Health Policy Report

September 25, 2017

The Week in Review

In a shortened week in Washington, the most noteworthy development was the growing sense of momentum for the newest Republican repeal and replace bill introduced by Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC). While the whip count is still in flux, the bill (H.R. 1628) is expected to be called to the floor this week for a vote in attempt to get it to the President’s desk before the close of the fiscal year – and the final chance to use the fiscal 2017 budget resolution – at midnight on Sep. 30th.  A full breakdown of the bill’s prospects is included in the roundup below.

On Tuesday, President Trump addressed (speech) the United Nations (UN) for the first time at the 72nd United Nationals General Assembly in New York. The President spoke to the Assembly in a markedly different tone than any of his predecessors, pushing his “America First” message for the right of individual nations to act in their own self-interest. Addressing the developing tension on the Korean peninsula, President Trump presumably called out China in arguing that no country should conduct business with a country “that imperils the world with nuclear conflict.”  While calling on the global community to develop a solution, he said that the U.S. would “totally destroy North Korea” if necessary.

The House spent the week in recess while the Senate left on Tuesday for the Rosh Hashanah holiday. Before leaving town, the Senate approved its version of the FY18 National Defense Authorization Act (NDAA) (H.R. 2810) on an 89-8 vote. Despite the wide bipartisan margin, it is unclear how the House and Senate will reconcile their two versions of the legislation while respecting the budget caps put into place by the 2015 Bipartisan Budget Act.

The Week Ahead

What will most likely be seen as the final and deciding round for the Republican effort to repeal and replace the Affordable Care Act (ACA) will commence when lawmakers return to the nation’s capital today. Senate Majority Leader Mitch McConnell (R-KY) is expected to raise the so-called “Graham-Cassidy bill” as an amendment to the underlying House reconciliation bill, immediately triggering a vote-a-rama that could go on for the remainder of the week. However, the announcements from three Republican senators (McCain (AZ), Cruz (TX), and Paul (KY)) that they currently oppose the bill may force off-the-floor negotiations before the bill’s introduction to the floor. Regardless of the outcome, Washington will likely be consumed this week by what represents the last possible try from Republicans to push through a repeal package in the foreseeable future.

House lawmakers return from a weeklong break today, and while they’ll undoubtedly be keeping one eye on what happens in the Senate, the House has its own docket of legislation to clear on the chamber floor. Specifically, lawmakers have teed up a controversial measure (H.R. 2792) that would revoke Social Security payments for those with an outstanding arrest warrant or parole violation. The bill was passed on a party-line vote out of the Ways and Means Committee and will likely face similar opposition on the House floor. Also due to hit the floor is legislation (H.R. 2824) that would reauthorize the Maternal, Infant, and Early Childhood Home Visiting Program (MIECHV) through the 2022 fiscal year. Despite bipartisan support for the nature of the program, the two sides are split on the amount of federal support that should be provided.  

With the fiscal year ending on Saturday, the House may push additional suspension bills that would provide temporary relief for other programs that need a reauthorization for the 2018 fiscal year.

Graham-Cassidy ACA Repeal and Replace Bill Faces Vote This Week

Washington is again in anticipation mode as a final fight on the Republican effort to repeal and replace the Affordable Care Act (ACA) is expected to start when lawmakers return to the nation’s capital today. As with past efforts, Republican proponents of the plan put forward by Sens. Lindsey Graham (R-SC) and Bill Cassidy (R-LA) will be facing significant headwinds and a fierce fight  from Democrats, opposition from virtually every healthcare stakeholder group, and deep skepticism from within their own ranks. The drama is expected to begin on Monday evening, with Senate Majority Leader Mitch McConnell (R-KY) needing to put the legislation on an accelerated track in order to beat the Sep. 30 reconciliation deadline.

Delivering a near fatal blow, Sens. John McCain (R-AZ) and Ted Cruz (R-TX) came out against the measure last week. McCain stressed the importance of regular order, while Cruz said that the bill did not do enough to lower premiums. With Sen. Rand Paul (R-KY) firmly against the bill and Sen. Susan Collins (R-ME) almost assuredly a no, this likely kills the Senate's last attempt to repeal and replace the Affordable Care Act this year.

While several Republican senators have yet to publicly commit to voting in favor of the bill, leaders are desperately trying to recruit the vote of Sen. Lisa Murkowski (R-AK) — who voted against a previous repeal and replace bill in July — with a financial incentive for her home state of Alaska, which would reportedly be one of the “losers” under the Graham-Cassidy legislative formula. Sen. Murkowski has stated previously that she would not be swayed by a sweetener designed specifically for Alaska, but she has been more receptive to this version of the repeal effort than past iterations. The rumored deal could include continued ACA premium tax credits, delayed Medicaid per capita caps, and an increased federal Medicaid matching rate for both Alaska and Hawaii.

This week, the Congressional Budget Office (CBO) is expected to “provide a preliminary assessment,” but the agency “will not be able to provide point estimates of the effects on the deficit, health insurance coverage, or premiums for at least several weeks.” Procedurally, the timing could be favorable for Republicans — the rules governing reconciliation only requires CBO to verify that legislation meet basic requirements, such as achieving sufficient savings. Politically speaking, the lack of estimates around such details as coverage and premiums, including any last-minute changes, will serve as a key criticism from Democrats, but could also serve as a benefit to GOP leaders, who may prefer turning a blind-eye to those potentially-grave implications. The Senate Finance Committee will hold a hearing on the bill on Monday afternoon.

Avalere Estimates Graham-Cassidy Would Reduce Medicaid Funding by $713B by 2026

According to new analysis from Avalere, the health care proposal Graham-Cassidy would lead to a reduction in federal Medicaid funding to states of $713 billion through 2026 — $593 billion in reductions through lower Medicaid funding as part of the block grants, and $120 billion due to the Medicaid per capita caps for traditional Medicaid. If the block grant funding were to end after 2026, Avalere finds that the bill would reduce Medicaid funding by $3.5 trillion over the 20-year period after passage.

Avalere’s analysis concludes that 34 states and the District of Columbia would see substantial reductions in Medicaid funding through 2026. These states include all expansion states and three states (ME, TN, and UT) that would see large reductions in their traditional Medicaid spending due to per capita caps. As expansion states are only permitted to use 15 percent of their block grant allotments in Medicaid, the report notes, their total Medicaid funding would be substantially reduced. On the other hand, Avalere finds that 16 states could see an increase in their available Medicaid funds through 2016, as the block grants in the bill are designed to equalize funding between states that decided to expand Medicaid under the ACA and those that did not.

Senate Finance Leaders Announce Five Year CHIP Extension Legislation

Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) announced last week the introduction of the Keeping Kids’ Insurance Dependable and Secure (KIDS) Act (S. 1827), which would extend funding for the Children’s Health Insurance Program (CHIP) for five years with a tapered match rate. The current reauthorization for funding will expire on Sept. 30, 2017. Details for the bill are not yet available, but the press release promised the legislation would:

  • Extend CHIP funding through fiscal year (FY) 2022;
  • Maintain federal matching rate at current statutory levels through FY 2019, change to 11.5 percent for FY 2020, and return to a traditional CHIP matching rate for fiscal years 2021 and 2022; and
  • Create protections and flexibility under the maintenance-of-effort provision.

Lawmakers say the intense focus on the Graham-Cassidy repeal effort will likely delay funding for the Children’s Health Insurance Program, which runs out of money in three legislative days. Congress was already expected to miss the deadline, and all Congressional Budget Office (CBO) staff were reportedly pulled off scoring the CHIP extension two weeks ago to work on scoring the repeal measure.

CMS Announces Request for Information on 'New Direction' for CMMI

The Centers for Medicare and Medicaid Services (CMS) has released an informal Request for Information (RFI) on a “new direction” for the Innovation Center (CMMI). As detailed in the announcement, the agency is seeking feedback on how to “promote patient-centered care and test market-driven reforms that empower beneficiaries as consumers, provide price transparency, increase choices and competition to drive quality, reduce costs, and improve outcomes.”

The release of the RFI follows an agency proposal in August to cancel the Episode Payment Models and Cardiac Rehabilitation pay models, and make the Comprehensive Care for Joint Replacement demonstration voluntary in some areas. In an op-ed last week in the Wall Street Journal, CMS Administrator Seema Verma emphasized the agency’s commitment to “shift[ing] away from a fee-for-service system that reimburses only on volume and move toward a system that holds providers accountable for outcomes and allows them to innovate,” adding that “consumers need more control over the allocation of health-care resources.” She also noted that “many of the current models might have encouraged consolidation within the health-care system, leading to fewer choices for patients.”

In the RFI, CMS lays out a set of guiding principles that will inform the future direction of the Innovation Center: (1) promoting choice and competition in the market; (2) focusing on voluntary models with defined control groups; (3) focusing on patient-centered care and ensuring beneficiaries have “flexibility and information to make choices as they seek care”; (4) using data-driven insights and price transparency to ensure cost-effective care; (5) encouraging transparency in model design and drawing on partnerships with public stakeholders; and (6) testing smaller scale models “that may be scaled if they meet the requirements for expansion under 1115 A(c) of the Affordable Care Act.”