Health Policy Report

The Week in Review

The Senate returned to Washington last week and completed its work on the Defense-Labor-HHS-Education appropriations minibus (H.R. 6157). Prior to final passage, the upper chamber approved a large bipartisan amendment package (#3695) following a brief hiccup in the process over an amendment offered by Sen. Rand Paul (R-KY) that would have defunded Planned Parenthood. The bill’s passage marks the first time the Senate has passed a labor, health, and education funding bill since 2007.

Meanwhile, President Trump was dealt a series of legal complications last week. The president’s former personal attorney, Michael Cohen, pleaded guilty to a series of felonies — including campaign finance violations he said he carried out in coordination with President Trump — at nearly the same moment former Trump campaign Chairman Paul Manafort was convicted of financial crimes. While President Trump has largely brushed off these developments, they will present an ongoing challenge for the White House as the Mueller investigation continues and the Midterm elections approach.

In somber news over the weekend, Sen. John McCain (R-AZ) passed away at the age of 81 following his battle with a deadly form of brain cancer called glioblastoma. Sen. McCain served Arizona for over 30 years on Capitol Hill and was the 2008 Republican presidential nominee. He is survived by his wife Cindy, mother Roberta, seven children, and five grandchildren.

The House remained out of town for August recess, and will return to Washington on Tuesday, September 4th.

The Week Ahead

Following the passage of the massive Defense-Labor-HHS-Education minibus, Senate lawmakers are now expected to enter conference negotiations with the House in September to reconcile differences between their spending bills. The two chambers will be pushing up against the September 30 government funding deadline, as they will only have 11 legislative days to hash out their differences on the respective funding bills. It also remains to be seen whether or not President Trump will sign an appropriations package that omits funding for a wall along the U.S.-Mexico border.

Looking ahead, the Senate will reconvene on Monday as it seeks to clear its presidential nominations queue. The upper chamber is slated to hold a cloture vote on the nomination of Lynn Johnson to be Assistant Secretary for Family Support at the HHS. Additionally, Majority Leader Mitch McConnell (R-KY) has filed cloture on 17 other nominations and the Senate will likely spend the balance of next week working to clear the docket. A full list of the 17 pending nominations can be found here.

Senate Clears Labor-HHS Funding Bill Including Drug Price Transparency in DTC Ads

The Senate passed the fiscal year (FY) 2019 Departments of Labor, Health and Human Services, Education (Labor-HHS) funding bill on strong bipartisan vote (85-7) last week, including adoption of a large amendment package that contains dozens of measures from members. This marks the first time that the upper chamber has cleared a Labor-HHS spending bill outside of omnibus measures since 2007. To ease the path for the roughly $854 billion Labor-HHS measure, Senate leaders moved it as a “minibus” paired with funding for the Department of Defense (DOD). The approval follows the Appropriations Committee markup from earlier this summer and is a significant step by the Congress in averting a government shutdown before the funding deadline at the end of September.

The Senate debate was dominated by discussion and behind-the-scenes negotiation around dozens of amendments to the bill, including several bipartisan amendments that were ultimately adopted to address transparency for drug prices, funding health care programs, and investments in medical research. Among the most-high profile of these, Senators Dick Durbin (D-IL) and Chuck Grassley (R-IA) offered an adopted amendment that would authorize $1 million in funding for HHS to implement regulations requiring drug companies to list their prices in TV ads. The amendment dovetails with a price transparency proposal included in the administration’s drug pricing blueprint.

The adopted amendment package also contains two opioid-related amendments, including one measure that would ensure youth are considered under guidance for medication-assisted treatment. Another provision requires the National Institutes of Health (NIH) to conduct a study on the agency's funding levels for mental health and substance use disorder.

HHS Issues Progress Report on Drug Pricing Initiative

On the 100th day marking the release of President Trump’s “American Patients First” drug pricing blueprint, the administration issued a new report last week enumerating the steps officials have taken to act on the blueprint’s strategies and proposal. The report, authored by Dan Best, Senior Advisor to the Secretary for Drug Pricing Reform, includes newly published data from the Health and Human Services’ (HHS) Assistant Secretary for Planning and Evaluation (ASPE). According to the administration, this data offers “clear evidence that drug company behavior has changed dramatically since the release of the blueprint’s proposals.”

HHS also signalled additional policy changes are forthcoming, stating, “Despite the progress made, the most significant parts of the President’s blueprint are largely still in the works.” Officials expect that these changes, including incentives and other steps, will further transform the drug markets. By acknowledging that legislative changes to the laws that govern drug markets will be needed to achieve their vision, administration officials attempted to shift some of the focus and responsibility to Congress. Notably, a proposal targeting the safe harbor for drug rebates is still under review by the Office of Management and Budget (OMB). Additionally, the annual policy update to the Medicare Part D program is an opportunity for the administration to advance new policy proposals.

CMS Formalizes Guidance on Medicaid Demos' Budget-Neutrality

In response to the Government Accountability Office's (GAO’s) long-standing concerns about the budget neutrality of Medicaid 1115 waivers, CMS released its first formal guidance last week explaining how states must make sure demonstrations won't increase costs to the federal government. GAO Comptroller General Gene Dodaro and CMS Administrator Seema Verma testified at a Senate Homeland Security & Governmental Affairs Committee hearing shortly before CMS released the budget neutrality guidance, and both expressed concerns about states gaming the system in part through the use of 1115 demonstrations that aren't truly budget-neutral. In releasing the guidance letter to state Medicaid directors, CMS acknowledged that the GAO has long sounded alarm bells about states using 1115 demonstrations to access more federal Medicaid money than they otherwise would qualify for.

In the letter and an accompanying press release, CMS said it will not approve 1115 waivers unless states can show — through a series of complex budgeting formulas detailed by the agency — that the waivers will not increase costs to the federal government compared to the Medicaid funding the states would otherwise receive. The agency also said it is taking new steps to tighten budget-neutrality requirements and procedures, including an upcoming requirement to have states use a standard reporting form to submit budgetary data for each demonstration project. CMS also said it is phasing in new rules governing the agency's re-approvals of existing demonstrations.

CMS Awards Marketplace Flexibility Grants to States

The Centers for Medicare and Medicaid Services (CMS) announced it will award 30 states and the District of Columbia $8.6 million under the State Flexibility to Stabilize the Market Grant Program. According to the CMS statement, these grants are intended to “strengthen their respective health insurance markets through innovative measures that support market reforms and consumer protections.” Five of the states receiving a grant award intend to take steps to address the opioid crisis, including reviewing formularies for compliance, ensuring plans meet substance abuse and mental health disorder treatment requirements and examining evidence-based benefit designs.

This funding is part of $250 million for State Rate Review Grants provided by Section 2794 of the Affordable Care Act to improve the process for how states review proposed health insurance rates. The grants are unspent Rate Review Grant funding from prior years that HHS is repurposing to help states plan and implement federal insurance reforms and consumer protections. This State Flexibility Grant program funding opportunity was first announced in February 2018, and is intended to help states assess the needs of consumers and support the development of innovative measures to ensure access to affordable health coverage in their respective individual and small group markets. The program is consistent with the administration’s goals to provide states more flexibility to tailor health insurance options and facilitate a state-driven regulatory framework.

CMMI Announces Model to Address Opioid Crisis, Behavioral Health for Children

The Center for Medicare and Medicaid Innovation (CMMI) has announced a new initiative, the Integrated Care for Kids (InCK) Model, that will call on local stakeholders and Medicaid agencies to develop alternative payment models (APMs) that address the impact of the opioid crisis for children. The program will allow Medicaid and local providers the opportunity to create sustainable alternative payment models that address behavioral health risk factors among youths under the newly-created initiative. The agency indicates that they will publish a detailed Notice of Funding Opportunity in Fall 2018 with additional details on how state Medicaid agencies and local health and community-based organizations can apply to participate in the model.

The InCK Model is “a child-centered local service delivery and state payment model aimed at reducing expenditures and improving the quality of care for children covered by Medicaid and the Children’s Health Insurance Program (CHIP) through prevention, early identification, and treatment of priority health concerns like behavioral health challenges and physical health needs.” The initiative will help state Medicaid agencies and their local health and community-based partners identify and address risk factors for behavioral health conditions, understanding that the earliest signs of a problem may present outside of clinical settings — such as in schools or at home — and may be known not to clinicians but rather to teachers and to child welfare and foster care programs. The interventions outlined in the InCK Model are designed to increase access to behavioral health and build capacity in communities to provide more effective, efficient, and affordable care through home- and community-based services.