Insights^

Will Joe Manchin leave the Democratic Party?  Ever since the Democratic Senator from West Virginia blew up negotiations on the Build Back Better Act, pundits have been speculating that Manchin will leave the party to become an independent.  While Manchin has bluntly thrown cold water on the idea of leaving the party in the past, such a move wouldn’t be without precedent.  Here are some examples of the dozen or so legislators who have made the uncommon decision to switch party affiliations in the last two decades.

Senators

• Arlen Specter (Republican to Democrat).  First elected to the Senate in 1980 as a Republican, Specter was a staunch centrist.  The Pennsylvania Senator switched over to the Democratic Party in 2009 due to what he viewed as the Republican Party moving “farther and farther to the right.”  Specter ultimately lost the 2010 Democratic primary race to Joe Sestak, who went on to lose the general election to current Sen. Pat Toomey (R-PA).  Specter died of non-Hodgkin’s lymphoma in 2012.
• Joe Lieberman (Democrat to Independent).  Lieberman was the Democratic nominee for Vice President in the 2000 general election, but then he  ran under the independent “Connecticut for Lieberman” party in his 2006 Senate reelection bid after losing the Democratic primary to current Connecticut Gov. Ned Lamont.  After winning reelection, Lieberman was officially listed as an independent but continued to caucus with the Democratic Party in the Senate.
• Jim Jeffords (Republican to Independent).  Elected to the Senate in 1989 as a Republican, Jeffords became an independent and caucused with the Democrats in 2001 due to disagreements over the Bush tax cuts.  Jeffords’ switch was particularly consequential because it changed control of the senate from a Republican majority to a Democrat majority. This was the first time such a switch had changed party control.  After his retirement in 2007, Jeffords was succeeded by Sen. Bernie Sanders (I-VT), an independent who also caucuses with the Democrats.

Representatives

• Jeff Van Drew (Democrat to Republican).  The New Jersey State Senator was elected  to Congress in the 2018 midterm elections that saw Democrats flip nearly 40 seats in the House.  However, in late 2019, Van Drew became a Republican due to his opposition to then-President Trump’s impeachment.  Van Drew won reelection in 2022 and continues to represent his purple district in southern New Jersey as a Republican.
• Justin Amash (Republican to Independent to Libertarian).  First elected in 2011, Amash announced in a 2019 op-ed his decision to leave the GOP and become an independent after becoming “disenchanted” and “frightened” by party politics and saying that he did not feel “well represented” by either major party.  The Michigan Congressman later joined the Libertarian Party in April 2020, becoming the first Libertarian to serve in Congress.  However, Amash declined to seek reelection in 2020.
• Paul Mitchell (Republican to Independent).  Mitchell took office in 2017 to represent a solid Republican district near Detroit, Michigan.  However, in July 2019, Mitchell announced he would not seek reelection in 2019, namely due to the “rhetoric and vitriol” in the federal government and a desire to spend more time with family.  Just a year later, Mitchell formally became an independent out of disagreement with then-President Trump’s efforts to overturn the results of the 2020 presidential election.  Mitchell died in August 2021 after a long battle with cancer.

2022 is shaping up to be a busy year for Congress, with potential implications for health care policy.  Lawmakers’ challenging agenda is partly due to unfinished business from 2021, including spending for Fiscal Year (FY) 2022 and the Democrats’ $1.7 trillion social and climate spending package, the Build Back Better Act.

At the top of the 2022 agenda are must-pass items tied to specific deadlines.  Here’s an overview of what Congress must take care of in the new year, no matter what.

• FY 2022 Appropriations.  The short-term spending bill that’s keeping the federal government running is set to expire on February 18, 2022.    The House has already passed most of its FY 2022 spending bills, including a bill that provides a nearly 20% increase in funding for the Department of Health and Human Services (HHS) compared to the FY 2021 level.  However, the Senate Appropriations Committee has only approved three spending bills for FY 2022.  Going forward, lawmakers are hoping a bicameral and bipartisan deal comes together quickly to avoid passing another Continuing Resolution and can finalize FY 2022 appropriations.

• MACRA.  A 5% bonus for providers participating in an Advanced Alternative Payment Model (A-APM) under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is set to expire at the end of 2022. To circumvent the provisions in MACRA from expiring, the Senate Finance Committee is expected to hold hearings to review implementation of MACRA in 2022, and health care providers have been pushing for the bonuses to be extended.  On a related note, legislators are also planning to hold hearings on how MACRA has affected the Physician Fee Schedule.

• Medicare Cuts.  In December, President Joe Biden signed into law a bill to extend the moratorium on 2% Medicare sequester cuts until April 1, 2022 and reduce the cuts to 1% from April 1 to June 30, 2022.  Providers will likely advocate for an extension of the moratorium due to continued stress from the COVID-19 public health emergency but are also looking to work with Congress to find a longer-term solution regarding the Medicare pay system.

• PDUFA VII.  The current Prescription Drug User Fee Act (PDUFA VI) expires at the end of September 2022.  Regulators and industry stakeholders spent 2021 negotiating the details of PDUFA VII, which will determine drug user fees in FY 2023-2027.  It will be up to Congress to reauthorize the next iteration of PDUFA by October 1, 2022, and lawmakers are expected to hold hearings on PDUFA VII in spring 2022.

Other items on the 2022 legislative agenda are top policy and political priorities, particularly for Democrats, who will be fighting to retain their majority in Congress in the upcoming midterm election.  Additionally, health care stakeholders are urging legislators to make progress on pressing health care issues that saw little movement in 2021.

• Build Back Better.  The White House and congressional Democrats had initially hoped to pass a $1.7 trillion social and climate spending package know as Build Back Better before the end of 2021, but progress halted after Sen. Joe Manchin (D-VW) rejected the measure due to concerns over its cost.  However, Democrats are hoping to pass a scaled-down version of Build Back Better that Manchin can support, with the hope that a revised measure will retain some of the original proposal’s health care provisions, including expanded eligibility for Affordable Care Act (ACA) subsidies and expanded Medicaid coverage in 12 states.

• Cures 2.0.  In November 2021, bipartisan members of the House Energy and Commerce Committee introduced the Cures 2.0 Act, which would build on the success of the 21^st Century Cures Act that passed in 2016. CURES 2.0 would authorize the Advanced Research Projects Agency-Health (ARPA-H), streamline the Food and Drug Administration (FDA) review process, enhance Medicare and Medicaid coverage of new technologies, and expand access to telehealth.  Lawmakers initially hoped to advance Cures 2.0 by the end of 2021, but a busy congressional agenda pushed work on the measure into the new year.  Since legislators expect 2022 to be just as busy, it’s possible elements of Cures 2.0 may find their way into PDUFA VII.

• Behavioral Health Care.  In September 2021, bipartisan leaders of the Senate Finance Committee issued a request for information (RFI) on policy proposals to boost access to mental health care services.  Some of the reforms mentioned in the RFI include strengthening the health care workforce, improving parity laws, and increasing the use of telehealth.  Underscoring the need for behavioral health care reform is the upsurge in demand for mental health care during the COVID-19 public health emergency.  The Finance Committee may incorporate responses to the RFI in a potential bipartisan bill in the new year.

• Prior Authorization.  In a bipartisan fashion, 246 House members cosponsored legislation to streamline prior authorization in Medicare Advantage and require rapid determination of the services that plans generally approve.  The Trump administration proposed to streamline prior authorization requirements in Medicaid (but not Medicare Advantage), but the Biden administration has since paused the initiative. Provider groups are advocating for new rulemaking or legislation to include Medicare Advantage in any push to improve prior authorization. (https://jensen-jensen.com)

Health care providers breathed a sigh of relief nearly two weeks ago when President Joe Biden signed into a law a bill to override certain Medicare payment cuts scheduled to take effect next month.   Congress taking action to prevent Medicare cuts isn’t exactly new – in fact, it seems to have become a regular occurrence.

What’s in the bill?  On December 10, President Biden signed into law S. 610, the Protecting Medicare and American Farmers from Sequester Cuts Act.  The bill specifically extends the moratorium on 2% Medicare sequester cuts until April 1, 2022, and reduced the cuts to 1% from April 1 through June 30, 2022. Additionally, the measure provides a one-year increase in the Medicare physician fee schedule of 3%, less than the 3.75% increase for 2021. The bill also delays the 4% statutory Pay-As-You-Go (PAYGO) sequester from taking effect early next year and now cuts won’t go into effect until 2023.

Medicare Sequestration, in Brief

Medicare sequestration began under the Budget Control Act (BCA) of 2011, which required a mandatory 2% reduction in Medicare provider payments, also known as sequestration.  The sequester was originally intended as an incentive for the so-called “super committee” of congressional leaders who convened that year to design a bipartisan plan to reduce the budget deficit by $1.5 trillion from Fiscal Year (FY) 2011 to FY 2021.  However, Congress failed to reduce the deficit, thus setting the stage for automatic spending cuts.

But the Medicare cuts never came.  The Medicare sequester was originally set to end in 2021 under the BCA, but cuts have delayed and the sequester period extended a total of seven times.  More recently, the Coronavirus Aid, Relief, and Economic Security (CARES) Act delayed the 2% automatic cuts to Medicare through March 2021, and the American Rescue Plan Act subsequently delayed the cuts until the end of 2021 until the Protecting Medicare and American Farmers from Sequester Cuts Act was signed into law earlier this month.

So why hasn’t the Medicare sequester ever gone into effect?  Medicare is extremely popular among voters. Also, generally lawmakers from both parties are especially hesitant to cut payments to doctors and nurses, especially now during a public health emergency.

PAYGO, In Brief

The current version of Statutory Pay-As-You-Go (PAYGO) was signed into law on February 12, 2010 under the Statutory PAYGO Act of 2010.  While PAYGO also uses sequestration to reduce government spending, it differs from the Medicare sequester in that it only applies to new government spending that increases the deficit.  Increased deficit spending under the American Rescue Plan Act of 2021 triggered PAYGO cuts that recently signed legislation delayed until 2023.  While the Medicare sequester is capped at 2%, PAYGO caps Medicare cuts at 4%.

Kicking the Can Down the Road

Per the BCA, the Medicare sequester was supposed to end in 2021, but that timeline has since been pushed back another 10 years.  To help pay for the delay in Medicare cuts, and in the case of the need for offsets for the Infrastructure Investment and Jobs Act, Congress has added additional years to the duration of the sequester.  An exception to this is the recently enacted law, the Protecting Medicare and American Farmers from Sequester Cuts Act, which paid for the delay by increasing the percentage of sequester for the last year of the cuts.  These actions by Congress to continually delay or extend the sequester could be interpreted as little more than a “budget gimmick” to ensure that Medicare cuts to providers never actually occur.

So… is there a long-term solution on the horizon to fix these cuts?

Medicare sequestration and PAYGO sequestration cuts cannot be fixed in the Build Back Better Act (BBBA), as these provisions cannot go through the reconciliation process. Therefore, both parties would need to negotiate on passing a whole different bill.  However, Republicans think overriding the PAYGO sequestration cut could be meaningless if the BBBA is enacted later and PAYGO is triggered again. Additionally, providers are starting to grow tiresome of the “budget gimmick” feel when addressing Medicare sequestration and the American Medical Association President Gerald Harmon in a statement urges Congress to find  “more in-depth reforms to the Medicare pay system.”

Nothing is ever certain in Congress, but both parties will have to come together at some point and address these issues.  Could Congress take up these fixes during 2022 and create a longer-term solution? It’s a possibility, but currently Senate Democrats are facing a heavy lift on passing a version of the BBBA and voting rights legislation early next year. Also, don’t forget Congress is heading into an election year, so whether they provide a longer-term solution is still up in the air, which in turn could lead to continuing to kick the can down the road.