TRP Health Policy Report

February 2, 2015
Last Thursday, the Senate voted 62-36 to build the Keystone XL pipeline, delivering Republicans the first legislative victory of their new majority. Nine Democrats joined with Republicans in voting to approve the $8 billion project, five votes short of the two-thirds majority that would be needed to override a promised veto from President Obama. The Senate and House, which passed a Keystone bill earlier this month, must now reconcile differences between their respective measures before final legislation can be sent to the White House. Aides said House Republicans have not decided whether to pass the Senate bill as-is or seek a conference committee, where a final version would be negotiated between the chambers. The House adjourned last Wednesday to accommodate the Democratic retreat in Philadelphia. Before departing, members voted 277-133 to expedite liquefied natural gas exports (H.R. 351) and approved a package of 12 bills to combat human trafficking. In notable healthcare implementation news, the CBO said expanded health coverage under the ACA will cost about $571 billion from 2015 to 2019, down from the $710 billion the budget office predicted in 2010. CBO Director Douglas Elmendorf said the lower cost projections are the result of many factors, including the overall “slowdown in the growth of health care costs” and estimated lower premiums that will be subsidized by the federal government.

The Week Ahead
President Obama will send his fiscal 2016 budget request to Congress today, and Cabinet officials will spend the week explaining the details to House and Senate committees. The Administration’s budget is expected to call for a spending increase for both domestic programs and the military, including $74 billion in additional discretionary spending – about 7 percent above the level set under sequestration. Reportedly, the budget will offset the new spending with a mix of increased revenue and cuts elsewhere. President Obama previously proposed raising $320 billion in taxes over a decade, mostly on top earners, to fund tax breaks for middle class families, child care and education.
In legislative activity, Senate Republicans will try to advance a House-passed Homeland Security funding bill (H.R. 240) that would roll back President Obama’s executive actions on immigration. Senate Democrats uniformly oppose the legislation and seek a “clean” appropriations bill, leaving the bill six votes shy of the 60 needed to advance. The Senate also plans to vote on legislation (H.R. 203) to provide additional transitional mental health and suicide prevention services for veterans. Senate and House Republicans also hope to quickly resolve differences between their bills (S. 1/H.R. 3) to force approval of the Keystone XL pipeline.
In the House, Republicans will again vote to repeal the Affordable Care Act (ACA). The House has already voted three times to modify the health law this month, including to establish a “full-time workweek” of 40 hours instead of 30. Unlike previous repeal bills, this week’s measure (H.R. 596) would also require relevant committees to report replacement legislation. It remains to be seen how Republicans would replace the ACA, but recent proposals have included policies such as portable healthcare coverage, additional support for research and development, medical liability reform, high risk pools, and health savings accounts. The House also plans to consider a series of suspension bills and two measures (H.R. 50/H.R. 527) aimed at easing federal regulations. Among the notable fiscal 2016 budget hearings, Treasury Secretary Jack Lew will appear before the House Ways and Means Committee on Tuesday, and Senate Finance on Thursday. HHS Secretary Sylvia Mathews Burwell will testify before Senate Finance on Wednesday, with a focus on the implementation of the Affordable Care Act.
Energy and Commerce Panel Releases 21st Century Cures Proposal
Last Tuesday, leading Republican members of the House Commerce and Energy Committee released a much-anticipated proposal aimed at speeding up the discovery of new treatments and cures across the U.S. The draft bill, presented under the 21st Century Cure initiative, would make far-reaching changes aimed at streamlining the approval of medical cures, enhancing collaboration and communication between the pharmaceutical drug industry and government agencies, injecting patients' voices into the clinical development and approval process, and modernizing medical product registration.
But Energy and Commerce ranking member Rep. Frank Pallone (D-NJ) and Rep. Diana DeGette (D-CO) spoke out against the proposal, which they said did not reflect true bipartisan collaboration. DeGette’s stance is particularly noteworthy, as she and Energy and Commerce Chairman Fred Upton (R-MI) led more than a year of conversations with patients, doctors, researchers and regulators on the Cures initiative.  Following the E&C panel’s release of a 21st Century Cures discussion draft, Senate HELP Chairman Lamar Alexander (R-TN) and Sen. Richard Burr (R-NC) released a report similarly addressing drug and device discovery, FDA review processes and NIH investment. The Senate HELP report initiates a process drawing on E&C’s 21st Century Cures effort, with Sens. Alexander and Burr anticipating working with Ranking Member Patty Murray (D-WA) on a bipartisan working group and series of stakeholder hearings. Like the Energy and Commerce panel, Senate HELP targets passage of legislation by the end of the year.
President Outlines $215 Million ‘Precision Medicine’ Plan
In related news, President Obama called on Congress to approve $215 million in new medical research that tailors treatment to an individual's genetic makeup. At a White House event last Friday, the President said the ‘Precision Medicine Initiative’ aims to capitalize on technological advances that have made it possible to analyze people’s full genetic composition. First unveiled during the State of the Union address, the initiative would use individuals’ personal health data to find new cures and treatments for diseases like cancer and diabetes. Under the plan, the NIH would get $130 million in new funding for the voluntary-research cohort for genetic study, the National Cancer Institute would get $70 million in new funding to study genetic causes of cancer, the FDA would get $10 million to evaluate new diagnostic devices and drugs, and another $5 million would be devoted to building the computing and privacy components of the genetic data network.
Funding for the Precision Medicine proposal is subject to Congressional approval. Underscoring that fact, the President met last Friday with a group of Congressional leaders, including Sen. Lamar Alexander (R-TN), the new chairman of the Senate HELP Committee, which oversees the NIH, FDA and related medical initiatives. Rep. Fred Upton (R-MI), chairman of the House Energy & Commerce Committee, said the President’s initiative “is a natural fit in the discussion about how to accelerate and improve the discovery, development, and delivery of new cures and treatments. This is something we’ve been talking about for the past year,” referring to his panel’s 21st Century Cures initiative. He said House Republicans hope “to get a bill to the President’s desk by the end of this year” that would incorporate his party’s ideas. These would likely include accelerated approvals for new drugs and medical devices by the FDA, supported by the pharmaceutical and device industries.
HHS Announces Plan to Move Toward Alternative Payment Models
Last Monday, HHS announced it will seek to make 30% of Medicare payments for hospitals and physicians through alternate payment models like accountable care organizations (ACOs) and bundled payments. Medicare – which paid $362 billion to providers caring for more than 50 million U.S. residents in 2014 – began to link payments to performance as part of the Affordable Care Act. About 20% of payments made by the insurance program are now made through alternate payment models. Writing in the New England Journal of Medicine, HHS Secretary Sylvia Mathews Burwell outlined the major goals for the Medicare system in the coming years. Along with the alternative payment models goal for 2016, Burwell also wrote that HHS will seek to have 50% of Medicare payments through alternate payment models by the end of 2018. Further, she wrote that HHS will seek to have 85% of Medicare hospital fee-for-service payments tied to quality or value – through programs such as the Hospital Value-Based Purchasing Program or the Hospital Readmissions Reduction Program – by the end of 2016. That percentage would increase to 90% by the end of 2018.
To facilitate the transition away from fee-for-service care, Burwell announced the formation of a Health Care Payment Learning and Action Network. Through the network, HHS will collaborate with private payers, consumers, employers, providers, Medicaid programs and other partners to expand alternate payment models into non-Medicare programs.  “Whether you are a patient, a provider, a business, a health plan or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people,” Burwell said. An HHS spokesperson said that a “majority” of fee-for-service payments are already linked to quality and value but did not disclose a precise percentage. The effort faces a long climb ahead amid potential resistance from healthcare providers and skepticism from beneficiaries and lawmakers.
GOP Moves to Draft ACA Replacement
Last Friday, House Majority Leader Kevin McCarthy (R-CA) announced that a trio of Republican committee chairmen will immediately get to work on drafting the party’s Affordable Care Act replacement plan. McCarthy announced the formation of the working group one day after House leaders scheduled a vote this week to fully repeal the 2010 healthcare reform law, marking the first such effort of the Republican-controlled Congress. The group, which includes Ways and Means Committee Chairman Paul Ryan (R-WI), is also tasked with developing a “contingency plan” to prepare for a looming Supreme Court decision in King v. Burwell that could undo ACA subsidies in 34 states.
HHS Secretary Sylvia Mathews Burwell has repeatedly said she remains confident that the Supreme Court will uphold the subsidies. When asked about how the Obama Administration is preparing states for the worst-case scenario, Burwell has declined to offer specifics. Aides say the King v. Burwell case was a major discussion point during the Republican retreat in Hershey, Pennsylvania, earlier this month. In addition to Ryan, the two other chairmen involved in developing the GOP healthcare alternative will be Energy and Commerce Committee Chairman Fred Upton (R-MI), and Education and the Workforce Committee Chairman John Kline (R-MI). The Republican Study Committee is also working on a replacement plan, which could complicate efforts to develop a unified Republican ACA alternative.
Treasury Officials: 6 Million Households Could Face ACA Penalties
Last Wednesday, U.S. Treasury officials said that as many as six million households may have to pay a penalty for not having health insurance coverage in 2014 under the Affordable Care Act’s individual mandate. About 150 million taxpayers are expected file returns during the coming tax season, said Mark Mazur, assistant secretary for tax policy at the Treasury Department. The health law requires almost all Americans to have coverage or pay a penalty, with some exemptions. About 2% to 4% of tax filers are expected to have to pay the fine for not having carried insurance last year, which is $95 per adult, or 1% of family income, whichever is greater. Up to 20% of tax filers – or about 30 million – who weren’t insured for most or any of last year will likely request and receive an exemption from the penalty, officials said. The CBO hasn’t publicly estimated how many people it expected would pay the 2014 penalty, which is the first year the requirement was in effect. In a June 2014 report, the budget office said about four million people would pay a penalty because they are uninsured in 2016.
An estimated $4 billion will be collected from those who are uninsured in 2016, and, on average, about $5 billion would be collected a year during the 2017-2024 period. The penalty consumers must pay increases after 2014. Those projections differ from a September 2012 estimate. At that time, about six million taxpayers were estimated to pay the penalty for being uninsured in 2016, with about $7 billion collected. The downward revisions were made in part because of projections on the number of people who will be exempt from the penalty. Last week, HHS announced that 9.5 million U.S. residents have signed up for health plans through exchanges so far during the ACA’s second open enrollment period. That includes 7.1 million consumers who used the federal exchange and 2.4 million people who relied on states using their own marketplaces. The enrollment numbers indicate the White House is on track to reach its earlier sign-up goals. The Administration said in November that it was aiming for up to 9.9 million paid-up enrollees by the end of 2015.