President Trump’s nominee for secretary of Health and Human Services, Alex Azar, served until recently on the board of directors of a company that helps clients—government agencies and private corporations—save money on health care by shifting costs to others, including individuals.
Azar’s nomination was approved by the Senate Finance Committee last week. Prior to the government shutdown, Republicans reportedly said they hoped to confirm him by the end of January.
At his confirmation hearings, Azar’s testimony dealt with his time as president of the pharmaceutical giant Eli Lilly’s U.S. affiliate, and his high-level stints at HHS during the George W. Bush administration. He was questioned about Obamacare, Medicare, Medicaid, and reducing health care costs.
Azar told the Finance Committee that his “extensive knowledge of how insurance, manufacturers, pharmacy, and government programs work together” would help him bring down drug prices.
Azar’s position on the board of directors at Texas-based HMS—which specializes in health care cost containment—did not come up during his hearings, and the company’s policies and business model have gone largely unexamined. His time there spanned just over a year, from October 2016 through November 2017.
It is not clear what role Azar played in guiding HMS policy while he was there. Documents reviewed by TYT suggest that—during Azar’s tenure—the company’s typical solution for containing costs was not to reduce them, but to shift them from HMS clients to individuals or to taxpayers.
In the private sector, the methods by which HMS helps employers cut costs sometimes result in reductions in employee benefits. HMS, for instance, advocated practices that squeezed spouses and other dependents off of employer health care plans. Conversely, HMS counsels government health care agencies not to negotiate lower prices from drug companies and health care providers, but to push costs onto other payers, including workers’ compensation plans.
One suggested method of lowering government health care costs is to limit eligibility. The Trump Administration has begun approving waivers to let states require adults to work to qualify for Medicaid, a controversial practice estimated to threaten coverage for hundreds of thousands of people.
At his January 9 hearing, Azar was pressed by Sen. Sherrod Brown (D-Ohio) about requiring “able-bodied” Medicaid recipients to work. Brown said addicts or the mentally ill could be included in the definition. Azar responded, “You’re imputing to me a desire I have not stated.”
But in a July 15, 2017, letter about Wisconsin, HMS lobbyist Kristen Ballantine wrote, “HMS strongly urges the State and CMS [Centers for Medicare and Medicaid Services] to leverage the waiver process to grow and mandate its Health Insurance Premium Payment (HIPP) program.”
Wisconsin’s waiver application reportedly includes a work requirement, among other restrictions.
Regarding the Children’s Health Insurance Program, an August, 2017, HMS white paper, “Effective Cost Management for Medicaid,” notes that, “between 3 to 7 percent of CHIP applicants and beneficiaries are also covered by commercial insurance, most often through a non-custodial parent.”
The paper urges federal officials to turn CHIP into a last resort for its beneficiaries, even as it acknowledges that, “often policymakers are reluctant to disenroll a CHIP beneficiary out of concerns associated with disruption in access to, and continuity of, care.”
To reduce costs for employers, one HMS white paper, “HR Leaders Seek Solutions to Rising Healthcare Benefits,” proposes targeting spousal health care benefits.
“When companies offer their employees robust health care benefits,” the paper says, “they often fail to consider the sheer number of those with working spouses who enroll in these programs, foregoing less generous coverage offered by their own employers. Essentially, companies with good health care plans subsidize those with lower quality benefits as couples shop for the best overall health coverage for their families at the best price.”
HMS suggests that its corporate customers require employees to sign an affidavit stating whether their spouse is employed and, if so, whether health insurance is offered by the other employer. If it is, the HMS customer can then “restrict access to coverage for these spouses, or add a surcharge to capture the additional cost.”
A spokesperson for HMS declined to comment, other than to provide Azar’s term of service there.
Wendell Potter, a health insurance whistleblower, consumer advocate, and founder of Tarbell.org, told TYT that the affidavit policy “frankly adds costs to our health care system. And HMS and companies like it make money off of it. Companies pay HMS a fee to verify eligibility and make workers sign these things. Many spouses inevitably are dropped from coverage and have to enroll in plans offered by their employers that have skimpier benefits.”
“This is nothing more than shifting costs from one employer to another and making people sacrifice benefits and possibly pay more for care out of their own pockets, or both, and companies like HMS are paid to do the shifting,” Potter said. “It does not remove costs from the system, it shifts them. And then it adds costs to the system because of the additional administrative costs involved, the ones that HMS and its competitors that their employer customers pay.”
One method HMS advocates to cut employer health care costs is “dependent eligibility verification,” defined in another HMS white paper, Surge in Working Spouse Provision Verifications, as a “tool to ensure only eligible dependents remain on your company’s health plan, while protecting your company’s financial interests in the process.” In practice, HMS offers to provide services that make it more difficult for employees to claim dependents. In some cases, HMS services may lead to removal or denial of coverage.
One example cited by HMS’s Dependent Audit Guide is common law spouses, stating, “The [health care] plan must first allow a common law relationship; and then the Plan participant must reside in a state which recognizes common law marriage.” The guide goes on to recommend requiring common law spouses to complete a notarized affidavit of common law marriage and produce two forms of documentation establishing a common household.
In cases when a child’s father is not listed on their birth certificate, HMS suggests requiring “a court order, child support order, [or] paternity acknowledgement.” The measure ostensibly would attempt to shift health care costs to the biological father, but anecdotal evidence suggests that onerous paperwork can drive even eligible participants to drop their claims altogether.
According to another white paper, Dependent Eligibility Verication, HMS has conducted over 1,500 dependent-eligibility verifications, reviewing over 4.5 million dependents in total. The paper says that, on average, for a health care plan covering 5,000 employees, HMS can render eight percent of claimed dependents ineligible.
Potter said, “I can’t see how this decreases costs to society. In fact, if we had sufficient transparency, I would think we could make a case that here too that HMS and companies like it contribute more cost than savings to our system. Dependent eligibility verification does nothing to reduce the cost of care being delivered by providers or improve the quality of that care. It meets a need of employers to reduce expenses related to employee benefits, but it is just shifting costs, and employers (and their workers, in a less direct way) pay the price.”
HMS also pushes its policy recommendations in the public sphere. In 2017, HMS and its parent company spent $550,000 lobbying Washington, up from $425,000 the year before. Since 2005, HMS has spent over $3.7 million on lobbying.
According to lobbying records, last year HMS lobbied for the Medicaid Third Party Liability Act, which would limit reliance on Medicaid by making it a last resort for beneficiaries, forcing them to exhaust all other coverage options first. HMS CEO Bill Lucia wrote an op-ed in The Hill, saying, “The bill strengthens the Medicaid program’s ability to assert its rights as the payer of last resort by removing loopholes to ensure that Medicaid is not paying claims when another health care program or party is liable.”
While Lucia’s recommendation could slow the growth of Medicaid spending, there is nothing to indicate it would reduce health care costs overall. Lucia acknowledges that the savings Medicaid sees could come from draining or hitting caps on other coverage Medicaid recipients may have. “For example,” Lucia writes, “the additional coverage could be from property and casualty or workers compensation insurance in instances of accidents or injuries; or it may be the result of employer coverage for low-income workers who also qualify for Medicaid.”
Lucia did not address the fact that those other coverage sources typically charge much higher copays than Medicaid does.
As Potter told TYT, “Many low-income people simply do not have the money to pay their deductibles and consequently often go without getting the care they need.”
Azar did not respond to TYT’s request for comment. Azar’s conflict-of-interest letter of November 14, 2017, for his nomination said that he would resign from the HMS board upon confirmation. The HMS spokesperson would say only that Azar resigned from the board on November 17, three days later.
HMS is a publicly traded company, with more than 2,200 full-time employees and more than 25 offices across the country. For his year on the HMS board, Azar’s financial-disclosure form shows, he received HMS stock worth more than $100,000, and options worth at least $15,000.
Follow TYT Investigates on Twitter, Facebook, and YouTube to stay on top of exclusive news stories from The Young Turks.