By Marissa Evans, CQ Roll Call

August 29, 2016 -- Kentucky Gov. Matt Bevin submitted his plan to overhaul coverage for the 400,000 low-income residents who qualified under Medicaid expansion, but it's unclear if the Obama administration will approve it or how strong the political blowback would be for ending the program.

On Aug. 24, Bevin, a Republican, turned in a long-awaited waiver application to the federal Department of Health and Human Services. The plan would provide stricter rules for beneficiaries who qualify but many of the proposed items are likely to be met with skepticism from the Obama administration. If the federal government does not budge on major conservative priorities such as work requirements and lock-out periods, Bevin has threatened to pull the plug on expansion altogether.

"The submission of this waiver is the result of many months of extensive research, planning, and time spent traveling the state," Bevin said in a news release. The revised waiver "will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner."

The proposal comes after the state collected public comments over the summer about plans that would change the nationally recognized and arguably successful program. After federal officials determine whether the state has properly submitted all of the required documents and a 30-day federal comment period ends, the Centers for Medicare and Medicaid Services will decide whether to approve the proposal.

Under an executive order in 2014, the Bluegrass State expanded eligibility for the joint federal–state health insurance program for the poor and disabled. The federal health law allows states to expand Medicaid to individuals with incomes up to 138 percent of the poverty level. Starting in 2017, states will have to start chipping in 5 percent of the costs and by 2020, 10 percent of costs. Thirty-one states and the District of Columbia have taken up expansion.

But after inheriting the expansion program from Democratic Gov. Steve Beshear, Bevin has been keen to overhaul the program with a more conservative edge. His proposed changes include requiring beneficiaries to work or volunteer, a request that the Obama administration has denied for multiple states with similar wishes. Advocates have been troubled by the Bevin administration's call for six-month lockout periods for beneficiaries who fail to make on-time payments or fill out Medicaid paperwork correctly. The plan also would allow consumers to use health savings accounts and receive dental and vision care if they practice specific healthy habits.

Advocates were pleased that the plan would improve access to substance abuse and mental health treatment.

Adam Searing, a senior research fellow with the Georgetown University Center for Children and Families, said in an interview that Bevin's plan could be precarious since the state has become a national example of a successful Medicaid expansion.

"I don't think I've ever seen a political leader propose eliminating health care for this high of a number of people," Searing said. "At least not without saying 'here's the great thing you're going to have instead of this'....to say we're going to take this and eliminate it is somewhat unprecedented at the state level."

Christopher Holt, director of health care policy for the American Action Forum, said in an interview that Bevin's more conservative stance on the health law and Medicaid expansion while on the campaign trail could give him protection should he end health coverage for 400,000 Kentuckians. It could also give him a boost among his base of support.

"He's in a position to probably handle this better than most other governors," Holt said. "It seems to me that his brand is built on a somewhat more combative approach to overall health reform efforts. I would think he's insulated in that sense from the political backlash."

By Erin Mershon and Andrew Siddons, CQ Roll Call 

September 1, 2016 -- Health and Human Services Secretary Sylvia Mathews Burwell said in a Thursday roundtable with reporters that the health exchanges will stabilize in the long term even without congressional action.

She said that legislative fixes "could help speed and change the dynamic" of that stabilization. But she also said "stability exists, even using the administrative tools we have." Federal officials are exerting their regulatory authority during the final year of the Obama administration to shore up the marketplaces as much as possible. Burwell pointed to recent actions like a proposal, released Monday, that would overhaul one of the central mechanisms designed to stabilize risks on the exchanges set up under the 2010 health law.

Insurance giants like Aetna Inc. and UnitedHealth Group have announced dramatic withdrawals from many of the exchanges in which they currently sell plans. Proposals for double-digit premium hikes are also fueling Republican criticism of the law and raising questions about both affordability and sustainability.

Burwell argued that some of the instability could be attributed to insurance companies' figuring out how to set their prices in the new marketplaces. If insurers had set their initial prices higher, as many of the law's architects had expected, the upheaval would be more limited, she said.

"You would most likely be at a higher premium, but we wouldn't be having the conversation we're having," Burwell said.

She also emphasized that while the individual market faces challenges, the vast majority of Americans receiving employer-sponsored insurance, Medicare, or Medicaid are seeing lower-than-expected cost increases.

"The rate increases are something we're obviously concerned about," she said. "But when we have the conversation, it's important to make sure we're talking about health care in the U.S."

Burwell declined to say how many people the administration is hoping to sign up during the 2017 open enrollment period, which begins Nov. 1. She said the administration would be increasing its focus on retention.

By Kerry Young, CQ Roll Call

August 29, 2016 -- Mylan N.V.'s unusual plan to launch a cheaper generic version of its own EpiPen failed to assuage lawmakers, who continue to press for an investigation of price spikes and a lack of competition for the widely prescribed device to treat severe allergic reactions.

Mylan on Monday said it would launch a generic version of the EpiPen with a list price of $300 for a two-pack carton, which the England-based company said is a discount of more than 50 percent from the list price. This cheaper version will be identical to the branded product in terms of both the device used to administer the active medicine in EpiPen, which is epinephrine, and the drug itself, Mylan said. It expects to launch the product in several weeks, pending completion of changes to the label for the drug. The company will also continue to sell EpiPen under that brand name.

"While I appreciate efforts to make the medication more accessible and affordable, today's action illustrates the need for a lasting solution that promotes competition and ensures that people have access to the medications they need at a price they can afford," Sen. Amy Klobuchar, D-Minn., said in a Monday statement.

There's growing bipartisan concern about why Mylan still dominates the market for easily administered epinephrine. Shortly after gaining EpiPen as part of a larger acquisition in 2007, Mylan said in a regulatory filing that the product has been available in the United States since 1980. The Food and Drug Administration on Monday received a letter questioning how it handles generic epinephrine applications from three key Republicans: House Energy and Commerce Chairman Fred Upton of Michigan and chairmen of the panel's health and investigations subcommittees, Joe Pitts and Tim Murphy, both of Pennsylvania. Separately, Sen. Susan Collins, R-Maine, the chair of the Senate Special Committee on Aging, and Sen. Claire McCaskill of Missouri, the panel's ranking Democrat, last week requested a briefing from Mylan staff on the rising costs of the EpiPen.

The Senate Judiciary Committee also is showing a strong interest in EpiPen's cost, which is said to have spiked from about $100 for a two-pack prescription in 2009. Senate Judiciary Chairman Charles E. Grassley, R-Iowa, last week asked Mylan to explain its pricing. He also joined Klobuchar, Sen. Richard Blumenthal, D-Conn., and colleagues in a letter to the FDA  questioning the process for considering generic epinephrine. Grassley on Monday said Mylan's plan to introduce its own competing version of EpiPen "sounds like good news but the details are important to know." 

"Consumers and Medicare, Medicaid, and insurance companies will want to know how widely available the generic product will be," Grassley said.

Blumenthal on Monday said he would continue to press for Senate hearings and investigative work by the Federal Trade Commission into Mylan. The outrage about the EpiPen also is spurring broad interest in the cost and access to medicines.

"A system in which public outrage is required to address these kind of unjust situations is not efficient," Blumenthal said. "When it comes to affording life-saving products for their families, consumers should not have to depend on the benevolence of monopolists."

Maintaining Profits

Shares of Mylan rose 25 cents, or less than 1 percent, to $43.28 in early afternoon trading Monday, in line with the increase in the Dow Jones Industrial Average.

Elliot Wilbur, an analyst with the research firm Raymond James called the announcement "a bold, out of the box move" that "seems likely to go a long way in terms of reducing the amount of external criticism the company will face." In a note written with colleagues, Wilbur noted Mylan said the company might sell an increased number of epinephrine pens due to the price cut. This is one of the reasons why Mylan's financial results might not be greatly changed by introducing a cheaper rival to its own product, according to the analysts' note.

"Though the optics of this move suggest Mylan will be taking an immediate revenue hit on a key billion dollar product franchise, we believe there is a visible path forward for Mylan to keep profits essentially flat," the Raymond James analysts said in their note.

Political considerations appear to have triggered Mylan's decision to sell a competing version of its own EpiPen, a strategy known as introducing an authorized generic, Barclays PLC analysts Douglas D. Tsao and Morgan Williams said in a Monday note. 

"While it's not uncommon to see for brand companies to launch authorized generics just ahead of a generic competition to lock in share of the generic market, we're not aware of a comparable situation in which an authorized generic was launched when generic competition seemed unlikely," Tsao and Williams wrote, referring to Mylan by its stock ticker. "In our view, this move is clearly not driven by competitive considerations but reflects MYL's determination to put this controversy to rest."

By Marissa Evans, CQ Roll Call

August 31, 2016 -- Despite ongoing contempt for the federal health law in some of the Medicaid expansion holdout states, lawmakers in a few of the states have started considering broader eligibility as they face gaping billion-dollar holes in their budgets.

In Virginia, Democratic Gov. Terry McAuliffe and his Republican-majority legislature are facing the prospect of filling a $1.2 billion budget hole when the session starts in January. While McAuliffe's Medicaid expansion hopes have been dismissed three years in a row, he continues to press for changes. He said in a speech on Aug. 26 that the $7.95 billion in federal funds "are dollars that we can never get back."

"We could soften this budget shortfall significantly if Virginia agrees to expand Medicaid and accept federal dollars that remain on the table waiting for our decision," McAuliffe said. "Those funds would go a long way in relieving some of the difficult budget actions that lie ahead."

McAuliffe is the latest governor in recent months to point to opening up eligibility for the joint federal-state health insurance program for the poor and disabled as a path to fiscal salvation. As state budgets continue to erode, even some of the most conservative lawmakers are softening long-held criticism of the federal health law to give expansion another look.

Alabama Gov. Robert Bentley, a Republican, has mulled how to convince his state legislature in recent months to take up expansion, a move that could bring the state $1.2 billion into the state's economy. The legislature recently walked away after denying the governor's request to have a vote for a state lottery in November. The state's Medicaid program is now dealing with an $85 million shortfall and grappling with how to adequately serve its one million beneficiaries.

"It was a vote against those children, those half a million children in poverty today because their health insurance is being jeopardized by the fact that the legislature did not take up this bill," Bentley said in an Aug. 26 speech. "They looked those children in the eye today and they said, 'I'm not going to do anything to fund your health insurance.'"

The Affordable Care Act allows states to expand Medicaid to individuals with incomes up to 138 percent of the poverty level. Starting in 2017, states will have to start chipping in 5 percent of the costs and by 2020, 10 percent of costs. Thirty-one states and the District of Columbia have taken up expansion.

Besides Alabama and Virginia, lawmakers in Georgia, Louisiana, Oklahoma, and Wyoming have considered Medicaid expansion for help with budget woes. However, chances are low that any of the remaining states will be able to strike a deal with federal officials before the Obama administration ends.

"An increased number of people are starting to say let's get real about this and let's have some conversation," said Matt Salo, executive director for the National Association of Medicaid Directors. "It's also setting the stage because there's only about three or four months left in the current administration and so it's unlikely the states are going to get an expansion finalized in the next three months."

While Republicans still predict unforeseeable costs with expansion and warn that the federal government could dial back support more after 2020, many states that have expanded are experiencing gains.

Expansion states have been able to shift more costly patients, including patients living with a disability and low-income pregnant women, from state to federal spending responsibilities, according to Stan Dorn, a senior fellow with the Urban Institute. States have also been able to restore substance abuse and addiction programs for beneficiaries, thanks to the new wave of federal funding under expansion.

John Hick, executive director for the National Association of State Budget Officers, said in an interview that many lawmakers from across the political spectrum can see there are some benefits to expansion. He points to states being able to spend less of their own money on the Medicaid program.

"The rationale in general for adopting expansion are more for health care reasons but there are some perceived economic benefits in the short run," Hick said.

Politically, the current post-primary season is a more opportune time to express interest in Medicaid expansion, said Salo. Saving face in front of more die-hard voters in the primary has been key for some lawmakers who are now considering expansion.

"For the past several years, there's always been a court case or election at the national or state level where you could conceivably say, 'Let's hold off on making a decision because the landscape could change six months from now,'" Salo said.

By Andrew Siddons, CQ Roll Call

August 29, 2016 -- Hillary Clinton's plan for mental health care has a lot in common with proposals in Congress to improve mental health treatment and expand access, including potential hurdles—namely, how to pay for it.

The Democratic presidential candidate's plan, released on Monday, would aim to promote early diagnosis and intervention, especially for children. It would emphasize treatment instead of jail time for low-level criminal offenders with mental illness. Clinton says she would enforce so-called parity laws, which require insurance providers that offer mental health coverage to provide benefits that are just as good as those for physical health care.

The proposal addresses issues similar to those tackled by various bills making their way through Congress. A bill (HR 2646) that passed the House in July and a Senate companion (S 2680) awaiting floor time share the overall goals of early prevention for children, improving the national suicide prevention system and promoting parity. Related language in a bill (S 2002) from Sen. John Cornyn, R-Texas, that would try to better integrate treatment into the criminal justice system is a potential candidate to ride along on a final compromise.

The Clinton plan also would build on an initiative championed by Sen. Debbie Stabenow, D-Mich. Stabenow, who has been actively stumping for Clinton during the campaign, wants to expand a program launched in 2014 that makes community behavioral health centers eligible for higher federal reimbursement rates. Stabenow has introduced a bill (S 2525) that would expand the number of states eligible for this program from eight to 24. Clinton's plan would invest $5 billion to bring it to every state.

"Mental illness touches the lives of one out of four people. And this is just one more example of how Hillary Clinton understands the issues American families face and will make them a priority when she is President," Stabenow said in a statement.

Such an expansion has bipartisan support in both chambers of Congress, but likely not enough for lawmakers to actually find a way to pay for it. Funding to improve mental health care has proven a stumbling block for both chambers as they have tried to advance legislation. The House bill was delayed for months after a Congressional Budget Office (CBO) analysis estimated a cost of at least $60 billion over 10 years to expand Medicaid access to inpatient mental health treatment. That provision was ultimately dropped from the version of the bill that passed.

Still, many lawmakers believe that making those investments could reap rewards that the CBO didn't consider, such as the savings incurred by helping people become productive members of society and keeping them out of emergency rooms and jails. The American Psychiatric Association, which praised Clinton's plan on Monday, pointed to its analysis that predicted a savings of between $26 billion to $48 billion if the physical and mental health care systems were more fully integrated.

The plan was generally met with praise from groups specializing in mental health treatment.

"We applaud Secretary Clinton for giving us an inclusive plan that promotes early identification and intervention, ensures access in all communities to skilled staff delivering effective services, addresses the unchecked rise of suicides, offers the promise of technology, strengthens mental health and addiction parity, and supports the research needed if we are going to make progress," said Linda Rosenberg, president of the National Council for Behavioral Health.

In addition to questions over paying for mental health care, enforcing parity laws might also be a difficult proposition. Clinton says she would launch randomized audits to detect violations, strengthen compliance monitoring and create an easier process to report problems.

But ever since the law was enacted in 2008 and addressed again during the 2010 healthcare overhaul, some health care providers have said they aren't been totally sure what is required of them and consumers haven't been totally sure what their rights are. The mental health bills in Congress would attempt to improve compliance by issuing guidance documents and requiring federal officials to clarify existing parity rules.

It might still be some time before patients can expect more coherent implementation. States generally are in charge of making sure that insurers comply with parity laws, but according to the Pew Charitable Trusts, only New York and California are consistent in enforcement.

By Kerry Young, CQ Roll Call

August 31, 2016 -- Republicans on the House Budget Committee appear ready to challenge the Obama administration on one of its most ambitious health proposals, a planned test of alternative Medicare payment for drugs administered in doctors' offices.

The committee invited a key opponent of this plan, known as the Part B drug model, as a witness for a Sept. 7 hearing on the Center for Medicare and Medicaid Innovation (CMMI), which was created in the health care law to fund new ideas. Ted Okon, the executive director for the Community Oncology Alliance, has been a leader in efforts to block CMMI's Part B drug model. 

Many cancer and rheumatoid arthritis doctors say that they might lose money under the Part B plan, which would lower the premium Medicare pays on the drugs administered in their offices to less than 1 percent from about 4 percent. CMMI also proposed adding a set fee of more than $16 to ease the potential financial hit for doctors from this initial stage of its Part B model, which also includes a blueprint for broader action that Medicare could pursue to address rising drug costs. Among the ideas CMMI suggested is pegging future Medicare payments for drugs to the results that they deliver for patients.

The March introduction of the Part B drug proposal vaulted CMMI, also known as the Innovation Center, from relative obscurity into the focus of one of the Obama administration's most bitter final fights with Republicans over health policy. Republicans, including members of the Senate Finance and Ways and Means committees asked the center's parent agency, the Centers for Medicare and Medicaid Services (CMS), to drop the plan entirely. Republicans argued that patients might need to travel some distances to find doctors still willing to administer costly drugs. 

CMS has not given a date for the expected release of the final model. The proposal has ardent backers including the seniors' advocacy group AARP, but many Democrats too have asked CMS to narrow the plan's scope, which now calls for nearly nationwide implementation of pricing changes. 

While debate about the Part B model may dominate the Budget hearing next week,  the witness list and title of the hearing suggest it may be intended as groundwork for a broader look at the Innovation Center. In a Wednesday media advisory, the committee questioned whether the center exceeded its legal authority in the design of recent payment tests, citing specific concerns about mandatory participation in certain programs.

The hearing also is intended to examine whether the Congressional Budget Office's approach to analyzing the financial impacts of the center's projects may be hampering Congress' ability to oversee the program, the committee said.

House Republicans want to bring to an end this center, which the 2010 health law created as something akin to a venture capital firm for testing ways to improve the practice of medicine. Provided with an initial allotment of $10 billion, the Innovation Center has claimed some success to date with efforts to save money and improve quality of care. It last week announced savings of $466 million from programs meant to provide more coordination of medical services, known as accountable care organizations.

In a June policy paper on health care, House Republicans called for ending CMMI on Jan. 1, 2020, when the health law calls for giving it a second $10 billion tranche of funding. They argue that the center's work could result in limiting access to care for some senior citizens. House GOP appropriators also proposed in the fiscal 2017 Labor-Health and Human Services-Education bill (HR 5926) to rescind $7 billion of the original funding that the center had been given.

Chairman's Interest

Other witnesses for the Sept. 7 Budget hearing include Mark Hadley, deputy director of the Congressional Budget Office, and Joseph Antos, a researcher at the American Enterprise Institute, which promotes limited government. The committee also has invited Mark P. Madden, an orthopedic surgeon at Ortho Virginia.

Budget Committee Chairman Tom Price, a Georgia Republican who is a former orthopedic surgeon himself, is seeking to suspend a separate CMMI test of alternative Medicare payment for care of people getting hip and knee replacements. Known as the Comprehensive Joint Replacement test, this test is mandatory for most hospitals in 67 regions of the country. Medicare may raise or lower reimbursement for hospitals participating in the test based on judgments about how well they have cared for seniors citizens and people with disabilities who get these joint replacements. Price has 23 Republicans cosponsors for his bill (HR 4848) that seeks to suspend the implementation of the program, along with one Democratic supporter, Rep. David Scott of Georgia.

Price is also one of 16 Republican cosponsors of a bill (HR 5122) from Rep. Larry Bucshon, R-Ind., that seeks to block CMS from implementing the Part B drug model, which has two Democratic backers, Rep. Brad Ashford of Nebraska and Rep. Pete Aguilar of California. Price, who serves on the Ways and Means health subcommittee, is known for taking an active interest in CMS policies. He played a key role in shepherding a bill addressing electronic health records rules through Congress on its final day in session last year.