Health Policy Report

February 13, 2017

The Week in Review

The Senate spent most of the last week working to confirm President Donald Trump’s nominees to top administration posts, spending a total of 90 hours of debate to confirm three key cabinet officials: Betsy DeVos as secretary of Education, Sen. Jeff Sessions (R-AL) as attorney general, and Rep. Tom Price (R-GA) as head of the Health and Human Services Department. During the debate on Sessions, Senate Republicans stopped Sen. Elizabeth Warren (D-MA) from participating, invoking the rarely used Rule 19, after they said she “impugned” the character of her fellow-Senator. Despite the made-for-TV theatrics, Sessions was ultimately confirmed on a party-line vote, and Gov. Robert Bentley (R-AL) appointed his state's attorney general, Luther Strange, to replace Sessions in the Senate.

The House had an abbreviated week in Washington, as House Democrats spent a few days in Baltimore for their annual retreat. They discussed their role as an opposition party, and a review led by Rep. Sean Patrick Maloney (D-NY) on the party's House campaign arm's 2016 performance.

The most-high profile development last week may have been related to President Trump's travel ban, which will remain on hold this week after a three-judge panel rejected the administration's appeal of a lower court ruling blocking the order. The administration is reportedly not currently planning to take its appeal to the Supreme Court, and is instead considering issuing a new, tweaked executive order. Meanwhile, Trump's recently-announced Supreme Court nominee Neil Gorsuch was said to have told senators he was "disheartened" by the president's disparagement of the Seattle judge who ruled against him on the travel ban. While Gorsuch's spokesman initially confirmed those comments, an eventual walkback followed public criticism and denials from Trump and White House officials.

The Week Ahead

The Senate returns today for a fourth straight week of partisan debates over President Donald Trump’s Cabinet nominations, with a vote planned today on Treasury Secretary-designee Steven Mnuchin. Later in the week, the upper chamber will turn to David Shulkin’s nomination to be Veterans’ Affairs secretary and then to Linda McMahon, Trump’s pick to lead the Small Business Administration. Also waiting in the wings for confirmation are two Republican congressmen, Mick Mulvaney (R-SC), nominated to lead the Office of Management and Budget (OMB), and Ryan Zinke (R-MT), Trump’s pick to lead the Department of the Interior. Former Texas Governor Rick Perry (R-TX) awaits confirmation to head the Energy Department, as does Oklahoma Attorney General Scott Pruitt, tapped to lead the Environmental Protection Agency. Democrats have stretched out debate on many of Trump’s Cabinet choices, requiring procedural votes and overnight debate before Republicans could confirm them along party lines.

In the House, Members will continue their effort to scrap a slate of Obama-administration regulations. Under the powers of the Congressional Review Act, the House plans votes to walk back five separate rules related to: (1) drug testing of certain unemployment compensation applicants (H.J. Res. 42); (2) a predator hunting rule from the U.S. Fish and Wildlife Service (H.J. Res. 69); (3) federal funding of family planning services (H.J. Res. 43); (4) auto-enrolling employees in state-run retirement plans (H.J. Res. 66); and (5) allowing large cities and counties to set up auto-enrollment retirement savings programs (H.J. Res. 67).

The House may also consider a bill (H.R. 428) which would direct the Bureau of Land Management to resurvey roughly 30,000 acres of federal land along the Red River and the Texas-Oklahoma border. Ownership of much of the land is disputed between the federal government and adjacent Texas landowners. The bill would effectively resolve the conflict in favor of the private landowners.

Reports: House GOP Leaders Float ACA Replacement Framework

As uncertainty about the timing of a Republican plan to replace the Affordable Care Act (ACA) came to a head last week following comments from President Donald Trump that a replacement will “maybe take ‘til sometime into next year,” House GOP leaders are working to quickly coalesce around the framework for a set of ACA replacement and market stabilization policies that could be advanced via reconciliation. Based on our discussions with key Republican staff, four replacement measures are currently under consideration, with a tentative goal to begin work in the relevant committees by the end of February.

The four key policies in the House Republican framework include: expanding Health Savings Accounts, enacting high-risk health insurance pools, reforming Medicaid, and authorizing tax credits to help Americans buy insurance policies. While some staff members have suggested that Congress isn’t moving as fast as these rumors indicate, other Hill sources have indicated there is a chance a House repeal package will be announced as early as this week, possibly in coordination with the confirmation of Rep. Tom Price (R-GA) as Secretary of Health and Human Services (HHS).

With respect to the legislative process, Congressional sources familiar with the plan have reported that the replacement policies would be rolled into a single measure to repeal the Affordable Care Act, which will be taken up and passed using budget reconciliation – an expedited process requiring only 51 votes for passage in the Senate. The emerging plan depends on the favorability of the Senate parliamentarian, who will have the deciding voice in determining whether or not the replacement pieces meet the standard for consideration in the Senate.

The refundable tax credits under consideration reportedly mirror the policy House Republican leadership included in its “Better Way” agenda last year, according to sources familiar with the plans. In regard to high-risk pools – where the particulars are especially important – few details have been provided around important decisions such as funding levels. These discussions remain extremely fluid, and the reports outlined above reflect only rumors and intelligence gleaned from conversations with Members of Congress, Hill staff, and GOP-backed replacement plans.

GOP Looks to Chart Course on Medicaid Reform

Medicaid is proving to be among the most complex challenges for the Republican ACA replacement plan. The GOP has proposed imposing per capita caps – spending caps tied to certain categories of people covered by Medicaid – but face significant hurdles in finalizing the details of such a plan. Among the key points of contention: determining whether base-year funding should be set based on enrollment before the ACA’s Medicaid expansion, or after. In order to bypass opposition by Democrats, Republicans will need to utilize reconciliation in the Senate or would have to peel off at least eight Senate Democratic votes to overcome an anticipated filibuster. Furthermore, it’s unclear whether Republicans will attempt to sort out the details to fully develop the policy before repeal, or if smaller Medicaid reforms can instead be attached to the repeal bill. 

Among the options under discussion to reform the state-federal health insurance program for lower income Americans is tacking the provisions onto a separate funding renewal for the historically bipartisan Children's Health Insurance Program, according to sources familiar with the negotiations. Getting Medicaid reform tacked onto such "must pass" legislation is seen as the most likely path, but there are limited options this year for that approach, including renewal of the Food and Drug Administration user fees, the likely-to-pass ACA reconciliation bill, and the previously mentioned CHIP funding.

Another Republican proposal for reform, block granting Medicaid, could save the federal government up to $150 billion. Changing the way Medicaid is financed to allot states a set amount of federal support could result in $150 billion less in federal Medicaid spending over five years, according to an analysis released Monday by a health care consulting group. Shifting to per capita caps could also save $110 billion over five years. So far, minimal legislative action has been seen regarding reform, as only two bills, H.R. 829 and H.R. 181, concerning minimal changes affecting eligibility have advanced to the House Energy and Commerce Committee.

House Panel Delays Markup of Drug Pricing Bill

The House Energy and Commerce Subcommittee on Health delayed a vote on the Lower Drug Costs Through Competition Act (H.R. 749) last week, despite comments from full Committee Chairman Greg Walden (R-OR) indicating that they would do so. While the bill was originally slated to be considered at a markup last Tuesday alongside two other healthcare-related measures, a Committee press release was been updated to indicate that the panel will vote on H.R. 749 “later this month” rather than “[last] week” – as it had previously stated, in order to allow for a full hearing on the bill in which outside stakeholders will have the opportunity to air their opinions.

The Schrader-Bilirakis bill would create a priority review voucher (PRV) to award development of generics for branded drugs currently without competition. The bill would also add new requirements for receiving a voucher under the tropical PRV program, and would mandate a study be completed on the impact of Risk Evaluation and Mitigation Strategies (REMS) on the generic marketplace and drug pricing.

In a statement, Chairman Walden indicated that the delay was instituted at the behest of Committee Democrats, but relayed that he was eager to move forward with the efforts to lower the costs of pharmaceuticals. Some Democrats have expressed concern that the legislation may be more closely aligned with the wishes of innovator drug makers rather than generics makers, and claim the bill represents an attempt to the attachment of drug pricing measures to the upcoming user fee reauthorization. Indeed, Rep. Walden mentioned that the bill was discussed during a recent meeting between President Trump and brand-name executives and the Pharmaceutical Research and Manufacturers of America (PhRMA), although sources close to the Chairman cited the bill's bipartisanship and support from last session as the reasons it was raised.

The Generic Pharmaceutical Association (GPhA) hesitated last week to throw its full support behind the bill. Among its reasons, GPhA has questioned how FDA would redeploy its resources to meet the demands of the new PRV program, and industry experts have warned the program may not actually give manufacturers an approval timeline that is any quicker than that agreed upon in the newest user fee agreement.

Tom Price Confirmed as HHS Secretary

The Senate confirmed Rep. Tom Price (R-GA) to serve as secretary of Health and Human Services during a 2 a.m. vote Friday, although no Democratic senator supported Price in the final 52-47 count. The Confirmation comes after the chamber voted along party lines last Wednesday evening to advance the controversial Secretary of Health and Human Services nominee to a final confirmation vote. Republicans say their plans to repeal the landmark 2010 Affordable Care Act depend largely on Price taking control of the Department of Health and Human Services (HHS), as many policy changes can be made administratively.