Republican Policy Brief Outlines New ACA Replacement Plan
In a new brief from the House Ways & Means and Energy & Commerce Committees, Republicans outline a plan to pull back Medicaid expansion and convert Medicaid into a per-person pay system.
The brief, which closely resembles the “A Better Way” plan by House Speaker Paul Ryan (R-WI), does not go into detail about how lawmakers will determine the baseline for setting per-capita allotments, nor does it specify how long states that expanded Medicaid would continue to receive the enhanced federal match promised by the Affordable Care Act for that population.
The brief says that Medicaid programs would move to a per-capita allotment system, although states could opt for a block grant. Congress would set the federal Medicaid payment to states by multiplying the state’s per-capita costs for major beneficiary groups—including the aged, blind and disabled; children; and adults—by the number of enrollees in each group. The states’ per-capita costs for the groups would be based on each state’s average Medicaid spending in a base year. Payments would grow based on an inflationary index, though the paper does not specify which one.
The brief does not define a base year, nor does it say whether the base year would be different for a non-expansion state than for a state that chose to expand Medicaid. It also says federal funding would be available to states based on their current federal match percentage, which varies state to state.
Some payments, including disproportionate share hospital (DSH) payments and administrative spending, would not be counted toward a per-capita payment.
Should states choose a block grant, the federal government would also set a base year to decide the grant amount with the assumption that states would pull coverage of expansion beneficiaries. The only federal mandate on states would be that they cover “the most vulnerable elderly and disabled individuals who are mandatory populations under current law.”
The Republican policy brief says states that expanded Medicaid would be able to keep their enhanced payments for beneficiaries that are currently part of the expansion population for an unspecified “limited amount of time.” After that, states could continue enrolling new beneficiaries with incomes up to 138 percent of the poverty level, but states would be reimbursed according to the federal match rate for their traditional Medicaid programs.
Expanded Use of HSAs Considered
AHIP, the health insurance lobby, and congressional Republicans are backing a policy proposal that would allow consumers to deposit any excess premium tax credits into a health savings account.
AHIP’s annual survey data shows that enrollment in HSAs linked to high-deductible health plans has grown steadily since being established in 2005 and HSAs are now in use by more than 20 million people.
According to the GOP policy brief, the reconciliation bill now being developed would replace existing premium-based subsidies with age-adjusted tax credits, and allow them to be used to purchase any insurance approved by a state and sold in the individual market, including catastrophic coverage. Subsidies could also be used for any unsubsidized COBRA plans. “If the individual does not use the full value of the credit, he or she can deposit the excess amount into a health savings account,” the plan says.
The GOP policy brief also proposes increasing the maximum contribution limits, and notes that the Better Way plan would align limits with maximum out-of-pocket spending limits. The plan would also allow spouses to contribute “catch up” amounts, and allow HSAs to be used for expenses incurred 60 days prior to establishing the account.
Sens. Orrin Hatch (R-UT) and Marco Rubio (R-FL) and Rep. Erik Paulsen (R-MN) introduced legislation that would make even more changes to HSA policy. The Hatch-Rubio-Paulsen bill would allow spouses to make catch-up contributions; let Medicare Part A enrollees aged 65 or over, people eligible for Indian Health Services and members of health care ministries contribute to HSAs; and also allow HSA contributions to be used for direct primary care service arrangements. It would further let consumers use their HSA funds for prescriptions and over-the-counter drugs, and for purchasing health coverage.
House Approves Bill Overturning Protections for Planned Parenthood
On Feb. 16, the House approved a bill to negate an Obama administration rule and allow states to restrict family planning grants to Planned Parenthood and other abortion providers.
The measure passed 230-188, largely along party lines, and marks Republicans’ first attempt this year to target Planned Parenthood funding.
The legislation would set up a process for Republicans controlling both chambers to use the Congressional Review Act to strike the Obama administration rule, issued in mid-December, with simple majority votes.
The regulation bans states from blocking Title X family planning grants to Planned Parenthood and other health care providers that offer abortion. Title X funding covers services such as contraception, STD screenings and treatments but cannot be used to pay for abortion services.
House Republicans argued that the measure upholds states’ rights and is not an attack on Planned Parenthood. Democrats branded the legislation an attack on women’s health.
Thirteen states have restricted Title X grants, a move abortion rights advocates say has reduced access to care.
House Freedom Caucus Endorses Sen. Rand Paul’s Obamacare Replacement Plan
On Feb. 15, the House Freedom Caucus officially endorsed Sen. Rand Paul’s (R-KY) Obamacare replacement plan, further signaling the divide among Republicans on Capitol Hill over how to overhaul the health care law.
House Freedom Caucus Chairman Rep. Mark Meadows (R-NC) said that the group supports immediately repealing Obamacare with the 2015 reconciliation bill, and replacing it with Paul’s bill. Rep. Mark Sanford (R-SC) has introduced its companion measure in the House. That legislation expands health savings accounts and would allow individuals and small businesses to create their own markets. The bill does not address the ACA’s Medicaid expansion. However, Meadows said the HFC supports its repeal.
Additionally, the Freedom Caucus chair said he does not support the newly unveiled plan to simultaneously repeal and replace the ACA. The caucus has said the ACA should be repealed in the next two to three months using the 2015 reconciliation package and then the law should be replaced on the same day. The chair of the House Freedom Caucus said he opposes the leadership plan because it does not address costs, he prefers a tax deduction over a credit, and he is against a refundable, advanceable tax credit.
House Oversight Committee Votes to Kill D.C.’s “Right to Die” Law
On Feb. 13, the House Oversight Committee approved a resolution to kill the District of Columbia’s “right to die” law for terminally ill patients.
In a vote of 22 to 14 along party lines, the committee moved to nullify the D.C. law, which allows patients with less than six months to live to obtain life-ending medication from a doctor. Congress can prevent the law from taking effect if it passes a disapproval resolution and President Donald Trump signs it within 30 legislative days of Jan. 6, the date it received the bill.
The resolution now moves on to the full House.
Six states have similar laws: California, Colorado, Montana, Oregon, Vermont and Washington.
Senate Confirms OMB Director Mulvaney
Rep. Mick Mulvaney (R-SC) was confirmed as director of the Office of Management and Budget (OMB) on Feb 16. Sen. John McCain (R-AZ) crossed party lines to vote against Mulvaney’s confirmation. For the new OMB director, there is a lot to catch up on. OMB has to help translate each of Trump’s executive orders into budget policy—something career staff are likely reticent to do. Mulvaney also will now have to fill key spots such as deputy directors, associate directors and communications staff to help carry out Trump’s policies. Since day one, OMB has been without a direct line to the Trump administration, leaving the 500-person office in a holding pattern.
Senate Confirms Shulkin as VA Secretary
On Feb. 13, the Senate unanimously confirmed President Donald Trump’s nominee David Shulkin for Veterans Affairs secretary.
The vote was 100-0 for Shulkin, a holdover from the Obama administration who has served as VA undersecretary of health since 2015. A physician and former health care executive, Shulkin will be the first VA secretary in the department’s history never to have served in the military.
The Senate set aside just 10 minutes for debate on his nomination. The Senate Veterans’ Affairs Committee had already unanimously approved Shulkin’s nomination, and he earned the support of all Senate Democrats despite concerns over whether Trump might move to privatize the VA.
During his Feb. 1 confirmation hearing, Shulkin allayed Senate Democrats’ concerns that the VA system would be privatized. Shulkin’s confirmation drew mostly praise from veterans service organizations.
Bipartisan Group of Senators Asks Price to Permit Drug Imports
Sens. Chuck Grassley (R-IA), John McCain (R-AZ) and Amy Klobuchar (D-MN) wrote a letter to HHS Secretary Tom Price asking him to use existing authority to fast track the importation of prescription drugs from Canada to help remedy drastic drug price increases in the United States.
The senators say Price should use this authority only when a drug is off patent or no longer marketed in the U.S. by the original manufacturer; has had a significant, unexplained price increase; has no direct competition and a competitor drug would help consumers; and the imported product is made by companies with a reputable record.
They say the policy should be limited so “it does not negatively affect innovator companies that invested in the development of the drug.”
CMS Awards Funds to Help Small Practices in the Quality Payment Program
On Feb. 17, CMS awarded approximately $20 million to 11 organizations for the first year of a five-year program to provide on-the-ground training and education about the Quality Payment Program for clinicians in individual or small group practices of 15 clinicians or fewer. CMS intends to invest up to an additional $80 million over the remaining four years.
CMS Delays Medicare Bundled Payments Rule
CMS is delaying implementation of new Medicare bundled payment models, citing a “regulatory freeze” that was imposed following President Donald Trump’s election.
CMS said it will push the effective date for the rule’s first elements to March 21, roughly a month later than initially planned. The models overhaul provider Medicare payments for cardiac rehabilitation treatments, as part of a broader shift toward compensating hospitals and doctors based on care quality, rather than the amount of care they provide.
The announcement also delays planned changes to Medicare’s payment model for hip and knee replacement surgeries until March 21.
CMS OACT Releases Projections of National Health Expenditures Data
According to a Feb. 15 report published by Health Affairs, national health expenditure growth is expected to average 5.6 percent annually over 2016-2025. These projections are constructed using a current-law framework and do not assume potential legislative changes over the projection period.
The report, authored by the CMS Office of the Actuary (OACT), projects national health spending growth to outpace projected growth in Gross Domestic Product (GDP) by 1.2 percentage points. As a result, the report also projects the health share of the GDP to rise from 17.8 percent in 2015 to 19.9 percent by 2025. Growth in national health expenditures over this period is largely influenced by projected faster growth in medical prices compared to recent historically slow growth. This faster expected growth in prices is projected to be partially offset by slowing growth in the use and intensity of medical goods and services.
According to the report, for 2016, total health spending is projected to have reached nearly $3.4 trillion, a 4.8 percent increase from 2015. The report also found that by 2025, federal, state and local governments are projected to finance 47 percent of national health spending, a slight increase from 46 percent in 2015.
Additional findings from the report:
- Total national health spending growth: Growth is projected to have been 4.8 percent in 2016, slower than the 5.8 percent growth in 2015, as a result of slower Medicaid and prescription drug spending growth. In 2017, total health spending is projected to grow by 5.4 percent, led by increases in private health insurance spending. National health expenditure growth is projected to be faster and average 5.8 percent for 2018-2025, largely due to expected faster spending growth in both Medicare and Medicaid.
- Medicare: Medicare spending growth is projected to have been 5.0 percent in 2016 and is expected to average 7.1 percent over the full projection period 2016-2025. Faster expected growth after 2016 primarily reflects utilization of Medicare covered services increasing to approach rates closer to Medicare’s longer historical experience. This results in Medicare spending per beneficiary growth of 4.1 percent over 2016-2025 (compared to 1.6 percent growth for 2010-2015).
- Private health insurance: Spending growth is projected to have slowed from 7.2 percent in 2015 to 5.9 percent in 2016, a trend that is related to slower growth in private health insurance enrollment. Spending growth is projected to increase to 6.5 percent in 2017, due in part to faster premium growth in marketplace plans related to previous underpricing of premiums and the end of the temporary risk corridors.
- Medicaid: Projected spending growth slowed significantly in 2016 to 3.7 percent, down from 9.7 percent in 2015, largely reflecting slower growth in Medicaid enrollment. Spending growth is expected to accelerate and average 5.7 percent for 2017-2025 as projected per-enrollee spending growth rises over that timeframe. Underlying the faster per enrollee growth is the increasingly larger share of the Medicaid population who are aged and disabled and who tend to use more intensive services.
- Medical price inflation: Medical prices are expected to increase more rapidly after historically low growth in 2015 of 0.8 percent to nearly 3 percent by 2025. This faster projected growth in prices is influenced by an acceleration in both economy-wide prices and medical specific prices and is projected to be partially offset by slowing growth in the use and intensity of medical goods and services.
- Prescription drug spending: Drug spending growth is projected to have been 5.0 percent in 2016, following growth of 9.0 percent in 2015, mainly due to slowing use of expensive drugs that treat hepatitis C. Growth is projected to average 6.4 percent per year for 2017-2025, influenced by higher spending on expensive specialty drugs.
- Insured Share of the Population: The proportion of the population with health insurance is projected to increase from 90.9 percent in 2015 to 91.5 percent in 2025.
To see the report, click here.
Anthem Files Lawsuit to Preserve Cigna Deal, After Cigna Files Suit
Anthem is suing to block Cigna from terminating its merger agreement. The insurance giant announced Feb. 15 that it filed a lawsuit seeking to keep alive what has become essentially a $54 billion hostile takeover of Cigna.
Cigna filed a lawsuit on Feb. 14 seeking to terminate the deal and asking for $13 billion in damages, in addition to a $1.85 billion breakup fee.
Anthem argues that Cigna has aggressively worked to derail the deal throughout the integration efforts and during the Justice Department’s successful effort to block the deal on antitrust grounds.
“Cigna’s lawsuit and purported termination is the next step in Cigna’s campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the Merger Agreement in support of such effort,” Anthem said in a statement.
Aetna’s proposed $37 billion acquisition of Humana has also been blocked by a federal judge. On Feb. 14, the parties mutually announced that they were calling off the merger.
4. State Activities
California Lawmakers Introduce Single-payer Legislation
California lawmakers introduced legislation Feb. 17 to create a single-payer health care system in the state as a way of retaining the gains made under Obamacare and to further expand insurance coverage to all residents, including those living here illegally.
The bill, titled Californians for a Healthy California Act and authored by state Sen. Ricardo Lara, would create a health care system administered by the state that would allow patients to choose their own doctors and hospitals. The current version of the bill does not detail how such a system would be funded. Lara said the financing piece will come later and will rely on pooling the resources the state currently spends on health care.
California and other states—most recently Vermont and Colorado—have made previous unsuccessful attempts to enact or pass a single payer health system. But Lara said that with congressional Republicans set to dismantle the ACA, this time is different.
Florida: Gov. Scott Proposal Reduces Hospital Charity Funding
Florida Hospital and Orlando Regional Medical Center—the hospitals that treated the Pulse Nightclub shooting victims last summer—do not provide enough charity care to keep additional Medicaid dollars under the budget spending proposal being pushed by Gov. Rick Scott.
Scott wants to reduce Orlando Regional Medical Center’s Medicaid charity funding by nearly $38 million. Florida Hospital would lose just under $50 million, according to a spreadsheet shared by the agency. No hospital would experience bigger reductions in charity care than the two medical facilities.
In all, Scott’s budget reduces hospital funding by about $930 million in the upcoming fiscal year, which begins July 1. About $300 million comes from eliminating additional Medicaid payments sent to hospitals for providing charity care. Scott’s proposal would eliminate the additional charity payments to any facility with less than a 67 percent ratio of charity care to operating margin—the average margin at for-profit facilities.
Louisiana: Health Department Releases State’s Medicaid Expansion Figures
An estimated 400,635 people have received coverage under Louisiana’s expanded Medicaid program, according to new figures from the state’s health department. Since expansion, the rate of uninsured dipped to 12.5 percent in 2016 from 21.7 percent in 2013.
New Jersey: Gov. Christie Makes Progress on Drug Addiction Reform Plan
New Jersey Gov. Chris Christie signed the centerpiece of his new drug addiction reform plan into law, which will limit initial opioid prescriptions to a five-day supply and mandate insurance coverage for inpatient drug treatment. New Jersey will now have the most stringent law on limiting opioid prescriptions. Several other states, including Massachusetts and New York, have adopted a seven-day limit. The governor also suggested he plans to attack drug addiction on a much larger scale, saying he discussed the legislation with President Donald Trump at a lunch recently.
Pennsylvania: Gov. Wolf Stresses Importance of Expansion on Substance Abuse Treatment
Pennsylvania Gov. Tom Wolf, in a letter to Senate Finance Committee Democrats, stressed the importance of maintaining coverage levels and access to substance abuse treatment in any ACA replacement plan. Wolf’s letter emphasizes the importance the ACA and Medicaid expansion has had in addressing the opioid abuse epidemic in his state by dramatically expanding access to substance abuse treatment. He noted that Pennsylvania is facing a $3 billion deficit and said if the federal funding match from Medicaid expansion goes away, it could “quite literally devastate our state from a financial perspective or force our state to make impossible decisions about which Pennsylvanians are entitled to quality health care.”
5. Regulations Open for Comment
CMS Proposes Rule for Prosthetics and Orthotics Suppliers
On Jan. 11, CMS issued a proposed rule that would implement statutory requirements and specify: the qualifications needed for practitioners to furnish and fabricate prosthetics and custom-fabricated orthotics, and for qualified suppliers to fabricate prosthetics and custom-fabricated orthotics; accreditation requirements that qualified suppliers must meet in order to bill for prosthetics and custom‑fabricated orthotics; requirements that an organization must meet in order to accredit qualified suppliers to bill for prosthetics and custom-fabricated orthotics; and a timeframe by which qualified practitioners and qualified suppliers must meet the applicable licensure, certification and accreditation requirements. This rule would also remove the exemption from quality standards and accreditation that is currently in place in accordance with Section 1834(a)(20) of the Act for certain practitioners and suppliers who furnish or fabricate prosthetics and custom‑fabricated orthotics. In addition, this rule also includes authority for the Centers for Medicare & Medicaid Services (CMS) to revoke the Medicare enrollment of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers that submit claims for items that do not meet the requirements of the statute and this proposed rule.
Only qualified practitioners who furnish or fabricate prosthetics and custom‑fabricated orthotics and qualified suppliers that fabricate or bill for prosthetics and custom‑fabricated orthotics would be subject to these requirements.
CMS will accept comments on the proposed rule until March 13, 2017, and will respond to comments in a final rule.
To see the proposed rule, click here.
FDA Releases Draft Guidance for Interchangeable Biosimilars
On Jan. 17, FDA outlined the criteria companies must meet to get a copycat biologic deemed interchangeable with its branded counterpart, a certification that paves the way for the cheaper products to be automatically substituted at the pharmacy level under state laws.
To get this designation, a biosimilar sponsor must show that its product can be expected to produce the same clinical result as the branded biologic in any given patient, for all of the drug’s approved uses, and that there are no risks if a patient is switched back and forth between the interchangeable biosimilar and the branded biologic, per draft guidance released by FDA.
Interchangeable biosimilars are expected to offer greater savings to the health system than biosimilars that lack this designation. Without the interchangeability designation a doctor must proactively write a prescription for the biosimilar.
The guidance outlines the types of studies and scientific data that companies will need to submit to FDA to get an interchangeable designation. When companies seek that designation, FDA recommends they seek approval for all of the branded biologic approved uses.
FDA is requesting comments on the draft guidance as well as a number of questions outlined in a Federal Register notice. FDA wants to know how it should regulate manufacturing changes of interchangeable products that occur after approval. The agency also wants to know how it should handle interchangeable designations if a branded biologic gets another use approved for the drug, after the interchangeable biosimilar is cleared by FDA.
FDA Releases Draft Guidance on Off-Label Drug Communication
On Jan. 17, FDA issued draft guidance that gives drug and device companies more flexibility to communicate off-label information about their products and avoid charges of misbranding. The new policy allows companies to promote a drug or device with information not on the agency-approved label as long as that information is truthful and non-misleading and is consistent with FDA-approved labeling.
Companies have asked FDA for clarity on marketing policies after a 2012 U.S. Court of Appeals decision ruled that under the First Amendment the government could not prohibit and criminalize the truthful off-label promotion of FDA-approved drugs.
The guidance outlines how FDA will determine whether a company's communication is consistent with FDA's required labeling. For example, companies will not be permitted to communicate information about the drug or device related to a use that has not yet been approved by FDA. They also can't promote a patient population for the drug or device that has not been cleared by the agency.
The agency offers some examples of information companies could communicate that could be consistent with its FDA-required labels. For example, FDA said companies can promote testimony of patients who used the drug for its FDA-approved uses, such as the product's effect on patients' daily activities. Companies could also communicate long-term safety and efficacy information about products that were approved for chronic use based on a six-month trial, if the company now has data on the drug lasting a couple of years, FDA added.
The guidance also outlines the type of scientific data companies need to support their off-label claims. Comments on the draft are due in 60 days.
CMS Proposes Average 0.25 Percent Hike for Medicare Advantage Plans
On Feb. 1, the Trump administration issued guidance that proposes updates to the methodologies used to pay Medicare Advantage plans and Part D sponsors. The guidance calls for raising Medicare Advantage payments an average of 0.25 percent.
Health plans take in roughly $200 billion a year from the government to provide care for seniors enrolled in private Medicare plans. There are currently more than 18 million people enrolled in Medicare Advantage, accounting for roughly a third of all of the program's beneficiaries. More than 1 million seniors have been added to private Medicare plans in the past year, continuing a trend of robust growth that goes back a decade.
"These proposals will continue to keep Medicare Advantage strong and stable and provide high quality, affordable care to seniors and people living with disabilities," said Patrick Conway, acting administrator of the Centers for Medicare and Medicaid Services.
Obamacare included major cuts to Medicare Advantage—America's Health Insurance Plans puts the total figure at $200 billion—that were designed to bring payments more in line with traditional government-run Medicare. Last year, the federal government paid private plans an average of 102 percent of traditional fee-for-service costs per member.
UnitedHealth Group and Humana are the biggest national players, accounting for roughly 40 percent of the Medicare Advantage market in 2015.
CMS will accept comments until March 3 and the final notice will be posted on April 3.
To read a fact sheet on the rate proposal, click here.
GAO: Enrollment in Private Plans Concentrated Among Small Number of Issuers
In a reissued report, GAO found that enrollment in private health insurance plans remained concentrated among a small number of issuers in most states in 2014, including in the newly established exchanges. On average in each state and the District of Columbia, 11 or more issuers participated in each of three types of markets—individual, small group and large group—from 2011 through 2014. However, in most states, the 3 largest issuers in each market had at least an 80 percent share of the market during the period.
To see the full report, click here.
GAO: National Strategy Needed for Food Safety Federal Oversight
In a new report, the GAO finds that a national strategy is needed to address fragmentation in federal oversight of food safety. The safety and quality of the food supply is governed by a system administered by 16 federal agencies. For example, one agency regulates frozen cheese pizzas, another agency regulates frozen pizzas with meat and additional agencies regulate components of both.
Food safety and government performance experts agree that there is a need to develop a national strategy to provide a framework for strengthening the food safety system. GAO recommended that the Executive Office of the President lead the effort to develop such a strategy.
To see the full report, click here.
GAO: CMS Needs Better Data to Oversee Personal Care Services
In a new report, GAO finds that CMS needs better data to monitor the provision of and spending on personal care services. Millions of Medicaid beneficiaries rely on personal care services for help with daily tasks like bathing and eating. However, these types of services are at high risk for fraud and abuse—e.g., services that were paid for but never provided. GAO found that CMS needs better data to oversee these personal care services, and recommended that the agency issue guidance to states for reporting key data, ensure that data meet requirements and develop plans to use that data for oversight.
To see the full report, click here.
Science Panel Warns Against Gene Editing for Enhancement
According to a National Academy of Science and National Academy of Medicine report, clinical trials that edit inheritable traits in the human genome should not be permitted at this time.
However, human clinical trials that would alter DNA in human embryos—known as the human germline—and affect the genomes of future generations could eventually be permitted and deserve serious consideration, according to the report. Such activity is banned in the United States and many other countries.