Health Policy Report

April 16, 2018

The Week in Review

An eventful week in Washington culminated with the news Friday night that British, French and U.S. forces struck Syria with more than 100 missiles, the first coordinated attack by Western countries against the government led by President Bashar al-Assad. The military action was in response to an alleged poison gas attack by the Syrian government. President Donald Trump announced the military action from the White House, saying the three countries "marshaled their righteous power against barbarism and brutality."

In major political news, House Speaker Paul Ryan (R-WI) announced on Wednesday that he intends to step down from his post at the end of this year and will not seek re-election in Wisconsin’s 1st congressional district. His departure will likely trigger a contested race to lead House Republicans, with House Majority Leader Kevin McCarthy (R-CA) and House Majority Whip Steve Scalise (R-LA) considered the two early frontrunners, Chief Deputy Whip Patrick McHenry (R-NC) as a dark horse contender, and Freedom Caucus co-founder Jim Jordan (R-OH) as a polarizing conservative alternative. Although Ryan had planned to retain his Speakership until the year’s end, he faces increasing pressure to resign from the position sooner in order to allow the House Republican caucus to solve its leadership situation in time to mount a stronger defense of their fragile majority. To that end, Ryan announced his support for Majority Leader McCarthy, who appears the odds-on favorite for the spot after meeting with President Trump last week.

Meanwhile, another House Republican lawmaker, Rep. Dennis Ross (R-FL), announced his resignation last week, joining more than 40 House Republicans who are retiring or seeking another office.

Both the House and Senate were in session last week, with the testimony of Facebook CEO Mark Zuckerberg before a pair of congressional committees headlining the week’s activity. Zuckerberg apologized for a series of missteps that imperiled the privacy of tens of millions of Americans, while several lawmakers earned criticism and considerable public ridicule for their seemingly uninformed questioning of the technology wunderkind.

On the legislative front, the House passed a series of bills that would ease regulations under the regime created by the Dodd-Frank financial reform law. The measures are seen as the latest salvo in the ongoing negotiation between House and Senate leaders on the bipartisan regulatory relief bill passed in the upper chamber earlier this year. Separately, the House fell short of the two-thirds support needed to send a balanced-budget amendment to the Senate. The mostly party-line vote for the GOP-backed measure could provide campaign fodder for Republicans looking to attack Democrats as lax on fiscal discipline. Meantime, the Senate continued work on presidential nominations, approving John Ring to join the National Labor Relations Board, Patrick Pizzella to be Deputy Secretary of Labor, and Claria Boom to become a U.S. District Judge in Kentucky.

The Week Ahead

Both chambers of Congress return today, with the House slated to take up a series of tax-related legislation: (1) a bill (H.R. 5192) that would provide fraud protection for vulnerable populations such as minors and recent immigrants; (2) a bill (H.R. 5444) that seeks to modernize and improve the Internal Revenue Service (IRS); and (3) a bill (H.R. 5445) that would improve cybersecurity and taxpayer identity protection and modernize information technology at the IRS.

Meanwhile, the Senate is expected to resume consideration of a bill (S.140) that would amend the White Mountain Tribe Water Rights Quantification Act of 2010 to clarify the use of amounts in the White Mountain Apache Tribe Settlement Fund. Senate Majority Leader Mitch McConnell (R-KY) also announced that he began the Rule 14 process to bypass the committee process and place S.2667 — a bill that would amend the Agricultural Marketing Act to allow State and Tribal regulation of hemp production — on the upper chamber’s legislative calendar.

Former FBI Director James Comey is also expected to make waves with the release of his new book this week. The Republican National Committee is leading efforts to push back on the book, and President Trump himself has taken to Twitter to label Comey a “liar” and a “slime ball.”

CBO 10-Year Economic Outlook Details Health Care Spending Projections

The Congressional Budget Office (CBO) has released a report outlining its analysis of the American budgetary and economic outlook over the next ten years. The annual report is normally issued in January, but was pushed back this year to allow the CBO to analyze the tax bill passed late last year, the budget deal approved in February, and the fiscal year 2018 omnibus spending plan that passed last month. Among the topline headlines are the CBO’s projection that the annual budgetary deficit will hit $1 trillion in 2020 and that the nation’s total debt will reach 96 percent of gross domestic product (GDP) by 2028. The recently-enacted legislation largely pushed up deficit estimations, although the report also notes that the tax bill should bump GDP growth by an average of 0.7 percent over the course of the next decade.

The report is already being seized on both sides of the political spectrum as evidence to support their preferred policy changes. For Republicans, the growing mandatory spending illustrated in the report may add to the conservative case that federal entitlement programs need to be rolled back, and House Republicans sought to reinforce that narrative last week through a largely symbolic vote on a balanced budget amendment for the Constitution. Democrats, meanwhile, are emphasizing the deficit growth attributed to last year’s tax cuts that were passed solely on Republican votes, with Senate Minority Leader Chuck Schumer (D-NY) saying that the report “exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself.”

The CBO’s analysis also provides a robust look at the anticipated spending for federal health care programs over the next decade. CBO projects that net federal outlays for Medicare, Medicaid, and other major health care programs will increase at an average rate of 6 percent each year, reaching $2 trillion by 2028. Medicare is expected to grow by 3 percent in 2018 — a slower pace than in recent years — before reaching a 7 percent annual growth rate over the next ten years, driven primarily by rising per-beneficiary costs of medical care. Cost growth accounts for nearly 5 percentage points of that increase, and growing enrollment accounts for the rest. By 2028, projected net outlays for Medicare grow to $1.2 trillion.

Spending for Medicaid is expected to increase by 2 percent in 2018, which is also a slower pace than in recent history. After 2018, outlays for the program are projected to grow at an average rate of about 5.5 percent per year (about 1 percent because of increasing enrollment and nearly 5 percent because of increasing per capita costs), closer to historical growth levels. Outlays for health insurance subsidies are estimated to increase by $10 billion, or 21 percent, in 2018. That jump mostly stems from an average increase of 34 percent in premiums for the second-lowest-cost “silver” plan in health insurance marketplaces established under the ACA. CBO estimates that, under current law, outlays for health insurance subsidies would rise by about 60 percent over the next decade, increasing from $58 billion in 2018 to $91 billion by 2028. Finally, CBO projects receipts from health care taxes to grow from $18 billion in 2018 to $39 billion in 2028.

CMS' Heath Insurance Exchange Rule Prioritizes State Flexibility, Plan Design Innovation

Last Monday, the Centers for Medicare and Medicaid Services (CMS) released the final 2018 health insurance marketplace rule, the Notice of Benefit and Payment Parameters (NBPP), which includes significant proposals affecting the individual and small group insurance markets, including Exchanges. The rule affects Qualified Health Plans (QHPs), Federally Facilitated Exchanges (FFEs), and State-based Exchanges (SBEs), with most proposals applicable for the 2019 plan year. It shifts decision making authority for several significant exchange policies to the states and aims to provide states with tools to help stabilize the market and ultimately to facilitate more affordable healthcare options for Americans.

For both sides of the aisle, this rule is likely to drive much of the narrative around health insurance affordability issues heading into the 2018 mid-term elections. Policy officials at the federal and state levels will look to public opinion research on matters of health insurance affordability to shape their engagement and messaging in this area. Stakeholders may also wish to consider the enhanced role individual states will have on key issues, such as the scope of the essential health benefits (EHB). Administrator Verma confirmed that CMS officials are reviewing whether the agency will continue to allow states to “silver-load” rates for the 2019 plan year; however, the rule does not directly address the practice. Additionally the rule identifies several other policy issues that CMS is still considering, including drug pricing, program integrity, and Exchange eligibility.

Broadly speaking, starting in plan year 2019, states will have significantly more authority to reshape and oversee their respective health insurance marketplaces. The final rule also notes that CMS intends to provide guidance on several other aspects of Exchange eligibility in the near future. CMS finalizes major proposals on essential health benefits, including:

  • allowing states to update their benchmark plans more frequently and have more latitude on how they define benefits, starting with the 2020 plan year;
  • enhanced state role in reviewing the QHP certification standards of network adequacy and essential community providers for the FFE;
  • a 15 percent default threshold for rate review;
  • a streamlined process for states to seek a lower medical loss ratio (MLR) standard in the individual market;
  • an ability for states to reduce the magnitude of risk adjustment transfers in the small group market under certain circumstances, beginning with the 2020 benefit year; and
  • changes to the Federally Facilitated SHOP, shifting it from online to direct enrollment starting in 2018.

Bipartisan W&M Leaders Release Opioid White Paper

House Ways and Means Committee Chairman Kevin Brady (R-TX) and Ranking Member Richard Neal (D-MA) — along with Health Subcommittee Chairman Peter Roskam (R-IL) and Ranking Member Sandy Levin (D-MI) — released a new opioid white paper analyzing feedback received in response to the Committee’s Request for Information (RFI). The RFI sought feedback on an array of issues pertaining to overprescribing and data tracking, communication and education, and treatment. The white paper focuses specifically on legislative solutions within the Committee’s jurisdiction.

The Committee plans to use the findings from stakeholder responses to inform and advance bipartisan policies that focus on improving Medicare’s response to the opioid epidemic. This will complement the Energy & Commerce Committee’s extensive work on this issue, which committee leaders hope will culminate with the passage of legislation before Memorial Day. Additionally, Ways and Means leaders may utilize the findings to encourage specific efforts in addition to the work already underway by the Centers for Medicare & Medicaid Services (CMS).  

The Ways and Means Committee’s white paper highlights stakeholder recommendations to Congress, including:

  • Enhance Medicare’s coverage of Medication-Assisted Treatment (MAT), specifically to address the current lack of coverage when such medications are prescribed or dispensed in an outpatient setting.
  • Address Medicare policies that create barriers to non-opioid treatments, including increasing coverage, reducing/eliminating beneficiary copays, and increasing reimbursement for such services.
  • Work with federal agencies to modernize Medicare quality measures program to address addiction screenings, mortality related to opioid use, or pain management after discharge.
  • The Committee noted a lack of consensus around opioid prescribing limits, but there was support for developing policies that provide appropriate prescribing guardrails.
  • Support greater interoperability of state-to-state PDMPs and integration with electronic health records. The report noted some support for facilitating e-prior authorization and e-prescribing practices.
  • Encourage adoption of evidence-based risk screening of patients with opioid use disorder or other substance use disorders as part of regular protocols and broader training and adoption of Medicare’s Screening, Brief Intervention, and Referral to Treatment (SBIRT) services.
  • Increase provider education in pain management and substance use disorders and related communication as well as patient education.

GOP Health Panel Chairman Opposes Point-Of-Sale Rebate-Sharing

House Ways & Means Health Subcommittee Chair Peter Roskam (R-IL) reiterated his opposition to point-of-sale rebate-sharing this past week, highlighting that he had recently sent a letter to the administration on the topic. The response came in response to an article claiming the health chair was warming to the idea, and staff for Rep. Roskam clarified he was only “open to learning more about the issue” to drive discussion. Staff noted specifically that he opposes directing plans to share rebates with individuals when they purchase pharmaceuticals at the pharmacy, as he believes the relationship lacks price transparency. He considers the policy a violation of the non-interference clause, as he laid out in his letter to the Centers for Medicare & Medicaid Services. Health experts warn that sharing rebates at the point of sale would disclose rebate amounts, which would weaken plans' hand in negotiating lower prices with drug makers.

The administration has been exploring the idea, and even recently included a Request for Information on the subject and modeled rebate-sharing plans in the Medicare Advantage and Part D rule. Drug industry representatives have been meeting with CMS to present plans that share rebates at the point of sale, and Secretary Alex Azar has praised national insurers who have recently announced point-of-sale drug discounts. Sec. Azar has repeatedly named lowering out-of-pocket spending on prescription drugs as one of his top priorities for the administration.