Oz Leaves Door Open for Medicaid Cuts, Work Requirements

(Bloomberg) — Mehmet Oz, President Donald Trump’s nominee to lead Medicare and Medicaid, told senators he would focus on chronic disease and improving the efficiency of federal health programs.

His remarks to the Senate Finance Committee show an early glimpse of his agenda if he’s confirmed to lead the Centers for Medicare and Medicaid Services, which oversees $1.7 trillion in federal spending.

Oz, a surgeon and TV star, cited higher costs for American health care compared to other countries and inefficiencies. He called for “rethinking our outdated approach” to treating symptoms rather than underlying causes of disease.

He refused to commit to opposing cuts to the Medicaid health program for low-income Americans, despite prodding from Democratic senators. Republicans in Congress are eyeing cuts to federal spending on Medicaid to extend tax cuts passed during Trump’s first term.

Instead, Oz said he supports paying providers enough to do what is requested from them in Medicaid and ensuring there are enough providers that accept Medicaid to provide services. But he also supported work requirements for people on Medicaid and suggested the program has outgrown its original remit.

“The rapid expansion of the required expenses of monies for Medicaid is far beyond what was ever envisioned when ACA was originally passed,” he said, referring to the Affordable Care Act, which expanded Medicaid coverage. 

Private Insurers

Senator Elizabeth Warren pressed Oz on addressing techniques private insurers use to boost their payments from Medicare, the US program for older and disabled people. Those practices within Medicare Advantage plans include home visits meant to identify diagnoses like peripheral artery disease that increase outlays even when patients don’t need treatment. 

Oz agreed that some practices amounted to “cheating,” a response that won praise from Warren. 

“It doesn’t just help the scoundrels who are stealing from the vulnerable, it’s actually hurting the people trying to take care of those vulnerable populations,” Oz said, referring to some Medicare Advantage home visits used to boost payments.

Following the fatal shooting of a UnitedHealth Group Inc. executive in December, criticism of insurance companies surged, including how they perform prior authorization for care. Congress hasn’t taken action on the issue, but several senators brought it up during the hearing.

Oz said prior authorization requirements are misused in some settings, and advocated for using technology to automate some processes to speed them up.

‘Intense Frustration’

“Doing this rapidly, we cut out several percent of administrative costs, and deal with the intense frustration the American people have with pre-authorization,” Oz said.

Oz also said that CMS should begin paying for new medical products as soon as the Food and Drug Administration approves them, making it easier for companies “to create lifesaving tools.” He cited his own experience developing a medical device called the MitraClip that treats leaky heart valves.

The change would be a boon for drug and device-makers. CMS separately evaluates whether to pay for some new products based on the evidence. The agency declined to pay for a controversial Alzheimer’s treatment approved by the FDA, seeking more evidence.

Oz was a surprise pick when Trump selected him to lead CMS. The agency’s programs provide health coverage for 68 million people on Medicare and 79 million people on Medicaid. CMS also regulates marketplaces for individual coverage through the Affordable Care Act covering 24 million.

These programs are already becoming flashpoints as Trump and Elon Musk seek to slash federal spending. US health insurers including UnitedHealth Group Inc. and Elevance Health Inc. get billions in revenue from administering private versions of Medicare and Medicaid plans, and hospitals like HCA Healthcare Inc. rely on the federal payments.

Trump has said he won’t cut Medicare, though Musk has recently called federal entitlement programs a key target for cuts.

(Updates with additional comments from hearing, background information starting in fifth paragraph.)

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