Health Policy Report

June 22, 2015

The Week in Review
Trade was once again at the forefront of discussion in Congress, as President Obama and Republican lawmakers sought to navigate “fast-track authority” around Democratic opposition in the House and Senate. The trade package seemed to be stalled after Trade Adjustment Assistance (TAA) was recently voted down in the House, but a new plan devised by Speaker John Boehner—to decouple TAA from the less contentious Trade-Promotion Authority (TPA)—revived the trade package and TPA passed the House with an unrelated bill on Thursday. TPA now heads to the Senate, where pro-trade Democrats must decide whether to approve the measure without the assurance that TAA will ever get through the House.

In addition to the trade showdown, the House considered and passed a series of healthcare-related bills, including repeals of parts of the Affordable Care Act (ACA) and reforms to Medicare Advantage plans. Most notably, the House passed a repeal of the ACA’s medical device tax (H.R. 160) by a near veto-proof margin, 280-140, with over 40 House Democrats voting in approval. Four Medicare Advantage reform bills also moved past the House through a voice vote, including:
·         H.R. 2505, which would require the Centers for Medicare and Medicaid Services to report each year on enrollment data in Medicare Advantage plans;
·         H.R. 2506, which would delay the authority to terminate Medicare Advantage contracts for plans that fail to achieve minimum quality ratings under the Medicare Advantage STARS rating system;
·         H.R. 2507, which would expand an annual regulatory schedule for Medicare Advantage payment rates;
·         H.R 2579, which would require the CMS to re-evaluate and as appropriate change the Medicare Advantage risk adjustment model.
Meanwhile in the Senate, members approved the National Defense Authorization Act (NDAA) for Fiscal Year 2016 (H.R. 1735) 71-25, but the appropriations battle is just beginning as Senate Democrats intend to use Department of Defense (DOD) spending as a means to force Republicans to make more general concessions on the budget.
The Week Ahead
Senate Majority Leader Mitch McConnell has planned a cloture vote on TPA for tomorrow, and proponents of the trade package hope to get it to the President’s desk before the Independence Day recess. The House is due to consider a spending bill that includes funding for the Department of the Interior, the Forest Service, and the Environmental Protection Agency (EPA) among others. Under the proposed legislation (H.R. 2822), the EPA would receive a cut of $718 million and staffing would be capped at 15,000 employees. The House will also debate two bills designed to roll back EPA regulations on chemical manufacturers (H.R. 2576) and power plants (H.R. 2042). This latter topic will also be the subject of a hearing of the Senate Environment and Public Works Clean Air and Nuclear Safety Subcommittee on Tuesday, with carbon emissions from power plants set to draw a heated debate.
With the flurry of healthcare action over the past week, the House postponed a planned floor vote on legislation (H.R. 1190) that would repeal the Independent Payment Advisory Board (IPAB) set up by the ACA. The House plans to complete its consideration and vote on the measure early this week. Finally, the House may act on a bill (H.R. 805) that would prevent the Commerce Department’s National Telecommunications and Information Administration (NTIA) from handing over its authority on Internet domain names to an international body until the Government Accountability Office (GAO) releases a report on the impact of internationalizing the system.
In healthcare-related activity off the floor, Congress’ fiscal year (FY) 2016 Labor, Health and Human Services and Education appropriations process continues to be a focal point, with a Full Appropriations Committee markup in the House and Subcommittee-level markup in the Senate. A House Ways and Means Subcommittee also plans to examine coming year health insurer premiums amid the recent individual and small group 2016 rate request filing deadlines and the initiation of rate review processes. Additionally, the Supreme Court has just few days remaining on its schedule with which to release the King v. Burwell decision (including Monday, June 22 and 29), although it can add new days and use portions of conference days (such as Thursday, June 25) to release decisions. 
House Votes to Repeal ACA’s Medical Device Tax; IPAB Repeal Vote Delayed
An impressive victory for House Republicans took shape on Thursday, as the House voted overwhelmingly, 280-140, to repeal a part of the ACA known as the medical device tax. The measure (H.R. 160) has come under the threat of a White House veto, but with Thursday’s vote, President Obama now faces the first serious possibility of a veto override. Legislation to derail the tax was first passed by the House in 2012, and while the bill still does not include an alternative funding source, proponents are confident that the measure can pass through a Republican-controlled Senate. 46 House Democrats voted in favor of the legislation and some Senate Democrats have also supported repealing the tax, including Sens. Elizabeth Warren (D-MA) and Amy Klobuchar (D-MN).
The bill’s supporters claim that it is an unfair tax on manufacturers that stifles innovation on important medical technology, such as x-ray machines and ventilators. However, the bill’s detractors, such as Minority Leader Sen. Harry Reid (D-NV) claim that medical manufacturers remain immensely profitable in spite of the tax. Nevertheless, the medical device tax has been seen as the most vulnerable of the ACA’s provisions, and with Senate Majority Leader Mitch McConnell (R-KY) calling the repeal a priority, the bill is likely to reach the President’s desk. Last week also saw the House consider a bill (H.R. 1190) to dismantle the Independent Payment Advisory Board (IPAB). The board, tasked with finding ways to slow Medicare growth, has had little to do since the enactment of the ACA and a slower-than-expected rise in Medicare spending. While the measure is likely to pass—it enjoys broad Republican support and has 20 Democratic cosponsors—a final vote was postponed until this week.
As 21st Century Cures Bill Nears House Floor, W&M Reconsiders Medicare Offsets
According to senior aides, the House Ways and Means Committee has privately considered removing some of the Medicare offsets included under the 21st Century Cures Act (H.R. 6), and a bipartisan group of 44 House lawmakers have demanded that at least one—the delay in Part D reinsurance payments—is cut from the final draft of the bill. Committee members have also questioned the sweeping measure’s $10 billion funding increase for the National Institutes of Health (NIH), with only antibiotic incentives seemingly safe from the negotiation between spending on research and cuts to Medicare. The bill’s sponsor, Energy and Commerce Committee Chairman Fred Upton (R-MI), is confident that it will survive Ways and Means scrutiny, and pass easily on the House floor; the Michigan Congressman is hoping to gain as many as 350 votes before sending the measure to the Senate.
However, threats to the Medicare offsets present a new challenge for the legislation, as they largely pay for the $13.2 billion package. For example, one offset that is under fire would give state Medicaid programs lower prices for durable medical equipment than Medicare pays, saving about $2.8 billion, but has drawn the ire of several medical technology trade associations. Other provisions have also drawn criticism, such as a proposed exemption for spending on continuing medical education (CME) from the reporting requirements under the Physician Payment Sunshine Law. The idea has gained the approval of the American Medical Association, but some smaller physician groups fear it would temper the Sunshine law’s overall strength.
GOP Closes in on Plan if SCOTUS Blocks ACA Subsidies
Senate Republicans are reportedly working on a plan to extend ACA subsidies for up to two years should the Supreme Court rule against the government in King v. Burwell later this month. The court’s ruling on whether or not millions of Americans continue receiving subsidies through the federal exchange may come as soon as today, and contingency plans for a decision in King’s favor are slowly coming together on both sides of the aisle. The Senate Republican plan would couple continued subsidies with repeals of many major pieces of the ACA, including the individual and employer mandates.
Republican leaders are deliberating how to pitch the plan to hardline conservatives, who would see any continuation of the subsidies as an unnecessary support of the 2010 healthcare reform law. House Republicans have devised a similar proposal, but would allow states to opt-out of all ACA rules and regulations in 2016. However, a group of the House’s most conservative lawmakers have introduced a bill that would negate both plans by legally preventing Congress from extending health law subsidies beyond the court’s mandate. President Obama remains dubious of all proposed Republican alternatives and would likely veto major revisions to his signature healthcare law, placing a significant policy burden on the states should King prevail.
Meanwhile, a new study from Avalere Health has suggested that should the Supreme Court rule against the government, premiums will rise by an average of $3,300 for the millions of people who buy insurance through This includes a rise of $4,000 or more in four states – Mississippi, Maine, Alaska, and Wyoming. According to the study, the consequences of a ruling against the government could also lead to major disruptions across the entire market, with many healthy customers simply electing to drop their coverage in the absence of subsidies. 
MedPAC Urges Congress to Look at Drug, Insurance Payments
The Medicare Payment Advisory Commission (MedPAC) published one of their two annual reports last Monday, including a series of suggestions that could reduce profits for some products sold by drugmakers and insurance companies. The proposals cover a wide range of issues and some are certain to face opposition from the industry if considered for implementation. Hospitals, however, are likely to embrace MedPAC’s call for an end to the “two midnight” rule that determines whether a patient’s hospital stay is reimbursed through the outpatient payment or the more generous inpatient payment. With the end of the sustainable growth rate (SGR) in April, other policy changes to Medicare are likely to gain additional consideration.
For instance, drug purchasing was a major point in the MedPAC report, particularly the administration of medication in physicians’ offices through the Part B outpatient program and the rules for payments to insurance companies that run the Part D drug programs. The 340B program, an initiative designed in the 1990s for hospitals to use savings from discounted drugs to provide services, is also addressed by the June report; with MedPAC proposing hospitals start sharing their savings with Medicare. Finally, the MedPAC report entered into politically contentious territory by offering an analysis of various value-based purchasing options for drug payments. While the report does not fully endorse any single model, it does set the stage for further consideration in the future.