Module 01 Course Project - Legislative Action

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Controlling Health Care Costs under the ACA — Chaos, Uncertainty, and Transition with CMMI and IPAB Gwendolyn Roberts Majette

T he ACA was designed to achieve three primary goals (1) expand health care coverage, (2) reform the delivery system, and (3) shift the health care

system to focus on wellness and prevention. These goals would be achieved through a new regulatory structure which I call the new governing architecture. The new governing architecture (NGA) is composed of national strategies, boards, councils, commissions, and new departments within the U.S. Department of Health and Human Services that I have selected based on the right to health features identified in a 2008 report by the Special Rapporteur for Health, Paul Hunt. The components of the NGA attempt to achieve the follow- ing goals: (1) improve the quality of care delivered by the health care system;1 (2) shift the system to focus on prevention and public health;2 (3) improve the pub- lic insurance programs that are designed to improve the health of vulnerable populations; (4) create better federal oversight of private insurance companies; (5) address the development of an adequate and appropri- ate health care workforce; and (6) collect and monitor key population health indicators. There are nine compo- nents of the NGA: (a) the National Strategy for Quality Improvement in Health Care, (b) the National Preven- tion, Health Promotion and Public Health Council and Advisory Council, (c) the National Prevention, Health Promotion, Public Health, and Integrative Health Care Strategy, (d) the Independent Payment Advisory Board, (e) the Center for Medicare and Medicaid Innovation, (f ) the CMS — Federal Coordinated Healthcare Office, (g) the CMS — Center for Consumer Information and Insurance Oversight, (h) the Health Care Workforce Commission, and (i) the Commission on Key National Indicators. This article will only address two compo- nents of the NGA that help to reform the delivery of health care and to control costs of the health care sys- tem: the Center for Medicare and Medicaid Innova- tion (CMMI) and the Independent Payment Advisory Board (IPAB). The republican-controlled federal gov- ernment has partially disassembled these two compo- nents, threatening the effectiveness of federal delivery system reform and cost control initiatives.

Gwendolyn Roberts Majette, J.D., LL.M., is an Associate Professor of Law at the Center for Health Law and Policy at Cleveland-Marshall College of Law. Professor Majette has di- verse experience working on health care and delivery system reform matters as an expert advisor to the Co-Chair of the Massachusetts Provider Price Variation Commission, as a member of the executive team for a state-based exchange, and as a legislative fellow working on Medicare, Medicaid, and Health Care Reform policy with the United States Congress. Prof. Majette received her LL.M. in Global Health Law with distinction from the Georgetown Law Center, her J.D. from George Washington University School of Law, and her B.B. A. from Emory University.

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The results of the 2016 election meant there will be changes to the ACA and by implication to the new governing architecture. Presidential candidate Don- ald Trump did not provide a detailed health care policy agenda, so the health care industry and indi- vidual states were forced to discern the meaning of a campaign promise to “repeal Obamacare.” Article I, Section 1 of the U. S. Constitution vests “all legis- lative powers” in Congress. According to the House Republican Leadership whitepaper, A Better Way, the values that will govern their health care reform pro- posals include: choice, portability, innovation, and transparency.3 These same values were also reflected in the numerous health care reform bills introduced in 2017, like the American Health Care Act, the Better Care Reconciliation Act, the Obamacare Repeal and Reconciliation Act of 2017, the Health Care Freedom Act, and Graham-Cassidy, Heller-Johnson.

A. CMMI’s Viability Under a Republican Controlled Federal Government CMMI was created in 2010 to test new payment and delivery models that reduce health care costs and improve the quality of care provided in Medicare, Medicaid, and the Children’s Health Insurance Pro- gram. In 2017, the viability of CMMI was in ques- tion. Legislative proposals like Better Way, recom- mended that CMMI be repealed effective January 1, 2020, the date the center would run out of its initial 10-year funding of $10 billion dollars.4 There was also the possibility that CMMI’s budget would be reduced, or that its authority to require participation in man- datory models would be limited.5 On September 29, 2016, several republican congressmen, wrote to Act- ing CMS Administrator Andrew Slavitt expressing concern that CMMI mandated participation in some models (i.e. bundled payment).6 President Trump’s first HHS Secretary, Tom Price was one of the authors. The congressmen recommended limiting the size and scale of participation in models.7 They criticized CMMI for exceeding its statutory authority by man- dating participation. Participation in most of CMMI’s demonstration projects has been voluntary.8 However, to ensure that participation was sufficient to produce reliable statistical results and to accomplish previous HHS Secretary Burwell’s goals to shift to alternative payment models in Medicare, experts recommended that participation be mandatory.9 Moreover, under the enabling language creating CMMI, Section 3021 (a) of the ACA, the Secretary of HHS has broad authority in designing payment models.10

Shifting to a value-based reimbursement policy is a way to lower U.S. health care costs and to reform health care-delivery with broad bipartisan support.

On December 6, 2016, the Health Care Transfor- mation Task Force (HCTTF) wrote to the incoming President and Vice-President, the HHS Secretary nominee, the CMS Administrator nominee, and Con- gressional leadership on the important work that CMMI was conducting.11 The task force is composed of 43 members, including employers, payers, insur- ance companies, health care providers and consum- ers/patients. The members include 6 of the top 15 health systems in the United States and 4 of the top 25 insurance companies. Elliot Fisher (Director of the Dartmouth Institute for Health Policy) and Mark McClellan (former CMS Administrator and FDA Commissioner under George W. Bush) are members. The task force is working to promote the transition to value-based payments. HCTFF members have a goal to transition 75% of their business to value-based pay- ment models by 2020. When the letter was written, the members had reached 41% of their goals, using capitation, global payment, ACOs, clinical episode, and oncology care value-based models.

The HCTTF letter emphasized the positive impact of CMMI on private sector delivery system reform ini- tiatives. The letter noted that CMMI was an “effective laboratory to test a variety of value-based care mod- els” and an “important partner for the private sector to push broad scale reform.” CMMI served as a mecha- nism for the private sector to provide “direct feedback to improve government programs and operations.” Moreover, CMMI supported state-based models that would allow states to innovate and drive the local mar- ket to adopt payment reforms and value-based care.12

The HCTTF made two recommendations to the Republican administration: (1) continue CMMI or a comparable entity, and (2) send a signal of support for value-based payments that lower costs, improve quality, and focus on patient needs. According to HCTTF, using value-based payments to align the public and private sectors is the single policy initia- tive that holds the most “promise to moderate entitle- ment spending.”13

(i) CMMI Facilitates Reformation of State Health Care Delivery Systems — Maryland and Massachusetts CMMI’s authorizing legislation14 and development of State Innovation Models (SIM) recognize the role of states in implementing delivery system reform initia- tives designed to lower health care costs and improve quality. CMMI recognizes the importance of states in “determining the effectiveness of the health care system and the health of their population.”15 States impact health as “payers for Medicaid, the Children’s Health Insurance Program, and state employee popu-

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lations, and they impact care delivery through their licensing and public health activities.” CMMI devel- oped State Innovation Models (SIM) “to address specific issues in [a] state” and to “accelerate [com- prehensive] state-level health care transformation.”16 Grant awards were made to develop State Health Care Innovation Plans (Model Design awards) and to fund implementation of transformation plans (Model Test states). Since 2013, CMMI has provided SIM funding to 34 states, 3 territories and the District of Columbia. Unlike other CMMI models that test a spe- cific delivery system or payment model, SIM models focus on “developing the infrastructure necessary to enhance coordination and communication across the care continuum.” These models are important to fed- eral-state efforts to control health care costs because CMMI partners with other CMS entities and other HHS agencies to “align and leverage federal delivery system reform programs and opportunities.”17 Mary- land will use the grant it received under CMMI’s State Innovation Model to implement a component of the next phase of the All Payer Model (Total Cost of Care). Initially from 2016 — 2018, Maryland worked on developing a Dual Eligible ACO for its Medicaid program to implement in 2019.18 Under the July 2018 Total Cost of Care Agreement, the state will continue to progressively plan for and implement dual eligible clinical care and payment alignment. The state will begin with integrating behavioral health and Medic- aid providers into the Maryland Primary Care pro- gram and consider at a later time the national dual- eligible ACO model or another national Medicare/ Medicaid model.19 Similarly, Massachusetts received a SIM Model Test Grant in April 2013 that was extended.20 Massachusetts Medicaid initially estab- lished a patient-centered medical home model, Pri- mary Care Payment Reform Initiative (PCPRI), that provided capitated payment and a coordination fee. It developed certified Community Partners, which are community-based organizations with expertise in delivering care to members with behavioral health, long term support, and social services. While provid- ers lauded the timely access to behavioral services, initially neither utilization nor spending decreased and there were no significant changes in measures of care coordination or quality of care. Thus in 2017, Massachusetts received a Medicaid Section 1115 waiver (2017–2022) to implement accountable care models that continue the work of the PCPRI, expands use of the state health-information-exchange to share information among clinicians, and continues use of e-referrals to community services.

(ii) CMMI’s New Direction — New CMS Administrator & Deputy Administrator for Innovation & Quality and Director of CMMI In September 2017, CMS Administrator Seema Verma articulated 6 goals for CMMI. Those goals are (1) Choice and competition, (2) Provider choice and incentives, (3) Patient-centered care, (4) Benefit design and price transparency (use of data to ensure receipt of cost-effective care that improves outcomes), (5) Transparent model design and evaluation (use partnerships and collaborations with public stake- holders and gather ideas from a broad array of organi- zations), and (6) Small Scale Testing.21 The request for information (RFI) sets forth eight areas of focus for future models.22 The one that would directly impact Maryland and Massachusetts’s existing global budget initiatives include the state-based and local innova- tion, including Medicaid-focused models. While the RFI asserts that the agency is going in a new direction, the primary thrust of this area is similar — allowing states and health care providers to work with CMS to drive reform and local innovation that “meets the needs and goals of each state for improving care and lowering costs.”

More clarity as to the direction of HHS came from the appointment of the second Trump Secretary for HHS, Alex Azur on January 24, 2018. In March 2018, he identified value-based transformation of the health care system as one of his top four priorities. He acknowledged that this important concept is more than a decade old. The four key factors to achieve this transformation are having interoperable health infor- mation technology; transparent health care prices; a willingness to experiment with new, flexibly-designed models of care delivery, and the removal of govern- ment burdens that impede value-based transforma- tion. In April 2018, Secretary Azur appointed Adam Boehler the Director of CMMI.

B. IPAB Under the Republican Administration IPAB was created to develop proposals to slow the growth of Medicare costs if they are projected to exceed a specified target.23 This is the most contro- versial and vulnerable feature of the new governing architecture. No presidential appointments were made, and a lawsuit was filed challenging its con- stitutionality.24 Better Way recommended repeal- ing IPAB.25 The whitepaper recommends allowing elected officials to reform the program using tools that lower costs and improve quality by allowing health plans and providers to compete for the busi- ness of Medicare seniors.26

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(i) Congressional Legislation — 2017 Federal legislation reflects a continued effort to elimi- nate IPAB that is consistent with the recommenda- tion in Better Way. In early February 2017, the Sen- ate and the House of Representatives introduced bills to abolish IPAB.27 However, Congress was unable to pass a bill or joint resolution by the three-fifths major- ity required under the ACA. Instead, in September of 2017, the Senate passed a budget bill that would defund IPAB.28 While the House of Representatives passed H.R. 849 to repeal IPAB on November 2, 2017, the Senate did not pass a companion bill.29 Finally, on February 9, 2018, IPAB was repealed by the Biparti- san Budget Act of 2018.30

(ii) IPAB Repeal — Loss of the Federal Oversight Entity While State Oversight Continues The Congressional Budget Office (CBO) originally projected that IPAB would achieve Medicare sav- ings of $15.5 billion from 2015 until 2019.31 A simi- lar amount of savings, $15 billion, would occur from 2018–2027. As expected, repealing IPAB is projected to increase the federal deficit by $17.5 billion over ten years (2018–2027).32

During IPAB’s tenure, the chief actuary first pre- dicted that Medicare’s growth rate would exceed the target rate in 2017. Thereafter, there were predictions for 2022, and more recently 2024, 2025, and 2026.33 Fortunately, the Medicare program did not exceed its per capita growth rate in 2017.

In contrast to the federal move away from an over- sight agency, states continue to use oversight agencies to contain health care costs and reform their delivery systems. For example, both Maryland and Massa- chusetts are continuing their efforts to bend the cost curve by limiting their health care cost growth to their state GDP through comprehensive or global cost con-

trol systems.34 Maryland has successfully limited its per capita hospital revenue growth for all payers to less than the state GDP (3.58%): 2014 (1.47%), 2015 (2.31%), 2016 (.80%), and 2017 (3.54%).35 On January 1, 2019, Maryland will shift from an All-Payer system focused on controlling hospital costs for the Medicare program to a Total Cost of Care program that focuses on limiting health care costs by all providers for the entire health care system.36 Over ten years Maryland will continue to keep its health care costs below the state GDP, limit its Medicare per beneficiary spend- ing growth to save the Medicare program at least $1 billion dollars by 2023, and improve patient outcomes and quality of care.37 In contrast, Massachusetts has

had mixed results controlling its health care costs. The total health care expenditure was below the state benchmark of 3.6% for 2013 (2.4%). It increased in 2014 (4.25 %) and 2015 (4.8%), and is preliminarily below the benchmark for 2016 (2.8%). However, the four-year average is below the state benchmark and each year’s growth is below the national growth rate.38

Conclusion The cost control components of the ACA’s new gov- erning architecture have been partially disassembled by the Republican controlled federal government. IPAB, the federal oversight entity, was finally repealed in 2018. CMMI is the remaining backstop to con- trol federal health care costs and redesign the U.S. health care system. For 13 months CMMI’s value was questioned. The new direction for HHS and CMMI reflects a deregulatory, flexible focus. The rescission of the mandatory Episode Payment Models, the Cardiac Rehabilitation Incentive Payment Model, and regula- tions39 exemplifies this shift. Moving forward collabor-

The cost control components of the ACA’s new governing architecture have been partially disassembled by the Republican controlled federal government.

IPAB, the federal oversight entity, was finally repealed in 2018. CMMI is the remaining backstop to control federal health care costs and redesign the U.S. health care system. For 13 months CMMI’s value was questioned. The new direction for HHS and CMMI reflects a deregulatory, flexible focus. The rescission of the mandatory Episode Payment Models, the Cardiac

Rehabilitation Incentive Payment Model, and regulations exemplifies this shift. Moving forward collaborative governance and state-based initiatives

will drive future delivery system reform and cost control efforts.

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Majette

ative governance and state-based initiatives will drive future delivery system reform and cost control efforts.

Note The author has no conflicts to disclose.

References 1. G.R. Majette, “Global Health Law Norms and the PPACA

Framework to Eliminate Health Disparities,” Howard Law Journal 55, no. 3 (2012): 887-936.

2. G.R. Majette, “PPACA and Public Health: Creating a Frame- work to Focus on Prevention and Wellness and Improve the Public’s Health,” Journal of Law Medicine & Ethics 39, no. 3 (2011): 366-379.

3. Republican Leadership for the United States House of Repre- sentatives, A Better Way, Our Vision for a Confident America, Health Care, June 22, 2016 at 2.

4. A Better Way, supra note 3 at 32; S. Muchmore, “GOP May Try to Hobble CMS Innovation Center,” Modern Healthcare, November 7, 2016.

5. Muchmore, supra note 4. A statutory amendment would be required to cut CMMI’s budget because its authorizing lan- guage provides that “money is available until it is expended.” Patient Protection and Affordable Care Act, Pub. L. No. 111- 148, § 3021 (a), 124 Stat 119 (2010) (codified as amended in scattered titles of U.S.C); 42 U.S.C.A. § 1315a (f )(1).

6. United States House of Representatives Tom Price, M.D., Charles W. Boustany, Jr., M.D., and Erik Paulsen letter to CMS Acting Administrator Andrew Slavitt and Deputy Administrator and Chief Medical Officer, Patrick Conway, M.D. (September 29, 2016); A Better Way, supra note 3 at 11.

7. Congressman Price et al., letter to CMS Administrator Slavitt p. 3.

8. Muchmore, supra note 5. 9. Id.; P. Orzag, “US Health Care Reform Cost Containment and

Improvement in Quality,” JAMA 316, no. 5 (August 2, 2016): 493, 494.

10. PPACA § 3021 (a); 42 U.S.C.A. § 1315a (d)(2)(B)–(C). 11. Health Care Transformation Task Force letter to President-

Elect Donald Trump, Vice-President Elect Mike Pence, Major- ity Leader Mitch McConnell, Senate Minority Leader Charles Schumer, Speaker Paul Ryan, House Minority Leader Nancy Pelosi, Secretary-Designate of Health and Human Services Tom Price, and CMS Administrator-Designate Seema Verma (December 6, 2016).

12. HCTTF December Ltr p. 4–5. 13. Id. at 2, 4. 14. PPACA§ 3021 (a); Section 1315a(b)(2)(B) describes models to

be tested including those that integrate care for individuals dually eligible for Medicare and Medicaid and models that test state all-payer payment reform. 42 U.S.C. § 1315a(b)(2) (B)(x)–(xi).

15. CMS Center for Medicare and Medicaid Innovation, Report to Congress at 36 (December 2014).

16. Id.; CMS Center Medicare and Medicaid Innovation, Report to Congress at 19 (December 2016).

17. CMMI 2016 Report to Congress at 70. In 2015, CMMI required Model Test States to submit initiatives that were “patient-centered, broad-based, transformative, accountable for the total cost of care, feasible, and able to be evaluated.” It also required the Model Test States to propose models that comply with the Medicare Access and Chip Reauthorization Act of 2015 and the 2015 DHHS Delivery System Reform Goals tying Medicare payments to value. Id. at 70–71.

18. Maryland Department of Health and Mental Hygiene, The Maryland All-Payer Model Progression Plan: Proposal to the

Centers for Medicare & Medicaid Services at 24-25, 40, 44 (December 16, 2016); Health Services Cost Review Commis- sion, All-Payer Model Progression Plan — Draft Strategic Blue- print at 6 (August 1, 2016 presentation to the HSCRC Advisory Council); Health Services Cost Review Commission, Progres- sion Strategy Discussion at slides 27–29 (August 1, 2016 PowerPoint presentation to the HSCRC Advisory Council).

19. Maryland Department of Health, The Maryland All-Payer Model Progression Plan: Update to the December 2016 Pro- posal to the Centers for Medicare and Medicaid Services at 31 (May 2018); Maryland Total Cost of Care Model State Agree- ment at ¶ 11(b)(iv)(3)(July 9, 2018).

20. CMMI 2016 Report to Congress at 70. 21. CMMI, Request for Information, September 2017, RFI, avail-

able at <https://innovation.cms.gov/Files/x/newdirection-rfi. pdf> (last visited October 22, 2018).

22. The other models focus on Advanced Alternative Payment, Consumer-Directed Care & Market-based Innovation, Physi- cian Specialty, Prescription Drugs, Medicare Advantage Inno- vation, Mental & Behavioral Health, and Program Integrity. Id.

23. PPACA § 3403; 42 U.S.C. § 1395kkk. 24. Coons v. Lew, 762 F.3d 891(9th Cir. 2014). 25. A Better Way, supra note 3 at 31-32. 26. Id. at 32. 27. Protecting Seniors Access to Medicare Act, S. 260 (Intro-

duced by Senator Cornyn with 21 republican co-sponsors on Feb. 1, 2017); Protecting Seniors Access to Medicare Act, H.R. 849 (introduced on Feb. 3, 2017).

28. S. 1771 (Sept. 7, 2017). 29. While the House passed H.R. 849, S. 260 never made it out

of the Senate Finance Committee. 30. Bipartisan Budget Act of 2018, H.R. 1892, Pub. L. 115-123 (Sec.

52001 Repeal of the Independent Payment Advisory Board). 31. March 20, 2010 CBO Letter to Nancy Pelosi at page 1, avail-

able at <http://www.cbo.gov/publication/21351> (last visited October 22, 2018).

32. Congressional Budget Office Cost Estimate, H.R. 849 Protect- ing Seniors’ Access to Medicare Act (Oct. 27, 2017); Medicare Boards of Trustees, 2018 Annual Report of the Boards of Trust- ees of the Federal Hospital Insurance and Federal Supplemen- tary Medical Insurance Trust Funds at 187 (June 5, 2018).

33. Medicare Boards of Trustees, 2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds at 180 (July 22, 2015); Medicare Boards of Trustees, 2017 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds at 179 (July 13, 2017).

34. Please see, G.R. Majette, “The ACA’s New Governing Archi- tecture and Innovative State Delivery System Reform Initia- tives” for an in-depth comparative analysis of Maryland’s All Payer Model and the Massachusetts Chapter 224 — An Act Improving the Quality of Health Care and Reducing Costs through Increased Transparency, Efficiency and Innovation (2012)(article on-file with the author).

35. Health Services Cost Review Commission, “All Payer Model Results, CY 2014–2017,” available at <http://www.hscrc.state. md.us/Documents/Modernization/Updated%20APM%20 results%20through%20PY4.pdf> (last visited October 22, 2018).

36. Maryland Department of Health, The Maryland All-Payer Model Progression Plan: Update to the December 2016 Pro- posal to the Centers for Medicare and Medicaid Services (May 2018); Maryland Total Cost of Care Model State Agreement (July 9, 2018).

37. Id. 38. Massachusetts Health Policy Commission, “2017 Annual

Health Care Cost Trends Report,” March 2018, at 12, 16. 39. 82 Federal Register 57066 (December 1, 2017).

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