Washington Watch for March 2020

Carter L. Alleman, J.D.

Surprise Billing Legislations Clears Committees

The House Education and Labor Committee, which has jurisdiction over employer-sponsored health insurance plans, approved its surprise billing legislation, the Ban Surprise Billing Act (H.R. 5800).

The House Ways and Means Committee also considered a bill (H.R. 5826) to protect patients against surprise insurance gaps, advancing the Consumer Protections Against Surprise Medical Bills Act by voice vote. House lawmakers are now faced with the task of reconciling the differences between the three pieces of surprise billing legislation that have been advanced out of committee. Each of the bills would prohibit balance billing and hold patients harmless from surprise insurance gaps. The bills differ, however, in how payment disputes between providers and insurers would be resolved.

The House Energy and Commerce Committee and Education and Labor Committee proposals would set a benchmark payment for out-of-network charges based on the median amount for a service in a geographic area while providing for an arbitration process for bills above $750, or $25,000 for air ambulance services. The Ways and Means Committee proposal does not use a benchmark payment rate, instead relying solely on a dispute resolution (IDR) process. Unlike the other proposals, the plan would not ban surprise bills from air ambulance providers.

During the markup, Ways and Means panel members argued that more data on the problem of air ambulance surprise bills needs to be collected first in order to avoid closure of air ambulance companies and a negative impact on rural communities. The White House has signaled opposition to the Ways and Means bill, raising concerns that too heavy a reliance on arbitration will increase health care costs. White House spokesperson Judd Deere also stated that the President does want air ambulances to be included in the final surprise billing plan.

During markup, Education and Labor’s Ban Surprise Billing Act was opposed by a bipartisan group of lawmakers who characterized the legislation as government rate-setting. They argued that the bill unfairly favors insurers and expressed concerns about its potential to drive down prices for providers in their districts and negatively impact patient access to care, voicing support for the rival legislation introduced by the Ways and Means Committee.

The Congressional Budget Office (CBO) has released its cost estimates of the two bills passed out of committee last week. CBO estimates that the Ban Surprise Billing Act would save $23.8 billion over the next decade, a figure comparable to that of the measure passed by the House Energy and Commerce Committee. Ways and Means’ Consumer Protections Against Surprise Medical Bills Act would save $17.8 billion over 10 years.

A bipartisan group of House aides met with House Speaker Nancy Pelosi’s (D-Calif.) office last week to discuss a path forward for the rival bills, but no consensus was reached. Lawmakers hope to reach a deal on surprise billing before funding for several health care programs expires on May 22. The surprise billing legislation could be used as an offset for the must-pass package of Medicare and Medicaid extenders.

White House Releases President’s FY 2021 Budget Proposal

The Office of Management and Budget (OMB) transmitted the President’s proposed fiscal year (FY) 2021 budget to Congress. The $4.8 trillion “Budget for America’s Future” projects economic growth above three percent and would add $5.6 trillion to the deficit over the next decade. The administration requests $590 billion for nondefense discretionary programs, less than the cap for FY 2021 established in last year’s budget agreement. The budget calls for $96.4 billion in discretionary funding for the U.S. Department of Health and Human Services (HHS) – a nine percent decrease from current levels – as outlined in the HHS Budget in Brief.

FDA Commissioner to Prioritize Data Modernization

During his first all-hands meeting at the FDA, Commissioner Stephen Hahn stressed his intention to modernize and enhance data collection with the goal of speeding product reviews. He discussed the need to incorporate real-world data from electronic health records (EHRs), studies and patient registries, and patient input into the agency’s processes while maintaining integrity in data strategies. Dr. Hahn spoke about expanding the Patient-Focused Drug Development Initiative, and noted his intention to better communicate with consumers about the entire lifecycle of products regulated by the FDA.

FDA Requests Withdrawal of Injectable Bacitracin

The FDA has requested the voluntary withdrawal of injectable versions of bacitracin, an antibiotic approved to treat infants with pneumonia and lung lining infections. While bacitracin is effective against staphylococcal bacteria, it also has serious side effects, including allergic reactions and kidney toxicity. The drug is mainly used off-label for the cleaning of surgical wounds. In April 2019, the Antimicrobial Drugs Advisory Committee voted 17-1 that the risks of injectable bacitracin outweigh the benefits.

Trump Touts Health Care Accomplishments in SOTU

During his State of the Union, President Trump highlighted his administration’s work on health care-related issues. He underscored White House efforts to increase health transparency. He also touted the administration’s success in combatting the opioid epidemic and reducing overdose deaths. The President pledged to protect Medicare against proposals like “Medicare for All” and noted his administration’s efforts to uphold protections for patients with preexisting conditions and to expand the availability of low-cost health insurance options. He called on Congress to pass legislation barring undocumented immigrants from receiving public benefits such as health care, announced a new $50 million request for neonatal research, and mentioned investments to improve kidney care and fight HIV. During his speech, President Trump urged Congress to act to eliminate surprise medical billing. He also pushed for unity on the issue of drug pricing, saying that he was in talks with Senate Finance Committee Chairman Chuck Grassley (R-Iowa) on legislation to lower the cost of prescription drugs. Without endorsing a particular bill, President Trump stated that if drug pricing legislation is sent to his desk that he “will sign it into law immediately.”

The State of the Union was widely criticized by Democrats for the campaign-style tone in which it was delivered. In the Democrats’ official response, Michigan Governor Gretchen Whitmer criticized Republicans for undermining the Affordable Care Act (ACA). She highlighted Democratic support for the ACA’s coverage expansions in contrast to the administration’s support for the lawsuit to strike down the law.

Launch of Bipartisan Personalized Medicine Caucus

Sens. Tim Scott (R-S.C.) and Kyrsten Sinema (D-Ariz.) and Reps. Eric Swalwell (D-Calif.) and Tom Emmer (R Minn.) announced the launch of the Congressional Personalized Medicine Caucus last week. The group will hold its first briefing on February 26 to educate Congress and the public about the benefits of early detection, targeted treatment, and improved prevention strategies in personalized medicine.

BPC Releases Bipartisan Rx for America’s Health Care

The Bipartisan Policy Center (BPC) published a new report last week making recommendations for reforming the nation’s health care system. The BPC proposes a federally funded and state administered reinsurance program, auto-enrollment for subsidy-eligible individuals, restoration of cost-sharing reduction (CSR) payments, expansion of federal outreach and enrollment activities, and the creation of premium tax credits for the middle-income population. The authors of the report argue in favor of limiting or eliminating the preferred tax treatment of employer-sponsored insurance, and of repealing the employer mandate.

In an effort to reduce system-wide costs, the report recommends requiring hospitals to enter into negotiations with the Federal Trade Commission (FTC). While many rural providers would be exempted, hospitals that choose not to negotiate would be prohibited from charging private insurers more than amounts defined by the U.S. Department of Health and Human Services (HHS) and the FTC. The report would address the problem of surprise insurance gaps by limiting charges for out-of-network services to in-network rates. The BPC also suggests creating a state option for 12-month continuous Medicaid eligibility for adults.

Grassley Remains Optimistic on Fate of Drug Pricing Bill

Senate Finance Chairman Chuck Grassley (R-Iowa) has been meeting with Senate Republicans up for reelection this year hoping to drum up support for the bipartisan drug pricing measure (S. 2543) advanced out of his committee last year. Grassley has said that he needs at least 25 Republican co-sponsors to get the Prescription Drug Pricing Reduction Act to the Senate floor. So far, 11 Republicans, including Grassley, are on the record in support of the legislation. Sen. Grassley plans to file an updated version of the drug pricing bill that he introduced with Ranking Member Ron Wyden (D-Ore.) in the near future. He has previously discussed adding a provision to overhaul the prescription drug rebate system.

Senate Majority Leader Mitch McConnell (R-Ky.) recently said that there remained internal divisions on the issue of prescription drug pricing within his caucus and that he is not sure whether any related legislation could pass the Senate this year. Sen. McConnell stated that the May 22 deadline to fund various health care programs would provide another opportunity for discussions on proposed drug pricing policies.

Lawmakers Raise Concerns About Organ Procurement, Transplant Oversight

A bipartisan group of senators are raising questions about the adequacy of patient safety standards at the U.S. Organ Procurement and Transplantation Network (OPTN). Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Ranking Member Ron Wyden (D-Ore.), Sen. Todd Young (R-Ind.), and Sen. Ben Cardin (D-Md.) sent a letter requesting information and data to the United Network for Organ Sharing (UNOS), which has been contracted by Congress to oversee the OPTN. Their letter cites numerous inspector general audits and news reports finding that thousands of available organs go unused and describing organ procurement organizations’ (OPO) use of questionable financial practices.

The lawmakers ask for details about the organ procurement and transplant process, including: legally required periodic performance reviews of OPOs, audits of OPOS that suggest Medicare was billed for unallowable expenditures, data released to OPOs identified as ‘underperforming’ or not in good standing over the last year, data related to delayed, mishandled, or damaged organs over the last ten years, data related to the number of organs not recovered or not transplanted over the last ten years, and information relating to the financial improprieties or conflicts of interest of OPOs over the last ten years. The letter requests a response by March 1.

Lawmakers Consider Potential Drug Shortages Stemming from Coronavirus

Several House lawmakers have highlighted the need to expand domestic manufacturing of prescription drugs in response to the coronavirus outbreak and concerns about resulting drug shortages among Chinese manufacturers. Reps. John Garamendi (D-Calif.) and Vicky Hartzler (R-Mo.) are pushing to include their legislation, the Pharmaceutical Independence Long-Term Readiness Reform Act (H.R. 4710) in the fiscal year (FY) 2021 defense authorization bill. It would require the Pentagon to purchase only American-made active pharmaceutical ingredients (APIs), medicines, and vaccines for members of the military. House Energy and Commerce Subcommittee on Health Chairwoman Anna Eshoo (D-Calif.) also supports advancing a measure to expand U.S. manufacturing of pharmaceutical products, though the panel is reportedly only in the early stages of drafting legislation. In related news, the World Health Organization (WHO) is calling on nations around to world to increase funding to combat the coronavirus outbreak despite the virus still being largely confined to China. WHO Director-General Tedros Adhanom Ghebreyesus expressed concerns that countries are not taking the outbreak seriously enough, arguing that now is the time to halt the spread of the virus while it is still “manageable.”

Health Care Reform a Common Focus in State of the State Addresses

Governors from 40 states have delivered their State of the State addresses so far this year, with the majority of the state leaders using the opportunity to outline substantive healthcare-related proposals, including those to address prescription drug costs, address surprise billing, and providing greater access to mental and substance abuse treatment. New York Governor Andrew Cuomo (D) requested additional authority from state lawmakers to lower prescription drug costs. Cuomo, along with Connecticut Governor Ned Lamont (D) and New Mexico Governor Michelle Grisham (D), also expressed support for the importation of prescription drugs from Canada. Capping the cost of insulin, specifically, is a policy that was endorsed by Cuomo, Kentucky Governor Andy Beshear (D), and Wisconsin Governor Tony Evers (D). Gov. Grisham also stated that she supports measures to cap out-of-pocket costs for patients with diabetes, asthma, chronic obstructive pulmonary disease (COPD), and other chronic conditions. In New Jersey, Governor Phil Murphy (D) pitched the establishment of an Office of Health Care Affordability and Transparency and promised to direct regulators to begin tracking health care costs. He also discussed the need to better integrate behavioral and physical health care, especially in light of the opioid crisis. Similarly, Cuomo said he will direct regulators to create a cost and quality comparison website for various health care procedures and providers in his state. Michigan Governor Gretchen Whitmer (D) plans to set up a task force to handle prescription drug price transparency and health care costs, while Indiana Governor Eric Holcomb (R) promised to create an all-payer claims database. Holcomb also proposed to require that providers give patients a cost estimate at least five days in advance of a treatment or procedure. Governor Gavin Newsom (D) in California plans to ask state lawmakers to make it easier to compel homeless people in need of treatment to receive community-based outpatient care and asked for increased funding to allow California’s Medicaid program to help enrollees find housing. Wisconsin Governor Evers proposed efforts to improve mental health services for farmers, and Tennessee Governor Bill Lee (R) announced the expansion of a mental health program for school aged children. Lee also called for a new mental health trust fund to support mental health services in the most at-risk schools.