This afternoon, the Labor, Health and Human Services and Education subcommitee approved the FFY 2017 HHS spending plan. Tonight's approval marks the first time since FFY 2008, the upper chamber's subcommittee has accomplished this feat. With several Senators in close races, the need to accomplish something in a bipartisan and effective manner overwhelmed the usual inertia.
We are still early in the process, of course, but there are a few things in this vote worth mentioning:
Zero funding for IPAB accompanied by this explanation in the Chairman's press release: "Funding for IPAB is eliminated. IPAB is a 15 member board of unelected bureaucrats created by the ACA to achieve a reduction in Medicare spending through the only means they have – rationing care."
Now, a spending deal for FFY 2017 won't get finalized before the Office of the Actuary has to report to the Secretary of HHS whether or not IPAB is triggered, giving today's vote limited power to calm the angst that might occur between now and the end of July. So, for what it is worth, our view is that the Office of the Actuary will report to the Secretary that IPAB is not triggered. We believe that because the law affords HHS a bit of discretion in calculating the Medicare per capita growth rate. Specifically, the Office of the Actuary can "take into account any delivery system reforms or other payment changes that have been enacted or published in final rules but not yet implemented as of the making of such [Medicare per capital growth rate] calculation." Given the pace of reform at HHS, that is a whole lot of stuff that gets taken into consideration.
If we are wrong, the vote today and what we anticipate will be complete agreement from the rest of the Senate and the House, will serve as a backstop. The zero funding of IPAB is good news for all health care but particularly Medicare Advantage Plans and drug manufacturers.
Increased funding of $5 million for the Medicare Office of Hearings and Appeals. The next steps in a lawsuit between the American Hospital Association and HHS depend on getting the backlog of appeals (mostly attributable to the Recovery Audit Program) under control. If HHS cannot, it could be bad news for HMSY, COTV, PFMT and GIB if the court is forced to intervene with a writ of mandamus. See more on that issue here.
Increased funding for NIH. An increase of $2 billion for Alzheimer's, Precision Medicine research and combatting drug resistant antibiotic drugs among other things. This is the second big year in a row for NIH funding. The impacts are not immediate but should be long lasting in the form of breakthrough medicines and other therapies.
Budget Neutrality for Risk Corridor Program. This marks year three for the budget neutrality language for the risk corridor program. Some insurance companies had been optimistic last year and HHS even suggested they would look for ways to make insurers whole. Not gonna happen. Ever. So, everyone is suing. This legislative action makes success in court, pretty unlikely, however.
Full text will be available at full committee mark-up on Thursday. Riders may be considered then so we will keep you posted as things unfold.