Washington Healthcare Update - March 30, 2015

This Week: House Approves FY 2016 Budget Proposal... House Passes Permanent SGR Reform and Two-Year CHIP Reauthorization... Senate Passes FY 2016 Budget Plan... HHS Report: ACA Led to $7.4 Billion Decline in Uncompensated Hospital Care Costs... New Hampshire Legislature Moves to End Medicaid Expansion in 2016

1. Congress

   House

   House Approves FY 2016 Budget Proposal

   On March 25, the House passed its FY 2016 budget resolution, a blueprint Chairman Price (R-GA) calls "A Balanced Budget for a Stronger America," by a party line vote of 228-199, with all Democrats and 17 Republicans opposing the measure. The budget resolution is a blueprint for Congress on spending priorities. It is not signed by the president and therefore is not a law. However, at times the budget resolution can include reconciliation instructions, which are directed to authorizing committees usually to reduce spending in specific programmatic areas like Medicare and Medicaid. The budget proposal impacts the health sector in a number of areas:

   Uses reconciliation to overturn the Affordable Care Act (ACA): The House Budget would use the reconciliation process to repeal the ACA "in its entirety" and would shift some savings to Medicare's solvency. Reverses the $700 billion taken from Medicare as part of the enactment of the ACA. The budget would put these savings toward Medicare solvency. Repeals the Independent Payment Advisory Board (IPAB), which was to advise Congress on Medicare cuts but never has been staffed. Repeals the ACA's funding for expansion of Medicaid. Instead, the resolution provides for new State Flexibility Funds that we believe will operate much like block grants. Reforms Medicare by changing the program to a premium support model, starting for beneficiaries in 2024, and combining Parts A and B so there would be a single premium for seniors. The budget also appears to call for some risk adjustment of premiums. It also provides a catastrophic cap on annual out-of-pocket expenses for Medicare beneficiaries. Unifies Medicaid and the State Children's Health Insurance Program (SCHIP) into a single program, while providing funds to extend SCHIP. Provides for medical liability reform. For more information, please visit budget.house.gov.

   House Passes Permanent SGR Reform and Two-Year CHIP Reauthorization

   On March 26, the House of Representatives passed H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015; the legislation creates a permanent fix to the Sustained Growth Rate (SGR) formula, the payment rate at which providers are reimbursed through Medicare, and includes a number of other important health-related policies, including funding for the Children's Health Insurance Program (CHIP), provisions known as "extenders," the Protecting the Integrity of Medicare Act and an extension of the Secure Rural Schools and Community Self-Determination Act of 2000. In a historic display of bipartisanship, the legislation passed by a vote of 392-37, with 212 Republicans and 180 Democrats supporting the proposal. The Balanced Budget Act of 1997 established the SGR formula to control Medicare spending for physicians' services; the formula set an overall target of how much that spending should be and measured spending on both annual and cumulative bases. Since 2002, the formula triggered reductions in physician payment and only the continued intervention of the U.S. Congress has prevented these cuts from being implemented. To avert these cuts, Congress has "patched" the problem, as determining how to pay for a permanent fix was a stumbling block. H.R. 2 only partially pays for the cost of the package, relying in part on the upcoming Congressional budget resolution to accommodate funding. However, part of the funding in the legislation comes from beneficiaries themselves. The Senate did not act on the House-passed SGR deal before it adjourned for a two-week recess, but Senate Majority Leader Mitch McConnell (R-KY) did promise the chamber would take up the measure "very quickly" when it returned; he and Senate Minority Leader Harry Reid will work together to schedule the vote on the bill. One potential point of contention: Senate Democrats have been very vocal on pushing for four years of funding for CHIP reauthorization; funding for the program runs out at the end of September 2015. The current SGR patch expires March 31, thereby mandating that the Centers for Medicare and Medicaid Services (CMS) hold claims until Congress does act, as the agency has done in the past.

   The Congressional Research Service (CRS), which provides exclusive policy and legal analysis to committees and Members of both the House and Senate, released a March 26 report that provides a brief summary of each provision of H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015 as well as a brief description of how each provision impacts the current law.

   Click here for a more detailed summary of the legislation.

   Ways and Means Hearing Examines the Use of Data to Stop Medicare Fraud

   On March 24, House Committee on Ways and Means Subcommittee on Oversight held a hearing on the federal government's use of data analysis—particularly the Centers for Medicare and Medicaid Services' Fraud Prevention System (FPS)—to identify emerging trends and stop Medicare fraud. This hearing allowed the Committee to hear testimony from both government and non-governmental witnesses on the progress that the FPS has made and what continued efforts are under way to use data analysis in identifying and stopping fraud and waste within Medicare.

   Witness List

   PANEL 1: Dr. Shantanu Agrawal Deputy Administrator and Director, Center for Program Integrity, Centers for Medicare & Medicaid Services Mr. Gary Cantrell Deputy Inspector General for Investigations, Office of Inspector General, U.S. Department of Health and Human Services PANEL 2: Ms. Charlene Frizzera President and CEO, CF Health Advisors Mr. Kirk Ogrosky Partner, Arnold & Porter LLP Mr. Mark Nelsen Senior VP for Risk Products and Business Intelligence, Visa Inc. Mr. Louis Saccoccio Executive Director, National Health Care Anti-Fraud Association

   For more information, or to view the hearing, please visit waysandmeans.house.gov.

   Bicameral Legislation Introduced to Eliminate Restrictions on HSAs and FSAs

   On March 23, Republican Rep. Erik Paulsen (MN-03) and U.S. Senator John Barrasso (WY-R) introduced twin legislation in the House and Senate respectively repealing certain Affordable Care Act (ACA) restrictions on health savings accounts (HSAs) and flexible spending accounts (FSAs). The Family Health Care Flexibility Act, H.R. 1547 repeals Section 9005 of the ACA that sets a $2,500 FSA contribution cap and prohibits HSA and FSA participants from using their own account dollars to purchase over-the-counter medicines without a prescription. "Health savings and flexible spending accounts put power in the hands of patients by letting them make their own decisions when it comes to their care," said Congressman Paulsen in a press release. "It makes no sense that the President's health care law prohibits a parent from using these accounts to purchase over-the-counter allergy treatment or cold medicine for their child without a doctor's prescription. As health care costs continue to rise, Washington should allow more choices in health care, not fewer options." Previously, individuals could receive reimbursement for all medications through these accounts, including over-the-counter drugs that were not prescribed by a medical provider; FSAs had no contribution limit and could be used to pay for routine medical expenses including vision and dental care. Sens. Kelly Ayotte (R-NH), Richard Burr (R-NC), Mike Crapo (R-ID), Johnny Isakson (R-GA), Jim Risch (R-ID), Pat Roberts (R-KS) and Roger Wicker (R-MS) also co-sponsored the bill.

   Senate

   Senate Passes FY 2016 Budget Plan

   On March 27, the Senate approved the Republican-led budget resolution that established the budget outline for fiscal year 2016. In a 52-46 vote, with Republicans Ted Cruz (R-TX) and Rand Paul (R-KY) opposing and Democrats Dianne Feinstein (D-CA) and Barbara Mikulski (D-MD) abstaining, the budget proposal was passed along party lines. With the plan, Senate Republicans anticipate saving $2.1 trillion by eliminating the coverage provisions of the Affordable Care Act (ACA), including repealing the law's expansion of Medicaid eligibility to households with incomes up to 138 percent of the federal poverty level and eliminating the subsidies available to low-...