Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Passage of FY 2013 CR Avoids Government Shutdown

After the Senate amended and voted 73-26 to approve H.R. 933, the FY 2013 continuing resolution (CR) funding federal agencies through September, the House voted 318-109 to send the CR to the President for his signature. With the current CR expiring on March 27th, the compromise bill passed by Senate Democrats and House Republicans avoided a potential shutdown of the federal government and allowed both chambers to go ahead with their scheduled Spring recess this week. The legislation includes full-year Defense, Military Construction/Veterans Affairs, Agriculture/FDA, Commerce/Justice/Science and Homeland Security Appropriations bills. Nonetheless, the bill does not alter sequestration cuts of $85 billion and the discretionary spending limit of $984 billion which affects all agencies. The 2% reduction in Medicare reimbursement rates mandated under the Budget Control Act (BCA) will also take effect for the remainder of FY 2013. Among other things, the legislation: corrects a $40 million flaw under sequestration, thus allowing the FDA to continue collecting all user fees at current law levels; cuts $10 million from the PPACA Independent Payment Advisory Board; and increases NIH funding by $71 million. Of note, the Senate avoided a dispute with the House by refusing to include: an additional $949 million requested by the Administration to implement health insurance exchanges and other provisions under the PPACA; and a Harkin amendment to increase NIH funding by $211 million. The House also rejected alternative budget plans offered by the Republican Study Committee (which would raise the Medicare eligibility age from 65 to 70 over time) and another by House Democrat leaders (that among other things would maintain the PPACA).

House Adopts FY 2013-2023 Budget Resolution

On Thursday by a vote of 221-207, the House adopted H. Con. Res. 25, setting forth budget levels for fiscal years 2014 through 2023. In general, the budget resolution would eventually produce a balanced budget by reducing federal spending by $4.6 trillion over ten years ($2.7 billion from federal health programs) and direct the Ways and Means Committee to come up with tax reform provisions without changing projected revenues under current law. Of note, the plan would place a discretionary spending cap of $966 billion for FY 2014 and require any increase in mandatory spending to be offset by spending reductions. Among the major health related provisions, the budget resolution would: provide for a Medicare premium support system beginning in 2024 for those born in 1959 or later that would give beneficiaries a subsidy equal to “average plan cost” to purchase a private plan or a traditional Medicare option; save $750 billion by block-granting Medicaid and capping increases using population growth, not medical prices; repeal the PPACA (except for $716 billion in certain Medicare savings under the program); and repeal the SGR formula and replace the current Medicare physician payment system; etc. Rejected was the Democrat alternative which would: retain the PPACA; repeal the 2% Medicaid reimbursement cuts mandated under sequestration; retain Medicaid without a block-grant; provide for a Medicare physician payment fix at a cost of $138 billion over 10 years; cut Medicare spending by $141 billion by giving committees options to extend Medicaid drug rebates to Medicare and to adopt MedPAC savings recommendations, etc.

Senate Adopts First Budget Plan Since 2009

Early Saturday morning, by a 50-49 vote, the Senate adopted S. Con. Res. 8, which sets forth FY 2014 budget levels for Senate committees, revises appropriate budgetary levels for FY 2013 and provides guidelines for spending and revenues in the FY 2015-2023 period. Opposed by all Senate Republicans, the budget resolution also received “no” votes from Democrat Senators Baucus (MT), Begich (AK), Hagan (NC) and Pryor (AR). By adopting budget resolutions before April 1, the Senate (and House) avoided having their members’ pay placed into escrow. In general, while the budget resolution would reduce the deficit by $1.85 billion from FY 2014-2023 by means of both spending cuts and revenue increases, a $566 billion deficit would remain at the end of the period. In addition, the budget plan would replace the $1.2 trillion in mandated cuts under sequestration, including the 2% cut in Medicare reimbursement rates, with a balance of targeted spending cuts and new tax revenues. Notable health-related provisions include: a $265 billion reduction in Medicare spending and a $10 billion reduction in Medicaid spending that does not affect beneficiaries; a Stabenow amendment to “establish a deficit-neutral reserve fund (DNRF) to protect Medicare’s guaranteed benefits and to prohibit replacing guaranteed benefits with the House-passed budget plan to turn Medicare into a voucher program”; a Johanns (R-NE) amendment to “establish a DNRF to restore family health care flexibility by repealing the health savings account and flexible spending account restrictions under the PPACA”; and a non-binding Hatch (R-UT) amendment to repeal the medical device tax under the PPACA; etc. Showing that the two Houses are unlikely to agree on a mutual budget resolution, the Senate voted 40-59 to reject an amendment that would have substituted the Ryan House-passed budget resolution for the Senate provisions. Five Republicans voted against the Ryan budget, including Senators Collins (ME), Cruz (TX), Heller (NV), Lee (UT) and Paul (KY). Of note, the Congressional Budget Office (CBO) would be directed to: report changes in direct spending and revenue associated with the PPACA, including the net impact on the deficit, both with on-budget and off-budget effects; and provide an analysis of the budgetary effects of 30%, 50%, and 100% of all Americans losing their employer sponsored health insurance and accessing coverage through federal or state exchanges.

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