Reform Update: Focus shifts to Senate after House passes spending bill that defunds ACA

All eyes now shift to the U.S. Senate after the House of Representatives on Friday approved a short-term spending bill that would keep the government operating after Sept. 30 and also includes an amendment to defund the Patient Protection and Affordable Care Act.

In a vote of 230-189, the lower chamber passed the $986 billion spending bill to continue government programs and services at the current, post-sequestration annual rate until Dec. 15. But because the measure includes language to defund President Barack Obama's signature piece of domestic policy, the bill has little chance of passing in the Senate, which increases the likelihood that a government shutdown is now imminent.

In the upper chamber, Sen. Ted Cruz (R-Texas) has already promised a filibuster if the Senate spending bill doesn't include ACA defunding language.

But on Thursday, Sen. John McCain (R-Ariz.) appeared on CNN's “The Lead with Jake Tapper” and said he can "state unequivocally" that the upper chamber will not succeed in defunding the 2010 law because there aren't 67 votes to override a presidential veto. The White House issued a veto threat earlier this week.

"We will not repeal or defund Obamacare, and to think we can is not rational," McCain told Tapper.

"Republicans are simply postponing for a few days the inevitable choice they must face: pass a clean bill to fund the government, or force a shutdown," Senate Majority Leader Harry Reid (D-Nev.) said in a statement Friday. "I have said it before but it seems to bear repeating: the Senate will not pass any bill that defunds or delays Obamacare. The Affordable Care Act has been the law of the land for three years. Democrats stand ready to work with reasonable people who want to improve it, but Republican attempts to take an entire law hostage simply to appease the Tea Party anarchists are outrageous, irresponsible and futile."

House Republicans have shied away from speculating on next steps, but Ilisa Halpern Paul, managing government relations director at Drinker, Biddle & Reath, said possible scenarios include the House and Senate sending different versions of the spending bill back and forth, or the two chambers hammering out their differences in a conference committee.

Halpern Paul said a conference report--which has to pass both chambers without amendment--would not pass the Senate without the Senate first stripping all Affordable Care Act defunding measures.

"We're running out of time for a very long ping-pong game here," she added.

Meanwhile, Halpern Paul noted that healthcare providers are growing anxious how the current spending fight will play out in lawmakers' discussions to extend the nation's borrowing authority. House Majority Leader Eric Cantor (R-Va.) promised earlier this week that the lower chamber would unveil debt-ceiling legislation that included language to delay the Affordable Care Act for a year. And after the House vote on Friday, Rep. Chris Van Hollen (D-Md.), ranking member of the House Budget Committee, said he doesn't know what steps the House GOP will take next, but that they're "talking of doubling down" on their current strategy, which he sees as having grave consequences.

"For the United States of America not to pay its bills on time would create chaos in the markets and the economy," Van Hollen told Modern Healthcare. "So shutting down the government is a really bad and terrible idea. Shutting down the economy unless you defund Obamacare is really the economic equivalent of a nuclear weapon. You will be blowing up the economy."

According to Halpern Paul, healthcare providers have become more worried in the last few days that a government shutdown will take place. But they're also wondering what will happen if a short-term spending agreement is reached, but lawmakers don't reach a debt deal before the country reaches its debt limit. If this happens, she said, the lights of the government will stay on, but they'll be "dimmed."

That's because the government won't shut down, but it will slow down. There are a few options the federal government could employ, including "prioritization," where the Treasury department decides to pay some bills first; "payment delay," in which Treasury holds bills until they have the money; and "apportionment," in which the Office of Management and Budget could instruct departments to place a hold on certain bills.

"They could tell HHS: We want you to put out the money for Medicare and Medicaid through the Treasury, but the federal contractors or NIH grants: hold those," Halpern Paul said.

Meanwhile, as GOP lawmakers persist in trying to dismantle the Affordable Care Act, implementation will continue, with open enrollment on the public exchanges set to begin in 11 days. Halpern Paul said it remains to be seen how the GOP leadership will connect the debt ceiling to the Affordable Care Act, but she suggested that most of the funding for it will stay in place.

"The majority of this spending is mandatory spending," Halpern Paul said. "The only way to turn off the spigot of the spending is to alter the language of the statute."

On Friday, HHS' Health Resources and Services Administration announced a total of $2.5 million in funding to the nation's rural health organizations to help educate and enroll individuals and families in the coverage options under the Patient Protection and Affordable Care Act. Nationwide, rural health organizations each will receive $25,000 from HRSA to help people in their communities understand the benefits that are available to them. Meanwhile, with funding from the CMS, the USDA's National Institute of Food and Agriculture is working with the University of Georgia to create a network of people who will help educate uninsured and underinsured individuals about the public insurance exchanges. "Nearly one in five uninsured adults in the United States lie in a rural area, and there is a great need to educate rural consumers about their insurance options under the Affordable Care Act," Tom Vilsack, secretary of the Agriculture Department, said in a statement.

Patient and consumer advocacy group Families USA will host a teleconference Sept. 25 that features representatives from different states who will discuss their outreach and enrollment efforts in their regions. The group will host a similar call Oct. 8, when navigators and assisters will offer an update on their progress and experiences after the first full week of open enrollment on the public health insurance exchanges.

Rep. Chris Van Hollen (D-Md.), the ranking member on the House Budget Committee, introduced a separate short-term spending bill this week that would replace the sequester for a full fiscal year with an approach that includes both spending cuts and higher taxes. The measure would fund the government through Nov. 15 and set funding levels for fiscal 2014 at $1.058 trillion. On Friday, the Maryland Democrat told Modern Healthcare he has tried eight times for a separate bill that would replace the sequester, but the House GOP has refused to bring the measure to the floor for a vote.

"We've been trying to get a vote in the House of Representatives on our plan to replace the sequester, which is having a very corrorisve effect on all sorts of important investments, including medical research and is hurting the economy," Van Hollen said. "The Congressional Budget Office says it will result in about 1 million jobs fewer this time next year. We have a plan that would achieve the same amount of deficit redcution and even more. It replaces the sequester for next year and has an additional $75 billion in deficit reduction."

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