TRP Health Policy Report

March 30, 2015

Following one of the most productive weeks of the 114th Congress, lawmakers made their way home last Friday to begin a two-week recess. Before adjourning, House and Senate Republicans passed their preferred budget resolutions and the House voted overwhelming to permanently repeal Medicare’s flawed Sustainable Growth Rate (SGR) formula. Early last Friday morning, the Senate passed a budget (S.Con.Res. 11) 52-46 that would slash $5.1 trillion in spending over 10 years and balance the budget within a decade. Passage of the budget followed a slew of votes on 44 amendments. The Senate vote followed House passage of a similar blueprint (H.Con.Res. 27), positioning both chambers to start hammering out a final budget deal in the coming weeks. The House passed its budget in a 228-199 vote, with 17 Republicans voting against it. No Democrats voted for the GOP budget. 

House Republicans notched another legislative win last Thursday, when members overwhelming passed a bill (H.R. 2) permanently replacing the system for calculating reimbursement for doctors and other Medicare providers. The bill, which passed by a vote of 392-37, puts Congress on the edge of ending a nearly two-decades old fight over the sustainable growth rate (SGR) formula. Since 2003, lawmakers have put off cuts under the Medicare formula 17 times, perennially punting the solution through short-term “fixes” that, over time, ran up the cost of abolishing the formula to nearly $200 billion dollars. The bipartisan House vote cleared the way for Senate passage of the deal, although Senate leaders failed to reach a unanimous consent (UC) agreement to pass the bill before leaving for recess.
Elsewhere, Senate Minority Leader Harry Reid (D-NV) announced Friday that he would not seek reelection, a decision that upends the hierarchy in the Senate Democratic Caucus. New York Sen. Charles Schumer is quickly cementing his position as the strong favorite to replace Reid as Minority Leader. Reid endorsed Schumer (D-NY) to succeed him last Friday.  Schumer’s path to take over as the Democratic leader was cleared of one major rival when Senate Minority Whip Dick Durbin (D-IL) said he wouldn’t seek the position, and would instead run again to serve as the party’s chief vote counter. Reid predicted that Schumer, the No. 3 Senate Democrat in leadership would win the Democratic leader post without opposition.
The Week Ahead
The House and Senate are in recess until April 13.
House, Senate Approve Fiscal 2016 Budget Plan
Last Friday, the Senate passed a Republican budget for fiscal year 2016 after a grueling, round-the-clock marathon of amendment votes. The spending blueprint for the year that begins Oct. 1 marked the first GOP budget to clear the Senate in almost a decade and brought Republicans another step closer to passing a budget through both chambers. The Senate adopted its budget in a party-line 52-46 vote. The House passed its own GOP budget earlier in the week. Lawmakers are expected to merge the two spending blueprints and both chambers will vote on the unified budget after the two-week spring recess. Senate Republicans, who control 54 of the chamber’s seats, had to maneuver carefully to pass a budget that needed 51 votes to be adopted. But Republicans expressed little doubt that Majority Leader Mitch McConnell (R-KY) would find the votes needed to secure passage. Budgets are non-binding and never become law, but they set the overall funding levels used to write spending bills considered later in the year. Top Republicans have said they plan to use spending bills to push their policy priorities while avoiding the recent deadline-driven standoffs between GOP lawmakers and President Obama. If both chambers can pass a unified budget, Republicans can also tap into procedural shortcuts enabling them to bypass Senate Democrats on some legislation, potentially including a repeal of the Affordable Care Act, though President Obama would veto it.
Senate Republicans said their budget would eliminate the annual federal budget deficit over a decade and curb spending by $5.1 trillion over that time. The Senate GOP budget is lighter on policy recommendations than the House budget adopted earlier in the week, which includes more contentious proposals for overhauling Medicare and other federal safety-net programs. Senate rules allow a budget to pass with just a simple majority, so to give the minority party a voice in the process; any Senator can require a vote to be held on any amendment. The amendment votes are symbolic, but they can show momentum building for an issue. Passage of the budget followed an hours-long series on more than 40 amendments that ranged from the minimum wage, to Common Core education standards to defense spending. It won't be easy to strike a deal that House Republican conservatives, defense hawks and Senate GOP moderates can all agree on. Hot button issues like the Pentagon budget, Medicare and Medicaid and domestic spending will all need to be resolved. Fiscal conservatives are pushing for sharp cuts in government spending, while moderates are wary of going too far. And any budget that calls for major changes to entitlement programs like Medicare could be very risky.
House Approves SGR Replacement Deal; Senate To Consider After Recess
Last Thursday, the House overwhelmingly passed a bill (H.R. 2) to reformulate how Medicare reimburses doctors and other providers. The bill also included a two-year extension to the Children’s Health Insurance Program (CHIP) authorizing $5.6 billion dollars in funding for the program. The measure was put together by House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA), who began talking early this year about how to fix what both sides agreed was a flawed formula for paying Medicare physicians. Absent Congressional action, doctors would face a 21% cut in payments starting April 1. Since 2003, lawmakers have put off cuts under the Medicare formula 17 times, punting the solution through short-term “fixes” that drove the cost of abolishing the formula to nearly $200 billion dollars.
The deal crafted by Boehner and Pelosi would cost $214 billion over 10 years, with $73 billion of that cost offset with spending cuts or new revenue, according to the Congressional Budget Office (CBO). The bill includes reforms to transition Medicare’s payment system from incentivizing quantity to quality in care and is likely to produce small savings for the government over time, according to the CBO. In a letter to Speaker Boehner, the budget office said $141 billion of the bill’s costs would come from increasing federal deficits. The rest would be paid for with added costs for Medicare beneficiaries, mostly higher premiums for the highest-earning recipients, and payment cuts to nursing homes and other providers.
Some of the offsets in the bill also drew criticism from Senate Democrats. While most opposition softened, some Democrats still indicated that they'd like the chance to debate and amend the legislation.  As a result of this, in addition to rumored Republican obstacles, the Senate didn’t act on the House-passed SGR deal before adjourning last week, leaving lawmakers little time to act after the recess. But Senate Majority Leader Mitch McConnell (R-KY) promised the chamber would take up the measure “very quickly” when it returns, reassuring his colleagues that “CMS indicates that they can handle this for up to two weeks.” He said he and Senate Minority Leader Harry Reid (D-NV) would work together to schedule the vote on the bill. Reid predicted easy, passage, too. “There's every reason to believe [the bill] is going to pass the Senate by a very large majority,” he said. Still, with the delay, lawmakers will be cutting it close. CMS can only hold checks through April 14, the day after the Senate returns.
CBO: SGR Deal Adds $141 Billion to Deficit
Last Wednesday, the Congressional Budget Office (CBO) said the bipartisan House SGR deal would increase the deficit by $141 billion over 10 years. While the price of ending the SGR formula is steep, the budget office said it's cheaper than doing nothing, because the status quo would cost $900 million more than the proposed reforms over the next 10 years. The CBO said there is uncertainty in the projection in the decade after 2025, but the likely result is “small net savings.” In a statement, House Speaker John Boehner (R-OH) touted the forecast, saying, “The nonpartisan Congressional Budget Office confirmed today that H.R. 2, bipartisan legislation to strengthen Medicare and permanently repeal the Sustainable Growth Rate (SGR), will save taxpayers money and put the nation’s budget on a more sustainable path.” While some Senate Democrats voiced concerns about some making wealthier seniors pay a higher share of their premiums, the CBO said the offset would save $34 billion over a decade. Last Wednesday, President Obama offered his support for repealing the SGR.  “I have my pen ready to sign a good bipartisan bill,” he said. And the White House subsequently issued a Statement of Administration Policy in favor of the legislation.
House Panel Reviews Approach to Opioid Abuse
Last Thursday, House Energy and Commerce members endorsed committing more resources toward monitoring doctors who overprescribe prescription painkillers while addiction experts urged legislators to also modernize laws that help addicts regain sobriety. The Oversight and Investigations Subcommittee held a hearing into opioid abuse the same day lawmakers, led by Edward Whitfield (R-KY), introduced legislation to renew grants for states to implement prescription drug monitoring programs. Increased electronic and surveillance records allow physicians to screen for abuse, blocking patients from shopping for physicians likelier to write prescriptions and reduce interstate trafficking of medications. However, experts said Congress should also focus on deterring individuals from employing medications such as Methadone and Buprenorphine, which are used to slowly reduce physical dependence on opioids. Last Thursday, HHS announced an initiative to combat opioid-related deaths by expanding the use of medication-assisted treatments and overdose drugs like Naloxone.
Witnesses at the House hearing also testified on the need for enhanced drug-monitoring programs – especially in areas where patients can easily travel to neighboring states to obtain painkiller prescriptions. Other witnesses detailed the need for medication-assisted treatments, noting that many opioid abuses resort to cheaper street alternatives, such as heroin, when prescription medications are unavailable. Oversight Subcommittee Chairman Tim Murphy (R-PA) also raised questions about the effectiveness of treatments that treat opioid abuse with more opioids. The Pennsylvania Congressman said there needs to be a greater emphasis on recovery, citing statistics that only 10 percent of people with a substance abuse disorder will get any form of medical care. Murphy has promised more hearings. The subcommittee's ranking member, Diana DeGette (D-CO), said lawmakers should examine differing polices among the states. “There is significant variation from state to state on issues such as treatment quality, access and coverage,” she said.
New Rules Seen for 340B Program
Last Thursday, key leaders on a House Energy and Commerce subcommittee hearing said the rapid expansion of the federal 340B discount drug program may require new legislation to make sure that its benefits reach the intended population, the neediest Americans. Rep. Larry Bucshon (R-IN) was among those who raised concerns about the lack of clear directives to hospitals about how savings from the program should be used. According to the Health Resources and Services Administration, hospitals, clinics and other health agencies enrolled in 340B saved about $3.8 billion in 2013 by acquiring steeply discount drugs, Hospitals are not required to disclose how they use the savings from the program, which was created in 1992 to aid medical facilities that serve as “safety nets” in less affluent communities. Some hospitals may use savings instead for general purposes, Buchson said. The Indiana Congressman said this use of the savings runs counter to the purpose of the program, which he believes should be expanded to include health services and education. More than 11,000 hospitals, clinics and other health organizations are participating in the 340B program, an increase of 30 percent since 2008, according to the Government Accountability Office. That growth, combined with questions about the role of contract pharmacies has Members of Congress taking a closer look at 340B, asking the Medicare Payment Advisory Commission to take a deeper look at the drug discount program.