CMS Proposes Overhaul of Part B Drug Payments

On March 8, CMS announced a proposed rule to change the way it pays for billions of dollars of drugs covered by Medicare. The new project, run through the Center for Medicare and Medicaid Innovation ("CMMI"), would allow the government to vary what it spends on drugs given in the hospital or doctor's office to test whether the existing payment model is encouraging doctors to use more expensive medicines that are less effective. The pricing experiment only applies to Medicare Part B, which pays for prescription drugs that are administered in a physician's office or hospital outpatient department.

The program would let Part B pay 2.5 percent and a flat fee of $16.80 per day. Part B currently pays the so-called "average sales price" plus 6 percent for drugs administered by health care providers. The agency would then study whether it has an impact on doctors' prescribing patterns. CMS is accepting comments on the proposed rule through May 9, 2016. Republican House and Senate lawmakers issued a statement critical of the Administration's proposal and vowed aggressive oversight of CMMI moving forward.

Senate Democrats Push for Work on Appropriations Bills

Senate Minority Leader Harry Reid (D-NV), Appropriations Committee Ranking Member Barbara Mikulski (D-MD) and other top Democrats sent a letter on March 7 urging Majority Leader Mitch McConnell (R-KY) to move ahead with passing spending bills based on the two-year budget agreement reached in 2015. The letter comes after Senate Budget Chairman Michael Enzi (R-WY) announced on Monday, March 7 that his committee will delay its markup of the fiscal year 2017 budget.

The 2015 budget framework allows the Senate to file a $1.07 trillion discretionary spending allocation for the Appropriations Committee if Congress cannot pass a budget by April 15. The March 7 letter cites concerns that waiting until the April deadline could make it difficult for the Senate to pass all 12 individual spending bills before the end of fiscal year 2016. In a House Republican caucus meeting on March 3, Budget Committee Chairman Tom Price (R-GA) proposed to pass the budget plan along with a stand-alone measure that would cut $30 billion from mandatory spending programs over two years.

HELP Committee Advances Biomedical Reform Bill

On March 9, the Senate Health Education Labor and Pensions ("HELP") Committee marked up a broad biomedical reform package as a counterpart to the House-passed 21st Century Cures Act (H.R. 6). In February, the HELP Committee approved a set of FDA- and NIH-related measures. On April 6, the committee will hold its third and final markup on the issue.

The committee approved seven bills, including legislation that would permanently reauthorize the FDA's rare pediatric disease priority review voucher program, a bill to establish a pathway for medical devices (S. 1077) and a bill exempting some medical software from FDA oversight (S. 1101). It also approved legislation adding Zika to the FDA rare disease priority review voucher program (S. 2512). The committee will most likely wrap the various bills into a larger bill to send to the Senate floor. One issue that will need to be addressed prior to action on the Senate floor is funding offsets for the various measures.

Senate Committee Introduces New Mental Health Reform Bill

On March 7, the Senate HELP Committee unveiled a draft mental health bill. The bipartisan discussion draft is expected to be formally introduced prior to the March 16 HELP Committee markup on mental health reform and other addiction and substance abuse-related bills. The discussion draft contains a large portion of the Murphy/Cassidy bill (S.1945) but excludes a number of controversial provisions including specific funding numbers, the inpatient care exclusion under Medicaid ("IMD") and early childhood intervention and treatment grants. The discussion draft also left out of any gun-related provisions.

While the bill seems poised to sail through committee markup next week, a path forward is less clear in the House. Rep. Tim Murphy (R-PA), author of the major piece of mental health legislation in the House, (H.R. 2646) was critical of the Senate effort for not addressing the IMD exclusion language among other provisions.

Health-Related Bills Introduced This Week

Sen. John Cornyn (R-TX) introduced a bill that would amend Titles XIX and XXI of the Social Security Act to require states to provide to the HHS Secretary certain information with respect to provider terminations.

Next Week in Congress

The House Budget Committee will vote on a resolution as early as March 15. Even if the committee approves the budget resolution for fiscal 2017, there's no guarantee the full House will adopt it, as many conservatives remain resistant.

The House Energy and Commerce Health Subcommittee will hold a hearing on the Medicare Access and CHIP Reauthorization Act ("MACRA") on March 17. MACRA was signed into law in April 2015. The hearing is intended to give lawmakers information on how CMS is implementing the law. Also in the House, the Ways and Means Health Subcommittee will hold a March 16 hearing on "preserving and strengthening Medicare."