Health Policy Report

The Week in Review

President Donald Trump’s 100^th day in office was met with little fanfare as a possible House vote on the Republican health care package was delayed and lawmakers punted a government funding decision, ultimately approving a weeklong stopgap spending bill on Friday to avert a government shutdown. Lawmakers have been negotiating on the omnibus package for weeks, with Democrats demanding funding be removed for Trump’s border wall and pressing for commitments from the Trump administration to continue making certain Obamacare payments to health insurers. On the healthcare front, an amendment to the American Health Care Act (AHCA) that would allow states to opt out of some consumer protections helped win the support for the bill from the hardline Freedom Caucus and influential conservative groups, but moderate Republicans continue to hold concerns and negotiations are ongoing as to how to bring them on board.

An agreement on funding the government for the remainder of Fiscal Year (FY) 2017 was finally struck last night, as congressional leaders announced they would move forward with a deal that does not provide funding for construction of a wall along the U.S.-Mexico border or eliminate money for so-called sanctuary cities. In a win for Republicans, the measure provides $1.5 billion for border security and $15 billion in additional defense funding – short the $30 billion in supplemental military funding President Trump requested in his budget blueprint. The defense increase is matched by a boost to non-defense programs for a total of $30 billion in additional funding over the sequester level set by a previous budget deal.  The National Institutes of Health will also see a $2 billion funding increase. It is anticipated that Congress will pass the package by May 5, when the short-term stopgap approved last week runs out. 

Setting up another major political fight later this year, the Trump administration released the framework of a plan to rewrite the U.S. tax code. The proposal calls for cutting corporate and individual taxes, but would eliminate popular deductions for state taxes. The outline did not include the House GOP's controversial border adjustment tax proposal. Democrats have generally opposed the policies outlined in the White House proposal, and Senate Finance Committee Ranking Member Ron Wyden (D-OR) released a statement calling the proposal an “unprincipled tax plan that will result in cuts for the one percent, conflicts for the President, crippling debt for America, and crumbs for the working people.” A timeline on when the package may be considered remains unclear, and most analysts have viewed the proposal as a start to negotiations rather than a realistic picture of a final package.

The Week Ahead

Moving a government funding package through Congress will be a top priority for lawmakers this week, a task that has become significantly easier after top negotiators appeared to reach a deal on Sunday night. Along with the broad framework outlined above, the package will also include several policy riders, including: $295 million to cover a Medicaid funding shortfall in Puerto Rico; money to permanently extend health benefits for retired coal miners; $2 billion in disaster funding for California, West Virginia, Louisiana and North Carolina; $407 million for wildfire funding to western states; and funding for the northeast Amtrak rail corridor, the Individuals with Disabilities Education Act and Head Start, an early education program for disadvantaged kids.

In the House, lawmakers will consider legislation to authorize new sanctions against North Korea amid heightened tensions. The bill authored by House Foreign Affairs Committee Chairman Ed Royce (R-CA) targets North Korea’s shipping industry and individuals who employ North Korean slave labor abroad. Last month, the House easily passed legislation directing the State Department to determine whether North Korea is a state sponsor of terrorism. This week’s measure also orders the Trump administration to report to Congress within 90 days whether North Korea should be re-designated onto the state sponsors of terrorism list. 

The Senate, meanwhile, will take up Jay Clayton's nomination to be a member of the Securities and Exchange Commission. Senators will take an initial vote on Clayton's nomination this evening, setting up a final vote for as late Wednesday morning. Clayton was approved by Senate Banking Committee last month with the support of three moderate Democrats. Other Democrats, though, have raised concerns that Clayton is too close to Wall Street to join an agency that is charged with helping regulate it. Nonetheless, Clayton is considered less controversial than some of Trump’s other nominees, and Republicans only need a simple majority for the nomination to clear the Senate.

GOP Leaders Release Updated ACA Repeal Plan; Fate Still Uncertain

House Republican leaders released an updated plan to revive the AHCA last week. The White House was optimistic that these latest changes to the stalled healthcare plan – put forward in an amendment by Rep. Tom MacArthur (R-NJ), co-chair of the moderate Tuesday Group – would help secure the roughly 15-20 additional House Freedom Caucus votes necessary to clear the goal post in the House. But House Speaker Paul Ryan (R-WI) decided that any vote on the bill would be delayed until this week at the earliest after a number of Republican moderates announced their opposition to the bill following changes allowing states to opt out of key Obamacare insurance regulations. Specifically, under certain conditions, states could apply for a waiver allowing them to opt out of: (1) the essential health benefits (EHB) provisions, which require minimum coverage requirements, and (2) the community rating rules, which ban insurance companies from charging more to individuals based on pre-existing health conditions.

Early indications suggested that GOP centrists were still wary last week, despite the involvement of Rep. MacArthur in crafting the latest changes. Per The Hill, a whip count at the end of last week showed at least 21 House Republicans voting “no” on the bill, and senior Republicans returning from a Ways and Means retreat over the weekend expressed privately that are “5 or 6 votes short.” Republican leaders are reportedly weighing another amendment designed to court moderates that would provide additional high risk pool funding, although it remains to be seen how much funding would be needed in order to gain the approval of those currently leaning against the bill. Additionally, opponents of the bill worry that the GOP is rushing a vote, as the nonpartisan Congressional Budget Office (CBO) told House Minority Leader Nancy Pelosi's (D-CA) office last Thursday that a score of the bill would not be ready this week.

Administration to Continue ACA Cost-Sharing Subsidies, For Now

The White House reached an agreement with Democratic leaders to continue paying roughly $7 billion a year in Affordable Care Act (ACA) cost-sharing reduction (CSR) payments to insurers, although the duration of its commitment to continue making the payments remains unclear. The agreement follows an ongoing stand-off between Democrats and Republicans, with Democrats asserting the cost-sharing subsidies be funded in exchange for avoiding a government shutdown. The reports came on the heels of remarks made recently by House Speaker Paul Ryan (R-WI) that the subsidies would not be included in the current spending bill, signifying just how fluid and contentious the issue has been thus far.

The insurance industry has been pushing for the subsidies to be funded through a congressional allocation, which would give them more certainty as they are deciding on their participation the marketplace next year. Right now, the administration is making the payments while a pending court case is on hold, but if the White House chose to drop the lawsuit, the current ruling – that the payments must be made through a congressional allocation – would stand, and the payments would stop.

House Democratic Leader Nancy Pelosi (D-CA) released a statement confirming the White House’s decision to continue CSR payments. However, as Politico pointed out, “[i]t was not immediately clear how long the White House planned to keep the money flowing.” Health Insurer Molina made clear last week that it would withdraw “immediately” from the ACA Exchanges if the CSR payments disappear, and signaled that many are not satisfied with the short-term answer from the White House.

Senate HELP Committee Advances FDA Nominee Scott Gottlieb in a 14-9 Vote

The Senate Committee on Health, Education, Labor, and Pensions (HELP) advanced the nomination of Dr. Scott Gottlieb to serve as the Commissioner of the Food and Drug Administration (FDA), last week. Members voted 14-9 to advance Dr. Gottlieb’s nomination for a final confirmation vote on the Senate floor. All Republican members and two Democrats – Sheldon Whitehouse (D-RI) and Michael Bennet (D-CO) – voted yes.

During the hearing, lawmakers sparred over whether Dr. Gottlieb will be able to separate his interests from those of the industry he would be in charge of regulating, given his financial interests. Democrats expressed doubts he will be able to separate himself from the more than two-dozen drug and medical device companies he's either invested in or consulted for. Republicans argued his experience in the healthcare field as a former physician and consultant is what makes him qualified for the job as FDA commissioner. Dr. Gottlieb has promised to recuse himself for one year from FDA matters that directly impact the companies he's tied to, and divest his financial interests.

Medicare Sees Small Increases for Hospice, Post-Hospital Care

Thursday, the Centers for Medicare and Medicaid Services (CMS) issued proposed rules updating fiscal year (FY) 2018 payments for hospices, inpatient rehabilitation facilities (IRFs), and skilled nursing facilities (SNFs). The agency also issued an advanced notice of proposed rulemaking (ANPRM) on potential changes to the case-mix methodology used in the SNF prospective payment system (PPS). The unveiled draft payment rules keep the fiscal 2018 reimbursement for the three sets of services relatively flat, with 1 percent increases predicted.

Within each of the FY 2018 proposed rules, CMS includes a Request for Information seeking ideas on “clear and concise proposals” on how to “increase quality of care, lower costs, improve program integrity, and make the health care system more effective, simple and accessible.” CMS expresses a particular interest in “incentivizing organizations and the full range of relevant professionals and paraprofessionals to provide screening, assessment and evidence-based treatment for individuals with opioid use disorder and other substance use disorders, including reimbursement methodologies, care coordination, systems and services integration, use of paraprofessionals including community paramedics and other strategies.” CMS said that payment for skilled nursing facilities might rise by $390 million in total, while those for inpatient rehabilitation facilities could increase by $80 million. The total gain in hospice cost could be $180 million

CMS will accept comments on these proposals, and will likely issue final versions in late July.