Health Policy Report
July 6, 2015
The Week in Review
The House and Senate were out last week for the Independence Day recess. Both chambers plan to reconvene tomorrow, Tuesday, July 7.
The Week Ahead
Among the first items to be considered by the House when they return this week is the bipartisan legislation known as the 21st Century Cures Act (H.R. 6). Floor action on the bill was postponed until after the recess following a request from Republican leaders to the Energy and Commerce Committee to look for $2 billion in budget offsets as a replacement to Medicare cuts that were opposed by providers. According to a notice from the House Rules Committee, “Cures” is scheduled to hit the House floor on July 8. In the Senate, Majority Mitch McConnell has fast-tracked legislation (H.R. 160) that would repeal the medical-device tax implemented by the Affordable Care Act (ACA), although the timetable for floor consideration is uncertain. The measure passed with significant Democratic support in the House. Other legislation that is slated to be considered by both chambers this month include major appropriations bills, such as Financial Services and the Department of the Interior-Environment Protection Agency package, and a highly anticipated highway funding bill.
Post-King, States Consider Medicaid Expansion, SBMs
In the wake of the Supreme Court’s ruling in favor of the government in King v. Burwell, the Obama Administration is beginning a renewed push to convince Republican-led states to adopt Medicaid expansion. 21 states have yet to extend their programs as promoted by the ACA, and the Administration sees expansion as the most promising avenue to move closer to its goal of universal coverage. However, even with their victory in King, the White House has shown a great deal of leniency in how states implement expansion, allowing conservative states to make adjustments such as requiring small premium payments and instituting work-referral programs. This leniency, combined with the ACA’s momentum after King, may convince the remaining holdout states to adopt expansion, and the federal dollars that come with it.
Among the other changes that may be spurred by the King decision is for some smaller states to abandon their state-based marketplaces in favor of HealthCare.gov. The Supreme Court’s confirmation that consumers can receive federal subsidies regardless of whether or not their state runs an exchange significantly reduces the incentive for states to struggle with the administrative burden of managing their own healthcare exchanges. While some states would like to maintain an exchange and hold control over the marketplace, technology issues and cost overruns are leading to an embrace of the federal alternative. Another possible model that has emerged is for states to perform some of the essential functions of an exchange, such as selecting plans and collecting fees from insurers, but relying on the technological infrastructure provided by HealthCare.gov. This system is already place in New Mexico and may become a model for states that are struggling with their own programs.
Updated ‘Cures’ Bill Released; Part D Offsets Scrapped
The expansive medical research funding bill known as the “21st Century Cures Act” (H.R. 6) received significant revisions ahead of its floor consideration this week. Among the major changes are an increase in the sale of the nation’s Strategic Petroleum Reserve to help pay for the bill and the elimination of a controversial offset that would have delayed payments to Medicare Part D providers. Replacing the Part D offset is a provision that will require brand-name drug makers to pay larger rebates to the Medicaid program. Reports had suggested that a tweak in the Medicare Part B reimbursement for biosimilars may be included in the changes, but that provision did not make the final cut.
The major thrust of the bill is to provide nearly $2 billion in funding annually to the National Institutes of Health (NIH) and Food and Drug Administration (FDA) for the research and development of new drugs. However, the sweeping legislation’s new language also eliminates authorized generics—which can often artificially lower the average manufacturer’s price for new medications—and makes it easier for the Department of Health and Human Services to impose penalties on federal contractors that fail to cooperate with an agency investigation. The bill has been closely followed by the health industry and is set to be debated on the full House floor beginning Wednesday.
Medicare House Call Program Considered for Extension
In a rare approval of an ACA provision, Republican lawmakers are showing support for an extension to the Medicare program that tests whether house calls by physicians can improve the care of disabled elderly people. The program, dubbed the “Independence at Home” project, was initially authorized as a part of the 2010 health care law. A bill (S. 971) to provide the program with a two-year extension is now being considered by the House, having already passed the Senate and receiving approval from the House Ways and Means Committee on June 2 by a voice vote.
One reason for the bill’s popularity stems from a report published by the Centers for Medicare and Medicaid Services (CMS) last month that concluded the Independence at Home program lowered Medicare expenses by $25 million in its first year. In a departure from typical CMS practice, the Independence at Home program doesn’t provide upfront financial assistance to providers seeking to participate; rather, the model allows participating medical practices to receive incentive payments if they meet certain targets on care and savings. Some Democrats are hoping that the success of the model and this year’s extension will lead to a permanent program for house calls being incorporated into Medicare.
62 Percent Support SCOTUS King Ruling; Obama Remains Open to ACA Changes
A recent poll released by the Kaiser Family Foundation found that 62 percent of Americans agree with the Supreme Court’s ruling to uphold the federal subsidies that are central to the 2010 health care law. Predictably, the results were split along party lines; 82 percent of Democrats and 61 percent of independents supported the Court’s decision and 62 percent of Republicans opposed it. The ACA as a whole received a much more mixed response, with 43 percent of Americans having a favorable opinion of the law, and 40 percent viewing it unfavorably. These latter numbers have remained fairly stable for the entire five-year life of the health care law, and suggest that Americans have not yet reached a consensus on the merits of the President’s signature legislative achievement.
President Obama understandably lauded the government’s victory in King, but his praise for the ACA was also marked by a call for bipartisan improvements to the highly contested law. Republicans are publically committed to ‘repeal and replace’ and may force a presidential veto by getting an ACA repeal to the president’s desk through the budget reconciliation process. However, some analysts suggest that more realistic changes may be on the horizon, such as a repeal of the medical device or Cadillac excise tax and a fix for the “family glitch” that has caused problems for certain health plans. With the budget battle heating up, funding the ACA will become another avenue for Republicans to attempt to force the President into making changes, but it remains to be seen if the Court’s ruling and recent polling data will encourage Republican leaders to pursue small changes to the ACA rather than a full repeal.