Congress may approve significant health care legislation during its lame-duck session

Official Washington is focused for now on the midterm election, but, when the dust settles on those races, attention quickly will turn to the pressing matters teed up for Congress’s lame-duck session. While an emerging wish list of potential bills, with champions located both inside and outside of Congress, includes many that won’t make the final cut, it is more likely than not that significant health care provisions will get approved before the end of the year.

 

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Lame-duck sessions — the legislative interludes between elections and the terms of newly elected officeholders — have become productive periods in recent years. In December 2020, Congress approved an omnibus appropriations bill that included major new funding for the nation’s COVID-19 response along with the No Surprises Act, which restricts surprise medical bills. With current appropriations expiring on December 16, Congress again must pass something before the holidays to keep the government open. It is therefore possible that an omnibus appropriations measure will become the vehicle for another sprawling year-end mega-deal.

Medicare payment adjustments will be among the provisions getting attention. In addition, with the public health emergency for COVID-19 likely to end in 2023, several of the flexibilities tied to it could be candidates for stand-alone extensions, along with other miscellaneous adjustments.

The following are some of the health-related matters that are most likely to be considered by Congress before it adjourns for the year.

  • Suspension of the Medicare PAYGO Sequester. In 2010, Congress approved a statutory pay-as-you-go bill that requires an across-the-board cut — a “sequester” — when legislation affecting taxes and/or mandatory spending is approved that would add to future deficits. The Congressional Budget Office projects the 2021 American Rescue Plan Act will widen annual budget shortfalls by $1.8 trillion, which means the PAYGO law’s sequester will kick in unless suspended by Congress. The cut to Medicare’s payments to facilities and clinicians will be 4%. The major organizations representing hospitals and physicians have asked Congress to suspend this cut before the end of the year, as it did for 2022 in legislation that passed at the end of 2021.
  • Physician Fee Update for 2023. A confluence of factors is pointing toward large cuts in Medicare’s fees for physicians in 2023 even if the PAYGO sequester is stopped. The law governing physician fee updates, which Congress approved in 2015, schedules modest annual increases to keep costs down. Further, CMS says other technical adjustments require a 4.4% reduction in 2023 to keep the system in line with statutory requirements. So, while consumer inflation is running above 8%, physicians are looking at a reduction in their Medicare fees of perhaps 8% or more if the PAYGO sequester is not suspended. In real terms, the cut would be well above 10%. Congress is unlikely to let that occur, but the scale of the adjustment that could get sufficient support to pass is not yet clear. Providing a one or 2% nominal increase would be consistent with prior episodes but may seem inadequate in the current inflationary environment.
  • Telehealth. The public health emergency (PHE) declaration allowed clinicians to bill Medicare for the services they provided to patients using telehealth. The current PHE extension runs until mid-January after which Medicare’s telehealth rules will revert to the pre-PHE status quo. Many provider organizations are pressing Congress to permanently liberalize Medicare’s telehealth rules to reflect the shifting expectations of both patients and those providing services to them.
  • COVID Response and Pandemic Preparedness. The Biden administration submitted to Congress a new COVID-19 response request of $22.4 billion in September, but Republicans balked at approving it. They argued that previously approved funds should be exhausted before new funds are approved. The White House contends the new funding is essential for developing and purchasing the next generation of vaccines and treatments for the pandemic. It also rolled out a new pandemic preparedness framework that will require resources. With Democrats controlling the House and Senate, it is unlikely that a bipartisan agreement on appropriations could be struck that rejected these White House requests in their entirety.

Several other measures could be included in a large compromise package. Many in Congress would like to impose a cap on insulin costs. Further, both parties had been working on renewing the Food and Drug Administration’s reauthorization law when a clean, five-year extension of user fees was approved in September. Several other reauthorization matters may still find their way into an end-of-the-year deal, despite the loss of momentum from the user fee provisions. More sweeping changes to mental health and substance abuse programs are also possible, as they generally enjoy bipartisan support.

What is not known at the moment is the political environment within which the lame-duck will take place. That will depend on what happens on November 8. If control of one or both chambers is set to flip to the Republicans in January, the incentive for the GOP will be to limit the size of the final package while allowing some controversial provisions to pass so that Democrats will share in the blame for them. If Democrats retain full control of Congress, then planning will begin immediately for an active session in 2023. In this scenario, some decisions that otherwise would have been taken during the lame-duck might get deferred.

James C. Capretta is a columnist for State of Reform and a senior fellow at the American Enterprise Institute.