Weekly Washington DC and Healthcare Policy Update

Election 2016

In what is being referred to as an historic upset, Donald Trump (R) defeated Hillary Clinton (D), winning 279 electoral votes. Clinton garnered only 228, falling far short of polls expectations. Totals in Arizona, Michigan, and New Hampshire remain too close to call. Arizona & Michigan will likely be won by Trump, with New Hampshire going to Clinton.

In the Senate & House, Republicans lost a handful of seats, but securely retained their majorities in both chambers. The Senate is currently 51 Republicans to 48 Democrats, with a run-off election for the Louisiana Senate race being held in early December.

House Republicans are likely to have a majority of at least 241, with Democrats flipping only a few districts in Illinois, New Jersey, New Hampshire, & Nevada.

In the hours after Donald Trump’s election as the 45th president of the U.S., Republicans in Congress claim a mandate for their agenda to revamp financial rules and replace Obamacare, and Hillary Clinton urged her supporters to give him a chance to govern.

Tax Revamp Optimism Reigns Among Ways and Means Republicans

House Ways and Means Committee Republicans are optimistic that 2017 might finally be the year to pass legislation overhauling the tax system—or, at least, the international side of the tax code. With majorities in the House and Senate, tax-focused leadership in both chambers and a tax proposal the committee pushed out last year, Republicans hope the time has come to eliminate some of the complexity in the tax laws in favor of lowering rates for corporations and individuals.

Short-Term Health Plans Cut to Under Three Months in New Rule

Short-term health plans bought by as many as a million people that do not comply with the Affordable Care Act must be limited to less than three months under a final rule issued Oct. 28 by three agencies. The short-term plans currently are limited to less than one year. They must end by Dec. 31, 2017, under the final rule (RIN:0938-AS93) from the Department of Health and Human Services, Department of Labor and the Internal Revenue Service. The plans are popular in states that have not expanded Medicaid under the ACA because they cover fewer benefits and cost less.

Court Rejects Challenge to Party ‘Soft Money’ Limits

A federal court rejected a challenge to the last major element of the McCain-Feingold campaign finance law, refusing to scrap restrictions on unlimited “soft money” contributions to political parties (Republican Party of La. v. Federal Election Commission, D.D.C., No. 15-cv-1241, 11/7/16). The Nov. 7 ruling by a special three-judge panel of the U.S. District Court for the District of Columbia sets up the case for a direct appeal to the Supreme Court.

The ruling, which was written by U.S. Circuit Judge Sri Srinivasan, said courts have upheld soft money restrictions of McCain-Feingold—also known as the Bipartisan Campaign Reform Act, or BCRA—in a series of cases going back to the 2003 Supreme Court ruling in McConnell v. FEC. The campaign finance law was passed in 2002 and is named for its primary sponsors, Sen. John McCain (R-Ariz.) and former Sen. Russ Feingold (D-Wis.). “We are not the first court to consider First Amendment challenges to BCRA’s limits on state and local political parties’ use of soft-money donations,” Srinivasan wrote in a 20-page opinion. “We see no salient distinction between the First Amendment claims rejected in those cases and the challenge presented here.”

Srinivasan’s decision was joined by the other members of the court panel: U.S. District Judges Christopher Cooper and Tanya Chutkan. The ruling upheld BCRA provisions that set a $10,000 “hard money” annual limit per contributor on the amount a state party committee can raise for activities that could influence a federal election.

More Time, Links to States Sought Under EPA Energy Incentives

A federal plan to spur new renewable energy and energy efficiency programs in support of carbon dioxide reductions from the power sector will require more time and methods to link with existing state programs, state officials said. Even supporters of the Environmental Protection Agency’s Clean Energy Efficiency Program, which rewards states for energy efficiency efforts and renewable energy investments in disadvantaged communities in 2020 and 2021, questioned how effective the program would be in comments on the proposed rule.

“If allowances were based on energy savings/generation accruing over a longer time frame (for example, from project commissioning through 2030 rather than just in 2020 and 2021), which would be demonstrated through standard protocols for modeling savings/generation, individual projects would see more compelling value in [Clean Energy Incentive Program] participation,” officials from the Massachusetts Departments of Environmental Protection, Energy Resources and Housing and Community Development said in comments on the EPA’s proposal. The Clean Energy Incentive Program (RIN:2060-AS84) would provide states with additional credits for every megawatt-hour of electricity demand reduced through energy efficiency in low-income communities beginning Sept. 6, 2018, and for each megawatt-hour of zero emissions generation for projects that begin commercial operation after Jan. 1, 2020. The credits can be used toward compliance with the Clean Power Plan, which limits carbon dioxide emissions from the existing fleet of fossil fuel-fired power plants. The comment period on the proposed incentive program closed Nov. 1.

The additional emission rate credits would be generated for 2020 and 2021, before the Clean Power Plan, which has been stayed by the U.S. Supreme Court, is intended to take effect. State regulators argued that is not sufficient time for significant investments in renewable energy or energy efficiency programs for low-income communities, which could hamper the incentive program’s effectiveness. Several states called on the EPA to extend the period during which programs could qualify for the additional credits, including giving states credit for programs that are already in place to accomplish those goals. “States, especially smaller ones, like West Virginia, simply cannot divert resources to developing and implementing an entirely new bureaucracy for a program that has only a two-year life and will provide relatively minor environmental benefit,” the West Virginia Department of Environmental Protection said in its comments. West Virginia has led legal challenges against the EPA’s Clean Power Plan.

USDA to Tighten Food Safety Inspections in 5-Year Plan

The Agriculture Department office tasked with inspecting meat, poultry and eggs for foodborne pathogens is set to expand its testing as part of its five-year strategic plan. In its report, the Food Safety and Inspection Service laid out a broad agenda that would increase inspections, toughen food safety standards, and expand processes for evaluating imported food products covered by the agency.

“FSIS is expanding the breadth, depth, and frequency of its sampling to better address gaps in testing for pathogens and chemical residues in FSIS-regulated products,” the agency said in the Nov. 4 report. The agency plans to toughen pathogen reduction standards, increase the percentage of establishments at which FSIS collects samples and streamline its testing process to reduce duplication, the report said.

The agency said it will put a priority on large-scale facilities like retail and warehouse locations. “With several hundred to thousands of in-commerce facilities that handle FSIS-regulated products in every State, FSIS, with State and local regulatory agencies, must strategically utilize regulatory resources to maximize coverage and efficiencies to ensure that food remains safe as it moves through the supply chain from production to actual consumption,” FSIS said.

FSIS said it would also update its method for estimating illnesses attributed to products the agency inspects, making the data less sensitive to year-to-year fluctuations. “These updates will provide greater transparency and understanding regarding the pathogens causing the majority of estimated illnesses, facilitating a more detailed assessment of agency progress,” FSIS said.

SCOTUS May Choose Senate in Advice and Consent Fight

A fight over the president’s power to fill temporary vacancies without the advice and consent of the Senate played out at the U.S. Supreme Court Nov. 7 (NLRB v. SW General, Inc., U.S., No. 15-1251, argued 11/7/16). The parties agree that Congress passed the 1998 Federal Vacancies Reform Act to regain the power it had lost when presidents from both parties flouted the previous law’s requirements, including by appointing their desired nominee to a lower position and then allowing them to serve as the “acting” official. However, the parties disagree on whether a person serving in an acting capacity may continue to serve after being nominated to fill the role permanently.

The justices seemed to lean in favor of requiring nearly all acting officials to step aside while their permanent nomination is being considered—not just a limited few. All eight of the lower court judges who have looked at the issue have decided it that way, Justice Anthony M. Kennedy said. Conspicuously missing from Monday’s argument was the Senate itself. SW General Inc., the losing party in a National Labor Relations Board proceeding over unfair labor practices, brought the challenge to the president’s authority.

Medicare Appeal Backlog Could Be Cleared by 2019, HHS Claims

The multiyear backlog of Medicare administrative appeals could be cleared up by the end of fiscal year 2019, according to an HHS filing in federal district court (Am. Hosp. Ass’n v. Burwell, D.D.C., No. 1:14-cv-851, opposition brief filed 11/7/16). The Health and Human Services Department asked the U.S. District Court for the District of Columbia Nov. 7 not to intervene in the appeals process, seeking dismissal of a case brought by the American Hospital Association (AHA) and three regional hospitals. The hospitals want a court order requiring the HHS to implement procedures designed to curtail the extensive appeals backlog they say is caused by the recovery audit contractor program. The AHA is expected to reply to the HHS filing in the case by Nov. 15.

The AHA has claimed the agency’s Office of Medicare Hearings and Appeals (OMHA) must, by law, resolve appeals within 90 days. However, as of February 2015, appeal resolution stretched to an average of 572 days and caused the HHS to suspend all new appeals for two years. According to the Nov. 7 filing, the HHS has worked to reduce pending appeals by 26 percent and to stem the tide of incoming appeals in an effort to cut down on the delay. The appeals backlog has grown as providers are challenging decisions by the HHS and its contractors to deny reimbursement for treatment of Medicare and Medicaid patients.

According to the HHS, the OMHA faces 658,307 pending appeals as of Sept. 30, 2016—down from 886,418 from a year earlier—and expects to reduce that number even further in the coming year. To support its projection that the backlog could be reduced to zero by 2019, the HHS points to administrative settlement programs and increased funding from the proposed Audit & Appeals Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015, a bill pending in Congress.

Cures Bill Likely Delayed by Democrats’ Drug-Pricing Demands

Democrats plan to oppose any effort to pass a new version of the 21st Century Cures Act unless it includes some policies targeting drug pricing. Leaders on the House Energy and Commerce Committee are seeking a new deal to enact the Cures bill during the lame-duck session, set to start Nov. 14. The bill, which is an effort to speed new drugs and devices to market, has support from House leadership, but any opposition from Democrats on the Senate Health, Education, Labor and Pensions Committee could prevent it from reaching the president’s desk.

Progressive think tanks and unions have stepped up their lobbying efforts in recent weeks to encourage Democrats to seek drug-pricing concessions from Republicans. Further clouding the Cures Act’s future is rising disagreement over possible changes to a Food and Drug Administration program that affects how generic drugs enter the market. The House version would extend the exclusivity period by six months on an FDA-approved drug or biological product that treats a rare disease or condition.

Conservatives have supported some drug-pricing measures, but it is unclear what agreement the two sides could reach by the start of the next session. Democrats want any final Cures bill to include some policies that facilitate access to affordable drugs and funding for the cancer “moonshot,” an effort to double the rate of progress in cancer research led by Vice President Joe Biden.

The House passed the bill in summer 2015, but the legislation has been held up in the Senate over disagreements on its multibillion-dollar price tag. Further complicating the matter, more than a dozen groups—including the Center for American Progress, the AFL-CIO and Public Citizen—sent a letter Oct. 26 to Democratic leaders in the House and Senate asking them to delay passing Cures until 2017.

Obamacare Cases in Limbo Following Republican Wins

The legal landscape for Obamacare-related litigation is uncertain following Republicans’ election-day sweep

The cases range from challenges to rules implementing the Affordable Care Act’s essential coverage provisions to insurers’ demands for payments allegedly due them under the ACA’s premium stabilization programs, known as the three Rs.

The stakes are high. Health care is a $3 trillion, heavily regulated industry. Government policies—and court decisions—affecting how providers get paid and how Americans access care are crucial to its future. President-elect Donald J. Trump said he would ask Congress to repeal Obamacare. The proposal would prompt a filibuster in the Senate, where Democrats retained enough votes to block it. Congress, however, will do its best to scale back the Affordable Care Act in budget reconciliation proceedings. Republicans are expected to keep some popular provisions, like those prohibiting insurers from denying coverage based on pre-existing conditions and requiring continued coverage for young adults up to age 26. While essential coverage provisions may survive, but the Trump administration could gut rules implementing them, like the contraceptive mandate, and the individual mandate, premium tax credits and Medicaid expansion “are all on the table”.

House Republicans Shunned in Obamacare Risk Corridor Suit

House Republicans Nov. 7 lost a bid to introduce a new defense into a health insurer’s suit seeking billions in unpaid Obamacare risk corridor funds (Health Republic Ins. Co. v. United States, 2016 BL 371062, Fed. Cl., No. 16-cv-259C, 11/7/16). The Department of Justice’s exclusive control over litigation involving the U.S. prevented the House from entering Health Republic Insurance Co.’s suit on the government’s behalf, the U.S. Court of Federal Claims said.

The court denied the House’s Oct. 13 request to file a friend-of-the-court brief in which it argued insurers couldn’t recover the money because the Affordable Care Act’s risk corridor program was meant to be budget-neutral (200 DER, 10/17/16). There are 11 cases pending in which insurers are trying to recover up to $5 billion in risk corridor money. The DOJ raised the same argument as the House in later-filed suits, but not in Health Republic’s purported class action.

CMS Seeking Input on How to Expand Medicaid Home Care Program

The CMS wants input on expanding a Medicaid program to help beneficiaries stay in their homes instead of institutional settings. The Centers for Medicare & Medicaid Services Nov. 4 said it wants input on the reforms needed to expand Medicaid’s home and community-based services. The agency requested comments in a notice (RIN:0938-ZB33) set for Nov. 9 Federal Register publication.

The home and community-based services programs provides individuals requiring personal care, respite care and other services the opportunity to receive those services in their own homes or in the community, instead of nursing homes or other institutional settings. Growth of the program means Medicaid now spends more on home and community-based services than it does on institutional care. In fiscal 2014, 53 percent of the $152 billion spent nationally on Medicaid’s long-term support services was for home and community-based services. The rate spent on home and community-based services (HCBS) in the late 1990s stood at roughly 25 percent, the notice said.

More than 3.2 million Medicaid beneficiaries received home and community-based services in calendar year 2012. This is a growth of almost 1 million individuals since 2002. Comments (using code CMS-2404-NC) are due Jan. 9.

John Zang Contributed to this report

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