Health Policy Report

The Week in Review

Congress returned for a truncated legislative work week as lawmakers made headway in the FY 2019 appropriations process. Both chambers passed the first conference report on a package of three fiscal 2019 spending bills, which fund agencies including the departments of Energy and Veterans Affairs, as well as military construction projects and Congress itself. Up next on the government spending docket is the “minibus” for the Defense-Labor, Health and Human Services, Education (Labor-HHS) FY 2019 funding bills (H.R. 6157) (bill text; conference report; summary). The Defense-Labor-HHS package will also serve as the vehicle for a continuing resolution (CR) through December 7^th — allowing Congress to avert a shutdown and punt decisions on controversial issues until after the mid-term elections.

Due to Hurricane Florence’s landfall and its disruption to air travel, legislative action outside of the appropriations work was limited as both chambers wrapped up work early. The House cleared over a dozen measures under suspension of the rules, including a bill (S. 3021) that reauthorizes the Water Resources Development Act (WRDA). Meanwhile, The Senate voted to confirm Charles Rettig to be Commissioner of the Internal Revenue Service (IRS).

The Week Ahead

The Senate is slated to reconvene today (Monday), when it will hold a vote on a highly anticipated package of bills to address the nation’s opioid crisis. The Opioid Crisis Response Act (section-by-section) comprises more than 70 bills reported out of five Senate committees and touches on nearly every aspect of the epidemic. If passed, the bill will need to be reconciled with the House-passed measure (H.R. 6) prior to becoming law. The upper chamber is also expected to vote on the Defense-Labor-HHS-Education conference report next week.

The House will remain out of session until Tuesday, September 25. When the chamber returns, lawmakers are expected to hold a vote on the Defense-Labor-HHS-Education conference report, as well as a bill (H.R. 3798) that would amend the Affordable Care Act’s (ACA) employer mandate to adjust the definition of “full-time employees” from a 30-hour threshold to a 40-hour threshold.

Labor-HHS Package Jettisons Drug Pricing Proposal

As Congressional negotiators reached an agreement last Thursday on a short-term spending package that would fund the government through December 7, lawmakers ultimately agreed to omit a drug pricing transparency proposal that was previously included in the Senate-passed Labor-HHS bill. The proposal, championed by Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL), would have provided $1 million for HHS to craft regulations to require that drug prices be included in direct-to-consumer (DTC) advertisements. The provision would have buttressed the administrations ongoing efforts to develop regulations on DTC — something that administration officials have indicated they are likely to do with or without congressional support. While Sen. Durbin later threatened to offer the language as an amendment to the spending package, the effort was trumped by lawmakers’ desire for expediency in passing the massive funding bill before the end of the current fiscal year. The Senate is expected to vote on combined Defense-Labor-HHS spending bill and continuing resolution this week, with the House expected to vote when they return next week.

CMS Streamlines Hardship Exemption Claims for Individual Mandate for 2018 

The Centers for Medicare & Medicaid Services (CMS) released guidance last week detailing how consumers can claim hardship exemption from the tax penalty imposed for not maintaining health coverage for 2018 on their federal income tax returns. CMS Administrator Seema Verma explained that the announcement “shows how President Trump is working to ease the burden of Obamacare.” CMS reported in the announcement that nearly 80 percent of households subject to individual mandate penalties in 2015 earned less than $50,000 a year, and called the Affordable Care Act (ACA) policy harmful to low and middle income Americans.

The health agency notes that the move to streamline hardship exemptions is a direct response to President Trump’s first Executive Order, mandating agencies minimize unwanted economic and regulatory burdens of the ACA on individuals and families. The announcement also follows the Tax Cuts and Jobs Act of 2017, which reduced the individual mandate penalty to $0 after the start of 2019. Individuals will only be subject to individual mandate penalties through the end of the 2018.

In the new streamlined path, taxpayers will be able to claim their exemption from the individual mandate directly on their tax return without presenting the documentary evidence or written explanation generally required for hardship exemptions. CMS clarified that consumers will still be able to apply for these exemptions through the Exchange using the existing application process, and warned consumers should keep with their other tax records any documentation that demonstrates qualification for the hardship exemption. Traditionally, individuals were only eligible for hardship exemptions under circumstances such as homelessness, domestic violence, or natural disasters and with sufficient documentation. The new streamlined path will allow for hardship exemptions from the penalty to be filed for more general financial burdens. For example, consumers can claim exemption if the expense of purchasing a qualified health plan would have caused the individual to “experience serious deprivation of food, shelter, clothing, or other necessities.”

House Bill Amending ACA Employer Mandate Would Cost $58.5 Billion, Says CBO

Last Tuesday, the Congressional Budget Office (CBO) released its score of a House Republican bill that would change the Affordable Care Act’s (ACA) employer mandate with respect to the full-time employee threshold. The Save American Workers Act of 2018 (H.R. 3798), sponsored by Rep. Jackie Walorski (R-IN), would cost the federal government $58.5 billion over the next 10 years, according to the CBO. A provision in the bill that imposes a moratorium on the employer mandate accounts for a large share of the lost revenue. The measure includes several additions to the bill that Rep. Walorski originally introduced last year. The updated bill would: (1) repeal the 30-hour threshold for classification as a full-time employee for the purposes of the employer mandate in the ACA and replace it with a 40-hour threshold; (2) give employers retroactive relief from any penalties resulting from failing to provide employer-sponsored health coverage in past years; and (3) delay the excise tax on high-cost health plans — the so-called “Cadillac Tax” — until 2023.

Among the CBO’s key findings, the agency reports that the moratorium on the employer mandate providing retroactive relief for employers with more than 50 full-time equivalent workers accounts for a loss of revenue of $25.9 billion, concentrated in the first three years after the bill’s effective date. The delay of the Cadillac Tax accounts for a further $15.5 billion in lost revenue. The bill’s central provision, the change in the definition for full-time equivalent for the purposes of the ACA, would have relatively little budgetary impact according to the CBO, saving the federal government $1 billion over ten years when coupled with the moratorium on the employer mandate.

The House is scheduled to vote on the bill this week. Previous versions of the bill stalled in the House during the 113th and 114th Congresses, and the GOP-controlled 115th Congress and a Republican President may be the bill’s best chance of enactment. While the bill is ultimately expected to pass the House this week, observers will be watching Republican incumbents in contested districts to see how they ultimately vote. Nonetheless, there remain major hurdles to the bill becoming law, as it would require the support of at least nine Senate Democrats. 

SAMHSA Releases National Survey on Drug Use and Health

The Substance Abuse and Mental Health Services Administration (SAMHSA) released the 2017 National Survey on Drug Use and Health (NSDUH) Friday morning, providing the nation with a statistical snapshot of the ongoing opioid epidemic and mental health of the civilian, non-institutionalized population over 12 years of age. The data is of particular importance to those interested in determining the prevalence of substance use disorder or mental illness among specific demographics or geographic subgroups. The report found that significantly more people received treatment for their substance use disorder in 2017 than 2016, and frequent marijuana use in both youth and young adults appears to be associated with opioid use, heavy alcohol use, and major depressive episodes. SAMHSA noted particular concern for young adults (ages 18-25), and reported higher rates of cigarette use, alcohol initiation, alcohol use disorder, heroin-related opioid use disorder, cocaine use, methamphetamine use, and LSD use than their younger and older counterparts. This population also had increasing rates of serious mental illness and major depressive episodes. Additionally, several data trends between 2015 and 2017 for pregnant women are also of concern to SAMHSA, with data trending in the wrong direction with respect to use of illicit drugs, including cocaine, marijuana, and opioids.

In a statement, Department of Health and Human Services (HHS) Secretary Alex Azar noted that the report would help better connect Americans to evidence-based treatments, while SAMHSA Assistant Secretary Elinor McCance-Katz explained the data provided the administration and stakeholders with an essential “roadmap” on where efforts should be focused. With Congress already poised to send legislation addressing the opioid epidemic to the President’s desk before the end of this year, lawmakers and the Administration could look to this and future data releases to shape new legislation and funding priorities in the next Congress.

Sec. Azar Notes Administration Looking to ‘Disruptive’ Reform for Drug Pricing

At a briefing last week, Department of Health and Human Services (HHS) Secretary Alex Azar explained that President Trump was exploring “disruptive” reform options to the “rules of the road” for the drug pricing system. He clarified that the changes wouldn’t dismantle companies, but would reorient their business models and the system they are a part of to bring down health care costs. He was careful not to place blame for the issue on pharmacy benefit managers (PBMs), and claimed the President’s plan would further empower PBMs. Additionally, Sec. Azar said his dream would be a market in which pharmacists could freely and easily substitute cheaper biosimilars for expensive name-brand biologics, and noted reform would focus on creating a “robust” market for both biosimilars and generics. The Health Secretary gave no specific timeline for when these changes might be released.