Health Policy Report

The Week in Review

House lawmakers approved their version of a budget resolution (H. Con. Res. 71) for the 2018 fiscal year, taking the first legislative step towards creating a comprehensive tax reform package through the budget reconciliation process. The next step will be for the Senate to do the same, which should happen in short order since the Senate Budget Committee approved their budget resolution (text) in a markup last week. Assuming the full Senate approves the resolution — which only requires a simple majority — the two chambers will then reconcile their respective versions in conference. In order for Republicans to meet their ambitious goal of getting tax reform legislation to the president’s desk before the end of the year, GOP lawmakers are hoping the conferencing and re-approval process will be done at a breakneck pace.

In the upper chamber, floor time was focused last week on presidential nominees, including the approval of Eric Hargan to be Deputy Secretary of Health and Human Services. The Senate also approved the nominations of Chairman Ajit Pai to continue as a member of the Federal Communications Commission (FCC), Lee Cissna to be Director of United States Citizenship and Immigration Services (USCIS), Randal Quarles to be a Member of the Federal Reserve Board of Governors, and Callista Gingrich to be Ambassador to the Holy See.

In notable political news, House Energy & Commerce Subcommittee on Oversight Chairman Tim Murphy (R-PA) announced that he would retire from Congress following a report suggesting that he urged a woman with whom he was having an affair to have an abortion. Murphy’s retirement comes as his Subcommittee steps up its probe into the 340B drug discount program and investigates the healthcare industry's response to malware threats. Murphy has also been a staunch advocate for mental health reform, and was instrumental in drafting the Helping Families in Mental Health Crisis Act which was eventually incorporated in the 21st Century Cures Act.

The Week Ahead

The Senate will be out of session all week, and the House has relatively light legislative work planned after approving the fiscal 2018 budget resolution last week. Items on the House agenda include a Senate-passed bill (S.585) designed to protect federal whistleblowers and a still-emerging disaster relief package. The White House submitted a $29 billion disaster aid request last week to help those effected by Hurricanes Harvey, Irma, and Maria begin what is expected to be a long recovery. While some conservatives have objected to the aid without complementary spending cuts elsewhere, the need for the aid will likely outweigh other political considerations. Adding to the sense of urgency for the aid, the National Flood Insurance Program (NFIP) is expected to run out of money by the week of Oct. 23.

House and Senate Panels Advance CHIP Bills, Although Funding Challenges Remain

The Senate Finance and House Energy & Commerce Committees both approved their versions of bills to renew funding for the Children’s Health Insurance Program (CHIP) last week as questions remain about what offsets will make it into law. With respect to the CHIP policies, both Committees are considering substantively equivalent bills: beginning to wind down the Affordable Care Act’s (ACA) 23 percent increase in federal matching funds to states in two years, and making tweaks to the law's "maintenance of effort" requirements that prevents states from reducing eligibility for the program.

But paying for the bill has proven to be a challenge, and as the Finance Committee advanced their bill without offsets, Democrats in the lower chamber opposed a Republican-backed plan to adjust Medicare premiums for higher-income households and more accurately account for lottery winnings in Medicaid eligibility determinations. In a statement, Energy & Commerce Committee Ranking Member Frank Pallone (D-NJ) said the House bill as it stands has “no chance of ever becoming law.” Meanwhile, Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) indicated last week that they have just begun to have discussions over pay-fors.

It’s unclear how lawmakers will solve the issues with offsets, but some have suggested that these complicating factors could push floor consideration of the bill all the way into December, when Congress will also be forced to act on a government funding bill — a potential vehicle for the CHIP bill. Federal funding for CHIP technically expired on Sept. 30, but lawmakers have been slow to renew the program as analysis concluded that most states won’t exhaust their existing CHIP funds until 2018. Any CHIP reauthorization bill would require 60 votes in the Senate, meaning that at least 8 Democratic votes are needed.

House Action on IPAB Repeal Could Complicate CHIP Funding

House Republicans are considering tying together bills to fund the Children's Health Insurance Program (CHIP) with repeal of the Independent Payment Advisory Board (IPAB), adding another potentially-complicating factor to the extension of CHIP. The Affordable Care Act (ACA) set up IPAB to reduce Medicare spending when it exceeds a current target. Opponents have argued that it takes control of Medicare decisions out of the hands of Congress, or even the HHS secretary. The Board is not expected to be triggered until 2022, and the 15-member panel has yet to be named.

Despite its dormant infancy, lawmakers from both parties have targeted IPAB for repeal. While several Democrats have publicly opposed the Board, only two of them joined every Republican on the Ways and Means Committee in advancing a repeal bill through the panel last week. Committee Chairman Kevin Brady (R-TX) said last week that House Republicans are "working toward" tying the bills together with CHIP reauthorization. Meanwhile, it appears that Senate GOP leaders might be resistant to that approach. "I'd rather have it be by itself," Senate Finance Chairman Orrin Hatch (R-UT) said of CHIP. "But sometimes it's a popular bill and they'll want to hang something on it." The Congressional Budget Office (CBO) has estimated IPAB repeal as costing $17.5 billion, $10 billion more than the estimate was in 2015.

Senate Health Committee Stabilization Deal Stalls Over 1332 Flexibility

Top negotiators on the Senate Health, Education, Labor, and Pensions (HELP) Committee have yet to reach a bipartisan agreement on an individual market stabilization bill, despite around-the-clock meetings by Committee staff over the last week and a half. Among the potential framework of the emerging negotiations: relaxation of rules around 1332 waivers, such as expediting the application process; expansion of enrollment in copper, or catastrophic, plans; authorization of cost-sharing reduction (CSR) payments through December 2019; and instructions to HHS to issue regulations on 1333 waivers that allow interstate insurance sales.

According to Committee staff, the amount of flexibility to grant states within 1332 waivers remains the sticking point. Democrats on the Committee have been resistant to allowing states to skirt the ACA’s “guardrails” on benefits or coverage estimates, while Republicans have been pushing to allow changes to key insurance regulations such as age rating limits and the essential health benefits (EHBs).  Even if an agreement is ultimately approved by Congress, insurers have already filed their rates for 2018, so any legislative package is unlikely to impact premiums until 2019.

MedPAC Urges Repeal of MIPS

The Medicare Payment Advisory Commission (MedPAC) is considering recommending that Congress scrap the Merit-based Incentive Payment System (MIPS) and replace it with a system that is less onerous on providers. During a public meeting last week, the commissioners almost unanimously agreed that MIPS was flawed, and fixated on finding an alternative policy solution that would achieve the original ambitions of MIPS: incentivizing providers to achieve high quality patient care. The Commission’s staff presented an alternative to MIPS that included withholding 2 percent of payments from those providers who are not in an advanced alternative payment model (A-APM), and allowing providers to earn back funds by joining groups of clinicians that would be rated on population-based performance measures.

While not all commissioners agreed that the alternative model represented a significant improvement, the overwhelming sentiment remained that MedPAC should recommend repealing MIPS. On the other hand, there continues to be strong support among the Commission for maintaining the development of APMs.  Recommending to Congress that they repeal MIPS would not affect the APM program that MedPAC wholeheartedly supports. 

It’s unclear how Congress would react if MedPAC were to recommend repealing or replacing MIPS. Congress is often hesitant to adopt on the Commission’s most ambitious priorities, and lawmakers may be reluctant to reopen discussions on MACRA, particularly given its widely bipartisan history. Likewise, provider organizations — many of whom appreciate the relative flexibility provided by MIPS — have made significant infrastructure investments to support the adoption of program. While a MedPAC recommendation could spur changes to the program to relieve provider administrative burden, wholesale repeal of MIPS remains unlikely.

Trump Administration Scales Back ACA Birth Control Mandate

The Trump administration released interim final rules last Friday that would allow employers to seek a religious or moral exemption to the Affordable Care Act (ACA) mandate that requires insurance plans to cover birth control. The rules — one on religious exemptions and another on moral objections — were designed to please conservative anti-abortion groups and are similar to draft regulations that leaked in May. The rules would significantly expand the types of organizations that could qualify for an exemption. The regulation builds upon a Supreme Court decision in 2014 that said closely held for-profit corporations with religious objections could qualify for an exemption. Under the new rules, any employer, including publicly traded companies, could apply for this option if they claim moral or religious objections.

Trump administration officials have argued that 99.9 percent of women won't be affected by the rule, a conclusion they reached by considering the 200 entities that have participated in lawsuits against the federal government over the mandate. An earlier study commissioned by the Obama administration showed that more than 55 million women have access to birth control without co-payments because of the mandate. The regulations have already drawn lawsuits from the American Civil Liberties Union and the National Women’s Law Center.

Senate Confirms Eric Hargan as Deputy Health Secretary

The Senate confirmed, 57-38, Eric Hargan last week as the next deputy secretary of Health and Human Services. Hargan's confirmation as second-in-command at HHS takes on greater importance because he would enter the agency less than a week after former Secretary Tom Price resigned from his post. Don Wright, a career official, is serving as the acting secretary but Hargan could take on a greater role in leading the department. Hargan previously held several positions at HHS under President George W. Bush, serving as deputy general counsel, chief of staff to the deputy secretary and as acting deputy secretary. Most recently, he worked at a Chicago law firm, focusing on health care law.