Azar: Actions Coming on Drug Prices, Transparency, Interoperability

Healthcare industry advocates launched preemptive criticisms of possible provisions of a major drug-price policy initiative by the Trump administration.

May 9—Coming Trump administration healthcare initiatives will include a push to curtail pharmaceutical prices, a price and quality-data transparency effort, and incentives for greater sharing of patient data, the administration’s senior healthcare official said.

Health and Human Services (HHS) Secretary Alex Azar II told the annual membership meeting of the American Hospital Association (AHA) that his recent hospital stays to treat diverticulitis had underscored the importance of achieving quick progress in each of those areas.

“The experience did bring home for me how challenging it is to be a patient,” Azar said. “And it reminded me how much information and data are required to deliver the right treatment.”

Azar also confirmed that President Donald Trump plans to release his long-delayed “comprehensive” drug price initiative on May 11.

The administration has four key areas that it aims to address with the pharmaceutical policy push, Azar said:

• High list prices set by manufacturers
• Overpayment for drugs by seniors in government programs due to a lack of up-to-date negotiating tools
• Rising out-of-pocket costs for consumers
• Foreign governments that freeload off of American investment and innovation

“HHS’s blueprint for addressing these challenges will build on the proposals put forth in the president’s FY19 budget and the actions he has already taken,” Azar said. “But he wants to go much, much further.”

Although it is unclear what proposals the administration plans to push, some potential provisions drew preemptive industry pushback this week.

For instance, some have urged policies that move health care away from drug rebates over concerns that the rebates are not helping many patients afford the most expensive drugs.

Jennifer Bryant, senior vice president for the Pharmaceutical Research and Manufacturers of America (PhRMA), said at a May 9 policy forum in Washington, D.C., that drugmakers also want to move away from rebates because they are rarely passed along by insurers and hospitals to patients. Instead, she urged sharing those discounts with patients at the pharmacy counter.

But Kris Haltmeyer, vice president at the Blue Cross and Blue Shield Association, called the focus on point-of-sale rebates “overblown” and warned that such an approach would drive premium increases. Instead, he urged the administration to focus on reducing manufacturers’ list prices.

And advocates warn that hospitals are getting caught in the crossfire of the administration’s efforts to cut drug costs through efforts to restrict the 340B discount drug program. Already, Medicare payments for some 340B drugs have been cut from the average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. The administration said the change was intended to lower out-of-pocket costs for Medicare enrollees.

Transparency Push

Beyond the focus on drug prices, Azar underscored his increasing push regarding price and quality transparency.

“For individuals to drive value, they must have access to data on price and quality,” Azar said. “Knowing prices and outcomes can then enable every American to find to find better, cheaper health care.”

The Inpatient Prospective Payment System (IPPS) proposed rule from the Centers for Medicare & Medicaid Services (CMS) would require hospitals in 2019 to begin posting their charges “via the Internet in a machine-readable format and to update this information at least annually, or more often as appropriate.”

“Now we know that real transparency is going to require going a lot further than that,” Azar said.

He noted that CMS sought information on several other transparency initiatives, such as ways to address “surprise billing.”

“It’s not an exaggeration to say that just about every hospital bill in America today is a surprise bill for folks,” Azar said. “Every time I check the mail I have a new bill come in from my recent experiences.”

Patients have a right, Azar said, to know what a procedure costs for providers and for them. He urged provider input to create such transparency and promised to highlight organizations that provide helpful transparency.

James C. Capretta, a resident fellow at the American Enterprise Institute, said the hospital chargemaster posting requirement in the IPPS rule had the potential to be a “mess.” Transparency efforts would have a bigger impact if CMS required bundled payment providers to submit their charges for the services involved with a given condition, then set a median price based on those.

“You could use that to start setting prices,” Capretta said in an interview.

Encouraging Interoperability

Among the latest data-sharing initiatives is CMS’s Blue Button 2.0, which is a system that uses open application programming interfaces to connect beneficiaries’ Medicare data to apps that are developed by private companies.

“It’s a new and major step forward in our work to maximize the promise of health IT by giving patients access where they want it—on their phone—to their own data,” Azar said.

Azar said HHS has been urging interoperability of electronic health records (EHRs) for a decade. But new technology has allowed the government to focus less on how EHR data will be shared than on the goals of shared data. Specifically, Azar said patients need to be given access to their data but that he would leave it up to providers and vendors to figure out how they want to give that access.

Azar saw how far providers are from achieving that objective during his recent hospital stay, when he had to repeatedly give his medical history and medications list as he moved through different providers that were working for the same hospital system.

“Consider that I found this a stressful experience, and I’ve got years of experience in the healthcare field,” Azar said. “Imagine if I had been a much older patient, one with no familiarity with how the healthcare system worked.”

Instead of attempting to “micromanage” the process of EHR interoperability, Azar said the administration plans to provide “the right incentives to make it happen.”

Azar’s comments drew positive responses from hospital leaders in attendance.

“I appreciate the clarity around the [administration’s] priorities,” Melinda L. Estes, MD, president and CEO, Saint Luke’s Health System, said in an interview. “The more clarity we have, then we as an industry can respond and prepare.”

The administration also drew positive responses from hospital leaders for outreach efforts, such as the 1,000 industry comments it received when it sought input on new payment-model approaches for the Center for Medicare and Medicaid Innovation.

“I’m really encouraged by the effort his organization put in to listen and engage with those of us in the field,” Steve Arner, executive vice president and chief operating officer for Carilion Clinic, said in an interview. “That exchange opportunity is going to be positive for both our federal friends as well as those of us who are trying to take care of our patients.”

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Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare