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Health Policies In and Out of the CR

Drew Keyes
Former Senior Policy Analyst

Drew Keyes is a former Senior Policy Analyst at the Paragon Health Institute. Drew brings nearly a decade of experience as a Congressional staffer, where he worked to advance conservative, free-market principles.

Brian Blase
President at Paragon Health Institute

Brian Blase, Ph.D., is the President of Paragon Health Institute. Brian was Special Assistant to the President for Economic Policy at the White House’s National Economic Council (NEC) from 2017-2019, where he coordinated the development and execution of numerous health policies and advised the President, NEC director, and senior officials. After leaving the White House, Brian founded Blase Policy Strategies and serves as its CEO.

The House plans a “laddered” approach to a Continuing Resolution with a vote scheduled later today. This newsletter, authored by Drew Keyes, focuses on the health policy extenders in the legislation. It breaks down what policies are being extended, why there is pressure to address them, and what’s left out.

Public Health Extenders

Community Health Centers (CHCs): The bill extends three provisions related to CHCs that were originally enacted under the Affordable Care Act (ACA). Specifically, the bill extends the Teaching Health Centers Graduate Medical Education program and funding for CHCs and the National Health Service Corps (NHSC).

Why now? Unfortunately, the ACA shifted most funding for CHCs and NHSC out of discretionary spending and into mandatory direct spending. As such, should these provisions expire, they would be unaddressed by the underlying CR.

Special Diabetes Programs: The legislation further extends two programs with authorizations that expired at the end of fiscal year (FY) 2023. These programs – the Special Diabetes Program for Type 1 Diabetes at the National Institutes of Health (NIH) and the Special Diabetes Program for Indians at the Indian Health Service (IHS) – provide direct funding for grants to study and address diabetes.

Why now? These programs are outliers for NIH and IHS, which typically receive funding through annual discretionary appropriations. As such, should they expire, funding for these programs would expire as well.

PAHPA Provisions: The Pandemic and All-Hazards Preparedness Act (PAHPA) expired at the end of FY23. While most of the functions authorized by PAHPA can continue through unauthorized discretionary appropriations, some provisions necessitated separate consideration.

  1. Temporary Reassignment and National Disaster Medical System: The legislation would extend authority for the appointment of disaster-response personnel to aid in operating the National Disaster Medical System and authority for states using federal emergency funds to temporarily reassign personnel during an emergency.
  2. Nondisclosure of Information and Limited Antitrust Exemption: The legislation addresses two provisions first enacted under the original PAHPA in 2006. The first provision allows the Secretary of the Department of Health and Human Services (HHS) to exempt certain information related to biodefense from the Freedom of Information Act. Further, the legislation grants the HHS Secretary limited antitrust exemption authorities to facilitate communication to improve the development of medical countermeasures.
  3. National Advisory Committees: The bill would extend several advisory committees that could not function without extended authorization. Specifically, it would extend the National Advisory Committee on Children and Disasters, the National Advisory Committee on Seniors and Disasters, and the National Advisory Committee on Individuals with Disabilities and Disasters.

Why now? These provisions are authorities and not funding streams. As such, should they expire, they could affect the ability of the federal government and state governments to respond to emergencies, and of the federal government to facilitate countermeasure development. The National Advisory Committees, without an extension, may be forced to disband.

Medicaid

Disproportionate Share Hospital (DSH) Cuts:  In the ACA, Congress reduced federal DSH allotments beginning in 2014. DSH payments theoretically support safety net hospitals that provide substantial uncompensated care, but Paragon research from Brian Blase has found DSH funding is very inequitable and the entire program needs significant reform. The ACA included these cuts because the law’s enormous new spending to enroll people in Medicaid and the exchanges would significantly decrease the uncompensated care provided by hospitals. Hospitals’ political power has meant those cuts have never been implemented, and Congress has already delayed them nine times.

Why now? Hospitals argue that the cuts, which are slated to total $8 billion for each of FY24-FY27, would be catastrophic.

Medicare Extenders

The bill includes two extenders that have become recurring issues in Congress – an extension of the work geographic practice cost index (GPCI) floor and a delay in the phase-in of clinical lab payment adjustments originally required by the Protecting Access to Medicare Act (PAMA). 

Why now? The Medicare Physician Fee Schedule sets payment rates based on the amount of physician work, practice expenses, and malpractice costs associated with each service, which are each adjusted for geography. Congress established a temporary floor for the physician work GPCI that expires at the end of this year. The CR would extend it through January 19, 2024. Without this floor, many providers, particularly in rural areas, would be paid under the normal formula for providers resulting in a Medicare payment reduction.

In 2013, the HHS Inspector General confirmed that Medicare chronically overpays for lab tests compared to the private sector. In 2014, Congress passed PAMA requiring that the Centers for Medicare and Medicaid Services base lab pay on the lower commercial rates. Unfortunately, the full impact of this provision has been delayed, largely because of independent labs’ concerns that CMS uses faulty methodology. Congress certainly has a role to ensure the methodology implemented by CMS meets the intent of the statute, but policymakers should also be cognizant that industries moving away from an excessive payment system will likely never be fully content with the replacement and will commonly seek to perpetually delay implementation.

What’s Out?

Two less pressing policies being promoted by provider groups were not included in the legislation. The first would mitigate some of the 3.4% decrease to the Medicare Physician Fee Schedule’s conversion factor, which is used to calculate what Medicare pays doctors. However, it is important to note that Medicare instituted this adjustment as offsets to increases in payments for other services, like primary care and longitudinal care.

The second would extend bonus payments for Advanced Alternative Payment Models (APMs), which aim to increase incentives for clinician participation. Paragon’s Joe Albanese has analyzed both the conversion factor and Advanced APMs. In short: not including these policies as habitual extenders may make for better policy in the long run. Habitually mitigating CMS’ offsets isn’t sound policy for Medicare’s long term fiscal health, and the Advanced APMs have largely failed. Long-term fixes to these issues, outside the chaos of end-of-year funding legislation, could yield better results.

Several other health care issues are left unresolved as the first session of the 118th Congress closes, including the recently expired PAHPA. The SUPPORT Act, which addresses substance use disorder and opioid recovery, has also lapsed. Other reforms, like those addressing Pharmacy Benefit Managers, transparency, and site-neutral payments in Medicare, had momentum but stalled in Congress. But these larger policies will likely be pushed into the second session of Congress, or beyond. And of course, Congress is paying little attention to the most significant problem—the major contribution of federal health programs to our nation’s rising and unsustainable federal debt.

Conclusion

Although the broader debate is not focused on health policy extenders, they are an important part of end of year policymaking. Paragon will continue to provide timely, understandable information to policymakers and the public. 

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