Congress moves to pass budget and avert shutdown

Rushing to avoid another government shutdown, the House narrowly passed a $1.1 trillion discretionary-spending budget last week to keep almost all of the federal government funded through September. At deadline Friday, the Senate had not yet voted on the bill but was expected to approve it.

The House bill prevailed by a 219-206 vote, with the bulk of support coming from Republicans. Passage of the budget deal was viewed as a victory for House Speaker John Boehner (R-Ohio) and his GOP caucus because it allows them to start with a clean slate when they take full control of Congress next month. Democrats threatened to derail the agreement, despite backing from President Barack Obama, in part over anger about a provision eliminating a piece of the Dodd-Frank financial reform legislation restricting risky bank investments.

The budget package, which House and Senate leaders hammered out earlier last week, includes $5.4 billion in funding to combat Ebola and prepare for future infectious-disease outbreaks. But the bipartisan bill also contained a controversial provision aimed at blocking a crucial risk-payment program to protect insurers participating in the Obamacare exchanges. Beyond that, funding for most key healthcare agencies was largely flat, continuing a trend of budget austerity in recent years.

When Congress reconvenes in January, Republicans will control both legislative chambers, positioning them to aggressively challenge the Patient Protection and Affordable Care Act and seek major changes to Medicare and Medicaid.

The Ebola funding was 13% less than the $6.2 billion requested by Obama. Roughly half that money will go to HHS. That includes $1.2 billion for international response efforts,

$255 million for state and local governments, $155 million for federal emergency preparedness and $10 million for worker training programs.

Insurance industry experts are worried about how the insurance risk-corridor provision might affect premiums and insurer participation in the Obamacare exchanges. Under that program, insurers that enroll disproportionately expensive members receive offsetting payments from the federal government, while those that enroll a less-costly pool of customers pay into the fund. The program, which runs through 2016, was designed to encourage cautious insurers to sell plans on the new exchanges.

Anti-Obamacare Republicans have pilloried the program as a “bailout” for the insurance industry, even though a similar risk-mitigation payment model is part of the Medicare Part D prescription drug program enacted by a GOP-controlled Congress and signed by President George W. Bush.

The provision in the new budget package calls for the program to be budget-neutral, and prohibits the CMS from using any Medicare funds to pay insurers. While the Obama administration has indicated that it expects the program to be budget-neutral, many experts think that's unlikely, especially for 2014. An analysis by Citi Research found that risk-corridor requests by carriers could exceed $1 billion for the year.

America's Health Insurance Plans sent out a legislative alert last week urging allies to contact lawmakers to get the risk-corridor language removed. “Any steps to weaken this program … would threaten to destabilize coverage for consumers by changing the rules in the middle of the game,” according to the e-mail. But the lobbying effort failed.

Insurance experts are uncertain about the ramifications of the provision. They say the CMS may be able to pay insurers from a different pot of money.

But if those payments aren't available, it could have a significant impact on premiums and insurer participation. A recent analysis by consulting firm Deloitte found that when the healthcare reform law's risk-corridor and reinsurance programs expire after 2016, there likely will be a significant spike in premiums.

“Our analysis shows these programs are important for providing some stability in the marketplace,” said Sarah Thomas, research director at Deloitte's Center for Health Solutions. “If they were to go away even faster, that could definitely threaten the stability of offerings on the market.”

The surgical strike against the risk-corridor program may signal Republican intentions when they take control of Congress next month, said Robert Laszewski, a consultant who works with insurers. “This is a big deal,” he said. Insurers are “absolutely counting” on the payments.

But Paul Keckley, head of the Navigant Center for Healthcare Research and Policy Analysis, said he's less worried. He noted that the CMS has other levers—notably Medicare Advantage rates and the healthcare reform law's health insurance tax—to soften the financial impact on insurers.

Beyond Ebola and the risk-corridor program, funding for most key healthcare agencies was basically flat. There is roughly $30 billion for the National Institutes of Health, an increase of $150 million over 2014. Similarly, the Centers for Disease Control and Prevention was allocated nearly $7 billion, a nominal $20 million bump over fiscal 2014. Those totals don't include additional Ebola-related funding.

Healthcare groups had hoped to jam through a number of other provisions during the lame-duck session, but those efforts did not succeed. Physician groups had pressed for repeal and replacement of Medicare's sustainable growth-rate formula for paying doctors, but there was no bipartisan agreement on how to pay the roughly $140 billion cost over the 10 years. The failure of that effort sets up the likelihood of another patch—the 18th consecutive short-term “doc fix”—when current funding runs out at the end of March.

Healthcare's lame-duck wish list also included renewal of the Children's Health Insurance Program and an extension of extra funding for community health centers that was part of the Affordable Care Act. Funding for both programs, which traditionally have had bipartisan support, is slated to run out in September. Neither ended up in the final budget deal.

In other issues, the 48,000-member Texas Medical Association lobbied to include a two-year delay in the Oct. 1, 2015 launch date for the implementation of the ICD-10 diagnostic and procedural coding system. The organization found a champion in Rep. Pete Sessions (R-Texas), but he failed to persuade congressional leaders. That improves the odds that the oft-delayed ICD-10 implementation will go forward as scheduled, though Congress still could put it off.

In other provisions, the budget bill asks the CMS to detail how its requirement that home-healthcare agencies provide face-to-face certifications by a physician before it will cover in-home care for Medicare and Medicaid beneficiaries has prevented fraud and affected costs and access to care. The legislation also asks the CMS to provide an analysis of how “rebasing” is affecting home-health agencies. In addition, the budget deal asks the administration to report on how a proposal to eliminate critical-access designation for facilities that are within 10 miles of each other would affect healthcare access in rural communities.

Finally, lawmakers are asking the administration to brief congressional panels on its progress in creating a website documenting drug prices and benefits for low-income and uninsured patients under the 340B drug-discount program for hospitals.

Follow Paul Demko on Twitter: @MHpdemko