Health Policy Report

May 23, 2016

The Week in Review

Even without a budget resolution, the House passed the first of its fiscal 2017 appropriations bills last week, as well as this year’s version of the National Defense Authorization Act (NDAA) and a bill transferring Ebola funds to fight the Zika virus. On Wednesday, House lawmakers approved the $610.5 billion spending authorization (H.R. 4909) for Department of Defense (DOD) programs 277-147 after winnowing down nearly 400 submitted amendments to the annual legislation. The House version of the bill includes a provision opposed by the White House that would allocate $18 billion in war funding to Pentagon weapons programs, which may force the next president to seek emergency funding for combat operations in the Middle East and Afghanistan.

After completing work on the NDAA, House lawmakers moved to the fiscal 2017 Military Construction-VA spending bill (H.R. 4974), including the consideration of controversial amendments to prohibit the large-scale display of Confederate flags in federal cemeteries and bar the government from using contractors that discriminate against the LGBT community. The latter of those amendments caused a fracas on the House floor, as a flurry of late GOP votes narrowly blocked the provision. Nevertheless, the spending measure was passed on Thursday by a 295-129 margin. Finally, House lawmakers passed a standalone Zika-funding measure (H.R. 5243), 241-184, that would provide $600 million to fight the virus by transferring money currently slated to be used for containing the Ebola virus. The measure is about a third of the $1.9 billion that President Obama requested to fight the mosquito-borne virus, and Democrats have described the House effort as “woefully inadequate.”

Senate lawmakers also debated the government’s approach to fighting Zika last week, settling on a $1.1 billion package to be included in the Transportation-HUD and Military Construction-VA spending minibus (H.R. 2577). The underlying measure was advanced by the Senate on an 89-8 vote on Thursday as the upper chamber works through the dozen appropriations bills needed to fund the government each year.   

The Week Ahead

With a week to go until the Memorial Day recess, lawmakers will work on a rewrite of toxic chemicals regulations, an amendment to send an energy efficiency bill to conference, and the continuation of both chambers’ appropriations process. Senators plan to start the week by taking up a bill (S. 2613) to reauthorize the national registry for sex offenders before moving to the upper chamber’s version of the fiscal 2017 National Defense Authorization Act (NDAA). The upper chamber’s defense bill lacks the use of war funding for weapons development, but includes a provision struck from the House version that would require women to register for the Selective Service.

The House, meanwhile, will continue its appropriations work, with the Rules Committee set to consider the Energy and Water Development spending bill (H.R. 5055) later today, setting up consideration for later this week. On Tuesday, the House plans debate on a bill (H.R. 2576) that would revise the procedures that the Environmental Protection Agency (EPA) references to review toxic chemicals used in manufacturing consumer products. The House also plans to take another run at passing a bill (H.R. 897) that would target Zika-carrying mosquitoes by exempting certain pesticides from Clean Water Act permitting requirements through Sept. 30, 2018. The House fell short of the two-thirds vote needed to pass the measure under suspension of the rules last week. Finally, House lawmakers may also take up an amendment late in the week to send a Senate-passed energy efficiency bill (S. 2012) to conference.

W&Ms Bill Targets Socio-economic Factors in Hospital Readmissions; Exempts Some Hospitals from Site-neutral Pay Cut

On Wednesday, the House Ways & Means Committee released legislation that would exempt some hospitals from site-neural pay cuts and modify Medicare’s readmissions program to adjust for socio-economic status of patients. The bill, which is fully paid for with spending offsets, would also delay Centers for Medicare and Medicaid Services (CMS) authority to end Medicare Advantage programs that do not achieve minimum quality ratings.

The bipartisan legislation called the “Helping Hospitals Improve Patient Care Act of 2016” aims to address concerns from rural and safety net hospitals, which provide care to low-income and vulnerable patients. Many of those hospitals said they were unfairly targeted by the Affordable Care Act's (ACA) Hospital Readmissions Reduction Program due to community health factors beyond their control. Under the legislation, readmissions penalties would be adjusted by comparing hospitals with similar populations of Medicare and Medicaid patients. Those adjustments would remain in effect until mandated research reports provide more balanced ways to adjust payments.

The legislation would also allow off-campus hospital outpatient departments currently under construction to continue receiving higher rates than similar facilities that are not owned by hospitals. The effort to implement a site-natural pay cut provision was part of a two-year budget agreement reached toward the end of 2015. However, stakeholders immediately expressed concern for hospitals in the process of building such departments, which had already accounted for higher payment rates. The bill therefore aims to exempt hospitals from site-neutral pay cuts that had a binding written agreement to construct an outpatient department as of November 2. To get the exemption, hospitals would also have to attest to meeting outpatient department criteria. However, those facilities in mid-build would still be paid the lower doctor-office rates in 2017, and then rates would revert to outpatient department levels in 2018.

Stalled Mental Health Bill in House Garners Attention

Last week, House Republicans began circling a revised draft of Rep. Tim Murphy’s (R-PA) legislation to address mental health which had long been stalled due to a number of controversial provisions within the bill’s text. Concerns from both sides of the aisle surrounding issues such as funding and healthcare privacy laws had placed the bill on hold since December and delaying full committee markup of the bill. However, House Energy and Commerce Committee Chairman Fred Upton (R-MI) reported last week that he is trying to change that by working with Rep. Murphy to “smooth over” some of the bill’s more controversial provisions and bring costs down in order to jump-start the legislation amid the election year.

Democrats have long objected to many aspects of Rep. Murphy’s bill, including one provision which would cause major changes to the Substance Abuse and Mental Health Services Administration (SAMHSA), and one that would allow caregivers and family members to have more information about a mentally ill person’s care by making changes to the Health Insurance Portability and Accountability Act, or HIPAA. While revisions are being made to address some areas of Democratic concern – such as scaling back some of the HIPAA changes – Democrats have generally been excluded from latest talks on the bill and therefore doubt that compromise can be reached, thus raising the prospect that Republicans would have to move forward with a party-line committee vote. Democrats instead hope they can gain leverage if the Senate passes its bipartisan mental health bill, which excludes many controversial provisions within Rep. Murphy’s bill. “It will give us some tailwind if the Senate passed the bill that was similar to ours,” Rep. Gene Green (D-TX), top Democrat on the health subcommittee, said. “We're not in the majority but I think we would pick up enough Republicans to be able to do something, [that’s] not like what Murphy has.”

On the other hand, Republicans are pleased with the revised bill as most of the major changes contain provisions that focus on cutting the bill’s cost. One piece would scale back the provision to allow Medicaid to cover more care of mental health facilities, which the Congressional Budget Office had said would cost $40 to $60 billion over ten years. The revised bill will instead allow Medicaid to cover stays in mental health facilities, but only if they are less than 15 days long.  Rep. Joe Pitts (R-PA), Chairman of the Health Subcommittee stated last week, “It's going well; I think it's going to move,” noting that he expects the bill to be marked up in full committee before mid-July recess. However, substantial negotiations will likely be needed to bring the Senate on board if Rep. Murphy’s bill gets passed in the House.

DOL Overtime Rule Likely to Affect Many Healthcare Workers

On Wednesday, the Department of Labor issued a new overtime ruling which will double the salary threshold for overtime exemption to $47,476 effective Dec. 1. Healthcare workers are likely to be greatly affected by the ruling as the average mean salaries for nurses, medical and physical therapist assistants, medical and pharmacy technicians, and paramedics can range from $25,710 to $47,010. Among those who have already expressed concern about the new ruling includes home-care businesses, whose average mean salary for home healthcare services is $24,050 and consist approximately of 470,710 employees.

A representative of the Home Care Association of America reported last week that the overtime threshold hike will cause financial strain for small home-care businesses, leading to increased costs for services and less pay for staff. Another stakeholder also said that small businesses will likely raise salaries for employees close to the upper limit while other employers may adjust hours or decrease pay as a result. However, the stakeholder noted that the December deadline will likely give employers ample time to adapt to the overtime ruling. Labor Secretary Tom Perez said last week that the Administration took several steps in the final rule to address business concerns, including lowering the threshold from the original proposed $50,440 and allowing bonus payments to count toward the threshold. Furthermore, Medicaid-funded home-care providers for individuals with disabilities or facilities with 15 beds or fewer will be exempt from implementing the new rule until March 17, 2019, and most home-care providers will likely be unaffected because those businesses are often privately operated.

Uninsured Rate Hits Record Low

According to a new study by the Centers for Disease Control and Prevention (CDC), the rate of uninsured fell to a record low in 2015 as a result of the Affordable Care Act’s (ACA) health coverage expansion. The study found that the uninsured rate has fallen from 14.4 percent in 2013 – before main ACA provisions went into effect – to 9.1 percent, thus allowing 16.2 million people to gain health insurance in 2015. According to the study, gains in enrollment were evident in both public and private coverage, but whether a state expanded Medicaid under ACA was a dividing line in how high the coverage gains were. The study found that the uninsured rate dropped 8.6 percentage points – from 18.4 percent to 9.8 percent – in states that expanded Medicaid. However, it found that the rate of uninsured only dropped 5.2 percentage points – from 22.7 percent to 17.5 percent – in states that did not expand the program. The survey also revealed that roughly 28.6 million remain uninsured.