Two opportunities created by association health plans

The new regulations around association health plans (AHPs) — which loosen restrictions for small businesses, franchises and associations — create two distinct opportunities in the benefits industry.

The first is for brokers, who will be crucial advisors to employers eligible for the new coverage options now available.

The second opportunity is for benefits and HR tech vendors, who will be instrumental in managing the transactional and administrative challenges that would otherwise hinder AHP success.

What challenges do association health plans represent? Let’s consider an example — the Nashville Hot Chicken restaurant franchise.

Let’s say Nashville Hot Chicken has 1,000 franchisees, each with five full-time employees. Before AHP options became available to this organization, these five-employee groups would either have had to pursue small group coverage, or employees would have had to find individual plans.

Both options likely would have been prohibitively expensive for the organization or the employees. With the new AHP regulations, however, these 1,000 franchisees may be able to pull all 5,000 workers together and create a large group benefits plan.

In doing so, they would reap the advantages of collective purchasing, just like large groups do. However, this AHP would not work like a regular group plan.

If a regular group has 5,000 employees, they would all be part of a centrally-operated payroll system and the insurance companies would receive just one check for all of the employees enrolled at the group. But under an AHP of franchisees, all the payroll systems would operate independently, and there is no clear, centralized entity to pay carriers.

This creates a massive administrative headache for Nashville Hot Chicken corporate, as well as all the individual franchise owners. In other words, who is going to manage the AHP?

Here’s where the brokers come in. Employers need brokers to walk them through all the complexities of AHPs, including sourcing carriers, third-party vendors, and compliance needs.

It would also be incredibly impractical to manage 5,000 employees through 1,000 separate businesses without a benefits and HR platform.

But brokers can provide a solution to this challenge by adopting a platform. With a benefits and HR system, the various administrative differences from franchisee to franchisee can be accounted for, while still allowing the 5,000-life group to enroll in the group offering.

By removing the administrative headache, benefits tech makes AHPs a real option for Nashville Hot Chicken. But it also gives the tech-savvy broker a clear leg up on the competition. A broker without a tech solution will be at a severe disadvantage for Nashville Hot Chicken’s business compared to a broker who has a platform.

So as small employers, franchisees and industry associations band together for group coverage, benefits tech can give brokers a competitive differentiator for this new business segment.

Read the article.

Source:
Tolbert A. (1 March 2018). "Two opportunities created by association health plans" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/01/two-opportunities-created-by-association-health-pl/


While Talk About Opioids Continues In D.C., Addiction Treatment Is In Peril In States

How is Washington handling the opioid crisis? Let's find out in this article from Kaiser Health News.


Opioids were on the White House agenda Thursday — President Trump convened a summit with members of his administration about the crisis. And Congress authorized funds for the opioid crisis in its recent budget deal — but those dollars aren’t flowing yet, and states say they are struggling to meet the need for treatment.

The Oklahoma agency in charge of substance abuse has been told by the state’s legislature to cut more than $2 million from this fiscal year’s budget.

“Treatment dollars are scarce,” said Randy Tate, president of the Oklahoma Behavioral Health Association, which represents addiction treatment providers.

It’s like dominoes, Tate said. When you cut funding for treatment, other safety-net programs feel the strain.

“Any cuts to our overall contract,” he said, “really diminish our ability to provide the case management necessary to advocate for homes, food, shelter, clothing, primary health care and all the other things that someone needs to really be successful at tackling their addiction.”

In just three years, Oklahoma’s agency in charge of funding opioid treatment has seen more than $27 million dollars chipped away from its budget — thanks to legislative gridlock, slashed state taxes and a drop in oil prices (with the additional loss in state tax revenue that resulted).

Jeff Dismukes, a spokesman for Oklahoma’s Department of Mental Health and Substance Abuse Services, says the already lean agency has few cost-cutting options left.

“We always cut first to administration,” he said, “but there’s a point where you just can’t cut anymore.”

The agency may end up putting off payments to treatment providers until July — the next fiscal year. Tate says that could be devastating.

“Very thinly financed, small rural providers are probably at risk of going out of business entirely — up to and including rural hospitals,” he said.

Getting treatment providers to open up shop in rural areas is really hard, even in good times, and more financial uncertainty could make that problem worse. In the meantime, according to an Oklahoma state commission’s opioid report, just 10 percent of Oklahomans who need addiction treatment are getting it.

That statistic is similar in Colorado. And as 2018 began, Colorado’s escalating opioid crisis got worse, when the state’s largest drug and alcohol treatment provider, Arapahoe House, shut its doors.

The facility provided recovery treatment to 5,000 people a year. Denise Vincioni, who directs another treatment center, the Denver Recovery Group, says other facilities have scrambled to pick up the patients.

Most of Arapahoe’s clients were on Medicaid. Autumn Haggard-Wolfe, a two-time Arapahoe House client who is now in recovery, worries the facility’s closing will have dire consequences, especially for people who need inpatient care, as she did.

“I feel like the only other option right now in therapy would be jail for people,” she said, “and people die in there from withdrawing.”

Arapahoe House’s CEO blamed its closure on the high cost of care and poor government reimbursement for services.

The mother of Colorado state lawmaker Brittany Pettersen struggled with addiction, and was treated at Arapahoe House. Pettersen says treatment centers rely on a crazy quilt of funding sources and are chronically underfunded — often leaving people with no treatment options.

“We have a huge gap in Colorado,” Pettersen said, “and that was before Arapahoe House closed.”

She is pushing legislation in the state to increase funding for treatment. But to get tens of millions of dollars in federal matching funds, Colorado lawmakers need to approve at least $34 million a year in new state spending.

That price tag may simply be too high for some lawmakers. But either way, she added, “It’s going to take a lot to climb out of where we are.”

Colorado did get new federal funds to fight the opioid crisis through the 21st Century Cures Act, passed in December of 2016, but it was just $7.8 million a year for two years — divvied up among a long list of programs.

Read the article.

Source:
 Daley J.,Fortier J. (5 March 2018). "While Talk About Opioids Continues In D.C., Addiction Treatment Is In Peril In States" [Web Blog Post]. Retrieved from address https://khn.org/news/while-talk-about-opioids-continues-in-dc-addiction-treatment-is-in-peril-in-states/

Compliance Bulletin: NLRB Reintroduces Indirect Joint Employer Standard

On Feb. 26, 2018, the National Labor Relations Board (NLRB) overruled the “direct control” joint employer standard adopted with the Hy-Brand decision and reintroduced the “indirect control” standard set out by the Browning-Ferris case.

The indirect control standard was adopted in 2015 and established joint employer status for employers that had “sufficient” control over a worker’s essential terms and conditions of employment, regardless of whether the employer actually exercised its right of control.

ACTION STEPS

The reintroduced standard may have a large impact on National Labor Relations Act (NLRA) compliance across many industries. Because there is not a clear limit as to where liability ends based on this standard, the list of potential joint employers for any given operation may be increased and can noticeably change the way franchises, staffing agencies and seasonal employers operate.

Employers should review their partnerships with other entities with which they share employees to determine whether they are affected by this NLRB decision.

The NLRA and Joint Employment
The NLRA applies to workplaces with labor unions. However, certain provisions of the NLRA also apply to non-unionized workplaces. Joint employer situations can present a complicated scenario when evaluating compliance with the NLRA.

Among other things, the NLRA protects workers from employer retaliation when workers engage in protected concerted activities. Workers engage in protected concerted activities when they join together to improve their wages and working conditions. The key to determining whether an employee has engaged in a protected concerted activity is whether the worker was acting for the benefit, or on behalf, of others and not solely for his or her personal interest. Workers do not need to formally agree to act as a group or designate a representative to participate in concerted activities.

Concerted activities can include spontaneous, uneventful actions such as a discussion of working conditions and wages or questioning a supervisor on a company policy. In that sense, the NLRA protects any employee who:

  • Addresses group concerns with an employer;
  • Forms, joins or helps a labor organization;
  • Initiates, induces or prepares for group action; or
  • Speaks on behalf of or represents other employees.

Download the Full Bulletin


Change to 2018 HSA Family Contribution Limit

Yesterday, the IRS released a bulletin that includes a change impacting contributions to Health Savings Accounts (HSAs).

 

  • The family maximum HSA contribution limit has decreased from $6,900 to $6,850.
  • This change is effective January 1, 2018 and for the entire 2018 calendar year.
  • The self-only maximum HSA contribution limit has not changed. 
  • This means that current 2018 HSA contribution limits are $3,450 (self-only) and $6,850 (family).

 

Why is the change happening so abruptly?

 

The IRS continues to make adjustments to accommodate the new tax law that passed at the end of 2017. Tax reform updates require the IRS to implement a modified method of calculating inflation-adjusted or cost-of-living-adjusted limits for 2018. The IRS is now using a different index (Chained Consumer Price Index for All Urban Consumers) to calculate benefit-related inflationary adjustments.

 

Typically, the IRS adjusts the HSA limits for inflation on an annual basis about six months before the start of the impacted year. For example, the IRS established the 2018 limits in May 2017. Today’s bulletin supersedes those limits.

Resource:

• IRS Bulletin IRB 2018-10March 5, 2018


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Compliance Recap - January 2018

January was a busy month in the employee benefits world. On January 24, 2018, the U.S. Senate confirmed Alex Azar as the new Secretary of the U.S. Department of Health and Human Services (HHS).

The U.S. Department of Labor (DOL) proposed regulations regarding association health plans. HHS released the 2018 federal poverty guidelines. The DOL issued updated civil monetary penalties for 2018 and announced the applicability date for final regulations regarding disability claims procedures. A U.S. District Court modified its order regarding the Equal Employment Opportunity Commission's wellness regulations.

Congress and the President delayed the Cadillac tax's effective date, delayed the health insurance tax (HIT), and reauthorized the Children's Health Insurance Program. The Internal Revenue Service (IRS) released its Employer's Tax Guide. HHS issued a proposed rule to protect conscience rights in health care and created a new Conscience and Religious Freedom Division within HHS' Office of Civil Rights.

UBA Updates

UBA released seven new advisors in January:

UBA updated existing guidance: 2018 Annual Benefit Plan Amounts

DOL Issues Proposed Regulations Regarding Association Health Plans

The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA) issued a proposed rule which would broaden the definition of "employer" and the provisions under which an employer group or association may be treated as an "employer" sponsor of a single multiple-employer employee welfare benefit plan and group health plan under Title I of the Employee Retirement Income Security Act of 1974 (ERISA).

The DOL posted 79 letters that were submitted as public comments as of January 31, 2018. The deadline for submitting public comments is March 6, 2018.

Read more about the proposed rule.

HHS Releases 2018 Federal Poverty Guidelines

The U.S. Department of Health and Human Services (HHS) released the 2018federal poverty guidelines (FPL). For a family / household of one in the contiguous United States, the FPL is $12,140. In Alaska the FPL is $15,180, and in Hawaii the FPL is $13,960.

For 2018, applicable large employers that wish to use the FPL affordability safe harbor under the employer shared responsibility / play-or-pay rules should ensure that their lowest employee-only premium is equal to or less than $96.72 a month, which is 9.56% of the 2018 FPL.

Civil Monetary Penalties Inflation Adjustment for 2018

The U.S. Department of Labor (DOL) published its civil monetary penalties for 2018. Under federal law, the DOL is required to annually adjust its regulations' civil monetary penalties for inflation no later than January 15 of each year. The adjusted penalty amounts are effective for violations occurring after November 2, 2015, that have penalties assessed after January 2, 2018.

Below are some examples of the increases.

Description 2017 Penalty Amount 2018 Penalty Amount
Failure to file Form 5500 $2,097 per day $2,140 per day
Failure to provide the Summary of Benefits and Coverage (SBC) $1,105 $1,128
Failure to provide documents requested by the DOL $149 per day, not to exceed $1,496 per request $152 per day, not to exceed $1,527 per request
Failure to inform employees of children's health insurance program (CHIP) coverage opportunities; each employee is a separate violation $112 per day $114 per day

 

DOL Issues Final Disability Claims Procedures Regulations' Applicability Date

The U.S. Department of Labor (DOL) announced that April 1, 2018, will be the applicability date for its rule that amends the claims procedure requirements of ERISA-covered employee benefit plans that provide disability benefits. The DOL'sFact Sheet contains a summary of the regulation's requirements.

U.S. District Court Modifies Order Regarding EEOC Wellness Rules

In August 2017, the United States District Court for the District of Columbia heldthat the U.S. Equal Employment Opportunity Commission (EEOC) failed to provide a reasoned explanation for its decision to adopt 30 percent incentive levels for employer-sponsored wellness programs under both the Americans with Disabilities Act (ADA) rules and Genetic Information Nondiscrimination Act (GINA) rules.

In December 2017, the court vacated the EEOC rules under the ADA and GINA effective January 1, 2019, and ordered the EEOC to promulgate any new proposed rules by August 31, 2018.

In January 2018, the EEOC asked the court to reconsider the portion of the court's order that required the EEOC to promulgate new proposed rules by August 31, 2018. The court vacated that portion of its order. The court's order to vacate the portions of the EEOC's wellness rules under the ADA and GINA as of January 1, 2019, remains.

Read more about the court's order.

Congress Delays Cadillac Tax Effective Date, Delays HIT Tax, and Reauthorizes CHIP

Congress and the President passed H.R. 195, a short-term spending bill. The bill delays the effective date of the excise tax on high cost employer-sponsored health coverage ("Cadillac tax") to 2022. The bill delays the health insurance tax (HIT) that applies to insurers. The HIT was in effect in 2014, 2015, and 2016, and will be in effect for 2018. Now the HIT will be delayed from 2019 to 2020; essentially, the bill implemented a one-year moratorium for the HIT for 2019. The bill also reauthorizes the Children's Health Insurance Program (CHIP) for six years.

IRS Issues 2018 Employer's Tax Guide

The Internal Revenue Service (IRS) issued its Publication 15 (Circular E) Employer's Tax Guide that discusses employers' tax responsibilities. The guide generally discusses health insurance plans, health savings accounts, and medical care reimbursement.

HHS Issues Proposed Rule to Protect Conscience Rights in Health Care

The U.S. Department of Health and Human Services (HHS) published a proposed rule titled "Protecting Statutory Conscience Rights in Health Care; Delegations of Authority."

HHS proposes this rule pursuant to President Trump's May 4, 2017, Executive Order 13798 "Promoting Free Speech and Religious Liberty" and the U.S. Attorney General's October 6, 2017, "Federal Law Protections for Religious Liberty"memorandum.

HHS proposes this rule to enhance awareness and enforcement of federal health care conscience laws and associated anti-discrimination laws, to further conscience and religious freedom, and to protect the right to abstain from certain activities related to health care services without discrimination or retaliation.

The rule cites several federal health care conscience laws and the activities that they protect, including:

·    The Church Amendments: conscience protections related to abortion and sterilization

·    The Coats-Snowe Amendment: conscience protections related to abortion, training, and accreditation

·    The Weldon Amendment: protections against discrimination for health care entities and individuals who do not further abortion or other services

·    HHS' 2011 final rule that enforces the Church, Coats-Snowe, and Weldon Amendments

·    The Consolidated Appropriations Act of 2017: protections from discrimination for health care entities and individuals who object to furthering or participating in abortion under programs funded by HHS' annual appropriations

·    The Patient Protection and Affordable Care Act: conscience protections related to assisted suicide, abortion, and the individual mandate to maintain minimum essential coverage

·    The Assisted Suicide Funding Restriction Act of 1997: protections for Medicare or Medicaid program providers and their employees from informing individuals about a right or service related to assisted suicide and from applying any advance directive term related to assisted suicide

·    Medicare and Medicaid: protection from being compelled to provide, reimburse for, or cover any counseling or referral service over a moral or religious objection

·    Global health program conscience and anti-discrimination protections

·    Exemptions from compulsory health care or services generally and under specific programs for hearing screening, occupational illness testing, suicide assessment or treatment services, vaccination, and mental health treatment

·    Conscience clauses related to religious nonmedical health care in Medicare, Medicaid, and the Children's Health Insurance Program (CHIP).

The proposed rule aims to revise the current regulatory framework of federal health care conscience protection statutes to a more robust regulatory framework similar to those that implement and enforce other civil rights laws.

To do so, the proposed rule would require written assurances and certifications of compliance with federal health care conscience and associated anti-discrimination laws as part of accepting federal financial assistance from HHS. The proposed rule would also require HHS and certain recipients to post a notice to the public, patients, and employees of their protections under the federal health care conscience and associated anti-discrimination statutes, including how to file a complaint with HHS' Office of Civil Rights (OCR). The proposed rule's Appendix A provides the notice's text. Further, the proposed rule would require recipients to report information about OCR investigation notices and compliance review letters to their applicable HHS funding source and to disclose complaints filed with OCR when applying for new or renewed federal financial assistance from HHS.

The proposed rule details OCR's authority to conduct outreach, provide technical assistance, initiate compliance reviews, receive and process complaints, and conduct investigations. The proposed rule grants OCR discretion to choose its means of enforcement, which will range from informal resolution to funding termination. The OCR may also refer cases to the U.S. Department of Justice for enforcement.

Public comments are due by March 27, 2018.

HHS Creates New Conscience and Religious Freedom Division

The U.S. Department of Health and Human Services (HHS) announced the new Conscience and Religious Freedom Division (CRFD) within HHS's Office of Civil Rights (OCR). According to HHS' press release, the CRFD will restore federal enforcement of laws that protect the rights of conscience and religious freedom. CFRD's website includes instructions on how to file a conscience or religious freedom complaint with OCR.

Question of the Month

Q. Can an employer exclude children from coverage based on a child's access to other coverage, employment status, or marital status?

A. No, if a group health plan provides dependent coverage, then the plan must generally make coverage available for children until age 26. These group health plans must not define dependent, for purposes of dependent coverage, in terms other than the relationship between the child and the plan participant.

This means that a plan cannot use items such as a child's access to other coverage, employment status, marital status, tax dependent status, residency, or student status to define dependent.

Also, if the employer is an applicable large employer, then it must offer coverage to its full-time employees' dependent children to avoid penalties under the employer shared responsibility provisions.


IRS Issues New Tables for 2018 Tax Withholding

Starting Feb. 15, 2018, employers must use new tables to determine how much income tax to withhold from their employees’ paychecks. The Internal Revenue Service (IRS) issued the required new tables, in Notice 1036, on Jan. 9, 2018. The notice contains early release copies of the “Percentage Method Tables for Income Tax Withholding” that will appear in IRS Publication 15 (Employer’s Tax Guide).

According to the IRS, Notice 1036 is the first in a series of steps that the agency will take to help employers improve the accuracy of their tax withholdings under changes made by a new tax reform law, the Tax Cuts and Jobs Act, enacted on Dec. 22, 2017.

New Tables Work with Existing Forms W-4 for 2018

The new tables in Notice 1036 are designed to work with the Forms W-4 that employees have already filed with their employers to claim withholding allowances for 2018. Thus, employers do not need to obtain updated Forms W-4 from their employees to start using the new tables.

For 2019, however, the IRS is revising Form W-4 to more fully reflect the new law and to help individuals determine whether to adjust their withholding. Once released, the revised Form W-4 can be used in 2018 by employees starting a new job and by existing employees who wish to update their withholding in response to the new law or changes in their personal circumstances. Until the revised Form W-4 is released, employees and employers should continue to use the 2017 Form W-4.

Read the Full PDF


DOL Announces New Standard for Unpaid Interns

On Jan. 5, 2018, the U.S. Department of Labor (DOL) announced that it would adopt a new standard for determining whether interns and students are “employees” who must be paid under the Fair Labor Standards Act (FLSA).

The DOL clarified that, going forward, it would abandon its six-part test and instead adopt the “primary beneficiary” test used by federal courts.

The six-part test provides that an intern at a for-profit company is an employee unless all six factors of the test are met. The primary beneficiary test has a more flexible approach, focusing on whether the intern or the business benefits more from the relationship.

The Old Six-part Test

The six-part benefit test is very specific and allows for interns to be unpaid only if all of the following factors are met:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and, on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The Primary Beneficiary Test

The primary beneficiary test looks at the “economic reality” nature of the employment relationship and includes seven factors to consider. However, unlike the six-part test, these factors provide only a reference frame to determine who is benefiting more from the intern-employer relationship.

The seven factors are:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Not every factor must be met, and not all factors must be given the same weight during the analysis. Instead, the courts will consider these seven factors and evaluate whether, in the totality of the circumstances, the employer is benefiting more from the relationship than the intern is. When an employer is the primary beneficiary of the relationship, the intern is an employee for purposes of the FLSA. When the intern is the primary beneficiary, he or she is not considered an employee under the FLSA.

More Information

Please contact Hierl Insurance Inc. for more information about compliance with FLSA issues.

Download the PDF


DOL Reintroduces 17 Opinion Letters

On Jan. 5, 2018, the U.S. Department of Labor (DOL) reintroduced 17 opinion letters. The letters were introduced by the Wage and Hour Division during the George W. Bush administration in response to specific employer compliance questions, such as whether “on-call” hours for ambulance personnel are considered as compensable time under the Fair Labor Standards Act (FLSA). The letters were withdrawn in 2009, shortly after their introduction.

Addressing compliance questions through opinion letters is a more relaxed approach than the administrative interpretations issued by the Obama administration.

Opinion Letters

Opinion letters provide the DOL’s official opinion on how labor and employment laws apply in specific situations.

The DOL issues opinion letters after receiving an employer’s request for clarification on how the law should be interpreted in specific scenarios. For example, multiple opinion letters present the DOL’s opinion on whether FLSA exemptions apply to specific employment positions.

As a result, opinion letters are fact-specific and employers can rely on them for guidance to the extent that the facts in their circumstances align with the scenarios described in the letter.

Publishing opinion letters is a labor-intensive process and employers that request one may need to wait several months to receive a response from the DOL. In addition, while the DOL reviews all opinion letter requests, it has traditionally only answered a few, at its discretion. The DOL has published instructions on how to request opinion letters on its website.

Impact on Employers

Opinion letters can be extremely helpful for employers that are trying to understand their legal responsibilities, particularly in areas where the law seems to be outdated or where compliance with one legal obligation interferes with compliance with another.

Indeed, employers that receive an answer to their request can rely on the answer they receive in their efforts to comply with their legal obligations. Employers are also encouraged to review past opinion letters and other DOL guidance to obtain a clearer understanding of their obligations.

However, an employer that seeks the DOL’s opinion regarding a specific situation should understand the risk that the DOL may not agree with its practices, so employers should consider this alternative carefully.

In addition, while employers can rely on an opinion letter, employers should also remember that opinion letters are merely guidance—they are not the law, and they are not binding. This means that DOL inspectors, auditors and judges may disagree with opinion letters and find noncompliance even when the employer is following the advice given by an opinion letter.

Good Faith Defense

However, employers that rely on opinion letters may be able to establish a good faith defense under the law. The good faith defense principle allows noncompliant employers to minimize the risk of penalties if they can prove they were making an honest effort to comply with the law.

Download the PDF


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HHS Nominee Vows To Tackle High Drug Costs, Despite His Ties To Industry

What is President Trump’s solution for fighting high drug prices? From Kaiser Health News, check out this article on the new Department of Health and Human Services (HHS) nominee.


Senate Democrats on Tuesday pressed President Donald Trump’s nominee for the top health post to explain how he would fight skyrocketing drug prices — demanding to know why they should trust him to lower costs since he did not do so while running a major pharmaceutical company.

Alex M. Azar II, the former president of the U.S. division of Eli Lilly and Trump’s pick to run the Department of Health and Human Services, presented himself as a “problem solver” eager to fix a poorly structured health care system during his confirmation hearing before the Senate Finance Committee. Azar said addressing drug costs would be among his top priorities.

But armed with charts showing how some of Eli Lilly’s drug prices had doubled on Azar’s watch, Democrats argued Azar was part of the problem. Sen. Ron Wyden of Oregon, the committee’s top Democrat, said Azar had never authorized a decrease in a drug price as a pharmaceutical executive.

“The system is broken,” Wyden said. “Mr. Azar was a part of that system.”

Azar countered that the nation’s pharmaceutical drug system is structured to encourage companies to raise prices, a problem he said he would work to fix as head of HHS.

“I don’t know that there is any drug price of a brand-new product that has ever gone down from any company on any drug in the United States, because every incentive in this system is towards higher prices, and that is where we can do things together, working as the government to get at this,” he said. “No one company is going to fix that system.”

Azar’s confirmation hearing Tuesday was his second appearance before senators as the nominee to lead HHS. In November, he faced similar questions from the Senate Health, Education, Labor and Pensions Committee during a courtesy hearing.

If confirmed, Azar would succeed Tom Price, Trump’s first health secretary, who resigned in September amid criticism over his frequent use of taxpayer-paid charter flights. A former Republican congressman who was a dedicated opponent of President Barack Obama’s signature health care law, Price had a frosty relationship with Democrats in Congress as he worked with Republicans to try to undo the law.

Price and the Trump administration often turned to regulations and executive orders to undermine the Affordable Care Act, since Republicans in Congress repeatedly failed to enact a repeal. “Repeal and replace” has been the president’s mantra.

But at the hearing, Azar was circumspect about his approach, noting that his job would be to work under existing law. “The Affordable Care Act is there,” he said, adding that it would fall to him to make it work “as best as it possibly can.”

Senate Republicans touted Azar’s nearly six years working for the department under President George W. Bush, including two years as a deputy secretary. Committee Chairman Orrin Hatch (R-Utah) praised Azar’s “extraordinary résumé,” adding that, among HHS nominees, he was “probably the most qualified I’ve seen in my whole term in the United States Senate.” Hatch, who is the longest-serving Republican senator in history, has been a senator for more than 40 years.

In addition to drug costs, Azar vowed to focus on the nation’s growing opioid crisis, calling for “aggressive prevention, education, regulatory and enforcement efforts to stop overprescribing and overuse,” as well as “compassionate treatment” for those suffering from addiction.

Pressed about Republican plans to cut entitlement spending to compensate for budget shortfalls, Azar said he was “not aware” of support within the Trump administration for such cuts.

“The president has stated his opposition to cuts to Medicaid, Medicare or Social Security,” Azar said. “He said that in the campaign, and I believe he has remained steadfast in his views on that.”

But Democrats pushed back, pointing out that Trump had proposed Medicaid cuts in his budget request last year. Sen. Sherrod Brown (D-Ohio) said such cuts would hurt those receiving treatment for opioid addiction.

“What happens to these people?” he said.

Despite such Democratic criticism, Azar is likely to be confirmed when the full Senate votes on his nomination. An HHS spokesman Tuesday pointed reporters to an editorial in STAT supporting Azar, written by former Senate majority leaders Bill Frist and Tom Daschle — a Republican and a Democrat. “We need a person of integrity and competence at the helm of the Department of Health and Human Services,” they wrote. “The good news is that President Trump has nominated just such a person, Alex Azar.”

Read further.

Source: