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Healthcare continues to be one
of the most important topics you
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think about in the United States
economy. And apparently, one of the
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areas that is focused on even
more so right now is the Center
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for Medicare and Medicaid
Services. The agency oversees
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$1.7 trillion in outlays in
healthcare services. To tell us
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what's going on there right now,
a pleasure to be joined by Ezekiel
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Emmanuel, who's Vice Provost for
Global Initiatives here at the
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Wharton School. You recently
penned an opinion piece in the
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medical journal <i>Stat</i> about the
agency.
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Zeke, great to catch up with
you again. How are you, sir?
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Besides being hoarse, I'm great.
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Well, I'll try to make this
painless, if I can. It is
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obviously an interesting time
for healthcare. There's so much
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discussion. There's even, to a
level, so much concern. But you
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say that this is an agency, CMS,
that really is standing out
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right now with some of the
things that they are doing.
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Well, you know, when Trump won, it
was the FDA that was a standout
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under Scott Gottlieb. And I
think Mehmet Oz has been doing a
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great job. He has a lot of
independence. He's very focused
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on bringing modern technology.
And they've launched some new
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initiatives, you know, to get
rid of some waste, like WISeR.
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And they're sort of giving
primary care a boost. And
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they're also trying to rein in
Medicare Advantage, which MedPAC
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at least suggests has
almost $90 billion per year of
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over billing in various ways,
whether through upcoding or
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selection of patients. So those
are important initiatives. Not
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every— I don't agree with
everything, of course.
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- Right.
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But that's the nature of policy. You
can— you can admire a group without
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necessarily agreeing, and
everything gets done. And I
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think the most important thing
one gets is sort of the
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intention to really try to
improve the system.
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Right. And because I think a lot
of people still believe that where
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we are right now and where we
need to be, there's still a
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fairly long pathway to try and
get to where this healthcare
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system needs to be in the years
ahead.
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I would say there's unanimity on
that point. - Yeah.
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Which is, the system
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is failing. I think everyone
agrees the system is failing.
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What we don't have now— you
know, sorry to go off, but
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political scientists say three
things are needed for major
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legislation and change. You need
a recognition of the problem.
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You need a clear policy. And you
need a policy window to open
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from an election or, you know,
some tragedy or something like
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that. We don't have a path
forward. We have lots of steps,
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but they're not a coherent
strategy. And I think that's
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what, over the next few years,
we're really going to need
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to focus on.
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All right. So a couple of things
that you mentioned, and you
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mentioned in the article. One
being the potential financial
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benefit of doing procedures in
facilities outside of hospitals.
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- Right.
- Take us into that.
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So it's called "site-neutral
payment." Basically, when the
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government, as well as private
insurance, they pay for the
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facility where you do the
procedure, the surgeon, the
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anesthesiologist, whatever else.
The problem is that when you do
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the procedure in an operating
room of a hospital, a facility
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fee— which is the biggest
portion of it, way more
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expensive than the doctors— is
way higher in hospital than at,
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say, an ambulatory surgery
center or even a physician's
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office. And that price
differential can be, you know,
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thousands, and potentially more than
ten, $20,000 depending upon the
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procedure. Many of us have been
advocating for, I would say,
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years, if not decades, that we
should have what's called site-
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neutral payment. Wherever you're
doing the procedure, you get the
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same amount of money so that you
incentivize it, to do it in the
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lowest-cost facility. Look, many
years ago, hips were only done—
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many years ago, a decade ago—
hips were only done in hospital.
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Then they made advances, and you
could do it in an ambulatory
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surgery center and spend 24
hours. Why are we paying the
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extra payment to a hospital?
It also incentivizes hospitals
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to get those costs down.
- Right.
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One of the things you also
talked about in terms of pay was
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what primary care physicians get
in comparison to specialists,
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and— explain why that stands out.
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Well, look, we know that primary
care doctors, there's good
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evidence that more primary care
doctors actually reduce
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mortality in a region and
increase health. In America,
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we've had— compared to every
other country, we have too many
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specialists compared to doctors.
There's a long history. It
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really probably goes back to
World War Two, when the military
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wanted specialists to treat
wounded soldiers and gave them
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higher rank in the military and
pay them more. And that carried
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over after a war into insurance.
The problem is primary care
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doctors make, you know, a half,
a third, a quarter of what
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surgeons and specialists make.
You're not going to attract that
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many people into primary care.
And yet they're critical for
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improving the health, especially
where the primary need is to
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treat chronic illness and manage
chronic illness and keep those
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people out of the hospital. So
increasing the pay of primary
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care doctors has long been,
again, something lots of people
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have urged, and this
administration is actually doing
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something in that direction.
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You also noted that the
Innovation Center at CMS is
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doing some good things, and I
guess I should say it's
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continuing to do good things.
And you know, having been around
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business as long as I have as a
journalist, we know how
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important innovation is to all
businesses.
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Absolutely.
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And we put in the Affordable
Care Act, a billion dollars a
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year to the Innovation Center to
develop new payment policies and
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other innovations that would
increase quality or lower cost.
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Now, the person heading what's
called CMMI, which is the
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Innovation Center, we should
champion. He's a Penn grad. He's
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a former secretary of mine. I
will say he got an A, and he's
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putting all the good stuff we
instilled in him to work.
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They've come out with several
really new models, and we're
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anticipating another model to
drop this month, maybe on
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Medicare Advantage. And so one
of the things they've done is
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they've seen a lot of abuses,
and they've said, listen,
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Medicare traditionally has not
had prior authorization. But
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areas where we've had abuses,
like skin substitutes, that have
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gone up 40 fold in less than
five years in terms of billings
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into the billions— we're going
to have prior authorization.
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And, you know, I think that's
actually really important to get
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rid of. A lot of— this is clear—
some of it's clear fraud, some
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of it's clear abuse, and all of
it's waste.
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How, then, do these potential
changes being made, and the
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advancements being made,
potentially impact the insurance
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industry? Because that's the
other side of this equation that
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seemingly is drawing more and more
attention these days.
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Well, one of the positive things
is they have this new access
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model, which is trying to get
more AI and apps, and use more
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virtual care in. Again, I think
one of the really positive
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steps. And they've collected not
just lots of tech companies,
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health tech companies, but
they've also collected a lot of
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private insurers to say that
they're going to participate
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with the model, too, and adopt a
lot of that innovation, which I
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think— again, very, very smart
move. Something, frankly, the
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Biden administration did not do
enough of. I've been urging, look,
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you've got to put a lot of money
behind every innovation you want
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adopted, because doctors get
paid from lots of different
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sources. Unless they're hearing
a coherent message, it's hard
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for them to change their
practice, just for Medicare or
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just for one insurer.
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You also noted that there— while,
you know, we've touched on the
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things that seemingly are going
very well and obviously will
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help CMS and help health care,
that there are some things that
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maybe they still need to address
that maybe are not going in the—
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in the path that they should.
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Well, I think, you know, the
obvious elephant in the room is
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Medicare Advantage. More than
half of seniors are now on
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Medicare Advantage. It's
hundreds of billions of dollars,
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and we know that its risk
adjustment methodology is
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antiquated. It's inaccurate.
Everyone agrees to that. It's
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abused. There's a lot of gaming
going on. Everyone agrees to
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that. And yet, Medicare has been—
glacial is maybe the best word,
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in revising that. And, you know,
when they developed the current
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risk adjustment methodology,
almost 30 years ago, they had—
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they recognized they didn't have
the technical skill, and they
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brought in people to help them.
I don't see that happening. You
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know, we at Penn have developed
a risk adjustment methodology
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which is three times more
accurate than what they use. And
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I have to say, getting a hearing
there has been hard.
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Overall, how are you feeling,
then, about CMS right now?
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Well, look. One is an absolute
statement. One is a comparative
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statement. The comparative
statement. Compared to all other
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agencies working for the
government, it's the best. I
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think I can say that pretty
clearly. Compared to absolute
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scale, I think it's going in the
right direction. I think there's
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many other things that could be
done that we have urged them to
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do. Nonetheless, I think, you
know, if I were to be objective
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about it, I think compared to the
four years under Biden, it's better.
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Zeke, great to catch up with you
again. Thanks for your time and
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your insight.
- Take care.
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Thank you. Ezekiel Emanuel,
who is Vice
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Provost for Global Initiatives
at the Wharton School.
