Health Policy Report

December 19, 2016

The Week in Review

It was a quiet week in Washington as lawmakers and their staff trickled out of town ahead of the holidays. One event of note was a meeting of the Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC), who approved their recommendations on the reauthorization of the CHIP program. CHIP is currently slated to expire at the end of the 2017 fiscal year – September 30, 2017 – and a full summary of the Commission’s decision is included in our roundup below.

The Week Ahead

Another uneventful week is expected in Washington as the clock winds down on 2016. Barring a surprise development, this will be the last edition of the TRP Health Policy Report for the 2016 calendar year. Both Congress and the TRP Health Policy Report are scheduled to return on January 3, 2017.  

Republicans Plot ACA Repeal Vote for Early 2017

The politically charged environment around ACA repeal leaves the GOP in a difficult predicament when they enter 2017 with control of both the Executive and Legislative Branches of the federal government. Come January 2017, Congressional Republicans can either: (1) use the tools available through budget reconciliation to quickly pass a repeal bill that phases out major ACA provisions over two to three years, and then work fervently to hold hearings, accept stakeholder input, coalesce around the principles for a replacement, draft legislative language, pass a bill, and implement a lengthy comment and rulemaking process; or (2) walk back their campaign promise to repeal the ACA “very very quickly,” and give themselves time for the policymaking process to catch up with their “repeal and replace” rhetoric.

So far, Republican leaders appear willing to accept the political risks of repealing the ACA without a replacement plan on tap. In the House, Speaker Paul Ryan (R-WI) and Majority Leader Kevin McCarthy (R-CA) appear poised to lead an aggressive charge that could put ACA repeal at the top of the priority list when Congress returns in the new year. “The first bill we're going to be working on is our Obamacare legislation,” Speaker Ryan recently said on CBS’s ‘60 Minutes’. “We want to make sure that we have a good transition period, so that people can get better coverage at a better price.”

In the Senate, leadership appears to be reading from the same playbook, and are already positioning themselves to take quick action next year – perhaps even before President-elect Trump is sworn into office on January 20. In a press conference, Majority Leader Mitch McConnell recently said that lawmakers were working on a budget resolution that would be ready by the time Congress reconvenes on Jan. 3.

But as Republican leaders attempt to chart a clear course for ACA repeal, warring factions inside the party – including a few influential voices – are questioning the approach being mapped by party bosses. Senate HELP Committee Chairman Lamar Alexander (R-TN) – who coined the transposed phrase “replace and repeal” – has set a marker as one of the more cautious voices in the GOP over their tactics on healthcare reform. “I agree with President-elect Trump, who said those things should be done simultaneously,” Alexander said recently. Likewise, Sen. Susan Collins – one of two Republicans who voted against the reconciliation-repeal bill that Congress passed in 2015 – has said that she may not vote to repeal the ACA without a detailed replacement. With an incoming majority of just 52-48, Senate Republicans will effectively have to sell every one of their members on their repeal strategy, as just a couple of defections could torpedo their efforts.

President Obama Signs 21st Century Cures Bill into Law

Last Tuesday, President Obama signed what is among the largest healthcare packages since the Affordable Care Act into law, capping more than a year of bipartisan negotiations on the 21st Century Cures Act.  The sweeping package of biomedical innovation bills also included legislation to improve U.S. mental health care, funding for several of the administration’s key health initiatives, and money to help states combat the opioid epidemic.

The nearly 1,000-page legislative package alters the way some products gain Food and Drug Administration (FDA) approval, including placing a greater emphasis on patients' perspectives in the review of drugs. It also establishes an abbreviated new pathway for innovative medical devices, similar to a program that currently exists for prescription drugs. Additionally, the measure changes the leadership structure at the Substance Abuse and Mental Health Services Administration (SAMHSA) and imposes several new transparency requirements on the National Institutes of Health (NIH). Language included in the final package creates and reauthorizes grants for state and community mental health care and encourages more representation from certain populations in clinical trials.

The “Cures” act will direct $4.8 billion in funding to the NIH over 10 years, specifically for programs including President Obama’s Cancer Moonshot Initiative. It also will direct $500 million over nine years to the FDA and $1 billion to states over two years to help fight prescription drug abuse, although appropriators will still have to sign off on the use of that funding in future years. A previous version of the legislation that passed the House last year (H.R. 6) would have provided a mandatory stream of money for the NIH and the FDA. The funding mechanism in the final bill that Obama signed drew criticism from some Democrats because appropriators each year would need to approve the money that sits in several “innovation” accounts which fall outside of yearly budget caps.

Senate Finance Republicans Seek GOP Governor’s Input on Future of Medicaid

GOP governors were invited last Tuesday by the Senate Finance Committee to provide their perspective and feedback on future changes to Medicaid ahead of a planned roundtable discussion in January. The program, which consumes a sizable chunk of state budgets nationwide, will be susceptible to a partial repeal, as the GOP majority plans to roll back the 2010 health law that allowed states to expand eligibility for Medicaid. Senate Finance Republicans addressed their letter to members of the Republican Governors Association, a group that largely opposed the Medicaid expansion of the 2010 law. Although many Republican governors chose to expand the program, even those that chose not to have seen a significant increase in the Medicaid rolls.

The letter addresses the need to continue “quality care” for vulnerable citizens, but asks for assistance in “reflecting” on increased flexibility under state power and factors that “inhibit innovation.” President-elect Donald Trump has selected Seema Verma as his nominee for chief of the Centers for Medicare and Medicaid Services (CMS) – a consultant who helped negotiate an expansion deal for Indiana’s GOP leaders. Seema Verma is expected to be more open to alternative ideas that leaders in other states will present for their Medicaid programs.

Many of the concerns voiced by lawmakers stem from fear that federal and state offices will face budget woes if they seek to allow Medicaid programs that expand coverage. Even before the ACA expansion, significant federal money previously supported state efforts to test new approaches to expanding health coverage through Medicaid, and given GOP lawmakers’ campaign calls for restraining federal spending, states are unlikely to receive much further help of this kind. That will lead to jockeying for available funds, which industry experts have described as “a massive state-by-state formula fight."

Marketplace Sign-Ups Close to Last Year; Deadline Extended Through Dec. 19

The Centers for Medicare and Medicaid Services (CMS) announced last Wednesday that more than four million people had signed up on the Affordable Care Act (ACA) Exchanges as of Dec. 10. Of the four million sign-ups that have taken place since Nov. 1, 1.1 million have been from new customers and 2.9 have been individuals renewing coverage. The sign-up period has been open for six weeks. About 150,000 more people had signed up for coverage in the first six weeks of enrollment last year. But that period was two days longer than the six-week enrollment period this year, and when comparing sign-ups day-by-day, CMS reports there are more than 250,000 enrollees now compared to last year. Additionally, more applications have been submitted so far this year, with 6.4 million consumers submitting applications compared to 6.1 million applications submitted at this time last year. CEO Kevin Counihan announced last Thursday that consumers in the 39 federally facilitated marketplace states will now have through midnight Monday (Dec. 19) to complete their application and sign up for coverage effective Jan. 1. Counihan said nearly 1 million consumers left their contact information with the Exchange as enrollment surged in advance of the prior Thursday (Dec. 15) deadline. The move came after both California's and New York's state exchanges extended their own deadlines through Saturday (Dec. 17), citing increased demand.

CMS officials said Monday and Tuesday of the past week had been two of the busiest days of any open enrollment period, with more than 700,000 sign-ups. This year, HHS tried to make consumers aware of the subsidies they are eligible for, an effort to counter news of significant premium increases in some parts of the country. Regardless of Republican plans to “repeal and replace,” the Obama administration continued to push consumers to sign up for coverage this year, with President Obama using his weekly address to encourage enrollments ahead of Thursday’s deadline.

MACPAC Recommends Five-Year CHIP Funding Reauthorization

Last week, the Medicaid and Children’s Health Insurance Program (CHIP) Payment and Access Commission (MACPAC) voted on its recommendations to Congress related to the funding reauthorization for the CHIP program as part of the Commission’s December meeting. The series of recommendations come ahead of the expiration of CHIP funding authority at the end of the 2017 fiscal year – Sept. 30, 2017 – and Congress’s impending deliberation on CHIP funding reauthorization. Broadly, the recommendations call for a five-year extension – through FY 2022 – of federal funding for CHIP in order to maintain coverage for the children currently reliant on the program.

Commissioners approved the recommendations on a 16-1 vote with Commissioner Christopher Gorton of the Tufts Health Plan being the only dissenting vote. However, many Commissioners offered reservations on their vote, which will be reflected in the formal recommendation given to Congress. Foremost among those reservations was the sense that extending the maintenance of effort requirements and enhanced federal matching rate for five years will further federalize CHIP.