Health Policy Report (1/3)

January 3, 2023

Lawmakers returned to Washington today to formally kick off the 118th Congress as the race for Speaker of the House remains in an unprecedented standstill. While Leader Kevin McCarthy (R-CA) earned more than 200 votes from his Republican colleagues in the first two rounds of voting, he remains shy of the 218 votes necessary to win the speaker’s gavel. As it currently stands, 19 House Republicans have opposed Leader McCarthy’s nomination, instead casting their votes for Freedom Caucus co-founder Rep. Jim Jordan (R-OH).

The speaker’s election is the first order of business for the new Congress. However, since Leader McCarthy can only afford to lose four GOP votes, multiple rounds of voting will be needed until a candidate meets the 218-vote threshold. A prolonged speaker’s race also has significant implications for committee work in the 118th Congress, as panels will be unable to name new members or subcommittee chairs until after the speaker’s election is settled.

Congress’ 2023 Omnibus Spending Bill Crosses Finish Line

Just before Congress departed for its final recess of the 117th Congress, lawmakers passed a $1.7 trillion spending package. President Biden signed the bill on December 29, and the newly codified provisions will apply to the rest of fiscal year (FY) 2023. The Consolidated Appropriations Act, 2023 includes a wide array of health care policy priorities, outlined within the Labor, Health and Human Services, Education, and Related Agencies (explanatory statement) and Agriculture, Rural Development, Food, and Drug Administration, and Related Agencies (explanatory statement) sections of the 12-bill package. Specifically, health-related policies within the omnibus spending package pertain to behavioral health, medical devices, accelerated approval, cosmetics, the health care workforce, and telehealth, among others.

The bill addressed Medicare provider payments — Statutory Pay-As-You-Go (PAYGO) Act provisions are waived and a smaller-than-mandated cut under the physician fee schedule (PFS) – after Congress included a 2.5 percent payment bump for 2023. The spending package additionally stands up several pilot programs, including for rare disease drug development, and seeks to bolster clinical trial diversity and operability. Under the Medicaid program, policies surrounding redeterminations, continuous eligibility for children, and postpartum coverage are also included in today’s package. Additionally, the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Program was reauthorized through 2027. Notably, the deal did not include provisions from the Verifying Accurate Leading-edge IVCT Development (VALID) Act and the Pioneering Antimicrobial Subscriptions to End Surging Resistance (PASTEUR) Act, as was contemplated during initial negotiations.

Drug Pricing in the 118th Congress

With a divided government entering Congress in a post-Inflation Reduction Act (IRA) environment, Democrats and Republicans will look to identify common ground as both sides of the aisle pursue additional cost saving reforms. Republicans are expected to leverage their majority in the House to hold a myriad of oversight hearings related to the IRA — generally with Centers for Medicare and Medicaid Services (CMS) officials — especially in the realm of generic and biosimilar products. In addition to these oversight priorities, Republicans will continue to home in on their message that the IRA stifles competition and limits the number of drugs able to come to market. Specifically, House Energy and Commerce Chair Cathy McMorris Rodgers (R-WA) plans to focus on ways in which the IRA negatively impacts generic drugmakers.

Despite criticisms from Republicans, the IRA is not going anywhere, although lawmakers may attempt to make some policy tweaks that can garner bipartisan support as CMS begins to implement the law. Already, there is chatter surrounding the IRA’s insulin pricing provisions. Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME) have previously introduced the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN)Act that would reduce the cost of insulin to $35 per month for those with private insurance plans, compared to the IRA’s more narrow focus on lowering insulin costs for Medicare plans. In addition to the Shaheen-Collins bill, there are some bipartisan drug pricing priorities that were left out of the IRA. Most notably, pharmacy benefit managers (PBM) have drawn the attention of lawmakers on both sides of the aisle and are high up on Chair Rodgers’ radar. The Pharmacy Benefit Manager Transparency Act of 2022 (S. 4293) — which would create oversight of PBM business practices — is another bipartisan bill that is expected to resurface in the 118th Congress.

HHS’ 2023 Regulatory Priorities Impacted by End-of-Year Spending Deal

While the finalization of the fiscal year (FY) 2023 omnibus included robust policy changes for the health care realm, several measures were left behind, including provisions that would have allowed the Department of Health and Human Services (HHS) to bolster its regulatory authority surrounding several of its pending priorities. Notably, Food and Drug Administration (FDA) Commissioner Robert Califf signaled that the agency intends to take up reforms related to tests developed in academic hospitals or labs after a provision granting the FDA increased authority to do so was excluded from the end-of-year spending package.

Also of note, while relatively untouched in the omnibus, the Centers for Medicare and Medicaid Services (CMS) will have its hands full as it begins to issue rulemaking surrounding the newly enacted drug pricing program instituted under the Inflation Reduction Act (IRA) last year. While a top priority for the agency, it will also need to consider the impending Medicaid coverage redeterminations now set to start in April.

Medicare Advantage Faces Hurdles as Program Grows

As Medicare Advantage (MA) program enrollment continues to grow in popularity, employers are looking to shift their companies’ retiree benefit packages — which are generally private health plans or traditional Medicare — to MA plans. While group MA plans can help employers save money, there have been recent lawsuits that may deter businesses from switching their employee retiree benefits to group MA plans. This disquiet can generally be attributed to oversight and transparency concerns from federal agencies, which then trickle down to consumers. The Centers for Medicare and Medicaid Services (CMS) last collected benefit, premium, and cost-sharing data from MA plans in 2017, and some enrollees have voiced frustration about accessing information about their plans.

The issue of oversight and consumer trust as a hurdle to MA plan adoption can be best seen in New York City. Recently, the city attempted to shift from Medicare supplemental plans to a singular MA plan as a means to save the city money and make care for retirees more efficient. However, opt-out fees and coverage ambiguity ultimately led the plan to disintegrate over backlash from the affected beneficiaries.

In an effort to improve transparency provisions and assuage consumers’ skepticism towards MA plans, CMS plans to finalize a rule in February that will dictate MA audit policy. Despite these challenges, MA plans are still expected to service a growing number of enrollees moving forward.

Health Care Stakeholders Prepare for Sanders as HELP Chair

Sen. Bernie Sanders (I-VT) is setting a new tone for the Senate Health, Education, Labor, and Pensions (HELP) Committee’s legislative session. As Chair of the Committee, Sanders will serve as an important hinge on the door to health policy creation. As head of the Committee, Sanders aims to improve access to health care, improve wages for the health care workforce, allow drug importation from Canada, and possibly address the impacts of climate change on health.