A few weeks ago, Paragon released a policy brief by Drew Keyes and Joe Albanese, detailing recommendations for the lame-duck Congress. The brief contained three main recommendations: 1) tying any supplemental COVID-19 funding to a prompt end of the public health emergency (PHE), 2) not increasing overall Medicare spending, and 3) avoiding major public health policy changes that have not been well-vetted.
Recent speculation about a possible deal permitting states to begin Medicaid redeterminations reinforces the need to promptly end the PHE. Congress must clearly and immediately end the PHE without any gradual phasedowns in the enhanced 6.2 percentage point increase in the federal reimbursement of state Medicaid spending that is tied to the emergency.
A Health Policy Agenda for the 118th Congress
While lame-duck activity will dominate Washington’s attention for the next few weeks, it’s important to start agenda-setting given that the 118th Congress will take their seats in a month. Today, Paragon released a policy brief outlining recommendations for a positive health policy agenda for the next Congress. This agenda includes legislative reforms as well as oversight matters.
Legislative Reforms
Congress should take several actions that put patients in control and expand health care choice and competition, including:
- Codify rules that expanded Association Health Plans and short-term plans, so Americans have more flexible and affordable coverage arrangements.
- Codify and build on rules that require upfront and actionable prices from hospitals and health insurers.
- Build on individual coverage health reimbursement arrangements through which workers use employer contributions to purchase coverage that works best for them.
- Reduce providers’ incentives for consolidation by enacting site-neutral payments in Medicare, removing problematic programs like Obamacare’s Medicare Shared Savings Program, and reforming the 340b Drug Pricing Program.
If the lame-duck Congress does not end the PHE, then the 118th Congress should. The new Congress should use the reauthorization of the Pandemic and All-Hazards Preparedness Reauthorization Act (PAHPA) to focus on needed public health reform. Congress should address problems with public health agencies and the process by which those agencies are authorized and funded.
Public health reform should start with the CDC. Congress should ensure the CDC’s role is properly defined, lay out a center-by-center authorization of the agency, reform its emergency powers, cut redundant activities, and reassign functions that may be carried out more effectively by other agencies. Activities that state and local governments are best equipped to do should not be crowded out by federal actions.
The NIH should be reformed to avoid groupthink and ensure the science it funds efficiently serves the public interest. The new Congress should also begin outlining FDA reforms.
Oversight
The new Congress will have a lot of important health care oversight work to undertake. Most important is an examination of the numerous failures with the federal COVID-19 response, including the promulgation of policies without scientific basis, poor communication, and an unprecedented, and often unlawful, expansion of government authority like the eviction moratorium. Congress should also investigate the growing politicization of public health agencies.
The Biden administration has also recklessly, and in one case illegally, expanded federal health care programs. The next Congress should conduct oversight of the illegal IRS rule to fix the so-called “family glitch” and the White House pressure on the IRS to change its implementation of the tax code to further expand government control of health care.
The need for Medicaid oversight is particularly acute given extraordinarily high improper payments in the program, as explained further below. Paragon has previously provided information on problems that Congress should investigate resulting from the dramatic growth of Medicaid managed care.
Improper Payments Permeating Federal Health Programs
Waste, fraud, and abuse in federal health care programs are perennial problems, and large payment errors are a sign of significant program mismanagement. A new policy brief that I coauthored with Joe Albanese takes a deep dive into CMS’s recent improper payment report.
Recently released data shows over $130 billion per year in improper federal payments, which are largely driven by unwise Medicaid policies and lax program integrity efforts. As we explain in the policy brief, questionable data collection practices mean that actual improper payments are likely much higher. It’s also important to note that improper payments do not account for the significant amounts of low-value spending in federal health programs that provide enrollees with little, if any, actual benefit so long as that spending follows program rules.
More than 60% of the reported improper payments are within the Medicaid program. The main takeaway: improper payments in Medicaid soared because of the Affordable Care Act’s expansion of the program. The federal government pays nearly all the Medicaid cost for expansion enrollees, and this payment structure caused lax eligibility reviews at the state level. The main cause of improper payments is states enrolling people in Medicaid who are not eligible or who have not had their eligibility properly determined prior to enrollment.
Unfortunately, we don’t know the true extent of the problem because CMS has failed to adequately track this rise in improper spending.
CMS stopped Medicaid eligibility reviews as part of its overall audits from 2014 to 2017. When it restarted eligibility reviews in 2018, there was a huge increase in reported improper payments (from a $36 billion in the 2018 report to $57 billion in the 2019 report), even though only one-third of states had eligibility reviews accounted for in the 2019 report. CMS audits one-third of states a year for these audits, and the report is the average of the three most recent years.
The 2020 report showed a further surge in Medicaid improper payments (up to $86 billion) as a second third of the states were reviewed for eligibility. The 2021 report did not fully assess eligibility in the final third of states, citing complications with using federal tax information for income verification. Despite this, Medicaid improper payments still rose to $99 billion in that report.
Other shortcomings in CMS’s error measurement stem from the pandemic. CMS paused all its improper payment activities from April to August 2020. The most recent report again cited “COVID-19 flexibilities,” such as postponed eligibility determinations, as a factor in its lower reported improper payments rate in the third of states reviewed this year.
In the policy brief, we discuss how improper payments are also a problem in both Medicare and the Children’s Health Insurance Program, and the brief contains several useful tables and figures for policymakers to understand the trends of reported improper payments in federal health programs.
There are ways to reduce massive improper payments. We concluded that policymakers should reform government health programs in ways that expand patient control of the dollars as patients would then have incentives to ensure higher value expenditures. And the political leadership in charge of managing these programs must prioritize program integrity efforts.
Zinberg’s public health take
Finally, Dr. Joel Zinberg, the director of Paragon’s Public Health and American Well-being Initiative, has a couple of recent commentaries that you may find of interest:
- End the Vaccine Mandates, City Journal, November 27, 2022.
- Biden wastes billions on COVID boosters no one wants, NY Post, November 25, 2022.
All the best,
Brian Blase
President
Paragon Health Institute
