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Mr. Azar goes back to Washington

It's a propitious time, at least for conservatives, for Alex Azar to take the top job at HHS. All elements have aligned for him to mold the Affordable Care Act, Medicaid and Medicare according to a vision they can support.

Things have changed since Azar last served at HHS under President George W. Bush. The ACA didn't exist then, and the Bush era's major overhaul to Medicare with Medicare Advantage and Medicare Part D became Azar's signature accomplishments during his time at the department.

It's his experience with these reforms that indicate how he would reshape the ACA, grapple with rising drug prices and manage Medicare and Medicaid.

Now Azar is poised to take the helm at the mammoth department and its $80 billion budget. The Senate Finance Committee is expected to move his nomination to the full Senate in the coming weeks amid a lack of known opposition to his being confirmed as HHS secretary. During his confirmation hearings, he left little doubt that he can advance his agenda with an efficiency that eluded the embattled Dr. Tom Price.

Azar—a former HHS legal counsel and deputy secretary, as well as a powerful pharmaceutical industry executive—holds Democratic respect for his expertise even if they fear his policy positions. And, according to former colleagues, he is also respected by the career HHS staff. He will have the winds of cooperation at his back.

THE TAKEAWAY
Times have changed since the former George W. Bush administration official last served at HHS. This time, elements are in place for Alex Azar to undertake a healthcare overhaul of his own.

"HHS will like him," said Tom Scully, who, as former CMS administrator under George W. Bush, worked with Azar when Azar was general counsel.

"I think Alex will accomplish a lot as the HHS secretary," said Roman Gurule, a former CMS official under Presidents George W. Bush and Barack Obama who also worked with Azar. Gurule acknowledged he may not agree with many of Azar's policies, but he admires the nominee's smarts and expertise. "As deputy secretary, he was the substantive policy and organizational leader kind, not the usual ceremonial kind."

Similar accolades flow in, with words like "leadership," "true gentleman," "fair" and "process guy."

As Scully noted, Azar is also an Indiana person: he led U.S. operations for Indianapolis-based pharmaceutical giant Eli Lilly and Co. The geographic link to Vice President Mike Pence, an Indiana native who has been chiefly responsible for staffing senior positions at the CMS, forms a ready alliance with appointed staff. Scully also expects Azar to slide into an easy working relationship with CMS Administrator Seema Verma, another Hoosier. This would contrast sharply with the experience of Price, whose reported personality clashes with Verma—even though they supported similar policy measures—fueled Washington gossip during Price's tenure.

Former colleagues and friends say Azar is a man of his word and will accomplish what he promises—reshaping the ACA exchanges, making value- and market-based program changes along the lines of Medicare Advantage, tackling drug prices in Medicare and curbing Medicaid. And he is expected to do all of that collaboratively.

Price was not right

Azar has differed strikingly from his predecessor Price, starting with his nomination.

Price, a former surgeon and Georgia congressman, faced one of the most contentious confirmations of any of President Donald Trump's picks, and not only because of ethics questions over controversial stock trades that dogged him throughout the process.

Price's hearings inevitably spiraled into high-pitched arguments about the ACA, exacerbated by their timing as Republicans laid the groundwork for a failed attempt to repeal and replace President Barack Obama's signature law.

Azar has already reaped the benefits of congressional exhaustion over ACA repeal attempts, even though he is better positioned and equipped than Price to achieve an individual market overhaul of his own, according to Washington insiders.

"We must make healthcare more affordable, more available, and more tailored to what individuals want and need in their care," Azar said last Tuesday in his confirmation hearing before the Senate Finance Committee.

The administration has already proposed relaxing some ACA insurance reforms, giving states more leeway on so-called essential benefits. HHS has also moved to clear the way for growth in association health plans and short-term insurance.

Add in the GOP's repeal of the individual mandate penalty, as well as momentum for reinsurance proposals, and Azar has all the tools he needs to splinter the core of the ACA's policies for a single risk pool and build it into a different kind of market.

"Alex is a good person to lead that," said Dr. Mark McClellan, who served as a CMS administrator and FDA commissioner under Bush. McClellan said Azar has the right combination of legal expertise, policy knowledge and practical experience to succeed in leading HHS.

The Medicare Advantage model

Medicare Advantage and Medicare Part D offer a key lens into Azar's approach to the policy goals he said he will tackle if confirmed.

"How we developed and finalized the (Medicare Advantage) policy, how we reached out to the American public about the drug benefit—Alex spent a lot of time on the road explaining the new coverage—through all of that he was very committed to getting the policies right and getting them out there," McClellan said.

Azar also touted his accomplishments in Medicare as the way forward through involving private companies in policy implementation.

Value-based payment models, Azar said, are the future. "We must harness the power of Medicare to shift the focus in our healthcare system from paying for procedures and sickness to paying for health and outcomes," he said. This way, the government can leverage "what is best in our programs and in the private, competitive marketplace."

Senate Democrats, though, blasted Azar for the unprecedented spikes in Eli Lilly's insulin prices that occurred during his tenure as president of the company's U.S. division.

The system is to blame, Azar told senators. Drug companies have every incentive to keep prices high.

Let PBMs negotiate prices

Instead of negotiations on prices, he touted the Part D pharmacy benefit manager model that he wants to adopt for physician-administered drugs in Medicare Part B.

"Can we take the learnings from Part D and apply them to Part B?" Azar said, in his most specific policy recommendation mentioned during the confirmation hearing.

The suggestion echoes the July 2017 paper from the Medicare Payment Advisory Commission, a congressional advisory panel, which recommended the same approach.

While the idea is controversial, his former colleague McClellan said he has no doubt Azar will also apply value-based models to drug payments.

Azar is also clear he wants to join Verma in ratcheting back Medicaid growth. Two factors in play will likely help Azar and Verma cut the program. First there's Verma's fast-tracking of state work requirements for able-bodied adults on Medicaid. But also significant is the CMS' action in late December, when the agency granted Mississippi a 10-year 1115 family planning waiver.

This was the first time the agency has approved such a long demonstration and signaled a new approach that widens the berth states have to implement their own versions of Medicaid.

Democrats respect Azar's expertise and abilities.This is why, perhaps, they fear him too. He is the one who can reshape how their health policies work in the real world.

"He seemed to say the right things in the hearing," Missouri Democratic Sen. Claire McCaskill said shortly after she sparred with Azar in a heated exchange over his approach to lowering drug prices. "But the actions of this administration have been pretty clear."

"We will have to see," she added.

Susannah Luthi covers health policy and politics in Congress for Modern Healthcare. Most recently, Luthi covered health reform and the Affordable Care Act exchanges for Inside Health Policy. She returned to journalism from a stint abroad exporting vanilla in Polynesia. She has a bachelor’s degree in Classics and journalism from Hillsdale College in Michigan and a master’s in professional writing from the University of Southern California.

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http://www.modernhealthcare.com/article/20180113/NEWS/180119935