Legislative Update

Martha M. Kendrick, Esq., Partner, Akin Gump Strauss Hauer & Feld LLP

Highlights: » President Trump’s Fiscal Year (FY) 2021 Budget Proposal would reduce discretionary funding for the Department of Health and Human Services (HHS) by 9% or $9.5 billion. Budget savings include a provision that would hit the post-acute care sector hard by establishing a unified post-acute care payment system (-$101 billion). » The Senate impeachment trial wrapped up on February 5, ending with the acquittal of the president on both articles of impeachment. Senators voted largely along party lines, with Sen. Mitt Romney (R-UT) the only Republican to vote to convict. » President Trump’s State of the Union address called on Congress to pass Sen. Grassley’s drug pricing legislation and touted the administration’s health care price transparency proposals, among other health care policy initiatives. » The House Ways and Means Committee released alternative surprise billing legislation; the House Education and Labor Committee also announced a surprise billing proposal that tracks closely to the bicameral compromise of the House Energy and Commerce and Senate Health, Education, Labor and Pensions (HELP) Committee.

FY 2021 Budget Proposal Includes PAC Reductions On February 10, 2020, President Trump released his annual Budget Proposal for the upcoming Fiscal Year (FY) 2021. The $4.8 trillion President’s Budget seeks to realign spending across both domestic and foreign aid programs, and attempts to eliminate a nearly $1.1 trillion deficit over 15 years. This is the only time since the president took office, that he has been able to develop a budget knowing exact spending levels. He signed a two-year funding deal into law in December 2019, and while he honors the military spending limit of $740.5 billion, the president proposes an additional $44.5 billion cut to non-defense programs for FY 2021. Although the president touted leaving Medicare alone, the Budget actually does propose $450 billion in cuts over a decade to the entitlement program, along with $92 billion in cuts to Medicaid.

Of concern to AMRPA, the Trump administration once again proposes to address “excessive” payments to post-acute care providers by establishing a unified payment system. According to the proposal, skilled nursing facilities, home health agencies and inpatient rehabilitation facilities will receive a lower annual Medicare payment update from FY 2021 to FY 2025. A unified post-acute care payment system would include all four post-acute care settings beginning in FY 2026. The proposal is expected to save over $101.5 billion over 10 years. Other notable assumed savings in the proposal include a repeat of the 2020 proposal expanding prior authorization to additional Medicare fee-for-service items at high risk of fraud, waste and abuse. The Budget specifically proposes to expand the Medicare program's authority to conduct prior authorization on certain items or services that are prone to high improper payments, including, inpatient rehabilitation services, for an expected savings of $13.7 billion over ten years. The Budget also assumes $135 billion in savings from an unspecified drug pricing proposal.

The Budget proposal aims to enhance quality improvement oversight at post-acute care facilities, including, IRFs, skilled nursing facilities and home health agencies, by providing the secretary with the authority to levy civil monetary penalties to address poor performance and quality of care concerns. The administration assumes $9.4 billion over 10 years in savings for modifications to the site neutral payment exceptions criteria for long-term care hospitals (LTCHs) by requiring at least an eight-day stay in an intensive care unit (ICU), rather than the current three-day requirement.

The Budget proposes a $22 million cut to the National Institute on Disability, Independent Living and Rehabilitation Research (NIDILRR), which currently receives $112 million in annual funding. The Budget request for the Traumatic Brain Injury program the Limb Loss Resource Center and the Paralysis Resource Center remain at 2020 levels. For the past few budget cycles the Trump administration has proposed to eliminate the Agency for Healthcare Research and Quality (AHRQ). For FY 2021, the administration proposes creation of a new agency called the National Institute for

Research on Safety and Quality (NIRSQ), which consolidates some of AHRQ’s function with the National Institute of Health (NIH), and would focus on value-based care and safety research. The budget would transfer $98 million from the Patient Centered Outcomes Research Institute (PCORI) to NIRSQ.

The Budget also proposes to assess a penalty on physicians and practitioners who order high-risk, high-cost items or services or supplies without proper documentation, such as encounter data or diagnosis. The penalty would be would be $50 for Medicare Part B items/services and $100 for Part A services. Current law does not allow Medicare to hold a health care practitioner financially responsible for improper documentation for ordered items or services. The administration requests $2 million more in funding for the Office of Medicare Hearings and Appeals (OMHA), as well as several informs intended to streamline the appeal process. This includes a fee of 10% of the administrative cost of an appeal for any providers that receive unfavorable outcomes to their appeals at the Administrative Law Judge (ALJ) or Departmental Appeals Board (DAB), which HHS estimates will save $20.4 million over a decade. The Budget also calls for an additional $28 million for the Office of Inspector General (OIG) in order to conduct additional oversight of Medicare and Medicaid Services.

It is important to note that the President’s Budget request is often considered aspirational and will unlikely be fully implemented by Congress. Lawmakers will consider the proposals and use (or not!) the document to make FY 2020 funding decisions during the upcoming Appropriations process.

President Trump’s State of the Union Address Promotes Health Policy Initiatives On February 4, President Donald Trump delivered the State of the Union Address before a Joint Session of Congress. On health care, the president highlighted falling health insurance exchange plan premiums, and he pledged to protect Americans with pre-existing conditions and to preserve Medicare and Social Security. The president also touted the administration’s initiatives to promote health care price transparency. President Trump contrasted his administration’s health care policies with “Medicare-for-All” proposals, stating that more than 130 members of Congress have endorsed legislation to “impose a socialist takeover” of the health care system. He also criticized proposals to provide free health care to undocumented immigrants. The president noted that the Food and Drug administration (FDA) has approved a record number of generic drugs. He called on Congress to take additional action to lower prescription drug prices and stated that he has been in negotiation with Sen. Grassley and others to advance bipartisan legislation. With respect to the opioid crisis, President Trump pointed to recent declines in overdose deaths, particularly in hard-hit states such as Ohio and Pennsylvania.

The president highlighted the coronavirus outbreak in China and noted that the administration is coordinating with the Chinese government to contain the disease and protect American citizens. In addition, he briefly mentioned government initiatives

Surprise Medical Billing Proposals Move through House Committees House Committees of Jurisdiction have been focused once again on surprise medical billing – with mark-ups held on each Committee’s respective proposal. The House Ways and Means Committee marked-up and approved its version by voice vote, which creates an arbitration system for resolving out-of-network claims, on February 12. This proposal, although considered more provider-friendly, has received pushback from the White House for being arbitration-centric. The Education and Labor Committee mark-up occurred on February 11. Its legislation – The Ban Surprise Billing Act – adheres closely to the House Energy and Commerce and Senate HELP Committees’ compromise, which relies on a benchmark payment rate for out-of-network bills and an independent arbitrator, if necessary. The bill includes two mechanisms to resolve payment disputes: For amounts less than or equal to $750 (or $25,000 for air ambulance services), the bill relies on a the median in-network payment rate. For amounts above $750 (or $25,000 for air ambulance), the parties may elect to use an independent dispute resolution process. The legislation also takes steps to address ground ambulance surprise bills. During the mark-up some Members unsuccessfully advocated for amendments that would have expanded arbitration, an approach favored by hospitals and other providers. The Committee approved the amendment in the nature of a substitute and reported the bill out of Committee by a vote of 32 to 13.

Bipartisan Legislation Introduced to Place Guardrails on CMS Innovation Center On February 3, Reps. Terri Sewell (D-AL), Adrian Smith (R-NE), Tony Cárdenas (D-CA) and John Shimkus (R-IL) introduced the Strengthening Innovation in Medicare and Medicaid Act (H.R. 5241) in order to reign in the Secretary of the Department of Health and Humans Services’ (HHS) ability to implement farreaching demonstrations through the Centers for Medicare and Medicaid Service’s (CMS) Innovation Center. The legislation would limit demonstrations to five years and prohibit the agency from moving beneficiaries into a demonstration program just to obtain a statistically viable sample. Demonstrations would also have to be monitored for access to care issues. The bill creates an expedited disapproval process for Congress, and requires a new process for advance public notice and an opportunity for public comment on the establishment, testing, implementation, evaluation and expansion of a demonstration. The co-sponsors are pushing for the legislation to be included in the May health care package that is coming together to address expiring health care extenders.

CMS Administrator Calls Prior Authorization Practices “Indefensible” During a recent keynote before members of the American Medical Association (AMA), CMS Administrator Seema Verma clearly stated her frustration about prior authorization practices. She explained that, “The prior authorization process became

indefensible years ago. Patients are frustrated and doctors are sick of pointlessly wrangling with insurance companies.” Further, she added that, “Prior authorization requirements are a primary driver of physician burnout, and even more importantly, patients are experiencing needless delays in care that are negatively impacting the quality of care they receive.” Administrator Verma confirmed the agency would be making prior authorization changes this year, and noted automation as a possible solution.

As we go to press, AMRPA continues to lobby actively on H.R. 3107, the bipartisan House prior authorization legislation that could move through Congress this year. Sponsor Rep. Suzan DelBene (D-WA) spoke in support of the bill during the House Ways and Means Committee markup on February 12, explaining that the legislation would establish “meaningful guardrails” for the use of prior authorization in Medicare Advantage. She asked Chair Richie Neal (D-MA) to include the bill in final surprise billing legislation. Chairman Neal replied that he is working with Ranking Member Kevin Brady (R-TX) on the issue and would like to address it in the future. He also expressed concern that HHS has not finalized standards for electronic prior authorizations.

Medicaid Block Grants Now an Option for States On Jan. 30, CMS released a long-awaited Medicaid block-grant waiver proposal, known as the “Healthy Adult Opportunity” Demonstration Initiative. The optional demonstration will allow states to request that a portion of their funding is capped in exchange for more flexibility to administer their Medicaid programs. The demonstration is limited to the ACA’s Medicaid expansion population, and individuals enrolled in Medicaid for a disability or long-term care services, as well as traditional populations like children and pregnant women, will not be eligible.

The demonstration provides states the option to waive a number of Medicaid program requirements, such as retroactive coverage periods, “nominal” premiums and cost-sharing. States will also have the opportunity to customize the benefit package for those covered and restrict formularies, which potentially allows them to exclude coverage of some prescription drugs. The demonstration proposal is expected to face immediate legal challenges, however, which may delay or derail its implementation. Further MA and Part D Updates Released On February 5, 2020, CMS released its proposed rule that updates Medicare Advantage (MA) and the Part D program for Contract Years 2021 and 2022. The rule proposes to foster new MA plan options for individuals with end-stage renal disease (ESRD); update the MA and Part D quality rating system; and permit a second, “preferred” specialty tier in Part D, among other changes. Comments are due April 6, 2020.

Affordable Care Act Developments The Supreme Court will use its private conference on February 21 to consider whether to hear Texas v. United States during the current term. The lawsuit was brought by Republican state attorneys general who argue that the Affordable Care Act (ACA) is no longer constitutional after the so-called individual mandate penalty was zeroed out in 2017. If four justices vote to review the case during the current term, a final decision could be handed down in June 2020. Meanwhile, GOP-led states and the Department of Justice are urging the Supreme Court to wait for lower courts to weigh in before taking up the case. In December, the Court of Appeals for the Fifth Circuit remanded the case back to the Texas district court to reconsider the scope of the severability of the individual mandate from other provisions of the 2010 law.

*** Although the President’s Budget is often considered “dead on arrival,” it does contain policies and “pay-fors” that lawmakers could use for future legislation. As noted above, Congress will have to make several difficult funding decisions in the coming months and weeks. With a ballooning deficit, any increase in spending will likely be balanced with funding reductions. As expected, the post-acute field is yet again a potential target for budgetary cuts.

We urge AMRPA members to register for the upcoming Leadership Conference and Advocacy Fly-In which will be held in Washington, DC, March 22-24, 2020. AMRPA needs your leadership and direct advocacy with your Members of Congress. We will help set up meetings for you and your colleagues on Capitol Hill with your Members of Congress and Senators, and brief you on the field’s most pressing policy issues, including the President’s Budget.

We hope to see you in Washington, D.C. in March!

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