November 18 - 22, 2013
The BreakPoint: Health Care Marketplace Implementation Week Eight - Déjà Vu All Over Again
***The next Breakdown will be issued on Friday, December 6, 2013. Breakaway wishes everyone a Happy Thanksgiving!
House hearings with Administration officials. Check. White House meetings with key stakeholders. Check. HealthCare.gov crashing. Check. Finger pointing on who knew what when about the website's problems. Check and double check. Major policy shifts announced by the Administration. Check.
This week brought more of the same for the Obama Administration as it continued its effort to recover from the problem-plagued roll out of the new health care marketplaces. Just last night, the Administration announced that it will move the start of the 2015 open enrollment period from October 1 to November 15, 2014. In making the announcement, the Administration said that the one-month delay would grant insurers more time to get a handle on their 2014 enrollment numbers, which will inform their 2015 premiums and benefit packages. Not surprisingly, Republicans pounced noting that the delay conveniently pushes the enrollment period's start past the November 5 mid-term elections. In another move this afternoon, the Administration extended the deadline for applying for coverage effective January 1, 2014, from December 15 to December 23, 2013.
Although the two announcements likely caused some vulnerable Democrats to breathe a sigh of relief, they and the Administration are not out of the woods yet. The November 30, 2013, deadline for HealthCare.gov to be running smoothly is fast approaching and Health and Human Services (HHS) staff and contractors are undoubtedly working around the clock. Although there are signs of improvement—including progress with direct health plan enrollment—both HHS Secretary Kathleen Sebelius and Centers for Medicare and Medicaid (CMS) Deputy Chief Information Officer Henry Chao have indicated that work to get the website completely functional will continue beyond that initial deadline. In fact, Mr. Chao informed the House Energy and Commerce Committee that although the website's consumer portion is functional, many crucial "backroom" components that enable plan payments and enrollment reconciliation have yet to be developed or tested.
Revelations on Backroom Features Add to Uncertainty for Insurers...
The revelations about the website's backroom capacity (or lack thereof) have added to insurers' unease caused by the President's announcement last week that states and insurers can elect to continue policies slated for cancellation. Aside from the administrative challenges of informing policy holders that their plans will continue, some plans and state insurance commissioners have expressed concern that the policy will lead to a bifurcated market, one in which sicker individuals enroll in marketplace plans resulting in an upward spiral in premiums. In piecing information together from multiple sources, it appears that the number of states accepting and rejecting the policy is evenly split at 14, with California, New York and Washington among the "thanks, but no thanks" states and Colorado, Florida and Oregon among the yeses. As these decisions have occurred, reports suggest that insurers and the White House have engaged in talks about possible steps to mitigate the impact of a risk pool that could vastly differ from the one that insurers expected. One option is to modify the risk corridors, which are designed to offer more payment certainty and protection from adverse selection. No deal has been reached yet, but the talk has spurred Senator Mark Rubio (R-FL) to introduce legislation—the Obamacare Taxpayer Bailout Prevention Act (S. 1726)—that would altogether repeal the ACA's risk corridors.
Although Senator Rubio's bill will not advance, his proposal turns an all too real issue facing insurers and the viability of the new marketplaces into another Republican talking point and may put congressional Democrats on the defensive again. The Administration's approach on cancelled policies also demonstrates how intricately intertwined the law's provisions are and how changing them, particularly at this stage of the game, can beget more changes that could lead to unintended consequences. We note that this could become an issue for Republicans, as well. Should they win back control over both Houses of Congress, and the Presidency, the policy issues confronting national leaders will more likely center around how modify the impacts of the ACA—rather than whether to repeal it outright.
IN OTHER NEWS...
Drug Compounding and E-Pedigree Legislation Sent to President's Desk
On Monday, November 18, after a protracted procedural process, the Senate adopted H.R. 3204, the Drug Quality and Security Act by voice vote. The bill, which the House passed in September, now awaits the President's signature. The Senate vote came just over one year after a fungal meningitis outbreak traced to tainted compounded drugs killed 64 people across the country. Key compounding provisions, as summarized by the Senate Health Education Labor & Pensions Committee, include:
● Distinguish compounders involved in a traditional pharmacy practice from those making large volumes of compounded drugs without individual prescriptions. Compounders practicing outside the scope of traditional pharmacy practice can register as outsourcing facilities. As under current law, State Boards of Pharmacy will continue to regulate compounders that remain traditional pharmacies;
● Subject outsourcing facilities to Food and Drug Administration (FDA) oversight in much the same way as traditional manufacturers (e.g., FDA will know who outsourcers are, which drugs they make, receive adverse event reports and have authority/resources to conduct risk-based inspections;
● Direct the FDA to compile a list of FDA-regulated outsourcing facilities for posting on the FDA's website; requires detailed labeling on compounded drugs, and prohibits false and misleading advertising; and
● Strike unconstitutional provisions in current law, resolving the patchwork of current federal regulation and applying a uniform standard nationwide.
Key E-Pedigree provisions include:
● Creation of a pathway to lead to unit-level tracing in a decade when supply chain stakeholders will participate in electronic, interoperable product tracing;
● Stronger licensure requirements for wholesale distributors and third-party logistics providers; and
● Establishment of nationwide drug serial numbers four years after the date of enactment.
The bill's adoption represents a rare moment of bipartisanship in an otherwise fractious Congress that to date has adopted the fewest number of bills in recent history. It represents months of negotiations and compromise between the House, Senate, Republicans, and Democrats. The bill requires the Secretary to develop a series of implementing regulations. As soon as the ink is dry from the President's pen, all eyes will turn to that process with stakeholders representing patients, pharmacies, and other health care providers paying close attention.
You Dropped a Bomb on Me... Harry
On Thursday, November 21, Senate Majority Leader Harry Reid (D-NV) led the Senate in voting to make a fundamental procedural change—the so-called "nuclear option"—that would reduce the number of votes needed to confirm a judicial or executive branch nominee from 60 to 51. Breakaway shares this because as the National Journal was first to point out, the nuclear option would come into play if and when the President appoints members to the ACA-created Independent Payment Advisory Board (IPAB) since the law requires the Senate to confirm IPAB appointees.
In general, the ACA charged IPAB with developing proposals to reduce per capita growth in Medicare spending should it exceed a specified target. The Board is to have 15-members who have "national recognition" for their expertise in health finance and economics, actuarial science, health facility management, health plans and integrated delivery systems, and reimbursement of health facilities.
Breakaway has heard nothing to suggest that IPAB appointments are imminent. On the contrary, two signs point away from the President taking action: 1) Medicare spending growth has slowed and according to some IPAB watchers, the Board may not need to make recommendations in the early years, and 2) IPAB is politically-controversial and moving forward with a board dubbed the "death panel" by Republicans gives them a strong talking point heading into the mid-term elections. Nonetheless, the wonks at Breakaway were intrigued with IPAB's connection to this monumental procedural change and wanted to pass it along.
The team at Breakaway would like to wish everyone a Happy Thanksgiving. We are grateful for our clients and friends in the health policy world and will be back with the next edition of the Breakdown on December 6.
Breaking News Events in Health Policy This Week
● The Obama Administration is extending the deadline to apply for coverage effective January 1, 2014, through the exchanges from December 15 to December 23, 2013.
● Kaiser Family Foundation released its November 2013 Health Tracking Poll, finding that the ACA is losing favorability across most demographic groups—most significantly among Democrats.
● HHS will delay the open enrollment period for 2015 by one month. The delay means that the second year of open enrollment will now take place from November 15, 2014, to January 15, 2015, instead of from October 15 to December 7, 2014.
● The Obama Administration's goal for November 30 is for 80 percent of users to be able to enroll in health plans smoothly via healthcare.gov.
● CMS announced that healthcare.gov can now determine subsidies for people who enroll for health plans directly through insurers rather than through the exchange websites.
● Some states running their own insurance exchanges report much higher rates of enrollment in November than in October.
● New Hampshire's Senate rejected a measure to expand Medicaid for an estimated 49,000 individuals.
● California incorrectly sent notices to 246,000 low-income residents, warning that they may need to find new doctors under the state's expanded Medicaid program next year.
● Cover Oregon's executive director does not expect the insurance exchange's online enrollment process to work before open enrollment ends on March 31, 2014.
Medicare Sustainable Growth Rate
● The Senate Finance Committee will mark up legislation to repeal the Sustainable Growth Rate formula and reform Medicare's physician payment system on December 12, 2013.
● Representatives Bill Flores (R-TX), Dan Maffei (D-NY), and 257 other House lawmakers signed a letter to Speaker John Boehner and Democratic Leader Nancy Pelosi in support of repealing the Medicare Sustainable Growth Rate formula this year.
● The Senate approved the Drug Quality and Security Act, a bill that establishes a national tracking system for prescription drugs and enacts new regulations for compounding pharmacies. The bill, which the House passed in September, now awaits the President's signature.
Click here to see the full calendar
There are no health care-related events scheduled next week in the DC area.
There are no health care-related hearings scheduled next week.
There are no health care-related hearings scheduled next week.