House Suspends Vote on American Health Care Act

Price and Verma Outline Principles on Medicaid Flexibility for States

Wyden Drug Pricing Bill Targets Pharmacy Benefit Managers, While Drug Companies Make Efforts at Greater Transparency

 

House Suspends Vote on American Health Care Act

On Friday, the House suspended voting (perhaps indefinitely) on the American Health Care Act, amid continued opposition from both conservative and moderate factions of the Republican Conference.

In the past three weeks, the legislation moved through the Energy and Commerce Committee and Ways and Means Committee in marathon markups that went through the night. This was followed by a markup of the Budget Committee, and then most recently a meeting of the Rules Committee. While leadership had hoped to pass the legislation on March 23, 2017, the seventh anniversary of the Affordable Care Act (ACA) being signed into law, late negotiations pushed the vote to March 24th.

As part of these negotiations, two factions of the House Republican Conference were at odds, both with enough votes against the bill to delay its consideration. The conservative House Freedom Caucus, led by Rep. Mark Meadows (R-NC), sought to fully repeal the ACA by repealing the essential health benefits and other market reforms included in Title I of the ACA. Meanwhile, the Tuesday Group, led by Rep. Charlie Dent (R-PA) and made up of more moderate Republicans, was concerned with repeal of the Medicaid expansion and other cuts to Medicaid. The challenge for Speaker Paul Ryan (R-WI) and President Donald Trump was that the push and pull of compromising with either side meant that pleasing one could lead to just as many more no votes from the other. Concerned with further delays in advancing the legislation through the House, President Trump pushed for the House vote to occur, no matter the outcome.

In the end, the negotiations on the House package resulted in the addition of a provision allowing states to determine the required essential health benefits, while also delaying repeal of a Medicare payroll tax on high earners. The compromise on essential health benefits also resulted in the addition of maternity coverage, newborn care, mental health, and substance abuse treatment to the uses of funds for the Patient and State Stability Fund, a fund meant to address concerns with preexisting condition coverage.

With this outcome, the ACA will remain in place for the time being. The administration may seek to make further regulatory changes, but it is unclear how priorities internal to HHS may have shifted as a result. President Trump has indicated that he is eager to move on to tax reform, which was already planned to be the next major legislative initiative. In the near term, Congress is likely to turn its attention to addressing the current Continuing Resolution which expires on April 28, 2017, and beginning the appropriations process for Fiscal Year 2018.

Price and Verma Outline Principles on Medicaid Flexibility for States

Secretary of Health and Human Services Tom Price and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma sent a letter to Governors on March 14, 2017, outlining their principles on the future of Medicaid. The letter conveys their goals and that of the administration to give states greater flexibility with designing and operating Medicaid programs.

As part of this greater flexibility, the letter describes CMS’ commitment to improving the State Plan Amendment approval process. In particular, CMS may expedite some waiver and demonstration extensions as well as improve the process for states to incorporate waivers and demonstration projects that have been approved for other states. Furthermore, the letter details potential reforms that states could incorporate into their Medicaid programs under the law, such as premium or contribution requirements, or alternative benefit plan designs that incorporate cost-sharing models or Health Savings Accounts, among other potential options. These views on reforming Medicaid align closely with Verma’s past work on state Medicaid programs, particularly in Indiana.

The letter also criticizes the Medicaid expansion through the Affordable Care Act (ACA), calling it a “clear departure from the core, historical mission of the program,” arguing that the enhanced federal match for the newly covered encourages states to prioritize this population over other previously covered groups.

Related to these efforts to provide flexibility to states, it has been reported that CMS is working on guidance pertaining to the Medicaid expansion and allowing states to scale back coverage to childless adults with incomes above 100 percent of the Federal Poverty Level. Reportedly, the guidance may modify the Medicaid managed care rule and home and community-based services rule. It is unclear whether this guidance could come as part of regulatory changes to the ACA.

 

Wyden Drug Pricing Bill Targets Pharmacy Benefit Managers, While Drug Companies Make Efforts at Greater Transparency

On March 15, 2017, Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced S. 637, the Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act (summary). This legislation would require Pharmacy Benefit Managers (PBMs) to disclose their rebate and discount agreements with drug manufacturers and provide information on savings passed on to health plans, among other provisions.

While this legislation comes at the drug pricing issue from a different angle than other approaches that have garnered more attention, such as negotiating drug prices in Medicare and importing drugs from Canada, this legislation is the latest development on the PBM front. PBMs manage pharmacy benefits for insurance carriers and others, including Medicare Part D plans. PBMs negotiate rebates and discounts with drug manufacturers sometimes in exchange for agreements to purchase certain volumes of drugs. However, PBMs have been criticized as being opaque “middle men” that increase the cost of drugs for patients and insurers. Notably, during the House Oversight and Government Reform Committee hearing with Mylan CEO Heather Bresch, PBMs received attention because of the complexity of Bresch’s explanation of EpiPen’s cost to patients at the pharmacy and the smaller amount of revenue that is returned to Mylan. Sen. Wyden’s bill seeks to come at the drug pricing issue from this angle, by shining a light on PBMs in order to reduce drug costs.

As a result of this increased focus on transparency as part of the drug pricing debate, some drug companies have sought to get ahead of the issue by preemptively releasing data on drug rebates, discounts, and prices. Most recently, Eli Lilly released data on March 20, 2017, following similar disclosures by Janssen (part of Johnson and Johnson) and Merck. Lilly’s data reports that while average list prices for its drugs grew 14 percent in 2016, the company’s realized net price only grew 2.4 percent.