The Center for Medicare and Medicaid Innovation Has Too Much Power

By Joseph Antos, Ph.D. & James C. Capretta RealClearPolicy Contributor December 28, 2018

In the Affordable Care Act (ACA), House and Senate Democrats created a powerful and little-known agency — the Center for Medicare and Medicaid Innovation (CMMI) — that can bypass Congress as it reshapes U.S. health care. While its work is described as conducting research, the CMMI can develop and implement sweeping new policies that change how the giant public insurance programs — and ultimately the entire health system — are run. Congress should defend its prerogatives in the policymaking process by limiting the CMMI’s authority.

The CMMI’s power has been on display in recent weeks. The Trump administration has proposed an international price index to cap Medicare drug payments and is planning to use the CMMI’s broad authority to put the concept into effect. Whatever one thinks of the index, it is unquestionably a major policy change with consequences that extend well beyond Medicare. Without the CMMI, Congress would have had to pass new legislation to turn this idea into national policy.

Establishing a policy making process that can get around Capitol Hill gridlock is tempting, but it comes with risks. The CMMI is a new benchmark in the ever-growing power of the executive branch, which is crowding out the role Congress should be playing in our constitutional system.

To a large extent, the rise in the relative power of the executive branch has been Congress’s own doing. Congress has delegated too much discretion to federal agencies, and, as partisan gridlock has made legislating more difficult, executive agencies have filled the policymaking void. It is no surprise that, after Democrats lost control of the Senate in 2014 (the House had already flipped in 2010), President Obama felt he could still govern effectively by exerting the expansive powers of the executive branch through his “pen and phone.”

In creating the CMMI, Congress once again ceded to the executive branch the power to establish policies that traditionally have fallen within the purview of Congress. The CMMI has the authority to test and evaluate new health-care policies for Medicare and Medicaid programs, and then put them into effect on a permanent basis if they are found to cut costs without harming quality.

The CMMI’s authority is so broad that very little is beyond its potential reach. In addition to the international price index, the agency could change how Medicare pays private insurers operating as Medicare Advantage plans, introduce a public option into Medicare’s drug benefit, or restructure how physicians get paid in the traditional Medicare program.

The CMMI’s vast power is backed by generous funding. The ACA granted the CMMI an initial appropriation of $10 billion to begin its work, and the agency will get another $10 billion every ten years. No further action by Congress is necessary for the agency to keep getting more resources.

The Obama administration used CMMI to roll out 34 separate projects, including controversial tests of “bundled payments” for high-volume surgical procedures which required mandatory physician participation (two out of the three mandatory projects were converted into voluntary tests by the Trump administration in 2017).

In 2016, the Obama administration proposed to test a new Medicare payment policy for physician-administered drugs (including treatments for cancer and other serious illnesses) that was little more than a simple cut in reimbursement. The administration stopped short of implementing the policy because of intense criticism from physicians and patients. That outcome was not guaranteed. CMMI had the power to impose the cut regardless of the complaints even though it was clear Congress would not have approved the change in a legislative proposal.

Now it’s the Trump administration’s turn to use CMMI to get around Congress, and especially a House which will soon be under Democratic control. In addition to the international price index, the administration is planning to use the CMMI to pursue changes which would inject more consumer choice and competition into the public programs.

Many of these proposals are worth exploring, but they may not last beyond the current administration. Some congressional Republicans may see the CMMI as advantageous because the Trump administration can proceed with its ideas without getting blocked by Democrats. But that’s a short-sighted perspective. Eventually a Democrat will be president again, and the CMMI will be used to pursue an agenda the GOP opposes.

There is precedent for Congress reversing course and pulling back on authority previously granted to the executive branch. The ACA also created the presidentially-appointed Independent Payment Advisory Board (IPAB), which was charged with enforcing a spending cap on Medicare. In theory, Congress could have enacted changes that would have overridden the IPAB’s policies. But the law gave little time for a legislative response, virtually assuring that the board’s recommendations to cut Medicare payments would have gone into effect by default.

Congressional Republicans immediately saw that the IPAB was an undisguised attempt to shift legislative powers to the executive branch. They offered a series of bills to abolish it, and eventually succeeded in the 2018 Bipartisan Budget Act. Many House and Senate Democrats supported IPAB’s repeal because they saw it would weaken their constitutional role in the policymaking process.

Few Republicans in Congress are giving CMMI much thought these days because the government is now run by a Republican administration. But over the long run, conservative governance requires placing limits on executive power. In this case, that means Congress should pass new legislation restricting what the CMMI can do by limiting its authority to conducting real and temporary research. Under the Constitution, it is left to Congress to pass judgment, through the legislative process, on significant and permanent shifts in federal policy, and that is as it should be.

Joseph Antos, Ph.D. is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute. James C. Capretta is a RealClearPolicy Contributor and a resident fellow at the American Enterprise Institute

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