Wage Index in the Spotlight at Hearing on HHS Priorities

Lower Medicare payments are hurting rural hospitals, lawmakers say

WASHINGTON — An obscure federal regulation known as the Medicare Wage Index was a surprise star at Wednesday’s House Education and the Workforce Committee hearing on the priorities of the Department of Health and Human Services (HHS).

The wage index is a formula that adjust Medicare provider payments to account for geographic area differences in hospital wage levels as compared with other hospitals nationwide. “This is a huge problem across the country,” said Rep. Phil Roe, MD (R-Tenn.). In the area Roe represents, the wage index is 0.72, so Medicare reimbursement for providers there is lower than in other places.

“It makes it difficult for us to [recruit] physicians and for us to get [hospital] staff because we can’t keep them,” whereas hospitals in California and New York have wage indexes at 1.6 or 1.7, he said. “It’s really harming rural America.”

Rep. Bradley Byrne (R-Ala.) agreed. “We have a crisis in rural America with regard to small hospitals … [in my area] we have lost 12 in the law few years — we lost the last one 3 weeks ago. It’s a crisis and we’re going to lose more hospitals if we don’t do something,” he said, and asked Azar to “please tell me what Congress can do.”

Azar said this was a “statutory issue” and that he would “work with Congress and the committees of jurisdiction to propose legislation.”

Four Major Priorities

Azar began the hearing by discussing his agency’s overall priorities as outlined in President Trump’s budget proposal. “The president’s budget especially supports four particular priorities we’ve laid out for the department … fighting the opioid crisis, increasing the affordability and accessibility of individual health insurance, tackling the high price of prescription drugs, and transforming our healthcare system into one that pays for value,” he said. Azar also noted specific expenditures, such as $3.5 billion to address the opioid crisis.

Rep. Robert Scott (D-Va.), the committee’s ranking member, pointed out that Azar’s appearance represented the first time an HHS official had appeared before the Education and Workforce Committee since Trump took office, calling the appearance “long overdue,” although he emphasized that the situation was not Azar’s fault.

Scott also noted that Azar’s visit was cut short due to the fact that Trump had requested to meet with the secretary soon after the hearing concluded, forcing committee chairman Rep. Virginia Foxx (R-Va.) to allow each member only 3 minutes for questions rather than the usual 5 minutes. “It’s impossible to do oversight if [we] don’t have time to ask questions and follow up,” Scott said.

Foxx herself criticized the department for its prior lack of response to the committee. “I’ve heard from some members, especially Rep. Scott, that some inquiries to your office have gone unanswered,” she said to Azar. “I hope if you see those members today … that you can provide some forecast as to when [they] can expect a response. We all know what a high volume of mail looks like, but [answering these letters] is an important part of this job.”

Pharmacy Fees a Concern

Another issue that members mentioned was “direct and indirect remuneration” (DIR) fees under Medicare Part D — fees and adjustments made after a drug is sold to a patient. These can include rebates made by drugmakers and monetary concessions made by pharmacies. Independent pharmacies can be especially harmed by these fees, said Rep. Lou Barletta (R-Pa.). “When pharmacies [dispense a drug], they get information when what the reimbursement for them will be … however, weeks later they can be notified that some of the reimbursement will be clawed back” because of the fees, he said. “Sometimes these fees are enough to put them out of business.”

Azar called DIR fees “an important issue, and it comes up in many contexts, including specialty pharmacies … I’ve long been concerned about [this issue] and I’ve asked the [HHS] inspector general to look into this. It’s important to ensure fair competition on this issue.”

Rep. Raja Krishnamoorthi (D-Ill.) expressed concerns about the burdens imposed on physicians via the electronic health record (EHR). He noted that HHS has announced some changes to Medicare’s Meaningful Use program and its Merit-Based Incentive Payment System (MIPS) that are supposed to loosen some of the EHR requirements for doctors. “I hope these changes are more than just cosmetic,” he said. “What’s going to be the practice impact of these changes and how are you going to measure whether they’re effective in improving patient outcomes and allowing doctors to spend more time with patients?”

“Our measure of success is, when the patient shows up, does their data arrive with them?” Azar replied. “Do they own it? Do they have access to it?” He added that HHS would also like to see doctors interacting with patients and not looking at the EHR. “I would love input from any source on how to make this work better.”

Addiction Training for Physicians

Rep. Donald Norcross (D-N.J.) asked about addiction training for would-be doctors. “Four hours in 4 years — that the average amount of time a medical student is trained in the diseases of addiction,” he said. “What is the department doing to make sure doctors are trained properly?”

“This is a passion of mine,” Azar said, adding that many states are looking at requiring addiction training as part of medical school accreditation requirements. “I would love to work with you; this is quite important.”

The Affordable Care Act (ACA) came in for its share of controversy during the hearing as well. Rep. Joe Courtney (D-Conn.) asked Azar to clarify the department’s pricing policies for the ACA’s health insurance exchanges — specifically, whether HHS was going to stop allowing insurers to substantially raise the price only of their “silver” level plans to account for the federal government stopping the payment of its cost-sharing reduction (CSR) subsidies.

“Is your department going to mandate” spreading that increased cost over all the plans, “which will result in large premium increases?” Courtney asked.

Azar said any action couldn’t be taken in time for plan rate-setting in 2019, and added, “I don’t think it’s a facile question how one addresses that.”

“All I’m asking is a clear answer from the department,” Courtney said, but Azar didn’t elaborate further.

In her closing remarks, Foxx used the opportunity to criticize the ACA. “All of us want to see people have access to affordable, effective healthcare, but putting Washington in charge of that is simply not going to work,” she said. “I’m sorry it’s failed so miserably, but it has, and we ought to own up to it and get on with our business and do everything we can to fix it.”

Author: Joyce Frieden
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