Health Policy Report

The Week in Review
 
The House and Senate were both in session last week, as each chamber passed respective versions of funding extensions for the Federal Aviation Administration (FAA).  Early in the week, the House advanced their own version of legislation that would extend aviation taxes — including fuel and ticket charges — through March 2017.  Later, the Senate passed its own version of the bill (H.R. 4721) that would only extend the taxing authority through mid-July, a maneuver from Senate Democrats who say they were promised they could attach renewal of alternative energy tax credits to an FAA bill this year. 

Also in the House last week, the chamber passed GOP-backed legislation to exempt operators of coal-fueled power plants from certain Environmental Protection Agency (EPA) rules. The bill (H.R. 3797), which has come under veto threat from the White House, would effectively lock in place the Cross-State Air Pollution Rule Phase I emissions allowances for sulfur dioxide from plants that use coal refuse for 75 percent or more of their fuel.  House Members also voted to pass a measure (H.R. 4596) which would exclude small businesses from certain federal broadband transparency rules.
 
In the Senate, negotiators failed to find a path forward legislation (S.764) that would invalidate state rules mandating labels for food containing genetically modified organisms (GMOs).  Trade groups representing agribusinesses support the GMO proposal, which was sponsored by Senate Agriculture Committee Chairman Pat Roberts (R-KS). But Roberts was unable to resolve differences with ranking member Debbie Stabenow (D-MI) and other Democrats, who criticized the measure for being too weak.
 
The Week Ahead
 
With the Senate out for a two-week recess, legislative activity will be focused on the House, where members are expected to consider legislation designed to alter the authority of the Federal Trade Commission (FTC) to police mergers. The House Rules Committee is scheduled to meet today to set the terms of floor debate for the financial regulation bill (H.R. 2745), which would limit the FTC’s authority to challenge mergers and acquisitions through administrative action. The measure would require the Commission to pursue actions in federal court to block a transaction that could violate antitrust laws.
 
With FAA program and funding authority set to expire at the end of the month, the House will also be under pressure to act on a Senate-amended three-and-a-half-month FAA extension (H.R. 4721) before lawmakers leave town March 24 for their own two-week recess.  The House already passed a longer-term extension of the agency’s authority to collect taxes, but Senate Democrats rejected that plan, saying they wanted to attach alternative energy tax credit provisions to the FAA bill later this year.
 
Off the floor, House appropriators are slated to mark up their first fiscal 2017 spending bill. The House Appropriations Military Construction-VA Subcommittee has scheduled a Wednesday markup, and Chairman Hal Rogers (R-KY) said his panel plans to proceed without the official top-line spending allocation from a budget resolution that House leaders continue to seek a path forward on.  Budget Committee Chairman Tom Price (R-GA) is seeking to round up votes for a possible floor vote next month on the $3.9 trillion budget resolution his committee approved last week, which has been complicated by opposition from the House Freedom Caucus.
 
GOP Seeks to Appease Freedom Caucus on FY 2017 Budget
 
House Republicans leaders unveiled their $1.07 trillion Fiscal Year (FY) 2017 budget resolution last week, and are already maneuvering to quell opposition from the Freedom Caucus – a cadre representing the chamber’s 40 most conservative members. When Budget Committee Chairman Tom Price (R-GA) laid out his plan on Tuesday, it was already clear that concessions would have to be made for Speaker Paul Ryan (R-WI) to get the package through the House with 218 votes – the minimum needed to advance on a party-line vote. While Speaker Ryan and Chairman Price have refused to budge on the $1.07 trillion discretionary spending levels allowed by last year’s budget agreement, the leaders are hoping that a side package of mandatory savings – a $30 billion per-year package of entitlement cuts – will assuage conservatives’ concerns over the spending caps.
 
Leadership’s approach has been met with skepticism from fiscal hawks who have acknowledged that the mandatory cuts would be a non-starter in the Senate. Rep. Dave Brat (R-VA), a prominent voice in the Freedom Caucus, has said the mandatory cuts bills should be included in must-pass legislation instead of being allowed to stall in the Senate. Rep. Brat, along with Rep. Marlin Stutzman (R-IN), were the only Republicans to align with Democrats in voting against the proposal in a Budget Committee markup last week. Meanwhile, several other Freedom Caucus members – Reps. Rod Blum (R-IA), Scott Garrett (R-NJ), Alex Mooney (R-WV), Gary Palmer (R-AL) and Mark Sanford (R-SC) – all voted to advance the bill out of the Committee, but have yet to commit to supporting the proposal on the House floor.  Before the proposal was passed, Rep. Garret successfully offered a surprise amendment pulling the package further right, including a mandate that $30 billion in entitlement cuts be attached to a must-pass bill.
 
House Republican leaders are further considering a package of rules changes that could help bring dissenting conservatives on board.  The idea of a rules package was generated by a memo from Rep. Tom McClintock (R-CA), who on March 3 urged fellow Republicans to make various changes in House rules to try to curb spending growth. His ideas included allowing mandatory spending to be cut in appropriations bills, barring the expansion of mandatory spending programs, and strengthening a prohibition against appropriations for unauthorized programs. Speaker Ryan has expressed openness to the proposals, saying in a statement last week that he “appreciates Rep. McClintock’s continued hard work and good faith efforts to help get a responsible budget package adopted and to get our fiscal House in order.”
 
Meanwhile, Senate Republicans have shown little enthusiasm for taking up a budget. Majority Leader Mitch McConnell (R-KY) has said appropriators in the upper chamber are set to begin moving on appropriations bills, which typically happens only after a budget plan has been adopted.
 
Key House Panels Introduce Entitlement Reforms to Quell Conservative Budget Opposition  
 
As part of a bid by House Republican leaders to win the support of the Freedom Caucus for their congressional budget blueprint, a pair of influential House committees have introduced a package of legislation claiming a total of $30 billion in mandatory-program reductions in FY 2017.  The House Energy and Commerce Committee last week advanced a package of cuts that would, among other things: (1) allow more lottery winnings to be counted as income for the purposes of determining Medicaid eligibility, (2) reduce Medicaid reimbursement rates for prisoners, (3) eliminate an increase in the federal matching rate for the State Children’s Health Insurance Program that was enacted as part of the Affordable Care Act (ACA), and (4) repeal the  ACA’s Prevention and Public Health Fund.  Meanwhile, Ways and Means Committee Chairman Kevin Brady (R-TX) last week introduced a separate package of mandatory cuts, which he’s teeing up for a vote soon.  That package includes a measure to require a Social Security number to claim a refund under the Child Tax Credit, along with a provision aimed at recovering ACA subsidy overpayments from under-reported income. The combined $30 billion in annual cuts to mandatory spending are designed as a concession to conservatives opposed to the discretionary spending levels in the GOP’s draft budget resolution.
 
Stakeholders Urge Congress to Push Back on Part B Drug Demo
 
As House lawmakers consider what steps to take regarding the Centers for Medicare and Medicaid Services’ (CMS) recently proposed Medicare Part B drug-payment demonstration, stakeholders are urging House and Senate leadership to ask the agency to withdraw the proposal.  In a letter from more than 300 oncologists, specialty doctors, biotechnology groups and others, the groups suggest that “a Center for Medicare & Medicaid Innovation (CMMI) initiative that focuses on costs rather than patients and health care quality, implemented based on primary care service areas, rather than the unique challenges of patients, is misguided and ill-considered.” The stakeholders go on to say that CMMI is statutorily required to make sure its initiatives target “deficits in care” and can only expand after an analysis of the model. But the Part B drug-pay demo would be applied on a nationwide basis, with the exception of Maryland, and will include the majority of Part B drugs, the stakeholders note.
 
In its initial phase, the CMS demo would restructure the Part B physician add-on payment to a combination of a flat fee and a lower percentage rate based on drug prices. Medicare Part B currently pays providers the average sales price of a drug, plus 6 percent. That policy has been criticized as encouraging providers to use expensive products because a portion of providers' reimbursement is based on the percentage of drug prices.  CMS officials are also asking for input on five other drug-spending policies they are considering testing for outpatients in the second phase of the pilot, which would begin in January 2017. Those policies include paying the same amount for therapeutically similar drugs; discounting or eliminating patient cost-sharing; adjusting payment for drugs based on how well they work; adjusting payment based on the diseases they're prescribed for; and creating prescribing guidelines.
 
Along with House and Senate leaders, the letter was also sent to the chairs and ranking members of the Senate Finance Committee, House Energy & Commerce Committee and House Ways & Means Committee. Senate Finance Chair Orrin Hatch (R-UT), House Ways & Means Chair Kevin Brady (R-TX) and Energy & Commerce Chair Fred Upton (R-MI) slammed CMS' Part B drug payment demo shortly after it was announced, calling it an “experiment on seniors.” The committee chairs also said they would pursue aggressive oversight of CMMI.
 
Senate HELP Committee Advances Mental Health Legislation
 
Last Wednesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced the bipartisan and wide-raging Mental Health Reform Act of 2016 (S. 2680) by voice vote. Among its provisions, the bill aims to: (1) to improve coordination of mental health programs by granting new powers to an assistant secretary in the Department of Health and Human Services and sets up a new office to encourage the adoption of evidence-based programs; (2) authorize grants for topics like integrating physical and mental health services, though the amount of the funding will depend on the appropriations process; and (3) push insurance companies to provide better mental health coverage through “parity.”
 
While the bipartisan bill easily advanced, a number of thornier amendments are expected to be addressed on the Senate floor should Majority Leader Mitch McConnell (R-KY) bring it up for a vote.  Among those are an amendment to remove a restriction on Medicaid from paying for care at certain mental health facilities, known as the “IMD [Institutions for Mental Diseases] exclusion,” which is seen as a major barrier to care access. A number of senators expressed support for the provision Wednesday, including Sens. Susan Collins (R-ME), and Chris Murphy (D-CT). Chairman Lamar Alexander (R-TN), highlighting bipartisan support of the policy, noted that the provision could be offered as an amendment on the floor. The Congressional Budget Office (CBO) has scored the change at $40 billion to $60 billion over 10 years, however Sen. Murphy has already begun talks with the Senate Finance Committee to find a way to pay for it. The CBO is said to be revisiting the score after being given new information by House lawmakers.
 
Among other provisions that could be added on the Senate floor are: (1) an amendment by Sen. Sheldon Whitehouse (D-RI) to fund a $250 million pilot program for mental health providers to be eligible for “meaningful use” financial incentive payments for adopting electronic health records; (2) an amendment by Sen. Roy Blunt (R-MO) to expand a program setting up urgent care mental health clinics from eight states to 24 states; and (3) a controversial amendment by Sen. John Cornyn (R-TX) which contains gun provisions, though Sen. Cornyn may also decide to offer his bill separately at a different time.
 
Some advocates have criticized the bill for being too narrow, particularly in the area of helping people with serious mental illnesses,  Rep. Tim Murphy (R-PA), the author of alternative mental health legislation in the House (H.R. 2646), has sharply criticized the HELP Committee’s compromise bill for “abandoning important reforms in order to reach a deal.”
 
CMS to Release MACRA Draft Proposal in the Spring
 
At a hearing with House lawmakers last Thursday, Dr. Patrick Conway, CMS’ chief medical officer, revealed that a proposed rule implementing the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) will be unveiled in the spring. MACRA will encourage health care providers to participate in CMS’ quality programs in one of two ways: (1) the new Merit-Based Incentive Payment System (MIPS), and (2) Alternative Payment Models (APMs). The forthcoming CMS rule will be key in shaping this major overhaul of payments for physicians, which focuses on paying for “value” over “volume.”
 
As Rep. Michael C. Burgess (R-TX), a physician, pointed out during the hearing last week, not all doctors are happy about the shift to alternative payment systems. Rep. Burgess suggested that the overhaul of Medicare payments will be highly disruptive and that many physicians would prefer to have fewer demands attached to their Medicare reimbursement. He went on to add that many of his fellow doctors are nervous about how the changes will affect them. Rep. Burgess and a number of other committee members told Dr. Conway that they will watch closely as his agency implements the new payment system.
 
House Appropriators Reject Mandatory NIH Funding Proposal
 
The House Appropriations Subcommittee on Labor, Health and Human Services, and Education rejected the Obama Administration’s proposal to use mandatory spending, rather than discretionary funding, to fund part of the biomedical research agency at a hearing on the National Institute of Health (NIH) last week. President Obama’s proposed fiscal 2017 budget designates $33.1 billion for NIH, including new funds for the “moonshot” initiative to cure cancer. The White House’s latest proposal would also direct $1 billion in new mandatory funding over two years to combat prescription drug and heroin abuse through enhanced treatment, prevention and recovery efforts.
 
At a markup last week, members of the Subcommittee criticized the proposal for relying too heavily on mandatory funds, arguing that the NIH's discretionary funding would actually decrease if the proposed mandatory funding was not provided. Among those who cited concerns was Subcommittee Chair Tom Cole (R-OK), who stated that “new, mandatory, one-time spending that may never materialize is not the path to do this.” Appropriations Committee Chairman Harold Rogers (R-KY) has made clear that any funding boosts would not come from mandatory increases.