Health Policy Report

September 19, 2016

The Week in Review

Early optimism that the Senate could quickly agree upon a continuing resolution (CR) to fund the government and leave Washington at the end of the week faded as lawmakers disagreed on the policy riders to be included in the stopgap spending measure. Funding a White House request for emergency resources to be directed towards combatting the Zika virus is almost assured to be in a final package (if not passed separately and on its own), but negotiations remain on issues ranging from changing the quorum rules of the Export-Import Bank to barring a planned handover of American Internet domain oversight to an international body. Delays in the Senate schedule led some House lawmakers to suggest that the lower chamber should move first on a CR, with Republican demands for policy riders reportedly limited to a halt in the Syrian refugee resettlement program; a prohibition against money going to Planned Parenthood clinics; and a final stipulation based upon Sen. Ted Cruz’s (R-TX) plan to halt President Obama’s internet transition plan, which is scheduled to go into effect at month’s end. 

While floor action on a CR was delayed until this week, the upper chamber was able to complete work on the Water Development Resources Act (WRDA) (S. 2848), which would authorize Army Corps of Engineers water infrastructure construction, including providing funding for lead-tainted drinking systems in communities such as Flint, Michigan. The bill was passed 95-3, and a House version (H.R. 5303) may be considered this week. However, the House’s iteration does not include Flint funding, and Democrats in the chamber are considering withholding their support over the provision. Passage in the House will send the bill to conference.

Last week, the House passed a bill 261-147 (H.R. 3590) that would repeal the income threshold set in the 2010 Affordable Care Act (ACA) that is used to determine whether an individual is eligible for tax deductions for healthcare expenses. The lower chamber also approved a measure (H.R. 5351) 244-174 that would prevent the Obama Administration from realizing one of its long-held goals to shut down the Guantanamo Bay military prison. Both of those bills are under veto threat from the White House. The Administration had concerns over another bill (H.R. 5620) passed by the lower chamber last week, 310-116, that would alter procedures for terminating employees of the Department of Veterans Affairs (VA), but it fell short of issuing a veto threat.

In the presidential campaign, national and swing state polls continue to show a neck-and-neck race between Hillary Clinton and Donald Trump. Clinton went back on the campaign trail after taking a few days off due to illness, and the former Secretary of State’s health has turned into a significant issue this month. Trump, meanwhile, was caught in controversy over his 5-year role as ringleader of the “birther” conspiracy alleging that President Obama was not born in the United States and is therefore ineligible to be President. Stumbles from both campaigns have only increased the importance of the first presidential debate, which is set to take place one week from today.

The Week Ahead 

Negotiations over a CR to fund the government past the end of the fiscal year will continue to be the highlight of the legislative action this week, and if all goes according to plan, it’s possible that both chambers will leave Washington for the election recess by this weekend. Majority Leader Mitch McConnell (R-KY) has scheduled the first procedural vote for a CR today, which could give an indication as to how close senators are to working out the remaining differences on the short-term spending package. The Legislative Branch spending bill (H.R. 5325) will serve as the vehicle for a CR funding the government through December 9, when it is likely lawmakers will complete an omnibus measure to set fiscal policy for the rest of the 2017 fiscal year.

Aside from a possible CR, other action scheduled for the House this week includes consideration of a bill (H.R. 5931) that would prohibit cash payments to Iran, instead mandating the White House use a channel through the Treasury Department’s Office of Foreign Assets Control and established financial institutions. The bill comes after a controversial cash payment made by the White House last month that settled a longtime dispute with Iran, but was timed with the release of four American prisoners – leading many Republicans to dub the payment “ransom.” Legislation (H.R. 3438) that would bar federal agencies from implementing regulations with an annual economic cost of at least $1 billion until all judicial reviews are completed is also on the House docket.  

The House also has a significant list of bills lined up for consideration under suspension of the rules, including measures to enhance the ability of the Government Accountability Office (GAO) to obtain records (H.R. 5690) and one (H.R. 670) to extend an exemption related to the use of trust in determining incomes of Medicaid beneficiaries.

Obama Meets with Insurance CEOs to Address Marketplace Concern

In an effort to acknowledge concerns over the sustainability of health exchanges created by the Affordable Care Act (ACA), President Obama took time last week to meet with executives from eleven leading health insurance companies to discuss ways to reinforce the marketplaces ahead of 2017’s open enrollment. The meeting – which included HHS Secretary Sylvia Burwell, White House Senior Advisor Valerie Jarrett, and White House Deputy Chief of Staff for Implementation Kristie Canegallo – was followed by an immediate call to action from the President. In a letter to the insurers, Obama appealed for their help to boost enrollment, and announced a Millennial Outreach and Engagement Summit, which will be held on September 27th.

Several health insurance trade associations and individual plans have called for stricter restrictions on open enrollment and improvements to the risk adjustment program in order to make the exchange-based plans more sustainable. The Centers for Medicare and Medicaid Services (CMS) has taken action on many of these concerns, and President Obama confirmed that HHS officials have continued to meet with stakeholders to discuss potential additional policy solutions. As part of this outreach, CMS will hold a meeting on October 5th to further discuss best practices and innovation in health insurance in order to assist the plans in the future with strategies for success.  The ACA’s fourth open enrollment period begins November 1st.

Zika to be Included in Government Funding Measure

It took 800 infected Floridians, but in a rare showing of bipartisanship, a group of House Republicans from Florida joined their Democratic comrades in backing compromise legislation to provide $1.1 billion to fight the Zika virus outbreak. The compromise language contains none of the policy riders on issues such as banning Planned Parenthood funding or loosening environmental protections that had stymied the effort for months. The bill (H.R. 5958) would fund both mosquito control efforts and biomedical research to aid the search for cures and a potential vaccine for the mosquito-borne disease. Rep. Harold Rogers (R-KY), chairman of the House Appropriations Committee, has declined to say whether he will back the compromise, although the decision will largely be up to appropriators like Rogers.

The White House’s call for Zika funding has been buttressed by wide-ranging support from the Florida Congressional delegation, with some of the most fiscally conservative members joining President Obama’s call for funding. Rep. Curt Clawson (R-FL), a member of the conservative House Freedom Caucus, said the dangerous situation posed by Zika outweighed his instinctual opposition to federal spending. “By God, if there’s one moment the government ought to act and do something, even if cost is involved, this is that moment,” said Clawson, who added that he would even prefer a bill that allocates more than $1.1 billion.

21st Century Cures Package May Move By Recess

In an effort to jump-start a process that seems to have broken down in the Senate, the House could vote on an updated package of biomedical innovation bills – widely known as the 21st Century Cures Act – as early as this week. The bill passed in the House last year and stalled in the Senate after disagreements over funding for the National Institutes of Health (NIH), but an updated version could be introduced by Energy and Commerce Committee Chairman Fred Upton (R-MI) as soon as this week. If put on the calendar for a vote under suspension of the rules, lawmakers would be able to limit debate and prevent further amendments to the package. Republicans are seeking the buy-in of Rep. Frank Pallone Jr. (D-NJ), the panel’s top Democrat, in order to advance the legislation without going through the regular committee process.

The updated version of the bill would largely include bipartisan, non-controversial provisions – many from the package proposed by the Senate Health, Education, Labor, and Pensions (HELP) Committee earlier this year. The White House is also seeking to add priorities of their own to a reconstituted bill, including a request for an additional $1 billion in funding for the President’s Cancer Moonshot initiative.  Meanwhile, Democratic demands for a directed funding boost for NIH still stand in the way of the bill’s progress – particularly in the Senate, where Republicans are unlikely to budge on their opposition to the higher funding levels, and oppose many of the proposed pay-fors.

Bipartisan Drug Transparency Bill Echoes State, Clinton Penalty Efforts

New bipartisan legislation targeting drug transparency would attach civil penalties of $100,000 a day to drug manufacturers who fail to justify price increases exceeding ten percent on an annual basis. The legislation mirrors efforts by several state legislatures as well as Hillary Clinton’s recently announced drug pricing penalty plan. The bills were introduced simultaneously in the Senate by Senators Tammy Baldwin (D-WI) and John McCain (R-AZ), and in the House by Rep. Jan Schakowsky (D-IL), on Thursday. The measure was immediately criticized by pharmaceutical manufacturers, while groups representing consumers praised the bill for taking an important step to address “skyrocketing” drug prices.

Among its details, the bill would require drug manufacturers to notify HHS and submit a justification report a full 30 days before any planned price hike of more than ten percent during a 12-month period. The reports would require the inclusion of specific details on manufacturing, research and development costs, marketing spending, and net profits collected from the drug’s sales. The legislation does not prohibit price increases, but penalizes manufacturers for doing so without justification, and funds collected would be used to create a Drug Value and Price Transparency Fund designed to finance activities to improve price transparency. 

While movement on the legislation is not expected this year, the bipartisan interest in addressing drug prices speaks to the salience of the issue as we look towards 2017, particularly given the way in which Mylan’s EpiPen price increases appeared to have “broken through” the regular media clutter to make an impact on voters.

Final MACRA Rule Sent to OMB

On Wednesday, the Centers for Medicare and Medicaid Services (CMS) sent the final rule on the Medicare Access and CHIP Reauthorization Act (MACRA) physician pay system to the White House Office of Management and Budget (OMB) for review. In the highly anticipated rule, the administration will seek to find the right balance by persuading physicians to accept the risk of penalties for poor performance while providing avenues to achieve bonuses based on providing high-quality care. And the success of the Affordable Care Act’s delivery and payment reforms depend largely on the ability of CMS to implement a new physician pay system that induces physicians to greater efficiencies.

MACRA creates a two-part pay system in which providers either qualify for performance bonuses based on their participation in alternative payment models (APMs) or are subject to a Merit-based Incentive Payment System (MIPS). After receiving feedback from many physicians, CMS recently announced that it would give doctors longer to adjust for the new payment system.  Many industry insiders thought it might take CMS longer to send the final rule to OMB for review, but agency officials now say they expect to publish the regulation by early fall.