Beacon of light: Healthcare additions in budget law pleasantly surprise providers

Congress' long-awaited budget deal, passed before dawn last Friday, serves as the most significant piece of healthcare legislation since President Donald Trump took office.

The extensive healthcare package, hammered out largely behind closed doors in the Senate, in many ways took Washington by surprise. Among its provisions were an extra four years of funding for the Children's Health Insurance Program, a repeal of the Affordable Care Act's Independent Payment Advisory Board, and a provision to accelerate the closure of what's known as the Medicare Part D "donut hole" for seniors.

The overall deal—called the Bipartisan Budget Act — includes a $90 billion disaster aid package with two years of full funding for Puerto Rico's nearly broke Medicaid program and $6 billion in funding over two years to address the opioid crisis.

By and large the health package is the one "beacon of light" in what otherwise is an exorbitantly costly budget bill, said Marc Goldwein of the Center for a Responsible Federal Budget. Goldwein praised its mix of structural reforms with "reasonable policy," and likes the fact that the bill pays for the increased healthcare spending.

The Senate beefed up the already sizable healthcare package included in the continuing resolution the House passed earlier in the week. The House legislation funded community health centers and expired Medicare programs for two years; it also included a two-year delay to the already-in-effect payment cuts to Medicaid disproportionate-share hospitals.

Rural hospitals have been stressed since Medicare extender funding expired months ago. Even now, Goldwein said Congress' decision to keep the funding temporary concerns him because with a healthy economy, policies should be paid for when they're passed.

"We need to get out of the rut of extending policies one or two years at a time," Goldwein said. "The way we do these health extenders is getting a little bit silly when they're just a given."

Still, passage of the extenders and delays to the Medicaid DSH cuts relieved hospital groups, which have been lobbying for months to get some certainty out of Congress. The DSH cuts went into effect in October and the CMS had lowered reimbursements for Medicare-dependent hospitals and providers in the low-volume adjustment program.

"Congress made the right choice this morning for patients and communities by voting to halt damaging cuts to hospitals that care for low-income working families and others who face financial challenges," said Dr. Bruce Siegel, CEO of America's Essential Hospitals, which represents the nation's safety-net facilities.

The Senate incorporated the House bill's own surprises like the Chronic Care Act, which opens up new flexibilities for Medicare Advantage and care for chronically ill Medicare beneficiaries, and a provision to slow implementation of the Merit-based Incentive Payment System that makes providers accountable for Medicare savings.

But then it went much further. Some additions hadn't been expected at all. The Medicare Part D donut hole provision, for example—which increases the discount drug manufacturers have to give beneficiaries from 50% to 70%—caught even House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) off guard.

Walden told reporters that he didn't know about the measure until the Senate released it, and that he wants his committee to take a look at its impact.

"I support the overall package," Walden said. "I'd have written it differently, because I think there are some public policy issues that we'll probably have to address later on because they could have an effect of actually raising list prices (for drugs). We would have to study the impact, but this was something that to my understanding came in from the Senate side, so we were not, how shall I say it diplomatically, consulted much."

Its inclusion may spur a legislative fight and immediately roused the ire of the Pharmaceutical Research and Manufacturers of America, which called it a bailout of insurance companies.

"Our industry has long supported efforts to make prescription drug coverage more affordable for Medicare Part D beneficiaries," PhRMA CEO Stephen Ubl said in a statement. "Rather than prioritizing lowering seniors' out-of-pocket costs, this proposal provides a massive bailout for insurance companies and undermines their incentive to reduce Part D costs, an incentive that has worked well for more than a decade."

A major structural change under the new law is the repeal of IPAB. Provider groups from the American Medical Association to the American Hospital Association applauded the move, even though Congress has never triggered the panel, which was charged to find and implement Medicare savings.

The idea of IPAB repeal has long had some Democratic support, as well as being a priority for providers and a rallying cry for conservatives who don't like the ACA. But policy analysts worry that by killing IPAB, along with instituting a two-year delay in the Cadillac tax—which was done in the Jan. 22 continuing resolution—Congress is undermining the ACA's major attempts to control healthcare spending in a way that will have lasting reverberations

"IPAB puts a cap on Medicare spending growth, and the Caddy tax effectively does the same for private health insurance," Goldwein said. "These were meant to be the major cost-control pieces of the ACA."

IPAB repeal doesn't cost much in the grand scheme of things, Goldwein, added—roughly $17.5 billion over 10 years—but the long-term policy implications are huge, and a big mistake."

Kaiser Family Foundation Senior Vice President Larry Levitt agreed. "Potential repeal of IPAB, along with continuing delays in the Cadillac plan tax, reveals a bipartisan consensus that healthcare cost containment generally seems better in theory than in practice," Levitt tweeted after the Senate unveiled its proposal.

The Trump administration welcomed the IPAB repeal as another step in repealing the ACA. The Administration supports other components of the Bipartisan Budget Act, including greater certainty for the Children's Health Insurance Program, an extension of funding for Community Health Centers, and repeal of Obamacare's Independent Payment Advisory Board (IPAB)," the White House said in a statement. "The IPAB authority allows an unelected, unaccountable board to undertake major changes to the Medicare program. The repeal of IPAB furthers the President's goal of repealing and replacing Obamacare."

Despite overwhelming support when the bill was first unveiled, the Bipartisan Budget Act ran into bipartisan trouble Thursday night when Sen. Rand Paul (R-Ky.) mounted a filibuster that pushed the Senate's vote on the measure past the midnight funding deadline. Paul was concerned about its cost—roughly $300 billion. The Committee for a Responsible Federal Budget projects the legislation will drive up the federal deficit by nearly $2 trillion within 10 years.

As Paul filibustered in the Senate, mounting House GOP and Democratic defections over concerns about debt and immigration prompted fears of another government shutdown—which did take effect but ended just hours later early Friday when the House voted for passage 240-186.