National Legislative Update for August 2018

August 21, 2018

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The Legislative Update is brought to us by Liz Powell, Esq., MPH, Founder of G2G. Liz is an attorney with 20 years government experience, including as Legislative Director on Capitol Hill. She leads a team of bipartisan professionals that has raised over $159M, run advocacy campaigns and shaped CMS reimbursement for clients.

Contributor-LPowell

OVERVIEW

Most of the G2G team is headed to the annual MHSRS (military medical conference) next week in Kissimmee, FL. This will be a great opportunity to find out the latest in DoD priorities and funding and meet with many program managers. The past few weeks have been quiet in the House of Representatives, but active in the Senate. August is normally a month for recess and Members of Congress working on their campaigns during an election year, however, this August Senate Majority Leader Mitch McConnell (R-KY) made his colleagues work most of the month. Just this week, the Senate worked on a complex minibus that covers funding for all the health and defense agencies after passing a separate minibus the week before that includes funding for Agriculture-FDA, Interior-Environment, Financial Services, and Transportation-HUD bills. Also, this week, President Trump signed into law John S. McCain National Defense Authorization Act (NDAA) (renamed in honor of Chairman McCain (R-AZ) who is still battling brain cancer). Both chambers are in session after Labor Day and will finish up the remaining appropriations bills.

HEALTH

Health Appropriations – The Senate Labor, Health and Human Services and Education bill includes $179.3 billion, $2.2 billion more than Congress appropriated for those agencies this fiscal year. The bill would total $1.06 trillion — 5 percent more than in FY2018 — when mandatory funding is included, the bulk of which is for Medicare and Medicaid. It also includes:

  • $90.1 billion for HHS, a $2.18 billion increase from fiscal 2018 that would largely go to the National Institutes of Health.
  • $71.4 billion for the Education Department, a $541 million increase.
  • $12.1 billion for the Labor Department, a $92 million decrease.

NIH budget would include:

  • $6.15 billion for the National Cancer Institute, a $190.1 million increase.
  • $5.51 billion for the National Institute of Allergy and Infectious Diseases, a $225.5 million increase.
  • $3.49 billion for the National Heart, Lung, and Blood Institute, a $107.9 increase.
  • $3.08 billion for the National Institute on Aging, a $507.3 million increase.
  • $2.87 billion for the National Institute of General Medical Sciences, an $88.9 million increase.
  • Increase funding for Alzheimer’s disease research by $425 million, for a total of $2.34 billion – first time exceeding the goal in the National Plan to Address Alzheimer’s Disease.

CDC budget would include:

  • $1.47 billion for the Office of Public Health Preparedness and Response, a $20 million increase.
  • $1.17 billion for the National Center for Chronic Disease Prevention and Health Promotion, a $3.88 million increase.
  • $1.13 billion for the National Center for HIV/AIDS, Viral Hepatitis, Sexually Transmitted Diseases, and Tuberculosis Prevention, a $5 million increase.
  • Rejection of the administration’s request to eliminate the Prevention and Public Health Fund — a mandatory account that funds several CDC programs — and instead increase discretionary funding for those accounts.
  • Cuts in CDC funding compared with FY2018 would largely come from the buildings and facilities account, as requested.

SAMHSA and to address the opioid crisis, appropriations would include:

  • $3.81 billion for substance abuse treatment programs, $548.5 million increase mainly through the State Opioid Response Grants, which would receive a total of $1.5 billion.
  • $1.57 billion for mental health programs, a $79 million increase.
  • $3.72 billion across the department to address the opioid crisis, including the SAMHSA opioid funding:
    • $500 million for opioid-related research at NIH.
    • $475.6 million for CDC opioid overdose prevention and surveillance, plus $5 million to address opioid-related infectious diseases.
    • $200 million for Community Health Centers to expand opioid treatment, prevention, and awareness.
    • $150 million for Certified Community Behavioral Health Clinics.
    • $120 million to address substance abuse use in rural communities.

Medical Device Tax – The House passed legislation to permanently repeal the Medical Device Tax with bipartisan support of 283-132. Rep. Erik Paulsen (R-MN) has led the effort to end the 2.3 percent tax on revenue for the industry for years. The bill is now in the Senate, but consideration is delayed due to some politics around who owns the issue on the Democratic side as Senator Claire Klobuchar (D-MN) has led the effort for years, but more recently Senator Joe Donnelly (D-IN) stepped up to lead due to his heated re-election campaign. In time, we expect this to pass the Senate on its own or wrapped into a final year-end package.

Medicaid and Medicare Changes – The Trump administration is preparing to allow conservative-led states to impose additional restrictions on Medicaid that could push tens of thousands of people off coverage. The changes entail adding work requirements and questions about illegal drug use in order to obtain Medicaid coverage. The administration is expected to sign off on work requirements in Arizona, Wisconsin and Maine and approve limited drug testing within a few weeks. As for Medicare, hospitals will get $4.8 billion more from Medicare in 2019 due to a final rule from CMS that will increase acute care hospital payments by 1.85 percent. The rule also requires online posting of hospitals’ standard charges.

Drug Pricing – HHS Secretary Alex Azar said at a cabinet meeting that the administration’s drug-pricing report will come out the week of August 20th. He said President Trump is “adamant” about lowering pharmaceutical prices. More than a dozen companies have said there will be no further increases this year. Azar said their plan involves letting in competition to ensure patient access and bringing negotiations and discounts to Medicare Part B.

Generic Drugs – Generic drug makers would no longer get two bites at the apple when challenging patents under legislation recently introduced by Finance Chairman, Senator Orrin Hatch (R-UT). Companies wanting to get new generic drug products on the market would have to pick one path: either federal court infringement litigation under Hatch’s namesake the Hatch-Waxman Act, or the inter partes review procedure in the Patent and Trademark Office’s Patent Trial and Appeal Board. Currently, generic drug makers can pursue patent challenges through both avenues.

Obamacare and Trump Healthcare – The administration is working to expand the availability of short-term health plans that critics deride as “junk” insurance, expand alternative coverage options for small businesses, halt payments to insurers for low-income customers and slash Obamacare outreach. Despite the administration’s efforts to sideline Obamacare, more insurers are signing up to sell 2019 coverage, and premium increases will be the lowest in years. The markets’ resiliency to these efforts surprised many. Public support for Obamacare has skyrocketed since congressional Republicans tried to repeal it last year. Now the Democrats are using this as a campaign issue during the fall elections.

Opioid Crisis – President Trump is now pushing for the U.S. government to sue pharmaceutical companies that manufacture opioids as part of his efforts to halt an epidemic of drug addiction, rather than just join existing litigation against the drug makers. Purdue Pharma and Johnson & Johnson, among others selling opioid painkillers, face hundreds of lawsuits filed by states, cities, counties, American Indian tribes and labor unions. The most recent lawsuit was launched by private ambulance providers as a class action suit to recoup costs associated with the epidemic. Also, the Meanwhile, the Justice Department and Drug Enforcement Administration just proposed an average 10 percent reduction in manufacturing quotas from 2018 in 2019 for the six most frequently misused opioids – a measure which has bipartisan support from Senators Dick Durbin (D-IL) and John Kennedy (R-LA). Meanwhile in Congress, the Senate may pass comprehensive legislation to address the nation’s opioid epidemic to follow what the House did under Chairman Michael Burgess (R-TX) before the August recess, passing nearly 60 separate bills. Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) are leading the effort by working with the heads of all three Senate committees with jurisdiction. They’re also negotiating with lawmakers outside their committees on added measures, such as relaxing Medicaid’s ban on inpatient drug rehabilitation and limiting initial opioid prescriptions. Representing one of the hardest hit states, Senator Shelley Moore Capito (R-WV) is pushing hard to move the legislation quickly. But if and when the Senate passes legislation, it will likely contain major differences from the House so the two chambers will need to meet in conference committee to come to a consensus.

DEFENSE

Defense Appropriations – The House passed their version of the Defense Appropriations bill in June and the Senate just officially launched floor debate on its version of the bill but has much to do as it works to pass a minibus that includes funding all the defense agencies and programs as well as those for health, education and labor in one package. This minibus is the chamber’s third minibus spending measure. The Senate version would provide the DoD with $675.6 billion in discretionary funding. The discretionary total would be $25.3 billion more than provided in the FY2018 omnibus bill and $429.9 million less than the president’s request. DoD would also receive $4.49 billion in emergency funds for missile defense and other programs and $434.2 million for disaster relief. The total provided under the measure would include $607.6 billion in base funding and $67.9 billion for Overseas Contingency Operations and would bar transferring F-35 aircraft to Turkey unless DoD certifies the Turkish government isn’t buying a Russian missile system and would limit the Navy to buying one aircraft carrier, instead of the dual purchase included in the House-passed defense funding bill and NDAA. As requested, the measure would eliminate OCO funds in FY2019 for intelligence, surveillance, and reconnaissance activities, which received $770 million in the FY2018 omnibus. It would also rescind $1.44 billion in OCO funding, including $800 million in coalition support funds. For military personnel, it would provide $139.3 billion in base funding, an increase of $5.93 billion from FY2018 and $1.39 billion less than requested. This would support an active-duty end strength of 1,329,461 and a reserve component end strength of 816,900 as well as a 2.6 percent pay raise for military service members.

Base procurement funds include:

Military                 Funding                Compared to FY18           Compared to Trump request

Army                     $22,559M            -$1,412.4                              +$697.2

Navy*                   $59,220.7             +$3,182.6                             +$4,184.5

Marine Corps     $2,801.0               +$858.3                                -$59.4

Air Force              $43,015.8             -$3,403.9                              -$865.6

Defense-wide    $6,663.8               +$1,234.6                             -$122.5

R&D funding is increased in the bill:

The bill would provide $95.1 billion in base funding for research, development, test, and evaluation (RDT&E) programs, $4.07 billion more than requested and a $6.82 billion increase from FY2018. This includes:

Military                 Funding                Compared to FY18           Compared to Trump request

Army                     $10,812.5M         +$165                                    +$653.1

Navy                      $18,992.1             +$981.3                                +$510.4

Air Force              $40,896.7             +$3,468.6                             +$718.3

Defense-wide    $24,049.6             +$2,038.6                             +$2,033.1

From those amounts, the bill would provide a combined $2.8 billion for basic research funding, $529.3 million more than requested. The committee report funds several priorities, such as:

  • $928.6 million more than requested for hypersonic research and prototyping.
  • $846 million plus-up funding for DoD test and evaluation infrastructure.
  • $316.5 million in extra funding for directed energy technologies.

Ships Funding

It would provide $1.57 billion for Ford-class aircraft carriers built by Huntington Ingalls Industries Inc.’s Newport News Shipbuilding Inc. The Navy couldn’t use the funds to buy two carriers although the NDAA and House Defense Appropriations bill would allow the Navy to buy two carriers under a single contract. This will be a contentious conference committee issue.

Military Medical Funding

The bill would fund medical research with $1.67 billion, which is $963.2 million more than requested, including:

  • $60 million more than requested for research on traumatic brain injuries.
  • $10 million more than requested to research alternatives to opioids for treating chronic pain.

It would provide $34.1 billion for the Defense Health Program (DHP), $292.2 million less than in FY2018 and $406.8 million more than requested. Another $352.1 million in OCO funding would also be appropriated. DoD has postponed further deployment of the electronic health records (EHR) system called Military Health System (MHS) GENESIS for both DoD and the VA while it evaluates the initial rollout. With the delay, the bill would rescind $215 million from DHP procurement funds from FY2018.

NDAA – The $717 billion John S. McCain National Defense Authorization Act for Fiscal Year 2019 was sent to the President for signature after passing the Senate by a vote of 87-10 and the House by a vote of 359-54. The bill would give U.S. troops a pay increase of 2.6 percent, which is also included in the House and Senate Defense Appropriations bills. The Defense programs, primarily at the Pentagon, would be authorized to receive $716 billion, which includes $639.1 billion in base funding and about $69 billion in Overseas Contingency Operations funding (OCO or war funding) that doesn’t count against the spending caps. Within the base amount, defense activities at the Energy Department would be authorized to receive $21.9 billion. It would allow the development of low-yield nuclear weapons to be carried on submarines, maintain the Washington Headquarters Services, which the House measure proposed eliminating, and contains compromise language to expand the authority of the Committee on Foreign Investment in the U.S. and eventually bar federal use of technology produced by Chinese companies Huawei Technologies Co. or ZTE Corp. The House and Senate negotiators dropped several provisions from the final agreement, including language that would have reinstated a ban on U.S. exports to ZTE, required the president to order National Guard members to full-time duty to assist with presidentially declared disasters upon the request of a governor, expanded direct hiring authority for acquisition personnel, imposed a mandatory two-year prison sentence for military personnel convicted of certain sex crimes, authorized multiyear procurement authority for the Navy to purchase as many as five amphibious dock ships, designated funding to research freeze-dried plasma for military dogs, and barred listing the greater sage grouse under the Endangered Species Act.

Authorization of R&D funding :

The R&D accounts do not align with the current Defense Appropriations bills pending in Congress. Instead, the NDAA would authorize slightly less with a total of about $93 billion for DoD research, development, test, and evaluation (RDT&E) programs, $586.3 million more than requested by the administration. Of that sum, $91.7 billion would be base funding subject to the spending caps, $670.5 million more than requested. The other $1.22 billion would be OCO funding. Specifically, it would authorize funding as follows:

Branch                                  Funding                Base                       OCO Total

Army                                     $9,961.6M           $325.1                   $10,286.7

Navy & Marine Corps     $18,384.5             $167.8                   $18,552.3

Air Force                              $40,677.9             $314.3                   $40,992.2

Defense-wide                    $22,471.5             $416.4                   $22,887.9

Military Medical Authorization of Funding

It would authorize $33.3 billion for the Defense Health Program, $393 million less than the administration requested and $800 million less than the Senate Defense Appropriations bill. However, an additional $352.1 million in OCO funding would be authorized for this program. Changes to health care policies would include: modifying the administration of TRICARE dental plans, requiring DoD to streamline the process for referring TRICARE Prime beneficiaries to the civilian provider network, and establishing a Military Health System Prescription Drug Monitoring Program that would share information with similar state programs to prevent misuse of opioids and other controlled substances.

Cybersecurity

The measure would authorize cyber operations across the DoD, authorizing funding as follows:

  • $364.7 million for U.S. Cyber Command from base and OCO funding in the Air Force operating forces accounts, the same amount as requested.
  • $830.4 million from the Air Force’s base and OCO O&M funding for cyberspace activities.
  • $424.8 million for Navy and Navy Reserve cyberspace activities from base and OCO O&M accounts.
  • $183.5 million for the Marine Corps’ cyberspace activities.

Also, it would require DoD to report to Congress by March 1, 2019 with a determination on whether to transfer responsibility for its computer networks from the Defense Information Support Agency to Cyber Command.

STEM & INNOVATION

R&D Priorities – The Trump Administration identified its R&D priorities for the FY2020 budget request in its annual memorandum, this time instructing federal agencies to prioritize “basic and early-stage applied research.” It also included new sections on advanced computing, manufacturing, space exploration, agriculture, and technology commercialization. Written jointly by the Office of Management and Budget and the Office of Science and Technology Policy, the memo provides guidance to federal agencies as they prepare their submissions for President Trump’s FY2020 budget request, which is due for release in February. This year, it identified several new R&D priority areas, ranging from advanced manufacturing to precision agriculture and was signed by Deputy U.S. Chief Technology Officer Michael Kratsios along with OMB Director Mick Mulvaney. However, the next day after the memo’s release, Trump announced his nomination of meteorologist Kelvin Droegemeier for OSTP director, who usually signs this annual memo. Droegemeier should be confirmed relatively quickly as Commerce, Science and Transportation Chairman John Thune (R-SD) is planning a confirmation hearing within early September to fill this spot that has been vacant since January 2017 – the longest it has ever been unfilled.

ECONOMIC DEVELOPMENT

Unemployment Rate – On August 3, the Department of Labor released a glowing assessment of the U.S. economy. Total nonfarm payroll employment rose by 157,000 in July, and the unemployment rate edged down to 3.9 percent, according to the U.S. Bureau of Labor Statistics. Employment increased in professional and business services, in manufacturing, and in health care and social assistance. The number of unemployed persons declined by 284,000 to 6.3 million in July. Both measures were down over the year, by 0.4 percentage point and 676,000, respectively.

Algal Blooms – Harmful algal blooms (HABs) have plagued the Great Lakes region and many parts of the country for years, hurting tourism and even poisoning drinking water for some communities. In Congress, both chambers have been working to address this problem in the Water Resources Development Act with grants for mitigating HABs. The House has passed its bill and the Senate Environment and Public Works Committee has advanced its bill, but action has yet to be scheduled in the full Senate. Senators Marco Rubio (R-FL) and Ben Nelson (D-FL) are pushing hard on Majority Leader McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY) to pass the bill as quickly as possible. Once done, the two chambers will have to reconcile any differences before a final bill can be cleared for President Trump’s signature.

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G2G (Government to Growth Consulting), LLC is a consulting firm specializing in assisting businesses and non-profit organizations. G2G provides comprehensive consultation in the fields of government affairs, economic development, grant writing, public relations, and event planning. G2G also has extensive experience in the areas of lobbying, advocacy, fundraising and grassroots organizing.