New budget agreement includes health care policy changes, but generally shifts attention to regulatory activity through 2016 elections

Posted by Anne Phelps, on November 2, 2015.

President Obama on Monday, November 2, 2015 signed into law a two-year budget deal that sets federal spending levels through September 2017 and suspends the federal debt limit until March 2017. The House and Senate passed the bill last week. The legislation generally clears the decks of any must-pass legislation until after the 2016 elections, shifting the life sciences and health care sectors’ focus in Washington largely to regulatory activity on issues such as the 340B drug discount program, the new Medicare payment law (MACRA), and the so-called Cadillac tax on high-cost employer-sponsored health coverage.

That said, the legislation includes some notable policy changes for the life sciences and health care sectors that stakeholders will need to take into account as they determine – and in some cases re-evaluate – their strategic priorities. For example, the bill extends the automatic 2% sequestration cuts to Medicare payments to health plans and providers for an additional year, through 2025. The bill also avoids a major increase in Medicare Part B premiums for certain beneficiaries and helps to cover the cost of the change to the federal government by raising premiums for the same beneficiaries to a lesser degree. The beneficiaries also would have a monthly surcharge to help fund the policy change that would be set according to a beneficiary’s income.

The legislation makes a reimbursement policy change affecting new provider-based off-campus hospital outpatient departments (PBD HOPD), i.e., those facilities that execute a CMS provider agreement after the date of enactment. These new facilities will not be eligible for reimbursements from CMS’ Outpatient Prospective Payment System (OPPS). Instead, they would be eligible for Medicare reimbursements from either the Ambulatory Surgical Center Prospective Payment System (ASC PPS) or the Medicare Physician Fee Schedule (PFS).

Of interest to life sciences companies, the bill extends the inflation-based Medicaid rebate currently paid on brand drugs to also apply to generic drugs if the price of the drug has increased faster than inflation (CPI-U). Currently, only single source and innovator multiple source drugs pay an additional rebate.

Of interest to health plans and larger employers more broadly, the bill also repeals a provision of the Affordable Care Act (ACA) that would have required employers with more than 200 employees to automatically enroll new full-time employees into health coverage. Regulations were never issued to implement the provision.

For more information, please contact:

US National Health Care Regulatory Team

Anne Phelps
Principal | Deloitte Advisory
US Health Care Regulatory Leader
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Daniel Esquibel
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP