Health Policy Report

The Week in Review

While lawmakers spent the final week of summer campaigning in their districts and prepared for a sprint of a September session, Republican presidential nominee Donald Trump made a high-profile trip to Mexico, followed by speech in Arizona where he outlined a 10-point plan on illegal immigration. Standing on a stage in Mexico City – at a lectern alongside Mexican President Enrique Peña Nieto – Trump’s usually fiery rhetoric was shelved for a more tempered tone. He called the Mexicans friends while also detailing the American interest in securing the nations’ border and stopping drug trafficking.

But when he returned to the Arizona for a speech that night, Trump struck a more familiar tone. He doubled down on his hard-line approach to immigration policy, and he said Mexico, would, in fact, pay for the wall between the two countries, even as the country’s president was clear he would not.

In contrast, Secretary Clinton spent much of the month raising money. While her time off the trail may have earned her some criticism, the record-setting fundraising month for her campaign and the Democratic Party will go a long way in helping her to afford a campaign juggernaut.

The Month Ahead

After a seven-week summer hiatus, lawmakers return to Washington this week for a month-long session that will be headlined by the effort to avoid an election-year government shutdown when the fiscal year budget ends September 30, and break a stalemate over new money to fight the Zika virus. With members of the House Freedom Caucus and other hardline Republicans clamoring for a six-month spending bill, the big question for House Speaker Paul Ryan (R-WI) is the duration of the continuing resolution (CR). Speaker Ryan, Senate Minority Leader Harry Reid (D-NV), and appropriators in both chambers have expressed a preference for a three-month CR that would expire in December. But don’t expect for any intraparty disagreement to get sorted out before House Republicans hold their first post-recess caucus this week. Those discussions will also include finding a path forward for the stalled $1.1 billion in supplemental funding for Zika.

As CR negotiations begin in earnest, the biggest sticking point may be the demand from Democrats to eliminate a provision that would disqualify Planned Parenthood from receiving public health grants to combat Zika. Democrats argue Planned Parenthood is a vital provider of contraception to help prevent the spread of the sexually transmitted disease, which has been linked to more than 20 U.S. cases of microcephaly and other severe fetal defects. Another question for lawmakers is whether the CR should be the actual legislative vehicle for the Zika funding measure as well as other unrelated policy matters, such as a proposal to restore the ability of the Export-Import Bank to approve financing of export-sales deals worth more than $10 million.

The upcoming September session will also give both parties a final opportunity to use the legislative process to push political messages before lawmakers hit the campaign trail. House Majority Leader Kevin McCarthy (R-CA) said in a recent memo to Republican colleagues that several bills are teed up for floor action to advance his party’s “A Better Way” legislative agenda. They include one that would allow the Veterans Affairs Department to fire or demote employees for misconduct or bad performance. Others would streamline financial regulation of smaller companies seeking to raise capital from potential investors.

Congress may also make a last ditch effort to reach an agreement on stalled legislation to add money for drug development research at the National Institutes of Health (NIH) and allow for expedited approval of new treatments, medications and devices. The House passed its version of the 21st Century Cures Act (H.R. 6) by a 344-77 vote last year.

Finally, Freedom Caucus members have said they will push a resolution to impeach the Internal Revenue Service (IRS) commissioner, whom they blame for tamping down a House inquiry into allegations that the agency targeted pro-Republican groups for increased scrutiny of their bids for tax-exempt status. In addition, Leader McCarthy told members that the House would craft a “legislative response” to President Barack Obama’s implementation of a financial settlement with Iran as the international nuclear deal was taking effect. 

Before lawmakers leave again for the campaign trail, they may be asked to provide emergency money for flood victims in Louisiana. But don’t expect lawmakers to have much of an appetite to linger in Washington once the Zika and CR issues are resolved. With 24 Republican-held Senate seats up for grabs in November, the Senate may scrap their scheduled plan to stay in session through the first week in October, and the House could also leave a week earlier than expected if they’re able to pass a CR in a timely fashion.

CMS’ Exchange Rule Includes Risk Adjustment Proposals, Adds Prescription Drug Data

On Monday, the Obama administration announced new regulations intended to strengthen the health of the Affordable Care Act’s (ACA) marketplaces and improve the experience for insurers. The proposed regulations released by the Centers for Medicare and Medicaid Services (CMS) include a number of technical changes intended to shore up the ACA insurance markets, including a proposal to factor in prescription drug data for diseases, such as hepatitis C, HIV/AIDS, end-stage renal disease and diabetes, into the risk adjustment starting in 2018. The slate of tweaks – known as the draft 2018 Notice of Benefit and Payment Parameters –  is the latest step in a range of actions the administration has taken this year to address complaints by insurers, and follows recent exits from the ACA’s marketplaces by some of the industry’s largest players, including United, Humana, and Aetna. By refining the law’s risk adjustment, CMS hopes to address a primary concern raised among insurers who have announced major retrenchments for the 2017 plan year. Risk adjustment is the only permanent program that the ACA maintains to help mitigate risk in the new insurance market, and results in the transfer of funds from plans with healthier patients to those with a sicker population.

Proponents of the rule say the inclusion of prescription drug data could particularly benefit small plans, who have argued their membership bases look healthier than they actually are because they do not have as much claims data. Smaller regional plans also have far less capital than more established insurers, making it challenging to comfortably make large risk-adjustment payments. Some experts believe allowing state regulators to cap how much can be transferred between plans would further limit financial damage to small plans. Meanwhile, critics say using drug data could create perverse incentives for doctors to change their prescribing behavior. Specifically, they say plans could encourage enrollees to be shifted to drugs for more serious stages of their condition in an effort to increase risk adjustment payments. However, other stakeholders question whether that worry is realistic, since insurers do not prescribe drugs and they assume doctors would act ethically instead of cheating the system.

While incorporating drug use information and other proposed changes to CMS’ risk adjustment methodology could make the system more accurate, legitimate questions remain as to whether further steps must be taken to restore insurers’ confidence in the marketplaces.  While some have suggested that CMS’ proposal “should be enough to stop the bleeding,” it’s also worth noting that risk adjustment only moves money around between insurers – it doesn’t add more money into the system.  While insurance industry officials welcomed the changes, updates to the risk adjustment will not necessarily change funds transfers between insurers, and it’s unclear whether the proposals will have a measurable impact on exchange participation in the 2018 plan year.

Secretary Clinton Releases Mental Health Policy Agenda

On Monday, Democratic presidential nominee Hillary Clinton released her “Comprehensive Agenda on Mental Health,” a plan aimed at ensuring Americans will no longer separate mental health from physical health in terms of access, care and quality of treatment. If elected, Secretary Clinton said she would hold a White House conference on mental health within her first year in office. As detailed in a fact sheet released by the campaign, Secretary Clinton plans to “set out policies that will direct support to individuals with mental health problems and their families – including a detailed agenda to support military service members and veterans, an initiative to end America’s epidemic of drug and alcohol addiction, and a robust caregivers’ agenda.”

Notably, Secretary Clinton’s mental health plan echoes debate in Congress, as the Senate continues to work on its version of mental health legislation. The House passed its own wide-ranging mental health measure in July.  Specifically, as outlined in her announcement, Secretary Clinton would: (1) promote early diagnosis and intervention, including launching a national initiative for suicide prevention; (2) integrate the nation’s mental and physical health care systems so that health care delivery focuses on the “whole person,” and significantly enhance community-based treatment; (3) improve criminal justice outcomes by training law enforcement officers in crisis intervention, and prioritizing treatment over jail for low-level, non-violent offenders; (4) enforce mental health parity to the full extent of the law; (5) improve access to housing and job opportunities; and (6) invest in brain and behavioral research and developing safe and effective treatments. While Republicans and Democrats in Congress often butt heads over how to fund mental health reforms, there has been a general consensus among lawmakers that the mental health system needs to be updated.

While mental health advocates said they are pleased that a presidential candidate is discussing behavioral health reform, they expressed concern that plan lacks implementation details and a funding source, which has stalled legislation in Congress in the past. For example, President and CEO of Mental Health America, Paul Gionfriddo, highlighted the fact that the plan lacks details about access and what services will be covered by Medicaid. He explained that the outline avoids dividing the advocate community by not choosing one approach over another and fails to mention some more controversial topics such as assisted outpatient treatment and adjustments to privacy laws. Meanwhile, the National Alliance on Mental Illness (NAMI) praised Secretary Clinton’s plan, pointing to the fact that it includes vital issues such as evaluating children for mental health problems, improving mental health services at school and colleges, and reducing unnecessary incarceration. While NAMI commended Secretary Clinton’s plan for its “balanced approach” to research, they acknowledged that Congress ultimately holds the power to determine funding.

Hillary Clinton Releases Drug Pricing Plan

On Friday, Democratic presidential nominee Hillary Clinton released a new plan to address “outlier price increases” for “longstanding treatments” – a move in direct response to recent criticism over the increasing price of EpiPen prescriptions. Among the details, Secretary Clinton’s plan would include the creation of an oversight group with the responsibility of investigating and responding to price increases involving “life-saving or critically needed treatment that has long been available.” According to the plan, in order for enforcement to be applicable, there must not have been any meaningful change in the product or how the product is produced that may have reflected a change in pricing.

Should an outlier price increase be determined by the oversight group, Secretary Clinton proposed to make a number of enforcement tools available, with a focus on supporting generic alternatives, importing foreign drugs, and imposing penalties on drug makers.  The proposal released by Secretary Clinton’s campaign would theoretically only apply to a very limited number of drugs, but could serve as a deterrent to any drug makers considering price increase. While the plan does not explicitly cite its application to generics, it’s expected that the proposed mechanisms would be applied to treatments that are no longer under patent. 

Secretary Clinton’s new policy proposal follows the prior release of a broader plan to address the price of prescription drugs. Introduced last September, her plan would let Medicare negotiate prices, cap monthly drug costs, and hold drug companies accountable to investing in research rather than marketing.  Additional measures would fully fund the Food and Drug Administration (FDA) Office of Generic drugs and prohibit “pay for delay” agreements that limit generic competition.

House Budget Committee to Hold Hearing on CMMI, Part B Demo

The House Budget Committee is holding a hearing this Wednesday, Sept. 7 to examine the Centers for Medicare and Medicaid Innovation’s (CMMI) and the agency’s scoring assumptions.  Witnesses include representatives of the Congressional Budget Office (CBO), as well as community oncologists and orthopedic surgeons, with CMMI Part B drug and mandatory joint replacement models as possible discussion points. Of particular note, Chairman Tom Price (R-GA) invited Ted Okon, the Executive Director for the Community Oncology Alliance, who has been a key leader in the efforts to block the Part B drug payment demonstration. This week’s hearing marks the most recent step in the GOP’s continued opposition to the Part B Demo, and reflects an increased focus from Chairman Price in seeking to hold CMMI accountable to the legislative branch. The Committee questioned last week whether the agency exceeded its legal authority in the design of recent payment tests, citing specific concerns about mandatory participation in certain programs. Wednesday’s hearing intends to examine whether CBO’s approach to analyzing the financial impacts of CMMI’s projects may be hampering Congress' ability to oversee the program.