Health Policy Report

December 5, 2016

The Week in Review

Despite last-second concerns from some senators, the House easily passed the legislative vehicle (H.R. 34) for the 21st Century Cures medical research package on a 392-26 vote last Wednesday. Passage in the lower chamber sets up consideration in the Senate this week, where the bill is expected to pass and be signed by President Obama before the winter holidays. The House also passed a bill last week (H.R. 6392) 254-161 that would alter the threshold for bank holding companies to be automatically designated “systemically important” and subject to additional regulatory scrutiny from the Federal Reserve. The measure passed over a veto threat from the White House and may offer a glimpse into the intentions of congressional Republicans once President-elect Trump takes office next year.

The House also advanced legislation (H.R. 6393) to reauthorize U.S. intelligence agencies, including the addition of new initiatives designed to counter the influence of Russian propaganda. In the Senate, lawmakers advanced a non-controversial Iran sanctions bill (H.R. 6297) and a measure (S. 2873) that would require the Department of Health and Human Services to study the use of distance-education technologies to provide health care, particularly in rural and underserved areas.

The transition team for President-elect Donald Trump named several picks for the incoming Administration last week, including Cabinet-level nominations for Treasury, Defense, and Transportation. Steven Mnuchin, the former Goldman Sachs executive and film producer, is set to be the next Secretary of Treasury, retired Marine general James Mattis was tapped to head the Pentagon, and former Bush administration Labor Secretary Elaine Chao will lead the Department of Transportation.

The Week Ahead

With the clock ticking towards a Dec. 9 funding deadline, House and Senate negotiators have yet to find consensus on the duration of the next short-term spending bill to keep the government running. House members have sought a Mar. 31 expiration of the next continuing resolution, while Senate Republicans pushed for one that would last weeks later in Donald Trump’s new presidency. While Congress is scheduled to remain in session until Dec. 16, passage of a stopgap spending bill before Friday may allow lawmakers to close out the 114th Congress a week early.

In addition to any spending bill work, the House has over two dozen suspension bills lined up for a vote before the holidays. A full list of the bills, which cover a wide range of subject areas, can be found here. Under normal procedures, the lower chamber will also consider a bill (H.R. 5143) that would bar U.S. negotiators from accepting capital standards set by an international body for insurance companies. Regulators from the Federal Reserve and the Department of Treasury regularly participate in international forums and Republicans have feared that international discussions have too heavily influenced the state-based insurance regulatory scheme in the United States. 

The Senate will take its turn on advancing the $6.3 billion medical research and drug approval omnibus, the 21st Century Cures Act (H.R. 34), that the House passed last Wednesday. An initial vote on the legislation is expected today, and Senate passage will allow President Obama to sign the long-negotiated package before the winter holidays. Both chambers also plan to vote on a conference report still being negotiated for reauthorizing the Water Resources Development Act. Speaker Ryan and Senator James Inhofe (R-OK), chairman of the Environment and Public Works Committee, say the water-projects package is the best legislative vehicle for providing as much as $170 million to help Flint, Michigan, clear lead pollution from its water system.

21st Century Cures Passes House with Bipartisan Vote, Expected to Pass Senate

Last Wednesday, the House passed in an overwhelming 392-26 vote a wide-ranging biomedical innovation bill, the 21st Century Cures Act, which would provide about $4.8 billion in medical research funding and make significant changes to the FDA’s review of medical products. The package also includes a range of other healthcare priorities, including $1 billion over two years to fight the epidemic of opioid addiction and $1.8 billion for Vice President Biden’s cancer “moonshot.” Additionally, the cures legislation includes a mental health portion that seeks to reorganize and improve accountability for government mental health programs, though Democrats have criticized the provision for lacking any funding. The legislation now goes to the Senate where it is expected to pass without any amendments early this week. Both the original Cures and mental health portions of the bill come after more than a year of bipartisan negotiations.

The measure built in a total of $6.3 billion in funding for various causes across nearly all sectors of the healthcare industry. The final Cures Act included several provisions from Sen. Chris Murphy's (D-CT) Mental Health Reform Act, including new administrative positions at the Substance Abuse and Mental Health Services Administration and would create a centralized database that must be maintained by HHS, which will include the identities of providers terminated by Medicaid in any state. It also builds centralized enrollment standards that define what doctors must submit to participate in Medicaid. Hospital leaders said they were pleased the act also included a change to take into account patient socioeconomic status in the Medicare Hospital Readmissions Reduction Program.

Following a threat from Sen. Charles Grassley (R-IA) to block a Senate vote on compromise 21st Century Cures legislation, the bill was amended in the House to remove some proposed changes to the Physician Payments Sunshine Act that would have exempted the disclosure of certain education-related support for doctors from drug and device companies.

Liberal detractors note that the new research funding, which is helping to bring some Democrats on board, is authorized, but not mandatory spending. Still, the $4.8 billion over 10 years is set aside in a separate fund and not subject to the usual budget caps, so it is presumably more likely to materialize. A few left-leaning Democratic senators – including Sens. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Jeff Merkley (D-OR) – have said they will oppose the bill. They cite concerns about weakened FDA oversight and benefits to the pharmaceutical industry, echoing some consumer groups that fear that speeding up the FDA’s approval process could lower safety standards. For example, the measure allows for sometimes using “real world evidence,” rather than more rigorous and time-consuming clinical trials, in drug approvals. The White House, however, has said it “strongly supports” the bill’s passage due to the inclusion of funding for opioid abuse treatment measures and cancer moonshot, and the bill is expected to move through the upper chamber by the end of next week. 

Rep. Tom Price Selected as HHS Secretary; Seema Verma Tapped as CMS Administrator

President-elect Donald Trump has tapped Rep. Tom Price (R-GA) to lead the Department of Health and Human Services (HHS), Trump’s transition team announced last Tuesday. Rep. Price, an orthopedic surgeon, who has been a longtime opponent of the Affordable Care Act (ACA), was one of the first Republicans to introduce an alternative to the law when Democrats were debating health care reform in 2009 and 2010. Currently the Chairman of the House Budget Committee, Price is expected to be a key player in helping the House design and pass an ACA replacement plan. Price also shares a close relationship with Vice President-elect Mike Pence – both former chairmen of the House’s Republican Study Committee.

The healthcare plan introduced by Price has similarities to both the “Better Way” plan put forward this year by House Speaker Paul Ryan (R-WI) and the plan Trump outlined during his campaign. Price’s bill – which also includes traditional GOP ideas such as health savings accounts, high-risk insurance pools, and allowing interstate insurance sales – also happens to be the most detailed, and is the only one that has been put into legislative language.  Price’s proposal arguably does less to protect the sick than Ryan’s ‘Better Way’ plan does. It includes limited funding for the high-risk pools ($3 billion, compared with Better Way’s $25 billion) and its limit on the employer-sponsored tax exclusion is also significantly lower than other GOP-backed proposals ($8,000 for an individual). Both of these differences would make Price’s bill less expensive for the government, and might be alluring to legislators as they begin the budgetary scoring process. Democrats are expected to hit Price hard on his very conservative positions on this and Medicare reform during his nomination hearings.

Also last week, Trump announced that he will nominate Indiana-based healthcare consultant Seema Verma as the next administrator of CMS. Verma may be best known for her work on Medicaid issues and her close ties to Mike Pence. She designed Pence’s Medicaid expansion model – known as Healthy Indiana Plan 2.0 – and has advised several Republican states, including Kentucky, on how to add conservative elements to their programs. Verma’s close ties to Republican governors could be a hopeful sign to some stakeholders who have expressed concern that the Trump Administration might walk back the ACA’s enhanced federal matching rate for Medicaid expansion. So far, 31 states and the District of Columbia have expanded the Medicaid program, and many Republican governors have expressed a desire to keep the enhanced federal contribution even as other parts of the ACA are repealed.

Walden Selected as E&C Chair, Neal in Line for Top W&M Democrat

Rep. Greg Walden (R-OR) won a key vote by the House Steering Committee last Thursday to become the next chairman of the House Energy and Commerce Committee. The House Steering Committee selected Walden in a closed-door vote and submitted its recommendations to be ratified by the full Republican conference last Friday. Rep. Walden will replace Rep. Fred Upton of Michigan at the helm of the powerful committee, due to Republican term limit rules preventing Upton from serving as chairman again next year. Rep. Walden says he will work to move the GOP's “Better Way” agenda, which includes Medicare premium support, moving Medicaid to a block grant or per-capita caps system and repealing the Affordable Care Act. Walden has been a long-time supporter of home care and hospice, but he hasn't been part of the committee's Medicaid Task Force.

The Energy and Commerce Committee is expected to hold immense influence next Congress. With its jurisdiction over issues related to health, energy, telecommunications and internet policymaking, the panel will have a role in several high-profile Republican efforts, including repealing and replacing the 2010 health care overhaul. The committee also will seek to reauthorize a user fee program at the Food and Drug Administration that funds almost half of the agency’s activities and is expected to weigh an overhaul of requirements for biofuels, among other items. Thursday’s outcome now sets off a scramble for who will head the six subcommittees, and one key race will be for chairman of the health subcommittee.

Rep. Richard Neal (D-MA) was officially chosen last Friday as the next top Democrat on the House Ways and Means Committee. Neal, who will replace Rep. Sandy Levin (D-MI), drew the backing of both the Democratic steering committee and the unanimous support of the full caucus. Neal, known for working across the aisle at Ways and Means, pitched himself to colleagues as having the policy expertise for the position, but also the ability to channel the white working class voters and middle-class voters who defected from Democrats earlier this month. The appointment is seen as a positive development for brand drug makers because Neal has defended the industry more aggressively than Rep. Xavier Becerra (D-CA), who was vying for the same position before being named as California attorney general.