Legislative & Regulatory Updates
Below are recent legislative and regulatory updates
related to the health care insurance industry
Pharma Lobby Denies Ongoing Negotiations with Administration on Drug Prices – Last week, representatives of the pharmaceutical lobby stated that they were unaware of a planned meeting at the White House to discuss lowering prescription drug prices, after President Trump said executives were coming to negotiate. “We’re working on drug companies on substantially lowering drug prices,” Trump said. “I’ve put out a favored nations clause, I’ve signed it. That means we get the lowest prices anywhere in the world, and we match whoever gets the lowest and the drug companies are having a real problem with that and they are coming in to see me, and we expect to get a very substantial price reduction of prescription drugs which has never been done before.” “We are not aware of any meeting,” said Nicole Longo, a spokeswoman for the Pharmaceutical Research and Manufacturers of America.
President Trump has previously claimed drug executives were ready to negotiate over his “favored nations” executive order, which purports to require drug makers to sell medicines in the U.S. at prices comparable to those in countries with more stringent price controls. Trump signed the order in late July, saying he would give drug companies a month to negotiate a less severe deal before it took effect, but the order has still not been released. Drug makers reportedly did provide the White House with a counterproposal to avert the favored nations executive order last week. The drug manufacturer’s plan reportedly would cut prices for a narrow slice of medicines — physician-administered drugs paid for by Medicare Part B — by 10 percent. It is expected that if the administration does push forward on Trump’s executive order it could involve months of rulemaking at various federal agencies.
Half of Americans Fear Bankruptcy Due to a Major Health Event – According to a new survey released by Gallup and WestHealth, 50% of all U.S. adults are concerned that a major health event in their household could lead to bankruptcy, an increase from 45% measured in early 2019. Concerns about medical bankruptcy have increased 12 and 9 percentage points, respectively, among adults aged 18-29 and 30-49. Fifty-five percent of both groups now report being extremely concerned or concerned that a major health event could bankrupt them. 15% of adults report that at least one person in their household currently has medical debt that will not be repaid — either in full or in part — within the next 12 months. The high cost of prescription drugs continues to be an issue for many Americans. According to the study, about one-third (35%) of Americans say that lowering the cost of prescription drugs is either the single most important issue (5%) or among the most important issues (30%) that will influence their vote in 2020. The study finds that Americans’ concerns about a major health event putting them in bankruptcy, while substantial in early 2019, were intensified because of the pandemic.
Study Finds Coverage Losses Might Not Be as High as Initially Anticipated – A new paper released by the Urban Institute finds that early data suggests that job losses and resulting health insurance coverage losses may not be as high as previously anticipated, but the study cautions that it is unlikely that the full picture of coverage losses will be available until far-reaching federal household surveys are released next year. The Urban Institute analyzed four separate studies that estimated the pandemic’s impact on employment and the employer-sponsored insurance market, including their own studies, as well as studies done by the Kaiser Family Foundation (KFF) and Families USA. The four studies came to substantially different conclusions as to the overall impact of the pandemic on coverage. The Urban Institute also examined recent household surveys with smaller sample sizes that indicated that net changes in insurance coverage thus far have been small. The data is still shifting, and it is important to wait for more definitive data points next year to get a fuller understanding of the pandemic’s effects on insurance coverage, the Urban Institute wrote. “Over the coming months, we will also learn about increases in Medicaid and marketplace enrollment from administrative data released by state and federal agencies and insurers…. Higher enrollment rates in those two programs may reflect two trends—reductions in income due to job loss and reductions in employer-provided health insurance.”
Poll Finds Many Americans Skeptical of any COVID Vaccine Released Before Election– According to a new poll released by the Kaiser Family Foundation (KFF), many Americans are deeply skeptical about any coronavirus vaccine approved before the November election, and only 42% would be willing to receive a vaccine should one be released before then. Six of 10 adults said that they were worried the FDA will rush to allow a vaccine because of political pressure. The Trump administration has suggested a vaccine could be ready by November, and the Centers for Disease Control and Prevention has instructed states to be prepared to distribute a vaccine by Nov. 1. Some Democrat lawmakers have raised concerns that President Trump is trying to accelerate vaccine approval to boost his reelection chances.
This week, the FDA announced that drug makers seeking an emergency authorization for a COVID-19 vaccine will have to meet a higher standard of efficacy than normally would be required for such a clearance. Typically, an emergency use authorization, or EUA, would require a company to show their product may be effective. Peter Marks, director of the FDA’s biologics office, said Thursday that the agency will require more robust data about how well a coronavirus vaccine works before granting an emergency waiver — something he called “EUA plus.” FDA Commissioner Stephen Hahn later stated that the agency planned to release guidelines for drug makers that aim to submit an EUA request for a Covid-19 vaccine shortly. FDA officials this week also released an opinion piece in USA Today, explaining that their decision making process during the pandemic is guided by evidence, and not politics.
Republican COVID Legislation Defeated in the Senate – A new COVID relief package introduced by Senate Republicans failed to advance last week. Senate Democrats unanimously voted to block the GOP’s slimmed-down COVID relief package with a 52-47 vote. Senate Republicans’ narrow bill would have protected businesses from lawsuits related to COVID, given states the option to extend reduced additional federal unemployment benefits, opened a second round of small-business loans, provided $16 billion for state COVID-19 testing, and set aside $31 billion for vaccine, therapeutic and diagnostic development and stockpiling. Bipartisan negotiations over a broader COVID-19 relief package have stalled in recent weeks. House Democrats passed an opening bid for another comprehensive relief package on May 15. The two biggest sticking points in negotiations have been around the proposed amount of additional federal unemployment benefits and aid to state and local governments. The November elections are less than 60 days away, leaving only a short legislative window left before many members of Congress leave DC for a final stretch of campaigning in their home states.
MedPAC Examines COVID’s Impact on Health Systems – A status report presented at the September Medicare Payment Advisory Commission (MedPAC) meeting, finds that for-profit health systems were able to weather the economic fallout caused by COVID-19 better than their nonprofit counterparts because of their greater ability to reduce expenses. Hospitals faced a massive dip in patient volume in March and April at the onset of the pandemic, which forced facilities to cancel or delay elective procedures. MedPAC looked at earnings for three large nonprofit systems in the U.S. and four large for-profit systems in the second quarter. Aggregate patient revenue for the nonprofit systems declined by $1.5 billion and this led to a $621 million loss for the systems in the second quarter compared to the same period in 2019. The four for-profit systems saw a $3.5 billion decline in patient revenue. However, the systems posted an increase of $634 million in operating income. “For-profit systems substantially reduced expenses in the second quarter, in aggregate reduced by $2.3 billion and that made up for lost revenue,” said Jeff Stensland, a MedPAC staff member. Nonprofit systems only saw a $13 million decline in expenses. MedPAC also found that for-profit systems received more relief funding ($1.9 billion compared with $782 million) from a $175 billion federal provider relief fund created by the CARES Act. MedPAC did not name the systems that it analyzed, nor did it delve into what expenses were reduced and how.
Federal Government Begins Risk Corridor Payments – Reports indicate the federal government has begun making risk corridor program payments to health insurers for coverage provided in 2014, 2015, and 2016. In April, the Supreme Court ruled that the government had no legal standing to stop making risk corridor payments, even though Congress failed to provide funding. This decision gave health insurers permission to seek risk corridor payments from the Judgement Fund, which the Department of Treasury uses to make payments to plaintiffs who win judgements against the U.S. government. So far, the now-defunct Land of Lincoln Mutual Health Insurance Company received $129 million to meet its liquidator obligations, while Moda Health Plan received $249 million. The past-due risk corridor payments are separate from unpaid cost-sharing reduction (CSR) payments (see below). More from Think Advisor.
Court Rules Insurers Are Owed Unpaid Cost-Sharing Reductions – A federal appeals court ruled on August 14, 2020, that the Trump administration violated the law when it stopped paying cost-sharing reductions (CSRs) to insurers in 2017. In a separate ruling, the same court said that insurers should not receive a “windfall” due to this ruling and remanded the case to a lower court to determine damages, recommending that payments to insurers for 2018 be reduced by the amount insurers recouped through silver loading. In its ruling, the appeals court cited the Supreme Court decision in the risk corridor case, stating it “makes clear that the cost-sharing reduction reimbursement provision imposes an unambiguous obligation on the government to pay money and that the obligation is enforceable through a damages action in the Court of Federal Claims under the Tucker Act.” The lower court must now determine the amount the issuers in question are owed for 2018. More from Modern Healthcare, Fierce Healthcare, Health Affairs.
Supreme Court to Hear ACA Case on November 10 – Influencing all of the above post-election health care scenarios is Supreme Court The Supreme Court announced oral arguments are set for November 10, a week after the election, in the case seeking to overturn the entire Affordable Care Act. The suit, led by Texas and other Republican-led states, argues that when Congress eliminated the individual mandate penalty in 2017, it rendered the entire law unconstitutional. Most legal observers believe the Court is likely to uphold the law, especially since Chief Justice John Roberts has voted to uphold major provisions of the law on two prior occasions. A decision from the Court is expected in spring 2021. More from Politico, New York Times, The Hill, Bloomberg News
View Full Blog