The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Obamacare Further Immerses Itself Between Doctor and Patient

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Citizens Against Government Waste’s February Waste Watcher, “Obamacare’s Cerberus,” discussed concerns with three organizations created under the Affordable Care Act (ACA), or Obamacare. They are the Patient Centered Outcome Research Institute (PCORI), the Independent Payment Advisory Board (IPAB), and the Center for Medicare and Medicaid Innovation (CMMI.) All have the capability to develop into government rationing boards.

While a lot of focus was placed on PCORI and IPAB prior to, and after, the ACA was signed into law, CMMI has been under the radar, steadily working in a more secretive manner to develop new payment and service delivery models. CMMI is a unit within the Centers for Medicare and Medicaid Services (CMS) and has broad authority to test its models within Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). With CMMI’s funding of $10 billion on autopilot until 2019, it has a lot of power.  Health policy experts have argued CMMI exists to institute price controls and limit payments to providers.

In July 2015, CMS released a proposed rule, the “Comprehensive Care for Joint Replacement Model,” the first mandatory bundled payment model that will be implemented in certain metropolitan districts. The CMMI-designed payment model covers all services a patient would receive within a limited time period for a hip or knee replacement. In spite of approximately 400 comments being submitted to CMS on the rule and Congress sending a letter raising their concerns, such as the short implementation time and the fact it is mandatory, the agency is moving forward with the payment model with few substantial changes. It is scheduled to begin in April.

Now CMMI’s latest controversial venture is a proposed change to the payment model for Medicare Part B drugs. These types of drugs are administered in a doctor’s office or in a hospital outpatient department. Currently CMS pays doctors the average sales price (ASP) of the drug, plus six percent to administer it. Last month, CMS accidentally posted a notice on their website that they were going to change Medicare Part B payments but quickly removed it, leaving providers anxious about its pending release. On March 8, the plan was officially released and for many providers, such as oncologists and biopharmaceutical companies, their concerns have been validated. CMS is accepting comments until May 9, 2016.

The payment model for Part B drugs is divided into two phases. For Phase 1, instead of the ASP plus six percent, some doctors will receive instead a payment rate of 2.5 percent of the ASP plus $16.80 for each drug administered. CMS’s goal “is for the test to result in savings through changes in prescribers’ behavior.”  Phase 1 will begin no earlier than 60 days after the rule is finalized, probably late 2016.

CMS also proposed a Phase 2 to the Part B pricing model that would adopt five “value-based purchasing tools.” Some of the proposals, such as reference pricing, are more often seen in European single-payer, or government-run, healthcare systems that have led to rationing and denial of payment for newer, advanced therapies. CMS would combine Phase 1 with one of the Phase 2 purchasing tools no earlier than January 2017. All providers and beneficiaries will be participating in the experiment.

Chairmen of the three congressional committees that oversee CMS reacted quickly.  Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-Mich), and House Ways and Means Chairman Kevin Brady (R-Texas) released a statement the next day about the new payment policy:

“Yesterday’s announcement marks another troubling example of unelected bureaucrats making decisions behind closed doors that impact the American people and their healthcare. This decision was made with a complete lack of transparency and clear disregard for the people and stakeholders who will be impacted the most. CMMI’s proposed experiment on seniors stands to limit access to the critical care the sickest Medicare beneficiaries rely on, as well as disrupt how health care providers serve patients in the future. The model could ultimately result in seniors’ receiving different standards of care based solely on where they live in the country.

“Medicare is an important program and policy decisions should be made in the light of day and reflect our democratic process. Moving forward, our committees will continue to pursue aggressive oversight over CMMI to ensure Medicare is meeting the needs of those the program is intended to serve.”

With this latest proposal, Obamacare once again pushes more Americans toward a system where Washington D.C. bureaucrats make choices about the kind of care they will receive and takes power away from their physicians. The best way to improve healthcare and lower prices is a system based on free-market principles and one in which the consumer controls their healthcare dollars.

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