Keynote, Alex Azar, former HHS secretary
Former HHS Secretary Alex Azar took the stage at Day 2 of the Fierce Health Payer Summit on Thursday.
Azar said he is “bullish” on Medicare Advantage, while also voicing concerns about where the outgoing Biden administration has left the program.
Azar pointed to the successes of value-based care models that were implemented under his tenure in conjunction with the Centers for Medicare and Medicaid Innovation like the ACO Reach model and the kidney care model. he stressed that under his tenure HHS improved value-based care.
“We changed the paradigm of how you think about value-based care, because I think this notion of paying for an outcome and rewarding an outcome, the transaction costs around that are so high it should was just more micromanagement from Security Boulevard, and instead we said total cost of care,” Azar said. “Let's instead think about delegated payments and unleashing providers and their patients to do what's right within a budget, and that became the current and future direction of value right now."
Azar said the new Trump administration will likely be more favorable to value-based care, though it’s not a sure fire initiative. He said the future of value-based care will depend on the personnel that president-elect Donald Trump hires in the Office of Management and Budget, the West Wing and to lead HHS and CMS.
“Anyone on the Republican side has worked for me over the last 20, 25 years. So we all did work together,” Azar said. “So we’ve all been trained, indoctrinated, are believers in that particular transformation. I think MA will find a more positive ear, [but] not unquestioning.”
Azar railed against the January 2024 Medicare Payment Advisory Commission (MedPAC) report (PDF) on the status of Medicare Advantage (MA) that said that Medicare Advantage costs more than Medicare fee for service (FFS). He said the Medicare payment advisory commission wrongly concluded that Medicare Advantage costs more than Medicare FFS, because it assumed that MA patients are healthier than Medicare FFS patients.
The report contributed to the “perfect storm” for Medicare Advantage that has led to hospitals and providers moving away from MA, Azar said. He argued that detrimental cuts to the program under the Biden administration and the post-pandemic healthcare utilization spike have made MA unprofitable for provider organizations.
“I talked to a hospital system CEO the other day. They're getting rid of all delegation next year on MA, because they're saying, ‘Hey, we know fee-for-service. We know how to turn the crank’ … I think you're gonna see a lot of these major physician groups that were taking on [risk] ... convert out of taking delegation.”
Conversely, Azar talked about the Inflation Reduction Act and the cuts it made to prescription drug programs for Medicare. Because FFS needs a stand alone prescription drug plan, which the reform has made “unsustainable,” Azar predicted that more payers will shift to MA. "That will accelerate the growth of MA membership," Azar said.
Azar also spoke on a panel as a board member of Absolute Care. He was joined by other value-based care experts, including Meera Atkins, vice president of medical management at Blue Cross and Blue Shield of Minnesota.
"We are certainly far more data driven now than we have been in the past. I think that there is ... more and more buy in," she said. “We can't dabble in this. I think we need to rip the bandaid off," she continued.
Azar called for the stability of the government's stance on value-based care. “The government has got to be a reliable business partner," Azar said. "It has got to be a public, private partnership. And the government has got to be stable, predictable, transparent with its data, because, again, we are running P&L businesses. We cannot, we just can't operate with quicksand.”
PBMs
Fierce Healthcare Senior Writer Paige Minemyer hosted a panel on Thursday with pharmacy benefit management experts from CVS Caremark, the nation's largest PBM lobbying group, and a venture capital investor with a background in the PBM market. The panel discussed the complexity of the pharmaceutical supply chain, disruptors in the industry like Mark Cuban Cost Plus drugs, and the impact of biosimilars and GLP-1s.
They also discussed the demands for PBM reform and drug pricing transparency from legislators and consumers.
JC Scott, president and CEO of the PBM lobbying group the Pharmaceutical Care Management Association, urged attendees to watch how the newly-elected Republican Congress will approach the Inflation Reduction Act, regulatory control for the NTC and how it addresses PBMs.
There is also no shortage of legislation at both the state and federal level that seeks to reform PBMs.
Also top of mind for PBMs, and healthcare payers more broadly, is how to handle costly GLP-1s, which have increased from about 5% of spending to between 20% and 30%. Ed DeVaney, president of employer & health plans at CVS Caremark, said the industry should watch the biosimilars market. “Biosimilars today are a ten billion market. In a short amount of time, it will be $100 billion,” he said.
DeVaney talked about the changes CVS Caremark is making to lower prices for customers. It is doing so by aligning their pharmacy benefit management business to align with the acquisition price of the drug.
“Over the next six months, we're going to convert 100% of our pharmacy benefit management business to align to acquisition … all the PBMs will contract under that, which is going to really kind of smooth out the pricing that members see,” DeVaney said.
DeVaney also stressed the cross subsidization of the drug supply chain.
“We are the single largest purchaser of drugs in the United States, possibly even global. When you look at our acquisition price and what we're selling it to customers, after you get rid of this cross subsidization, which is again losing money on every brand, making up more than your fair share on generics, Mark Cuban Cost Plus Drugs is 40% more expensive," he said.