Health Policy Report (9/30)

The Week in Review

After the Senate cleared (81-16) the House-passed continuing resolution, President Donald Trump signed the stopgap funding bill into law ahead of the Sept. 30 government funding deadline to temporarily avert a shutdown. The CR pushes the funding deadline to Nov. 21 while also ensuring that numerous key policy riders — including extensions for several expiring health care programs, the National Flood Insurance Program (NFIP) and Export-Import Bank — are addressed prior to the deadline. In other notable FY 2020 spending news, the Senate Appropriations Committee cleared funding bills for: (1) Interior-Environment; (2) State-Foreign Operations; (3) Commerce-Science-Justice; (4) Homeland Security; and (5) Legislative Branch during a markup last week.

In the House, lawmakers passed groundbreaking legislation that would open up banking to cannabis companies this week. In a move aimed at getting the bill through the GOP-controlled Senate, House Democrats tacked on provisions to the Secure And Fair Enforcement (SAFE) Banking Act that would prevent a revival of the Obama-era program known as "Operation Choke Point," and clarify that institutions doing business with hemp companies will not face scrutiny under federal law. Additionally, members also passed a pair of Homeland Security measures aimed at reforming policies pertaining to U.S.-Mexico border security. 

The Week Ahead

Congress has adjourned for a two-week district work period. Lawmakers will return to Washington on Tuesday, Oct. 15.

Energy and Commerce Members Working on ‘21st Century Cures 2.0’

At an Energy & Commerce subcommittee hearing on Speaker Nancy Pelosi’s (D-CA) recently-released drug pricing legislation, former chairman Fred Upton (R-MI) said that he and Rep. Diana DeGette (D-CO) are working on an update to the 21st Century Cures Act, an Obama-era law aimed at speeding up the research and approval of novel treatments. The legislation is reportedly in the initial stages of development, and Reps. DeGette and Upton are currently gathering stakeholder feedback to learn how the law can be made to work better.

While the law bolstered data sharing and interoperability, it is expected that the update will go further and by attempting to make data flow more smoothly between providers and patients. Stakeholders have called for requirements that would improve electronic medical record interoperability, for example. Observers expect the update to include language surrounding delivery system reforms, health information technology, and small fixes to the original bill. Reps. DeGette and Upton hope to have their legislation ready for consideration in late 2020.

Ways & Means Democrats Release International Drug Pricing Comparison Report

Last Monday, Democrats on the House Committee on Ways & Means released a report exploring differential pharmaceutical pricing between the U.S. and abroad. The report, which analyzed the list prices of single doses of 79 distinct brand-name drugs, found that U.S. drug prices were an average of nearly four times higher in 2018 than in comparator countries. It also found that prices remain higher in the U.S. even when accounting for rebates. That said, Ways & Means staff found a wide variation of drug prices among the countries studied. Beyond implications that reference price systems and monopsonistic price negotiations contribute to lower prices, the report did little to explore why price differences exist between the U.S. and other countries or why prices also vary abroad.

It was already well known that U.S. drug prices tend to be higher than they are internationally. Rather than breaking new ground, this report served as a marker for future action by the Ways & Means Committee. By comparing different reference price systems, calling for direct price negotiations, and modeling spending reductions based on pricing drugs using an average of a basket of other rich countries, Ways & Means has staked out a position that negotiations and reference pricing have a path forward under current leadership. The report found that the U.S. could save $49 billion annually using certain reference pricing policies, and that figure can be expected to be a centerpiece as the House debates drug pricing legislation.

Ways & Means Chairman Richie Neal (D-MA) said in a press release that the report shows the necessity of passing Speaker Pelosi’s plan to lower drug prices across Medicare, Medicaid, and commercial markets in part through reference pricing mechanisms. There is currently no Congressional Budget Office score for H.R. 3, however, and this report may serve as a placeholder for the cost or savings related to certain parts of the bill as leaders await an official score. In addition to tacitly — and sometimes explicitly — calling for negotiations and reference price controls, the report calls out specific products for their price differentials.

CMS Announces Dramatic MA Premium Reduction in 2020

The Centers for Medicare and Medicaid Services (CMS) announced a substantial drop in Medicare Advantage (MA) plan premiums for plan year 2020. In a press release, CMS said that average 2020 premiums would be 14 percent lower than those in 2019, and 23 percent lower than 2018. This is coupled with a greater average number of MA plan choices available to beneficiaries — an average of 39 plans per county as opposed to 33 this year. Part of the increase in plan availability may be due to CMS’ 2019 removal of a requirement of “meaningful differences” between a plan sponsor’s different offerings. CMS also highlights MA plans’ expanded ability to offer supplemental benefits that can address beneficiaries’ needs that help them to achieve better health.

This dramatic premium reduction is not reflected outside Medicare. While 2020 individual market premiums are not expected to rise substantially, analysts still see a 0.6 percent increase in premiums on the horizon. CMS previously announced that average Part D plan premiums would be 13.5 percent lower in 2020, similar to the reduction in MA premiums. However, CMS officials did not point to any one factor that could be responsible for premium reductions of this magnitude. “That is what CMS has been delivering with its improvements to Medicare Advantage: lower costs, more options, and benefits tailored to patients’ needs. This proven record of success—decreasing premiums in both Medicare Advantage and Medicare Part D—contrasts with proposals for a total government takeover of healthcare,” said Department of Health and Human Services Secretary Alex Azar alongside the announcement.

Meanwhile, Senate Democrats have called for greater oversight of MA plans. In a September 13 letter, a group led by Sen. Sherrod Brown (D-OH) asked CMS to take action to enforce provider directory regulations, tackle overbilling, and ensure MA plan performance. They also raised concerns about star ratings, asserting that “some deficient plans…receive four- and five-star ratings” and requesting that CMS address “the issue of misleading MA plan star ratings.”

Senate Finance Releases Drug Pricing Bill Text

Last Thursday night, the Senate Finance Committee released the text of its bill to reduce prescription drug prices in Medicare and Medicaid. Among other things, the bill restructures the Part D benefit, modifies payment methodologies for some drugs, and imposes an inflation cap on drug price increases. The Committee marked up the legislation prior to leaving for the August recess, and it cleared the committee in spite of not receiving a majority of Republican votes. Finance Chairman Chuck Grassley (R-IA) signaled that he believes the bill might not receive consideration until next year, stating that he hopes to get President Donald Trump’s support on the legislation.

In the time between the markup and the release of this bill text, House Democrats have introduced their own rival bill that goes much further, including requiring the Department of Health and Human Services (HHS) to directly negotiate drug prices with manufacturers. Chairman Grassley is no on board with that approach, however, and has remained a staunch supporter of the noninterference clause. While President Trump has signaled his support for Chairman Grassley’s bill and initially praised the House Democrats’ draft as well, the kickoff of an impeachment inquiry threatens to derail not just drug pricing but Congress’s entire legislative agenda.

Chairman Grassley highlighted the popular support for drug pricing reforms as a potential driver for his bill’s consideration, saying “if [Majority Leader Mitch] McConnell (R-KY) wants to keep the majority, then this drug pricing bill is part of that plan.” Leader McConnell has appeared reluctant to bring the bill to the floor, however, given that a large number of GOP senators oppose significant parts of the legislation, notably mandatory rebates to HHS for prices that rise faster than inflation. Regardless, Chairman Grassley said that he believes the release of the text could spur additional support.

Grassley’s bill reflected the Chairman’s Mark and the modifications thereto that were released prior to the July markup. No additional amendments were adopted during the markup, however. While members offered and withdrew a number of amendments that appeared to be possibilities for consideration and inclusion in the final text, none found their way into the text released last week.

CMS Finalizes Rules Reducing Paperwork, Modernizing Discharge Planning

The Centers for Medicare and Medicaid Services (CMS) issued a pair of final rules last week aimed at reducing provider burdens and promoting effective hospital discharge planning. The rules, which combine proposals from 2015 through last year, are intended to modernize and streamline requirements for hospitals and other providers. In particular, the discharge planning rule contains requirements for making patient records available in an electronic format to boost data sharing and interoperability. The discharge planning rule comes as CMS moves towards a unified prospective payment system (PPS) for all four settings of post-acute care (PAC).

The discharge planning rule updates the framework for discharge planning by hospitals and PAC providers. A number of the proposed requirements, which were published during the Obama Administration, did not make it into the final rule. However, the proposal implements portions of the IMPACT Act, which required facilities to consider and document a patient’s care goals and treatment preferences. The burden reduction addresses the Trump Administration’s executive order on kidney care in part, seeking to reduce the number of discarded organs by loosening certain reporting requirements on transplant clinics.

Both rules are scheduled to take effect on November 29, 2019. The Administration will highlight these rules as fulfilling the President’s health care-focused executive orders, including a 2017 executive order which directed agencies to promote healthcare choice and competition across the country, and the June 2019 executive order which emphasizes improving price and quality transparency in healthcare.