TRP Health Policy Report

After a two-week recess, Congress returns today to confront an expired deadline on Medicare payments to doctors and other unfinished business. The Senate is under pressure to act on a House-passed bill (H.R. 2) to stop a 21 percent cut in Medicare payments that kicked in April 1. Lawmakers have acted 17 times since 2003 to cancel such reductions with so-called “doc fix” legislation. Majority Leader Mitch McConnell (R-KY) has said he expects the Senate to move quickly on the bill upon returning this week. Still unclear is whether Republican fiscal hawks will introduce an amendment insisting that the entire $210 billion cost of the bill be paid for, or whether Democrats seek to amend the legislation to further extend the Children’s Health Insurance Program (CHIP) or to improve beneficiary protections in the bill. Aside from the “doc fix,” McConnell also is in the midst of an impasse over legislation (S. 178) to help victims of sex trafficking. Last month, Senators failed to advance the measure to a floor vote after abortion-related language scuttled action on the bill. Before the recess, the Kentucky Republican said action on the trafficking measure had to be completed before the Senate took a confirmation vote on Loretta Lynch to be attorney general. 

In the House, members will take up several bills to mark the April 15 tax-return filing deadline. Among them: legislation that would repeal the federal estate tax (H.R. 1105) and make permanent the state and local sales tax deduction (H.R. 622). The House will also consider a series of bills aimed at revamping the IRS in response to allegations the agency targeted Tea Party-aligned groups. Off the floor, Budget Committee chairmen Sen. Mike Enzi (R-WY) and Rep. Tom Price of (R-GA) have said a House-Senate budget conference could begin its work as early as this week. The Congressional Budget and Impoundment Control Act of 1974 set an April 15 target for a budget that presents a unified view of priorities for both chambers, although there’s no punishment for missing the deadline. If the House and Senate can’t reach agreement, each chamber can deem its resolution as binding on the spending and revenue bills that come later. In healthcare-related hearings, the Senate Finance Committee convenes Tuesday to review Medicare’s audit and appeals process.  That same day, the House Ways and Means Health Subcommittee will hold a hearing on the mandates and penalties in the Affordable Care Act (ACA). On Wednesday, Senate Homeland Security will meet to review IRS challenges in implementing the 2010 health law.  The following day, the House Energy and Commerce’s Health panel will hold a hearing on Medicare post-acute care.
 
Conservatives Press for ‘Doc Fix’ Changes
 
Conservative objections over spending are raising doubts over whether the Senate can quickly approve legislation fixing the Medicare physician payment system. Some Senate conservatives are threatening to insist that the measure be fully offset, after the House approved a version of the "doc fix" bill (H.R. 2) on March 26 that would increase the federal deficit. As passed by the House, the $214 billion initiative would replace the flawed Sustainable Growth Rate formula (SGR) with one more focused on quality of care. The Senate is expected to take up the measure this week, having punted on addressing it after a marathon series of votes on the chamber's fiscal 2016 budget resolution. Lawmakers must pass a bill addressing the doctors’ payment cuts before April 15 or providers will face double-digit reimbursement cuts. President Obama has already approved of the deal, which was negotiated by Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA). Senate leaders said they would take it up quickly after lawmakers return to Washington this week, but a group of Senate conservatives have called the House bill irresponsible because it would add an estimated $141 billion to the U.S. debt over the next 10 years, according to the CBO. Senator Mike Lee (R-UT) is expected to offer an amendment to require Congress to find a way to pay for the "doc fix" by the end of this year. Meanwhile, some outside conservative groups are urging Senators to strike an exemption from Congressional "pay as you go" rules that was written into the House-passed legislation. Striking the exemption would require Congress to enact enough savings to cover the bill's cost by the end of 2015. In response to the opposition, last Friday, Speaker Boehner urged Senators to see the bill as a conservative gain. The measure requires more means testing of Medicare beneficiaries so that those with higher incomes pay higher premiums. “This bill represents the first real entitlement reform in nearly two decades, and CBO and other experts have confirmed that it will save taxpayer dollars over the long term," Boehner said in a statement.
 
Any significant delay by the Senate would trigger sharp cuts in reimbursements to doctors who participate in the Medicare program for the elderly. The federal government warned Congress last week that it must act before April 15 or thousands of Medicare doctors nationwide will face a 21 percent pay cut under the old reimbursement formula. Senate Democrats may also seek to amend the measure. It includes a two-year extension of the Children's Health Insurance Program (CHIP) for low-income children, but Senate Democrats would prefer a four-year reauthorization. Any Senate change in the bill would also send it back to the House, signaling further delay. Physician groups are incensed at the possibility that their payments may be cut, and have warned that some doctors may refuse to treat Medicare patients if the situation isn’t fixed. House leaders are now counting on Majority Leader Mitch McConnell (R-KY) to push the bill through the Senate. Last Friday, a spokesperson for McConnell said Senators “are discussing the path forward,” and that “the leader said he expects the bill will be done quickly.”
 
CMS Looks to Expand Mental Health Parity
 
Last Monday, CMS issued a proposed rule that would extend mental health and substance use disorder treatment parity requirements to the Children's Health Insurance Program (CHIP), Medicaid alternative benefit plans and Medicaid managed care plans. Under final rules released in 2013 for the 2008 Mental Health Parity and Addiction Equity Act, insurers and group health plans are required to cover treatment for mental health issues and substance use disorders in the same way they do physical illnesses. The proposed rule also would require CHIP, Medicaid alternative benefit plans and Medicaid managed care plans to inform beneficiaries of the reason for any denial of payment for substance use disorder or mental health treatment. 
 
In addition, states would need to have parity provisions in their Medicaid managed care contracts. States would not be allowed to exclude treatment for substance use disorders or mental health issues from such contracts. The proposed rule would not apply to fee-for-service Medicaid plans. However, CMS in the proposed rule said it hoped the policy would prompt states to enact similar parity requirements in their Medicaid programs. CMS officials said the new proposed rule would affect about 850,000 CHIP beneficiaries and about 21.6 million Medicaid beneficiaries. Thirty-seven states and Washington, D.C. currently contract with managed care plans to provide benefits to at least a portion of their CHIP or Medicaid beneficiaries. About 70% of Medicare beneficiaries are in managed care plans. CMS is accepting public comments on the proposed rule through June 9.
 
Republicans Working Toward Budget Deal
 
According to senior aides, Republicans on the House and Senate Budget committees spent the two-week Congressional recess trying to work toward a joint conference agreement on their spending blueprints. They have little time to spare with the April 15 deadline just days away. House Budget Committee Chairman Tom Price (R-GA) and Senate Budget Committee Chairman Mike Enzi (R-WY) are hoping to strike the agreement by that deadline. If they do reach a deal, the final version of the budget would have to pass in both chambers. If lawmakers miss the deadline, any final agreement could still be effective once it’s completed. Senate Republicans narrowly adopted their blueprint in a 52-46 vote on March 26 after a marathon session of voting on amendments. House Republicans adopted their budget in a 228-199 vote on March 25.
 
While both budgets stick to spending ceilings imposed by a 2011 law, some critical components are very different: the House budget would cut $5.5 trillion and balance in nine years, whereas the Senate budget would cut $5.1 trillion and balance in a decade. The House plan would partially privatize Medicare by transitioning it to a premium support model. Enzi’s plan honors President Obama’s request to find just over $400 million in Medicare savings. The House budget also issues reconciliation instructions to 13 different authorizing committees, while the Senate budget only issues them to two — the Finance and HELP committees. The rare budget procedure isn’t subject to a filibuster in the Senate and could be used to target the Affordable Care Act, pass tax reform or raise the debt ceiling. The last time a GOP-controlled Congress adopted a joint conference agreement on the budget was in 2005.
 
Study: Health Spending $2.5 Trillion Less Than Forecast
 
A report issued last Wednesday says that the most recent official projections indicate that the U.S. will spend $2.5 trillion less on health care from 2014 until 2019 than had been originally estimated when the ACA became law in 2010. That represents a nearly 11 percent decrease in projected spending, according to the study issued by the Urban Institute, which was funded by the Robert Wood Johnson Foundation. The report, which relied on projected spending data from CMS, says that actual health expenditures during the five-year time frame now are expected to be $21 trillion. Nearly half of the decrease in projections comes from lower spending estimates for Medicare and Medicaid, the government health coverage programs for the elderly and poor, respectively. The ACA began taking full effect in 2014, and is scheduled to be almost fully implemented in 2018, when the so-called ‘Cadillac tax’ on costly group health plans kicks in. Much of the reductions in projected spending are "due to the recent recession, and a long period of slow income growth; the growth of high deductible private health plans, cost constraints within state Medicaid programs and Medicare policies related to the ACA," the report said.
 
The Urban Institute study noted that national health spending since 2009 "has grown at historically low rates," which played a large part in the lowering of projected spending. "But it is also likely that the health law contributed" to the lower projections, "though how much is impossible to estimate.” New legislation can explain some of these changes, as well as the Budget Control Act of 2011 and the Supreme Court decision on Medicaid expansion that have occurred since the ACA baseline forecast in September 2010, the study’s authors conclude. But much of the decline in projected spending for the 2014-2019 period seems to be related to the historically low growth in actual health spending that began with the recession in 2008 and has continued to the present," the report said. The study contradicts some other reports that healthcare spending has been on the rise in recent months. The Altarum Institute’s Center for Sustainable Healthcare Growth said that spending was up more than 5 percent between November 2013 and November 2014. The Financial Times also suggested that healthcare spending could increase due to the recovering economy.