CMS 2025 Policy-Area Impacts

This is my third, and final, post in a series focused around the leading policy trends that will impact CMS in the next five years. The remaining two aspects focused in this article intersect with the other policy trends that I have discussed, however, their potential for impact in our world make them worthy of a standalone article. These aspects are as follows:

1. Controlling Medical Costs
2. Increasing Industry Consolidation

Controlling Medical Costs

Issues around medical costs have gotten a great deal of attention from Congress and the Executive Administration in recent years. Though these concerns are at a height, it seems unlikely that significant cost-related legislation will pass as early as 2020. It is almost a certainty, however, that such legislation will be enacted early in the new decade, though perhaps not in the first year or two. Congress and the next elected President will surely continue to treat the control of medical costs as a critical endeavor. Such actions will likely be divided into several different sectors, all of which will impact CMS and its programs.

For some time now, there has been a public outcry for greater pricing transparency in the American healthcare system. This is the first and perhaps the chief initiative to control medical costs for the general public. CMS has published regulations to force hospitals and insurers to improve pricing data for their products and services, though not without some pushback from the industry. The ever-increasing cost of healthcare in this country will continue to pressure Congress to act. Such Congressional efforts might include forcing more disclosure from the medical industry, caregivers and medication manufacturers/distributors alike. CMS will be the main agency charged with fulfilling many of these mandates. As a first step in the direction of greater disclosure, CMS recently finalized a rule requiring hospitals to make standard charges public and proposed another rule requiring insurers to provide more detailed information to their consumers.

There are also issues around Medicare payment coverage, as CMS payment-coverage policies often set a standard for overall industry coverage. As the industry begins to adopt more personalized medicine practices, such as “designer drugs” and an increased use of genetic testing, several of the current coverage policies will have to be modified. Many of these changes will be very costly, and subject to serious discussion on various tradeoffs and less-expensive alternatives. Such discussions are already beginning to occur: Seema Verma, the CMS Administrator, has made several public statements which point out problems that occur when trying to balance innovation and cost in healthcare.

Technological innovation will also impact coverage decisions. The advent of 5G technology, just one of the latest improvements in the ever-evolving field of mobile technology, will make it easier to deliver services to mobile applications. These mobile services continue to extend far beyond the traditional definitions of telehealth.

Many members of the healthcare space are aware of “surprise billing” and the financial woes it causes for many insured Americans. This has garnered a lot of attention in recent years, as Congress and the mainstream media continue to publicize horror stories about patients being billed for thousands of dollars that they did not anticipate. This is not as large of an issue for CMS as it is for private insurance agencies, due to existing payment limits on what hospitals and others can charge to the agency. Nonetheless, this is still an issue for CMS in some capacity.

Finally, there is the issue of drug pricing. The cost of drugs continues to grow in its share of the overall healthcare costs in the United States. As long as these prices rise, there will be a push for the government to find solutions that control or reduce them. Such solutions might involve indexing prices to other countries, letting CMS do direct negotiations with drug manufacturers, or expanding the supplier side to import drugs from less-expensive sources like Canada.

Increasing Industry Consolidation

This policy area includes not only the consolidation of existing entities but also to consolidate the retail giants who are now expanding their reach into the healthcare space. The rise of these new corporate goliaths creates challenges for CMS as a regulator and as a buyer. As a regulator, CMS will see this rise upend the traditional legal issues around protected health information (PHI) and covered entities. From the perspective of CMS as a buyer, having new innovative players is not necessarily a bad thing, because they can force a decrease in price and improve quality through the adoption of successful practices from other professional sectors into the health space. The problem here, however, is that if the healthcare space were to be controlled by only a few large entities, the public may eventually end up with higher prices and no improvement in quality. Low-margin areas, such as this rural American communities, will continue to lack in key aspects as these large for-profit enterprises build both vertically and horizontally across the healthcare ecosystem while only targeting the higher-profit areas. Historically, limited competition has impacted consumer choice and created higher prices in other industries.

A major challenge for CMS is that industry consolidation can make it much more difficult to manage costs and ensure a level playing field. Already, the Medicare Advantage market is dominated by a few large insurers. These insurers continue to expand their reach across the healthcare landscape by buying up PBMs, provider groups, technology companies, and health organizations across the point-of-care spectrum. Because of these entities’ extensive lobbying reach, it may prove difficult for regulators to achieve major constraints on the predatory habits of large corporations.

Closing Thoughts

CMS, as I have stated many times in this blog, has many talented employees and contractors who do great work for our country every day. CMS’ scope and influence in the U.S. healthcare market continue to expand, and perhaps much further if single-payer or public options are realized. The policy challenges that I have discussed in the last few blogs are not trivial; they require a dedicated and knowledgeable workforce who can understand and act on the various nuances and tradeoffs that any major policy decision requires, all without being unduly influenced by hordes of lobbyists and other influencers who constantly pressure CMS to bend the rules in their favor. Unfortunately, the quality and caliber of a workforce necessary to keep the policies fair will not be easy to maintain. I will discuss the CMS workforce more in a future blog. In short, our country will be in much worse shape if CMS is not able to properly oversee an increasingly complex healthcare landscape.