TRP Health Policy Report

Last week saw the Senate debate anti-human trafficking legislation (S. 178), but the chamber failed to advance the measure after a partisan dispute arose over an anti-abortion provision. Senate Majority Leader Mitch McConnell (R-KY) filed cloture on the measure Thursday, as lawmakers try to find a way forward on the Justice for Victims of Trafficking Act. In other legislative activity, Senators voted unanimously to confirm two executive branch nominees: Christopher Hart to be Chairman of the National Transportation Safety Board (NTSB) and Daniel Marti to serve as Intellectual Property Enforcement Coordinator. The House was not in session. 

Off the Hill, HHS Secretary Sylvia Burwell announced that nearly 11.7 million people have signed up or re-enrolled in a qualified health plan through either a state-based exchange or Healthcare.gov. Of those, 76 percent were in states using the federal exchange and 24 percent were in the 14 states using their own platform. More than half of consumers who signed up on the federal exchange will pay $100 or less a month after tax credits to reduce the price of their premiums, Burwell said. The strong enrollment figures are threatened by a Supreme Court challenge to subsidies obtained through the federal marketplace. On March 4 the high court heard oral arguments in the King v. Burwell case, which would wipe out subsidies for consumers in states that use HealthCare.gov.
 
The Week Ahead
 
Fiscal 2016 budget plans, a possible confirmation vote on attorney general nominee Loretta Lynch, a potential long term “doc fix,” and partisan jockeying over abortion language highlight the Congressional schedule this week. House members plan to consider two bills (H.R. 1029/H.R. 1030) that would put new requirements on Environmental Protection Agency (EPA) and may also vote on overturning a National Labor Relations Board (NLRB) rule (S.J.Res 8). Budget matters will also consume much of the week, as House Budget Committee Chairman Tom Price (R-GA) plans to release his fiscal 2016 budget on Tuesday, with a markup set for the following day. Senate Budget Committee Chairman Mike Enzi (R-WY) is set to roll-out his blueprint Wednesday. His committee has opening statements that day followed by a markup on Thursday. The Senate budget plan is said to retain caps on defense and domestic spending while possibly including an escape valve that would allow the busting of the defense limits. It also would seek to balance the budget within 10 years and provide tools to dismantle the Affordable Care Act (ACA). Senators will also consider a measure intended to help victims of human trafficking (S. 178), though the bill could remain stalled over abortion-relation provisions. How long the Senate works on the trafficking bill could affect when the chamber proceeds to consideration of Lynch’s nomination. Healthcare will also be discussed at the committee level, with Senate Finance holding a Thursday hearing on the five-year anniversary of the ACA.
 
House Leaders Close-In on Permanent SGR Fix
 
Top House lawmakers say they’re inching closer to a plan that repeals the Sustainable Growth Rate (SGR) formula and replaces it with one that rewards providers for high-quality care – a measure that both sides of the political aisle say is long overdue. Congress has tried for some time to repeal the Medicare payment formula, which lawmakers override each year with a fiscal patch known as the “doc fix.” Reps. Paul Ryan (R-WI), Sander Levin (D-MI), Fred Upton (R-MI) and Frank Pallone (D-NJ), the top members of the Ways and Means and Energy and Commerce Committees, confirmed they are in talks for a permanent fix last Friday. “We are now engaging in active discussions on a bipartisan basis — following up on the work done by leadership — to try to achieve an effective permanent resolution to the SGR problem, strengthen Medicare for our seniors, and extend the popular Children’s Health Insurance Program,” the lawmakers said in the statement. The plan would offset only about $70 billion of the more than $200 billion cost of making the permanent fix, which will likely draw opposition from conservatives over budget concerns.
 
The proposal emerged after negotiations last week with House GOP and Democratic leaders, though details have not been finalized. Reportedly, it would also include a two-year extension of the Children’s Health Insurance Program (CHIP) and supplemental Medicare payments known as “extenders.” Including the CHIP extension would push the bill total cost to over $200 billion. The “doc fix” portion of the deal would cost an estimated $174 billion over 10 years, according to the Congressional Budget Office (CBO). While it is unclear how Congress would pay for the bill, Hill insiders say the House SGR package includes $15 billion to $25 billion in hospital pay cuts over 10 years, $12 billion to $17 billion in post-acute care pay cuts, and may contain new means-testing for some Medicare beneficiaries. Members of the GOP Doctors Caucus, which has long pushed to eliminate the Medicare cuts, predicted that a permanent doc fix will pass the House this spring. Senate Finance Committee Chairman Orrin Hatch (R-UT) suggested he could back the measure, even it is not fully offset. If Congress does not act before March 31, Medicare providers face cuts of more than 20 percent.
 
Senate Budget Proposal to Maintain Sequester Spending Caps
 
Last week, Senate leaders confirmed that the Budget Committee is working on a fiscal 2016 budget resolution that would balance the budget in 10 years, maintain sequester-level caps on discretionary spending and likely issue reconciliation instructions to be used as at least a partial replacement for the ACA. Republicans said the current plan will reflect the sequester-level, statutory caps of $523 billion on defense discretionary spending and $493.5 billion cap on non-defense spending. But it also contains a deficit-neutral reserve fund that would allow the budget limits to be raised later in the year if a budget deal is reached with Democrats and the White House. Speaking after a briefing on the plan from Senate Budget Chairman Michael B. Enzi (R-WY), Senate Majority Whip John Cornyn (R-TX), predicted the plan would get the 51 GOP votes needed to clear the Senate. The Budget panel is also considering several ways to increase defense spending, including a proposal to boost defense funding in 2016 and 2017 and pay for the increase by slowing Pentagon revenues later in the decade. But several Senators also said any increase in the defense and non-defense spending above the sequester levels would be subject to a point of order in the Senate, requiring 60 votes to waive and therefore require Democratic support. Senators described the budget as a “work in progress” but also said the Budget Committee will be ready to mark it up this week.
 
FDA Commissioner Talks Faster Cures, Warns Against Lower Standards
 
Last Tuesday, outgoing FDA Commissioner Margaret Hamburg called on members of the Senate HELP committee to maintain safety and effectiveness standards as they push to speed up patient access to medical products, and urged them to adequately fund her agency. She touted the FDA's efforts in approving new drugs, stating that 2014 was a 20-year high in new drug approvals. As such, she warned against making an incorrect diagnosis that blamed the agency for slowness in drug approvals. Hamburg’s comments were echoed by leading Democrats on the committee, and came as consumer advocates warned Congress against curtailing the FDA's capabilities or lowering the agency’s standards of review. The House is currently working on its ‘21st Century Cures’ package, which has a number of bills intended to stimulate medical innovation through deregulation and policy changes. Meanwhile, the White House is touting President Obama's precision medicine initiative.
 
At the hearing, Chairman Lamar Alexander (R-TN) asked both Hamburg and NIH Director Francis Collins what issues lawmakers should focus on in the coming year. Hamburg urged Senators to make “appropriate investments” in FDA along with investments to NIH in order to “give us opportunities to develop our areas of science.” NIH director Francis Collins added that he “heartily agreed” with the need to adequately fund both agencies. The lack of new funding for NIH was an obstacle leading to House Democrats' withdrawal of support from the ‘21st Century Cures’ legislative package in January. After the hearing, Senator Alexander said he hopes legislation in this area will be enacted by early 2016, adding that this will be around a “one-year project.” House GOP lawmakers have said they hope to have their Cures bill enacted by the end of the year.
 
CBO Lowers ACA Cost Estimate
 
According to updated projections by the Congressional Budget Office (CBO), the federal government will spend 11% less on the Affordable Care Act over the next decade than previously anticipated. Overall, the 2010 healthcare reform law is expected to cost $1.2 trillion over the next 10 years. By comparison, in March 2010 the budget office estimated the ACA would cost $710 billion from 2015 to 2019. However, federal scorekeepers now forecast that the law will cost about $506 billion, or about 29% less, during that timeframe. According to CBO officials, the decline in the estimated cost is the result of fewer people enrolling in exchange coverage than previously anticipated, as well as a slowdown in healthcare spending growth. Additionally, fewer Americans signed-up for Medicaid coverage and more consumers enrolled in employer-sponsored health plans and private coverage than had been expected.
 
CBO also forecast one million fewer U.S. residents will gain coverage under the ACA than previously projected, with about 24 million previously uninsured individuals expected to gain health plans. Still, CBO estimated that the ACA would help to insure 91% of U.S. residents at its peak over the next decade. Further, CBO officials estimated an $8 billion increase in Medicaid spending over the next two years because of unanticipated higher federal spending on the program during the first four months of 2015. All told, the federal government's spending on Medicaid and Medicare is expected to increase to $1.1 trillion and $576 billion annually, respectively, by 2025. Still, because of a lower-than-expected number of individuals who will be enrolled in Medicaid, CBO predicted that the program would cost $73 billion less than previously forecast from 2016 to 2024.
 
CMS Unveils 'Next Generation' ACO Model
 
Last Tuesday, CMS unveiled the ‘Next Generation Accountable Care Organization (ACO) Model,’ which it hopes will provide an attractive alternative payment model for providers wary of existing models. According to federal health officials, the new framework will pay ACOs using a combination of capitation and fee-for-service. As in the current ACO programs, hospitals and doctors that successfully reduce the cost of care may keep some of the savings. But in a blog post CMS’s Patrick Conway said the ‘next generation’ contracts will use a new formula to calculate savings targets that won't exclusively rely on ACOs' historical performance – an approach that some critics say is unfair to providers already delivering low-cost care. The changes seek to address critics of Medicare's three-year-old venture into accountable care, which was launched under the ACA in 2012. Federal health officials have aggressively expanded Medicare's use of the model, and in January pledged to meet ambitious targets through 2018 for broader use of ACOs and other new payment models.
 
The Shared Savings Program is Medicare's largest test of accountable care, generating more than 400 ACOs since its launch in 2012.  CMS separately operates a small ACO test known as Pioneers, which also launched in 2012 but agreed to more sophisticated and risky payment models. The number of ACOs in the Pioneer model has dropped from 32 to 19 as hospitals and medical groups have struggled with the initiative's rules and risks. Both programs have yielded mixed results so far.
 
Participating providers saved $417 million for Medicare and earned bonuses totaling $460 million through the end of 2013, according to CMS. The health agency will accept applications for the ’next generation’ ACO model in two rounds that conclude on June 1, 2015, and June 1, 2016, respectively. To be eligible, provider groups must serve at least 10,000 Medicare beneficiaries. The program is slated to launch in January 2016 and expand to reach between 15 and 20 ACOs, Conway said.