Health Policy Report

The Week in Review

Last week, Congressional Democrats made their first move in a series of legislative and legal maneuvers to prevent President Trump from circumventing Congress to fund a border wall. House lawmakers passed (245-182) a resolution of disapproval (H.J.Res 46) that would reject the President’s national emergency declaration on the southern border. While reports suggest that the House GOP is expected to largely vote against the Democratic resolution, schisms among Senate Republicans are starting to emerge as Sens. Susan Collins (R-ME), Lisa Murkowski (R-AK), Thom Tillis (R-NC), and Rand Paul (R-KY) have indicated they will join Democrats in voting to reject the national emergency declaration.

Also in the House, lawmakers cleared a pair of measures aimed at improving the nation’s gun background check system. Last Thursday, the House passed (240-190) a bill (H.R. 8) that aims to strengthen the existing gun background check system by mandating universal background checks — thus closing a loophole for buyers online and at gun shows —ensuring individuals prohibited from gun possession are not able to obtain firearms. The lower chamber also cleared (228-198) a bill (H.R. 1112) that would extend the initial background check review period to 10 days from three. Despite passage of the gun control measures, the fates these bills are uncertain in the GOP-controlled Senate and White House.

Meanwhile, Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) rolled out a bill (text; summary) that would renew over two dozen expired tax breaks for businesses and individuals. The proposal would provide disaster tax relief benefits — such as allowing access to retirement funds, employee retention credits, and rules on earned income and deductions for disaster-related personal casualty losses — to individuals and businesses adversely impacted by natural disasters in 2018. The Grassley-Wyden bill would also extend a rule that allows taxpayers to claim an itemized deduction for unreimbursed medical expenses when those expenses exceed 7.5 percent of their adjusted gross income.

While it remains to be seen if the Grassley-Wyden bill can pick up enough momentum to pass both chambers on its own, addressing these so-called “tax extenders” appears to be a top priority for Chairman Grassley this year. His efforts to renew the provisions could result in the bill getting tacked on to a broader legislative vehicle that addresses a host of “must-pass” priorities such as disaster relief, agreements on the debt ceiling and budget caps, and reauthorization of the 9/11 victim’s compensation fund and Violence Against Women Act (VAWA). Backpay for furloughed federal contractors could also conceivably ride on that package.

The Week Ahead

House and Senate lawmakers are set to begin another legislative workweek. Senators will return to action today and will resume their push to clear the presidential nominations queue with consideration of Allison Jones Rushing’s nomination to be a Circuit Judge for the Fourth Circuit. House lawmakers will return Tuesday, and have teed up the Democrats’ sweeping ethics, campaign finance, and voting rights reform bill (H.R. 1) for the week.

Senate Finance Committee Explores Solutions to Rising Drug Costs

Last Tuesday, the Senate Finance Committee held its second hearing in a series on rising drug costs and possible policy solutions to bring down prices. The hearing featured testimony from seven CEOs of leading drug companies, who were re-invited to testify after Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) publicly scolded drug manufacturers for refusing an invitation to testify in January. Witnesses invited to testify included leaders from drug companies AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer, and Sanofi. Chairman Grassley indicated that representatives from Pharmacy Benefit Managers (PBMs) — who the drug companies were eager to point to as cause for rising costs — will be the next group invited to appear before the Committee.

Chairman Grassley and Ranking Member Wyden were united in their quest for bipartisan, comprehensive legislative solutions, although Chairman Grassley warned he will take his time pursuing drug pricing reforms. Although the hearing featured fewer attacks on the pharmaceutical industry than anticipated, Ranking Member Wyden individually called out each company testifying for actions he declared helped raise costs. In particular, several senators offered pointed questions to AbbVie, which has been criticized for the “patent thicket” that has stymied biosimilar competition to their blockbuster drug Humira. Sen. John Cornyn (R-TX) was among the most vocal in that criticism, a notable departure for the number two Senate Republican who has previously been wary to censure the industry. That left waning support among Republicans who did appear on the dais: while Sens. Pat Roberts (R-KS) and Johnny Isakson (R-GA) were among the few who struck a deferential tone in their questioning, other potential industry allies expressed some concerns. For example, Sen. John Thune (R-SD) expressed doubt that value-based pricing agreements would give drug companies incentives to lower drug costs, and Sen. Bill Cassidy (R-LA) expressed support for President Trump’s international drug pricing index and changes to the six protected classes policy.

The witnesses, for their part, expressed a united front in their commitment to work with Congress while joining in criticism of other players in the supply chain. Witnesses agreed that comprehensive legislation to lower drug costs should eliminate rebates for pharmacy benefit managers (PBMs), cap out-of-pocket costs in Medicare Part D, encourage greater use of value-based pricing arrangements, and increase industry-wide transparency on how prices are set. Witnesses clarified that they would be inclined to lower list prices if rebates were eliminated in both the commercial market and Medicare, and several expressed support for increased biosimilar competition. Witnesses were quick to identify PBMs and insurers as the leading cause for increasing prices, skirting arguments from senators who suggested that addressing high list prices should be a top priority for policymakers. Finally, witnesses faced scrutiny over taxpayer and company-funded research and development costs, as well as international price differences. It was suggested by witnesses that the U.S. try to share the burden of research and development costs through trade negotiations, although few material policy solutions in this area ultimately emerged. 

Progressive House Democrats Introduce 'Medicare for All' Legislation

Rep. Pramila Jayapal (D-WA) — with 107 co-sponsors — introduced a revised Medicare for All plan (H.R. 1384) on Wednesday. The legislation, which was introduced without a score from the Congressional Budget Office (CBO), would replace private insurance in two years with a government-run, single-payer system encompassing all Americans, and would offer medical, dental, vision, pharmaceutical, maternity, and long-term care services. The latest Medicare for All push would offer hospitals and institutional providers a fixed budget with which to work, but would pay doctors based on services rendered through the fee-for-service system. Additionally, the plan protects against discrimination and would allow patients to see any provider. The government would determine services that federally qualified health centers must cover and directly negotiate prices for drugs, medical supplies and other technologies each year, and hospitals would negotiate the salaries of doctors and other health care employees with the government annually. The bill also specifies that along with the elimination of all other types of insurance, it would do away with cost-sharing and balanced billing.

Rep. Jayapal has commitments for Medicare for All hearings from the chairmen of the House Rules and Budget committees, although House Budget Chair John Yarmuth (D-KY) expressed skepticism over the bill and asked the Congressional Budget Office to study the design and policy implications of developing a single-payer health care system. Speaker Nancy Pelosi (D-CA) is allowing the hearings, but isn’t a proponent of the proposal and stated in an interview she wasn’t sure how it would get paid for. Previous CBO reports for Medicare for All proposals have estimated a $32 trillion price tag over the course of ten years. The same day the bill was released, the New Democrat Coalition, comprised of 101 centrist members, called for Democrats to immediately work together with Republicans to bring down Affordable Care Act premiums and reverse the Trump administration’s “sabotage” of the health care law. America’s Health Insurance Plans and the American Hospital Association publicly spoke out against Medicare for All last week, and the Blue Cross Blue Shield Association endorsed the New Democrat Coalition’s plan on Thursday.

Trump Administration Issues RFI to Help Preserve Grandfathered Group Plans, Expand HSAs

The Departments of Health and Human Services, Labor, and Treasury issued a Request for Information (RFI) on challenges related to maintaining “grandfathered” group coverage under the Affordable Care Act (ACA), citing “limited information” available on the subject. The RFI also asks how the Departments can help plans and insurers keep their grandfathered status — consistent with existing law — in “ways that would benefit employers, employee organizations, plan participants and beneficiaries, and other stakeholders.” Comments on the RFI are due March 27, 2019.

The RFI asks stakeholders to clarify how the federal government could help preserve grandfathered status, the primary reasons why employers and insurers have chosen to preserve grandfathered status, why individuals remain enrolled in grandfathered plans, factors considered in whether to maintain grandfathered plans or not, and the changes in benefits that typically result in the loss of grandfathered status. Additionally, the administration hopes to gain more insight on the prevalence of grandfathered plans, characteristics of grandfathered plans, the major differences between grandfathered and non-grandfathered plans, and overall impact that grandfathered group plans have had on the individual and small group market risk pools.

The RFI is the latest in a series of actions by the administration to insert more flexibility in the implementation and interpretation of the ACA. Most of the administration’s actions have focused on the individual market — including making it easier to enroll in short-term and association health plans — but the RFI requests input on potential changes to make it easier for non-compliant group plans to thrive. Last week, the Department of Health and Human Services (HHS) Secretary Alex Azar floated the possibility that the administration funnel ACA subsidies into Health Savings Accounts (HSAs) for people in the individual market to pay for premiums and other out-of-pocket health spending. At the same time, the administration is exploring a proposal that would allow high-deductible plans with HSAs to cover preventive services such as providing free insulin.

Surprise Billing Legislation to be Released this Month

Bipartisan surprise billing legislation will be released later this month, according to bill sponsors Sens. Bill Cassidy (R-LA) and Maggie Hassan (D-NH). Sen. Cassidy explained that a bipartisan working group is ironing out final details with health plans and insurers on middle-ground payment rates, and noted infighting between hospitals and insurers had delayed the introduction of the legislation. He clarified that while insurers want Congress to set a low benchmark rate for any out-of-network services, hospitals hope to retain the ability to negotiate rates. Senate Health, Education, Labor, & Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) has not yet committed to a hearing on the topic, according to Sen. Cassidy.

Sens. Cassidy and Hassan revealed they are looking to employ a “baseball-style” arbitration process, but have not yet decided on the issue. They went on to note that although some members of the working group wish to have amounts specified in the language, others do not. The working group on surprise billing consists of Sens. Cassidy, Hassan, Lisa Murkowski (R-AK), Tom Carper (D-DE), Todd Young (R-IN), and Michael Bennett (D-CO). The group recently requested stakeholders submit data on surprise billing to better inform the coming legislation.