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GOP Faces Budget Hurdle in Bids to Limit CMS Center

By Kerry Young, CQ Roll Call

September 7, 2016 -- House Republicans will encounter a hurdle if they put forward a serious plan to end the Obama administration's Center for Medicare and Medicaid Innovation (CMMI), which is at the heart of one of Washington's big fights over health policy. A federal budget expert on Wednesday said the center is likely to save $34 billion over a decade.

The House Budget Committee held a hearing Wednesday about the center, which was created in the 2010 health care law to test ways to improve care and save money. 

"Unfortunately, under its current analysis, the Congressional Budget Office (CBO) tells us that any altering of CMMI's demonstration activities would result in a substantial loss in savings," said House Budget Chairman Tom Price, R-Ga. Republicans say the center's work represents an overreach of executive authority.

One of the biggest disputes is over the center's proposed tests of payments for drugs, such as chemotherapy, that doctors provide in their offices. Drugmakers, many doctors and lawmakers oppose the center's proposed alternative Medicare payments for drugs, known as the Part B drug model. Groups including AARP and the nonprofit Medicare Rights Center back it as an initial step toward addressing the nation's rising drug costs.

In June, House Republicans proposed in a policy paper to end the center in 2020, when the center's initial $10 billion funding will lapse. House GOP appropriators also want to rescind $7 billion from the center through the fiscal 2017 Labor-HHS bill (HR 5926). Committee Democrats opposed this. The Senate version (S 3040) wouldn't make this cut.

Mark Hadley, deputy director of the CBO, told the budget panel Wednesday that the center's initiatives may save about $30 billion between fiscal 2021 and 2026. CBO projects another $4 billion in earlier savings between fiscal 2017 and 2020, for a total of $34 billion over a decade.

Republicans' efforts to block the drug pricing proposal also would likely result in the loss of federal savings. CBO's Hadley told reporters Wednesday that the budget office may complete its cost estimate of the proposed Part B drug model in the next several weeks. This could complicate efforts to move a bill (HR 5122) to block the center's Part B drug model. The Centers for Medicare and Medicaid Services (CMS) has not set a date for releasing a final version of the administration's proposal, first unveiled in March.

The projected savings from the center and its drug proposal present a challenge for Republicans, who in recent years have called for offsets when CBO estimates that legislation would result in costs to the federal government. The federal debt held by the public rose to $14.1 trillion from $5 trillion in the past decade.

The first test of the GOP's strategy in blocking the center's project could happen this fall.

Kentucky Democrat John Yarmuth predicted at the hearing that Republicans will seek a workaround to the hurdle of the CBO estimate if they seek to limit the center's work.

"If Republican leadership doesn't like the CBO score, it can waive its own cut-as-you-go rule or redefine the baseline and pass the bill regardless of the cost," Yarmuth said. "I am guessing that the majority will ultimately end up doing that here, and that's too bad because the demonstration projects being pursued by the innovation center are incredibly important."

Differing Views

A former CBO official told House Budget that the agency is making a mistake in counting heavily on savings from the center, which is in the early stages of its work.

"If you look back at past behavior by CBO, it would never have assumed savings from demonstrations," said Joseph Antos, who served as the budget office's assistant director for health and human resources from 1995 to 2001.

Antos, now an American Enterprise Institute researcher, raised concerns about reported financial results of the center's early work. He referred to an analysis in which Ashish K. Jha, director of the Harvard Global Health Institute, says one of the center's key efforts lost $216 million last year.

In a recent blog post, Jha drilled into the costs of accountable care organization programs, which are meant to give hospitals and doctors financial incentives to improve care. ACOs are part of the groundwork for larger efforts to move away from the traditional fee-for-service approach to Medicare reimbursement, which bases pay on volume rather than the quality of medical care.

There are difficulties inherent in estimating future savings from the center's work, whether done by CMS itself or CBO, because of the limited data available and guesswork about the future, Antos said.

"What is sometimes overlooked is that any assessment of the spending impact of a CMMI demonstration project is not a simple accounting exercise," Antos said. "The estimate is, ideally, the best one can forecast at the moment, but the savings are far from certain."

The House Budget hearing made clear partisan splits about the center. Price views the program as an example of presidential overreach that may disrupt the care of people enrolled in Medicare, which covers about 55 million people. By changing payment in tests, the center may cause doctors to stop providing certain treatments because of expected financial losses, critics of the Part B drug model argue.

"When we talk about new payment models, we are not just talking about a computer simulation or a science project in a lab somewhere," Price said at the hearing. "We are talking about whether or not seniors on Medicare are able to receive the medications or treatment options that their physicians believe are in the best interest of the patient."

But the center has its staunch backers as well. It was designed to take the approach that venture capitalists do, funding many projects in the hope that a few will pay off. Rep. Tim Ryan, D-Ohio, argued for more federal funding for the center, with the knowledge that some efforts will fail. He said the winners among its projects may restrain spending growth for Medicare, which already costs about $600 billion a year. The center's aim is to save money while also improving the care that elderly and disabled people get from doctors and hospitals.

"We've got to spend a little bit of money from the government side to figure out how to do all of this better," Ryan said. "The private market is not going to do it. They keep getting paid to do the same thing."

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