Health Policy Report

The Week in Review

Treasury Secretary Steven Mnuchin announced last week that the White House and Congressional leaders have agreed on terms for a sweeping budget deal that would address spending levels for fiscal years (FY) 2020 and 2021 and the debt ceiling. According to Mnuchin, Congressional leaders agreed to offset the increased spending limits for FY 2020 and 2021, as well as raise the debt ceiling for two years. As of now, a timeline for a finalized deal is unclear as officials are still negotiating specific numbers, revenue offsets, and “certain structural issues.”

Despite indications of progress from Speaker Pelosi and Secretary Mnuchin, the dwindling summer floor time — coupled with the slow pace of negotiations — has increased the likelihood that some form of stopgap measure will be needed to address the pressing fiscal deadlines. While the House has cleared all but two of its FY 2020 spending bills, Senate Appropriations Chairman Richard Shelby (R-AL) conceded yesterday that the upper chamber is not likely to begin marking up appropriations bills this summer, as Majority Leader Mitch McConnell (R-KY) has remained adamant on waiting for a budget deal first.

On the floor, House lawmakers cleared a bill out of the Education and Labor Committee that would raise the minimum wage to $15 per hour by 2025. In addition to 14 suspension bills, other notable legislation that cleared the House floor last week included a measure authorizing appropriations for U.S. intelligence operations and a resolution holding Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt of Congress for failing to comply with subpoenas issued by the Committee on Oversight and Reform. Meanwhile, the Senate’s work focused primarily on clearing presidential nominations.

The Week Ahead

Congress will reconvene for its last week of legislative business prior to August recess. Despite reports that a general agreement on the framework for the deal has been reached, talks are still ongoing. Late last week, the White House gave House Democrats an extended list of $574 billion in offset options — including drug pricing provisions and proposed cuts found in the administration’s fiscal year (FY) 2020 budget — that was rebuffed by Speaker Nancy Pelosi (D-CA) and House Democrats. Talks are expected to resume throughout the week as negotiators look for a vote on a deal ahead of the month-long break. 

On the floor this week, the House will consider a bill out of the Ways and Means Committee aimed at bolstering struggling union pensions. The Rehabilitation for Multiemployer Pensions Act would establish a new Pension Rehabilitation Administration and a related trust fund within the Treasury Department to make loans to multi-employer pension plans in critical and declining status. House Democrats have also queued up a border-related measure that would: (1) increase transparency and community engagement within the Department of Homeland Security (DHS); (2) provide independent oversight of border security activities; and (3) improve training for agents and officers of U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement. Meanwhile, the Senate will begin consideration of two key presidential nominees, including Mark Esper to be Secretary of Defense and Stephen Dickson to be Administrator of the Federal Aviation Administration (FAA).  

House Votes to Repeal Cadillac Tax

Last Wednesday, the House voted to repeal the “Cadillac tax” on high-cost health plans (H.R. 748). In a 419-6 vote, the Democrat-led House looked to scrap the 40 percent excise tax, which was originally put in place as part of the Affordable Care Act (ACA). Intended to slow rising health care costs by putting an effective limit on the generosity of health plans, the tax took fire from unions, businesses, and other stakeholders. The Congressional Budget Office (CBO) released a score of the repeal bill hours before its passage, finding that it would cost the federal government nearly $197 billion over ten years, and no offsets were offered on the cost of the legislation. While House Republicans looked to package a health insurance and medical device tax repeal into the bill, they were ultimately given no opening to do so.

Repealing the Cadillac tax has been a longtime goal of a number of Democrats and Republicans alike. Under the ACA, the tax would have gone into effect in 2018 but Congress successfully delayed its implementation until 2022. Senate Majority Leader Mitch McConnell (R-KY) has been silent on the issue recently and has been generally reluctant to bring up health care legislation this Congress. It is also possible that the cost of the legislation, along with the current delay in the tax’s implementation, may give some Senators pause. However, Finance Committee Chairman Chuck Grassley (R-IA) has indicated that the repeal may provide a vehicle for a tax extenders package, and advocates see an opening for repealing other unpopular ACA taxes such as the medical device tax and the health insurance tax, both of which have much smaller price tags than the Cadillac tax.

Senate Finance Democrats Push for Medicare Drug Price Negotiation

Democrats on the Senate Finance Committee have thrown a wrench into the panel’s bipartisan drug pricing negotiations, sending a letter to Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) that pushes for Medicare price negotiation and expresses concern that the package floated to senators last week “may not go far enough.” The Members go on to say that “we hope to support a final product that ensures meaningful changes to the status quo.” The letter was signed by 11 of the 12 rank-and-file Democrats on the Committee, with Sen. Bob Menendez (D-NJ) as the only defector.

While the letter stops short of directly opposing the package, this strong chorus among Committee Democrats portends a challenging road ahead for negotiators. As August recess quickly approaches, Committee leaders are coming under increasing pressure to complete their work on drug pricing — and they now face incoming fire from both sides of the aisle. Multiple Republicans have expressed concern with a proposal to place an inflationary cap on drug prices under Medicare Part D, while Democrats are now saying even that might not be enough to contain drug spending. But even if the Committee’s work flounders, their ideas could be on the menu for Senate and House leadership – the so-called ‘four corners’ – as they seek offsets for a year-end spending deal.

A Committee markup which had been long rumored for July 17 will slip until at least next week — and perhaps until after the August recess — as Committee leaders seek to shore up support for their proposal. The Trump administration, for its part, appears to be throwing weight behind the package: Secretary Alex Azar and White House Director of Domestic Policy Joe Grogan stepped in to brief Members on the package last week, and tomorrow, Members are schedule to meet with top officials from the Congressional Budget Office (CBO). 

E&C Committee Sends Surprise Billing Legislation to Full House

The House Committee on Energy & Commerce referred a raft of health care-related bills to the full House, including legislation to end “surprise bills,” delay cuts to disproportionate care hospital (DSH) funding, and reauthorize the Patient-Centered Outcomes Research Institute (PCORI) on Wednesday. Members reached a deal on surprise billing legislation in advance of the hearing, agreeing to insert an arbitration backstop in the benchmark-based dispute resolution mechanism for surprise bills to assuage the concerns of members such as Rep. Raul Ruiz (D-CA) and Rep. Larry Buschon (R-IN). Further calming worries about the benchmarking plan were amendments, all unanimously agreed to, to direct HHS to take into account factors such as case mix and rural status when determining benchmarks and to require reporting on the implementation of the legislation. The legislation ultimately was referred to the full House on a voice vote.

Mirroring last week’s Health Subcommittee markup of the same legislation, little dissent was noted on any of the proposals discussed. As with the surprise billing legislation, changes to other legislation under consideration appeared to be negotiated behind the scenes, without a sign of discord reaching the hearing room. Members unanimously agreed to amendments placing additional program integrity requirements on Puerto Rico’s Medicaid program, targeting health care workforce programs to underserved areas, and instituting a cost reporting program for air ambulances before sending all of the health bills to the floor on voice votes. The Committee also advanced legislation based on the FAIR Drug Pricing Act requiring pharmaceutical manufacturers to disclose and explain certain price increases. While the legislation was unanimously referred to the full House, Ranking Member Greg Walden (R-OR) signaled that changes to the negotiated text could result in the withdrawal of his support. Chairman Frank Pallone (D-NJ) said, however, that he would “protect” the bill and work to shepherd it through the floor with bipartisan support.

W&M Committee Launches Rural Health Task Force

Last week, the Ways and Means Committee announced the creation of a “Rural and Underserved Communities Health Task Force.” The bipartisan-led group will discuss the obstacles rural and underserved areas face in delivering medical services and explore “holistic bipartisan policy options” to improve health care access, outcomes, and costs in these communities. The task force, co-chaired by Reps. Danny Davis (D-IL), Terri Sewell (D-AL), Brad Wenstrup (R-OH), and Jodey Arrington (R-TX), plans to convene members and experts to discuss the challenges of delivering health care in rural and underserved areas. The first meeting is scheduled for Thursday, July 25. The new Task Force could provide a platform to highlight issues such as the value of expanding Medicare reimbursement for telehealth services as well as other changes designed to bring stability to hospitals in rural areas.

CMS Issues Additional Guidance on 1332 Waivers

The Centers for Medicare & Medicaid Services (CMS) announced last Monday new guidance and templates to assist states’ development of Section 1332 waivers under the Affordable Care Act (ACA). The new resources from CMS include an updated checklist of requirements needed to submit state innovation waiver to waive certain requirements under the ACA and four “model template” applications illustrating the four previously released waiver concepts. However, the Government Accountability Office (GAO) concurrently released a decision determining that Trump administration guidance on state innovation waivers is subject to Congressional review. The GAO’s opinion notes that Trump administration guidance on 1332 waivers from October 2018 should have been issued as a rule and thus will be subject to the Congressional Review Act (CRA).

The review of the guidance and decision comes in response to a letter from Sen. Ron Wyden (D-OR) and Rep. Frank Pallone, Jr. (D-NJ) seeking a GAO determination, and the guidance now must be submitted to Congress and the Comptroller General before taking effect. Sen. Wyden informed Republicans last Monday that they’ll “be forced to take a position on pre-existing conditions protections” as Democrats plan to introduce a resolution in the “near future” to roll back the guidance. Democrats will try to reverse the guidance using the CRA’s expedited legislative process that requires only a straight majority vote that cannot be blocked by a filibuster. The House has already passed legislation that would reverse the guidance — Rep. Kathy Castor’s (D-FL) Protecting Americans with Pre-existing Conditions Act passed on a 230-183 vote on May 9, with four Republicans joining Democrats voting to throw out the guidance.

Federal Judge Upholds Expansion of Short-Term Health Plans

Last Friday, a federal judge approved the Trump administration’s expansion of short-term health plans, ruling against a group of insurers who had attempted to block the rule. U.S. District Judge Richard Leon explained that “not only is any potential negative impact from the 2018 rule minimal… ts benefits are undeniable.” The judge added that the plans aims to "minimize the harm and expense" for individuals who might otherwise decide not to purchase insurance because of high premiums. The Trump administration had issued a regulation last year expanding short-term health care plans to 12 months instead of three. The Association for Community Affiliated Plans (ACAP) sued the administration under the argument that the rule put them at an unfair disadvantage as they were still required to cover Affordable Care Act (ACA) protected benefits and must charge higher premiums to do so. Judge Leon explained in his ruling that the plaintiffs were unable to prove that the changes actually impacted their enrollment in 2019.