TRP Health Policy Report

The House and Senate were in recess last week for the Fourth of July recess. Despite the break on Capitol Hill, healthcare remained a hot topic in Washington, with two Supreme Court rulings that could have lasting impacts on the implementation of the Affordable Care Act (ACA). In a 5-4 decision last Monday, the Court ruled that some private companies may, on religious grounds, opt out of the ACA’s requirement that employer-sponsored health insurance plan provide contraception coverage. Three days later, the high court voted 6-3 to provide temporary relief to a non-profit college that also objected to the contraception coverage mandate. The rulings fiercely divided the court, as well as supporters and opponents of the 2010 health law.

At the agency level, CMS proposed a new rule to eliminate a reporting exemption for certain continuing medical education (CME) related payments pursuant to the Physician Payments Sunshine Act. Just last year, CMS had created the exemption after an extensive regulatory process as part of a Final Rule on the law that requires drug and device companies to disclose payments to physicians. In a significant reversal, CMS said its previous policy created an ‘unintended’ appearance of agency endorsement of commercially supported CME events. CME advocates were blindsided by the action and pledged to fight the proposal, saying it could create a significant disincentive for physicians to take part in post-graduate medical education. Elsewhere, the FDA released proposed regulations to strengthen its oversight of compounding pharmacies last Tuesday. The rule would update the FDA’s list of risky drugs that have been removed from the market or are banned from being compounded by pharmacies.

The Week Ahead

Members of the House and Senate return from their July 4th break this week. Lawmakers begin a work period that is expected to focus on a host of unfinished business, including highway funding, appropriations, and terrorism risk insurance. In the House, members will take-up a $27.3 billion Energy-Water appropriations bill (H.R. 4923) and legislation (H.R. 4718) to make bonus depreciation permanent. The House will also vote on a bill (H.R. 4007) setting anti-terrorism standards at chemical facilities and Senate-passed legislation (H.R. 803) to modernize federal workforce development programs. In the Senate, lawmakers are expected to vote on Executive Branch nominations and may consider legislation to renew the Terrorism Risk Insurance Act. Off the floor, conferees from both chambers will continue working to resolve their differences over how to pay for legislation (H.R. 3230) to remedy wait times for patients at Veterans’ Affairs facilities.

GAO Study Finds High Part D Prices

Last week, the GAO released a study finding that drugs in the Medicare Part D program are more expensive than those purchased under Medicaid and the Department of Defense – a conclusion that bolsters key Democrats' view that CMS needs power to negotiate prices. Rep. Henry Waxman (D-CA) said the findings show that CMS' inability to negotiate Part D drug prices and the program's lack of rebates have created a "taxpayer rip-off," and that the $84,000-per-treatment price of the breakthrough Hepatitis C drug Sovaldi is not an anomaly. The report, which looked at 2010 drug reimbursement prices from the different programs, found that for brand-name drugs, Medicaid paid the lowest price and Medicare paid an estimated 69 percent more. According to the GAO study, Medicare also paid 4 percent more than Medicaid for generics, while the DOD paid 50 percent more. In May, CMS Deputy Administrator Sean Cavanaugh said the agency will estimate Sovaldi's impact on Medicare when it receives Part D bids for 2015. Waxman and Rep. Diana DeGette (D-CO) have requested a hearing on Sovaldi, and are using the high price of the drug to push for extending Medicaid drug rebates to low-income Medicare beneficiaries.

High Deductible 'Copper' Plans Face New Scrutiny

Last November, a group of Senators including Mark Warner (D-VA) and Mark Begich (D-AK) introduced legislation (S. 1729) that would create a new "copper" plan under the Affordable Care Act, which would give people access to less expensive health insurance plans. Dubbed "copper" because they would offer a lower level of coverage than the "gold," "silver" and "bronze," the plans would allow individuals to purchase plans on the federal exchanges with lower monthly premiums, but require greater out-of-pocket medical costs. Similarly, America's Health Insurance Plans (AHIP) has proposed offering "bare-bones," catastrophic coverage plans on the exchanges to attract young adults. The copper plan proposed by Begich and AHIP's "lower premium catastrophic plan" would pay 50 percent of covered expenses, on average, and be eligible for premium tax credits. Advocates say copper plans would be useful for younger people who tend to have lower healthcare costs and want a less expensive option. It would also address concerns that not enough young people will sign up for health insurance under the health law, which would make the overall pool of enrollees more risky and lead to higher premiums for everyone.

But some consumer advocates say that copper plans offer a false pretense of affordability and would expose consumers to unaffordable healthcare costs if they get sick. Statistics from HHS appear to support such concerns, finding that the lowest-level plan available this year, the bronze plan, was selected by only 20 percent of enrollees. An April survey by Enroll America came to a similar conclusion, finding that 48 percent of those who didn't try to enroll said the primary reason was the fear that they couldn't afford coverage. Insurers and other copper plan advocates acknowledge that affordability is a top consumer priority and argue that the lower-premium costs would ultimately provide greater opportunity for Americans to participate in the healthcare marketplace. While Congressional action on Warner’s and Begich’s bill remains very unlikely, growing support from insurers and consumers could lead lawmakers to closely examine similar high-deductible proposals in the coming years.

CMS Proposes Changes to Sunshine Act Disclosure Rules

Last Wednesday, CMS announced plans to eliminate its previously promulgated exclusion for continuing medical education (CME) in the Open Payments program, known as the Sunshine Act – a provision of the ACA which requires drug and device companies to disclose payments to physicians. CMS’ initial proposal for implementation of the Sunshine Act from last year required industry to report payments to physicians for CME programs. But after considerable pushback from stakeholder groups, the final rule included a narrow exemption, saying adequate safeguards were already in place and that it was important to encourage physician participation in accredited CME.

Some critics, however, continued to argue that the exclusion would allow drug and device companies to avoid disclosure by transferring marketing funds to CME and away from direct promotional programs. CMS’ reversal of its earlier, fully vetted Final Rule caught CME proponents, who had spent over a year implementing policies to comply with the rule, completely blindsided.

CMS defended its policy reversal, saying that eliminating the exemption will “create a more consistent reporting requirement.” The agency also said that an “unintended consequence’” of the [original] policy was the appearance of agency endorsement of continuing education events.” CME organizations, physician groups and manufacturers that fund education events were stunned by the move, and many pledged immediately to oppose the proposed change.

SCOTUS Rulings Limit ACA's Contraception Mandate

Last Thursday, the Supreme Court ruled a Christian college in Illinois will not have to follow part of the regulations under the Affordable Care Act’s contraception mandate. The 6-3 decision followed the Court's 5-4 decision on Monday in which it ruled that closely held companies with religious objections did not have to provide certain forms of contraception to which they objected. Under Thursday’s ruling, Wheaton College will not have to complete a form sent to both the federal government and third-party insurers, which would then provide contraceptives for free with a government subsidy. Wheaton and more than 120 other nonprofits have sued, saying the workaround violates their religious views. Monday’s decision hinged on challenges to the mandate brought by the Hobby Lobby craft store chain and Conestoga Woods Specialties, a Pennsylvania-based cabinetmaker.

The ACA's contraceptive coverage rules require most for-profit, private businesses to offer contraceptive coverage in their employer-sponsored health plans. Houses of worship are exempt from the requirement, and religiously affiliated not-for-profits are eligible for an accommodation that ensures they do not have to pay for or directly provide the coverage to their employees. Reverberations from the Supreme Court’s rulings were felt immediately across Washington, where opponents of the contraception mandate hailed it as a triumph for religious liberty. But the mandate’s backers and the Court’s liberals warned of a slippery slope that could provide a means for companies to discriminate in hiring on the basis of race or gender, simply by claiming religious objections. Legal analysts said the rulings would likely trigger thousands of new religious-belief challenges to the ACA’s contraception mandate, opening the door to additional Supreme Court rulings in the future.