Health Policy Report (9/7)

September 7, 2021

Capitol Hill Update

House lawmakers are set to convene for another week of committee work, with the bulk of this week’s activities focusing on reconciliation markups. The House Ways and Means Committee will kick off its four-day markup on Thursday, along with the Committees on Education & Labor, Science, Space & Technology, Small Business, and Veterans’ Affairs. Members on Ways and Means are scheduled to resume their work on Friday, with the Agriculture and Homeland Security Committees set to hold reconciliation markups as well.

House committees are instructed to report out their specific reconciliation language by September 15, but timing on the floor vote could slip into October due to lingering disagreements between the centrist and progressive wings over the $3.5 trillion benchmark. In a Wall Street Journal op-ed last Thursday, Sen. Joe Manchin (D-WV) on Congress to “hit a strategic pause” on the multi-trillion-dollar measure until there has been a more thorough review of legislation’s impact on the current economic landscape. The piece drew the ire of several progressive House lawmakers who have vehemently championed the proposed investments in health care, climate, education, and housing. Democratic leadership has a tall task ahead of them in the coming weeks ahead and will need to carefully navigate intraparty negotiations before a final package and floor strategy emerge.

Medicare Trustees Publish 2020 Report

Last week, the Medicare Board of Trustees released their annual report (fact sheet) for Medicare’s two separate trust funds: (1) the Hospital Insurance (HI) Trust Fund; and (2) the Supplementary Medical Insurance (SMI) Trust Fund. The report maintains its previous assertion that the HI Trust Fund will be depleted by 2026, at which point Medicare Part A is projected to only have the ability to pay 91 percent of estimated expenditures in 2026 and 78 percent in 2045. Meanwhile, the SMI Trust Fund is expected to be adequately financed for the next 10 years since the fund is financed by general revenues and beneficiary premiums. As such, the burden to support the SMI fund will increase for taxpayers and beneficiaries as costs continue to rise. The Trustees’ best estimates of the effects of the COVID-19 pandemic are reflected in the report, though they assume that the pandemic will have no enduring impact on long-range assumptions. The report emphasized that Congress should act with a “sense of urgency” to address these issues, noting that early introduction of reforms will allow health care providers, beneficiaries, and taxpayers adequate time to adjust. 

The report comes onto the scene as Democrats attempt to pass a $3.5 trillion reconciliation package that would expand Medicare coverage for dental, vision, and hearing services. Centrists including Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) may harness the Trustees’ report to argue for more moderate spending in the package, while Republicans will likely leverage the report to turn public opinion against the Democrats’ spending bill. Senate Finance Ranking Member Mike Crapo (R-ID) underscored last week that the delayed timing of this report “is especially troublesome given the massive amount of legislation contemplated by one side in Congress, in willfully partisan reconciliation exercises, that may impact important Medicare program.” On the other hand, liberal Democrats point to Medicare insolvency as an indicator that preventative care coupled with drug price negotiations in the package will help to remedy the issue. Senate Finance Chair Ron Wyden (D-OR) said in a statement that “while the projected depletion of the Medicare Trust Fund remains unchanged from last year’s report, this provides cold comfort to the millions of Americans who rely on the Medicare program for their health care.” House Ways and Means Chair Richard Neal (D-MA) echoed these sentiments in his press release.  

FDA to Issue Rules Independently of HHS

This past Wednesday, Department of Health and Human Services (HHS) Secretary Xavier Becerra revoked a Trump-era regulation issued in September of 2020 requiring HHS to sign off on the Food and Drug Administration’s (FDA’s) policies prior to implementation. Fast moving COVID-19 vaccine developments and a desire to tightly control the process catalyzed the Trump administration’s requirement for FDA. Under Trump, the two agencies were sometimes at odds over vaccine and testing developments, and the rule allowed HHS to override FDA and allow unproven COVID tests on the market. Preceding this 2020 policy, FDA had not been required to check with HHS before issuing rules.

Now that the rule has been repealed, FDA can issue rules without worry that HHS will override the Agency. This regulatory change occurs as FDA navigates the Biden administration’s COVID-19 booster plan amidst controversies. Some experts believe that a booster plan is premature, and two top vaccine regulators resigned last Tuesday. One of the officials confirmed that their departure from the Agency was based on how the booster policy is transpiring. Additionally, former FDA Commissioner Scott Gottlieb recently voiced his discontent with the Centers for Disease Control (CDC), accusing the Agency of violating FDA’s jurisdiction over boosters.

Biden Administration to Provide $3 Billion for Domestic Vaccine Supply Chain

As the country gears up for COVID-19 booster distribution, the Biden administration is investing about $3 billion to help American companies bolster the vaccine supply chain. Investments include production lines and facilities, critical supplies including lipids, bioreactor bags, tubing, personal protective equipment (PPE), and plants to produce these items. White House COVID-19 Response Coordinator Jeff Zients said that the administration has yet to discern which companies will receive funding, though it will be conducted via the contracting process within the next few weeks.

While Zients noted that this increased capacity would enable the U.S. to continue producing vaccines for the rest of the world, the investment is not unanimously supported. Many are concerned that prioritizing booster shots over initial vaccinations for people around the world promotes vaccine inequity and enables the emergence of new variants. In late August, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus voiced his disdain for booster development and called for a two-month moratorium on booster shots. National Institute of Allergy and Infectious Diseases (NIAID) Director Anthony Fauci joined the conversation as well. He stressed that countries providing booster shots to their residents should follow the U.S.’s lead in donating vaccine supplies.

MedPAC Commissioners Prepare to Scrutinize MA Plans

In the first session of the Medicare Payment Advisory Commission’s (MedPAC’s) September meeting, commissioners discussed short- and long-term health care spending trends. The conversation covered the impact of COVID-19 on beneficiaries as well as national and Medicare spending trends. Commissioners discussed several key policies that contribute to significant portions of Medicare spending, including Medicare Advantage (MA) plans, low-value care, and overuse of services. Staff and commissioners deliberated these issues just one day after the Medicare Board of Trustees released their report. Commission Chair Michael Chernew and Vice Chair Paul Ginsburg stressed that the commission needs to be “aggressive” and take “bolder action” to reduce costs. Chair Chernew also emphasized the need to drive down costs, saying that “we will not be shy” when making recommendations in December.

The commission focused on evidence that spending per beneficiary is growing faster in MA than Medicare fee-for-service (FFS) and Part D. FFS spending experienced a four percent growth rate between 2011 and 2019, MA plans grew at a rate of 6.9 percent. The Kaiser Family Foundation also found that MA makes up 42 percent of Medicare beneficiaries and 46 percent of all federal Medicare spending. In the MedPAC meeting, commissioners expressed interest in a comparison between the cost breakdown of FFS and MA components to help the commission target areas for cost reduction in MA as well as an examination of MA benchmark policies including coding issues and 115 percent benchmark areas.