United States: Capitol Hill Healthcare Update – December 18, 2017

SHUTDOWN SHOWDOWN: CHIP, OTHER HEALTH PROVISIONS AT RISK AS DEADLINE NEARS

Renewal of the Children's Health Insurance Program and a host of other healthcare provisions hang in the balance as congressional Republicans struggle to find consensus on a year-end budget bill that would avert a government shutdown.

Unless lawmakers approve a new stopgap funding bill this week, the federal government will close beginning Saturday morning. The optics of a shutdown couldn't be worse for Republicans, who want to tout their sweeping tax reform legislation that Congress is expected to approve this week.

But House and Senate Republicans have different strategies for keeping the government open. House conservatives want to fund the Pentagon for the year but the rest of the government only until Jan. 19. To try to lure Senate Democrats to support that package, the House would add a five-year CHIP renewal and funding for federal health centers and veterans' healthcare.

Conservatives want the House to vote on this plan and then adjourn, forcing the Senate to approve it or risk a shutdown. But Senate Democrats say they will reject the legislative dare and instead develop a bipartisan spending bill that can attract the needed 60 votes in the Senate and send it back to the House.

In addition to CHIP renewal, a bipartisan Senate spending bill could include money for insurers to subsidize consumers' premiums under the Affordable Care Act. Although House conservatives strongly object to the ACA cost-stabilization bill advanced by Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., Sen. Susan Collins, R-Maine, conditioned her vote on the tax reform bill to Congress separately passing it.

Uncertainty over the year-end spending bill also affects opponents of the Trump administration's plan for the 340B prescription drug discount program. They were hoping to leverage the budget bill to block a Centers for Medicare and Medicaid Services (CMS plan to reduce by 28 percent hospital discounts for physician-administered drugs. Without action by Congress, the 340B rule will go into effect Jan. 1.

While the risk of a government shutdown is elevated amid the partisan and intra-GOP squabbling, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell say they won't let it happen. If the Senate doesn't adopt the House's take-it-or-leave-it approach and the House doesn't adopt the Senate's bipartisan strategy, Congress could simply vote to delay funding decisions until January.

WITH TAX BILL, CONGRESS SET TO STRIKE ACA'S INDIVIDUAL MANDATE

Republicans in Congress struggled unsuccessfully for months in 2017 to repeal and then develop a replacement for the Affordable Care Act, but this week lawmakers are likely to eliminate one of the ACA's key provisions.

The House and Senate are poised to approve the most sweeping tax overhaul in 30 years, including effectively repealing the health law's individual mandate. The tax bill keeps the mandate's structure but sets the tax penalty for not buying insurance at $0.

While some ACA provisions have been modified in recent years – like delaying the medical device industry's excise tax or eliminating reporting requirements for small businesses – repealing the individual mandate would represent Republicans' most significant blow to the health law.

Some GOP lawmakers are pressing for a separate vote this month to overturn the law's Independent Payment Advisory Committee, the panel charged with reducing Medicare spending if it grows past a certain threshold.

AZAR'S CONFIRMATION HEARING DELAYED UNTIL JANUARY

The Senate Finance Committee last week confirmed that hearings for HHS Secretary-designate Alex Azar won't occur until the Senate reconvenes in January after the holidays.

The committee's focus in recent weeks on pushing tax reform legislation had effectively prevented the panel from holding a hearing on Azar. President Trump last month nominated Azar, who is a former HHS general counsel and a senior executive with Eli Lilly.

Barring an unforeseen development, the Senate is likely to confirm Azar early next year, though Democrats are expected to continue to criticize drug companies over prices and what they say is Trump's lack of action to lower them.

HOUSE GOP PUSHES FOR REPEAL, DELAY OF ACA TAXES

Republicans on the House Ways and Means Committee last week introduced a series of bills that would repeal or delay several taxes included in the Affordable Care Act, but it's not certain if Congress can approve them this month.

Reps. Erik Paulsen, R-Minn., and Jackie Walorski, R-Ind., introduced legislation to delay for five years the ACA's tax on medical device manufacturers. The 2.3 percent excise tax is currently in a two-year suspension, but it is scheduled to go back into effect Jan. 1 unless Congress stops it.

Separate legislation would delay the tax on high-cost employer health plans – known as the Cadillac tax – for one year, and repeal the health insurance tax for some plans next year and for all plans in 2019.

Some of the GOP's bills to roll back ACA taxes, especially the medical device tax and the Cadillac tax, enjoy bipartisan support. But discussions between Republicans and Democrats have stalled as the GOP focuses on its broader tax reform legislation.

House Republican leaders have pledged to device industry lobbyists that Congress won't allow the tax to snap back next month. But because of the uncertainty over the larger year-end spending issues, it's not clear how or with what legislative vehicle Congress will consider the ACA taxes this month.

MODIFIED ORPHAN DRUG TAX CREDIT IN FINAL GOP TAX BILL

Congressional Republicans' tax overhaul legislation will maintain but modify the orphan drug tax credit, which has incentivized the development and approval of hundreds of new drugs in the past 30 years.

The tax bill, which Congress is expected to approve this week, would allow pharmaceutical manufacturers to deduct 25 percent of the costs of clinical trials for drugs to treat diseases that affect fewer than 200,000 people. Current law allows companies to deduct up to half the costs of their research into orphan drugs.

Smaller patient populations dramatically increase the costs for clinical trials, and before the tax credit was created in 1983, the FDA approved fewer than 40 orphan drugs. Since then, more than 600 orphan drugs have won FDA approval. But amid the politics of drug prices and criticism that drugmakers have benefited from the credit even for drugs that treat wider populations, there are questions about whether the tax credit should be reformed.

FINGER-POINTING AMONG STAKEHOLDERS AT HEARING ON DRUG PRICES

The House's first hearing this year on prescription drug prices turned into a finger-pointing session as drug manufacturers, insurers and pharmacy benefit managers (PBM) blamed each other.

The House Energy and Commerce Subcommittee on Health hearing aimed to look at the drug supply chain and the role that stakeholders in addition to drugmakers have in setting prices and determining consumers' out-of-pocket costs. Ten witnesses appeared at once on the same panel, and PBMs took most of the incoming fire.

Pharmacists and drug manufacturers singled out PBMs as middlemen that drive up both complexity and cost for consumers. One subcommittee member, Rep. Morgan Griffith, R-Va., openly questioned what value PBMs bring to the supply chain, calling them a "big black box." He said insurance companies should negotiate directly with pharmaceutical manufacturers and pharmacists.

SPECIALTY DOCS OBJECT TO POTENTIAL PROVIDER CUTS

A coalition of national medical specialty societies representing more than 100,000 physicians wrote to congressional leaders last week to object to the redistribution of Medicare misvalued billing codes from high-paying specialties to more primary care services.

CMS periodically reviews and identifies services as being potentially misvalued and makes coding revisions. The alliance said most physician services have been resurveyed and revalued in recent years, efforts that have "squeezed value out of most specialty codes to the point where" reductions in reimbursements would be below physicians' costs. Surveying again for misvalued billing codes, as a funding offset for other Medicare payments, would burden the specialty doctors and their patients, the group warned.

The alliance wrote to the bipartisan leadership of the House Committee on Ways and Means, the House Committee on Energy and Commerce and the Senate Committee on Finance. The alliance comprises the American Academy of Facial Plastic & Reconstructive Surgery, the American Association of Neurological Surgeons, the American College of Mohs Surgery, the American College of Osteopathic Surgeons, the American Gastroenterological Association, the American Society for Dermatologic Surgery, the American Society of Cataract and Refractive Surgery, the American Society of Plastic Surgeons, the American Urological Association and the Coalition of State Rheumatology Organizations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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