In early February, Congress passed a massive bipartisan budget deal to fund the government through March 23, 2018, suspend the debt ceiling until 2019, raise budget caps by nearly $300 billion over two years, and fund various parts of the government.
Naturally, passage of the budget agreement means that quite a few health care priorities made their way into the law. For example, several health care “extenders” were reauthorized, community health centers (CHCs) were funded, cuts to safety net hospitals were delayed, as were cuts to the CHRONIC Care Act and the Part B Improvement Act, while revisions to the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) were made.
Then, the deal reached in the Senate added $6 billion in funding to address opioid and mental health treatment, $4 billion for VA hospitals, and $2 billion in new funding for research at the National Institutes of Health (NIH). The Senate deal also extend funding for the Children’s Health Insurance Plan (CHIP) by an additional four years — a ten-year extension when combined with the six-year reauthorization secured last month.
Interestingly, the agreement also permanently repeals Medicare’s moribund Independent Payment Advisory Board (IPAB), while also making adjustments to the prescription drug “donut hole” that will require pharmaceutical companies to provide steeper discounts for seniors in the coverage gap.
IPAB Repealed
Before it could go into effect, Congress included the repeal of the unpopular Affordable Care Act (ACA) Independent Payment Advisory Board (IPAB), which would have been responsible for identifying potential Medicare savings to Congress. Congressional representatives of both parties had disdain for IPAB because it had the ability to limit Congress’ power over its recommendations. While Medicare spending has yet to hit the designated threshold that would have triggered the creation of the panel, the most recent Medicare trustees report estimated that it may have been enacted as soon as 2021.
The repeal of IPAB is likely to benefit drug makers and private Medicare plans as without the repeal, the Board would have been precluded from rationing care, increasing beneficiary spending, or cutting payments to hospitals and hospices.
The Donut Hole is Closed
The bill increased the discounts that drug companies pay to beneficiaries whose drug costs fall into the coverage gap of Part D, from the current 50 percent level to 70 percent. This change is estimated to save the federal government $10 billion over the course of a decade but is expected to cost drug companies close to $40 billion over that same decade.
Part D plan sponsors, on the other hand, had a decrease in their liability from the 25 percent they were expected to pay to begin in 2020 all the way down to 5 percent. The hole will remain the same for patients – 25 percent.
Changes to MACRA
The Medicare Access and CHIP Reauthorization Act (MACRA) had several changes made to it by way of the budget deal, including excluding the cost of Part B drugs from the calculation of doctor pay, delaying the use of cost measures in doctor performance scores, giving CMS three more years to transition to the performance threshold, and allowing the Physician-Focused Payment Model Technical Advisory Committee (PTAC) weigh in earlier on the payment models that providers design.
Physician advocate groups had been lobbying for the ability to exclude the cost of drugs they administer from the calculation of their Merit-Based Incentive Payment System (MIPS) scores because they were concerned that specialty therapies do not always have consistent coverage in reimbursement. In addition to listening to the concerns on that front, lawmakers also allowed CMS the flexibility to determine the weight of the cost performance category between 10 percent to 30 percent for three years.