TRP Health Policy Report

The House and Senate remain adjourned for their five-week summer recess. Despite the lull in activity on Capitol Hill, last week saw several notable updates on the implementation of the Affordable Care Act (ACA). Last Tuesday, a government report found that the health law’s medical device tax is raising roughly three-quarters of the revenue originally expected. The Treasury Inspector General for Tax Administration (TIGTA) said the IRS needs to continue to tweak its compliance rules, identifying several mistakes that slowed collection of the controversial tax.

Elsewhere, a pro-ACA advocacy group said last Wednesday that nearly 7 million people can sign up for coverage under ACA even before the new enrollment period begins in November. Enroll America, which has close ties to the White House, said that millions of adults are eligible to sign up for insurance before Nov. 15 because they have moved, gotten married, had children, lost insurance or become American citizens. Last Friday saw the White House issue a new set of rules to provide contraceptive access to women whose employers object to allowing their insurance plans to cover birth control, which is broadly required under the ACA. Under the proposed rules, HHS would give companies the same accommodation extended to religious charities that raise objections. The change comes in response to the ruling by the Supreme Court in June, in the Burwell v. Hobby Lobby case, that the federal government cannot require companies to provide the coverage if they have a religious objection. 

The Week Ahead

 The House and Senate are adjourned until September 8. When Congress returns, lawmakers plan to take up a series of issues, including a continuing resolution to fund the government past September 30, a border security bill, reauthorization of the Export-Import Bank, extending the Internet Tax Freedom Act and consideration of a fiscal 2015 Defense Authorization bill. The Senate may also consider a constitutional amendment regarding campaign financing, legislation on the minimum wage, student loans and a bill to address the Supreme Court’s Hobby Lobby ruling. Senate leaders say the chamber will be in session straight through September 23rd, when members will adjourn again until after the November elections. The House is scheduled to be in session from September 8-19 and September 29-October 2.
 
Uncertainty Grows Over Stopgap Funding Bill 
 
Last week, indications arose that some House Republicans may oppose September passage of a continuing resolution (CR) that would expire in December, rather than a later date in 2015. Hopeful that their party will seize the Senate majority in the November elections, Republicans believe a longer CR would give them greater leverage in passing a new budget bill. The result could be a House-Senate standoff in September, since Senate Democrats are unlikely to support extending a CR into next year. The uncertainty over the stopgap funding measure could complicate what is intended to be only a brief return to Washington for lawmakers next month amid their reelection campaigns. The House will return to session on Sept. 8 for 10 days of legislative work next month and two days in October, when they then adjourn until after the November 4 elections. In the Senate, Majority Leader Harry Reid (D-NV) has determined members will be in session through September 23, including weekends.
 
Congress will need to approve a short-term fiscal 2015 spending bill to keep government open past October 1. None of the 12 annual appropriations bills for federal agencies has yet passed in versions agreed upon by both chambers. Before the August recess, lawmakers in both parties were widely predicting that a CR would pass in September, likely through December 15. But senior aides are now saying that some GOP legislators are viewing a December 15 expiration date with trepidation, saying it would allow the current Senate Democratic majority to block Republicans from amending the spending bill for fiscal 2015. Last week, House GOP aides predicted that at least two unrelated items will be attached to an otherwise “clean” CR. Temporary renewal of the Export-Import Bank is one item, along with short-term reauthorization of the federal backstop for terrorism insurance. Adding the measures to the CR would allow more time for differences between the House and Senate versions of the bills to be resolved.
 
Bipartisan Policy Center Offers Healthcare Reform Recommendations
 
Last Tuesday, the Bipartisan Policy Center (BPC) released a white paper report offering recommendations for healthcare delivery system reform. The BPC report touched on legislation (H.R. 4015) to replace the Medicare sustainable growth rate (SGR) and create a two-track payment system, as well as incentives for alternative payment models. Earlier this year, the Senate Finance, House Ways & Means and House Energy & Commerce committees reached agreement on legislation that would replace the SGR physician payment system. The BPC report suggested that the agreement could be offset “in a thoughtful way that can garner bipartisan support,” but the group did not provide offset suggestions. While acknowledging that passage of SGR reform is unlikely this year, the BPC said it “points in the direction of payment reforms for physicians that might be politically feasible.”
 
BPC also suggested that CMS could change the structures of “alternative systems of care” with its work on bundled payments, accountable care organizations (ACOs) and patient-centered medical homes. “While differing in scope and design, all three of these models are designed to improve quality and value, leading to better care and lower healthcare costs,” the report states. On ACOs, the BPC said that many of the Medicare Payment Advisory Commission's recent recommendations to improve the program were similar to those included in the center's report in 2013. The BPC plans to delve into those recommendations and other challenges with ACOs in a forthcoming study. The center says it also plans to address some of the challenges to implementing alternative systems of care, including wider provider participation, models to engage and pay specialists, interoperability of health IT and improved quality measures.
 
Report: 'Copper' Exchange Plans Could Save Billions
 
According to a new report by Avalere Health, adding “copper” plans to the menu of options sold through the Affordable Care Act's (ACA) insurance exchanges starting in 2016 would result in 350,000 additional U.S. residents enrolling in coverage and would bring down federal healthcare spending by $300 million over the next 10 years. The idea of offering a copper plan has been championed by Senators Mark Warner (D-VA) and Mark Begich (D-AK). Under the ACA, the lowest-tier of plans sold through the ACA's exchanges – often called bronze plans — are intended to cover 60% of an average enrollee's medical costs.
 
Avalere’s research estimated that copper plan premiums could be about $4,600 per year in 2016, nearly 18% below those of the average bronze plan. As a result of the lower premiums, researchers estimated that 50% of those in the individual market currently enrolled in bronze plans would switch to copper plans and that nearly 75% of new enrollees who would have selected bronze plans would instead select a copper plan. The report found that the federal government would save $5.8 billion over a decade in reduced subsidy costs, but would take in $5.5 billion less revenue, mostly from a reduction in fines collected via the employer mandate penalty, because more employers would continue offering coverage.
 
Device Tax Falls Short of Expected Revenue in 2013
 
According to a report released last Tuesday by the Treasury Inspector General for Tax Administration, the ACA's medical device tax generated $913.4 million in revenue in the first half of 2013, well short of the $1.2 billion the IRS estimated it would receive. To help fund the 2010 health law, the ACA created a 2.3% tax on the sale of medical devices that are primarily used by physicians and hospitals. The tax went into effect in January 2013. Companies that are subject to the tax must file quarterly tax forms with the IRS. The report stated that while the agency has worked to educate businesses about the tax, it “faces challenges to definitively identify manufacturers subject to the medical device excise tax reporting and payment requirements.”
 
The report also noted several mistakes the IRS has made in collecting funds owed under the tax, including 276 errors resulting in discrepancies worth $117.8 million. Additionally, the report found that IRS mistakenly assessed 219 tax penalties totaling more than $700,000 during a grace period from the tax between March 31 and June 30. To address these issues, the report recommended that IRS improve its compliance rules for the tax and implement tools that will improve accuracy. The report also said the agency should revisit the forms that contained errors. The IRS stated that it agreed with the recommendations made in the report and is revising its tax forms to help curb future errors.
 
GOP lawmakers cited the report as proof the ACA's medical device tax is failing and should be repealed. The effort to repeal the tax has bipartisan support in both chambers. In addition to a bipartisan House bill (H.R. 523), a companion bill (S.232) has been introduced in the Senate, and some Senate Democrats have voiced support for a two-year delay. The Senate also supported a nonbinding resolution to repeal the tax in 2013. According to senior Capitol Hill aides, some Republican legislators are looking to try to repeal the measure in a tax package at the end of the year. The medical device industry has aggressive pushed for the device tax's repeal, saying it hinders job creation, reduces medical innovation investment and increases healthcare costs.
 
Study: ACA Boosts Mental Health Access for Young Adults
 
A new study published in Health Affairs suggests that an Affordable Care Act provision is partly responsible for a 2% increase in the number of young adults that receive mental health care. Researchers analyzed data from the 2008 to 2012 National Survey of Drug Use and Health. They focused on people ages 18 to 25 with potential mental health or substance use disorders. Under the health law, young adults are allowed to stay on their parents' health insurance plans until age 26. The analysis found that in the two years following the implementation of the ACA provision, the ratio of young adults with mental health issues who were receiving treatment increased by 2%, up from just over 30% before 2010.
 
In addition, the study found that the number of uninsured visits to mental health providers declined by 12.4% and that the number of such visits covered by private insurance increased by 12.9%. Meanwhile, the number of young adults receiving care for substance use disorders did not change, according to the study. The study’s researchers said the health insurance system will, nevertheless, still need to change to further increase access to care for mental health and substance use disorders. Among their recommendations was to ensure that provider networks are large enough and maintaining continuity of care for patients with transitory insurance.