The Senate is getting into the nitty-gritty of what exactly will be included in a massive $3.5 trillion infrastructure package that seeks to make major reforms to Medicare.
And that means healthcare industry groups are watching very closely.
Democrats have called for the $3.5 trillion package to tackle drug prices and add dental, hearing and vision benefits to Medicare, as well as efforts to expand coverage. But the actual legislation on how to do that will now be crafted by Senate committees and considered by lawmakers when they return from their August recess next month.
Democrats aim to use a procedural pathway called reconciliation that lets budget bills pass the Senate via a simple majority and avoid a legislative filibuster. The Senate took its first step toward creating the package when it approved a budget resolution earlier this week.
Here are some of the major issues several payer and provider groups are keeping an eye on and what they want to include in the final package.
Expanding healthcare coverage
Several provisions in the $3.5 trillion package aim to expand health insurance coverage, but how that can happen is still going to be hammered out.
Payers and provider groups were in favor of making permanent enhanced income-based subsidies for Affordable Care Act (ACA) exchange coverage. The American Rescue Plan Act boosted subsidies but only for the 2021 and 2022 coverage years.
But the ACA enhancements aren’t the only coverage expansions that Congress is mulling.
The framework for the $3.5 trillion package calls for legislation to close the Medicaid coverage gap, which refers to low-income residents that don’t qualify for ACA income-based subsidies but reside in states that didn’t expand Medicaid under the ACA.
Some groups were surprised the issue has gotten so much traction in Congress over the past several months.
“The momentum for that has been pretty impressive,” said Dan Jones, vice president of federal affairs for the Alliance of Community Health Plans (ACHP), which represents nonprofit health plans.
But now committees will decide how the coverage gap gets filled, and some groups are pushing for a quick solution to the issue.
Several Senate Democrats introduced legislation last month that would create a new program resembling Medicaid through which residents in states that didn’t expand the program can get coverage. However, such a program could take a while to set up, said Chip Kahn, president and CEO of the Federation of American Hospitals (FAH).
Kahn instead endorsed a stopgap that would make people in the coverage gap eligible for subsidies on the ACA’s exchanges.
“If we make these people eligible, they would be fully subsidized and have good coverage,” he told Fierce Healthcare.
The additional subsidies could run for a few years and give more states time to expand Medicaid under the ACA, Kahn said. The American Rescue Plan Act did increase the federal matching rate for Medicaid for newly expanded states, but the sweetener hasn’t enticed more states.
“The great opposition to ACA is blowing over to an extent,” he said. “We will have to wait and see how it plays out, but we could find other ways to get those other states to move.”
Finally tackling drug prices, but how?
Senate Democrats signaled that they want to address drug prices in the infrastructure bill, but to what degree remains uncertain.
Progressive lawmakers want to give Medicare broad authority to negotiate for lower drug prices, a desire shared by President Joe Biden. Implementing price negotiation authority could also produce savings that could help pay for the package. But more moderate members could balk at broad negotiation authority.
Some groups see an opportunity to get more bipartisan proposals to be included into the bill.
The advocacy group Campaign for Sustainable Rx Pricing is pushing lawmakers to adopt a series of bipartisan reforms that include capping out-of-pocket drug costs for seniors. The campaign is a coalition of hospital, pharmacy, payer and other provider groups as well as advocacy groups such as AARP.
“We called for action on solutions that have garnered bipartisan support in the past,” said spokesman Jon Conradi in an interview with Fierce Healthcare.
Another potential issue is forcing drugmakers to pay a larger share of coverage in the catastrophic phase in Medicare Part D. Drugmakers now cover 50% of the costs of their products when a beneficiary reaches the catastrophic phase, which is the maximum out-of-pocket limit beneficiaries pay for drugs.
“Now is the time for action,” Conradi said. “There is truly unprecedented momentum for Congress to act on prescription drug prices.”
Ditching the rebate rule for good
Drug price negotiations isn’t the only item Congress has identified as a potential pay-for to help cover the costs of the package.
Several payer groups are hoping Congress also decides to fully repeal a controversial Trump-era rule that eliminates safe harbor protections for Medicare Part D drug rebates and creates a new safe harbor for discounts at the point of sale.
The bipartisan infrastructure package that passed the Senate recently includes a three-year delay in implementing the rule until 2026. The delay netted roughly $50 billion in savings for the package.
Now, payers are hoping to put the final nail in the coffin.
Conradi said the campaign wants the rule to be fully repealed because it can “increase overall drug costs.”
The Pharmaceutical Care Management Association, which represents pharmacy benefit managers, called for a permanent repeal.
“We are encouraged that there is bipartisan support for repealing the Medicare rebate rule, which if allowed to take effect will drastically increase premiums for seniors and other Medicare Part D beneficiaries,” said President and CEO JC Scott in a statement after passage of the bipartisan infrastructure package.
Payer and provider groups are also keeping a watchful eye on any other pay-fors that could be employed as committees start drafting the legislation.
“Any changes to the Medicare Advantage program are things we are paying close attention to,” said Jones of ACHP. “Those are always things that we want to keep a close eye on.”
FAH was disappointed that the bipartisan infrastructure package restarted a 2% sequester cut to Medicare payments next year as a pay-for.
“I don’t anticipate on the hospital front any major changes on the payment side of this bill,” Kahn said. “Until the fat lady sings, you need be wary.”