Federal Government Relations

This week, we explore the Administration's proposed rule related to AKS safe harbors and what it means for the drug pricing debate. On Capitol Hill, Democrats in both chambers are beginning to examine behaviors by various companies in an effort to drive home the need for additional oversight. It's clear that drug pricing is going to be a hot topic for this Congress. What's unclear is whether both sides can find consensus in proposals that lower drug costs

The shutdown fight is over for now and Congress is ready to get the work of the 116th Congress underway. This week, there will be four relevant hearings to health care stakeholders, two of which will center around prescription drug pricing. The other two will look at pre-existing conditions and community health center related policies. On the regulatory side, we wait and see if the Administration will be putting forth any regulations in this space, in particular the discount safe harbor rule.

While Congress is still mired in a partial government shutdown, the Administration is continuing to put out relevant health care regulations and approving new Medicaid work requirements.

On Friday, December 14th, Judge O’Connor, a Texas Federal District Court Judge, ruled on the case Texas vs. Azar. As background, Texas vs. Azar was filed by 20 Republican state attorneys general and governors. The plaintiffs challenge the constitutionality of the individual mandate in the Affordable Care Act (ACA) and argue that since the individual mandate has been repealed, or more technically zeroed out, the rest of the ACA must be struck down. They argue that the individual mandate cannot be severed from the ACA given its key structural role in the law. The Department of Justice agreed with some, but not all parts, of this argument, and sixteen states and DC are defending the ACA.

This week, Congress is in session for what should be the last week of the 115th Congress. However, the spending fight that has been raging since the last continuing resolution is no closer to being wrapped up than it was a month ago. Additionally, we watch to see if the IMPROVE Act can be finalized this week.

Congress has two weeks to finish up a partial spending deal. For many health care stakeholders, the focus is on finishing the reauthorization of the Money Follows the Person program and passing the ACE Kids Act. While there are other legislative items in the health care space still pending, the current thinking is that policy changes around the doughnut hole or the medical device tax will be left unaddressed.

Conventional wisdom holds that 2018 will be a wave election year for Democrats. When one party controls both chambers of Congress and the White House, it is typical that the opposition party makes gains in the midterm elections. Beginning with 1994, at least one chamber of Congress has flipped in each midterm election, save 1998. So far, 2018 seems to fit the trend. Democrats have performed well in several recent special elections, even in deep red districts, and the generic congressional ballot currently has Democrats up. Still, Republicans have several structural advantages that Democrats lack. House districts across the country are drawn in a way that benefits Republicans, giving them a disproportionate share of “safe” seats, and Democrats are tasked with defending 26 seats in the Senate compared to the Republican 9. That being said, the most likely scenario two months from Election Day is that Democrats will take the House. The Senate remains a coin flip.

With Labor Day now behind us, Washington returns to a fairly significant workload for September and October in the run-up to the midterm elections in November. The House is in session for the next two weeks before returning home for a state work period (Sept. 17-21). Theoretically, they will then return to DC for three weeks—through October 12—but there's a good chance they will adjourn before that date so that members can campaign in their districts. Although not exhaustive, the following is ML Strategies’ guide on what to watch over the next few months from Capitol Hill and the Executive Branch agencies. While all issues addressed in this update may not be completed before the midterms, we anticipate that they will take up the bulk of the legislative and regulatory agenda. With that said, the Senate has taken up the nomination of Brett Kavanaugh to serve on the Supreme Court and that process has the potential to impact the agenda on other items. With that said, the Senate has taken up the nomination of Brett Kavanaugh to serve on the Supreme Court, and that process has the potential to impact the agenda on other items. We expect the Senate, which remained in session throughout its normal recess period in August, will likely continue to focus on Judicial and Executive branch nominations.

Congress has continued its 57-year tradition of passing an annual defense authorization bill with the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 finalized by Congress on August 1 and signed into law by President Trump on August 13. The NDAA makes important reforms and updates to the process by which investments in U.S. businesses by foreign persons are reviewed by the Committee on Foreign Investment in the United States (CFIUS) and updates and codifies Department of Commerce practices related to export controls.

In a previous blog, we reviewed pending and approved 1115 waivers in 11 states. These reviews provide an overview of 1115 waiver applications, including a focus on work requirements, lock-outs, changes in coverage structures, repealing the Medicaid IMD exclusion, and other behavioral health initiatives.  

On Friday, after weeks of delay, the President finally delivered his Drug Pricing Speech and released the HHS Blueprint detailing the Trump Administration's plan to lower drug prices and reduce out-of-pocket costs.