Last week, Congress passed and the President signed into law the Consolidated Appropriations Act of 2016 (“the Omnibus”). This legislation contains both $1.1 trillion in government spending for FY16 as well as $650 billion in tax breaks. The Omnibus includes several health care related provisions, both on the funding and tax sides. This post highlights some of the more significant items.
Key Appropriations Provisions
Title II, Division H, contains the funding and other provisions for the Department of Health and Human Services (HHS). Some of the key provisions are summarized below. The explanatory text for this title of the Omnibus has a description of the numerous HHS funding line items, along with directives and some specifics for each agency within the Department.
340B Drug Program: HRSA is requested to provide a briefing to update the Committees on Appropriations of the House of Representatives and the Senate on the status of 340B guidance, the secure website, and covered entities in the 340B drug program.
National Institutes of Health (NIH): The Omnibus provides a $2 billion increase in funding from fiscal year 2015. The total spending level for FY16 for NIH is $32 billion. Some of the initiatives receiving increased and/or new funding include:
- $936 million for Alzheimer’s research (an increase of $350 million)
- $200 million for Precision Medicine
Centers for Disease Control (CDC): Overall, CDC receives a $300 million increase in funding for a total of $7.2 billion for FY16, as follows:
- $1.2 billion for Chronic Disease Prevention and Health Promotion
- $70 million for the prevention of prescription drug abuse
- $579 million for Emerging and Zoonotic Infectious Diseases
Centers for Medicare & Medicaid Services (CMS): CMS receives $3.6 billion, the same amount appropriated in FY2015.
Prescription Drug Report –Of particular note is that the Omnibus directs the Secretary of HHS, in consultation with the Secretary of the Department of Veterans Affairs, to submit a report to the Committee on Appropriations of the House of Representatives and the Senate, using non-proprietary data, which is only available under current law. The report must be delivered in a time period not later than 180 days after the date of enactment of the Omnibus — December 18, 2015. This report must discuss the following topics: (1) price changes of prescription drugs (net of rebates) since 2003; (2) access to prescription drugs by patients in the four programs listed below; (3) health outcomes and patient satisfaction with care that addresses the four programs listed below; and (4) an analysis of the current cost and length of time necessary to bring new drugs to market. The report “should” include prescription drug prices (net of rebates) paid by Federal programs for the 10 most frequently prescribed drugs and the 10 highest cost drugs under Medicare Part B, Medicare Part D, Medicaid and the Department of Veterans Affairs.
Key Tax Provisions
Two Year Moratorium on the Medical Device Tax: Section 174 of the tax proposals creates a two year moratorium of the 2.3 percent excise tax on the sale of medical devices that took effect in 2013. The tax will not apply in 2016 or 2017.
Delay of the Tax on High Cost Health Plans a/k/a/ the Cadillac Tax: Title 1 of Division P contains a provision that delays the Cadillac Tax for two years (2018 and 2019). This makes the tax on high cost, health insurance plans effective in 2020.
One-Year Moratorium on the Health Insurance Tax (HIT). Title 1 of Division P also includes language setting a one-year moratorium on the annual HIT (2016), making the tax effective in 2017. The annual HIT is, in essence, a sales tax on health insurance premiums.