Health Policy Report

The Week in Review

Both chambers began their 2018 legislative work in earnest last week with the top headline being the ongoing funding negotiations to keep the government open past Jan. 19. Despite fervent behind-the-scenes discussions between lawmakers and White House officials for a long-term omnibus to set funding for the remainder of the fiscal year, Republican leaders signaled last week that the passage of another stopgap spending bill will be needed to keep the government running beyond Friday.

Progress on reaching a long-term deal over government funding has been complicated by a seemingly unbreakable impasse over the Deferred Action for Childhood Arrivals (DACA) program after the Trump Administration signaled its intention to end the program last September. The rumored agreement — developed by a bipartisan group including Sens. Michael Bennet (D-CO), Dick Durbin (D-IL), Jeff Flake (R-AZ), Cory Gardner (R-CO),  Lindsay Graham (R-SC), and Bob Menendez (D-NJ) — would shield so-called Dreamers from deportation, make additional policy changes to immigration laws, and offer funding for border security. However, it remains to be seen whether conservative lawmakers and President Trump will agree to any proposal that does not include funding for the construction of a wall on the nation’s southern border, and President’s Trump’s dismissive tweets this weekend suggest the two sides are currently far apart.

In floor action, the House passed (256-164) the legislative vehicle for reauthorization of Sec. 702 of the Foreign Intelligence Surveillance Act (FISA). The bill (S.139) —  which authorizes U.S. intelligence services to collect electronic communications of non-Americans stored by internet service providers — is expected to face procedural challenges in the Senate, where Sens. Ron Paul (R-KY) and Ron Wyden (D-OR) have indicated they may filibuster the House-passed bill.

In a continuation of the pattern of Republican retirements in recent weeks, two prominent California House Members in competitive districts — Reps. Ed Royce (R-CA) and Darrell Issa (R-CA) — announced that they would not be running for re-election in this fall’s midterm elections (although Rep. Issa is rumored to be mulling a run in a neighboring district currently represented by Rep. Duncan Hunter (R-CA)).  Royce, the current chair of the House Foreign Affairs Committee, is the eighth House committee chair to announce they will not maintain their post next year, meaning that there will be significant turnover in committee leadership regardless of the outcome of the mid-terms.

The Week Ahead

The Friday deadline for funding the government will loom large this week as Congress is expected to consider and pass yet another stopgap spending bill in order to avoid a government shutdown. House Majority Leader Kevin McCarthy (R-CA) has announced that the House will consider another short-term continuing resolution (CR) that would keep the government open through the Presidents’ Day holiday next month. With Democrats threatening to withhold their votes until a deal is reached on immigration, GOP leaders may be forced to pass the CR without Democratic support.

Following the observance of Martin Luther King, Jr. Day yesterday, lawmakers return today for a full slate of floor action. The Senate is expected to resume consideration of the legislative vehicle for the reauthorization of Sec. 702 of the Foreign Intelligence Surveillance Act (FISA). While the bill may face challenges, a coalition of most Republicans and moderate Democrats should ensure that the measure is able to overcome the 60-vote threshold for passage.

Meanwhile, the House has three bills currently on its docket, including two measures advanced by the Financial Services Committee. Specifically, the House is due to consider a bill (H.R. 2954) that would exempt some institutions from Home Mortgage Disclosure Act reporting requirements and another measure (H.R. 3326) that would aim to increase accountability at the World Bank.

CMS Releases Guidance on Medicaid Work Requirements

Last week, the Centers for Medicare and Medicaid Services (CMS) released new guidance for states on Medicaid work requirements that allows 1115 Waiver demonstrations “that make participation in work or other community engagement a requirement for continued Medicaid eligibility or coverage for certain adult Medicaid beneficiaries.” The agency emphasized that certain individuals must be excluded from employment-based eligibility requirements, including those eligible for Medicaid due to a disability, old age, youth, and pregnant women. Also, states must also take into consideration areas of high unemployment or a beneficiary’s caregiving for young children or elderly family members. While states are required to provide support to assist beneficiaries in meeting work requirements, no additional federal funding will be allotted, and all 1115 Waiver requests must be budget neutral.

This highly-controversial proposal represents one of the biggest changes in the Medicaid program’s 52-year history, and is already facing criticism for imposing unreasonable access barriers for individuals in need. The Trump administration has indicated that they view Medicaid as a vehicle to help move people out of poverty, and has hypothesized that requiring employment as a precondition of health benefits could help improve peoples’ lives. While Democrats and many health policy analysts offered a highly critical response, a survey from the Kaiser Family Foundation (KFF) shows that imposing work requirements has widespread public support. But KFF also concludes that most people on Medicaid who can work already do, and relatively few would lose eligibility or be incentivized to look for work if implemented correctly.

In a press release, CMS notes that they have already received demonstration proposals from 10 states that include employment and community engagement initiatives: Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah and Wisconsin.  CMS Administrator Seema Verma has indicated that “now that we have taken this big important step, we expect that [states] will hear from us on waivers in short order.” Indeed, on Friday, the Centers for Medicare & Medicaid Services (CMS) approved Kentucky’s 1115 waiver request to impose work requirements for certain state’s Medicaid recipients. The waiver approval is part of the state’s plan to significantly overhaul their Medicaid program, and will require specified populations of poor adults to work up to 20 hours a week in “community engagement positions” in order to retain Medicaid benefits. According to state officials, Kentucky’s Medicaid waiver is projected to save the State $2 billion over the course of five years, and will result in 95,000 fewer people on Medicaid. If true, this number runs counter to the KFF suggestion of a limited impact. As a result, Democrats and liberal advocacy groups have warned they will pursue litigation once a state plan is approved.

CHIP Funding Package Could See Action This Week

Congressional leaders will likely attach long-term funding language for the Children’s Health Insurance Program (CHIP) to a short-term federal funding bill next week. Little detail is available, as lawmakers have yet to decide on the length of the funding bill and how to get it passed. Although House Energy and Commerce Chairman Greg Walden (R-OR) stated last week that he would introduce a six-year extension for CHIP, the amount or period of reauthorization has not yet been settled. Both Senate Finance Committee leaders – Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) – are pushing for a longer reauthorization of ten years.

The fight to reauthorize CHIP funding was given new life this past week after the Congressional Budget Office (CBO) reported the government could save $6 billion by funding it for 10 years.  CBO attributed the wild swing in its projections to the fact that CHIP costs the government far less than the alternatives: Medicaid and ACA plans. Some Republicans are skeptical of allowing a reauthorization of ten years to pass with so little time to fully analyze whether structural changes are needed, however, and are considering passing six years to start and coming back later in the year to provide the additional four years of funding.

House Speaker Says Entitlement Reform not on the Agenda for 2018

Friday, House Speaker Paul Ryan (R-WI) stated that he doesn’t see Congress “tackling” entitlement reform this year. He acknowledged that both parties had failed to find the “bipartisan consensus” necessary to tackle the long-term and “thorny” issue, in a step down from supportive comments made before the holidays. He noted that although Congress wasn’t likely to get to it this year, entitlement reform was still necessary. Majority Leader Mitch McConnell (R-KY) has also acknowledged that entitlement reform would be virtually impossible given the upper chamber's current makeup of 51 Republicans to 49 Democrats.

FDA Releases Strategic Roadmap for 2018

The Food and Drug Administration (FDA) released its 2018 Strategic Policy Roadmap, which includes new initiatives to promote generic drug competition, address the opioid crisis, and encourage smoking cessation. The Roadmap focuses on four strategic policy areas: (1) addiction crises, (2) innovation, (3) consumer empowerment, and (4) the FDA workforce. In each of the four policy areas, specific policy efforts are highlighted along with a list of actions that will be undertaken to achieve the Roadmap’s goals.

In order to continue ongoing efforts to expand access to cheaper generic drugs, the FDA stated they will issue new guidance to prevent brand companies from abusing safety programs known as REMS to prohibit generic competition. The potential misuse of citizen petitions by brand pharmaceutical companies in an attempt to block generic competition will also be the subject of future FDA guidance. Additionally, a review of the Hatch-Waxman law as well as a focus on efficient biosimilar development and approval will be priorities for the FDA this year. On the opioid issue, the agency plans to push the development of less addictive pain treatments and finalize policies that would make naloxone readily available over-the-counter.

CBO Expected to Reduce Estimate of Uninsured Due to Individual Mandate Repeal

Last week, the Congressional Budget Office (CBO) rolled back the predicted number of individuals that would be uninsured following repeal of the individual mandate. In presentation slides made public by the CBO and the Joint Committee on Taxation (JCT), the agencies detailed steps they took to reach the previous projection of 13 million uninsured over ten years, and concluded that the impact on insurance uptake is less profound than originally projected. Additionally, the CBO and JCT had previously reported the repeal of the law would result in $338 billion in government savings, but that number is also expected to now be lowered.

The news of fewer possible uninsured individuals comes after congressional Republicans challenged the original estimates by the CBO. Republicans have long argued that the effectiveness of the individual mandate has been overstated, prompting a promise of revaluation of the report by the CBO and JCT. The agencies wrote in the slides that they had “undertaken considerable work to revise and update their methods” on how the repeal of the individual mandate penalties would affect the number of people without health insurance. Notably, CBO has not indicated specifically how much their projections would change, or when a final report will be released.

The CBO has said that it arrived at their initial 13 million estimate partly because it predicted that healthier people who didn’t think they would need coverage would no longer purchase it, causing premiums to rise to the point of being cost-prohibitive to customers who do not qualify for subsidies. It was also noted that others would become uninsured because insurers would flee the exchanges and not offer coverage in some counties. CBO and JCT base their claims off information gleaned from consulting “a range of outside experts.”

CMMI Announces Voluntary Bundled Payment Model, BPCI Advanced

The Centers for Medicare & Medicaid Services (CMS) Center for Medicare and Medicaid Innovation (CMMI, or Innovation Center) has announced a voluntary bundled payment model that requires participants to take on financial risk and includes outpatient and inpatient episodes of care. The Bundled Payments for Care Improvement (BPCI) Advanced demonstration, which will qualify as an Advanced Alternative Payment Model (A-APM) under the Quality Payment Program (QPP), will allow participants to earn additional payment if expenditures for a beneficiary’s episode of care are under a spending target. Additionally, physicians who participate in the model will receive a 5 percent bonus payment starting in 2019 (for participating in an A-APM), and be exempt from the reporting requirements under the Merit-Based Incentive Payment System (MIPS).

The release of BPCI Advanced represents another step in the Trump administration’s shift away from mandatory demonstrations, less than two months after CMS officially nixed two mandatory bundled-payment models created under the Obama administration — the Episode Payment Models and the Cardiac Rehabilitation Incentive pay model. The Trump administration has been a vocal advocate of reducing administrative burden for clinicians and has touted voluntary models as a solution. Meanwhile, the Medicare Payment Advisory Commission (MedPAC) has expressed concern with certain aspects of the QPP, including the design of the 5 percent A-APM incentive payment.

BPCI Advanced includes 32 types of clinical episodes, such as major joint replacement of the lower extremity (inpatient) and percutaneous coronary intervention (inpatient or outpatient). Other outpatient episodes included under the model include cardiac defibrillator and back and neck except spinal fusion, none of which were offered in the Innovation Center’s previous bundled payment model (the Bundled Payments for Care Improvement initiative). The episodes last 90 days under BPCI Advanced. CMS’ Request for Applications (RFA) is now available and applications must be submitted through the BPCI the BPCI Advanced Application Portal which will begins on Jan. 11, 2018 and closes on March 12, 2018. CMS will hold an Open Door Forum on the Model on Jan. 30, 2018. The agency also says that there will be a second application opportunity in Jan. 2020.