Health Policy Report

The Week in Review

With Easter recess calling, policymakers in Washington had a noteworthy week on both the domestic and international fronts. Starting in the Senate, Majority Leader Mitch McConnell (R-KY) “went nuclear” to confirm Supreme Court nominee Neil Gorsuch as Democrats rallied the votes to maintain a futile filibuster. With 45 Democrats opposed to Gorsuch’s nomination – mostly over his strongly conservative record and in retaliation their belief that Republicans slighted Obama nominee Merrick Garland by refusing to hold a hearing or vote on his nomination for nearly 300 days – the majority elected to change Senate rules in order to confirm Gorsuch on a simple majority. Many senators on both sides lamented the loss of the 60-vote threshold for high court nominees, fearing that future selections may be far more ideological, but no compromise solution ever truly took shape. Gorsuch was officially confirmed on Friday and will be able to hear the court’s last few cases before they adjourn in June.

In the House, floor action saw lawmakers clear a pair of bipartisan financial services bills (H.R. 1343; H.R. 1219) as well as a bipartisan health care measure (H.R. 1304) that would allow stop-loss insurance to be regulated separately from traditional health insurance. There was also a relatively quiet effort to revive the Republican health care package, which is detailed in our roundup below.

In perhaps the most consequential event of the week, President Trump took his first significant military action as president by ordering an attack on a Syrian military airfield in retaliation for a chemical weapons bombing carried out by the regime of Syrian President Bashar al-Assad. The strike marks the first time the United States has struck the Syrian government’s military infrastructure in the country’s six-year civil war, but it remains unclear if the White House is planning any further action.

The Week Ahead

Congress is set for a two-week recess in honor of the Easter and Passover holidays. When they return, there will only be four legislative days to address a funding solution for the remainder of the 2017 fiscal year as the current continuing resolution (CR) will expire on Apr. 28. Lawmakers may also pass a stopgap bill that funds the government for a short period in order to give themselves more time to negotiate.

House Republicans Try To Revive Amended AHCA Repeal Bill

Last Thursday, House Republican leaders revived their Affordable Care Act (ACA) repeal bill, modifying the plan to earn the support of wary conservatives and setting the table for a showdown when Congress returns from a two-week recess. In an attempt to build momentum before recess, House Republicans attached an amendment to the American Health Care Act (AHCA) that would allocate $15 billion to subsidize premiums for sicker customers, allowing insurers to charge less for healthier people. Under the ACA, insurers are required to charge everyone of the same age the same amount for premiums, regardless of their medical history or conditions. That means costs are spread out among healthy and sick people, with insurers essentially passing those costs on to healthy people. The $15 billion would help subsidize the costs of expensive patients, but the amendment doesn't lay out how the money would be distributed. Instead, it leaves distribution up to the Health and Human Services Department. In 2020, administration of the program would be handed over to the states. The Rules Committee approved the amendment Thursday 9-2 along party lines.

The amendment was offered by Freedom Caucus members Rep. Gary Palmer (R-AL) and Rep. David Schweikert (R-AZ) and based on the “invisible risk sharing programs” that were implemented by Maine in 2011, and more recently by Alaska.  In both instances, the programs successfully reduced premiums in the individual market. Republican lawmakers held up the measure as a hopeful development after the latest round of talks failed to bridge rifts within the GOP over a way forward. In a Thursday press conference, House Speaker Paul Ryan (R-WI) expressed confidence that the amendment was a step in the right direction to garner consensus around the AHCA. Schweikert said it would not resolve everyone’s concerns, but it does address one of the main concerns from the Freedom Caucus– that the AHCA did nothing to lower premiums. He said there are still questions over what flexibility in Medicaid expansion means and how states could be more creative without HHS interference. Rep. Pat Tiberi (R-OH), a member of the Ways & Means Committee, stated that he expects the amendment will pick up Freedom Caucus votes, though he does not know if it will be enough to push House Republicans across the finish line. It remains to be seen whether moderate Republicans will accept the change

Trump Administration to Continue ACA Insurer Payments During House Lawsuit

House Speaker Paul Ryan (R-WI) and White House officials both confirmed last week that the Trump Administration would continue to fund payments to insurers while a House lawsuit runs its course. In 2014, GOP House lawmakers sued the Obama administration over the payments — called cost-sharing reductions — that reimburse insurers for giving discounted deductibles to low-income ACA enrollees. A recent study in California estimated that insurers would have to raise premiums by 16 percent if the Trump administration stopped issuing the cost-sharing reduction payments to insurers.

"While the lawsuit is being litigated, then the administration funds these benefits. That’s how they’ve been doing it and I don’t see any change in that," Ryan said recently. White House officials confirmed that Health and Human Services Department would continue the payments while the lawsuit is being litigated. Insurers have been concerned that the Trump administration would not continue the payments and have threatened to drop out of the market for 2018 or increase premiums if they don't get them. 

Senate Democrats on the Health, Education, Labor and Pensions Committee argued the lawsuit needs to be dropped. "Failing to take immediate action to oppose the lawsuit or direct House Republicans to forgo this effort will increase instability in the insurance market, as insurers may choose not to participate in the marketplace in 2018," Democratic Sens. Tammy Baldwin (WI), Sheldon Whitehouse (RI), Elizabeth Warren (MA), Maggie Hassan (NH), and Chris Murphy (CT) wrote in a letter to President Trump. 

Senate Panel Questions FDA Nominee over Opioids, Industry Ties

On Wednesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee held its confirmation hearing on Dr. Scott Gottlieb’s nomination to serve as Commissioner of the Food and Drug Administration (FDA). Members extensively questioned Dr. Gottlieb on the agency’s role in addressing opioid abuse. Democrats pressed him on potential conflicts of interest and questions related to his ability to serve with impartiality, while Republicans lauded his private-sector experience and past service to the FDA.

Dr. Gottlieb noted in his opening remarks he appreciates the agency’s work as a hospitalist and cancer survivor. He emphasized that he respects congressional intent and wants to assure timely implementation of laws, adhere to scientific rigor, and heed guidance from career staff. He said the agency must “lean forward” in implementing 21st Century Cures and that it is a “false dichotomy that everything is a balance between speed and safety,” adding that both are possible while adhering to “gold-standard regulatory conduct.”

Dr. Gottlieb told the Committee that addressing the opioid crisis would “require dramatic action” from the FDA. “The opioid epidemic in this country is having staggering human consequences,” Gottlieb said. “I think this is the biggest crisis facing the agency and is going to require dramatic action on the part of whoever steps into the agency.”  Dr. Gottlieb declined to discuss whether treatment for opioid addiction should be considered an essential health benefit when pressed by Sen. Al Franken (D-MN), suggesting the issue would be out of the agency’s scope if he were confirmed.

HELP Committee Ranking Member Patty Murray (D-WA) and other Democrats on the committee expressed numerous concerns about Dr. Gottlieb’s role in venture capital with New Enterprise Associates — a firm that invests in the healthcare sector — and as a board member and investor in various industry entities. Dr. Gottlieb stated he is committed to earning the public’s trust, had thoroughly complied with Office of Government Ethics’ procedures, and was committed to a “front office” process to mediating any ongoing concerns, including recusals.

CMS Reveals 2018 Medicare Advantage Plan Rates

Last Monday, the Centers for Medicare and Medicaid Services (CMS) posted the calendar year (CY) 2018 Medicare Advantage and Part D Rate Announcement and Call Letter delineating final methodological and payment changes for Medicare Advantage (MA) plans, as well as key policies under Part D. Medicare officials announced that revenue for the insurer-run Advantage plans could rise by 2.95 percent next year, slightly topping the rate they predicted in a February draft. In the newly unveiled final 2018 payment document, agency officials also sought to open a debate on simplifying Medicare rules, and tilted an existing policy for awarding extra money for the care of more frail senior citizens in a direction favored by insurers.

In the new MA policy document, CMS also said it will retreat a bit on its plan for eventually weighting evidence of medical care more heavily in assessing when insurers are due extra funds for caring for more frail customers. CMS and insurers have been wrestling for years over how to weight insurers’ own reports on patients’ health, as reflected in the so-called risk adjustment processing system, in these calculations. CMS had considered sticking with a system in which the data would account for about 75 percent of a score. The remaining 25 percent would be drawn from what’s called encounter data, which includes reports of actual medical care delivered. This is the same ratio currently used for the 2017 payment year.

The agency said it will instead reduce the weighting for the encounter data to 15 percent for 2018, describing this as “stepping back” on its policy. CMS said it still intends to encourage collection of complete submissions of the encounter data, which is why it opted not to revert to the 2016 calculation, when it counted for just 10 percent.