Health Policy Report

November 2, 2015

The Week in Review
A busy week in Washington was highlighted by the changing of the guard in the top post of the House. Speaker Paul Ryan (R-WI) was elected to replace John Boehner (R-OH) by the Republican Conference on Wednesday and secured the House floor’s approval on Thursday, with just 9 Republicans voting against him. In his acceptance speech, the newly-minted Speaker struck a courteous tone and buoyed hopes of more bipartisan work being completed in the House for the remainder of the Obama Administration.

Speaker Ryan will be able to start his tenure without any impending fiscal deadlines, as his predecessor successfully negotiated a debt-limit and budget deal (H.R. 1314) that will keep the government funded through March 2017, notably not until after the 2016 general election. The package sailed through the House and Senate relatively unscathed, by votes of 266-167 and 64-35 respectively. The package’s passage marks a major win for the White House, former-Speaker Boehner and current-Speaker Ryan, moderate Republicans, and perhaps most importantly, the health of the nation’s economy. For a full breakdown on the bill, including health policy ramifications, see our story below.
In other news on the Hill, the House passed a stand-alone measure (H.R. 597) to revive the Export-Import Bank, after a group of moderate Republicans banded together with Democrats to force through a discharge petition that allowed the bill to circumvent the hostile House Financial Services Committee and reach the chamber floor. The House-passed bill is unlikely to see stand-alone Senate consideration, but it could be eventually rolled into a broader highway package, with Leader McConnell saying that “the way to achieve Ex-Im . . . would be in the context of the highway bill.” The highway package he referred to is likely to be passed within the next three weeks. A measure (H.R. 3819) to provide a three-week patch in funding authorization—and avoid an October 29 deadline—cleared the House and Senate and was signed by the president last week. The new deadline is November 20, and many observers expect a longer-term agreement rather than another short patch in the coming weeks.
Other action in the Senate included the passage of a long-negotiated cybersecurity bill (H.R. 754) that would encourage companies to share information on cyberthreats with the government and others in the industry.
Finally, the Republican Party held its third primary debate on Wednesday, with CNBC’s controversial moderation of proceedings and the candidates’ revolt emerging as the most significant storyline. In response, the Republican National Committee (RNC) discontinued its plans to host its sixth debate on the NBC network.
The Week Ahead
Next week, legislation reauthorizing highways and transit programs, as well as the Export-Import Bank, is expected to take center stage as the House convenes under Speaker Paul Ryan.  The House’s to-do list also includes a planned override vote of President Barack Obama’s veto of the fiscal 2016 defense authorization bill (H.R. 1735). Although the budget deal cleared last week defused a major White House objection by raising caps on both domestic and defense spending, House Armed Services Committee Chairman Mac Thornberry (R-TX) has laid out two scenarios to reconcile the defense authorization with the budget agreement: scrap a scheduled veto override vote and have both chambers pass a new bill that reflects changes resulting from the budget deal, or try to override the veto and fix the funding tables retroactively. Senate Armed Services Committee Chairman John McCain (R-AZ) said he expects to go with a new bill.
In the Senate, Republicans will seek to proceed to a bill (S. 1140) that would rewrite Clean Water Act jurisdiction over waters and wetlands. Although they may lack the 60 votes needed for cloture, the leaders want to give senators a chance to show their opposition to what they see as excessive environmental regulation by the Obama Administration.
Congress Passes 2-Year Bipartisan Budget Agreement
With the debt limit fast approaching and a government funding debate slated for early December, Congress moved swiftly last week to advance a two-year bipartisan budget deal negotiated among congressional leaders and the White House.  On Friday, the Senate voted 64-35 to approve the measure to raise the debt limit and set government funding levels until after the 2016 general election. The Senate’s action sends the bill to President Obama after House lawmakers passed the deal earlier in the week by a vote of 266-167, with the support of just 79 Republicans.  The package was a final legislative victory for outgoing House Speaker John Boehner (R-OH), who officially submitted his resignation on Thursday. Importantly, it also gives new Speaker Paul Ryan (R-WI) breathing room as he settles in to the House’s top spot, by allowing him to avoid some near term crises. The deal suspends the limit on borrowing until March 16, 2017, leaving the next fight to President Obama’s successor. It also raises spending levels above the 2011 Budget Control Act, increasing funding by $80 billion through September 2017.
Among the bill’s wide-ranging provisions are number of notable healthcare measures.  Chief among them, the bill assuages the impact of a pending increase in Medicare Part B premiums, expected to affect 30 percent of seniors enrolled in the program. Under the agreement, millions of Medicare beneficiaries facing a $54 spike in their monthly premiums next year would only see an estimated $18 increase.  The other 70 percent of Part B enrollees are protected from an increase by a “hold harmless” provision that prevents their premiums from rising more than their Social Security payments.  The money would come from a loan to the supplemental medical insurance trust fund that would be repaid starting in 2016, by imposing a $3 monthly surcharge on beneficiaries who aren’t protected by the hold harmless.
The budget deal also draws savings from some government health care programs, including a one-year extension of the sequester cuts for Medicare that’s projected to save around $11 billion.  Another provision would prevent off-campus physicians’ offices that are purchased by hospitals in the future from billing under the hospital outpatient system, which provides a higher reimbursement rate than what is paid to typical doctors’ offices. That’s expected to save around $9.3 billion. Another change is designed to extend the existing requirement for brand-name drug manufacturers to pay a rebate to Medicaid if the price of medicines rises faster than inflation to generic drugs, which is projected to save about $1 billion over 10 years.
With the agreement headed to President Obama’s desk—where he’s expected to sign it—lawmakers will now turn their attention to passing either 12 individual spending bills or one large omnibus bill. Senate Majority Leader Mitch McConnell (R-KY) tried to move individual spending bills earlier this year, but was blocked by Democrats who wanted a larger budget deal. Minority Leader Harry Reid (D-NV) pledged that his party would cooperate going forward, as long as Republicans don’t “mess up” the appropriations process.  “We'll be happy to move the bill as long as we get rid of those vexatious riders that have nothing to do with the bill brought before us,” Reid said on the floor last week.
Hatch Supports a Suspension for Medical Device Tax
Last Wednesday, Senate Finance Chairman Orrin G. Hatch (R-UT) declared his support for a potential $5 billion two-year suspension of the health law’s 2.3 percent excise tax on medical devices as a possible add-on to the highway bill or to a year-end package of tax break extensions. Repeal of the tax has been a bipartisan priority for a number of members of Congress, especially among those representing states where the industry is prominent.
The Senate’s top tax writer argued that the best way for such a proposal to pass would be as part of a year-end package of tax break extensions but would be willing to look for an opening to deal with the issue in conference negotiations on the Senate-passed surface transportation bill (HR 22). According to Senate Majority Whip John Cornyn, (R-TX) the elimination of the tax will take priority in coming weeks as the GOP tackles health care law, including the two-year budget deal and a projected November vote on the House-passed reconciliation bill (HR 3762), which would repeal parts of the law.
Supporters for the suspension hope that the wide-ranging debate of the health reconciliation bill will open the Senate for a test vote. Hatch added that the medical device tax debate would be part of the deliberations on a tax break extension package at the end of this year.
Senate Version Of 'Cures' To Improve FDA Hiring and Facilitate EHR Sharing
Last Monday, Senate HELP committee chair Lamar Alexander (R-TN) stated that the Senate’s version of the House-passed ‘Cures’ bill would allow the Food and Drug Administration (FDA) to recruit scientists, personnel and outside experts, as well as make it easier for doctors and hospitals to exchange electronic health records, giving patients and providers easier access to health information. The legislation would also focus on reducing regulatory burdens that have hindered scientists from efficiently researching and developing new drugs. The HELP Committee’s medical innovation legislation will help the FDA keep up with the rapid pace of scientific discovery by allowing them to recruit the best talent. Currently, the federal hiring process requires nearly a year to bring a new employee on board. This bill would lift hiring caps and raise salary caps for senior level scientists and researchers at the FDA, and let FDA hire these staffers directly.
The draft Senate bill would also incorporate several provisions from health IT legislation introduced by Sens. Bill Cassidy (R-LA) and Sheldon Whitehouse (D-RI) to address information blocking issues and set up a health IT rating system so that providers can compare electronic health records more easily. The legislation would also include a proposal to map 1 million genomes that is part of the White House’s Precision Medicine Initiative.
The Senate health committee is expected to unveil its package of agreed-upon medical innovation initiatives and then allow it to be enhanced through a robust committee markup and floor amendments.
Average Premiums to Rise 7.5 Percent on ACA Benchmark Plan
According to data released last Monday, the average premium of a key benchmark Affordable Care Act (ACA) plan is expected to jump by roughly 7.5 percent next year. This increase would be much higher than last year’s 2 percent rise among benchmark silver plans, which are most popular nationwide. Importantly, the rise is expected to affect the second-lowest cost option among silver plans, which determines healthcare subsidies for people living in that area, even if they pick a different tiered plan. The Obama administration argued that the single digit increase, which they claim was harder to achieve before the Affordable Care Act, would not place too much of a burden on consumers since plans costing less than $100 a month would still be available.
The increase for next year does not take into account the billions of dollars in government subsidies that are provided to people on the exchanges, nor does it include the dozen state marketplaces that set their own rates and benchmark plans. According to the data released, the change in premium prices varies widely among the 34 states in which some states such as Oklahoma will see an increase in premium costs, while others such as Indiana, Maine, Mississippi and Ohio will see drops in their premiums. The next ACA enrollment period begins on November 1. Officials believe that roughly 10 million people will sign up this year, a number that falls below original expectations but would still bring in about 1 million new customers.