Trump Health Agency Challenges Consensus on Reducing Costs

WASHINGTON — For several decades, a consensus has grown that reining in the United States’ $3.2 trillion annual medical bill begins with changing the way doctors are paid: Instead of compensating them for every appointment, service and procedure, they should be paid based on the quality of their care.

The Obama administration used the authority of the Affordable Care Act to aggressively advance this idea, but many doctors chafed at the scope and speed of its experiments to change the way Medicare pays for everything from primary care to cancer treatment. Now, the Trump administration is siding with doctors — making a series of regulatory changes that slow or shrink some of these initiatives and let many doctors delay adopting the new system.

The efforts to chip away at mandatory payment programs have attracted far less attention than attempts by President Trump and congressional Republicans to dismantle the Affordable Care Act, but they have the potential to affect far more people, because private insurers tend to follow what Medicare does. That in turn affects the country’s ability to deal with soaring health care costs that have pushed up insurance premiums and deductibles.

The administration has proposed canceling or shrinking Medicare initiatives that required doctors to accept lump sums for cardiac care and joint replacements, two of Medicare’s biggest cost drivers. More than 1,100 hospitals were scheduled to take part in the cardiac initiative starting in January, and 800 have been participating in the joint replacement program.

And while Congress passed a bipartisan law in 2015 creating a new payment framework that is supposed to reward doctors for value over volume, Mr. Trump’s Department of Health and Human Services has exempted more doctors from a provision that created merit pay by giving them bonuses or penalties depending on the quality of their work.

In September, the department released an outline of a “new direction” for the Center for Medicare and Medicaid Innovation, set up by the Affordable Care Act to test models aimed at improving medical care and reducing costs. While the Obama administration had pushed large, mandatory experiments to test new models of pay, the Trump administration wants to encourage smaller, voluntary programs — and has asked the doctors to help design them.

“Clearly a great big foot has been put on the brake,” said Donald Crane, the chief executive of CAPG, a group of doctors and hospital administrators that, unlike many in the profession, has pushed to tie physician pay to quality measures rather than the old model of fee for service.

Mr. Crane was referring specifically to the scaling back of the cardiac and joint replacement programs by Tom Price, an orthopedic surgeon and Republican former congressman chosen by Mr. Trump as secretary of health and human services. Mr. Price, who resigned in September over his use of expensive private jets, had accused the Obama administration of trying to “commandeer clinical decision-making” by forcing doctors to participate in experiments that test new ways of paying for care. Mr. Trump is said to be close to appointing a successor — possibly Alex Azar, a former pharmaceutical company executive who worked in the Department of Health and Human Services under President George W. Bush — and doctors’ groups will be watching carefully to see if the agency continues in the same direction.

Already, other administration officials have signaled support for protecting doctors and giving them more say. The agency’s Centers for Medicare and Medicaid Services, led by Seema Verma, has suggested it will accept more recommendations than it did in the past from a committee of doctors formed by the American Medical Association on how much Medicare should pay for services and procedures — essentially letting doctors set their own pay.

Ms. Verma’s agency also issued the call for changing the direction of the innovation center. The formal “request for information” proposed, among other potential changes, allowing doctors and hospitals to contract directly with Medicare patients. This would allow doctors and other providers to propose their own prices, moving toward a long-held Republican goal of so-called premium pricing.

Research has shown that the traditional model of paying doctors, known as “fee for service,” often results in unnecessary or inappropriate care. The federal government has been slowly moving away from it since 1983, when Medicare changed some of its payments to hospitals.

But the changes now pushed by H.H.S. are a renunciation of the Obama administration in particular. It had sought to shift 30 percent of fee-for-service Medicare payments to alternative payments based on quality or value by 2016 — a goal it achieved — and 50 percent by 2018. To do so, it required doctors and hospitals in many regions of the country to adopt those new payment models.

Canceling mandatory bundled payments for cardiac and orthopedic procedures was a pet project for Mr. Price, who had fought against what he saw as unnecessary government intervention since his days as a surgeon in the suburbs north of Atlanta.

Mr. Price defended the old model in front of thousands of doctors and medical administrators gathered in June for the annual meeting of CAPG, the group pushing for new payment models, arguing that the health care system in the United States — “the finest,” he said, in the world — had developed around it.

“So we ought to recognize,” he told the group, that “fee for service may not be the end of the world.”


Seema Verma, left, the head of the Centers for Medicare and Medicaid Services, was a partner in efforts by Tom Price, right, to slow changes in the way doctors are paid. CreditEric Thayer/Getty Images

Many in the health care field criticized some of the rules issued by the Obama administration as overly prescriptive and welcomed the department’s effort to review them.

“Many experiments that the Obama administration launched were overly micromanaged,” said Grace-Marie Turner, an opponent of the health law and president of the Galen Institute, a research center that advocates free-market health policies. “Innovation has to percolate up from the bottom. The Obama administration tried to drive it from the top.”

Even with Mr. Price’s departure, the department still has numerous people who have advocated strongly for doctors and industry in the past. They include senior staff members who have worked representing medical device makers, pharmaceutical and hospital supply companies, the nursing home industry and physician specialty groups. The acting secretary of health and human services, Eric Hargan, is a former lawyer for the law and lobbying firm Greenberg Traurig who served as a deputy secretary at the agency during Mr. Bush’s tenure.

Miranda Franco, senior policy adviser at the law firm Holland & Knight, has closely tracked the changes. She said it appeared the administration was using the innovation center to further its priorities of “more provider-friendly approaches, more voluntary models.”

Ms. Verma, the administrator of the centers, seemed to confirm that when she wrote in a Wall Street Journal op-ed: “Providers need the freedom to design and offer new approaches to delivering care. Our goal is to increase flexibility by providing more waivers from current requirements.”

Last month, Ms. Verma also announced a plan to re-examine and streamline all the ways the federal government has been measuring the quality of the care doctors provide, saying in a speech, “We want to move to a system that pays for value and quality — but how we define value and quality today is a problem.” The goal, she said, was to relieve doctors of excessive regulatory burdens and make sure payment policies are “guided by those on the front lines serving patients.”

Gail Wilensky, the administrator of the Centers for Medicare and Medicaid in the first Bush administration, said she heard many complaints from doctors who felt that during the Obama presidency the agency was not listening to any of their ideas for how to move toward payment based on quality rather than quantity.

“It’s hard for me to believe that physicians will do any better than they would have done, having Tom Price there,” Ms. Wilensky said. “From their point of view, this was about as good as it was going to get.”

But Tim Gronniger, a deputy chief of staff at the centers during the Obama administration, argued that there was little demand from hospitals or physicians to cancel the bundled payments, or to delay the merit-based payments.

In fact, many doctors are still subject to the rules of the merit-based system, which passed with bipartisan support in Congress in 2015. And other value-based programs are continuing.

“They’ve confused people,” said Mr. Gronniger, now a senior vice president at Caravan Health, which helps health care providers shift to value-based payment models. “The risk that H.H.S. and Tom Price created is that some physicians incorrectly read the press release or hear from their colleagues that Medicare is canceling value-based purchasing and think all of that’s over.”

“Physicians and hospitals need to be engaged in this work,” he added, “and exempting them doesn’t do them any favors.”

Although little has changed since Mr. Price’s departure, there are signs that the agency is still trying to figure out the best way to proceed, said Michael Chernew, an economist at Harvard Medical School who supports moving away from fee for service.

Mr. Chernew said he was “cautiously hopeful” about H.H.S. continuing to promote alternative payment models, pointing out that Medicare rates under fee for service will remain flat over the next decade anyway under the payment law that Congress passed in 2015.

“My general sense, and I’ve met with them, is that they genuinely want to try to have a better set of payment models,” Mr. Chernew said of Ms. Verma and those working for her at the Centers for Medicare and Medicaid Services. “They don’t just want to try to blow everything up.”

He added, “If you take all the politics out of it, the right thing for them to do is move ahead.”