Far-Reaching Medicare Part B Changes Violate Separation Of Powers — And With CBO’s Blessing

Members of Congress expressed outrage at the Congressional Budget Office during a recent House hearing for assuming that sweeping, untested changes to Medicare will save $34 billion “even before you know what the project is,” Rep. Scott Garrett (R-NJ) said.

“There is no cost-benefit analysis, there is no testing done, you don’t even know what they’re going to be looking at, but you’re saying this is going to save $34 billion,” he said. “That, sir, sounds absolutely absurd to me.”

The House Budget Committee hearing highlighted what members consider a power-grab by the Obama administration—with CBO complicity.

The Affordable Care Act handed significant new powers to bureaucrats at the Department of Health and Human Services by creating an entity called the Center for Medicare and Medicaid Innovation. CMMI grabbed these new powers and ran with them.

CMMI has proposed, among other things, a massive experimental project called the Medicare Part B Drug Payment Model that would force a majority of doctors and Medicare patients to participate in nationwide “demonstration” projects to test changes in how Medicare pays for drugs administered in doctors’ offices or outpatient clinics. Patients with diseases such as cancer, macular degeneration, rheumatoid arthritis, and primary immunodeficiency diseases, among others, would be impacted by this proposal with no testing on how the quality of their medical care would be affected.

Based on very limited data and dubious scoring assumptions, CBO attributes large savings to projects that CMMI would undertake, making it extraordinarily difficult for Congress to intervene.

House Budget Committee Chairman Tom Price (R-GA)—a physician—chaired the hearing and said he strongly opposes the proposed demonstration: “It’s important to remember when we talk about new payment models that we are not just talking about a computer simulation or science project somewhere in the lab. We are talking about real people and their access to care.”

Congress is outraged because the CBO says that for Congress to stop or reduce the scale of CMMI’s Medicare Part B payment demonstration, it must offset the savings. CBO says Congress would have to find $34 billion in new taxes or cut spending, most likely from entitlement programs such as Medicare and Medicaid, to close it down.

“This remarkable decision to score lost savings for demonstration projects that have yet to be announced is a sharp break with past practice,” according to testimony from Joseph Antos, a scholar at the American Enterprise Institute who has held senior positions both at the CBO and as the director of research and demonstrations for Medicare.

Antos says CBO’s savings estimates cannot be based in fact. “I am acutely aware of the limitations that research and budget analysis have in projecting the future impact of new approaches on the health system and health spending,” he testified.

Members challenged CBO Deputy Director Mark Hadley to explain why Congress’ budget scoring office has decided that Congress must find offsetting savings elsewhere to stop a project designed by the Obama administration that it never approved, that members strongly oppose, and whose presumed savings are entirely speculative.

Hadley said in his testimony that before CMMI was created, CBO was reluctant to score savings from demonstration projects: “In nearly every disease management and care coordination demonstration, CBO found, government spending was at least as high as the spending that would have occurred in the absence of the demonstration.”

One of the reasons he says CBO believes the CMMI demos will be more successful is because CMMI has the power to make participation mandatory: “According to most of the experts that CBO consulted, requiring participation in demonstrations helps the center conduct rigorous evaluations that are capable of identifying successful approaches.”

But Antos says Congress must offset expected savings for “CMMI projects based on the assumption of savings from projects that may not be implemented, or even announced, for years to come.” He provides numerous examples in his testimony of past demonstration programs that have produced savings far below original estimates.

That means that millions of senior citizens will be “participating” in an experiment without their knowledge and without any testing to see if it adversely affects their medical care or saves the government money.

The Part B demo represents a dramatic shift in power between the executive and legislative branches of government, and Congress is incensed. In a letter to CMS currently being circulated for signatures by Chairman Price, Rep. Charles Boustany (R-LA), and Rep. Eric Paulsen (R-MN), they say the proposed CMMI payment rule is an “overstep of authority, given the mandatory participation required of thousands of providers and millions of patients with serious conditions and rare diseases on a near-nationwide scale.”

“CMS’s Part B proposal…would rewrite Medicare Part B payment law for 75% of the country without going through the Constitutional procedures where legislation is debated and approved in both chambers of Congress, and subsequently signed by the President,” the legislators write.

“We look forward to your response detailing next steps as to how the agency plans to ensure that the CMMI will cease mandatory initiatives and refrain from pursuing any future initiatives that exceed CMMI’s scope of authority,” they write.

Galen Institute scholar Doug Badger, who has experience in senior positions in both the legislative and executive branches, writes, “The Founders recognized that no man is more dangerous than one convinced of the purity of his intentions and the keenness of his intellect.

“They sought to rein in these impulses by creating a federal government of limited and enumerated powers. They charged Congress and the Supreme Court with restraining the imperial inclinations of the executive branch. Those imperial inclinations have nonetheless flourished, as CMMI illustrates.”

Badger says that is “the responsibility of Congress, which created the Medicare program and which alone bears responsibility for making legislative changes to it, [but in the eyes] of the Congressional Budget Office…Congress should mind its own business and leave lawmaking to those who inhabit CMMI’s cubicles of excellence.”

The Better Way plan offered by House Speaker Paul Ryan and his colleagues earlier this year outlines House Republicans’ forward-looking policy agenda. A key pillar stresses the importance of returning to Constitutional government that would “subject agencies and bureaucracies to more scrutiny from a Congress that writes clear laws and enforces clear lines of authority.”

Members are alert to the administration’s strategy of rewriting laws without congressional approval and are determined to restore the balance of power between the two branches. If Congress must find billions of dollars to offset the costs of stopping a project created solely by the administration, the balance of power would be seriously eroded.

Chairman Price concluded his hearing with remarks to CBO’s Hadley: “It hurts me that Members of this Committee express concerns about the objectivity of the Congressional Budget Office. I hope it hurts you. And I would ask you to take back to the Congressional Budget Office concerns that you heard by Members from this Committee about that objectivity and take to heart those concerns.”

There is significant concern about the proposed Medicare Part B payment rule among groups with a laser focus on federal spending such as the National Taxpayers Union, Americans for Tax Reform, Citizens Against Government Waste. And the unease is bi-partisan: Senate Democrats have sent a letter expressing serious concerns with the CMMI Part B demonstration project. Senate Finance Chairman Orrin Hatch (R-UT) called a hearing earlier this summer challenging the CMMI overreach with the “ill-conceived” demonstration project, asserting that it “goes beyond the agency’s statutory authority.”

And former CBO director Dan Crippen writes in the Morning Consult:“Untested payment changes for Medicare benefits, especially when mandatory and applied to tens of millions of recipients, should receive much more consideration than a brief public comment period before the initiation of the new policy.”

Crippen gets to the bottom line: “Given this shift in balance of power between the two branches, and the difficulty in measuring the true cost savings from any CMMI experiment, Congress should not set precedent by attempting to legislatively offset the cost of delay or repeal of any CMMI proposal…

“Congress should exercise its authority and halt this experiment until it can properly consider the effects of the proposed policy,” he concluded.

Congress should not have to raise taxes or cut spending on other government programs to offset fictional savings conjured up by the CBO based upon hope rather than experience. If it does, it basically is ceding to the administration spending authority granted by the Constitution exclusively to the legislative branch. Members are rightly outraged.

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About the author

Grace-Marie Turner is president of the Galen Institute, a public policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform. Full biography