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February 16, 2016

Washington Health Policy Week in Review Archive f443143c-558b-4c12-a728-0a549d3bff30

Newsletter Article


CMS Innovation Center Spending Ticks Up as Obama Era Nears End

By Kerry Young, CQ Roll Call

February 10, 2016 -- The Obama administration is picking up the pace of spending through its $10 billion Center for Medicare and Medicaid Innovation (CMMI), which may prove to be a short-lived initiative for testing ways to improve health care by tying federal payments to the quality of services.

The center is expected to spend about $1.60 billion in fiscal 2017, up 13 percent from $1.41 billion in fiscal 2106, according to the final budget from the Obama administration, which was released Tuesday. The $3 billion to be paid by CMMI over just those two years exceeds the combined annual outlays from the program in its first six years of operations. The program was created by the 2010 health law.

The Obama budget unveiled Tuesday shows an expectation for a fairly rapid depletion of CMMI's uncommitted money. The balance dropped from $5.67 billion at the end of fiscal 2015 to $3.84 billion in fiscal 2016, and then is projected to fall to $2.36 billion by fiscal 2017. 

Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell has said there's a deliberate push to get large CMMI projects ready to begin operations in the final months of the Obama administration.

"This is about getting the changes rolling," said Burwell at a Feb.5 meeting with reporters. 

A major new initiative is slated to begin this year that would compel about 800 hospitals to keep closer tabs on how people on Medicare fare after undergoing hip and knee replacements, with part of their reimbursement at stake for poor results. 

Part of the spending increase is due to a maturing of CMMI programs. Among the more than 25 projects already in motion are test programs to try to better coordinate care of people on Medicare who have cancer or failing kidneys.

"They have developed a creative, very interesting portfolio of projects that I believe will be important in fundamentally changing the organization of U.S. health care for the better," Lawrence Casalino, a professor of health policy at Weill Cornell Medical College told CQ HealthBeat in an email, adding that CMMI has done "a very good job spending the money at a reasonable pace."

Casalino had last year raised concerns about whether CMMI was getting plans in place quickly enough to spend its $10 billion. CMMI's roots in the 2010 health overhaul have attracted some GOP opposition despite some bipartisan support for the program's core mission. The health law  provided an initial $10 billion for CMMI to be used through fiscal 2019, with an expectation that another $10 billion would be provided for the following decade. Budget politics make this second tranche of funds unlikely to materialize, even if a Democrat follows Obama as president.

In a May 2015 article published in the New England Journal of Medicine, Casalino had suggested that "it may be better to spend the money sooner rather than later" at CMMI. CMMI had only committed about a third of its $10 billion as of fiscal 2014.

The following month, House GOP appropriators made a bid to rescind $6.8 billion from CMMI. While this was unsuccessful, it could set a precedent for eyeing CMMI's untapped funds as an offset.

Some of CMMI's programs are on track to run well beyond the end of Obama's tenure.  A five-year program intended to encourage more coordination in the care of cancer patients is slated to start in mid-2016. A large program involving so-called accountable care organizations is set to end in 2020.

The CMMI initiative may have effects by changing the expectations about the quality of care attached to future policy decisions about Medicare payments, Burwell said.

"I feel like there are some standards that, even if we are gone, people are going to pursue if it is successful," she said.

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Medicare: Budget Proposes More Than $470 Billion in Savings

By Kerry Young, CQ Roll Call

February 9, 2016 -- The final budget blueprint from President Barack Obama proposes ways to shave more than $470 billion over a decade from Medicare spending, slowing the pace of growth for expenses for the federal program for the elderly and disabled.

If Congress were to approve the cuts, the estimated annual cost of the Medicare program would still hit $1 trillion by fiscal 2026, up from an estimated $598 billion in fiscal 2017. The aging of the baby boomers will lead to an expansion of enrollment in Medicare, already the nation's largest single purchaser of health care. 

Seeking to counter the natural growth in costs for the program, the White House in its fiscal 2017 budget proposed changes in rules for paying doctors and other providers of health care that the administration estimates would save $421.4 billion over a decade. 

Increases in contributions that people enrolled in Medicare make to the cost of their medical care would generate another $56.4 billion over a decade. Asking wealthier people to contribute more to the cost of their health care and drug purchases would account for about $41.2 billion of the expected savings.

The final Obama budget proposal for Medicare may generate legislative interest that extends beyond the end of this administration. Lawmakers in both parties have used Medicare savings to offset both the cost of recent budget deals and to pay for spending increases for the program. The blessing of a Democratic president may make it easier for members of both parties to endorse reductions in Medicare payments.

Some of the biggest proposed Medicare savings in the fiscal 2017 budget proposal would be taken from the pharmaceutical industry. About $121.3 billion would be saved by lowering the payments for drugs purchased for people on Medicare who are living in or near poverty, to match Medicaid payments. Another $9.6 billion would be saved over a decade by encouraging people on Medicare who qualify for low-income assistance to use more generic drugs.

The budget proposal also calls for allowing Medicare to negotiate lower prices for expensive biologic and prescription drugs. No savings estimate was included for this proposal, indicating that many details would need to be worked out for such a change in approach. 

Another target for savings are the insurer-run Medicare Advantage plans, with the administration saying that changes to "increase the efficiency" of the program could save $77.2 billion over a decade.

The Medicare Payment Advisory Commission has looked at several avenues for reducing Medicare Advantage expenses, with an aim of maintaining the quality of health services provided to elderly and disabled people while cutting costs.

The proposal for savings through the Medicare Advantage program, though, drew the ire of Marilyn Tavenner, who last year resigned as administrator of the Centers for Medicare and Medicaid Services (CMS). Tavenner now leads the lobbying group America's Health Insurance Plans.

"Millions of seniors depend on Medicare Advantage, yet, the Administration's latest budget proposal would directly undermine the care and programs that are proven to work and improve beneficiaries' health," she said in a statement. "This is not the time to cut Medicare Advantage. It's the time to protect and strengthen it."

The industry of providers that care for people after hospital stays for serious illnesses and surgeries is another target for deep savings in the budget proposal. Curbing the growth in payments could generate $86.6 billion in savings over a decade. The White House also estimates that $9.9 billion could be saved over a decade by creating a new bundled payment for care provided to people on Medicare after hospital stays, a move that would end the current patchwork of separate payments for different services.

At least one White House's proposal would add to Medicare's expenses. The budget calls for eliminating the coinsurance that beneficiaries have been charged for removal of polyps during colonoscopies, a $2.43 billion new expense over a decade.

The White House also proposed cost savings for the state-federal Medicaid program for those living in or near poverty. The proposals include giving states a new tool to reduce spending on high-cost drugs through a negotiating pool. The improved bargaining power would save $5.8 billion over a decade, the budget request projected.

The budget also calls for allowing CMS to require insurance plans that cover people in Medicaid and the Children's Health Insurance Program to pay out at least 85 percent of premium revenues for medical costs through a so-called medical loss ratio requirement. This would produce $23.5 billion in savings over a decade.

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Brady Urges HHS to Work with Congress on Health Tax, Medicare

By Kerry Young, CQ Roll Call

February 10, 2016 -- House Ways and Means Chairman Kevin Brady urged Health and Human Services (HHS) Secretary Sylvia Mathews Burwell Wednesday to work with Congress on the areas of rare policy agreement between Republican lawmakers and the Obama administration, citing specific Medicare programs and a tax on insurers as examples.

At a hearing on HHS' fiscal 2017 budget request, Brady, a Texas Republican, pointed out recent actions on the so-called "Cadillac" tax as a model for how bipartisan work still can be done by the Hill and White House. Last year's spending and package tax package (PL 114-113) made significant legislative revisions to the 2010 health overhaul by placing a two-year moratorium on a tax on high-cost employer health plans and a tax on medical devices.  Obama's budget includes a $1.2 billion proposal to narrow the scope of the Cadillac tax insurers pay on high-cost employer-sponsored health care plans. 

"While we will disagree more than we agree today, I do believe that there are some important areas of cooperation," Brady said. "I'm glad that the White House has finally faced reality in one area and agreed that the so-called Cadillac tax is not workable."

Brady also raised with Burwell two policy issues that he has long championed as specific areas in which bipartisan agreement could be found. One is unifying the patchwork of Medicare payment policies now in place for care provided to people after hospital stays for serious illnesses and injuries, known as post-acute care. The other is the training of physicians in the United States, a field in which the federal government is a major contributor through the Medicare and Medicaid programs as well as the Department of Veterans Affairs and the Indian Health Services.

At the hearing, Brady also initially sought to reignite partisan debates over how successful the Obama administration has been in implementing the new health insurance exchanges. He said the policies sold through the exchanges have proven costly, while Burwell defended the program for reducing the number of American who lack health insurance. Brady also criticized what he sees as duplicative social welfare programs in the Obama budget. These include a plan to create a home visiting program through the Department of Agriculture, even though Burwell's department already has one.

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HELP Panel Approves Health Innovation Bills, but Funding Issues Loom

By Andrew Siddons, CQ Roll Call

February 9, 2016 -- Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander of Tennessee touted the panel's quick passage Tuesday of seven bills designed to spur medical innovation as an example of rare bipartisan cooperation. But some of his colleagues predicted that a debate over funding would ultimately derail the whole process.

The seven bills that the committee reported favorably without amendment included a measure designed to make it easier for medical providers to use federal electronic health records (S 2511), which was adopted by 22–0. The rest, approved by voice vote, included a bill (S 2014) to support young researchers at the National Institutes of Health (NIH) and another (S 1622) that would aim to improve the Food and Drug Administration's (FDA) review process for devices.

The approvals mark the start of the Senate's consideration of legislation to mirror the 21st Century Cures bill (HR 6) that the House passed last summer.

However, the specter of how to agree on funding loomed large. Alexander said that offsets to pay for the measures could be addressed later on the Senate floor when the bills and other measures would be debated. He plans two more markups to debate about 40 more bills over the next two months, hoping to meld them into one cohesive measure.

But others didn't share his optimism.

"There's not going to be an innovation bill," Sen. Richard M. Burr, R-N.C., said during Tuesday's HELP meeting.

Burr was referring to the fact that committee Democrats, led Ranking Member Patty Murray, don't appear eager to go along with any medical innovation packages that won't include mandatory funding to support research at the NIH. Some Democrats are also skeptical about bills that might, in the words of Senator Elizabeth Warren of Massachusetts, "neuter" the FDA's oversight of drugs and medical devices.

The package, said Murray, "must include mandatory investments in the NIH and FDA and must uphold the gold standard of FDA approval."

Warren said she would not support any legislation that didn't include mandatory funding. "Real innovation starts with funding for basic research," she said. She also criticized the overall approach: "A handful of smaller targeted changes like we're voting on today won't get us where we need to be," she said.

Despite the differences over funding, Alexander sought to convince his bickering committee members that it was too early to predict the demise of a final package.

"Proceeding step by step in the right direction is one good way to get where you want to go," he said.

Despite the pessimism from Burr and Warren over the committee's inability to move forward with a single comprehensive piece of legislation, other senators praised Alexander's approach.

Sen. Susan Collins, R-Maine, described the legislation advanced on Tuesday as "important bills that will make a real difference to American families."

While many members spoke of constituents whose lives would be positively impacted by Tuesday's legislation, one bill, which aims at improving NIH research into medical rehabilitation, might make a difference on an even more personal level for one committee member.

"This bill comes from my time recovering from a stroke in Chicago," said Sen. Mark S. Kirk, R-Ill., who missed a year of work in the senate after suffering a stroke in 2012. Among stroke victims, he said, 75 percent "will not return to work as I have been able to do." Kirk expressed hope that this bill could improve that statistic.

Despite the panel's divisions, Alexander has a record of bringing people together. He has touted his committee's work on last year's education bill (PL 114-95) as an example of bipartisanship. Alexander is convinced he can achieve similar results with the innovation bill.

"With this bipartisan action in committee today, we've shown the Senate's potential to be the vehicle that turns these groundbreaking ideas into law this year to help improve the lives of nearly every single American," Alexander said after the markup.

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Hatch Objects to Direct Medicare Drug Negotiations

By Kerry Young, CQ Roll Call

February 11, 2016 -- Senate Finance Chairman Orrin G. Hatch warned President Barack Obama's health secretary Thursday not to try to move toward direct federal negotiations on drug prices, though there is no indication that the administration is poised to do so.

The Utah Republican reminded Health and Human Services (HHS) Secretary Sylvia Mathews Burwell that the 2003 measure (PL 108-173) that created the Medicare Part D drug program deliberately assigned the task of negotiating pharmaceutical prices to the insurance companies that manage this benefit. Hatch told Burwell that he has heard "rumblings" that the White House is considering whether it could use an executive order to allow direct negotiations by federal officials to lower the costs of drugs in the Medicare Part D plans, which is projected to cover roughly $90 billion in purchases this year.

"Such an executive order would be in violation of the law, as the statute explicitly prohibits such interference in private negotiations," Hatch told Burwell on Thursday during a Senate Finance hearing on her department's fiscal 2017 budget request. 

Growing drug costs have become an increasingly hot topic in American politics. GOP presidential contender Donald Trump and the contestants for the Democratic slot, Hillary Clinton and Sen. Bernard Sanders, I-Vt., have spoken in favor of direct Medicare drug negotiations. In its fiscal 2017 budget request, the White House reiterated its support for allowing HHS to negotiate directly on certain expensive medicines, without fleshing out in great detail how this approach would work.

Burwell didn't directly answer Hatch's question about whether the White House has considered any executive action, instead emphasizing that her department is focused on both the needs of the developers of new medicines and of Americans facing high pharmacy bills. Burwell cited a forum on pharmaceuticals that HHS held in November as an example of her approach. 

"It's not just drug prices," Burwell said. "It's about innovation, which is why we actually brought everyone in for a conversation about both of those issues at the end of last year so that we could hear from industry as well as consumers in terms of the issue. As we think about it and the steps that we have taken, we are focused on both innovation as well as that affordability."

Burwell noted that Rob Portman, R-Ohio, had raised concerns about the impact of drug spending on deficits.

"We take that very seriously and are looking for the opportunities that we can do in terms of drug prices," said Burwell. She pointed out a series of steps that the administration has already taken to address concerns about prescription costs, including narrowing a Medicare coverage gap that forced seniors to shoulder some of their drug costs.

Before raising his concerns about Medicare Part D drug negotiations, Hatch complimented Burwell on her performance as HHS secretary. Senators agreed that Burwell has reached out actively to lawmakers in both parties, even amid continuing deep partisan splits over the implementation of the 2010 health care law.

"I want to keep working with you," Hatch said. "Listen to our side, too, and maybe you'll get a lot done."

At the hearing, Burwell addressed a wide range of issues. She promised to follow up on concerns that Sen. Johnny Isakson, R-Ga., raised about seemingly slow progress at the Food and Drug Administration on the review of new sunscreen ingredients. She and Sen. Rob Portman, R-Ohio, discussed their mutual interest in taking steps to curb the widespread use of opioid painkillers that has often served as a pathway to narcotic addiction and heroin use. And Sen. John Thune, R-S.D., asked Burwell to address long-standing concerns about Indian Health Service operations in his state, as Rep. Kristi Noem, R-S.D., had done at a House Ways and Means Committee hearing on Wednesday. 

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