TRP Health Policy Report
September 22, 2014
Following the November 4 elections, members of the House and Senate are expected to return for two weeks before breaking for the Thanksgiving holiday. Congress could then next be in session in December, when work will continue on appropriations, expired tax provisions and curbing corporate inversions. Other issues that could be considered during the lame-duck session include defense and intelligence operations reauthorizations, terrorism risk insurance (TRIA) reauthorization as well as bills related to commerce, sanctions and trade.
Bipartisan House Bill Would Exempt Indirect Payments for CME from Reporting
Last Friday, Reps. Michael Burgess (R-TX) and Allyson Schwartz (D-PA) introduced bipartisan legislation (H.R. 5539) to exempt indirect payments that drug and device manufacturers offer to continuing medical education (CME) providers from Sunshine Act reporting requirements. If enacted, Burgess sand Schwartz said the legislation would reverse CMS's plan to do away with the exemption. A provision of the Affordable Care Act, The Physician Payments Sunshine Act requires companies to inform CMS about payments to physicians in an effort to boost transparency and discourage conflicts of interest. The Open Payments system is designed to let physicians review and dispute what drug and device makers say they have given them before the information enters the public domain.
The bipartisan bill came a day after Reps. Burgess and Frank Pallone (D-NJ) sent a letter to CMS, voicing concern about the agency's plan to eliminate the CME exemption in the Sunshine Act's Open Payments program. Burgess and Pallone, who sit on the House Energy and Commerce Health subcommittee, said the proposal to do away with the CME-specific exemption in favor of another provision of the Open Payments program would cause confusion for CME providers and have a negative impact on medical professionals. The lawmakers join an overwhelming number of CME stakeholders asking CMS to reconsider its proposal. According to the CME Coalition, 98 percent of the more than 900 comments submitted to CMS favored keeping the exclusion in place. The CME Coalition estimates that requiring reporting of indirect payments from manufacturers would cost CME providers nearly $200 million over three years in administrative costs.
House Approves Bill to Repeal, Refund Medical Device Tax
Last Thursday, the House passes a jobs package (H.R. 4) that would repeal the medical device tax and issue refunds for all levies paid since the 2.3% excise tax went into effect last year. The House voted 253-163 to approve the “Jobs for America Act,” a package of bills that had already passed the lower chamber. The Joint Committee on taxation estimates that repealing and refunding the medical device tax will cost $4.48 billion in revenues in fiscal 2015 and $25.74 billion over fiscal years 2015-2024. But estimates on how much the tax would raise have varied significantly with federal officials projecting that the tax will raise about $30 billion over 10 years and medical device groups estimating the cost at $1 billion during the first 6 months of last year.
In August, an audit by a U.S. Treasury inspector general found that the IRS is having difficulty determining which companies are even subject to the tax. The IRS collected a little more than $913 million during the first half of 2013, well below the $1.2 billion it expected to generate from the device tax. Rep. Erik Paulsen (R-MN) – a lead sponsor of device tax repeal in the House – said the IRS report and the tax’s damaging effect on the medtech industry show that the time is right for repeal. But it remains to be seen whether a lame-duck Senate will take up a jobs bill that would roll back a portion of the Affordable Care Act. While there is bipartisan support for repealing the medical device tax – including a symbolic 79-20 Senate vote for repeal last year – Senate majority leader Harry Reid (D-NV) has been opposed to making any changes to the 2010 health law. Still, Rep. Paulsen said he's optimistic that the upper chamber will follow through if Senate Democrats push for a vote on the House jobs package.
Report: 7.3M U.S. Residents Have Paid Exchange Plan Premiums
Last Thursday, CMS announced that 7.3 million people who signed up for coverage through the Affordable Care Act's insurance exchanges paid their premiums, effectively completing their enrollment. The figure includes individuals who completed the process by mid-August, including those who signed up during special enrollment periods because of qualifying life changes. The number still falls short of the eight million enrollees the Obama Administration had reported in mid-April. During a House Committee on Oversight and Government Reform hearing, CMS Administrator Marilyn Tavenner said the new number is lower because “[i]ndividuals may have gotten employer-sponsored insurance or found out they were eligible for Medicaid, and some individuals may have decided not to go forward and pay.”
Tavenner said the Administration does not know how many individuals failed to pay their premiums, but it should have such information by the end of the year. She also acknowledged that some might have joined “the ranks of the uninsured.” Still, Tavenner said she “think[s] 7.3 million is a strong number. She added that the majority of ACA enrollees who obtained private insurance coverage through the exchanges pay “$100 or less per month” for their plans and “nearly half of individuals selecting plans with tax credits in the federally facilitated marketplace — specifically, 46% — were able to get covered for $50 per month or less.” Despite the encouraging numbers for the White House, CMS confirmed that federal computer systems are still not able to track the number of enrollees, relying instead on monthly reports from insurers.
ACO Programs Save Medicare More than $800 Million, CMS Says
According to new financial performance results from CMS, 64 of the 243 Medicare accountable care organizations (ACOs) that launched in 2012 have saved enough to earn bonuses. Included in the 2010 health law, ACOs seek to save money and enhance patient care through better coordination among healthcare providers. Released last Tuesday, CMS’s findings are from two ACO programs: the Medicare Shared Savings Program and the CMS Innovation Center's Pioneer ACO program. The agency reported that – all told – ACOs have reduced Medicare spending by $817 million. The 64 ACOs received a combined $445 million in bonuses, while Medicare saved the remaining $372 million.
CMS’ findings come amid questions about the long-term viability and effectiveness of ACOs. Critics have called the program fatally flawed, and as of earlier this month, Medicare's “Pioneer” initiative had dropped from 32 to 22 participants. ACOs that stopped participating cited concerns about financial stability given the requirement to pay the CMS if their price of care goes up. Analysts quickly noted that the ACO bonuses and Medicare savings are very small in the context of a program that spends $500 billion annually on care for the elderly and disabled. But the White House views the results so far as evidence that reorganizing the financial incentives for doctors and hospitals can translate to substantial savings if the program expands nationwide. According to CMS, there are currently more than 360 Medicare ACOs caring for about 5.6 million elderly Americans.
Census Data Puts Uninsured at 13.4% in 2013
Last Tuesday, the Census Bureau reported that approximately 13.4% of Americans were uninsured in 2013, an indication that the number of people without health insurance dropped in early 2014 – the first year the major provisions of the ACA took effect. However, in an important caveat, the bureau said that comparing 2013 figures with previous years isn't possible because of a change in the questions used. The Census Bureau’s 2013 data is roughly equivalent to an estimate of uninsured for the first quarter of 2014 issued earlier Tuesday in The National Health Interview Survey, released by the Centers for Disease Control and Prevention. The CDC study shows that the percentage of people in the country without health insurance dropped between 2013 and the first three months of this year, from an estimated 14.4 percent to 13.1 percent. The drop was largest among young adults aged 19 to 25 — from an estimated 26.5 percent uninsured last year to 20.9 percent in early 2014. The survey also found significant drops in the uninsured rate among African Americans and Latinos, two groups that have historically had higher uninsured rates than the overall population. The latest 2014 figures offer some indication of how the uninsured rate changed under the ACA, but didn't capture the surge of people who signed up for coverage at the end of the enrollment period – many of whom didn't become insured until May.