CareTalk Podcast – Obamacare to Bidencare: What’s Next with Dan Mendelson

Founder and former CEO of Avalere Health, Dan Mendelson, stops by to share his outlook on Bidencare and the future of health policy in the US.

 

David Williams:

John with Biden wrangling over healthcare. We need some inside the beltway knowledge about what can and can’t happen.

John Driscoll:

How about DC expert and CEO of Avalere Health, Dan Mendelson.

David Williams:

That Clinton guy? Welcome to Care Talk, your weekly home for incisive debate about healthcare, business and policy. I’m David Williams, president of Health Business Group.

John Driscoll:

And I’m John Driscoll, the CEO of CareCentrix. David, who do we have today?

David Williams:

Well, John, I know you couldn’t get your first, second, third, fourth or fifth choice. Luckily Dan Mendelson is always there for us. Who is that guy anyway?

John Driscoll:

He’s the CEO and founder of Avalere. Long friend and policy expert. And a political alumnus of the Office of Management and Budget. Dan, welcome.

Dan Mendelson:

Great to be here, I think.

David Williams:

Great. Office of Management and Budget, isn’t that the one where they can’t get the person confirmed?

John Driscoll:

Well, maybe we could, maybe we could nominate Dan.

David Williams:

That was before they had Twitter, is when Dan was in that office, if I recall.

Dan Mendelson:

That is true, but they’ll have no problem with Shalonda Young, she’s awesome.

David Williams:

Dan, as the CEO of Avalere and a policy expert and a political alumnus, where are we in terms of healthcare reform and the Biden agenda, what’s going on there?

Dan Mendelson:

Look, this is a group that comes in with a really ambitious set of plans. And it starts of course, with COVID-19 because nothing can happen until that’s under control. And you already see that in a national strategy for immunization and a national strategy for testing and, the wheels are still beginning to turn. I think that things are turning around on that and that’s the first priority, but followed very quickly by coverage. And coverage, of course is a major priority of the new administration. And you can already see that in the Recovery Act. And so there will be other things that will come behind it focusing on disparities, for example, but it’s going to be a very active couple of years. And I think we’re all going to be very busy as a result.

David Williams:

What can Biden do on coverage? There’s already been a few things like open enrollment again for Obamacare there, are there things like that or it’s more fundamental?

Dan Mendelson:

Yeah. It’s going to be expansion of existing programs. As long as we have Joe Manchin in the Senate and I think nothing crazy is going to happen. So I don’t expect to see a major Medicare expansion. I don’t expect to see any kind of a public option passing. I think what we’re going to see is a reliance on the Affordable Care Act on Medicaid and really publicizing those two programs. I think that’s really where the emphasis is going to be.

John Driscoll:

What’s going to happen in Medicaid? If you really believe that there’s no Medicare for all and you don’t see a public option, what can the federal government do in terms of Medicaid and Medicaid expansion?

Dan Mendelson:

Well, Medicaid’s an interesting one because first they’ll roll back a lot of what happened over the last four years. So for example, these work requirements that are inhibiting people from signing up in certain States, I think will get rolled back quite rapidly. And when CMS and OMB want to get coverage expansion through waivers, they can often do it. And so I think that it’s going to be a lot of waiver activity that is focused on expansion. And then if they can get more subsidies out to the States, I think they will do that.

Then the other thing that I think is really not being discussed a lot is that one of the best ways to expand Medicaid is through ballot initiatives. And ballot initiatives have been very successful. And John, I think you’ve done some work on them yourself over the last few years, but these ballot initiatives, I think really do have potential to force the issue. Because most people in most States believe that should be available for the poor. That’s why they succeed.

David Williams:

Dan, we talked, I think the day after the original Supreme Court decision on Obamacare, and we talked about what was going to happen with Medicaid expansion, which was shown they couldn’t make it mandatory. And you gave the example of CHIP where actually the incentives were good enough that everybody had actually gone for it. The incentives were even better here, but we didn’t get to 50 States because it became probably so politicized. Are we going to get there now? What’s going to happen?

Dan Mendelson:

David, do you guys have to go to like, what’s a waiver? What’s CHIP? What are you talking about here?

David Williams:

A waiver is John, the sign that I give you when I want you to be quiet. I don’t know. CHIP, I thought it was a snack. Well, let Dan explain what it is.

Dan Mendelson:

Children’s Health Insurance Program otherwise known as CHIP. Sometimes called state CHIP, SCHIP, but same program. And David is right, that was one of my responsibilities in the Clinton administration, was to implement it. But it was not a slam dunk to get all of the governors to agree to that because they had to pay to expand. And I will say that we did a lot of arm twisting during those years. So there were a number of occasions where either I or Chris Jennings or somebody else in the White House during that time would call up a governor and say, congratulations, we’re coming to do an event on your state to celebrate the fact that you’re going to put this program into place in your state.

And the governor’s office will say, well, we have no plans to do that. And we’re like, well, then you’re going to explain that to the press. And we would get on the airplane and go. And there was a lot of arm twisting during that time, but we did end up, as you said, David, getting all States to adopt that program and we insured 10 million children as a result. Very proud of that.

John Driscoll:

It was really a transformational win for poor children. And I think an interesting example of it, if you’ve got the politics right, you can actually drive the policy forward. Is there anything like that that’s going to happen in the Biden administration?

Dan Mendelson:

I think one of the reasons actually, John, why it was really a transformational win is that all of that care is delivered through the private sector. So it is delivered by the same companies that deliver Medicaid, it’s Molina and Centene and United. And one of the things that I find so interesting about that expansion and really every expansion that has come since is that it is a public private partnership. And it was really the first one that was done in that way. And to me, that was really one of the things that was most transformational about it. I think it’s too early to know whether we’re going to see expansion on that order of magnitude of like 10 million people.

I do think that it is well within the administration sites to expand the Affordable Care Act by two, 3 million people and possibly to expand Medicaid by two, 3 million people. So I think that that is doable, but I think we can’t underestimate the fact that we’re in the middle of a pandemic right now and that in a normal time the administration would have come in and gone hard on coverage. Right now, that’s really not a possibility. They just passed a $1.9 trillion Relief Act. And yes, it had a little bit of money in it for the Affordable Care Act. But most of that money is going to make sure that the economy gets back on track.

David Williams:

Let’s talk about another dimension besides coverage, which is about, what is covered and we’ve gone in the pandemic to a work from home model. And so the home has become the center of people’s lives even more than it was. What about care to the home? Home care, we talk a lot about on the show, a lot of advantages to it. And a lot of people who before were saying, I’ll go to the hospital for something. Now people actually want to be at home. How does that translate?

Dan Mendelson:

Yeah. There’s definitely been a shift and part of it is telemedicine. And the fact that Medicare is now covering telemedicine and seniors really like it. They enjoy it. And there are going to be some times when it’s not appropriate or when you don’t get the right information or it’s very important to also make sure that it’s being billed properly and that there isn’t fraud associated with it. But when you get past that stuff and it really is, those are technical solutions that need to be adopted. It’s very, very popular. So I do think that that transformation is going to be durable and that we’re going to see more and more care shift over to the home. It’s going to be dialysis. It’s going to be other types of home care. It’s going to be hospital at home. It’s going to be all different aspects of it because it’s safer. And it’s generally preferred by the people who can accommodate it.

John Driscoll:

And David, you know that at CareCentrix, we’ve been really transforming care to the home for a lot of MA and Medicaid members and have had dramatic impacts on how much time vulnerable patients spend in hospitals and nursing homes. But what’s remarkable is we actually did some research with dance group Avalere and found that when you actually can align resources, work with patients and their families goals and really flood the zone with the help that people need, not just clinical, but behavioral, informational, whether it’s food or transportation, it can have a transformative impact, not just when we’re sort of working with the patients but long thereafter. So we can take cost out of the system right now. Dan, you can speak to the Avalere research because it was really exciting that we were saving more money than we realized.

Dan Mendelson:

Yeah, this was exciting for us. Sometimes when the results pop out from the page and you see, they’re much better than you could imagine that they might be. And this was a very careful study that was done using Medicare advantage data in a very wide data set that has a lot of statistical power. And again, what we showed was what you will want to see, which is that care improves by standard benchmarks and it’s much less expensive. And I think that a lot of it has to do with the way John, that you and your group are setting up the care pathways and the algorithms that are necessary in order to make sure that you’re delivering the right care to the right patient.

And look, Medicare advantage plans, Medicare managed care has every incentive to substitute lower cost care, especially at times when they can show that quality improves. So I think we’re kind of in a virtuous cycle by virtue of the fact that there’s so much interest in Medicare advantage right now. That’s one of the other things that I think has really enabled this shift to the home is that… When I was running OMB health in the late 1990s, we had about 6% of Medicare beneficiaries opting into Medicare managed care. And now it’s 40 and it’s growing by 8% a year. So it’s taking over and five years from now, it’s going to be more than half of Medicare beneficiaries opting into this kind of care. So there’s going to be more and more care shifting to the home as a result.

John Driscoll:

Well, I also think there’s this huge opportunity. We would think about it as whole patient diagnostics of dealing with all of the nonclinical challenges that a lot of vulnerable patients have, whether it’s food or transportation or housing. And also making sure that we kind of enable the agency of giving our patients and their families and their caregivers more control. All of that, I think plays into how we can actually provide more to the patients that CareCentrix and Medicare Advantage plans serve, and actually end up paying less as a society for their care. Because we’re creating opportunities to keep people healthy while leveraging machine learning and big data. But some of it just comes down to really solving the nonclinical challenges like food and hunger and people bouncing back into the system.

Dan Mendelson:

Yeah. And this is something where there has been tremendous progress over the last few years, and we should definitely give Seema Verma some credit here because she pushed for this kind of diversification in benefits. And so you’re right John, now Medicare Advantage plans can get paid for transportation services, for pest control and for making modifications to the home. If somebody is released from the hospital, after having a hip fracture, you could repair the stairs up to the person’s home, and that can be worked into your Medicare Advantage rates. And by the way, those benefits are not available in fee for service. So there’s a little bit of friction there.

David Williams:

Dan, when you were talking about the public private partnership with CHIP, I think now it probably goes a step further, because now we’re more into the era of data and real-world evidence. And I think that this study that you’re talking about with the private sector player on home care is a way to actually demonstrate real-world evidence and give, I think, some more confidence to everybody, regardless of political persuasion about what works and what’s the productive use of the federal funds.

Dan Mendelson:

Yeah. You got to work from the data. And I think it’s really encumbered because there are so many interesting companies offering interesting solutions, but if you can’t prove that they actually work, it’s a tough-

John Driscoll:

Well, that was the exciting thing about leveraging Avalere to really have a benchmark of an index group of identical folks based on demographics and health condition and to look against the impact. But I think more and more of that is going to have to be done by Avalere and others, just to make sure that what health plans are investing in actually does drive results. Dan, I had a slightly different question for you, which is what happens if we run out of money? The Medicare trust fund’s supposed to run out in 24 while we’re-

David Williams:

John’s always a big downer. Run out of money, world is going to end, is going to be pandemic. Come on.

John Driscoll:

He’s balanced by Jacques of 97 alumnus. Things can come up short in healthcare. If the Medicare trust fund is going to run of money in 24, when did we start feeling that pinch from the federal government?

Dan Mendelson:

It’s really interesting. This is one of these political thing when the politics change and the Republicans are no longer in charge and now it’s the Democrats are in charge, all of a sudden the Republicans in Congress care about money. And so this is like one of these things. And I think we have to acknowledge it. Look, when I was at OMB, I was very proud of the fact that we actually had balanced budgets in 98 and 99 and 2000, and that was a really big deal. I think now there’s a lot less concerned about that. And again, part of it acknowledge again that we are coming out of a major crisis right now. So this $1.9 trillion bill is going to add to our debt. And essentially this is a mortgage that we’re taking on our kids’ future. With that said, you’re right that the Medicare trustees are going to come out with a report. It’s going to show the depletion of this mythical trust fund that we have. And by the way, there’s no trust fund. This is really a government calculation.

David Williams:

Say it isn’t so Dan. I thought it’s in Fort Knox. It’s all in gold bullion.

Dan Mendelson:

No. This is not like the trust fund that you set up for your kids. This is a calculation. So yes. There’s going to be a lot of discussion about it. But I frankly do not think that it is going to have much of a practical effect in the short term. Now, the one thing that might get expedited by this is some kind of reduction in prices for pharmaceuticals. So I can say that and maybe be a little bit controversial, which is to say that I think that if you think about the Medicare world and you think about COVID, no one wants to go after hospitals right now the hospitals have really been on the front lines. But there has been a lot of discussion about reducing the cost of prescription drugs in Medicare part B, in Medicare part D. So that is one area where I think the politics converge.

John Driscoll:

Discussion but no progress. The majority of Republicans agree. What’s going to happen there, Dan? How do we reduce drug cost?

Dan Mendelson:

Well, look, what I’d say here is that first, the benefits that Medicare patients have don’t make a lot of sense to me. If you are unfortunate enough to have multiple sclerosis or cancer or any of these other major diagnoses, you are going to face 20 or 30% copays as a result of that. And frankly, from my perspective, the benefit designs don’t make a lot of sense. So that’s kind of thing one. And I don’t think this problem gets solved until those savings ultimately get passed onto the consumer.

But then there’s kind of the practical issue of the fact that Medicare is the dominant payer for these drugs, but really has no say in a link between the pricing of that drug and the value of the drug. And that rankles a lot of members of Congress. I was speaking with one member of Congress just last week who was communicating to me about, it makes no sense that there isn’t a value test for these new products that are coming into the market. And that’s something that I think is likely to pass at some point over the next couple of years.

David Williams:

Well, John, I would say if we want Dan to solve the drug pricing problem, we’ll have to bring it up sometime earlier than the last minute of the show. So maybe that’s a good time to say we’ll invite him back another time. Dan Mendelson, CEO of Avalere. Thank you so much for joining us today. That’s it for another edition of Care Talk. I’m David Williams, president of Health Business group.

John Driscoll:

And I’m John Driscoll, the CEO of CareCentrix. Thank you, Dan.

Dan Mendelson:

My pleasure. Fun to talk with you guys and see you again.

John Driscoll:

If you liked what you heard or didn’t, we’d love a review, give us some feedback. And please do subscribe.