Health Policy Report

The Week in Review

Senators reconvened last week to address key legislative priorities ahead of the August recess.  In addition to a host of presidential nominations, the Senate addressed budgetary spending caps and the federal debt ceiling by clearing the House-passed budget agreement. The deal — which approves $321 billion in new spending and suspends the debt ceiling for two years — was swiftly enacted into law by President Donald Trump late last week.

When Congress returns in September, lawmakers will look to feverishly push FY 2020 spending bills through both chambers as negotiators agreed that both a government shutdown and 12-bill omnibus spending measure should be avoided. Senate Appropriations Chairman Richard Shelby (R-AL) stated earlier in the week that he may look to package the spending bills for Defense, Labor-Education-Health and Human Services, and Energy-Water for consideration when the upper chamber returns. The Senate Appropriations Committee plans to mark up its first spending bills on Sept. 12.

The Week Ahead

Lawmakers have left Washington for the August recess. Both chambers of Congress will reconvene for legislative business on Monday, Sept. 9.

HHS, FDA Release Drug Importation Plan

The Department of Health and Human Services (HHS) last week released its blueprint for allowing the importation of prescription drugs intended for foreign distribution with the goal of lowering prices for American patients. The Administration’s plan lays out two pathways for importing prescription drugs; one that is driven by states, wholesalers, and pharmacists, and another that is driven by drug manufacturers themselves. The first would authorize demonstration projects proposed by states, wholesalers, and pharmacies to import drugs from Canada and the second would permit manufacturers to sell cheaper versions of their own Food and Drug Administration (FDA)-approved drugs intended for distribution abroad in the U.S.

In order to execute the first pathway, HHS will need to publish a notice of proposed rulemaking (NPRM) and solicit public comment on its proposals prior to authorizing demonstrations. The second pathway is more direct, with FDA issuing guidance to pharmaceutical manufacturers on how to import their own products intended for foreign use in such a way that does not run afoul of U.S. law. The Administration did not provide a timeline for release of guidance or an NPRM in the announcement.

The initial Republican response to these proposals was tepid on Capitol Hill. House Energy & Commerce Committee Ranking Member Greg Walden (R-OR) said in a statement that “the U.S. drug supply chain is the gold standard… We look forward to continuing our work with HHS and FDA as we explore these paths to lower drug prices for American consumers, while ensuring Americans can remain confident that the drugs they take are safe and effective,” while praising President Trump’s engagement on drug pricing. Senate Health, Education, Labor, and Pensions Chairman Lamar Alexander (R-TN) praised the first steps to allowing importation, while similarly sounding a note of caution. “The key for me is whether this plan preserves the Food and Drug Administration’s gold standard for safety and effectiveness,” he said. Meanwhile, PhRMA, the leading drug manufacturer trade group, also raised questions about safety. “The Administration’s importation scheme is far too dangerous for American patients. There is no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain,” said PhRMA president and CEO Stephen Ubl. He also cautioned that the Canadian officials have called such a policy “unworkable.”

Senate Passes Bipartisan Budget Agreement

Last Thursday, the Senate passed (67-28) a sweeping budget agreement that would address pressing deadlines for the federal debt ceiling and budgetary spending caps. The deal was quickly signed into law by President Donald Trump, who had previously urged scores of skeptical Congressional Republicans to vote for the measure over the course of the last two weeks. With a budget agreement now in place, Congress will have about three weeks to decide how to spend that money in the next fiscal year. While funding levels have been set, a contentious debate over immigration, health care, pet spending projects, abortion, and more are sure to complicate the work of congressional appropriators. With a Sept. 30 deadline quickly approaching, lawmakers could potentially opt to pass a short-term continuing resolution (CR) that would provide them with more time to hash out a fiscal year (FY) 2020 spending bill.

Broadly speaking, the deal provides for a $321 billion increase in federal spending over the next two years compared to current spending levels, with $738 billion for defense spending and $632 billion for non-defense in FY 2020 and $740.5 billion for defense and $634.5 billion for non-defense in FY 2021. By waiving the spending caps for FY 2020 and 2021, the agreement essentially marks the end of the 2011 Budget Control Act which is set to expire at the end of 2021. The agreement racks up roughly $77 billion in savings — lower than the administration’s original request of $150 billion — by extending Medicare cuts mandated under current statute beyond FY 2027 and extending fees collected by U.S. Customs and Border Protection.

Additionally, congressional leadership pledged to forgo “poison pill” provisions and policy riders that could have jeopardized the measure’s bipartisan support. In practice, this agreement reduces the pressure on lawmakers to find tens of billions of dollars in budgetary savings in other areas, such as prescription drug pricing. Instead, key health care related policies that may have hitched a ride on the budget caps vehicle — such as drug pricing, tax, and health extender provisions — could be attached to an end-of-year spending bill. Lawmakers will look to push FY 2020 spending bills through both chambers once Congress returns in September, as negotiators agreed that both a government shutdown and 12-bill omnibus spending measure should be avoided. Senate Appropriations Chairman Richard Shelby (R-AL) stated last week that he may look to package the spending bills for Defense, Labor-Education-Health and Human Services, and Energy-Water for consideration when the Senate returns in September. The Senate Appropriations Committee plans to mark up its first spending bills on Sept. 12.

CMS Decides not to Approve Partial Medicaid Expansion

On July 29, the Centers for Medicare & Medicaid Services (CMS) posted a statement formally announcing that it will continue to only approve Medicaid demonstrations that comply with the current policy pertaining to the scope of Medicaid expansions to adults. Specifically, this policy makes the Affordable Care Act’s enhanced Medicaid funding contingent upon expansion to adults with incomes up to 138 percent of the Federal poverty level. This decision has implications for several states that have expressed interest in so-called “partial expansions,” and most immediately for the state of Utah, where state lawmakers adopted a partial expansion in the wake of the ballot initiative win for Medicaid coverage for adults. While CMS is not approving Utah’s partial expansion, the state plans to submit a new proposal with a “per capita cap” waiver request consistent with its ballot initiative.

The administration’s decision carries implications for other Medicaid policy proposals and federal guidance that are actively under consideration. In particular, the Office of Management and Budget (OMB) is currently reviewing a State Medicaid Director Letter entitled “Medicaid Value and Accountability Demonstration Opportunity,” which may potentially include, among other concepts, guidance around per capita caps or similarly significant changes to the financing structure for certain Medicaid populations.

CMS Releases Three Key Payment Rules

The Centers for Medicare & Medicaid Services (CMS) issued on Monday a series of highly-anticipated Medicare payment proposals covering reimbursement for physicians, hospitals, kidney care, and medical equipment for calendar year (CY) 2020. Notably, the administration is proposing to require hospitals and insurers to disclose their negotiated prices. The proposal, which builds on an executive order President Trump signed last month, would represent a major shakeup to negotiations that have historically been kept private. The three proposed rules released last Monday include:

With respect to the transparency requirements, the proposed payment rule for hospital outpatient departments and ambulatory surgical centers spells out the proposal for hospitals to publicize their “standard charges” negotiated with insurers for items and services and then post them online in an easily comparable format. They would also have to disclose negotiated rates for services that consumers can shop around for — including X-rays, outpatient visits, lab tests, and c-sections — in a manner consumers can understand. Hospitals can face civil monetary penalties of $300 per day for not complying.

Stakeholders now have the chance to review the three rules, which dictate how CMS will pay for services in CY 2020. The agency is soliciting comments on the rules, and in some cases makes specific solicitations. Comments are due for all three rules on September 27, 2019. Following the comment deadline, CMS will review stakeholder feedback and issue final rules in time for CY 2020 to begin.  

CMS to Give Providers Direct Access to Medicare Claims Data Via New Pilot

The Centers for Medicare & Medicaid Services (CMS) announced last week they would advance the MyHealthEData initiative by implementing a new pilot to give clinicians direct access to Medicare claims data. The new pilot program — to be called “Data at the Point of Care” (DPC) — will look to “fill in the gaps” in patient medical history and enable providers to make more informed treatment decisions by connecting them with Blue Button 2.0 claims data directly in their workflow. In a speech announcing the pilot at the White House Blue Button Developers Conference, CMS Administrator Seema Verma said that “technology, coupled with open data sharing, is how we will improve value, control costs and keep patients healthy while ensuring a solvent Medicare program for generations to come.”

The new pilot will leverage Medicare’s Blue Button data through an industry-standards application programming interface (API) to provide clinicians with direct access to useful information and help “connect the dots” between health records held by different providers. Administrator Verma explained that the claims data could help “fill in the gaps” for clinicians on patient history, saying that Blue Button 2.0 has already provided better access to data for patients. Providers will be able to access the DPC pilot data directly from their electronic health records workflow, which CMS noted will further reduce burden on physicians. The additional data could also encourage more providers to embrace value-based arrangements, according to the administration, and Administrator Verma noted that the new pilot program would enable providers to spend more time providing high quality care and less time chasing down information or working with an incomplete picture of the patient’s medical history. She stressed how the current system wastes money and time through repeated procedures and tests.

Providers can begin signing up for the pilot program now, and CMS will begin rolling out test data in August for the first clinicians. CMS will begin testing with production data in September and October, and will eventually make the Data at the Point of Care API available to all fee-for-service providers. CMS did not provide a timeline for when the program would be available to all.