No Matter What, Congress will Act on Health Care Next Year

When Congress passed the Medicare Access and Children's Health Insurance Program (CHIP) Reauthorization Act (MACRA) last year, House Energy and Commerce Committee Chairman Fred Upton (R-MI) said "stick a fork in it; it's finally done." While some elements—especially Medicare's long-flawed Sustainable Growth Rate formula—were permanently remedied, other provisions were temporarily addressed by the bill and come due again in September or December of next year.

So, while the presidential candidates and others consider broad-based health care policies, the passage of which in the near term is dubious, there is a wide array of issues we can bank on Congress taking up, likely in one, consolidated legislative package.

Funding for the CHIP program may be the foremost among these issues, accompanied by a batch of expiring Medicare "extenders" that Congress typically addresses before they lapse. These provisions, which used to reliably hitch a ride on perennial "doc fix" legislation, are expected to travel together in a bill that, along with Food and Drug Administration user fee reauthorizations, is among a few must-pass health bills in 2017. The package will begin to take shape early in the next Congress and ideally gain focus by spring to give states lead-time for budgetary planning, especially with regard to the CHIP and Medicaid components.

Last year, Senate Democrats pushed for a four-year CHIP funding reauthorization, which would have aligned CHIP funding with the Affordable Care Act's reauthorization of the program itself through 2019. Their efforts fell short in MACRA, although a two-year funding reauthorization keeps the program in the clear until Sept. 30, 2017.

While it's early to predict what will be included, we anticipate the following potential items will likely be considered in this CHIP funding and Medicare extenders package:

CHIP Funding Reauthorization

Extending CHIP funding for another two years would cost in the neighborhood of $7 billion, based on MACRA's score. Depending on how Congress disposes of other policy "levers," that may be the low water mark for next year's bill. The debate has already been playing out in the Medicaid and CHIP Payment and Access Commission (MACPAC), where commissioners have floated anywhere from two to 10 year funding extensions but seem to be converging on suggesting a five-year funding reauthorization. They will finalize their recommendation in December for a March 2017 Report to Congress.

Another key decision for MACPAC—and perhaps the reauthorization package—is whether to let the ACA maintenance-of-effort (MOE) provision lapse after fiscal year (FY) 2019. The CHIP MOE requirements bar states from reducing eligibility levels for the program or risk losing some or all of their Medicaid funding. MACPAC has also raised some wildcard considerations, such as allowing optional CHIP-financed subsidies for eligible children to obtain Exchange coverage and broader State Innovation Waivers for integrating CHIP, Medicaid, and Exchange coverage for children. These concepts are just emerging, although they suggest that CHIP policy changes could be afoot if the funding reauthorization invites a broader look at the program, in the context of this post-ACA world.

For more discussion on the politics and policy of CHIP, see this recent Health Affairs article on the subject. Many of the issues I posed in my blog post regarding the program on these pages two years ago are also still ripe for debate next year.

Medicare Extenders

Several expiring Medicare provisions will be considered for this package as well. If they are maintained for another two years, the approximate cost will be around $6 billion. Among these is the physical, occupational, and speech language therapy cap exception process created by Congress in 2006, which enables Medicare beneficiaries to exceed the annual per-patient cap for therapy based on medical necessity ($1.9 billion; expires December 31). Others, with their approximate two-year cost and expiration date in parentheses, include:

• Geographic Practice Cost Index (GPCI) floor, which sets at 1.0 the variable Medicare uses to adjust the work component of physician payments based on where they live, basically exempting physicians in certain, often rural, areas from any adverse consequence from this policy ($1.1 billion; expires December 31);
• Medicare low-volume hospital add-on payments, which help offset the costs of operating a hospital that has a low number of Medicare discharges ($1.1 billion; expires September 30);
• Add-on payment for ground ambulance services, including in super rural areas ($400 million; expires December 31);
• Funding for National Quality Forum (NQF) review, endorsement, and maintenance of quality measures and the ACA-defined pre-rulemaking process through which the NQF-convened Measure Applications Partnership provides input to the Department of Health and Human Services ($100 million; expires September 30);
• Medicare-Dependent Hospital Program extension for rural hospitals with no more than 100 beds serving a high percentage of Medicare beneficiaries ($400 million; expires September 30);
• Funding for outreach and assistance to low-income populations, including State Health Insurance Programs, Area Agencies on Aging, and Disability Centers, and the National Center for Benefits Outreach and Enrollment ($100 million; expires September 30);
• Medicare add-on for home health services in rural areas ($200 million; expires December 31); and,
• Authority for Medicare Advantage Special Needs Plans, which allows plans to limit enrollment to certain high needs populations ($600 million; expires December 31, 2018).

Other Extenders

A host of other provisions expiring on September 30, 2017, could find their way into the package, totaling about $9.75 billion. This includes funding for the following (estimates again reflect two-year reauthorizations):

• Additional funding for Community Health Centers, the National Health Service Corps, and Teaching Health Centers ($8 billion);
• The Indian Health Service's Special Diabetes Programs ($600 million);
• Abstinence-only education programs ($100 million);
• "Personal Responsibility" Education Programming for states and other groups to address teen pregnancy and HIV/STD prevention, youth development, and adult preparation ($100 million);
• Family-to-family health information centers at the state levels, which assist families with children with disabilities or special needs (<$50 million);
• Health Workforce Demonstration Project for Low-Income Individuals, assisting with education and training for in-demand health care positions ($200 million); and,
• Maternal, Infant, and Early Childhood Home Visiting Programs providing states, territories, and tribes with funding for evidence-based in-home visiting programs for at-risk families ($700 million).

Outlook and Political Considerations

So, that's a lot. This will likely be a $20 billion-plus package, which, by the way, will need to be paid for with corresponding savings, raising the notorious "offset roulette" dance that health care stakeholders grew accustomed to during the doc fix era.

Meanwhile, depending on what takes shape during the upcoming lame duck session, there could well be issues leftover from this year's deliberations around hospital policies included in a House-passed package this summer, durable medical equipment competitive bidding, electronic health record meaningful use criteria, and the just-announced Finance Committee chronic care package.

But, make no mistake, CHIP will likely be the hub of this effort, garnering the most debate and public interest. While the program's goal of insuring low-income children and pregnant women has bipartisan support, the duration of funding reauthorization, pay-fors, and stringency of eligibility parameters are among key issues shaping the debate.

Oh by the way, potential President Hillary Clinton considers CHIP to be a key accomplishment of her tenure as First Lady. Of course, current Finance Committee Chairman Orrin Hatch, also likes to take some credit for the program. Indeed, it was created on a bipartisan basis in 1997.

A Clinton Administration is likely to expend some political capital ensuring CHIP funding reauthorization is on track and reflects Democrats' priorities, including sustaining the ACA's 23 percent enhanced match for program enrollees.

Under a Trump Administration, which likely portends continued Republican majorities in Congress, CHIP funding reauthorization may reflect tighter eligibility parameters and a revisiting of CHIP's role vis-à-vis Medicaid, employer, and Exchange coverage.

Stay tuned. Now that annual SGR patches have been put to rest, this is one of the bigger health bills that is a sure bet next year.

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