House Democrats passed President Biden’s sprawling economic package Friday after months of haggling over how expansive the legislation would be. But the changes are far from over.
One possibility: Democrats are discussing making a cut to certain states’ hospital payments last just a few years instead of permanently,according to four people familiar with the situation.
The idea would protect states that get coverage for their Medicaid expansion populations for the first time from hospital funding cuts if lawmakers don’t extend the policy past 2025. The economic package extends health insurance to roughly 2.2 million people living in the mostly GOP-led states that have refused Obamacare’s Medicaid expansion – but the expansion is only guaranteed for a few years.
The potential change, though far from definite, would make the hospital payment cuts last just through 2025, instead of permanently. That would align the reduction in dollars with the length of the new Medicaid expansion opportunity.
Hospitals and key lawmakers, such as Georgia Sens. Raphael Warnock (D) and Jon Ossoff (D), are fighting hard to remove the 12.5 percent reduction in payments altogether.
But supporters of the cuts argue policies granting more people health insurance (like expanding Medicaid) would improve hospitals’ finances — and more than make up for the cuts.
Hospitals get paid money from Medicaid for seeing a significant number of low-income patients. The theory: Those dollars, known as disproportionate share hospital (DSH) payments, are supposed to help offset the costs of providing services to patients who may not be able to pay or where Medicaid funding falls short.
Here’s the policy argument for the cuts: Closing the so-called Medicaid coverage gap would improve hospitals’ margins because facilities would get paid for more of the care they deliver. Those who gain coverage may also seek more medical services, according to a white paper from the USC-Brookings Schaeffer Initiative for Health Policy.
Yet, the powerful hospital industry is lining up against the reduction in payments — even for just a few years. They’re lobbying hard to kill the provision and are in part banking on Georgia’s Democratic senators, who helped Democrats win the majority last year, using their leverage to get it removed from the bill.
Meanwhile, a half dozen Republican senators from non-expansion states are asking congressional scorekeepers to further analyze any potential impact of the cuts.
The House passed the Build Back Better bill, which bears the name of Biden’s campaign slogan, in a 220-to-213 vote Friday. Only one Democrat, Rep. Jared Golden (Maine), opposed the measure, while no Republicans supported it.
The vote is a victory for House Speaker Nancy Pelosi, who helped guide the bill’s passage despite warring among the party’s moderate and more liberal members. But now it heads to the Senate, where it faces a tough road ahead.
Hospitals are fighting payment cuts in Biden’s economic package. The potential change would make the hospital payment cuts last just through 2025, instead of permanently.
Download this slide deck for an overview of the bill’s costs and offsets, key policy provisions, and proposals that were dropped or scaled back.
With hospitals experiencing surges in demand for care, nursing has become one of the top occupations with the highest projected job growth, according to the Bureau of Labor Statistics. Nurse shortages brought on by the Covid-19 pandemic persist across the nation, despite hospitals’ offers of signing bonuses and pleas for federal help. To address the labor shortage in New York, Gov. Kathy Hochul announced on Thursday that the state will launch a scholarship program, covering tuition for 1,000 nursing students.
The Covid-19 pandemic has fueled unprecedented demand for skilled health-care professionals—and the demand will only continue after the U.S. emerges from the pandemic.
Without training thousands of new American-born doctors and nurses, the clearest way to fill gaps in the health-care workforce is hiring talent from abroad, experts say.
Hospital groups have lobbied Congress for the past 18 months to address a shortage of nurses and physicians by offering green cards to tens of thousands of foreign health-care workers, among a number of proposed legislative options. While that legislation hasn’t advanced, industry groups and immigration advocates are eyeing a major social spending package backed by the White House to lower barriers for those international workers to come to the U.S.
Legislation (S. 1024) backed by more than 20 trade groups including the American Hospital Association and American Medical Association would designate 25,000 unused green cards for nurses and 15,000 for physicians. While a limited number of education exchange or high-skilled work visas are available for professionals like medical doctors, those short-term options aren’t available to nurses.
The bipartisan green card bill would also exempt dependent family members from counting toward green card limits. It hasn’t received committee consideration after being introduced with bipartisan support the past two years.
Advocates hoped the bill would move on its own or be attached to one of the pandemic relief packages passed last year, said Dan Kosten, assistant vice president of policy and advocacy at the National Immigration Forum.
“For some reason it did not and we’re a little mystified as to why,” he said.
Immigration advocates have targeted a major social spending package backed by President Joe Biden to advance pathways to permanent legal status for millions of immigrants in the U.S.
The Senate parliamentarian has ruled proposed legalization measures for undocumented immigrants don’t clear chamber rules for the reconciliation process, which Democrats plan to use to pass the White House spending plan. But green card recapture provisions, which would make thousands of expired visas available, are seen to have stronger prospects for inclusion. Recent versions of House reconciliation text have included language to restore unused green cards in addition to offering protections for undocumented immigrants short of legalization.
If passed, many of those green cards would likely benefit foreign medical workers, advocates say. That legislation wouldn’t address immediate challenges like bottlenecks at U.S. consulates slowing visa approvals for travel to the U.S., said Bruce Morrison, a former congressman and lobbyist for the American Hospital Association.
But Robyn Begley, CEO for the American Organization for Nursing Leadership, said the bill would “expedite the visa optimization process for highly trained nurses.”
While healthcare groups pushed for green card fixes over the past 18 months, several states dropped barriers like licensure requirements that have kept foreign-educated workers on the sidelines. Eight states, including New Jersey and New York, enacted emergency orders during the pandemic to allow those healthcare workers to get off the sidelines, including issuing temporary medical licenses.
Most underemployed foreign health-care workers are women, with training in nursing and bilingual skills, making them highly valuable to in the health-care field, said Michael Fix, a senior fellow at the Migration Policy Institute.
Legislation (H.R. 4179) passed as an amendment to the National Defense Authorization Act (H.R. 4350) would direct the Department of Labor to study factors limiting employment opportunities for immigrants in the U.S. Supporters hope to see a similar measure (S. 3157) attached to the defense reauthorization bill in the Senate.
“There’s growing recognition something needs to be done to address brain waste associated with those coming into the U.S. with advanced degrees, including in the health sector,” Kosten said.
The Covid-19 pandemic has fueled unprecedented demand for skilled health-care professionals—and the demand will only continue after the U.S. emerges from the pandemic. Without training thousands of new American-born doctors and nurses, the clearest way to fill gaps in the health-care workforce is hiring talent from abroad.
The Covid-19 pandemic has fueled unprecedented demand for skilled health-care professionals—and the demand will only continue after the U.S. emerges from the pandemic. Legislation could offer long-term solution for workforce gaps. Industry groups target green cards for doctors and nurses.
Children’s health advocates are cheering the Congressional Budget Office’s estimate that requiring one-year continuous enrollment for kids in Medicaid or CHIP under the Build Back Better plan will save nearly $3.7 billion over 10 years while making CHIP permanent will save about $1 billion. Meanwhile, it will cost $2.21 billion to extend coverage for postpartum women from 60 days after giving birth to one year.
The CBO released its final scoring of the reconciliation package on Thursday (Nov. 18) and estimated the two children’s health provisions could save billions of dollars. The CBO score for making CHIP permanent accounts only for costs in 2028 through 2031 because Congress last extended the program through 2027.
The score came out hours before the House was slated to vote on the Build Back Better package.
Children’s health advocates and lawmakers had worried CHIP would become a bargaining chip again during future budget negotiations if the program was not permanently extended.
“This score demonstrates why we need to do this now,” Bruce Lesley, First Focus on Children president, said in an email.“It currently saves about $1 billion. CBO estimates that CHIP is cheaper than the exchange for kids and that savings offsets the fact that they believe 2 million children would lose coverage altogether if CHIP expires.”
CHIP’s CBO score has more to do with what’s happening with the affordability of the exchanges, Medicaid or private sector rather than CHIP, Lesley said.
“However, as you saw, in the out-years a CHIP extension starts to cost money. Every year that passes leads to the possibility that CHIP becomes a ‘coster’ rather than a ‘saver,’” he added.
“We just need to get this done NOW so the health coverage of 10 million kids is not threatened by a future and ever-changing CBO score,” he said.
Advocates are also pushing lawmakers to pass 12-month continuous enrollment for children enrolled in Medicaid and CHIP. They’re worried minimal gains in kids’ enrollment in Medicaid or CHIP will vanish once the public health emergency ends and states resume kicking people, including children, off the rolls.
Continuous enrollment for one year decreases the chances of children being inappropriately removed from Medicaid and CHIP because families won’t have to undergo the renewal paperwork and bureaucracy hurdles as frequently.
CBO also estimated the maternal health provisions, including one-year postpartum coverage and investments in the perinatal workforce, will cost roughly $3 billion over 10 years. The latest version of the Build Back Better plan includes $954 million to provide a maternal health home for pregnant and postpartum women.
“This is a really landmark moment to ensure new moms and their babies are set up for a healthy lifetime, and to narrow longstanding disparities among new moms in Black, Latino and Indigenous communities,” Families USA said in an email. “Now Congress needs to get it done!”
Stakeholders upset by the Build Back Better package’s inclusion of civil monetary penalties for violations of the mental health parity law are pressing congressional leadership to make last-minute changes that would give firms compliance assistance and appeals rights if the provision moves forward. The letter comes a day after the Congressional Budget Office said granting the Department of Labor authority to enforce the penalties would raise $35 million from 2022 to 2031, a number a source says was expected, and as the House prepares to vote on the BBB package as soon as Thursday night.
In a letter out Thursday (Nov. 18), eight groups representing large employers, insurers and behavioral health providers told House and Senate leaders from both parties they are committed to providing quality treatment for mental health and substance abuse and are working to comply with current requirements, but they want lawmakers to tweak the BBB final language to include due process, compliance assistance and appeals rights.
They stress that after passage of the Consolidated Appropriations Act and the release of mental health parity guidance, stakeholders made a good faith effort to comply with new requirements. Under the CAA, individual and group health plans that offer mental health/substance abuse and medical/surgical coverage and impose non-quantitative treatment limitations (NQTLs) on the mental health/substance abuse benefits must prepare a comparative analysis of the design and application of the NQTLs.
“However, despite extensive good faith efforts to comply, our members have reported that upon submitting analyses, DOL staff sent back dozens of questions and requests for substantially more documentation,” the groups say. “The public and private sectors are committed to working together to improve MH/SUD access and are taking clear steps to comply. We ask that you now turn your focus toward ensuring that the federal agencies that enforce MHPAEA support compliance with the CAA requirements.”
Providing more tools and templates that include examples of complex benefit analysis would be helpful as would releasing the de-identified examples of mental health parity violations, which is required under the CAA, they add.
If Congress does opt to move forward with BBB provision, the groups ask that lawmakers amend the language to ensure that due process, compliance assistance and the right to appeal is offered. The changes they seek would:
The letter also includes legislative language with the proposed alterations.
“Penalties won’t improve mental health coverage or care. At best, they will take money out of plan funds, punishing employers who make mistakes interpreting complicated rules. At worst, they will stifle innovation and cause employers to use more cookie cutter plan designs. We can do better than this for patients,” says James Gelfand, vice president for health policy at the ERISA Industry Committee (ERIC), one of the lobbies that signed Thursday’s letter.
Other groups on the letter include American Benefits Council, Association for Behavioral Health and Wellness, AHIP, Blue Cross Blue Shield Association, Business Group on Health, Business RoundTable and National Retail Federation.
Stakeholders upset by the Build Back Better package’s inclusion of civil monetary penalties for violations of the mental health parity law are pressing congressional leadership to make last-minute changes.
More than a year after Saint John’s Episcopal Hospital in Queens admitted the borough’s first Covid-19 positive patient in March of 2020, life is returning to some semblance of normalcy. The three refrigerated tractor-trailers serving as morgues are gone and its halls — once at 150% of capacity — have quieted.
But with the retreat of the worst of the virus comes the reality that for many facilities, the finances never worked. The billions of dollars of aid the U.S. government distributed to hospitals during the pandemic — including advances in Medicare payments — kept struggling facilities afloat, but papered over longstanding problems.
The elective procedures that generate the most revenue haven’t returned to pre-Covid levels. Now, a staffing crisis has emerged as a new challenge just as the final government disbursements are paid out — putting potentially thousands of hospitals at risk. “It does keep me up at night,” said Jerry Walsh, chief executive officer of St. John’s, a safety-net hospital that primarily treats patients that don’t have private insurance.
These risks aren’t yet reflected in the financial markets — an indication of the extent of the federal support. Junk-rated municipal hospital bonds are underperforming the overall high-yield muni index only slightly this year, with a 6.91% return, compared with 7.11% for the overall index. Still, concerns are growing about the added stress of rising labor, supply and interest costs on a system already rife with problems.
“We will see a significant number of failures post-pandemic,” said Steven Shill, head of the health-care practice at advisory firm BDO USA. “All the risks are pointing to probably a tough 18 months.”
Even before the coronavirus, many American hospitals were struggling to adapt to changing models of care, including the shift of even some complex procedures to outpatient settings. Weaker operators are still grappling with the same issues as before the virus, including poorer, sicker and often shrinking populations.
“There is no doubt that the CARES money kept the wolf from the door,” said Ken Kaufman, chair and co-founder of health-care consultancy Kaufman Hall, which estimates that more than a third of the 6,000 or so hospitals in the U.S. are losing money. His group also forecast the pandemic has cost them close to $400 billion this year and last.
More than three dozen hospitals entered bankruptcy in 2020, compared with just two this year, according to data compiled by Bloomberg. That includes Chicago’s Mercy Hospital and Medical Center, which filed Chapter 11 in February and was sold for just $1.
Turnaround adviser Alvarez & Marsal calculated that operating expenses jumped 5% last year at the 25 largest hospital systems, and those have the benefit of scale. St. John’s, for example, has been paying thousands of extra dollars a week to staffing agencies for certain positions to compete with larger systems for health-care workers, Walsh said.
“For safety-net hospitals, it’s an issue,” Walsh said. With enough state money to just survive under normal circumstances, “when you run a Medicaid business and they haven’t raised Medicaid rates in New York in 13 years, it’s a problem.”
Hospitals received $178 billion through the Provider Relief Fund, with most funding distributed or about to be. But the remaining aid doesn’t change the long-term problem that many don’t bring in enough to pay their bills.
“The upcoming disbursements won’t account for expenses and lost revenue from the spring and summer surges across the country due to the delta variant,” American Hospital Association executive vice president Stacey Hughes said in a statement to Bloomberg.
After the pandemic abates, labor and supply costs will be permanently higher, chiseling margins for a well-run hospital to 1.5% to 2% from an already-modest 3%, according to Kevin Holloran, a senior director at Fitch Ratings.
And though defaults have been low, an uptick in interest rates could change that. Felicia Gerber Perlman, who co-heads the bankruptcy and restructuring group at law firm McDermott Will & Emery, expects the next wave of distress to hit in the second half of next year. Rural facilities, urban hospitals that rely on publicly-funded insurance and centers in communities that can’t support more than one hospital are expected to be hot spots.
“Now the federal aid is ending, but you still have underlying issues that will be facing the system,” Perlman said.
More than a year after Saint John’s Episcopal Hospital in Queens admitted the borough’s first Covid-19 positive patient in March of 2020, life is returning to some semblance of normalcy. But with the retreat of the worst of the virus comes the reality that for many facilities, the finances never worked. The billions of dollars of aid the U.S. government distributed to hospitals during the pandemic — including advances in Medicare payments — kept struggling facilities afloat, but papered over longstanding problems.
Thousands of nursing homes would be forced to close and thousands of others would have to stop taking new admissions if several provisions of the Build Back Better Act become law, industry officials said Wednesday.
House Democrats’ sweeping $1.75 trillion package addresses climate, education, and numerous social programs, but it would also require nursing homes to have a registered nurse on site at all times. In addition, the legislation would impose mandatory minimum staffing requirements for all facilities a year after HHS conducts a $50 million study to determine ideal staffing levels for nursing homes.
Both provisions are well-intentioned, said Mark Parkinson, president and CEO of the American Health Care Association and the National Center for Assisted Living, which represents more than 14,000 U.S. nursing homes.
“Unfortunately, if these provisions actually became law, we believe that thousands, if not most of the skilled nursing facilities in the United States would close. And I know that’s a dramatic statement, but we believe it’s true,” Parkinson told reporters during a web briefing.
The AHCA/NCAL is urging the Senate to scrap both proposals or provide massive federal funding in order to meet the “unfunded mandates,” Parkinson said.
Nearly 187,000 residents have died from Covid-19 at nursing homes and other long-term care facilities, as of Nov. 16, according to the Kaiser Family Foundation. The carnage, along with the industry’s history of low pay, poor benefits, and difficult working conditions, has led 221,000 nursing home workers to leave their jobs since the pandemic began.
Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, is urging lawmakers to retain both provisions, which were originally included in the Nursing Home Improvement and Accountability Act that was introduced in the House (H.R. 5169) and Senate (S. 2694).
“We feel strongly that they should be maintained,” she said. “They’re necessary to move us forward in improving the conditions that exist in nursing homes and helping to ensure that residents” are properly cared for.
The House Build Back Better legislation also includes provisions to improve the accuracy of cost reports and other data that facilities submit to the Centers for Medicare & Medicaid Services. It also calls for stricter oversight and monitoring of facilities by state inspection agencies.
If the HHS study found that nursing homes need to hike clinical and direct care staff by 25%—which Parkinson said was a reasonable estimate—it would require hiring more than 150,000 registered nurses, licensed practical nurses, and certified nursing assistants at a cost of $10.7 billion per year.
“The workers are simply not there. It’s one thing to mandate that we have a certain amount of employees. But it’s completely unrealistic to do so if the employees are not there to hire,” Parkinson said.
Smetanka said the industry’s reputation is playing a part in the labor shortage.
“Certainly we are sensitive to the fact that we are seeing labor shortages right now, but the reality is that these buildings have not necessarily been good places to work,” she said.
Federal law currently requires nursing homes to provide “licensed nursing services” that are “sufficient” to meet resident needs. But Medicare only requires nursing homes to have at least one registered nurse on duty for eight straight hours per day. If the BBA’s 24-hour requirement for registered nurses becomes law, the AHCA/NCAL estimates it would require hiring 21,000 more nurses, at a cost of $2.5 billion a year.
Parkinson said his organization supports the 24-hour requirement for registered nurses—as long as it’s paid for.
Smetanka said they’ll be working with House and Senate staff to keep both provisions. “We’re hoping that common sense prevails here,” she said.
The Occupational Safety and Health Administration (OSHA) is suspending enforcement of the Biden administration’s COVID-19 vaccine mandate for large private businesses after a federal appeals court upheld a stay on it last week.
OSHA said in a statement published on its website Friday night that while it is confident in its power to protect workers amid the pandemic, it is suspending activities related to the mandate, citing the pending litigation.
“The court ordered that OSHA ‘take no steps to implement or enforce’ the ETS [Emergency Temporary Standard] ‘until further court order.’ While OSHA remains confident in its authority to protect workers in emergencies, OSHA has suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation,” OSHA said.
President Biden announced in September that the administration was rolling out a new rule that would require all private employers with 100 or more employees to mandate vaccines or weekly testing for all personnel, a guideline that has the potential to impact nearly 80 million workers.
Earlier this month the administration set Jan. 4 as the deadline for qualifying private employers to start mandating the vaccine or requiring weekly testing. The rule was developed by OSHA.
In a 22-page ruling last week, the 5th U.S. Circuit Court of Appeals wrote that the administration’s COVID-19 vaccine and testing mandate was “fatally flawed” and ordered that OSHA not enforce the requirement “pending adequate judicial review” of a motion for a permanent injunction.
The court said OSHA should “take no steps to implement or enforce the mandate until further court order.”
The case originated when Texas Attorney General Ken Paxton (R), along with the states of Louisiana, Mississippi, Utah and South Carolina, filed a lawsuit against the Biden administration over the vaccine mandate in October, requesting a preliminary and permanent injunctive relief to stop the mandate from being enforced. The lawsuit also asked that the mandate be declared unlawful.
Earlier this month, the federal appeals court ordered a temporary halt on the mandate, but the Department of Justice then requested that the halt be lifted, contending that the administration has the legal authority to require COVID-19 vaccines or testing for larger companies and that the states that are challenging the mandate have not shown that their claims outweigh the harm of stopping of rule.
The court, however, upheld the stay, which prompted OSHA’s announcement that it is suspending enforcement of the rule.
More than two dozen state attorneys general and other groups are also challenging the mandate in court.
Despite the court’s ruling, however, the White House urged businesses to continue implementing the guidancefor COVID-19 vaccines and testing.
“We think people should not wait. We say: Do not wait to take actions that will keep your workplace safe. It is important and critical to do and waiting to get more people vaccinated will lead to more outbreaks and sickness,” White House deputy press secretary Karine Jean-Pierre told reporters last week following the ruling.
“We’re trying to get past this pandemic, and we know the way to do that is to get people vaccinated,” she added.
The administration has said that it believes it is on firm legal footing even after the federal appeals court’s ruling, maintaining that it has the authority to mandate vaccination for workers in an effort to stop the spread of COVID-19.
It is not clear how the White House will react to OSHA’s announcement.
A cloture vote Wednesday to expedite debate on the annual National Defense Authorization Act will kick into gear senators’ push to tack their priorities onto must-pass spending bills before the end of the year.
NDAA and a likely forthcoming omnibus carrying 12 annual appropriations bills are primary targets for vehicles to complete other items, with lawmakers scheduled to head home for the holidays in less than a month.
Senate Majority Leader Chuck Schumer (D-N.Y.) blazed the trail by telling lawmakers that with the tight schedule a $250 billion bill to spur U.S. competitiveness with China, help the semiconductor industry, and provide relief for the supply chain will be attached to NDAA.
Schumer said adding the competitiveness bill to the must-pass $740 billion NDAA bill (H.R. 4350) is necessary to address the crisis.
“Nothing will do more over the next few years to reduce supply chain problems than this bill, and especially in the semiconductor industry,” Schumer said Tuesday on the Senate floor. “The chip shortage isn’t some abstract issue.”
Members of both parties are on board with the strategy as the clock ticks. Sen. John Cornyn (R-Texas) said he’s “agnostic” on the vehicle for the competitiveness bill, as “it needs to get done because every day we waste is another day or more of disruption to the supply chain.”
There’s added urgency to get things done by the holidays given the uncertainty of how much can pass next year as the 2022 midterm elections heat up. With President Joe Biden’s popularity sagging, Democrats may opt to push a less aggressive agenda if they’re able to get through Biden’s social spending plan, the NDAA, and the appropriations package.
Senate Majority Whip Dick Durbin (D-Ill.), a senior member of the Appropriations Committee, said he’s working with Republicans to also get other bills finished in the final days of the year, including the rewrite of the Violence Against Women Act, a law Biden helped author to help abused women. The House passed a VAWA rewrite (H.R. 1620) this year, but it hasn’t budged in the Senate.
“I would put it on any train that’s moving,” Durbin said in an interview. “I want to get it reauthorized this year. We’re eight and a half years late on this.”
The budget bill also could be targeted to carry more new initiatives. Among others, House Majority Leader Steny Hoyer (D-Md.) unveiled legislation (H.R. 5830) to support U.S. pledges at the COP26 meeting to commit $9 billion to fight against deforestation and reduce greenhouse gas emissions.
“The Congress of the United States is ready to back up President Biden’s commitments with concrete action,” Hoyer said.
The bipartisan bills proliferating as the session winds down include one that Durbin, Sen. Chuck Grassley (R-Iowa), and other Senate Judiciary Committee members recently introduced to expand provisions in a 2018 sentencing overhaul law (Public Law 115-391) to those sentenced earlier for drug offenses. Another bill they recently unveiled would require online publication of financial disclosure reports for federal judges and mandate judges submit periodic transaction reports for securities transactions (S. 3059). Companion legislation (H.R. 5720) is being sponsored by members of the House Judiciary Committee.
Durbin and Grassley recently teamed up with Sen. Amy Klobuchar (D-Minn.) and others in what could be an eleventh hour push on a new bipartisan bill (S. 2992) establishing rules for dominant digital platforms amid concerns about anticompetitive behavior. Senate Minority Whip John Thune (R-S.D.) said he’s also pushing to pass bills to help increase online transparency and accountability, including the Platform Accountability and Consumer Transparency (PACT) Act (S. 797).
The Senate last spring passed the United States Innovation and Competition Act (S. 1260), which Schumer plans to attach to the Senate’s NDAA bill. The House has not yet finished its own competitiveness bill and didn’t include it in the version of the defense authorization measure the chamber has passed. Whether the competitiveness measure remains in the final defense legislation will be determined in negotiations between the chambers.
The NDAA also could include legislation (S. 3003) the Veterans Affairs Committee reported last summer to allow veterans with illnesses tied to exposure to overseas burn pits to gain access to VA health care.
Sen. Kirsten Gillibrand (D-N.Y.) enlisted Jon Stewart, the comedian and veterans advocate, to argue for the measure’s enactment at a recent Capitol Hill news conference. Stewart previously successfully lobbied Congress to make the 9/11 Victim Compensation Fund permanent. Gillibrand filed the bill as an amendment to the defense authorization measure.
Sen. Tammy Duckworth (D-Ill.) said an omnibus remains an option for that bill should NDAA amendments be limited.
“I don’t know how much time we have for a stand-alone,” Duckworth said in an interview. “It’s gonna be faster to attach it to something.”
Many lawmakers are targeting the omnibus spending package as the best vehicle for riders, but so far appropriators haven’t announced any framework of a deal that could permit the legislation to be assembled. Senate Appropriations ranking member Richard Shelby (R-Ala.) said lawmakers may buy time by pushing a new spending stopgap to Dec. 17. A current stopgap funding the government expires Dec. 3.
The omnibus would typically be used to extend expiring programs and taxes and carry many other items. Grassley and other farm-state senators in both parties recently said they’re pushing new legislation to address longstanding issues of price discovery and transparency in the beef industry. Both sides also announced bills to help teenagers in foster care and to repeal Medicare’s lifetime limits for inpatient psychiatric care.
Members of the Louisiana delegation said they want the omnibus to include another slug of aid to help their state recover from Hurricane Ida and other storms.
“It’s possible that there will be something that would be not just for us but the Northeast,” Sen. Bill Cassidy (R-La.) said in an interview. “We’re anticipating that the needs are far greater than that which has already been appropriated.”
The detente that allowed Congress to pass a law to curb surprise medical bills has disintegrated. A bipartisan group of 152 lawmakers have been assailing the Biden administration’s plan to regulate the law and medical providers, warning of grim consequences for underserved patients.
For years, patients have faced these massive, unexpected bills when they get treatment from hospitals or doctors outside their insurance company’s network. It often happens when patients seek care at an in-network hospital, but a physician such as an emergency room doctor or anesthesiologist who treats the patient is not covered by the insurance plan. The insurer would pay only a small part of the bill, and the unsuspecting patient would be responsible for the balance.
Congress passed the No Surprises Act last December to shield patients from that experience after long, hard-fought negotiations with providers and insurers finally yielded an agreement that lawmakers from both parties thought was fair: a 30-day negotiation period between health providers and insurers when disputes over bills arise, followed by arbitration if agreements can’t be reached.
The rule, which would take effect in January 2022, effectively leaves patients out of the fight. Providers and insurers have to work it out among themselves, following the new policy.
In releasing the rule, the Centers for Medicare & Medicaid Services pointed to an analysis of the Congressional Budget Office that the No Surprises Act would lower health insurance premiums by about 1% and shave $17 billion off the federal deficit.
Lower premiums are an especially important goal for the administration and some of its allies, like patient advocacy groups and labor unions.
But now, many doctors, their medical associations and members of Congress are crying foul, arguing the rule released by the Biden administration in September for implementing the law favors insurers and doesn’t follow the spirit of the legislation.
“The Administration’s recently proposed regulation to begin implementing the law does not uphold Congressional intent and could incentivize insurance companies to set artificially low payment rates, which would narrow provider networks and potentially force small practices to close, thus limiting patients’ access to care,” Rep. Larry Bucshon, R-Ind., who is a doctor and helped spearhead a letter of complaint this month, told us in a written statement.
Nearly half of the 152 lawmakers who signed that letter were Democrats, and many of the physicians serving in the House signed.
Some members of Congress who are also doctors held a conference call with the administration late last month to complain, according to aides to lawmakers on Capitol Hill, who could not speak on the record because they did not have authorization to do so. “The doctors in Congress are furious about this,” says one staff member familiar with the call. “They very clearly wrote the law the way that they did after a year, or two years, of debate over which way to go.”
However, the backlash has not won the support of some powerful Democrats, including Rep. Frank Pallone, N.J., chair of the Energy and Commerce Committee, and Sen. Patty Murray, Wash., chair of the Senate Health, Education, Labor and Pensions Committee, who wrote to the administration urging officials to move forwardwith their plan.
The controversy pertains to a section of the proposed final regulations focusing on arbitration.
The lawmakers’ letter — organized by Reps. Thomas Suozzi, D-N.Y., Brad Wenstrup, R-Ohio, Raul Ruiz, D-Calif., and Bucshon — noted that the law specifically forbids arbitrators from favoring a specific benchmark to determine what providers should be paid. Expressly excluded are the rates paid to Medicare and Medicaid, which tend to be lower than insurance company rates, and the average rates that doctor’s bill, which tend to be much higher.
Arbitrators would be instructed to consider the median in-network rates for services as one of several factors in determining a fair payment. They would also have to consider items such as a physician’s training and quality of outcomes, local market share of the parties involved where one side may have outsize leverage, the patient’s understanding and complexity of the services, and past history.
But the proposed rule doesn’t instruct arbiters to weigh those factors equally. It requires them to start with what’s known as the qualifying payment amount, which is defined as the median rate that the insurer pays in-network providers for similar services in the area.
If a physician thinks they deserve a better rate, they are then allowed to point to the other factors allowed under the law — which the medical practitioners in Congress believe is contrary to the bill they wrote.
The provisions in the new rule “do not reflect the way the law was written, do not reflect a policy that could have passed Congress, and do not create a balanced process to settle payment disputes,” the lawmakers told administration officials in the letter.
The consequences, opponents of the rule argue, would be a process that favors insurers over doctors and pushes prices too low. They also argue that it would harm networks, particularly in rural and underserved areas, because it gives insurers incentive to push down the rates they pay to in-network providers. If the in-network rates are lower, then the default rate in arbitration is also lower.
That is the argument made specifically in a lawsuit filed last month against the Biden administration by the Texas Medical Association.
The suit alleges that in a handful of states, such as California, that already have a strategy similar to the rules the Biden team has written, a recent study shows payment rates are driven down. Citing that data and a survey by the California Medical Association, the suit says insurers now have an incentive to end contracts with better-paid in-network providers or force them to accept lower rates, since out-of-network providers then become subject to the same lower baseline.
Jack Hoadley, of Georgetown University’s Health Policy Institute, says the results could run either way depending on whether insurers or providers are more powerful in a specific market.
“You’ve got some markets where you have a dominant insurer, and they can say to providers: ‘Take it or leave it. Because we represent most of the insurance business, we represent most patients,’ ” Hoadley says.
But in other places, there might be a provider group that is stronger. “All the anesthesiologists might be in one large practice in a market, and they can basically say to the insurers in that market, ‘Take it or leave it,’ ” he says.
Whether networks of providers will be diminished remains an open question, Hoadley says. Surveys cited in the Texas lawsuit also show that the use of in-network services rose in some of the states with benchmarks similar to the national law, though it’s unknown whether more doctors joined networks or more people shifted to in-network providers.
It’s also unclear whether the administration will consider the lawmakers’ concerns and change the regulations. Some Hill staffers involved in the pushback think the process is probably too far along to be changed and would have to be resolved in the courts. Others see a chance for a last-minute shift.
One House staffer notes that more than 70 Democrats complaining to a Democratic White House could have an impact.
“Combined with the whole craziness of the surprise-billing battle over the past few years and the legal threat, I think there’s plenty of ballgame left,” the staffer says.
In early July, as the covid-19 pandemic slammed rural America, the president of a small Kansas hospital sat down on a Friday afternoon and wrote the president of the United States to plead for help.
“I do not intend to add to your burden,” said Brian Williams, a retired Army lieutenant colonel and Desert Storm combat veteran. He said his hospital, Labette Health, was “like a war zone,” inundated with unvaccinated patients. A department head had threatened to resign, saying he could not “watch one more body be carried out.”
But Williams wasn’t seeking pandemic relief.
Instead, he asked President Joe Biden to confront pharmaceutical manufacturers Eli Lilly and Co., Novo Nordisk and others for refusing to honor a federal drug discount program for hospitals and clinics. The program gives Williams millions to pay staff members, ensure remote clinics remain open and provide charity care for patients unable to pay, he said.
“During a global pandemic, I think health care workers deserve a little bit more respect than to have resources taken away,” Williams said in an interview with KHN and InvestigateTV. “Every one of those [drug] companies, I looked them up, and they were not suffering tremendous [financial] losses, as hospitals were.”
Eli Lilly’s stock price increased nearly 40% and the company’s value rose by $59 billion in the first seven months of 2021. In the same period, Labette Health lost $1.2 million in revenue just from the missed savings on prescriptions, Williams said.
Lilly and other manufacturers, though, are holding their ground. They refuse to offer discounts to thousands of hospital-contracted pharmacies, saying the program has grown beyond its intended use and lacks federal checks and balances against duplicate discounts and other abuses. In lawsuits, they contend the billions in discounted sales they provide are rarely passed on to patients and instead are swallowed up by middlemen like contract pharmacies and third-party administrators.
Congress created the so-called 340B program in 1992 to provide extra funding for hospitals and clinics, especially those serving the poor and elderly. The purpose, lawmakers wrote, is to “stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”
Companies that want their drugs covered by Medicaid or Medicare Part B are required to offer 340B discounts, typically 25% to 50% off what they might otherwise pay. Hospitals and clinics buy the drugs at the discount and then are reimbursed by an insurance company, Medicare or Medicaid at the higher negotiated rate. The difference is kept by the hospital or clinic to use as it sees fit.
The law does not require patients to benefit directly, a nuance that has fueled great conflict about how the program works and should be regulated.
The 340B program’s reach exploded after federal regulators ruled in 2010 that hospitals and clinics could contract with an unlimited number of retail pharmacies such as Walgreens and CVS, which are paid a fee to dispense the discounted drugs. The growth, coupled with long-held questions about regulatory authority, puts the program at a tipping point, with patients stuck in the middle, industry experts say.
The number of pharmacies contracted to work with 340B hospitals to dispense the discounted drugs has soared. It’s reached more than 31,000 nationwide this year from just over 1,700 in 2010, according to an analysis of federal data by InvestigateTV and KHN.
One eye-popping statistic: The drugs purchased under 340B climbed to $38 billion in 2020 from $5.3 billion in 2010, according to the Health Resources and Services Administration, or HRSA, which oversees the program.
Interests on both sides of the program — hospitals and drugmakers — say they are at the mercy of a program designed with the best of intentions, now run amok, hijacked by for-profit companies and wealthy hospitals trying to profit from its largesse.
Adam J. Fein, chief executive of the industry research organization Drug Channels Institute, estimates that nearly half the nation’s retail, mail and specialty pharmacies now profit from 340B: The program, he said, is “essentially taking over the pharmacy industry.”
Legal fights about the program have landed before the U.S. Supreme Court, which is slated to hear arguments this month in American Hospital Association v. Becerra. The hospital industry is challenging a 2018 rule by the Trump administration to cut reimbursement on certain 340B drugs by 28.5%. As Biden’s HHS secretary, Xavier Becerra has upheld the rule.
Most important, the administration says, is to make sure providers use the savings to benefit patients. In an interview with KHN and InvestigateTV, Rear Adm. Krista Pedley, director of the Office of Special Health Initiatives, which oversees the program within Becerra’s agency, said, “We need legislative changes to help make that happen and require that.”
‘Deeply Troubling’
When Sen. Joe Manchin (D-W.Va.) asked during a June appropriations hearing about pharmaceutical companies denying the discounts, Becerra said the drugmakers are violating the law.
“I hope what you’ll do is give us more authority” to regulate the program, Becerra said.
Manchin responded: “I really think we could do that in a bipartisan way, because I’ll tell ya, we’re all being affected.”
As California’s attorney general, Becerra led a coalition of national lawmakers calling for the federal government to hold the manufacturers accountable for their “deeply troubling” actions to undermine the program. At HHS, Becerra put the companies on notice.
Drugmakers — Lilly, AstraZeneca, Novo Nordisk, Sanofi, Novartis and United Therapeutics — took the matter to court, filing several lawsuits. This month, a federal judge ruled that the companies are not required to provide the discounts. A judge in Lilly’s case criticized the “unilateral” action by drugmakers but ruled that the U.S. government’s effort to force them to honor the discounts was invalid.
Notably, U.S. District Court Judge Sarah Evans Barker in Indianapolis wrote that manufacturers believe they are “at the mercy of a system run amok” and that the program “can no longer be held together and implemented fairly” solely through the agency’s guidance and inconsistent messaging.
Becerra requested $17 million annually for 340B program oversight, a $7 million bump. The money would establish a dispute review panel and increase the audits the agency does on manufacturers as well as the providers.
Williams — at his small hospital in rural Parsons, Kansas — said the nearly $4.3 million the hospital gains each year from 340B has allowed him to add a full-time position for case management, increase staffing hours, develop after-school programs and open clinics in impoverished towns that lacked health care.
The hospital has about 20 pharmacies under active contracts, according to the federal database. Williams said it includes locally owned shops like Bowen Pharmacy as well as corporate giants like Walgreens and Walmart, sites that are convenient for patients. A pharmacy added in 2019 is in Frisco, Texas — a mail-order facility that ships specialty drugs directly to patients’ homes.
Eli Lilly’s stock price increased nearly 40% and the company’s value rose by $59 billion in the first seven months of 2021. They refuse to offer discounts to thousands of hospital-contracted pharmacies, saying the program has grown beyond its intended use and lacks federal checks and balances against duplicate discounts and other abuses. In lawsuits, they contend the billions in discounted sales they provide are rarely passed on to patients and instead are swallowed up by middlemen like contract pharmacies and third-party administrators.
Updated Cures 2.0 draft legislation to be unveiled Tuesday (Nov. 16) would fund and create several pandemic-related programs, including an immunization education campaign and a grant for organizations that help patients access and pay for care to develop their own response plan for future pandemics.
The updated bipartisan 21st Century Cures 2.0 discussion draft also keeps previously reported policies like requiring the president and HHS secretary to create a national strategy, including medical supply chain preparedness and data sharing, based on lessons learned from COVID-19.
The bill, spearheaded by House Energy & Commerce Reps. Diana DeGette (D-CO) and Fred Upton (R-MI), also would direct the HHS secretary to study so-called long COVID and create national, virtual meetings with plans, providers and medical and scientific researchers, among other experts, to discuss the lingering effects of COVID-19.
The six-month study would survey patients who self-identify as having long-COVID so the department can assess sources of health coverage, long-term care coverage, and disability coverage. The long-COVID learning collaborative would involve hospitals, physicians, nurses, patient and consumer advocates, data scientists, service providers and developers of diagnostics and therapeutics.
The discussion draft also creates a Pandemic Preparedness Rare Disease Support Program meant to help organizations create a pandemic preparedness plan that outlines how they will overcome current or future pandemic-related challenges.
The Health Resources and Services Administration in collaboration with the Centers for Disease Control and Prevention would distribute the annually appropriated $25 million fund to organizations that help patients and their families access and pay for medical care. Priority would go to organizations focusing on rare diseases or conditions as defined by the Federal Food, Drug, and Cosmetic Act, the draft says.
The bill also would allocate $25 million from 2022 through 2024 each to strengthen CDC immunization information systems and create a public education campaign on the safety and importance of vaccines.
Drug companies’ restrictions on 340B program discounts have cost covered hospitals and clinics $3.2 billion annually, according to a footnote buried in a recent federal court ruling on drug company lawsuits against HHS’ effort to make them give 340B discounts to all pharmacies that 340B hospitals contract with.
Since October, three federal courts have issued opinions on lawsuits by drug makers against the policy by the Health Resources and Services Administration, which oversees the 340B drug discount program.
The opinions differ. A federal judge in Indiana ruled the policy as “arbitrary and capricious.” A federal judge in D.C. ruled that the law doesn’t prohibit drug makers from imposing some conditions on the sales of discounted drugs, offering the friendliest of the three cases for the drug industry, while a federal judge in New Jersey sided with the government.
Lawyers at Foley Hoag pointed out a footnote in the opinion by the judge in New Jersey, which consolidated cases brought by Sanofi-Aventis and Novo Nordisk. Those companies sold a total 10.5 million units of 340B-priced drugs per month before they implemented their 340B restrictions, and after their policy took effect that number dropped to 2.9 million units.
The ruling cites an administrative record from HHS that suggests the restrictions cost the hospitals nearly 83 million units, or an annual loss of $3.2 billion.
“The stakes in these cases are therefore enormous, suggesting neither party is likely to back down anytime soon. What comes next is likely more agency action and, likely, appeals,” Foley Hoag Partner Ross Margulies wrote in a recent blog on the cases.
The results of the three cases leave room for the government to rework its case for enforcing compliance with its contract pharmacy policies. According to Margulies, the court rulings suggest that there is lawful support for HRSA’s contract pharmacy guidance, so drug makers might not be able to get away with imposing restrictions on discounts for long.
Still, drug makers aren’t likely to stop enforcing their restrictions, nor are they likely to pay the penalties HRSA tried to fine them while the government refines its approach.
“Manufacturers may have won the battle, but they have not won the war,” the Foley Hoag blog states. “While the immediate impact of the decisions is relief for the manufacturers from the Enforcement Letters, the decisions also suggests a path forward for HRSA to enforce its contract pharmacy guidance.”
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