There is a growing appetite among congressional Republicans for stand-alone legislation to quickly provide the CSR funding, but the legislative approach is “varied,” a congressional healthcare leader says.


June 8—The chances that Congress will approve either cost-sharing reduction (CSR) payments or a Republican healthcare overhaul remained unclear as summer legislative action was launched this week.

The prospect of continuing funding of CSR payments—desperately sought by insurers—drew positive comments from Trump administration officials and Republican members of Congress, but no specific plans are in place to provide the funding.

For instance, Tom Price, secretary of the U.S. Department of Health and Human Services (HHS), said in congressional testimony that the administration’s support for continuing the CSRs for two years was shown by their inclusion in recently released budget proposals for FY17 and FY18. More detailed comments were not possible, he said, because he is a named party in a House of Representatives lawsuit that has successfully challenged the legality of using non-appropriated funding for the CSR payments. The case is under appeal.

The CSR payments—estimated at $7 billion for FY17 by the Congressional Budget Office—subsidize out-of-pocket costs for Affordable Care Act (ACA) marketplace plan enrollees with incomes of up to 250 percent of the federal poverty level.

The Kaiser Family Foundation has estimated that insurers would need to raise ACA silver plan premiums by about 19 percent on average to compensate for the loss of CSR payments.

“We should act within our constitutional authority—now—to temporarily and legally fund cost-sharing reduction payments as we move away from Obamacare and toward a patient-centered system that truly works for the American people,” Rep. Kevin Brady, chairman of the House Ways and Means Committee, said at a June 8 hearing. “Insurers have made clear the lack of certainty is causing 2018 proposed premiums to rise significantly, and when these payments are funded by Congress, families trapped in Obamacare should expect these proposed premiums to be reduced significantly.”

The California ACA marketplace determined that its silver plan premiums would be 16.6 percent higher if CSR payments were not provided. The calculation was based on having insurers submit two sets of rates, pending the administration's decision to fund the subsidies, according to a report. Conversely, premiums for other ACA plan tiers would decline without the CSR payments.

Despite the increasing calls by congressional Republicans to appropriate the funding, inclusion appears limited to two years—through 2019—of CSR payments in the House-passed American Health Care Act (AHCA). That bill is undergoing revisions in the Senate.

But that legislation may not pass for months—if at all—and insurers say action on CSR payments is needed by the June 21 deadline for plans sold through the federally operated ACA marketplace to submit their initial rate proposals to the Centers for Medicare & Medicaid Services.

A recent letter from America’s Health Insurance Plans (AHIP) to the senior Senate Republican on health policy, Sen. Orrin Hatch (R-Utah), estimated that the loss of CSRs would drive a premium increase of 15 to 20 percent for ACA marketplace plans and create a need for higher federal premium subsidies.

“While those AHCA provisions are critical, health plans are making 2018 business decisions and finalizing plan products and offerings right now,” wrote Marilyn Tavenner, president and CEO of AHIP.

Rep. Michael Burgess, MD (R-Texas), chairman of the Health Subcommittee of the Energy and Commerce Committee, noted a growing appetite for stand-alone legislation to quickly provide the CSR funding, but the prospective approach to the legislation is “varied.”

“The fact that the payments continue to be made is an important point” about Republicans’ commitment to them, Burgess said at a June 8 media briefing.

AHCA Outlook

Although discussions are ongoing among Senate Republicans over the details of their version of the AHCA, Mitch McConnell (R-Ky.), majority leader, this week took a procedural step to allow a healthcare bill to be put directly on the Senate calendar so a vote can be held when a final bill is ready.

The timelines for AHCA passage that Burgess has heard range from the before the Fourth of July recess to sometime in 2018.

“The likelihood of success is probably directly proportional to the timeline that is available,” Burgess said.

Healthcare industry investment-analysis firm Hedgeye wrote in a June 8 industry note that although many in the industry believe the Senate will never pass a healthcare overhaul bill, “We have never held this opinion.” The firm believes political obligations will drive the chamber toward passage.

Other ACA-related developments this week included a letter from 14 Republican senators asking HHS to reverse a late Obama administration regulation on short-term health insurance coverage, which cut the limit on short-term, limited-duration plans from 364 days to just 90 days. 

“As health insurers continue to leave the Obamacare exchanges, consumers need more, not fewer, options for health insurance,” the senators wrote. “Reversing this regulation will provide consumers with an important option for health coverage.”

Hospital Actions

Benjamin Isgur, leader of the Health Research Institute for PwC, said there is general confusion about any time frame for resolving the legislative battle over the AHCA. But provider actions are clear in the face of that uncertainty.

“In some ways, you have to compartmentalize the Washington, D.C., discussion and say, ‘What are the things we can actually control and act on as an organization?’” Isgur said in an interview. “If I’m a health system leader, I want to be out there with my management team saying, ‘Are we the highest quality in our neighborhood? Are we the most efficient? How are we getting close to consumers, because they’re going to have a lot of choices?’ And if there’s more uninsured coming up, then uninsured people are like wild cards in terms of where they are going to go or how they are going to interact with the system.”

Such periods of uncertainty are good times to get back to the fundamentals.

“You’re always going to be doing the right thing if you’re having high quality, creating more efficiency, getting ready for things we know are going to be driven by the private sector—like more narrow networks,” Isgur said.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, June 08, 2017