TRP Health Policy Report

June 1, 2015

The House and Senate were in recess last week for the Memorial Day holiday.
The Week Ahead
The Senate returned a day early from their Memorial Day recess for a rare Sunday session to continue working to resolve their differences over renewing phone data-gathering provisions of the Patriot Act.  Lawmakers remain divided over whether to continue, rein in, or abolish the National Security Agency’s (NSA) ability to gather the bulk telephone call data as part of its effort to hunt terrorists.  While the Senate was unable to prevent the programs from at least temporarily expiring, Republican leaders will try to make changes to House-passed legislation and quickly restore surveillance authorities that lapsed today.  Later this week, Senators are expected to take up a $612 billion fiscal 2016 defense authorization bill (H.R. 1735), which was recently approved by the House. 

In the House, appropriations work will dominate the agenda, as Members are expected to consider spending bills for both Commerce-Justice-Science (C-J-S) and Transportation-House and Urban Development (HUD).  The $51.4 billion C-J-S spending bill (H.R. 2578) would provide an increase of $1.3 billion above the current fiscal year, and the $55.3 billion Transportation-HUD bill (H.R. 2577) would provide a $1.5 billion boost.  Also on the House agenda this week is legislation to reauthorize fishery oversight activities of the National Oceanic and Atmospheric Administration.
In healthcare activity, on Tuesday, the House Ways and Means Committee will hold a markup of a range of health-related legislation, including five Medicare Advantage bills, two Medicare bills previously passed by the Senate and language to repeal the Affordable Care Act’s (ACA) controversial medical device tax and Independent Payment Advisory Board (IPAB). Among the bills slated for tomorrow’s mark up:

  • Protect Medical Innovation Act of 2015 (H.R. 160) – Amends the Internal Revenue Code to repeal the excise tax on medical device manufacturers and importers which was part of the financing structure of the ACA.
  • Protecting Seniors’ Access to Medicare Act of 2015 (H.R. 1190) – Repeals the sections of the ACA that implement the IPAB.
  • Medicare Advantage Coverage Transparency Act of 2015 (H.R. 2505) – Requires greater transparency by requiring the Centers for Medicare and Medicaid Services (CMS) to annually report on enrollment data in Medicare Advantage (MA) plans.
  • Seniors’ Health Care Plan Protection Act of 2015 (H.R. 2506) – Delays the authority to terminate MA contracts for plans failing to achieve minimum quality ratings under the Medicare Advantage STARS rating system – allowing seniors to choose and keep the plan that fits their needs
  • Increasing Regulatory Fairness Act of 2015 (H.R. 2507) – Expands an annual regulatory schedule for MA payment rates so that stakeholders have the necessary time to review and provide feedback to ensure seniors continue to have access to quality low-cost plans of their choosing.
  • Securing Care for Seniors Act of 2015 (H.R. 2579) – Requires CMS to reevaluate and as appropriate make changes to the MA risk adjustment model to ensure that it is accurate, evidence-based and transparent so seniors can maintain the choice and access to low-cost quality plans.
  • LTCH Technical Correction Act of 2015 (H.R. 2580) – Provides for a technical change to the Medicare long-term care hospital moratorium exception included in the Pathway for SGR Reform Act of 2013 and Protecting Access to Medicare Act of 2014. The bill also modifies the Medicare long-term care hospital outlier payment policies.
  • Preservation of Access for Seniors in Medicare Advantage Act of 2015 (H.R. 2581) – Creates a three year demonstration program for MA plans that meet certain criteria that would reduce or eliminate copays, coinsurance, or both on certain medications for treatment of chronic conditions.
  • Medicare Independence at Home Medical Practice Demonstration Improvement Act of 2015 (S. 971) – Provides for an extension of the agreements under the Medicare independence at home medical practice demonstration program from three years to five years.
  • Steve Gleason Act of 2015 (S. 984) – Provides Medicare beneficiaries access to eye tracking accessories for speech generating devices and removes the Medicare durable medical equipment (DME) rental cap for speech generating devices.

Medicaid Officials Release Long-Awaited Managed Care Rule
Last Tuesday, the Centers for Medicare and Medicaid Services (CMS) released an extensive, and much anticipated, proposed rule (press release; fact sheet) on Medicaid and Children’s Health Insurance Program (CHIP) managed care that seeks to acknowledge increased enrollment in managed care delivery systems and promote cross-market alignment with Marketplace Qualified Health Plans (QHPs) and Medicare Advantage (MA). The ostensible purpose of the proposed rule is to facilitate beneficiaries’ transitions and care management across product lines. Among its primary provisions, the CMS proposal represents an overhaul of the rules for Medicaid managed care plans by applying a national medical loss ratio to Medicaid managed care plans, adds long-term services, creates a grading system similar to Medicare Advantage star ratings, establishes network adequacy standards, and aligns the rules for managed care among Medicaid, Medicare and private exchange plans. This was the first time CMS has proposed changes to the Medicaid managed care program since its inception more than a decade ago. In the intervening years, Medicaid has grown considerably, due in large part to the Affordable Care Act, and the majority of states now use managed care to deliver Medicaid services.
Although there was too much in the 653-page plan for stakeholders to immediately digest, manage care companies were quick to take issue with the application of a medical loss ratio (MLR) to Medicaid.  Medical-loss ratio is an Affordable Care Act (ACA) concept mandating that health plans have to spend a certain percentage of money that they are paid on the provision of actual health care. The ACA set an MLR of 80 percent for individual and small-group plans and 85 percent for large-group plans. And while Medicare has an MLR for private Advantage and Part D plans, until now, Medicaid managed care was the only area of the private insurance market untouched by a national MLR. The new rules proposed by CMS would set a federal MLR of 85 percent for those plans starting in 2017.
King v. Burwell Looms, as Republicans Scramble for Possible Remedies
With just a few weeks before the Supreme Court is expected to rule on a key component of the Affordable Care Act in the case King v. Burwell, congressional Republicans are divided over their strategy for handling the possible fallout, should the Court invalidate the low income subsidies in states where the federal government runs the exchange.  Republicans are at odds over whether to extend temporarily the health law’s tax credits, with some secretly hoping the law is upheld due to the potential for ugly politics if the law unwinds. Others have spent months pitching ideas on how to respond to address the disruption if the Court should rule against the ACA.  But according to a new report by the American Academy of Actuaries, none of the GOP proposals are likely to protect against off the massive disruption in the healthcare marketplace that would result from such a ruling.
Currently, the leading idea backed by Republicans—eliminating the individual mandate altogether—could cause the most damage, according to the Actuaries. Their report warns that option would “threaten the viability” of the entire market leading premiums to skyrocket for those remaining in the market. Another popular Republican idea—a temporary extension of premium subsidies—also drew the ire of the American Academy of Actuaries, which warned that it would only serve to “delay the market disruption.”  Democrats seized upon the new report to bolster their case that Republicans lack a feasible plan if King should win the case against the government.
States Considering ACA Exchange Mergers
Some of the 13 state-run Affordable Care Act (ACA) exchanges are reportedly beginning to grow concerned about how they’ll survive once federal dollars supporting them run out next year. Although it could be very difficult to figure out logistically, a shared marketplace—an option buried in a little-known clause of the ACA—has become an increasingly attractive option for states desperate to slash costs. If state exchanges are not financially self-sufficient by 2016, they will be forced to join the federal system,  “What is happening is states are figuring out the money is running out,” said Jim Wadleigh, the director of Connecticut’s exchange, hailed as one of the most successful in the country.  “At the end of 2016, everyone has to be self-sustaining.”
It is unlikely that multiple states could ever merge the full responsibilities of a marketplace, such as regulating plans and managing risk pools. And even a simpler model, like a shared call center or website platform, would present major hurdles.  Jennifer Tolbert, a state health expert with the Kaiser Family Foundation, said “one of the trickiest issues” would be determining a governing structure for multi-state exchanges. These sorts of challenges have kept multiple states from moving forward with plans to merge functions. Delaware, Maryland and West Virginia, which commissioned a study on the option in June 2013, have all dropped the idea. Still, the appetite for cost sharing and greater efficiencies is spurring a reconsideration of the option for some.
Bipartisan Policy Center Pushes for Cost-Effectiveness Analysis
Last Thursday, the nonprofit Bipartisan Policy Center (BPC) on Thursday issued a call for greater use of economic analysis in making health care decisions, a move that could trigger debate about cost-effectiveness research.  In a recently issued report, the BPC’s Prevention Task Force recommended that the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) begin to require cost-effectiveness analysis in all future grant applications. The Task Force’s recommendation is part of a series of proposals that are intended to move the US healthcare system away from its longstanding fee-for-service approach.  “These recommendations will help develop new financing mechanisms and integrated programs and services that will shift America’s health care system toward disease prevention and wellness,” said former Senate Majority Leader, Bill Frist, M.D., a heart and lung transplant surgeon who serves as an adviser to the BPC’s Prevention Task Force.