Health Policy Report (11/18)

November 18, 2019

The Week in Review

House and Senate Appropriations leaders made progress toward averting a government shutdown and funding the government for fiscal year (FY) 2020 during a series of meetings last week. In a press gaggle following their Wednesday afternoon meeting, House Appropriations Chairwoman Nita Lowey (D-NY) and Senate Appropriations Chairman Richard Shelby (R-AL) announced that the forthcoming continuing resolution (CR) will fund the government through Dec. 20 to provide for additional time to hammer out a broader deal for FY 2020 bills. Congressional appropriators and the White House are reportedly close to an agreement on 302(b) funding allocations and could announce a deal at some point this week. 

On the floor, House lawmakers passed (235-184) a Financial Services bill that would reauthorize and reform the Export-Import (Ex-Im) bank. The 10-year reauthorization bill is not expected to be taken up in the GOP-controlled Senate after the White House issued a veto threat, saying the legislation was not the right "bipartisan, bicameral approach" to deliver a long-term extension. In light of Republican opposition to the measure, lawmakers are expected to include a funding provision for Ex-Im in the next stopgap government funding measure as the agency's charter is set to expire on Thursday.

The Week Ahead

Congress will return to action later this afternoon as the government funding deadline approaches. Action on a month-long CR is expected in both chambers early this week as lawmakers look to avert a funding lapse ahead of Thursday’s deadline. As negotiations for FY 2020 spending continue, early indications are that the spending bill for Energy-Water will likely move first during this end-of-the-year funding blitz.

In addition to the CR, House lawmakers are expected to take up a measure out of the Education and Labor Committee that seeks to address workplace violence in the health care and social service sectors. Specifically, the bill would require the Secretary of Labor to issue an occupational safety and health standard mandating that certain employees within the health care and social service industries develop and implement a comprehensive workplace violence prevention plan. The bill was reported favorably (26-18) out of the Committee during its June markup, with two Republicans ­— Reps. Elise Stefanik (R-NY) and Phil Roe (R-TN) — joining the majority in support of H.R. 1309. Meanwhile, Senators are expected to continue their focus on clearing presidential nominations.

Trump Administration Advances Health Care Price Transparency Rules

Last Friday, the Trump administration published a pair of rules intended to improve health care price transparency and drive price conscious decision-making. The Department of Health and Human Services (HHS) finalized policy changes proposed in July to require publication of hospitals’ standard charges, and HHS, the Department of Labor, and the Department of the Treasury proposed a rule requiring broad price transparency of health insurers. Shortly after the final hospital rule was posted, a number of hospital groups, including the American Hospital Association, the Association of American Medical Colleges, the Federation of American Hospitals, and the Children’s Hospital Association announced they would sue HHS to block the hospital transparency regulations from taking effect. Observers have noted that the proposed rule for plans may stand on firmer legal ground.

In a press conference, President Trump touted the rules, saying that they would enable patients to make informed choices and seek out higher-quality, lower-cost care. He also framed the rules as a solution to surprise billing. Administration officials were not shy about the hoped-for impact of the rule, with HHS Secretary Alex Azar saying that the announcement “may be a more significant change to American healthcare markets than any other single thing we’ve done.” Officials anticipate that transparency will encourage lower health care costs. “Kept secret, these prices are simply dollar amounts on a ledger; disclosed, they deliver fuel to the engines of competition among hospitals and insurers. This final rule and the proposed rule will bring forward the transparency we need to finally begin reducing the overall healthcare costs,” said Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma.

CMS Proposes Rule to Crack Down on Medicaid Supplemental Payments 

Last Tuesday, the Trump administration announced a proposed rule meant to improve the oversight and fiscal integrity of the Medicaid program. The Medicaid Fiscal Accountability Rule (MFAR) proposes to increase transparency around state supplemental payments and financing arrangements and ensure spending is consistent with applicable statutory requirements. CMS reported that much of the recent growth in Medicaid spending came from the federal share, and Medicaid supplemental payments rose from 9.4 percent of all Medicaid payments in 2010 to 17.5 percent in 2017. Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma noted that the administration had seen a proliferation of payment arrangements that mask or circumvent current Medicaid rules, and said the proposed rule will “shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”

CMS noted that oversight agencies have previously recommended changes to better oversee and understand Medicaid supplemental payments, disproportionate share hospital payments, and the non-federal share of Medicaid expenditures. A 2015 Government Accountability Office (GAO) report noted that the government could be paying states “hundreds of millions, or billions, more than what is appropriate” without implementing policy and criteria for collecting data and scrutinizing payments. Additionally, a 2006 Office of the Inspector General (OIG) report recommended that CMS establish regulations to ensure DSH payments are used correctly and reimbursement reflects actual costs. Lastly, a 2012 GAO report on the agency’s general oversight of DSH payments also informed the proposed rule. Comments on the proposed rule are due 60 days after it is published in the Federal Register. On the Hill, the Senate Finance Committee is reviewing compliance with Medicaid program regulations and released a report on supplemental payments in April. The Committee could look to fill in gaps in the proposed policies in future legislation. Additionally, CMS is working on guidance on an alternative federal funding mechanism that could resemble a block grant.

The proposed rule would provide states, hospitals, and other stakeholders with clear guidance on what payments are legal under the Medicaid program, close existing loopholes, and improve reporting to ensure states do not exploit the system for additional federal funding. The proposed rule would establish new requirements for states to report provider-level information on Medicaid supplemental payments, responding to calls from oversight organizations for CMS to increase transparency and amid worries that certain supplemental payments — such as upper payment limit (UPL) payments — may be miscalculated. The administration explained that many of the current vulnerabilities in Medicaid financing arise from high-risk financing mechanisms that states have used, or sought to use, for the state portion of Medicaid payments. The proposed rule clarifies policy for states and stakeholders to ensure that states fund their share of payments to providers through only permissible sources and with methodologies that comport with statutory requirements and align with Medicaid program goals. Additionally, the proposed rule would implement new regulatory definitions for Medicaid “base” and “supplemental” payments and clarify definitions and processes associated with provider ownership categories to close loopholes. To ensure payment arrangements align with both state and federal Medicaid program goals, states would also be required to sunset supplemental payments and tax waivers after no more than three years, with the option to request renewal.

Azar Signals Aggressive Turn for IPI

The Secretary of Health and Human Services (HHS) Alex Azar signaled on Wednesday that the administration would pursue a policy to get “the best deal among developed countries” on prescription drugs. Speaking at an Axios event, Secretary Azar said that President Donald Trump was unhappy with HHS’s advance notice of proposed rulemaking (ANPRM) on an international pricing index (IPI) for Part B drugs, favoring instead a model in which the U.S. would get the lowest price among comparator countries. "[President Trump’s] view, which he has articulated publicly, is that America ought to be getting the best deal of developed countries,” Secretary Azar said. “That is the terminology of most favored nation status, and that is the type of proposal we are working on."

It is unclear whether the model would still be rolled out through the Center for Medicare and Medicaid Innovation (CMMI), with Secretary Azar saying that he “cannot pre-judge the president’s decision-making.” Secretary Azar gave no indication as to the timeline for a proposal, “if and when” it comes out, though a proposed rule has been under review at the Office of Management and Budget (OMB) since June. Secretary Azar also indicated that the revised policy would be limited to Medicare Part B. This comes as rumors have circulated over the last several months that the administration has considered extending their proposed IPI model to Part D. "The president and I are working of course on an importation regime, as well as on foreign reference pricing to bring more competitive market pricing into one of our programs in particular, Medicare Part B. Those are the physician-administered drugs," he said.

President Trump has previously spoken of a preference for a “favored nation” system for drug pricing, calling for paying the least amount for a given drug out of a group of developed countries. This was in opposition to HHS’s ANPRM, which would target a roughly 30 percent reduction in Part B drug prices using a formula based on prices in that basket of countries. Secretary Azar’s announcement that HHS is working on a “favored nation” system is also in conflict with his own statements at a June 2018 Senate Finance hearing, where he said that he did not believe such a program would be effective and would only result in price increases abroad. Likewise, the Administration’s May 2018 blueprint panned the idea of foreign reference pricing, saying that “such price controls… prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing these policies.”

Sens. Booker, Sanders, Harris Introduce Drug Pricing Bill

Presidential Candidates and Senators Cory Booker, Bernie Sanders, and Kamala Harris introduced legislation on Friday aimed at creating an independent agency to determine the list prices for prescription drugs. The Prescription Drug Affordability and Access Act would create the Bureau of Prescription Drug Affordability and Access and would penalize drug companies that do not comply with regulations by voiding exclusivity protections. Specifically, drug companies would be required to submit information to the new bureau on the cost of research and development, the cost of the drug, the cost of comparable medications in other countries, and federal investments that contributed to the drug’s development. The new bureau would use this information to determine an appropriate list price for the drug. The Senators noted that the bill is one of few to directly address a pharmaceutical’s list price.

W&M Task Force Seeks Input on Rural Health Issues

Last Friday, the Ways and Means Committee leaders, Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) announced a Request for Information (RFI) regarding health care outcomes in underserved communities. The RFI comprises ten questions, soliciting input from stakeholders on factors impacting health in these communities. The information provided will be used by the Rural and Underserved Communities Health Task Force as it looks to develop bipartisan legislation to improve health care outcomes. Comments on the RFI are due Friday, November 29. As Chairman Neal and Ranking Member Brady detailed in their release, “Earlier this year, we formed a bipartisan task force to examine the delivery and financing of health services in urban and rural underserved areas. Now, we urge stakeholders from across the country to provide their input on priority topics that affect health status and outcomes for the Task Force to consider and discuss.” Specifically, the RFI seeks information on health care delivery, data collection, workforce issues, and social determinants.