Health Policy Report

February 25, 2019

The Week in Review

Last week, in response to President Trump’s southern border national emergency declaration, House Democrats introduced a resolution of disapproval (H.J.Res 46) that would reject the President’s declaration. It’s the first move in a series of potential legislative and legal maneuvers by Congressional Democrats to block President Trump from circumventing Congress to fund a wall on the U.S.-Mexico border. The resolution is expected to easily pass the House early this week and could end up attracting the support of some Republican Senators — such as Sens. Susan Collins (R-ME), Lisa Murkowski (R-AK), Lamar Alexander (R-TN), and Mitt Romney (R-UT) — who have been critical of the national emergency declaration.

Meanwhile, voters in North Carolina’s 9th Congressional District are set to head to the polls again after the 2018 House race was marred by credible allegations of election fraud by the Republican winner’s campaign. Last week, North Carolina's State Board of Elections ordered a new election in the NC-09, setting up a likely rematch between Republican Mark Harris and Democrat Dan McCready — both of whom called for a new election prior to the Board’s decision. A date for the new election has yet to be officially announced.

The Week Ahead

Lawmakers in both chambers will resume legislative business this afternoon following a brief President’s Day district work period. On the House floor this week, the Democratic leadership has teed up a pair of measures aimed at strengthening the nation’s gun background check system. The Bipartisan Background Checks Act (H.R. 8) and the Enhanced Background Checks Act (H.R. 1112) are both expected to pass the lower chamber easily later this week, however, their fates are uncertain in the GOP-controlled Senate and White House. For today, House lawmakers will consider seven bills under suspension of the rules, including a bill out of the Energy and Commerce Committee (H.R. 525) that directs the Department of Health and Human Services (HHS) to establish a public-private partnership for purposes of identifying health care waste, fraud, and abuse.

In the upper chamber, Senators are set to resume consideration of a bill (S. 311) that would prohibit a health care practitioner from failing to exercise the proper degree of care in the case of a child who survives an abortion or attempted abortion. Following consideration of the Born-Alive Abortion Survivors Protection Act, Senate Majority Leader Mitch McConnell (R-KY) is likely to begin clearing his queue of presidential nominees, which includes the nominations of Eric D. Miller to be a Judge for the Ninth Circuit; and Andrew Wheeler to be to be Administrator of the Environmental Protection Agency (EPA). On Tuesday, all eyes will be on the Senate Finance Committee when it convenes a hearing entitled Drug Pricing in America: A Prescription for Change, Part II, which will feature the CEOs of seven leading pharmaceutical makers.

CMS Estimates 4.4 Percent Growth in Healthcare Spending in 2018

Nationwide healthcare spending rose more quickly in 2018 over the previous year, according to a new report from the Centers for Medicare and Medicaid Services’ (CMS) Office of the Actuary. Owing largely to growth in Medicare spending, total expenditure increased by 4.4 percent to $3.6 trillion, CMS estimates. Total healthcare expenditure increased 3.9 percent in 2017 by comparison. Healthcare made up 17.9 percent of the American economy in 2017, CMS estimates, and will comprise 19.4 percent of the economy by 2027. 

CMS Administrator Seema Verma called attention to the report in a series of tweets. In particular, she used the report’s findings to say there is an urgent need to ensure healthcare programs are paying for value. Additionally, she signaled the Administration is continuing to navigate its position on drug costs, writing, “Prescription drug spending is projected to increase in part b/c of shifts in drug usage associated w/ the many drugs in development that could result in innovative, yet more expensive therapies for conditions such as cancer, diabetes & Alzheimer’s disease.”

CMS stated that it expects healthcare costs to continue to accelerate, projecting a growth rate of 4.8 percent in 2019. However, these rates are still well below CMS’s projection of an average 5.5 percent annual growth rate in the period between 2018-2027, with total expenditure rising to $6.0 trillion. CMS attributes these increases largely to economic and demographic factors, such as the aging of baby boomers. Furthermore, expanding Medicaid eligibility will bump up Medicaid costs, with Maine, Idaho, Nebraska, Utah, and Virginia having recently added or planning to add new beneficiaries to the program. CMS estimates that prices will increase sector-wide between 2018-2027 by 2.5 percent annually, a marked increase over the 1.1 percent annually of 2014-2017 that accompanied low inflation in the economy overall. 

Democrats Call for CMS to Halt Medicaid Work Requirements

Senate Finance Committee Ranking Member Ron Wyden (D-OR) and House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) sent a letter last Thursday to Department of Health and Human Services Secretary Alex Azar asking for the Administration to end Medicaid work requirements. The members of Congress argued that the waivers go against Congressional intent of the program, echoing concerns they first aired in a letter sent to HHS in August. More than 18,000 beneficiaries lost Medicaid coverage in Arkansas in 2018 — the only state to implement a Medicaid work requirement so far. The Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma recently told the Medicaid and CHIP Payment and Access Commission (MACPAC) that CMS would continue to approve work requirement waivers, despite MACPAC’s recommendation to halt approvals.

Sen. Wyden and Rep. Pallone noted that all eight states approved to implement Medicaid work requirements by CMS had developed program evaluation plans. They point out that although Arkansas submitted an evaluation plan, it was rejected by CMS and the state has not yet moved forward with another proposal. The letter urges HHS to halt any Medicaid work requirement requests and to “faithfully administer the Medicaid program.” A U.S. District Court for the District of Columbia will hear arguments on two lawsuits challenging work requirements in Arkansas and Kentucky on March 14. CMS is set to release an extensive guidance document within the next several weeks that will counsel states on how to implement and evaluate 1115 waivers in Medicaid, with a focus on work-requirement programs.

Sen. Warner Engages Health Care Industry to Improve Cybersecurity

Last Thursday, Sen. Mark Warner (D-VA) sent a letter to health care industry stakeholders requesting their input on ways the federal government can better address cybersecurity issues in the health care sector. Sen. Warner, a member of the Senate Finance Committee and co-chair of the Senate Cybersecurity Caucus, wrote that the increased use of technology in all facets of the health care system has led to improvements in quality and efficiency, but has “left the health industry more vulnerable to attack.” He expressed his desire to work alongside health care entities, and urged industry stakeholders to help him develop a “short and long term strategy for reducing cybersecurity vulnerabilities in the health care sector.”

Several committees and subcommittees with jurisdiction over cybersecurity are planning to spend considerable time examining the web of issues and developing legislative proposals to address identified cyber threats this year. Sen. Warner has been among the leading voices in the health care specific aspect of cybersecurity. The issue has the potential to present an opportunity for bipartisan action if this Congress can successfully navigate the complexity of health or other threats to cybersecurity.

The letters were sent to the nation’s largest health stakeholders, and asked them to survey their members on steps they’ve taken to reduce vulnerabilities, report attacks, patch and replace obsolete software, how groups track connected systems in their facilities, and how they’ve made staff more aware of security issues. Sen. Warner also requested advice on steps the federal government should take to improve health care security. He cited reports from the Government Accountability Office (GAO) showing more than 113 million care records were stolen in 2015, as well as a separate report from the same year which estimated that the cost of cyberattacks would cost our health care system $305 million over a five-year period. 

Dozens of Insurers Win CSR Payments Cases

Two U.S. Court of Federal Claims judges ruled on February 15 that insurance companies offering plans in the Exchanges are entitled to receive cost-sharing reduction (CSR) payments. The payments, which were stopped in late 2017, are owed for 2017 and 2018 regardless of lack of specific appropriation from Congress and silver-loading workaround, according to the judges. Cases brought by L.A. Care, Common Ground Health Corporation, Community Health Choices, and Community Health Options all won entitlement to lost CSR funds.

Judge Thomas Wheeler argued that the payer "should not be left 'holding the bag' for taking our Government at its word," and Judge Margaret Sweeney determined that the government had violated the ACA’s statute that created the CSRs and also breached an implied contract. Judge Sweeney also disregarded the government’s argument that the silver-loading practice precludes recovery of CSRs for the 2018 plan year. The government has until February 28 — and March 14 for the L.A. Care Case — to meet with insurers to discuss recovery amounts. The cases are certain to be appealed by the government, and are likely to the end up in the Supreme Court