Obamacare’s Cerberus | Citizens Against Government Waste

Obamacare’s Cerberus

The WasteWatcher

In March 2010, the Affordable Care Act (ACA), or Obamacare, was signed into law.  The debate over controversial Obamacare initiatives is ongoing, particularly whether the law will lead to rationing and price-controls that are seen in single-payer or government-run healthcare systems.

For example, the National Institute for Health and Care Excellence, or NICE, an agency of the British National Health Service, recommends which treatments will be paid for, and which will not, based on cost and comparative effectiveness research (CER).  As a result, innovative treatments are often delayed or denied to patients.  Nurses for Reform Director Helen Evans, a registered nurse, stated in a February 2009 Heritage Foundation issue paper that “NICE is a controversial body” that has continually stopped breast cancer and Alzheimer patients from receiving new, powerful breakthrough drugs and “patients with kidney cancer continued to be denied effective treatments designed to prolong their lives, often by months or even a few years.”

The programs in ACA that could easily morph into similar rationing boards are the Patient Centered Outcome Research Institute (PCORI), the Independent Payment Advisory Board (IPAB), and the Center for Medicare and Medicaid Innovation (CMMI.)

PCORI is an independent nonprofit, nongovernmental organization created under Obamacare.  Its stated mission is to “improve the quality and relevance of evidence available to help patients, caregivers, clinicians, employers, insurers, and policy makers make informed health decisions.”  PCORI specifically funds CER and other analyses that are supposedly intended to “improve the methods used to conduct such studies.”

PCORI is run by a 21-member board of governors.  Seventeen members are appointed by the Comptroller General of the United States and include individuals that are physicians and other healthcare providers.  The remaining members are from federal and state healthcare-related agencies.  The organization is funded by general appropriations from the Treasury, monies from the Centers for Medicare and Medicaid (CMS) trust funds, and a tax of $2.17 per person (in 2016) who participate in employer-sponsored and self-insured health plans.  Under Obamacare, PCORI was supposed to receive $3.5 billion in fiscal years 2010 – 2019.

PCORI began to award grants in 2012.  Dr. Scott Gottlieb, a scholar at the American Enterprise Institute and former deputy commissioner for medical and scientific affairs at the Food and Drug Administration, reviewed the 2014 awards and stated in a July 31, 2014 Morning Consult article that numerous research projects “were mostly trivial.”  He stated this is “what happens when grants are filtered through a Federal process that is invariably politicized, and influenced, if not spearheaded by an insular crowd of academic types who are the main beneficiary of the grants” and its “another illustration of the inefficiency and excesses that must be tolerated any time money is funneled through a government payment system.”  Dr. Gottlieb noted that even with its $3.5 billion funding, PCORI is not focusing its efforts or spending enough on the “kinds of clinical trials that would actually inspire change in clinical practice.”

An August 4, 2015 NPR article pointed out that while PCORI still has fans, even some liberals are not happy with the results so far and query if the millions already spent have been productive.  Republican legislators remain hostile to it because they believe many of their studies are wasteful and others will lead to the government controlling the kind of medicine doctors provide.

IPAB has often been referred to as the “death panel” by Obamacare opponents.  It earned this title because the board is composed of 15 unelected bureaucrats appointed by the president, with the advice and consent of the Senate, who would have unprecedented power to reduce the per capita rate of the growth in Medicare spending.  While the board cannot raise beneficiary premiums, increase cost sharing, or restrict benefits, it can cut payments to all providers such as doctors, hospitals, and pharmaceutical and medical equipment suppliers.  The law specifically states the board cannot “ration” care, but that is a distinction without a difference: if physicians must reduce the number of Medicare patients they treat because of reduced payment rates, seniors by default will have their care rationed.

IPAB board members can serve up to two six-year terms and must have “national recognition for their expertise” in healthcare matters such as finance, facility management, or providers of health services.  While the president is required to consult with majority and minority congressional leadership in making his selections, he could use recess appointments to obtain a board with a one-sided political view on healthcare policy.

If Medicare spending should rise above a targeted growth rate established by the CMS Actuary, it would trigger the board to submit a proposal within a limited time frame to reduce spending.  If it does not, then the Secretary of Health and Human Services (HHS) must submit a proposal.  Congress can stop an IPAB (or the secretary’s) recommendation only if both houses agree to a plan that cuts the same amount and has a 3/5 majority in the Senate.  If not, IPAB’s recommendation becomes law.

Medicare’s costs have not reached the threshold that would require action, but the president has not yet appointed anyone to the IPAB either.  Perhaps it is because he does not want a political fight with Republicans that would call attention to IPAB’s dubious role.  However, his inaction does leave the Secretary of HHS in charge of IPAB’s mission by default.  That is a lot of power for one person.  For now, the IPAB is a sleeping giant.  Its funding has been reduced, but it could be revived sometime in the future, unless it is eliminated by law.  Repeal efforts so far have been unsuccessful.

CMMI was created under ACA to test “innovative payment and service delivery models to reduce program expenditures … while preserving or enhancing the quality of care furnished.”  CMMI funding is on autopilot.  Starting in 2011, CMMI received $10 billion for fiscal years 2011-2019 and is scheduled to receive $10 billion more for each subsequent 10-year fiscal period starting in 2020.  That kind of unfettered funding can cause a lot of mischief.

CMMI has broad authority to test all kinds of payment models in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) with little transparency.  For example, in phase 1 model testing there are no limits on their time or reach, and CMMI can waive Medicare and some Medicaid requirements.  CMMI is not required to follow regular notice and comment rulemaking periods for input in designing its delivery and payment models, and its decisions are not subject to judicial review.

Dr. Steven Greer, a surgeon and CEO of the Healthcare Channel, described in a June 4, 2012 Wall Street Journal article that CMMI, despite “its lofty ideals, it is one more pork program and venue for political cronyism.”  In January 2012, he had been invited to review grant applications for a CMMI project called the Health Care Innovation Challenge.  CMMI had offered grant awards ranging from $1 million to $30 million to local healthcare systems and state Medicaid programs with a priority for projects that would “rapidly hire, train, and deploy new types of health workers.” CMMI received more than 3,000 grant applications and Greer was given only two weeks to review and grade 12 of the applications, all of which were more than 100 pages in length.  He became frustrated with the entire process and ultimately concluded that CMMI was not interested in quality and left the vetting process.

Later in 2012, CMMI announced its first group of recipients, which proved that Dr. Greer was correct in his assessment.  For example, George Washington University received a $1.94 million grant to find a way to “reduce” costs by $1.7 million over three years.  Many grantees received similar grants with dubious “savings” over a three-year period, claiming that more savings will be forthcoming.  Only vigorous oversight will be able to determine the validity of those claims.

In an April 24, 2014 Wall Street Journal article, health policy experts Lanhee Chen of the Hoover Institute and James Capretta of the Ethics and Public Policy Center identified many other problems at CMMI besides wasting federal tax dollars.  They wrote that the “agency's broad mandate reveals the mind-set of ObamaCare's authors.  The premise is that the federal government is best positioned to lead an effort in innovation in medical delivery, despite all evidence to the contrary.”  They believe this “stealthy” agency exists to impose price controls and limit payments to providers and because it has 10 years of funding available, it does not have to go back to Congress for funding that at least would keep its power in check. 

A key target for CMMI are the dual-eligible beneficiaries of Medicare and Medicaid.  These patients can receive benefits from both programs.  Medicare is always the first payer, while Medicaid supplements the coverage.

In July 2011, CMS created the Financial Alignment Initiative in which states could participate in two financing models that would integrate care for dual-eligibles.  Currently, 13 states are participating.  But one major concern is how dual-eligible beneficiaries are enrolled.  CMS allows the states to automatically enroll beneficiaries, which means the state decides where the patient goes, unless the patient has already chosen a plan by the enrollment date.  However, dual-eligibles are often the most vulnerable of Medicare patients; they tend to be poorer and sicker and provide unique healthcare challenges.  Should a patient lose a doctor they trust or another provider they rely on, the process could be harmful to them in the long run.  It is another example of big government knows best, and raises serious questions over patient choice.

In July 2015, CMS released a proposed rule for the “Comprehensive Care for Joint Replacement Model.”  This is the first mandatory bundled payment model; it would require providers in certain metropolitan statistical areas of the country to cut spending annually by 2 percent for this “episode of care.”  In other words, the payment would cover all of the services the patient received for a hip or knee replacement within a limited time period.  On September 21, 2015, more than 50 members of Congress sent a letter to CMS Acting Administrator Andy Slavitt expressing concern over the new mandatory Medicare payment model, reminding CMS that other payment models have been voluntary.  While the members do not object to the goal of getting better outcomes at lower costs, they are concerned about how CMS seeks to achieve it and, in particular, the limited amount of time it must be implemented.

Is spite of Congress’s and healthcare provider concerns, CMS is moving forward with the CMMI payment model, albeit with a few concessions such as dropping the number of areas from 75 to 67.  It will still be mandatory and it is scheduled to begin on April 1, 2016.

These programs are just three examples of how the federal government is becoming more ingrained in how healthcare is delivered for millions of Americans.  And while the supposed purpose of these programs is to lower costs, improve the quality of care, and encourage innovation, it is far more likely they will do the opposite.

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