, 2018

Azar signals openness to easing physician-owned hospital restrictions

Daily Briefing

    HHS Secretary Alex Azar during congressional committee hearings this week defended President Trump's fiscal year (FY) 2019 budget proposal for HHS and suggested an openness to easing restrictions on physician-owned hospitals.

    During the hearings, Azar fielded questions about Idaho's plan to allow health plans that do not comply with the Affordable Care Act (ACA), discussed proposed policy changes to Medicare and to curb prescription drug prices, and outlined his priorities for the department, including improving health care access and affordability, transitioning toward value-based payment models, and expanding coverage for telehealth services.

    Azar addresses budget, Medicare concerns

    During a House Ways and Means Committee hearing Wednesday, Azar fielded questions from several Democratic lawmakers concerned about the White House's proposed FY 2019 budget for HHS. Azar said he felt the budget, which requests $95.4 billion in discretionary HHS funding for FY 2019, represents a significant investment in health programs and would be sufficient to support his priorities for the department.

    For instance, Azar touted proposals in the budget that would increase Medicare beneficiaries' access to telehealth services.

    Azar also countered concerns about the White House's proposed Medicare payment reforms, which the Trump administration estimated would reduce Medicare spending by $554 billion over a decade. Azar called Medicare the "bedrock of our society," and said the White House's proposed budget would extend the program's solvency by eight years by reducing abuse, fraud, and waste in the program, while continuing to move Medicare toward value-based payment models. Azar said, "The future of Medicare must be driven by value."

    Azar discusses plans to curb Rx drug prices

    Azar during the hearings also discussed the administration's proposals to lower prescription drug prices. For instance, he told House Ways and Means Committee members that he was open to revising the government's authority to negotiate prices for Medicare Part B prescription drugs.

    During Thursday's Senate Finance Committee budget hearing, Azar also defended drug pricing proposals included in Trump's budget, including one that would shift more prescription drug costs to insurers once Medicare Part D beneficiaries have reached their catastrophic coverage limits.

    Azar said, "If we can use our influence through these government programs and create incentives toward lower or flatter list prices, it benefits everybody," adding, "It creates a disincentive towards a higher list price and that list price is the same across the entire sector."

    Azar signals openness on physician-owned hospital restrictions

    During Wednesday's House committee hearing, Azar also indicated his willingness to revisit existing regulations to help physician-owned hospitals compete and deliver quality care. Under the ACA, physician-owned hospitals that treat Medicare patients must request permission from HHS to expand or build any new physician-owned facilities. According to Modern Healthcare, hospital groups say physician-owned hospitals are more likely to cherry-pick insured patients with complex diagnoses.

    However, Physician Hospitals of America and some Republican lawmakers, including Rep. Sam Johnson (R-Texas), have pushed for the provision to be repealed. In response to a question from Johnson about repealing the provision, Azar said, "I commit to work with you on any changes we can make to make sure we are allowing good competition allowing physician-owned, or other-owned, facilities to compete and deliver the highest quality, low-cost care to our beneficiaries." He added, "It's my understanding that many physician-owned hospitals provide superb quality care, and we ought to be inspiring competition among providers."

    Azar pressed on response to Idaho

    Azar on Wednesday also declined to directly answer questions about HHS' response to Idaho's decision to allow health plans that do not comply with the ACA, saying the state had not submitted a waiver request or asked for HHS' opinion on the matter.

    Azar was further pressed on the topic during separate House and Senate committee hearings Thursday. During those hearings, Azar told lawmakers that he could not take enforcement action until the state files a waiver request or Blue Cross of Idaho submits proposed plans that do not comply with the ACA to HHS for approval. When the matter is officially brought before HHS, Azar said he "cannot imagine a circumstance where we would not evaluate it for compliance against the law before offering it to consumers."

    Azar declined to state how he might approach the issue, but, after a back-and-forth with Sen. Ron Wyden (D-Ore.), said he would follow up with the committee on his plans within 30 days. Azar said of Idaho's proposal, "I think what we are seeing here is a cry for help," adding, "It's saying that where we are right now with our individual market because of the structure we have is not serving enough of our citizens. There are too many Americans who simply cannot afford the insurance packages we have in our program because of the way the statute is designed and the way it has been implemented" (Luthi, Modern Healthcare, 2/14; MacDonald, FierceHealthcare, 2/15; O'Brien, HealthLeaders Media, 2/14; Swetlitz, STAT News, 2/15; Cohen, Inside Health Policy, 2/15; Firth, MedPage Today, 2/15; Siddons/McIntire, CQ News, 2/15 [subscription required]).

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