Health Policy Report

The Week in Review

Prior to leaving Washington for a two-week recess, House Democrats pulled their proposal to raise discretionary spending caps from the floor amid disagreements over non-defense spending levels. The legislation would provide for a $17 billion increase above FY 2019 budget caps for defense spending and a $34 billion bump above that level for non-defense. Members from the Congressional Progressive Caucus wouldn't support the underlying bill without an amendment from Rep. Pramila Jayapal (D-WA) that would have added $33 billion to non-defense spending, while moderates from the Blue Dog Coalition were pushing for a balanced budget amendment. Despite the House’s inaction on the spending caps deal and a budget resolution, the rule setting up debate on the Democrats spending cap proposal will allow appropriators to develop fiscal year (FY) 2020 spending bills with an overall limit of $1.3 trillion for defense and non-defense funding. 

Meanwhile, Senate Majority Leader Mitch McConnell (R-KY) said last week that he and House Speaker Nancy Pelosi (D-CA) reached an agreement to begin negotiating a new two-year deal to raise budget caps, starting with discussions among Congressional staff. Leader McConnell stated there is a "bipartisan desire" to avoid another stopgap spending bill, as well as to skirt the $126 billion in automatic budget cuts set to go into effect on Oct. 1 if Congress fails to raise the budget caps. Despite this early camaraderie, it remains to be seen whether the two sides can navigate contentious political landmines — such as border security, “Medicare for All,” and the Green New Deal — to reach a compromise. 

Elsewhere in the House last week, Democrats followed through on a key campaign promise to rebuke the Trump administration’s action on Net Neutrality. Lawmakers passed a bill (H.R. 1644) that would undo the Federal Communications Commission’s (FCC) repeal of the 2015 Open Internet Order. The measure is considered dead on arrival in the GOP-controlled Senate and White House. 

In the upper chamber, Senators voted to confirm a slew of presidential nominees, including Acting Interior Secretary David Bernhardt’s nomination to lead the department permanently. Bernhardt’s nomination passed despite concerns from lawmakers about possible conflicts of interest and the Interior Department’s plans for opening U.S. coasts to oil and gas drilling. House Natural Resources Committee Chairman Raúl Grijalva (D-AZ) stated that he plans to call Bernhardt to testify before his committee in the coming weeks as part of ongoing oversight investigations into policy decisions shepherded by former Secretary Ryan Zinke.

The Week Ahead

Both chambers of Congress have left Washington for a two-week district work period. Lawmakers will resume legislative business on Monday, April 29.

House Committees Continue Work on Drug Pricing

The House Ways & Means Committee unanimously passed a four-piece package aimed at lowering prescription drug costs at a markup last week, while the House Energy & Commerce Committee held a hearing with insulin manufacturers and pharmacy benefit managers (PBMs). In Ways & Means, the committee passed the Prescription Drug Sunshine, Transparency, Accountability and Reporting (STAR) Act (H.R. 2113; section-by-section) — their first stride in a step-wise approach to building a more comprehensive package alongside Energy & Commerce. The measure would require drug makers to justify large price hikes and high launch prices, order HHS to conduct a study on Medicare Part A drug costs, make HHS publish aggregate rebates and price concessions negotiated by pharmacy benefit managers on a public website, and compel drug makers to submit information to HHS on the average sales prices for drugs in Medicare Part B.

Meanwhile, the House Energy & Commerce Oversight Subcommittee Chair Diana DeGette (D-CO) told insulin manufacturers and PBMs that she hopes to finalize bipartisan legislation this summer to make diabetes medications affordable. While both parties criticized drug and PBM executives during the hearing, Democrats out-did GOP members with threats of directing Medicare to negotiate prices and regulating PBMs into utility status. Chair DeGette said those statements by fellow members were more “expressions of frustration” than real threats, however, and emphasized that any legislation advancing out of the Committee would be bipartisan.

At Finance Hearing, Senators Call on PBM Executives for Increased Transparency

Executives from five of the largest pharmacy benefit managers (PBMs) testified at the Senate Finance Committee last week, as Republicans and Democrats alike called for greater transparency into PBM business practices and contracts. Chairman Chuck Grassley (R-IA) expressed support for allowing PBMs to negotiate drug prices with manufacturers, but he also called for a greater examination of PBMs’ market power and whether or not consolidation benefits the public. Meanwhile, Democrats on the Committee expressed some skepticism of the Trump Administration’s proposal to end manufacturer rebates to PBMs in Medicare Part D and Medicaid — ranging from a sense that action is also needed to address drug prices at the manufacturer level, to relative sympathy for PBMs from Sens. Sherrod Brown (D-OH) and Sheldon Whitehouse (D-RI).

The PBM executives vigorously defended their businesses, saying that they help bring down drug prices and provide important clinical expertise in drug distribution. They largely denied “gaming” the rebate system and chalked up any instances in which they had done things that senators found unseemly, such as OptumRx’s reported request for two years’ notice for list price reductions, to one-off incidents.

The day after the hearing, Committee Chairman Chuck Grassley (R-IA) pushed lawmakers to move quickly on drug pricing, suggesting that if senators cannot reach consensus on a package to lower prescription drug costs by June, such a package may not pass this year. The plan is to advance packages in the different committees to the floor at the same time, Sen. Grassley said, similarly to how opioid legislation was handled last year. Sen. Grassley said he and Ranking Member Ron Wyden (D-OR) started discussions a month ago, but have not yet actually started working on a bill.

CMS Lays Out ACO Application Timeline For 2020 Start

The Centers for Medicare and Medicaid Services (CMS) has announced it will start accepting notices of intent on June 11 to apply to participate in the overhaul of the Medicare Shared Savings Program (MSSP) — a key program for Accountable Care Organizations, which the agency is now calling ‘Pathways to Success.’ The application window runs from July 1 through noon on July 29, and CMS expects ACO agreements with CMS to be signed in December.

Under Pathways to Success, CMS eliminated the four MSSP tracks (Track 1, Track 1+, Track 2, and Track 3) and replaced them with two pathways — Basic and Enhanced:

• The Basic track offers ACOs a glidepath to assuming downside financial risk by offering upside-only risk for the first two performance years and gradually increasing the levels of downside risk for the remaining three years of the performance period. The highest level of downside risk offered through the Basic track will qualify eligible clinicians for the Advanced Alternative Payment Model bonus under MACRA.
• Through the Enhanced track, ACOs can take on greater levels of financial risk compared to their peers. The track is similar to the current MSSP Track 3, but Enhanced will offer ACOs greater rewards for adopting the highest levels of financial risk, including telehealth and other Medicare payment requirement waivers.

Sanders Reintroduces ‘Medicare For All' Bill as Democrats Position for 2020

Sen. Bernie Sanders (I-VT) reintroduced his “Medicare for All” legislation along with 14 other Democratic senators, pushing the party’s most progressive health care proposal once again as most other Democrats focus on more moderate public options. The legislation updates his 2017 bill by adding coverage of long-term care — an element that is also included in the House's single-payer proposal, which was rolled out by Rep. Pramila Jayapal (D-WA) in late February. Sanders suggests several possible ways to pay for the health system overhaul, which would eliminate all private health insurance and move every American to a Medicare-like system but does not lay out a specific plan to finance his universal health care proposal.

The Medicare for All Act of 2019, which Sanders reintroduced on Wednesday (April 10), would turn Medicare into a universal health care program funded by the government. Sanders, who is running to be the 2020 Democratic nominee, has gained popularity in progressive circles thanks to his single-payer legislation. But Medicare for All has also gained many detractors due to concerns about cost and the level of government control. White House and congressional Republicans immediately pounced on the proposal, arguing that Democrats support a government takeover of health care, and they attempted to portray GOP ideas as a realistic alternative. The White House pointed to its efforts to lower drug costs and end surprise billing, Senate Republicans reintroduced legislation to protect people with preexisting conditions, and House GOP leaders revived a demand that Democrats hold hearings on Medicare for All in the committees of jurisdiction.