Health Policy Report

The Week in Review

The Trump administration officially kicked off the fiscal year (FY) 2020 appropriations process last week, unveiling a budget (text; fact sheet; summary tables; press release) that calls for five percent cuts to non-defense spending. The budget’s proposed cuts and reforms to entitlement and health care programs, coupled with increased spending on Presidential priorities such as border security and defense, will certainly be a point of contention between President Trump and Congressional Democrats — suggesting that lawmakers will likely need to navigate familiar political landmines to avoid another shutdown. Looking ahead to next steps, House Democrats are expected to release their proposed budget later this month.

In a rebuke to the Trump administration, the Senate passed (59-41) a resolution of disapproval (H.J.Res 46) that would overturn President Trump's border security national emergency declaration. Senate Democrats earned the support of a dozen GOP Senators on the measure as lawmakers on both sides of the aisle expressed uneasiness about the President’s plan to circumvent Congressional appropriation authority. President Trump responded by issuing the first veto of his presidency which will likely survive an override attempt, as overturning the emergency declaration does not have the support of a two-thirds majority in the House. 

Meanwhile, House lawmakers cleared a pair of messaging resolutions prior to adjourning for a district work period. The lower chamber first passed a resolution (H.Res. 206) out of the Financial Services Committee acknowledging that the lack of transparency in financial transactions and corporate formation poses a threat to the economy and national security. Additionally, lawmakers overwhelmingly approved a resolution (H.Res. 24) out of the Judiciary Committee expressing the sense of Congress that the report of Special Counsel Robert Mueller should be made available to the public and to Congress.

The Week Ahead

Both chambers of Congress have left Washington for a weeklong district work period. Lawmakers will resume legislative business on Monday, March 25.

Key Healthcare Provisions in the White House's FY20 Budget Request

Last week, the White House unveiled its fiscal year (FY) 2020 budget request calling for $4.7 trillion in federal spending. Called “fiscally responsible and pro-American” by the White House, the budget would decrease nondefense spending to 5% below current budget caps while increasing funding for Presidential priorities such as defense and border security.

With $2.7 trillion in spending cuts over the next decade, the White House has claimed that the budget is the largest spending cut ever requested by a Presidential Administration. While the budget would widen the federal deficit to $1.1 trillion next year, it aims to eliminate the deficit entirely by 2034. However, some observers have criticized the growth assumptions underlying the budget’s deficit models, which assume annual economic growth around three percent for the next decade.

As with the President’s previous two budgets, this year’s ambitious spending cuts are unlikely to gain traction in Congress. Regardless, they present a starting point for the budget and appropriations processes and outline President Trump’s priorities as he navigates a divided Congress. In particular, the President’s border wall request and proposed cuts to entitlement programs look to be major points of contention between the President and Congressional Democrats.

The President’s budget would cut the Department of Health and Human Services’ (HHS) discretionary budget by nearly 12 percent from the previous year to $89.6 billion. In part through reforms to the Medicare program such as site-neutral payments and in part through turning Medicaid into a block grant, the Administration calls for $1.25 trillion in savings on mandatory programs over the next ten years. In spite of Democratic control of the House, the Administration continues to call for repealing and replacing the Affordable Care Act (ACA), specifically asking Congress to pass legislation like the proposal proffered by Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA) in 2017. Funding for programs to combat the opioid crisis remain flat, but the proposal would continue to implement some provisions of the SUPPORT Act.

CMS Announces New Tools for Evaluating 1115 Demos 

In a blog post published last week, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma announced new tools for evaluating 1115 waiver demonstrations. The guidance includes an implementation plan template, a monitoring report template, and guidance on evaluation design — all developed to structure and provide guidance on what constitutes an effective demonstration. Last week’s release pertains particularly to waivers permitting states to implement work requirements in their Medicaid programs and other experimental eligibility and coverage policies.

The announcement comes as criticism surrounding work requirement demonstrations heats up, particularly as it pertains to Arkansas’ recent demonstration. The Medicaid and CHIP Payment and Access Commission (MACPAC) sent a letter to Health and Human Services (HHS) Secretary Alex Azar in November 2018 questioning, among other things, the lack of an evaluation plan for the Arkansas demonstration. Congressional Democrats also used Secretary Azar’s appearances on Capitol Hill defending HHS’s Fiscal Year 2020 budget request this week to criticize CMS’ lack of insight and data on the implementation of the Arkansas work requirements. These new tools may in part be a response to those criticisms. Administrator Verma wrote in her blog post that the tools released last week will help states “quickly understand the impacts that a given demonstration is having, allowing the state to make course corrections if necessary.” Administrator Verma’s announcement also came on the same day as a federal judge heard arguments on lawsuits challenging work requirements in Arkansas and Kentucky, and vowed to deliver a decision by the end of the month. The judge hearing the arguments is the same one who invalidated Kentucky’s work requirement initially, resulting in the state rewriting and resubmitting its waiver application.

Ned Sharpless to be Named Acting FDA Commissioner

The Trump Administration announced last Tuesday it would name the Director of the National Cancer Institute, Ned Sharpless, M.D., as acting Commissioner of the Food & Drug Administration next month. The current Commissioner, Scott Gottlieb,M.D., announced plans to resign in early April a week before, and Department of Health and Humans Services (HHS) Secretary Alex Azar confirmed the announcement at a House Energy & Commerce Health Subcommittee hearing.

Sharpless took over the National Cancer Institute in October 2017, after leading the Lineberger Comprehensive Cancer Center at the University of North Carolina. Sec. Azar said in a staff memo to the FDA that Dr. Sharpless was already well acquainted with the agency, and that there would be no deviation of the agency’s focus, “from ongoing efforts on drug approvals and combating the opioid crisis to modernizing food safety and addressing the rapid rise in youth use of e-cigarettes.” Dr. Sharpless was reportedly an enthusiastic supporter of Gottlieb’s agency direction, including his aggressive push to increase tobacco and e-cigarette regulations. The new Acting Director is also familiar with the biotechnology industry and drug development, as he had co-founded two biotechnology companies in the past.

Pharmacy Benefit Managers Invited to Testify Before the Senate Finance Committee

Senate Finance Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) sent letters to five pharmacy Benefit Managers (PBMs) last Tuesday, asking them to appear before the Committee. CVS Caremark, CVS Health, Humana, OptumRx, and Prime Therapeutics were all asked to give their perspective on high drug costs at an upcoming April 3 hearing. Previously in February, the Committee discussed pharmaceutical costs with the executives of seven major drug company CEOs and stated they would ask other members of the health care supply chain to weigh in on the issue. Senators indicated they are working on legislation to bring more transparency to the drug rebate system and implement the Administration proposal to eliminate PBM rebates for Medicare Part D plans.