Health Policy Report

The Week in Review

The second session of the 115^th Congress got off to a slow start as the House elected to take the week off and the Senate’s work was hampered by severe weather along the Atlantic Coast. The week’s most significant legislative development saw the swearing in of two new Democratic senators, Tina Smith (D-MN) and Doug Jones (D-AL). Sen. Smith, formerly the lieutenant governor of Minnesota, was selected by Minnesota Gov. Mark Dayton to replace Al Franken and is expected to run in the special election for Franken’s permanent replacement this fall. Sen. Jones takes the normally Republican-held seat in Alabama after winning the state’s special election in December, narrowing the Republican advantage in the Senate to 51-49.

Another significant Senate development broke last week when Senate Finance Chair and President Pro Tempore Orrin Hatch (R-UT) announced that he would not seek an eighth term in the upper chamber this fall. The announcement clears the way for a Senate candidacy from former Republican presidential nominee Mitt Romney, who has long been rumored to be seeking the Utah seat. Sen. Hatch’s decision will also likely spark a change in Republican committee leadership next year as the Finance Committee post is considered to be one of the most important policymaking positions in Congress.

The White House faces an uphill start to 2018 as the Administration looks to negotiate a government funding package with Congress while responding to salacious allegations in a new book released by The Hollywood Reporter journalist Michael Wolff. On the first issue, President Trump met with the “Big Four” congressional leaders on Wednesday to continue hammering out an omnibus bill to fund the government for the remainder of the fiscal year, but with significant differences still remaining, another short-term stopgap spending bill remains a likely outcome.

Meanwhile, media headlines last week focused on the details of Wolff’s Fire and Fury: Inside the Trump White House, which portrays a White House in chaos and poses questions about President Trump’s fitness for the office. Both the President and White House officials have sought to discredit the book, calling it a “phony book” that mischaracterizes the relationship between President Trump and his advisors. Fueling the fire, the President and former White House strategic advisor Steve Bannon engaged in a public spat last week over quotations in the book attributed to Bannon that characterized meetings involving Donald Trump Jr. and a Russian lawyer as “treasonous and unpatriotic.” Bannon issued a statement over the weekend apologizing for some of his remarks, and denied that the Trump campaign had engaged in any collusion with Russia during the 2016 campaign.

The Week Ahead

Both chambers will convene this week to start their 2018 legislative work in earnest. Most policy attention will focus on funding negotiations to keep the government open past Jan. 19, with disaster aid emerging as a new divisive issue between the two parties. The House passed an $81 billion relief package before the holidays, but Senate Democrats are opposing that measure in the upper chamber over concerns that it doesn’t provide enough support for disaster-struck areas, most notably Puerto Rico. Republicans have accused the minority of slow-walking desperately needed aid, adding another wrinkle to the funding debate with just two legislative weeks left before the next government shutdown deadline.

Floor action this week will start in the Senate with a cloture vote scheduled for Monday on the nomination of William Campbell to be a U.S. District Judge and three additional judicial nominations in the queue for the remainder of the week. The House’s inaugural docket for the 2018 session features two Senate-passed bills on tribal water rights (S. 140) and the use of a criminal investigation tool known as Rapid DNA (S. 139).

In notable committee activity, the Senate Finance Committee will hold a confirmation hearing for Health and Human Services (HHS) Secretary nominee Alex Azar on Tuesday, January 9. Mr. Azar was nominated by President Trump in November following the resignation of former HHS Secretary Tom Price. His experience includes previous tenure at HHS during the Bush Administration, as well as serving as a president for Eli Lilly, USA, the company’s largest affiliate. Azar is likely to face scrutiny from Democrats for his ties to the pharmaceutical industry and his role in allegedly ‘gaming’ patent laws.

Proposed Rule on AHPs Would Redefine 'Employer' Under ERISA

Last week, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) released a proposed rule that would expand Association Health Plans (AHPs), also known as Small Business Health Plans. The proposed rule, which applies to employer-sponsored health insurance, would allow certain employers to join together as a single group to purchase insurance in the large group market. Sole proprietors and other self-employed individuals would also be eligible to join these so-called “association plans,” which are prohibited from conditioning membership based on health status.

The Administration states that the goal of the rulemaking is to expand access to affordable health coverage, especially among small employers and self-employed individuals, by removing restrictions on the establishment and maintenance of AHPs. By allowing more small groups to band together under recognized entities, proponents suggest that they will be able to negotiate lower rates and more effectively spread risk.

Critics of the proposal have suggested that new associations could form to offer “junk insurance” that is exempted from many of the consumer protections enacted under the Affordable Care Act (ACA), such as the “10 essential health benefits.” Those opponents suggest that these cheaper plans might also be more desirable for young and healthy participants, which could ultimately deteriorate the individual market’s risk pool should healthier individuals gravitate towards AHPs rather than the Exchanges.

The proposed regulation would remove existing restrictions in the Department’s subregulatory guidance on the Employee Retirement Income Security Act (ERISA) section 3(5) to allow employers to more easily join together in organizations that offer group health coverage to member employers and their employees under one group health plan. The regulation would allow employers to band together for the express purpose of offering health coverage if they either are: (1) in the same trade, industry, line of business, or profession; or (2) have a principal place of business within a region that does not exceed the boundaries of the same State or the same metropolitan area.

The proposed regulation manifests the goals outlined in Executive Order 13813, “Promoting Healthcare Choice and Competition Across the United States” issued by President Trump on Oct. 12, 2017. The EO called on the agencies of the executive branch to prioritize three areas for improvement in the near term: (1) association health plans (AHPs), (2) short-term, limited-duration insurance, and (3) health reimbursement arrangements (HRAs). This new regulation on AHPs is the first to be formally released by the Administration. The proposed rule is expected to be published in the Federal Register on Friday, Jan. 5, beginning a 60-day comment period that will end on approximately March 6.

Trump Administration to Pursue Medicaid Work Requirements

The Trump Administration is rumored to be preparing to release guidelines detailing work requirements for Medicaid recipients soon. The guidelines would allow states to add work requirements to their Medicaid programs under set conditions. The work requirements will not take effect unless a state pursues the changes through a waiver from the federal government. The details surrounding the guidance remain unclear, but the release is expected within weeks. Nine states have already submitted waivers to impose Medicaid Work requirements, and experts expect CMS to approve Kentucky’s waiver first.

The work requirements, to be allowed for the first time, have been a priority for Centers for Medicare and Medicaid (CMS) Services Administrator Seema Verma. She hinted at the guidelines in a speech in November, in which she criticized the previous administration for expanding Medicaid to “able-bodied” adults. Democrats have long criticized the policy, arguing that the changes would result in individuals who rely on Medicaid to lose coverage because they don’t meet new requirements. They note that many Medicaid enrollees do work, and most of those who don’t, can’t due to disability or family care obligation. Medicaid advocate groups are preparing to sue the administration over the changes, arguing that work requirements are not allowed under current law and would require congressional action.

HHS Releases RFI on 'Barriers to Choice and Competition,' Citing Medicare, Medicaid, and AHPs

The Department of Health and Human Services (HHS) has released an informal request for information (RFI) seeking advice from stakeholders on federal and state laws and policies that may “discourage or prevent high-quality health systems” — including those pertaining to Medicare, Medicaid, and other payment systems. Specifically, HHS is requesting feedback about “barriers to choice and limits to competition in order to provide a report to the President that details which laws and policies promote these goals.”

This RFI specifically requests feedback relating to Association Health Plans (AHPs), Short‐Term, Limited‐Duration Insurance (STLDI), and Health Reimbursement Arrangements (HRAs). HHS notes in their proposal that responses to the RFI are solely for information and planning purposes. Comments on the proposal are due by Jan. 25, 2018.