3:45 PM
Nov 08, 2018
 |  BC Extra  |  Politics & Policy

Azar teases new push for mandatory episode-based payment models

HHS Secretary Alex Azar said Thursday that the agency plans to revisit episode-based payment models on cardiac care and explore a mandatory episode-based payment model focused on radiation oncology, as the agency looks to move beyond voluntary bundled payment models as a means to cut costs. Both could include drug costs in the bundle.

HHS has already seen “significant savings” from its voluntary Bundled Payments for Care Improvement (BPCI) model, which covers joint replacement, pneumonia and several other common inpatient episodes, but needs to move beyond voluntary initiatives, Azar said in remarks at the Patient-Centered Primary Care Collaborative in Washington.

“Real experimentation with episodic bundles requires a willingness to try mandatory models,” Azar said, calling such models the most effective route for evaluating whether bundles can cut costs and improve quality.

The Trump administration pulled back episode payment models on cardiac care last year before they launched, but HHS has since re-evaluated episode payment models for “value-based transformation,” one of the agency's priorities, Azar said.

"There is nothing virtuous about maintaining outdated systems within Medicare fee-for-service -- effectively a mandatory system for so long -- when we know we could be exploring better alternatives," Azar added.

When CMS finalized the cancellation of mandatory episode payment models on cardiac care last November, it said: “Not pursuing these models gives CMS greater flexibility to design and test innovations that will improve quality and care coordination across the in-patient and post-acute care spectrum.” The episode payment models had been slated to launch Jan. 1, 2018.

BIO spokesperson Daniel Seaton told BioCentury the organization hopes HHS's episode payment models consider separate payments for drugs where appropriate. "Patients should receive treatments based upon clinical considerations, rather than hospital and provider financial incentives," Seaton said.

In a statement Thursday, the American Society for Radiation Oncology supported advancing alternative payment models for radiation oncology, but expressed concerns about requiring mandatory participation out of the gate. New models represent a "significant departure from the status quo," ASTRO said. "Care must be taken to protect access to treatments for all radiation oncology patients and not disadvantage certain types of practices."

Azar did not say when the programs would launch, or how much savings he expected the models to generate, but he did signal the initiative was a priority for HHS.

“If you have any doubt about our ambitions in this area, consider the IPI model we introduced,” Azar said.

HHS proposed the mandatory International Pricing Index (IPI) model on Oct. 25 to address price disparities between what the U.S. and other countries pay for drugs (see "Backing into Value with Part B").

Following the proposal, American Society of Clinical Oncology CEO Clifford Hudis told BioCentury ASCO opposes mandatory participation in any demonstration because “such a requirement exposes large numbers of patients and practices to unknown outcomes from an untested model” (see "Trump's Divide and Conquer Part B Plan").

On Thursday, Hudis reiterated ASCO's "significant concerns" about any mandatory demonstration project. "We strongly support the Secretary's goal of testing multiple models," Hudis said in a statement, but the group urged the administration to "conduct such experiments with willing participants."

ASCO has also come out against payment bundles where all treatment costs are bundled into a single episode-based payment. In a July 2017 statement outlining its position on ways to address cancer drugs' affordability, ASCO threw its support behind testing value-based pathways, indication-based pricing and outcomes-based pricing (see "ASCO Outlines Position on Cancer Drug Pricing").

An HHS spokesperson declined to provide further comment on the agency’s plans.

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