the American Association of Colleges of Osteopathic Medicine

This analysis was prepared by McDermott+ Consulting, on behalf of AACOM.

Purpose

The U.S. House Energy and Commerce Subcommittee on Health held this hearing to examine various Fiscal Year 2024 budget requests as related to the Department of Health and Human Services (HHS).

Members Present

Chairman Guthrie, Ranking Member Eshoo, and Representatives Barragan, Bilirakis, Blunt-Rochester, Bucshon, Burgess, Cardenas, Carter, Craig, Crenshaw, Griffith, Harshberger, Hudson, Johnson, Joyce, Kuster, Latta, Miller-Meeks, Pallone, Rodgers, Ruiz, Sarbanes, Schrier, and Trahan

Witnesses

The Honorable Xavier Becerra

Secretary, U.S. Department of Health and Human Services

Washington, D.C.

Key Takeaways

The hearing focused on a myriad of health-related issues, including price transparency, drug negotiation, and pandemic preparedness and response.
Repeated concerns regarding the fentanyl and opioid crises were expressed, noting that the proposed budget did not address prevention of fentanyl drug trafficking and overdoses.
Multiple members brought up recently approved Alzheimer’s drugs that are not currently being considered for coverage by the Medicare and Medicaid programs.

Opening Statements

Chairman Guthrie (R-KY) expressed concerns over the large federal budget request, and a significant increase in funding for the CDC. He stated a lack of public trust in the CDC, an unmet need for fentanyl overdose prevention methods in the budget, and the need for scheduling all fentanyl related substances. He mentioned the Centers for Medicare and Medicaid Services (CMS) unwillingness to cover an FDA-approved Alzheimer’s drug and the Biden Administration’s tax cuts to the Affordable Care Act (ACA) health coverage and Medicare payments. He emphasized the need for price transparency, despite it not being mentioned in the budget.

Ranking Member Eshoo (D-CA) thanked Secretary Becerra and the Biden Administration’s commitment to improving the nation’s healthcare system, with premiums at an all-time low and enrollment at an all-time high. She cited figures of 3.7 million new enrollees, with 4 out of 5 enrollees qualifying for $10/month health plans. She mentioned the progress in the fight against the fentanyl crisis, with a 37% increase in naloxone prescriptions and a 6-month decrease in overdose deaths. The administration’s FY2024 budget request builds on these achievements and further addresses gaps. The budget proposal attempts to make permanent enhanced premium tax credits, expand surprise billing protections, and cap the monthly cost of insulin at $35 for those with group and individual market coverage. The budget provides a historic $46.1 billion to address the overdose crisis, based on evidence-based care, $13.8 billion on mental health, increasing availability of crisis care and 100% of parity coverage, and $50.5 billion in pandemic preparedness, to prepare and prevent public health threats. An increase of the Medicare tax rate to 5% for those making over 400,000 a year gives the Medicare trust fund solvency, allowing older Americans to retire with dignity and financial security.

Energy and Commerce Chairwoman Rodgers (R-WA) emphasized the importance of halting the fentanyl crisis and reigning in government spending to reverse inflation from the Biden Administration. She criticized the budget’s lack of mention regarding preventing fentanyl overdoses, with mention of treatment only. She expressed a need to restore trust in public health agencies with oversight prior to asking for more funding, as COVID vaccine mandates have led to parents questioning regular vaccinations. She also said that school closures and mask mandates negatively impacted children, physically, emotionally, and academically. She committed herself to introducing bipartisan policies that will improve health and quality of life.

Energy and Commerce Ranking Member Pallone (D-NJ) stated that Republicans should provide their own budget if they have other alternatives to cover fentanyl and Alzheimer’s drugs, among other issues. The Inflation Reduction Act (IRA), Medicare’s drug negotiation and cap on insulin, along with the 16.5 million Americans with ACA coverage on the marketplace experiencing lower premiums are all testaments to the administration’s commitment to improving the nation’s health. The budget proposes an increased number of drugs eligible for Medicare drug negotiation, a cap on insulin for marketplace coverage, expanded access to home and community-based care, and 12-month postpartum coverage mandated for all states. He said that budget cuts for programs like the ACA, as suggested by many Republicans, negatively impacts quality of and access to care.

Rep. Burgess (R-TX) stated that it is one thing to have health coverage, but a lack of providers means that care cannot occur. He was concerned regarding cuts in physician reimbursement rates on top of inflation costs, which may lead to practice closures and an even further shortage of providers.

Rep. Ruiz (D-CA) discussed the pandemic response, with a need for comprehensive examining what occurred early in the pandemic. He said the Trump Administration’s lack of providing personal protective equipment (PPE) and public health measures while politicizing the public health crisis only made the pandemic worse, while President Biden’s swift action of evidence-based guidance has allowed for schools to re-open and stay open.

Testimony

Secretary Becerra opened by stating that 16.4 million Americans have secured insurance through the ACA marketplace, with 300 million Americans now covered overall. He listed the prescription drug negotiation, insulin cap, and free vaccinations under Medicare. Sec. Becerra said the Biden administration pulled off the greatest adult vaccination campaign in American history. He mentioned the growing behavioral health crisis, and a need for infrastructure to build a stronger care system. He emphasized a move towards wellness care that invests in health early, especially for elderly adults and those with disabilities, seeking care at home. The proposed $30 billion for public health crisis prevention includes bolstering of the Strategic National Stockpile (SNS). The required 12-month postpartum coverage for all states would strongly address the nation’s maternal morality crisis. The budget would strengthen and secure Medicare funding for current and future generations, fund childcare and preschool programs, and increase home and community-based services for Medicaid beneficiaries. The budget funds cancer moonshot, Advanced Research Projects Agency for Health (ARPA-H), Title X health programs, and bolsters the healthcare fraud and abuse detection and enforcement system. He emphasized a move from illness care to wellness care, that ensures wellness as reachable for all Americans.

Question & Answer

Chairman Guthrie (R-KY) asked about permanent scheduling for fentanyl-related substance as Schedule 1 drugs. Sec. Becerra said hopefully that will be approved, with a need for conversations on mandatory minimums through the DOJ. HHS’s perspective is to allow for research towards cures and treatments of fentanyl overdoses.

Chairman Guthrie expressed concerns of innovation, with CBO evidence that it could halt innovation. He asked if CMS has considered how the divestment in cheaper alternatives and setting the price of treatments will play out. Sec. Becerra wants to ensure a competitive industry and a safe harbor for some innovative companies. That will stimulate innovation and production but not lead to any unnecessary price gouging.

Ranking Member Eshoo (D-CA) discussed fraud, waste, and abuse in healthcare. She asked about HHS audits of saving taxpayer dollars and how much they will cost. Sec. Becerra said the reason for audits is to analyze how Medicare spending is used, including overbilling. The cost of audits will aim to recoup the billions spent in overbilling. Rep. Eshoo asked what a cap on spending would mean for decreased National Institutes of Health (NIH) grants. Sec. Becerra said that cuts would lead to a cut in 5,000 NIH grants, including research done on various cures for diseases.

Rep. Burgess (R-TX) asked about the higher volume of claims under the No Surprises Act, and why HHS was not prepared to accommodate them, instead blaming providers. Sec. Becerra said there have been 164,000 claims in 8 months. Rep. Burgess asked about the 85,000 immigrant children released from HHS care to which Sec. Becerra stated the New York Times made up that figure, it is not based on data.

Rep. Sarbanes (D-MD) mentioned the $2.7 billion proposal for Health Resources and Services Administration’s (HRSA) workforce and the National Health Services Corps and asked how these funds will help with the health workforce. Sec. Becerra discussed the need for understanding data on where shortages are and how to address them moving forward. Rep. Sarbanes asked about the possibility of collaboration of organizations who have not previously partnered, Sec. Becerra said HRSA and the Substance Abuse and Mental Health Services Administration (SAMHSA) is working on this.

Rep. Rodgers (R-WA) asked about how HHS uses quality adjusted life years (QALYs) and equal value life years gained. Sec. Becerra said HHS does not use mentioned measures and he is not familiar with them. Rep. Rodgers asked what additional resources HHS provided regarding hospital transparency laws, to which Sec. Becerra said they have begun implementing these strategies but have not yet been fleshed out because they are so new, so they must wait to see proposals from the industry. Rep. Rodgers asked about changes to Medicare Advantage’s risk adjustment payments to plans, if they constitute a cut to Medicare and Sec. Becerra stated that insurance companies will get more payments than last year. Rep. Rodgers referenced site neutral payments, reducing service costs for all locations. Sec. Becerra said different regions have different prices, must give a fair evaluation of cost of product or service. Rep. Rodgers described numerical errors in COVID-19 data that exaggerated rates, creating policies that negatively impacted children. Sec. Becerra said the Centers for Disease Control and Prevention (CDC) always attempt to be transparent.

Rep. Pallone (D-NJ) described how rural hospitals in Medicaid expansion states closed at lower rates than those in non-expansion states, explained the IRA cap on costs for Medicare Part D, and asked why these provisions were so important. Sec. Becerra said these caps help Americans save money for critical medications and vaccination. The price gouging is unnecessary and the ability to negotiate will reward all Americans.

Rep. Latta (R-OH) asked about the scheduling of fentanyl, Sec. Becerra said he supports the discussion but will leave this up to FDA. Rep. Latta described his work of track and trace related to fentanyl, to which Sec. Becerra said SAMHSA works with states and local entities to support this monitoring.

Rep. Cardenas (D-CA) explained the 988 suicide and crisis lifeline, with funding for mobile crisis response grants in rural areas being included in the budget. Sec. Becerra said this infrastructure is important as crises do not just happen from 9-5 and having resources 24-7 will allow to save lives and keep people from harming themselves. Rep. Cardenas emphasized having crisis care responders rather than police who respond to emergency calls, with a need for the 988 hotline to become locally monitored like the 911 hotline.

Rep. Griffith (R-VA) asked if Sec. Becerra would testify at a hearing regarding oversight of the Office of Refugee Resettlement. Sec.Becerra said yes. Rep. Griffith asked about the newly passed bill that requires the declassification of information related to the origins of the coronavirus. Sec. Becerra said HHS will move swiftly to get information out and be fully transparent. Rep. Griffith asked about discussions of origins of the Coronavirus, to which Sec. Becerra said the US must communicate with Chinese organizations to understand these origins.

Rep. Ruiz (D-CA) asked about how slashing Medicare funding would hurt seniors. Sec. Becerra said that Medicare has lifted seniors out of poverty, so cuts would be devastating. Rep. Ruiz discussed an annual Medicare payment update tied to inflation and asked about the yearly threat to physicians about reimbursement cuts. Sec. Becerra said the strain on healthcare professionals creates a large threat to sustaining the workforce.

Rep. Johnson (R-OH) asked about Sec. Becerra’s comments on the Biden administration’s “whole of government” response to the East Palestine train derailment. Sec. Becerra said a community health center in the area was providing treatment for those impacted, HHS immediately gave an emergency grant to this center, among other health efforts. While HHS is not always on the ground, HHS intends to support those providing care. Rep. Johnson asked bout the grant being provided, Sec. Becerra said that the HRSA grant is what they are utilizing and are willing to provide further funding if needed.

Rep. Kuster (D-NH) described the importance of telehealth in rural and underserved areas. Sec. Becerra said telehealth can provide behavioral health that was not previously available. Rep. Kuster asked about a Medicaid rule that prohibits payments of incarcerated populations, as it is the largest payer of behavioral health care and asked about cuts in funding for Medicaid expansion. Sec. Becerra said Medicaid expansion has covered 19 million more Americans, and without this coverage, they would incur additional costs on the healthcare system by being uninsured.

Rep. Harshbarger (R-TN) expressed issues with pharmacy benefit managers (PBM), their lack of transparency, and conflicts of interest. Sec. Becerra said PBM reform is not controlled through the budget but should be evaluated. Rep. Harshberger asked about a commitment towards extending approval of mail order cancer drugs, Sec. Becerra agreed to work with her. Rep. Harshberger asked about employees who work from home and showed an image of the HHS parking lot, to which Sec. Becerra said many employees choose to work from home.

Rep. Barragan (D-CA) discussed the Food and Drug Administration (FDA) approval but lack of CMS coverage for an Alzheimer’s drug, stating that CMS should consider it. She thanked HHS for funding for home and community-based services. She asked about protecting Medicaid enrollees from unwinding. Sec. Becerra said he wrote a letter to all governors last year about impending unwinding and how they should prepare for quick reenrollment.

Rep. Bilirakis (R-FL) expressed concerns of the mental health and substance abuse crisis coming in from the border. Sec. Becerra said fentanyl is being addressed through the budget with funding for opioids and other drug overdose treatments.

Rep. Schrier (D-WA) discussed recruiting and retaining a health workforce, and that where physicians train indicates where they will practice. Sec. Becerra said that HHS supports expanding graduate medical education residency slots in rural areas to increase the workforce there. Rep. Schrier emphasized how subsidies in the IRA have made a true impact on ACA beneficiaries.

Rep. Hudson (R-NC) asked about vaping products and requests for market approval. Sec. Becerra said the FDA dispelled up to 90% of claims and are now facing lawsuits in response. Rep. Hudson asked about the backlog of claims, Sec. Becerra said that this litigation is delaying the ability to move forward on a product. Rep. Hudson asked about remaining and uncommitted COVID relief funds, Sec. Becerra said there is only about 4-6% remaining.

Rep. Blunt Rochester (D-DE) discussed the nursing shortage and asked about potential funding to rebuild this. Sec. Becerra listed multiple tools, including loan repayment and expanded residency slots, that can help to rebuild the workforce. Rep. Blunt Rochester asked about data for determining workforce shortages. Sec. Becerra said HRSA is working on a survey to address this. Rep. Blunt Rochester asked how local and state organizations are being included, Sec. Becerra said they are crucial as they understand the full extent to the shortage and what can be done at the source. Rep. Blunt Rochester discussed rising mental health and substance use disorders, asked the Secretary to describe president’s proposal. Sec. Becerra said community health centers (CHCs) stepped up to provide care during the pandemic, have been funded through HHS, and the budget includes increased funding to help with behavioral health through the budget.

Rep. Bucshon (R-IN) stated an interest to increase transparency and accountability in the 340b program. A 2020 letter from Secretary Becerra described the program as, “for public hospitals, community health center, and others serving indigent patients”. He referenced a NYT article from September describing how large hospital systems have bought up 340b eligible entities in low-income areas and used these locations to obtain 340b eligibility in their facilities in more prosperous areas, pocketing the profits, and failing to use this money to help patients as the program was intended.

Rep. Bucshon asked, “Do you agree that 340b program participants should be accountable for how they use savings from the program?” and Sec. Becerra said yes. Rep. Bucshon stated that as Attorney General in 2020, Sec. Becerra sued Sutter Health for aggressively buying up hospitals and physician practices, which exploited market dominance by raising prices. Rep. Bucshon asked if the health system should still be allowed to participate in the 340b program.

Sec. Becerra said he does not want to find that there is little transparency in how money is being used, and that 340b does not have the transparency it needs, but the Sutter case was different. Sutter health was engaged in practices that stifled competition. Sec. Becerra wants to ensure that 340b is not driving pharmacists out of business, making sure community clinic get the benefits they need Rep. Bucshon explained how his line of thought goes to show whether Sutter health is acting well on the program or not, given the issue of transparency.

Rep. Bucshon said that in 2014, Kathleen Sibelius, the HHS Secretary under President Obama, testified about the FY2015 budget, and responded in a question about 340b, saying “it had been expanded beyond its bounds.” At that point, there were 9 billion in sales at the 340b price. In 2021, there were 44 billion in sales at the 340b price. According to MEDPAC, the number of covered entity sites has more than doubled since 2014, to 50,000 sites and half of all hospitals participate in this program.

Rep. Bucshon said he is a huge supporter of 340b if it is done properly but wishes to make it transparent, so it does not continue to struggle and jeopardize participation. He also mentioned that such an expansion should also mean exponential growth in charity care and community benefits, but that is not what has occurred over the last 8 years. He asked what the Secretary thinks of this. Sec. Becerra said there is an attempt to reform 340b, but it is necessary to have statutory authorities to make these changes, as there were lots of losses filed due to the program. He stated that compliance and transparency are needed, which would be done through legislative action, and Rep. Bucshon said “Good, I’m working on that.”

Unrelated to 340b, Rep. Bucshon talked about insurance companies not actually paying what is owed after losing various lawsuits.

Rep. Craig (D-MN) discussed how mental health and substance use disorder crises are rising. With a shortage of hospital-based care providers and a threefold increase in death rate due to opioid overdose in Minnesota. She asked the Secretary how HHS works with other agencies on this issue. Sec. Becerra said that drugs fall under HHS jurisdiction as well as DOJ for enforcement of drug laws, leading to joint decision-making by the two organizations. They both want the best healthcare outcome and with it comes a fine line of prescribing drugs for those managing addictions.

Rep. Carter (R-GA) stated that 3 PBMs control 80% of the market, are all owned by insurance companies, and he asked the FTC to look at this through a 6B study, which is now occurring. He also discussed the negative impact of hospital mergers. Rep. Carter asked what the HHS budget does to address vertical integration. Sec. Becerra said that the consolidation of care leads to less available care. While HHS does not have this jurisdiction, it is controlled by the FCC and DOJ, but HHS is trying to ensure coordination of care that does not remove competition.

Rep. Carter asked about the cancer moonshot and CBO’s input that 15 fewer cures will be discovered. Sec. Becerra disagreed, stating that more than 15 cures will be released, and he does not agree with the CBO’s statement.

Rep. Crenshaw (R-TX) asked about the greatest cause of death for adults ages 15-44, answering the question himself by stating opioid and fentanyl overdoses. Rep. Crenshaw asked why HHS has an Office of Climate Change and Health Equity and why it needs to be funded if they don’t have the data to support that climate change is killing people. Sec. Becerra said he can provide data of what communities have been impacted by climate change. Rep. Crenshaw listed statistics that deaths due to nature have plummeted by 70% since President Biden took office and said they are inciting fear by requesting net zero emissions from hospitals. Sec. Becerra said that the hospital industry is one of the largest contributors to climate change due to its production of chemicals, contributing to the degradation of the environment.

Rep. Hudson (R-NC) criticized policies that limit the negotiation of prices for therapeutic drugs and asked how many people will go without medicine due to the evisceration of small molecule drugs. Sec. Becerra said that Americans will pay lower prices for prescriptions they need.

Rep. Hudson said that of 90 new therapeutics approved, 6 were for cancer, and all were for small molecules, but that innovation in the cancer space will be hit hard. He noted that China has been the largest producer of these daily-use drugs, rather than the US. Rep. Hudson asked what the US is doing to incentivize production. Sec. Becerra said he wishes to increase domestic drug manufacturing, halt any supply chain issues, and expand the capacity to incentivize production of basic medical supplies as well. Rep. Hudson asked what HHS is doing to prepare for future pandemics. Sec. Becerra said the NIH is doing research on vaccines, the CDC is collaborating with state partners to detect and surveille, and the Administration for Strategic Preparedness and Response (ASPR) is still working with COVID tracking.

Rep. Joyce (R-PA) said this budget threatens the Orphan Drug act and asked what HHS is doing to ensure that the innovation of these cures is not limited. Sec. Becerra explained how innovative and curative medicines are important, but the cost of them is unattainable for consumers, with these changes requiring producers to charge a fair price. Rep. Joyce stated that these companies will not be able to continue seeking cures. He wanted a timeline for what drugs will be negotiated and how much time they will have to discuss it. Rep. Joyce also discussed how individuals cannot afford drug treatments, specifically for Alzheimer’s. He asked why CMS will not cover these drugs. Sec. Becerra said that CMS does not have a pathway for the coverage of life-altering medicines, it needs the law to change so CMS can consider or grant these approvals.

Rep. Trahan (D-MA) discussed her involvement with pandemic preparedness and described how organizations like ASPR and Biomedical Advanced Research and Development Authority (BARDA) function. She asked if HHS does have the capacity to succeed in preparedness with limited funding. Sec. Becerra said without this proposed funding, HHS would be vulnerable to public health crises. There must be a unified effort with other organizations to prepare for these crises domestically, including strengthening the SNS and preventing supply chain issues, which can only be addressed with sources of long-term funding.

Rep. Miller-Meeks (R-IA) stated that the budget proposes an increase in funds for the healthcare fraud and abuse program with an emphasis on data analytics and asked how to apply artificial intelligence (AI) for fraud, waste, abuse in the Medicare program. Sec. Becerra said it would be great to use AI appropriately, to monitor such programs. Rep. Miller-Meeks expressed displeasure with CMS’ implementation of the surprise billing law as it does not protect providers and patients the way it was intended.

Final Comments

Chairman Guthrie concluded by thanking Secretary Becerra and that he is looking forward to working with him and HHS on many issues discussed today.

Watch the full hearing here.