Health Policy Report

The Week in Review

House and Senate lawmakers returned from a two-week district work period to begin four weeks of legislative business. During their first week back, House lawmakers cleared a pair of resolutions out of the Financial Services Committee aimed at promoting financial literacy. The resolutions seek to support the protection of elders through financial literacy (H.Res 328) and would encourage greater public-private sector collaboration to promote financial literacy for students and young adults (H.Res. 327).

Additionally, House lawmakers passed a measure to reject President Donald Trump’s stance on the Paris Climate Agreement. The Climate Action Now Act (H.R. 9) would bind the Trump administration to the carbon-cutting goals of the 2015 Paris Agreement from which the President vowed to withdraw the U.S. almost two years ago. The bill passed along party lines in the lower chamber and is expected to be taken up in the Senate.

In the upper chamber, Senators resumed consideration of pending presidential nominations. The Senate failed to override President Trump’s veto of legislation that would cut off U.S. support to the Saudi-led war in Yemen. The resolution would have required the President to withdraw any U.S. troops in or "affecting" Yemen within 30 days unless they are fighting al Qaeda. 

The Week Ahead

Health care legislation will hit the House floor this week, as lawmakers are expected to vote on legislation to reverse Trump-era Affordable Care Act (ACA) regulations and a pair of bills that take incremental steps toward the broader goal of addressing prescription drug prices. The Protecting Americans with Preexisting Conditions Act (H.R. 986) prohibits the Departments of Health and Human Services (HHS) and Treasury from taking any action to implement, enforce, or otherwise give effect to the Section 1332 guidance that was issued last October. Meanwhile, the drug pricing measures (H.R. 1503 and H.R. 1520) would respectively update the FDA’s Orange Book and Purple Book to provide better information on brand drug and biologic patent exclusivity. 

House lawmakers are also poised to take up another disaster relief bill (textsummary) in hopes of breaking a months-long impasse over the emergency funds. The latest $17.2 billion offer from House Appropriations Chairwoman Nita Lowey (D-NY) includes additional funding for Army Corps of Engineers projects, Community Block Development Grants, and the Department of Agriculture's Emergency Conservation program. The bill would also provide an extension of the National Flood Insurance Program (NFIP), pushing the expiration date from the end of this month to Sept. 30 in hopes of providing lawmakers with more time to hammer out a long-term reauthorization measure.

Billions of disaster relief dollars have been held up in Congress since December with funding for Puerto Rico remaining the biggest sticking point. Senate Republicans‘ latest disaster relief offer includes $300 million in new community development funding for Puerto Rico, with language ensuring that the U.S. territory safeguard those funds against waste, fraud, and abuse. While President Donald Trump has reportedly signed off on the provision, it remains to be seen whether Democrats will go along with a measure that does not meet many of their priorities for assisting Puerto Rico.

Lawmakers Consider Delaying Rebate Rule to Gain an Offset

Lawmakers are reportedly considering delaying the Trump administration’s proposed ban of point-of-sale rebates and using savings from the delay to pay for other legislative priorities. Late last week, CBO released an analysis that estimates the rule would increase federal spending by about $177 billion over 10 years. Congress may be tempted to delay or repeal the rule, as the savings could be used as on offset for other key priorities — such as capping seniors’ annual spending in Medicare Part D.

Congress could potentially use savings from a rebate rule delay in several ways. The savings could help offset a budget cap deal or infrastructure legislation. It also could help pay for the cost of capping out-of-pocket spending in Medicare Part D. Separately, House Speaker Nancy Pelosi’s (D-CA) staff is negotiating with the White House in a bid to reach a legislative deal to create a third-party arbiter to negotiate drug prices with drug makers. The plan also likely would include an out-of-pocket spending cap, but the arbitration measure might not fully offset the cost of the cap, so delaying the rebate rule could also potentially be used to help defray that expense.

E&C Subcommittee Discusses Reducing Medicare Drug Costs

The House Energy & Commerce Subcommittee on Health questioned Dr. James Mathews, the Executive Director of the Medicare Payment Advisory Commission (MedPAC) on drug prices in Medicare Parts B and D. The hearing featured bipartisan criticism of policies like step therapy — both generally and in relation to Medicare’s six protected classes policy. Dr. Mathews largely defended practices like step therapy, prior authorization, and formulary restrictions based on the tradeoff of lowering costs for taxpayers and, in some circumstances, patients’ out-of-pocket costs. Subcommittee Chairwoman Anna Eshoo (D-CA) closed the hearing by calling on MedPAC to make recommendations on patient access to needed medications, calling step therapy in particular “not defensible” and implicitly rebuking the Commission for not adequately considering access and its effect on patients. Rep. Larry Bucshon (R-IN) agreed with Chairwoman Eshoo, adding that he does not believe that step therapy saves money in the long run due to the costs of delaying care.

Dr. Mathews, detailing MedPAC’s previous recommendations on Medicare drug pricing policies, called for the restructuring of the Part D benefit to give plans greater liability in the catastrophic phase and a beneficiary out-of-pocket cap. Several members on both sides of the aisle offered their support for an out-of-pocket cap in Part D. Dr. Mathews also suggested that manufacturers should have a role to play in covering costs in the catastrophic phase. While some Democratic members pressed Dr. Mathews on direct price negotiations in Part D, he demurred, pointing to Congressional Budget Office (CBO) analyses that show a limited benefit to such negotiations. Instead, he signaled support for binding arbitration, a position shared by some Committee Democrats that may have broader support in Congress.

Experts and Patient Advocates Testify on “Medicare for All” Legislation

Last Wednesday, the House Rules Committee held the first-ever hearing on “Medicare for All” legislation supported by progressive Democrats. Republicans argued that the hearing was a transparent push for the Democratic agenda in a committee with little jurisdiction over the issue. However, following the hearing, House Ways & Means Committee Chairman Richard Neal (D-MA) announced it would also hold a hearing on the legislation.

Democrats questioned witnesses on the costs of the current healthcare system compared to a universal coverage environment and asked how the current system limits access to quality care for all Americans. Patient advocate Ady Barkan of the Center for Popular Democracy stated that universal health coverage would greatly benefit Americans facing chronic health problems and devastating diseases, but not all Democrats embraced the bill. Rep. Joe Morelle (D-NY) warned against dramatically raising taxes without a clear and executable plan to implement a new healthcare system, and several lawmakers called for a more detailed transition plan. Republicans highlighted an analysis showing over $30 trillion in new costs to the government over ten years under the plan, and they argued it would not be as easy to abandon employer-sponsored insurance as the legislation anticipates. They also expressed concern that reimbursing hospitals and providers at Medicare rates would result in hospital closures and physician shortages. 

The Congressional Budget Office (CBO) released an evaluation of universal healthcare coverage the day after the hearing, detailed below.

CBO Releases Policy Considerations for Single-Payer Health Program

The Congressional Budget Office (CBO) concluded in a report last week that moving to a single-payer health care system could significantly affect the entire economy and laid out key issues for lawmakers to consider when crafting legislation that could affect one-sixth of the gross domestic product. CBO did not provide a cost estimate or spell out specific recommendations, however. The report responded to a request from House Budget Chairman John Yarmuth (D-KY), who plans to hold a hearing on the House “Medicare for All” legislation later this month.

CBO’s 30-page report laid out factors for lawmakers to weigh when deciding, namely: what roles the federal and state governments should play; who could enroll and whether they could opt out; whether to base the benefit package on Medicare, Medicaid or the ACA and whether to include other services; which new treatments and technology would be covered; what entity would make coverage decisions; what level of beneficiary cost-sharing would be required; how to structure provider payments; how to purchase pharmaceuticals; whether private insurance would be entirely cut out; and how the new system would be financed.

CMS Seeks State Feedback on 1332 Waiver Concepts

The Centers for Medicare and Medicaid Services (CMS) and Department of the Treasury jointly issued a request for information (RFI) last week on new 1332 waiver concepts. The RFI builds on a 2018 guidance loosening the guardrails around the waivers by asking commenters to propose ideas that allow states to use 1332 waiver plans to structure health insurance markets in line with their state-specific priorities. CMS has asked for comments on concepts that may cover the entire range of Affordable Care Act (ACA) requirements that may be waived under section 1332 and welcomes ideas that combine 1332 waivers with other flexibilities, including Medicaid section 1115 demonstrations. “The new guidance the Departments issued last fall gives states the flexibility they need to address problems in their market. The prior guidance issued by the previous administration proved to be unnecessarily restrictive for states,” wrote CMS Administrator Seema Verma in a blog post accompanying the RFI.

In the absence of Congressional action to roll back ACA requirements, CMS views 1332 authority as an important vehicle for states to advance marketplace reforms as well as health care system reforms more broadly. The agency announced its intention to continue building out the 1332 resources for states and is eager for state leaders and stakeholders to add more specificity to the potential models they wish to advance. CMS also signaled its openness to state proposals that combine marketplace and Medicaid reforms through waiver plans, including Medicaid block grants or other financing reforms that some states are already exploring. Meanwhile, legislation to nullify CMS’s prior guidance on 1332s will reach the House floor this coming week. While it is expected to pass the House, it faces no path forward in the Senate.