Health Policy Report

The Week in Review

House leaders from both parties successfully shepherded a revised bill (H.R. 5278) addressing the Puerto Rico debt crisis through the lower chamber, putting the legislation on track to be on the president’s desk before a July 1 deadline for the island territory’s next debt payment. The measure, which was approved on a 297-127 vote on Thursday, would create a seven-member board to help manage the Puerto Rico’s debt restructuring and fiscal policy. While the White House has urged Senate leaders to quickly advance the bill, Senate Majority Leader Mitch McConnell (R-KY) has not yet scheduled its consideration in the upper chamber.

The House also managed to get back on track with the appropriations process last week by approving the fiscal 2017 Legislative Branch spending bill (H.R. 5325) on a 233-175 vote on Friday. Later that day, the chamber also forced through two resolutions aiming to preempt potential future actions on energy policy. The resolutions formally put the House on record as saying that the Obama Administration’s proposal for a $10-a-barrel tax on oil (H. Con. Res. 112) and any future tax on fossil fuels (H. Con. Res. 89) would be harmful to the U.S. economy.

Meanwhile, the Senate continued its work on the fiscal 2017 National Defense Authorization Act (NDAA) (S. 2943), with Sen. John McCain’s (R-AZ) proposal to use $18 billion in war funding for Pentagon weapons programs failing to reach the necessary 60-vote threshold for inclusion in the underlying measure. The marathon debate on the measure – covering issues from economic sanctions on Iran to closing the Guantanamo Bay military prison – is set to come to a close next week after Leader McConnell filed for cloture last Friday.

The Week Ahead

After a successful cloture vote on Friday, the Senate aims to begin the week by wrapping up debate on the fiscal 2017 National Defense Authorization Act (NDAA) (S. 2943). Senators will work through the remaining amendments before moving on to the Commerce-Justice-Science spending bill (H.R. 2578). The $56.3 billion legislation would increase funding for the Space Launch System and the Orion spacecraft, which is designed to provide the platform for an eventual human mission to Mars. Senators may also quickly approve a House-passed measure (S. 2276) to reauthorize pipeline safety programs.

In the House, lawmakers will continue their appropriations work by taking up the 2017 defense spending bill. The measure (H.R. 5293) would use $16 billion of the Pentagon’s war-fighting funds to purchase additional military aircraft, a move that Democrats are likely to oppose. House lawmakers may also take up a measure (H.R. 5053) next week that would prohibit the Internal Revenue Service from requiring tax-exempt organizations to identify their donors.  

Finally, both chambers will be working on a compromise package to provide funding to combat the Zika virus. President Obama requested $1.9 billion in emergency funding to fight the mosquito-borne disease, but the two chambers passed competing resolutions that fell short of that figure. However, last week, former presidential candidate Sen. Marco Rubio (R-FL) spoke out in favor of providing the full amount, giving hope for a bigger package ahead of this week’s negotiations.

Senate Appropriations Committee Advances Labor-HHS Bill

Last Thursday, the Senate Appropriations Committee voted to report the fiscal 2017 Labor, Health and Human Services, and Education and related Agencies Appropriations bill to the floor. Lawmakers on both sides of the aisle praised the bill, while acknowledging that tough decisions had to be made, given that the funding level is $270 million below this year’s amount. The bill was negotiated and written by Sens. Roy Blunt (R-MO) and Patty Murray (D-WA), chairman and ranking member of the Labor-HHS subcommittee. It includes extra funding for two top priorities of both parties: medical research at the National Institutes of Health (NIH) and fighting the opioid drug abuse epidemic.

The measure includes a $2 billion increase for the NIH, bringing its total funding to $34 billion. It also increases funding for the Precision Medicine Initiative by $100 million, raising the total to $300 million. The bill gives $1.39 billion to Alzheimer’s disease research, an increase of $400 million. The Labor-HHS funding bill also keeps the Affordable Care Act (ACA) funded, although it requires the health care law’s risk corridor program to be budget-neutral for the third year in a row. It also eliminates funding for health law’s Independent Payment Advisory Board (IPAB), a controversial panel that would recommend ways to limit Medicare spending. The panel has never been set up, given that healthcare spending has grown too slowly to trigger the panel into action. The bill also includes $261 million, a $126 million increase over last year, slated for the CDC, SAMSA and HRSA to aid those agencies in fighting the opioid epidemic.

States Take On Drug Pricing

Fearing that the federal government may be moving too slowly, roughly a dozen states have embarked on initiatives to improve drug pricing transparency or deliver other solutions to address  concerns that medicines are too expensive. This year, California residents will vote on the Drug Price Relief Act, which would require the state to pay no more for prescription drugs than the US Department of Veterans Affairs rates. California is often seen as a bellwether state for shaping legislative ideas for the rest of the country. In Vermont, the governor recently signed into law one of the first state drug pricing bills.  The measure requires state regulators to develop a list of 15 drugs each year that are deemed too burdensome to state finances and/or where their prices have increased substantially.

Despite opposition from the pharmaceutical industry, drug transparency is a popular initiative with many consumer groups, employers, and hospitals, fueling action in state capitols across the country. California, Massachusetts, New York, North Carolina, Oregon, Pennsylvania, and Texas have introduced drug price transparency legislation, which would require drug manufacturers to disclose costs of R&D, production, and marketing. Drug cost containment strategies are being used in 25 states to rein in prescription drug costs. Meanwhile, Delaware, Louisiana, Maine, Maryland, Montana, New York, and Vermont have laws that limit the out-of-pocket payments of patients in private health plans.

HHS Seeks Limits on Short-Term Health Policies

HHS plans to limit the use of short-term health plans and tweak the Affordable Care Act's risk-adjustment program for health plans to account for people who need coverage for only part of the year. Under a proposed rule released last Wednesday, insurers would only be able to offer short-term health policies that last less than three months, and the coverage couldn’t be renewed at the end of that period. The proposal seeks to close a gap that has let healthier consumers purchase short-term plans that could last for nearly a year, sometimes using them as a cheaper substitute for ACA plans. The short-term plans haven’t been considered individual health insurance, so they have been exempt from the ACA’s coverage standards. The short-term policies also don’t spare consumers from the health law’s penalties for lack of coverage, but can be far less expensive than ACA plans because they lack features that the health law requires for other policies, such as coverage for preexisting medical conditions, maternity care and prescription drugs.

The plans’ popularity has created a challenge for the ACA’s marketplaces, siphoning off healthier people who were needed to help make the ACA exchange model work. Those consumers could then add to the costs of ACA plans if they bought the fuller coverage only when they developed significant health needs. Industry consultants said the new proposal would make it very difficult to use short-term policies as an alternative for full ACA plans. In addition to the proposal on short-term plans, the Administration plans to tweak the ACA's risk-adjustment program for people who need coverage for only part of the year. Beginning in 2017, the risk-adjustment model will account for people who enroll for only a portion of the year because of major life changes. HHS is also cracking down on the use of special enrollment periods. Starting June 17, consumers will be asked to provide significant documentation to prove eligibility for coverage outside of open enrollment.

House-Passed Hospital Bill Faces Obstacles in Senate

The House on Tuesday overwhelmingly approved an industry-backed hospital bill to amend the site-neutral payment provision passed in last year’s omnibus funding bill. The bipartisan measure would amend the changes made to Medicare hospital payments under the Bipartisan Budget Act last year, which changed the rate at which Medicare reimburses doctors’ offices purchased by hospitals. Until then, these doctors offices were reimbursed at the same rate as hospitals, which is higher than the rate paid to physicians’ offices. The argument goes that hospitals incur additional expenses, and thus should be reimbursed at a higher rate. Supporters said the new policy helps cut down on unnecessary health care spending while reducing hospitals’ incentive to acquire physician offices. The bill passed on Tuesday would exempt facilities from the new payment system if they were developing outpatient facilities when it passed. Among its other provisions, the bill would allow hospitals providing cancer care to operate under a separate payment system, help hospitals serving low-income communities avoid penalties for readmissions by adding consideration of socioeconomic status, and extend a program dealing with the reimbursement of small rural hospitals.

But despite overwhelming support for the bill in the lower chamber, the bill could face hurdles in the Senate, where Finance Committee members are expected to add provisions that will make it difficult to pass the bill. Among those proposals include lifting a ban on physician-owned hospitals, and reversing a wage-index policy that benefits hospitals in a few states – mostly Massachusetts – to the detriment of hospitals in other states. While the Physician-Owned Hospitals of America has emphasized that there is support among senators for legislation that would lift the ban on physician-owned hospitals, most other hospitals would aggressively lobby against lifting the ban.

E&C Committee to Consider Long-Stalled Mental Health Legislation

The House Energy and Commerce committee will mark up a major mental health reform bill next Wednesday, a significant step forward for the long-delayed legislation. The Committee has been working for months to make changes to the legislation from Rep. Tim Murphy (R-PA) to try to smooth over controversial areas, and a draft circulated last week from Chairman Fred Upton (R-MI) will likely assuage the concerns of Committee Democrats. The previous version of the bill would have changed the Health Insurance Portability and Accountability Act (HIPAA) to make it easier for caregivers to have information about mentally ill people. Democrats warned this would loosen privacy protections for patients. The new version of the bill leaves out these changes and instead shifts the responsibility to the Department of Health and Human Services (HHS) to address problems with HIPAA.

Among the other primary concerns, Democrats had worried that the bill would dismantle the Substance Abuse and Mental Health Services Administration (SAMHSA). The new bill leaves the agency’s administrator in place, however, and creates a new HHS assistant secretary on top of that. Democrats also disliked a funding boost for state Assisted Outpatient Treatment (AOT) laws, which allow judges to order mentally ill people to follow a treatment plan. The new bill eliminates a 2 percent funding boost to states to incentivize such laws and instead authorizes new funding that will have to be appropriated later on. The new bill also scales back a costly provision to allow Medicaid to pay for more care at mental health facilities, which had drawn some Republican concerns. The revised bill instead codifies the Obama administration’s less expansive managed care regulation.