Health Policy Report

The Week in Review

The 114^th Congress closed a week early after both chambers were able to clear a stopgap spending bill (H.R. 2028) and water resources measure (S. 612) that were keeping lawmakers from leaving Washington for the holidays. In the House, the continuing resolution (CR) – which funds the government through April 28 at a $1.07 trillion annualized rate – passed rather smoothly in a 326-96 vote on Thursday. The Senate struggled to do the same on Friday as a group of coal state Democrats led by Sen. Joe Manchin (D-WV) threatened to derail the process due to a provision addressing expiring health benefits for coal miners that they deemed inadequate. The power of jet fumes and a bipartisan majority in the House proved to overpower their concerns, however, and the spending bill passed 63-36 after the Democrats’ hold was lifted late Friday evening. The water infrastructure bill – which includes funds for Flint, Michigan to clean up its water supply – was passed soon thereafter.

As expected, the 21^st Century Cures Act (H.R. 34) sailed through the upper chamber early last week on a 94-5 vote, and in a final sign that the bill will become law, the CR provided $872 million for fiscal year 2017 Cures activities. A full report on Cures being sent to the president’s desk is included in our roundup below.

The presidential transition team made another set of significant appointments last week, namely fast food executive Andrew Puzder to head the Department of Labor and former presidential candidate Dr. Ben Carson to lead the Department of Housing and Urban Development. Additionally, there were unconfirmed reports late in the week that Exxon Mobil CEO Rex Tillerson will be leading the State Department. Those appointments fill out the majority of significant positions for the incoming Trump cabinet, which has been marked by appointees boasting little government experience but with success on Wall Street or industry.  

The Week Ahead

The 114^th Congress has officially adjourned and lawmakers are headed home for the holidays. The Senate of the 115th Congress is due to convene for the first time on Monday, January 2, with the House scheduled for a day later, on January 3.

What We Know About ACA Repeal and Replace

After six years of campaigning to repeal the Affordable Care Act (ACA) and over 50 votes held to undercut the law, Republicans in Congress will be ‘shooting with real bullets’ in the 115th Congress – thanks in part to the election of Donald Trump – and will finally be positioned to deliver on their long-held position that President Obama’s healthcare law should be repealed as expeditiously as possible. But without a concrete replacement plan in place, Republicans remain at a crossroads over what set of policies should encompass their ACA alternative, and face the politically challenging prospect of deciding how – and how quickly – they will be able to achieve consensus.

The ACA repeal vote will not be easy. There are a handful of crucial sticking points that have divided Republicans – particularly the length of the “sunset” window for repeal of many major ACA provisions. As it stands now, the Republican leadership is eying a plan – with work on a reconciliation bill set to begin on Jan. 3 – that would sustain the ACA for two or three years while they get to work on replacing in. But some in the GOP have expressed concern with the plan to push through repeal without a replacement in waiting. And in the Senate, where Republicans will hold the slimmest of majorities, Majority Leader Mitch McConnell (R-KY) will need to have buy-in from across the caucus to put a repeal bill on Trump’s desk during his first few weeks in office. Meanwhile, stakeholders from across the health care community – providers, consumer groups, insurers, and others – are lining up to oppose repeal without a contemporaneous replacement plan.

When it comes to replacing the ACA, Senate Republicans have already signaled that they will attempt to pass a bill through regular order, requiring 60 votes to pass and the bipartisan support of at least 8 Senate Democrats. But even if it has Democratic fingerprints on it, any ACA replacement will largely be shaped by Republicans. Some of the common proposals among GOP-backed plans include fixed-dollar, age-adjusted premium tax credits to take the place of the ACA’s means-tested tax credits; an expansion of health savings accounts; a requirement to maintain continuous coverage to avoid preexisting condition exclusions; federal subsidies for state high-risk pools; and authorization of the sale of insurance across state lines. Whether a handful of Democrats would be willing to sign on to a plan with those major elements remains to be seen.

Senate Sends 21^st Century Cures to the White House

The Senate passed the 21^st Century Cures bill by a vote of 94-5 on Wednesday, making it the largest healthcare package to pass Congress since the Affordable Care Act. The bipartisan bill contained $6.3 billion in funding to advance medical cures, and has been praised by leaders from both sides of the aisle for its focus on life-saving research. Last Wednesday, the House passed the bill in an overwhelming 392-26 vote. In a statement shortly after Senate passage, Obama said he would sign the measure as soon as it reached his desk.

The final bill is an ambitious mix of regulatory reform and a new research push for hard-to-treat diseases. It speeds up approval for “breakthrough” medical devices, reforms the government’s rules for clinical trials and creates new incentives for drug companies to study rare diseases. It also puts a greater focus on patient data to move toward “personalized medicine,” a priority of President Obama’s health team. The package includes $1.8 billion for Vice President Biden’s cancer moonshot initiative, and the initiative was renamed to honor Biden’s late son Beau Biden. Additionally, the 21st Century Cures Act marks the first time Congress has approved funding to address the nation’s growing opioid epidemic, authorizing $1 billion in state grants, and makes the biggest changes to the nation’s mental health system in more than a decade by reorganizing and improving accountability for government mental health programs. It also builds centralized enrollment standards that define what doctors must submit to participate in Medicaid. Hospital leaders said they were pleased the act also included a change to take into account patient socioeconomic status in the Medicare Hospital Readmissions Reduction Program. Following a threat from Sen. Charles Grassley (R-IA) to block a Senate vote on compromise 21st Century Cures legislation, the bill was amended in the House to remove some proposed changes to the Physician Payments Sunshine Act that would have exempted the disclosure of certain education-related support for doctors from drug and device companies.

Although it received nearly unanimous consent in both chambers, the Act faced backlash from liberals like Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT), who opposed it over provisions related to drug maker incentives. They cited concerns about weakened FDA oversight and benefits to the pharmaceutical industry, echoing some consumer groups that fear that speeding up the FDA’s approval process could lower safety standards. For example, the measure allows for sometimes using “real world evidence,” rather than more rigorous and time-consuming clinical trials, in drug approvals.

Finance Committee Leaders Introduce CHRONIC Care Act

Last week, the leaders of the Senate Finance Committee’s Chronic Care Working Group released the CHRONIC Care Act – a wide-ranging Medicare bill which lawmakers hope will improve the program’s handling of patients with chronic conditions. The release of this legislation follows a bipartisan discussion draft in late October. The bill was announced by the leaders of the Finance Committee – Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) – as well as the bipartisan co-chairs of the Chronic Care Working Group – Sens. Johnny Isakson (R-GA) and Mark Warner (D-VA). Chairman Hatch, Ranking Member Wyden, and Sens. Isakson and Warner have been working since last year on the legislation, which they hope to tee up for consideration in 2017. The bill could also potentially be a vehicle for other Medicare-related and disease-specific legislation that stakeholders hope to advance next year. 

The bill would allow for broader enrollment of people suffering from failing kidneys in insurer-run Medicare Advantage, and let these plans offer a wider array of supplemental benefits to people with chronic conditions, including allowing people enrolled in Medicare who undergo dialysis treatment greater access to telehealth services, starting in 2018. Other parts of the bill expand Medicare’s Independence at Home demonstration, aiming to authorize the program for an additional two years, and change how patients are assigned to ACOs. The bill also calls for Government Accountability Office (GAO) studies on topics including longitudinal care for Medicare beneficiaries, medication synchronization programs, and obesity drug utilization.

Notably, the draft of the bill released last week does not include offsets, and instead eschews Title VII from the discussion draft which notes that “offsets [will] be supplied.” While Chairman Hatch and Ranking Member Wyden have asserted that budget neutrality is prerequisite for provisions to be included in the legislation, Committee staff suggested at a briefing in October that the bill will require a relatively small cost of “hundreds-of-millions of dollars, not several billion,” which they suggested will be “manageable.” Committee staff also suggested that any offsets to the bill will be negotiated in a bipartisan manner.

AHIP Offers Recommendations as Lawmakers Considers Repeal and Replace

America’s Health Insurance Plans (AHIP) signaled last Tuesday it is prepared to work with Congress on policies that will encourage people to maintain continuous coverage despite looming healthcare reform. AHIP, an advocacy group representing over a thousand health insurance companies, outlined solutions to prevent disruption in the individual market, and said Congress should finance cost-sharing reduction payments and the ACA's temporary reinsurance program through 2019, address special enrollment periods, adjust the certification process time-frame and reduce regulatory burdens.

AHIP stated lawmakers should follow key principles as they begin the process of improving the individual market: a strong commitment to continuous coverage; delivery of affordable coverage, including tax credits and potentially high-risk pools; protecting taxpayers by boosting consumer choice and cost controls; and providing more flexibility to states. The advocacy group also called on members to maintain sufficient funding in Medicaid to avoid a sudden and significant impact on state budgets and jeopardizing insurance coverage for enrollees.

Additionally, the insurance industry wants the administration to implement a pre-enrollment verification system for the special enrollment periods, and to stop people eligible for Medicare or Medicaid from being steered into commercial plans. CMS has already said it would pilot a pre-enrollment verification process, and is expected to issue guidance on third-party payers potentially steering consumers from public programs. To help mitigate premiums, Congress must also make the reinsurance payments for the 2016 plan year, and should eliminate both the health insurance tax and the PCORI fee, AHIP said.

AHIP stressed that plans are already developing products for 2018, but asked Congress to move the certification time-frame out, potentially into the summer. Uncertainty in early 2017 may discourage plans from submitting bids for 2018 – which could mean most people have no pathway to purchase the coverage they need, AHIP stated, adding that Congress should also consider actuarially sound methods for funding high-risk pools, or other risk mitigation efforts.

McCarthy Promises House to Vote ‘Very Soon’ on Repeal of ACA

House Majority Leader Kevin McCarthy (R-CA) promised last week that Republicans would take action against the Affordable Care Act (ACA) in the first few weeks of the 115^th Congress. He stated that the budget reconciliation bill, including language that paves the way for ACA repeal, is expected to be introduced in the Senate within the first week of 2017, and the House will follow suit “right away.” Reconciliation, a tool that allows budget-related legislation to pass the Senate with a simple majority as opposed to 60 votes, was last used by Republicans in 2015 in another attempt to repeal the ACA. GOP leaders are expected to largely use the same reconciliation bill in this endeavor.   That bill includes a two-year delay of the damaging effects, buying time for Republicans to write their own legislation that would prevent 22 million people from losing coverage.

Rep. McCarthy declined to provide a more specific timeline for the repeal vote than “very soon,” but many have reported Republicans have set a goal of approving the joint budget resolution by Inauguration Day, and passing the reconciliation bill in the first 100 days. Conservative groups as well as some centrist Republicans say the GOP should pass a bill repealing and replacing the ACA immediately. A longer timeframe could cause political problems for Republicans ahead of the 2018 midterms, some moderate lawmakers said during last week’s House GOP caucus meeting. McCarthy said no decisions have been made about how long to delay the bill, but said there would be a transition.