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Review of Trump's Medicare Executive Order

By Sarah K. Weinberg, MD, HCFA Newsletter Editor
Originally Published in the Fall 2019 Newsletter

On October 3, 2019, the President released an Executive Order to counteract the Medicare for All Act of 2019 ("Medicare for All") that has been filed in the House of Representatives.

This entire Executive Order should be viewed as an attack on Medicare for All proposed legislation and is designed to sow confusion and distrust regarding the classic Medicare program that has been in effect for over 50 years. 

Follows is a section-by-section summary and review of the Executive Order. Comments are shown in italics.  

The entire Section 1 is a two-page diatribe claiming that Medicare for All would destroy the health plan that seniors know and love; "eliminate health choices for all Americans" (referring to insurance choices, not actual health care choices); and "compel Americans to pay more in taxes". To "protect and improve" Medicare, the emphasis will be on increasing the "market-based" aspects of the current system.

Section 2 sets policy to enhance fiscal sustainability using alternative payment schemes linked to "value", yet somehow "lower regulatory burdens" on providers.

Section 3 encourages more Medicare Advantage (MA) plan choices, include "Medicare Medical Savings Accounts", allow cash rebates as "incentives to seek high-value care", not allow Fee for Service (FFS) Medicare to be promoted above MA plans, and (here's the big one!) "modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market". This will "inject market pricing into Medicare FFS reimbursement.

Section 4 allows the Secretary of the Centers for Medicare & Medicaid Services (CMS) to adjust network adequacy requirements for MA plans. This has to do with the competitiveness of the health market in some states and boosting telehealth services.

Section 5 claims to enable "providers to spend more time with patients". What it really does is to loosen licensing and supervision requirements and equalizing reimbursement between physicians and non-physician practitioners.

Section 6 speeds the "approval, coverage, and coding process" to bring new products to market faster. This section also encourages allowing MA plans to "cover items and services that make use of new technologies that are not covered by FFS Medicare".

Section 7 CMS policies are to "encourage competition and a diversity of sites for patients to access care."

Section 8 CMS to "propose a regulation" (What?! A new regulation?) to generate "better quality care and cost data". There will be additional information from Medicare claims data regarding practice patterns for services "that may pose undue risks to patients" and to inform health providers about "outliers, or... outside recommended standards of care".

Section 9 The mandatory clause about combatting "waste, fraud, and abuse". Now the use of artificial intelligence technology will be allowed. (Will drone attacks on abusers be next?) Also in this section, the Secretary shall "recommend approaches to transition toward true market-based pricing in the FFS Medicare program". Possibilities: shared savings and competitive bidding in FFS Medicare; use of MA-negotiated rates to set FFS Medicare rates; and "novel approaches...."

Section 10 Secretary to change or eliminate regulations "that create inefficiencies or otherwise undermine patient outcomes."

Section 11 Allowing seniors to opt-out of Medicare Part A (hospitalization insurance included in Social Security) without losing their Social Security benefits. This will open the door to "private contracts" and the "development of market-driven prices".

Section 12 General disclaimers about not interfering with the authority of executive departments, agencies or their heads; the functions of the Office of Management and Budget; applicable law; and the "availability of appropriations". Also, this order "does not create any right or benefit..." that would be "enforceable at law."

The underlying theme of this entire Executive Order is to make Medicare more like the health insurance system available to American residents under age 65. While the expectation throughout is that a market-driven system will be cheaper without lowering quality or accessibility, which has not been borne out by experience over the years. Especially, the comparison of MA plans with FFS Medicare leads to the conclusions that MA plans cost Medicare more, and encourage disenrollment of those who become expensively sick.

Market forces may indeed lead to lower prices in consumer goods, but health care does not function that way. Indeed, corporate providers, drug companies, and device makers have successfully driven up prices that health insurers simply pass on to their enrollees as higher premiums and/or cost-sharing (deductibles, co-pays, & co-insurance).

There is also a lot of hot air in this Order. Many sections depend on recommendations to come from CMS. It's not at all certain that recommendations to accomplish the goals can be found. Examples:

- More payment-for-value schemes that also lower regulatory burdens?
- Monetary rebates to create incentives to seek high-value care?
- Eliminating waste, fraud, and abuse by using artificial intelligence?

This Order may have two effects:

1) Confuse people about the benefits of Medicare for All by making totally baseless claims that it would destroy Medicare for seniors, and by conflating choice of insurance with choice of provider for actual health care.

2) To the extent that this Order is implemented, it will undermine FFS Medicare, and can lead to severe cuts based on "availability of appropriations".

Link to Fact Sheet released by the White House 10/3/19.

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