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March 30, 2015

Washington Health Policy Week in Review Archive 4ac459a3-15dc-4bd9-8fe0-79f41b93974c

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Senate Passes on 'Doc Fix' Before Leaving for Recess

By Melissa Attias, CQ Roll Call

March 27, 2015 -- The Senate punted last week on a House-passed package to replace Medicare's physician payment formula, departing for a two-week recess without taking any action to avert a 21 percent cut to doctors scheduled to take effect April 1.

Senate Majority Leader Mitch McConnell, R-Ky., told senators that the Centers for Medicare and Medicaid Services (CMS) will be able to handle the delay for up to two weeks and that the Senate will address the legislation (HR 2) quickly when it returns. "I think there's every reason to believe it's going to pass the Senate by a very large majority," he said.

Minority Leader Harry Reid of Nevada said Democrats were willing to proceed to the measure and that he was disappointed it would not get done. "As I've indicated to the leader earlier on—early on today, we would hope we could get this done but I understand it's late, whatever day it is," he said.

Reid added that it's his understanding that senators could vote on a "very limited number" of amendments to the package when they return and McConnell said he expects to find a path forward quickly.

The leaders' comments came around 3 a.m. last Friday after a marathon series of votes on amendments to the Senate's fiscal 2016 budget resolution (S Con Res 11). The House had already backed the physician payment measure in an overwhelming 392-37 vote, with 212 Republicans and 180 Democrats endorsing the deal negotiated by Speaker John A. Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif.

The package to replace the oft-criticized sustainable growth rate (SGR) formula also has the backing of President Barack Obama and has drawn an outpouring of support from influential physician groups. Robert M. Wah, president of the American Medical Association, said in a statement his group is "extremely disappointed" the Senate didn't vote on the package before leaving town.

"We urge the Senate to immediately address this issue upon their return and once-and-for-all lay this destructive issue to rest by building the stable and sustainable Medicare program that our nation's patients and physicians need and deserve," he said.

The current one-year payment patch (PL 113-93) expires in four days and CMS has said it doesn't have any plans to hold off on processing claims as it has done in the past to buy Congress time. But in an email to health professionals, the agency noted that electronic claims aren't paid until at least 14 calendar days after they're received, providing something of a cushion before doctors feel the scheduled cut. CMS also said it would provide an update by April 11 about whether Congress has acted.

In addition to replacing SGR, the bill includes a two-year extension of funding for the Children's Health Insurance Program and community health centers, and would require wealthier seniors to pay more for their Medicare outpatient and prescription drug coverage starting in 2018 to help offset the cost.

It would generate additional savings by preventing Medigap plans sold to those who enroll in Medicare beginning in 2020 from covering the deductible for outpatient services, which is currently $147 a year, as well as by adjusting payment rates for certain health providers.

The bill also includes permanent extensions of programs to help low-income Medicare beneficiaries pay their premiums for outpatient coverage and to allow low-income Medicaid enrollees who become ineligible to keep their coverage for a transition period.

Some Senate Democrats have expressed concerns with the package because it includes two rather than four more years of funding for CHIP, which expires Sept. 30, as well as language that applies abortion restrictions to the community health center money. Meanwhile, Republicans Jeff Sessions of Alabama and Ben Sasse of Nebraska have both outlined opposition to the deal, citing the fact that it's not fully paid for.

The Congressional Budget Office estimated last week that the bill would increase the federal deficit by $141 billion through fiscal 2025, though House GOP leaders have emphasized that it would cost $900 million less than freezing doctors' payments for that period. They maintain that comparison is a more appropriate baseline because Congress has repeatedly passed short-term patches to prevent cuts from taking effect.

Lawmakers came close to replacing SGR last year when the three committees with jurisdiction over Medicare agreed on a permanent fix, but the effort faltered when lawmakers were unable to agree on offsets.

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Permanent 'Doc Fix' Passes House with Strong Bipartisan Majority

By Melissa Attias, CQ Roll Call

March 26, 2015 -- The House backed a package to replace Medicare's oft-criticized physician payment formula last week in an overwhelming bipartisan vote, kicking it over to the Senate, where it faces an uncertain fate as the chamber prepares to leave for a two-week recess.

The legislation (HR 2) passed 392-37, with 212 Republicans and 180 Democrats joining to support the deal negotiated by Speaker John A. Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif. If it clears the Senate, the bill will put an end to a cycle of 17 short-term "doc fix" bills that temporarily averted cuts to Medicare doctors dictated by the sustainable growth rate formula, or SGR.

In addition to replacing the formula, the bill includes a two-year extension of funding for the Children's Health Insurance Program (CHIP) and would require wealthier seniors to pay more for their Medicare outpatient and prescription drug coverage to help offset the cost. The measure is only partially paid for, with the Congressional Budget Office projecting that it would increase the federal deficit by $141 billion over 11 years.

Lawmakers came close to replacing the formula last year when the three committees with jurisdiction over Medicare agreed on a permanent fix, but the effort faltered when lawmakers were unable to agree on offsets. A one-year payment patch (PL 113-93) passed instead will expire in five days, leaving the Senate with a narrow window for action.

"I know that they're working because they know the clock is ticking and no one wants to deny reimbursement to doctors here on the first of the month," said House Ways and Means Health Subcommittee Chairman Kevin Brady, R-Texas. "And so we're just hopeful they'll be able to get it out."

The Centers for Medicare and Medicaid Services plans to continue processing claims from providers. But in an email to health professionals, the agency noted that electronic claims aren't paid until at least 14 calendar days after they're received, providing some cushion before doctors feel the 21 percent scheduled cut. CMS also said it would provide an update by April 11 about whether Congress has acted and next steps.

The broad bipartisan House vote puts additional pressure on the Senate to act before it leaves town for spring break. However, senators could still object to any unanimous consent request to bring up the bill. Some Democrats have expressed concern that the package includes a two-year extension of CHIP funding rather than four years, along with the abortion restrictions applied to money for community health centers.

Sen. Jeff Sessions, R-Ala., also expressed opposition to the deal in a floor speech because the cost is not fully offset and urged colleagues to pass a short-term payment patch instead.

Ben Sasse of Nebraska maintained in an op-ed last week that " the House bill is a missed opportunity to fix Medicare and arguably makes our long-term problems worse" and expressed concern about its potentially rushed consideration.

"Congress should scrap this deal and work on a new solution," he wrote. 

While the Obama administration recently released a Statement of Administration Policy supporting the bill, White House Press Secretary Josh Earnest also noted that some senators think it could be "further improved" through amendments and expressed support for providing an opportunity to offer them.

The Senate already has a full plate and is expected to be voting late into the night on amendments to its fiscal 2016 budget proposal (S Con Res 11). An effort to vote on the SGR package could be made after consideration of the budget is complete.

Asked if lawmakers have prepared another short-term patch as a backup measure, Brady said he's sure the Speaker's office is planning for all contingencies "but we're going at full steam ahead."

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Why the 'Doc Fix' Deal Has Senate in Something of a Fix

By David Hawkings

March 25, 2015 -- The odds have crested the 50–50 threshold for what would surely become one of the year's biggest legislative achievements—an overhaul of how doctors and other Medicare providers get paid. And the usual encrusted ideological positioning, at both ends of the political spectrum, is no longer the biggest obstacle.

Instead, what's standing in the way is a springtime functionality gap between the Capitol's two wings.

The House is on course to embrace something resembling a legislative unicorn: A bipartisan plan to restrain entitlement spending. Both Speaker John A. Boehner and Minority Leader Nancy Pelosi claim pride of authorship in this modest breakthrough of a bill, and they're basking in the expectation it will pass with the votes of most Republicans and most Democrats.

It's a phenomenon rarer on the Hill than flurries at the end of March. The Hastert Rule (measures coming to the House floor must command support from a majority of the GOP majority) is going to co-exist with what might be called the Peterson Reality (you can count on one hand the number of remaining Democrats who are like Minnesota's Collin C. Peterson, whose reliably "red" districts give them a political survival motive for going along with the GOP).

But there's deepening suspense to see whether the Senate will take the House's loud "Yes!" for an answer.

If senators decide to acquiesce to the House plan, they'll probably do so in the form of a lickety-split voice vote at the last minute before their spring break starts. That's the senatorial equivalent of an, "Oh, I guess that's OK …" Don't expect triumphant speeches, congratulatory news conferences, or even a call of the roll.

The time pressure comes from next week's deadline—the current Medicare payment formula lapses on March 31. Unless Congress replaces the existing rules or extends the status quo, in April physicians will see a 21 percent cut to their reimbursements for treating the elderly. In an almost annual ritual known as the "doc fix," Congress has stepped in 17 times previously with legislation temporarily forestalling such reductions, part of a deficit-reduction law enacted almost two decades ago.

But there are solid reasons, both tactical and petty, why the Senate will either deadlock over or proactively postpone the "permanent doc fix" measure—perhaps only for a month or so, but maybe until later this year or beyond. (If that happens, the get-out-of-town votes at the end of the week will be to apply an 18th consecutive patch to the formula.)

Senate Majority Leader Mitch McConnell has been pledging since election night to do whatever he can to revive the Senate's traditional deliberative culture, and working to dragoon all his colleagues into an immediate acceptance of the House's work product would openly contradict those "return to regular order" promises.

Beyond that, the Kentuckian's experience as a strategic thinker may have given him another idea: Such a rare bipartisan agreement should not be permitted to become law so easily; instead, such a "unicorn" is best consigned to the stables until his fellow Republicans have readied some more politically complicated freight to catch a ride on its back.

It's also the case that, if the Boehner–Pelosi pact sails through, it will unavoidably cast additional unflattering light on the sour relations between McConnell and Minority Leader Harry Reid, who can hardly agree these days on when the Senate should schedule an hour off for lunch.

If McConnell doesn't raise a hand against the bill, there's a chance the Democrats on the Senate Finance Committee will be the ones to put a hold on it—not because they're unalterably opposed to the package, but because they are peeved at not being consulted on the deal.

And, as even a modestly cynical observer would note, perpetuating the "doc fix" debate assures a continued steady flow of generous campaign contributions to lawmakers in both parties—from their rich physician constituents as well as the political arms of an enormous array of medical specialty groups.

Enacting the Boehner–Pelosi plan would not only turn off that spigot, but also transform the world of health industry lobbying by allowing doctors to count on regular inflationary increases in their Medicare fees and obviating the need for any more temporary patches.

To make most Republicans happy, it would accomplish this without raising taxes. Instead, it would offset about a third of the $210 billion cost during the next decade, mostly by making wealthier beneficiaries pay more for their coverage but also from trimming some payments to hospitals. To make most Democrats happy, the bill would also extend for two years the Children's Health Insurance Program (CHIP), which covers the medical expenses of poor kids. Hoping to plump up support in both parties, and woo senators as well, the package also extends programs that pay for therapy services, subsidize ambulance systems, keep community clinics open and prop up the books of rural hospitals.

The most conservative Republicans object on the grounds that the deficit should not be permitted to grow by $140 billion for almost any reason, including preserving the current levels of physician income. Others on the right don't want to ask elderly rich people to pay more for their Medicare.

The most liberal Democrats oppose the package for not giving CHIP a longer lease on life, and leading abortion-rights lawmakers lament the deal would maintain the current rules preventing spending on abortions except in cases of rape or incest.

More often than many realize, senators live up to the stereotype that their egos are both bigger and more easily bruised than those of their House counterparts, and that the same goes for their turf consciousness, fundraising ferocity, hostage-taking zeal, and proclivity to play it too clever by half. All of that is in play in the next three days.

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Blue State Governors Look to Feds After Marketplace Snafus

By Marissa Evans, CQ Roll Call

March 26, 2015 -- Three Democratic governors have become so exasperated by flaws in their health law insurance marketplace, or exchange, websites that they took steps this month that could lead to the federal government assuming control over all or part of their operation. More states may follow.

Oregon Gov. Kate Brown signed a bill on March 6 that have her state's Cover Oregon exchange use the same computers that run the federal government's—after  the state spent millions of dollars to fix the site and fired the contractor that built it. In a March 16 letter to lawmakers, Minnesota Gov. Mark Dayton wrote that he wants a task force to examine the long-term financial sustainability for the state's MNsure exchange. And Vermont Gov. Peter Shumlin said March 20 that if the new contractors setting up the Vermont Health Connect exchange don't have it ready by October, the state may take steps to move residents to the federal marketplace.

"Before 2014, a lot of the blue state governors saw it as politically advantageous to get out front and take ownership of the ACA and their state marketplaces," said Larry Levitt, a senior vice president at the Kaiser Family Foundation. "At this point it's not clear what are the advantages for states running their own marketplaces."

Thirteen states plus the District of Columbia are running their own exchanges, called for in the Affordable Care Act (ACA), where residents can purchase health insurance. New Mexico, Nevada, and Oregon opted to run exchanges that provide outreach and customer service, but allowed the federal government to manage the information technology supporting the website.

Sabrina Corlette, a senior research fellow with the Georgetown University Center on Health Insurance Reforms, said state-run marketplaces are spending millions of dollars to keep afloat.

"Unfortunately, with IT, you can't just build a site and walk away," she said. There are "not only regular maintenance costs but states have to sink a lot of money into significant upgrades."

Corlette said it's possible that other state exchanges will follow New Mexico, Nevada, and Oregon to use the federal exchange's backend technology to support their sites. Hawaii and Rhode Island, for example, may do so because their small populations make it difficult to generate enough revenue to sustain the exchanges, Corlette said.

Dan Schuyler, a senior director for Leavitt Partners, a health care consulting firm, said that despite Oregon's woes most state marketplaces improved their performance during this past enrollment period. He said they had more time to prepare and the sites were functioning better than last year. He argues that the state exchanges have the advantage of being able to have more control of the plans on their site than they would if they relied on

Relying on the federal exchange's technology might be an option for states that haven't built their own site but "the federal platform is not going to be free forever," Schuyler said.

Nevada, which was one of the first states to set up an exchange supported by, has been told by the Centers for Medicare and Medicaid Services that it will have to start paying for the support in 2017. Silver State Health Insurance Exchange officials wrote in a March 12 report that they will work with CMS to calculate how much the state will have to pay . The board for New Mexico's health exchange is also trying to pitch a "rental" fee to CMS for continued use of the federal site.

"If supported state marketplaces are going to have to pay you can almost assume the federal government will have to pass on the cost to federally facilitated marketplace states as well," Schuyler said.

Tom Miller, a resident fellow with the American Enterprise Institute said that there's not really any difference between running a state exchange versus being part of He said the main advantage states with an exchange have right now is that their residents would be able to keep their subsidies if the Supreme Court rules that citizens in states without their own sites cannot receive them.

The court heard oral arguments in that case, King v. Burwell, on March 4. The case examines whether the ACA can give subsidies to residents of the 34 states that didn't set up health insurance exchanges. An estimated 13.4 million people could lose the subsidies if the court strikes them down, according to a Kaiser Family Foundation analysis.

The pending decision and potential lost subsidies has state lawmakers in Indiana, Maine, Missouri, New Hampshire, New Jersey, Ohio, Pennsylvania, Tennessee, and Texas weighing bills to set up their own marketplaces, according to the National Conference of State Legislatures.

Levitt said it's too soon for states to decide if they'll keep using or create their own marketplaces in the wake of the high court ruling this summer.

"States might talk about moving ahead but logistically there's not a lot they can do right now," Levitt said. "The aftermath of a court decision for the challenger would be so unpredictable that I think states will wait to see how it plays out. No one knows what rules might be to constitute marketplace."

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Effort Would Change Cost-Sharing for Specialty Drugs

By Georgina Gustin, CQ Roll Call

March 25, 2015 -- A bipartisan House plan introduced last week would require insurers to charge patients who use expensive specialty drugs and biologics a fixed copayment instead of a percentage of the cost. 

The bill by Reps. David B. McKinley, R-W. Va., and Lois Capps, D-Calif., is a version of legislation that was introduced in 2014 and 2013 and gained some steam last year with 142 bipartisan cosponsors.

At a briefing, McKinley and Capps said they hoped to best that this year. "We have to persuade our leadership," McKinley said, noting 50 current cosponsors. "No one in the House or Senate is on a $100,000 medicine. We need to convince them."

Patient advocacy groups have criticized insurers and employers for placing biologics, or drugs made from living organisms, into higher pricing tiers, where patients can wind up paying thousands of dollars a month. Most biologics don't have cheaper generic versions, although the Food and Drug Administration recently approved the first "biosimilar" earlier this month and more are under agency review.

At the hearing, William Harvey, of the American College of Rheumatology, called the practices "discriminatory." 

"These medications transform patients' lives. Despite the high costs, despite the insurers . . . we can chart a path forward," Harvey said. "These are drugs that people need—not want—need."

The treatments are used to treat a number of complex disease, including rheumatoid arthritis, lupus, and multiple sclerosis.

Insurance companies note total spending for health care payers increased more than 13 percent in 2014, largely because of the rise in specialty drug costs. According to a 2014 report by the pharmacy benefit manager ExpressScripts, only 1 percent of U.S. prescriptions are for specialty drugs, yet they represented nearly 32 percent of the total drug spend. 

"Proposals to place a cap on prescription drug coverage without addressing the price will only drive costs higher for patients," said Ben Jenkins, a spokesperson for America's Health Insurance Plans.

McKinley said he believed he could get a hearing on the calendar before the summer recess.

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Health Law Credits Boosted Coverage in 2014, GAO Says

By Adriel Bettelheim, CQ Roll Call

March 23, 2015 -- A look at the early numbers suggests that the premium tax credit offered via the Affordable Care Act boosted health care coverage in 2014.

A Government Accountability Office (GAO) report released last week found that the tax credit, which was intended to make premiums more affordable under the law, expanded coverage among uninsured, eligible people by as much as 5 percent in 2014.

The GAO looked at studies on insurance rates and interviewed experts from 11 research groups, as well as from the Department of Health and Human Services.

The report found that the advanced premium tax credit reduced premiums by 76 percent from 2013 to 2014.  Although data were not yet available for 2015, studies found the tax credit caused only modest changes between 2014 and 2015.

The GAO also released a report last week recommending that Congress require Medicare to pay certain exempt cancer hospitals in the same way in pays teaching hospitals, saying that methodologies for paying the exempt hospitals provided little incentive to control costs.

In 2012, the report found, Medicare payments to the exempt hospitals and the teaching hospitals, were substantially higher—roughly 42 percent more for inpatient services.

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