Health Policy Report

The Week in Review

While Congress continued their congressional recess, last week brought several news-worthy developments that will shape the political debate when lawmakers return in September. Tropical Storm Harvey battered the coast of Texas over the weekend, with total rainfall expected to reach 50 inches, causing significant damage in Houston and surrounding areas. Some confounding political dynamics are likely to ensue, as Sen. Ted Cruz (R-TX) and other Texas Republicans were among opponents of bi-state aid after Hurricane Sandy wreaked havoc in 2012, saying the federal relief package had become laden with unrelated “pork” spending. The irony wasn’t lost on Rep. Peter King (R-NY), who tweeted Sunday, “Ted Cruz & Texas cohorts voted [against] NY/NJ aid after Sandy but I’ll vote [for] Harvey aid. NY won’t abandon Texas. One bad turn doesn’t deserve another.”

Lawmakers are also likely return to a deluge of political questions, as controversies foment around race relations and immigration following President Trump’s response to protests in Charlottesville, the pardoning of former Arizona Sheriff Joe Arpaio, and continued calls to build a wall along the southern border. President Trump held a campaign-style rally in Phoenix, Arizona on Tuesday, where he threatened to veto any government funding measure that lacked provisions for the construction of the wall, adding to the threat of a government shutdown in early October. Later in the week, Trump officially pardoned Joe Arpaio, who had been convicted of criminal contempt for not following a judge's order to stop detaining Latinos solely on suspicions about their immigration status — a move that was condemned by many Republicans, including Arizona Sen. John McCain (R-AZ). And GOP leaders have continued to distance themselves from Trump on the response to the violence in Charlottesville, with Speaker Paul Ryan (R-WI) conceding that the President “messed up” in his reaction, and Secretary of State Rex Tillerson saying that Trump “speaks for himself” on the matter.

Among the other developments that emerged last week, President Trump outlined a new strategy for the war in Afghanistan in a primetime address. The administration's plan reportedly includes sending 3,900 additional U.S. troops to the country. Separately, Trump signed a directive banning transgender people from joining the military, and instructed the Pentagon and the Department of Homeland Security to evaluate how to handle transgender people who are currently serving. Additionally, White House officials confirmed last week that Sebastian Gorka, a former Breitbart staffer who served as a deputy assistant to Trump, is no longer part of the administration.

The Week Ahead

This will be the last week of the August recess as both chambers are slated to come back after Labor Day on Tuesday, Sep. 5. Congressional staffers and policymakers are likely to start gearing up for what is expected to be a tumultuous month with a series of deadlines for must-pass legislation, including bills to fund the government, raise the debt ceiling, and reauthorize the Children’s Health Insurance Program (CHIP), among others.

Governors, State Insurance Commissioners to Testify at Bipartisan Hearings

The Senate Health, Education, Labor, and Pensions (HELP) Committee has announced the first two of four hearings in September on stabilizing premiums in the Affordable Care Act (ACA) Exchanges. In a release, Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) note that the first two hearings will include testimony from state insurance commissioners and governors, respectively. The hearings will be held on September 6 and 7, and witnesses for the hearings are forthcoming. Governors Charlie Baker (R-MA), Steve Bullock (D-MO), Bill Haslam (R-TN), Gary Herbert (R-UT) and John Hickenlooper (D-CO) will testify at a hearing on Sept. 7. State insurance commissioners will testify Sept. 6.

Sens. Alexander and Murray have previously indicated that they hope to have a draft bill ready by mid-September, and could be looking to attach a “small, bipartisan, and balanced” package of reforms to one of the several moving vehicles that are expected to see congressional action at the end of next month. Sen. Alexander has identified continued cost-sharing reduction (CSR) payments to insurers and “greater flexibility for states” (potentially under Section 1332 waivers) as areas that are ripe for compromise.  Changes to the employer mandate, repeal or delay of the medical device tax, and other policies are also likely to be considered as part of the discussion.

Congress Faces CHIP Funding Deadline Upon Return

Nine million low-income children covered under the Children’s Health Insurance Program (CHIP) are set to lose federal funding if the program is not extended before the September 30^th deadline. Congress is under great pressure to fund CHIP, among other funding deadline expirations it faces this fall, and state governors and about 1,000 children's-advocate groups are lobbying Congress for CHIP reauthorization. Meanwhile, providers have expressed concern that many of the Medicare extender programs — over a dozen coverage provisions, grants, and social services programs that had previously been attached to the now-defunct “doc fix” — will not retain funding at the end of the fiscal year if they are separated from CHIP.

The last CHIP reauthorization only extended the program for two years, but advocates are pushing for a four- or five-year renewal that would give states more ability to plan long-term. We expect that Congress will uphold the ACA-enacted 23 percent enhanced federal matching rate for CHIP in their reauthorization, but lawmakers are unlikely to provide the longer-term authorization that advocates are seeking. The more pertinent question surrounding CHIP for many stakeholders is what other policies will “ride” alongside this moving health care vehicle.

CHIP and the Medicare extenders (therapy cap exceptions, low-volume hospital payments, and newborn home visiting (MIECHV), etc.) will cost about $23 billion if all are maintained for another two years. Further, some providers will be pushing for another delay of the ACA’s cuts to disproportionate share hospitals (DSH) — those that serve a large proportion of uninsured and Medicaid beneficiaries. As key negotiators on Capitol Hill have reportedly reach an agreement on policy but are at a stalemate on pay-fors, the odds are increasing that short-term extensions (ex. three months) may be necessary, or that CHIP could be bifurcated from DSH and the Medicare extenders — leaving provider advocates to fend for themselves later this year.

Former CMS Administrators Advise Medicaid and Marketplace Changes Should be Separate

Former CMS administrators Gail Wilensky (of the Bush administration) and Andy Slavitt (of the Obama administration), have advised lawmakers to address long-term Medicaid reforms and exchange stabilization as separate issues. Ms. Wilensky and Mr. Slavitt wrote in the Journal of the American Medical Association on August 15^th that lawmakers should delay efforts for a year to gather support for Medicaid reforms such as improving the waiver process, focusing the program on outcomes, and making states less reliant on supplemental Medicaid funding.

The former CMS officials laid out six areas where Medicaid could be improved: streamlining the waiver process, making Medicaid more outcomes-based, improving Medicaid financing, targeting access challenges, investing in data and technology infrastructure, and coordinating care for dual eligibles. To reduce burden on states and beneficiaries, the former administrators say they agree with current CMS Administrator Seema Verma and HHS Secretary Tom Price's March letter pledging more flexibility for states in the waiver process. Although they disagree on the future of federal funding for Medicaid, the former administrators say the federal government needs to review what funding is allowed, as too much Medicaid money currently comes from large supplemental pools, such as Disproportionate Share Hospital payments and uncompensated care pools. Additionally, Ms. Wilensky and Mr. Slavitt recommended greater coordination between Medicare and Medicaid for dually eligible beneficiaries, including more cost sharing with the states.