TRP Health Policy Report

Last week, Congress turned its attention to a series of lingering legislative issues. Republican Whip Sen. John Cornyn (R-TX) and Sen. Patty Murray (D-WA) reached a compromise regarding abortion language in a long-stalled human trafficking bill (S. 178), leading to its passage by a vote of 99-0. The legislation now moves to the House. The passage of the human trafficking bill set the stage for confirmation of Attorney General nominee Loretta Lynch. She was confirmed by the Senate by a vote of 56-43, with 8 Republicans joining Democrats to reach the 51 vote threshold required for cabinet level confirmations. Meanwhile, the House considered a pair of bills that would encourage the sharing of information between the private sector and government (H.R. 1560/H.R. 1731), which passed by a vote of 307-116, and 355-63 respectively. Despite a White House veto threat, the House also passed legislation (H.R. 1195) to create three advisory boards within the Consumer Financial Protection Bureau (CFPB) by a vote of 235-183. 

The Week Ahead
 
This week, Congress plans to debate the Iran nuclear deal, create a unified budget blueprint, and begin discussions on defense authorization as well as appropriations legislation. Senate Majority Leader Mitch McConnell (R-KY) will attempt to start debate over legislation that would give Congress oversight on any deal to lift sanctions on Iran. Additionally, the Senate will hold a vote on overriding President Obama’s veto of a measure that would overturn a National Labor Relations Board rule on labor-organizing practices. Separately, the House intends to consider the first two spending bills for FY 2016—Energy and Water Development and Military Construction-Veterans Affairs. In the House, members will consider a budget conference agreement with the Senate, which sets the funding priorities for Congress in fiscal 2016. Lastly, this Wednesday, both chambers will hear Japanese Prime Minister Shinzo Abe address a joint meeting of Congress.
 
Latest Efforts to Repeal the Medical Device Tax
 
Discussions have restarted in Congress about repealing the medical device tax. Last Thursday, Sen. Patrick Toomey (R-PA), Chairman of the Senate Finance Subcommittee on Health, held a hearing on the issue, which renewed debate over the largely unpopular tax. Included in the Affordable Care Act (ACA) and launched in 2013, the medical device tax imposes a 2.3 percent sales tax on medical device supplies. The device tax was one of many revenue-raising provisions designed to offset the cost of providing coverage to more than 25 million Americans under the ACA. Last Thursday’s hearing focused primarily on questions related to industry profits following the passage of the 2010 health law, medical device tax deductibility, and the impact the tax has had on small to medium size medical device companies.
 
Republicans were fully supportive of a complete repeal of the medical device tax, arguing that the levy discourages innovation. Further, GOP lawmakers commented that the ACA is below initial cost projections and does not require additional revenue. As the lone Democrat in attendance, Sen. Debbie Stabenow (D-MI) seemed supportive of device tax repeal, but argued that it may be better to consider the issue as part of a broader debate over tax reform. Device tax repeal has been supported by Democrats and Republicans alike. In 2013, the Senate passed a non-binding budget resolution amendment to repeal the tax by a vote of 79-33. Sen. Edward Markey (D-MA) and Sen. Orrin Hatch (R-UT) have also introduced separate bills to repeal the tax. The House has approved the repeal of the device tax three separate times in the past two years, including as recently as September 2014. The White House has historically opposed these efforts, but President Obama recently indicated he would entertain the idea.
 
GOP Prepares ACA Backup Plan
 
Last Monday, Sen. Ron Johnson (R-WI) introduced legislation (S. 1016) that would allow U.S. residents to temporarily keep subsidies to help them purchase coverage through the federal exchange even if the Supreme Court strikes them down in King v. Burwell. Under Johnson's bill, residents would be able to keep their ACA plans and subsidies until August 2017. The legislation also would repeal the individual and employer mandates. At issue in the Supreme Court case is that while the Affordable Care Act (ACA) says subsidies are available to help certain U.S. residents purchase coverage offered “through an exchange established by the State,” a May 2012 IRS rule allows the subsidies to be used in an exchange administered either by a state or the federal government. The high court heard oral arguments in the case in March and will issue a decision by the end of June. If the court strikes down the federal exchange subsidies, the ruling would eliminate about $28.8 billion in subsidies to 9.3 million individuals in 34 states in 2016, according to an Urban Institute analysis.
 
Sen. Johnson’s plan has 29 Republican co-sponsors, including Senate Majority Leader Mitch McConnell (R-KY). However, a McConnell spokesperson said the Majority Leader's sponsorship does not make the bill the GOP's only ACA backup plan. Other Republican lawmakers have unveiled similar contingency plans in case the court strikes down the subsidies. A plan by Sens. Lamar Alexander (R-TN), John Barrasso (R-WY) and Orrin Hatch (R-UT) would provide temporary assistance, while a separate proposal from Sen. Ben Sasse (R-NE) would allow residents to continue to receive subsidies for 18 months. In addition, a group of House GOP legislators has outlined a backup plan that would allow affected individuals to continue receiving subsidies in the form of tax credits. Introduction of the ACA back-up plans could help alleviate political pressure on Republicans to restore coverage to millions of U.S. residents who could lose coverage because of a ruling in King v. Burwell. If enacted, the measure could give a newly-elected Republican President time to repeal the ACA and replace it with a GOP alternative, aides say.
 
Reopening the Debate on End-of-Life Counseling
 
Sen. Mark Warner and CMS are re-opening a debate on end-of-life counseling that was stunted during the enactment of the Affordable Care Act, but which many medical professionals think is long overdue. At question is whether Medicare should reimburse doctors for time helping patients consider their treatment in case of a terminal illness. More broadly the debate involves encouraging greater use of living wills and other tools to plan for medical care at the end of life. Warner, who has plans to introduce a bill establishing coverage for end-of-life counseling, said he intends to work with Republicans including Sens. Johnny Isakson (R-GA) and Susan Collins (R-ME) in crafting and passing legislation. At the same time, CMS is considering payment for advance care planning as part of a broader reimbursement regulation. Due to conservative objections, Democrats stripped the 2010 health law of a provision meant to have Medicare pay doctors for talking to patients about treatments for terminal illness, which some Republican critics dubbed as “death panels.” Many ACA opponents argued that paying doctors to discuss approaches to dying could result in some Medicare patients feeling pressured to forego treatment.
 
Sen. Warner says that end-of-life counseling is needed because Americans are increasingly interested in planning for their final days. The Virginia Senator’s interest stems in part from seeing his mother’s experience in living with Alzheimer’s disease. Warner said his bill is likely to resemble one he offered in the last Congress. That measure was intended to create Medicare and Medicaid payments for doctors who help patients understand their options for treatments in case of terminal illness.
 
Moving such a bill through both chambers might still prove challenging, however. The debate about the counseling remains tied to the politics surrounding the 2010 health law. A faster route may be through CMS regulation. For that reason, Sen. Collins, one of the Senate Republican advocates of end-of-life counseling, has urged supporters to ask President Obama for action. Last year, CMS rejected a request from the American Medical Association to provide specific payments for this counseling in a 2015 payment rule. But agency officials have recently signaled an interest in the idea and accepted comments for several months.
 
GOP Budget Deal May Include SGR Offset Costs
 
According to senior aides, House and Senate negotiators are nearing a budget agreement that likely will include funding for a new law (H.R. 2) that permanently replaces Medicare's sustainable growth rate formula (SGR). The measure will provide a 0.5% annual payment increase through 2019 for providers who participate in Medicare and then transition to an incentive-based payment system designed to encourage participation in alternative payment models. The bill includes several other measures related to health spending, such as funding for community health centers, which serve low-income individuals in every state. In addition, the measure includes a two-year extension of funding for the Children's Health Insurance Program (CHIP). Further, the bill delays fully enforcing CMS' “two-midnight” rule for two months. Overall, the SGR replacement law is projected to cost about $213 billion over 10 years. It will offset about $70 billion of the projected costs and add about $140 billion to the federal deficit over 10 years. The offsets include $35 billion in increased Medicare premiums for higher-income beneficiaries, which are not scheduled to take effect until 2018. In addition, the law includes payments cuts to home health agencies, hospitals and nursing homes.
 
Last month, the Senate voted 52-46 to approve Republicans' fiscal year 2016 budget proposal, which includes changes to federal health programs and a provision to repeal the Affordable Care Act. The proposal calls for more than $400 billion in Medicare savings over 10 years but does not provide many specifics on how those savings would be achieved. The plan also calls for states to have more flexibility in running Medicaid programs and seeks about $400 billion in Medicaid savings over a decade. The House last month also approved a Republican budget plan that seeks deficit reduction in part through revisions to federal health spending and repealing the ACA. Under the House plan, Medicare would transition to a “premium support” model for future beneficiaries. Medicare would provide funds for beneficiaries who join the program after 2023 to purchase private coverage. The plan also calls for the federal government to give states a lump sum to run their individual Medicaid programs. Senate and House budget negotiators are currently hammering out the differences between their two frameworks. The chairmen of both budget committees had hoped to wrap up negotiations by April 15, but are still working to come up with one blueprint both sides can pass.
 
According to senior aides, Sens. Mike Crapo (R-ID) and Jeff Sessions (R-AL) are hoping to include offsets for the entire cost of H.R. 2 in the final budget proposal. Crapo has said he is working to pressure other budget negotiators to cut about $140 billion from the budget over the next decade to pay for the remaining costs of H.R. 2. Conservatives in Congress have faced a backlash for passing the SGR replacement measure without specifying ways to fully fund it. Meanwhile, details are still vague about other health care issues within a final budget agreement, such as Republicans' strategies for dismantling the ACA. GOP lawmakers are split over whether to use budget reconciliation to repeal the health law. Some Republicans say using the technique, which ultimately would be vetoed by President Obama, would be a waste of an opportunity to achieve other budget priorities. However, other conservatives say not using reconciliation to repeal the ACA goes against campaign promises.