Health Policy Report

The Week in Review

At the end of a chaotic week for the Trump Administration, the White House announced on Friday that Chief Strategist Steve Bannon had resigned from his post. Bannon is considered one of the primary architects of Trump’s rise to power and is likely to remain an influential voice through his position at far-right news outlet Breitbart News, which he immediately returned to following his departure from the White House. The chief strategist position is not a traditional formal White House position and it is unclear whether Bannon will be replaced with another adviser. 

The House and Senate have adjourned for August recess. Both chambers are scheduled to reconvene for legislative business on Tuesday, September 5. The Senate will meet in “pro-forma” sessions every few days during the recess, which will effectively block President Trump from being able to make recess appointments over the break.

The Week Ahead

Washington will continue its August recess as a busy September awaits. When Congress returns after Labor Day, they will face approaching deadlines to address federal government funding by month-end, reauthorize Children’s Health Insurance Program funding, act on expiring Medicare “extenders,” and raise the debt ceiling.

Uncertainty Over Future of Cost-Sharing Reduction Payments Creates Chaos

Continued uncertainty over whether the Trump administration will continue making Cost-Sharing Reduction (CSR) payments to insurers has created mayhem for insurers attempting to file rates for the Affordable Care Act (ACA) Exchanges for 2018. Although the administration extended the deadline to file rates to September 5^th due to President Trump’s threats to cut off the payments, many insurers have already announced major price hikes to cover possible loss of the funding. Idaho’s Department of Insurance posted proposed rates for 2018 last Monday, and cited continued uncertainty as reason for an average 38 percent rate hike, including a 50 percent increase for silver plans, the most popular of the Exchange’s three plan options. Nationally, experts predict that insurers will announce rates of 15 to 20 percent higher than last year.

Last week, the Trump Administration announced it would make CSR payments for August, while continuing to leave the extended future of the payments hanging. An analysis released earlier last week from the nonpartisan Congressional Budget Office (CBO) estimated that insurance companies would need raise premium prices about 20 percent in 2018 for mid-level ACA plans if Trump ends these payments — closely in line with estimates made by independent actuaries. CBO’s estimate was based on the assumption that insurers would know by the end of August that the payments would end after December.

Meanwhile, Congress is considering stepping in to fund the CSR payments starting in October — but since insurance rate filings will already be submitted, it’s unclear whether their actions will have a meaningful impact on curtailing premium increases for 2018. Senate HELP Committee Chairman Lamar Alexander (R-TN) has said he would like to include funding for CSRs in a bipartisan, short-term marketplace stabilization bill, and Majority Leader Mitch McConnell (R-KY) recently signaled he would be open to supporting such a deal. Both the Senate HELP and Finance Committees will begin holding hearings when they return in September, and hope to pass legislation by the end of the month.

CMS Scales Back Key Bundled Payment Demos

The Centers for Medicare and Medicaid Services unveiled a proposal last week that would cancel some mandatory bundled payments, experiments where hospitals and doctors are paid fixed amounts for certain surgeries and procedures. These programs had been initiated by the the Center for Medicare and Medicaid Innovation (CMMI) under President Obama, which was authorized under the Affordable Care Act (ACA) to carry out bundled payments and other projects. The rule would eliminate Medicare bundled payments to hospitals for heart attacks, bypass surgery, hip fractures, and femur fractures. The agency is also proposing to scale back its bundled payment program for hip and knee replacements trimming the number of mandatory geographic areas in half.

 

The announcement marks a significant blow to the future of bundled payments, as the joint replacement expansion and cardiac care program represent Medicare’s most significant proposals to date to test their efficacy. Just a week after longtime CMMI Director Patrick Conway announced his departure from the agency, this proposal reflects the desire of Secretary Tom Price to limit mandatory participation for doctors and hospitals in bundled payments. The agency has signaled that it will instead focus on its broader Bundled Payments for Care Improvement Initiative, which allows providers to opt into bundled payments for specific treatments.

 

HRSA Again Delays Effective Date of 340B Rule

 

The Health Resources and Services Administration (HRSA) last week proposed to further delay the effective date of a final rule titled “340B Drug Pricing Celling Price and Manufacturer Civil Monetary Penalties.” Thursday’s proposal would delay the effective date from Oct. 1, 2017 to July 1, 2018. This is fourth time the Administration has delayed the effective date of the rule, which was published in early January. The rule includes the so-called "penny-pricing policy" and a formula for calculating discounts. It also sets penalties for manufacturers that "knowingly and intentionally" overcharge 340B providers.

 

HRSA says it will delay the rule because it is still examining “important substantive issues” on which it intends to engage in additional rulemaking. HRSA notes that it would be “disruptive” for drug manufacturers to implement requirements of the January 2017 final rule while “substantial questions of fact, law and policy” are undergoing further consideration. The delay has largely been applauded by pharmaceutical manufacturers, and opposed by major hospital groups. HRSA is seeking comment on the proposed delay by mid-September.