Public Health: How is it Affected by the Government Shutdown?

A special thanks to to Nili Yolin and the American Health Lawyers Association for providing this update. Their alert is posted below:

In the early morning of October 1, the federal government officially went dark. The shutdown came in the aftermath of the Senate's decisive vote to reject a House of Representatives plan that would have kept the government funded for several more months but delayed implementation of key portions of the Affordable Care Act (ACA) for one year.

The impact of the shutdown will be felt across all health care sectors as many federal employees face furloughs of unknown duration. In particular, the U.S. Department of Health & Human Services (HHS) announced in its Contingency Staffing Plan (Plan) that more than half of its employees will be furloughed. HHS' Plan is based on federal guidance that allows agency programs to continue only if they either do not rely on annual appropriations, or they involve the safety of human life or the protection of property.¹ According to HHS, the following programs and services will continue:

• Funding for Medicaid and the Children's Health Insurance Program will continue uninterrupted because funding has already been set aside for these programs;
• Funding for Medicare will likewise continue uninterrupted but only in the short term. If the political impasse stretches beyond several weeks, the program could be disrupted by the reduction in HHS staff;
• The Centers for Medicare & Medicaid Services (CMS) will continue to implement the ACA, "including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services";²
• State and federal health insurance exchange programs will open as planned, though it is not clear how the information technology (IT) that underpins the exchanges will function since they are operated by government contractors;³
• The National Institutes of Health (NIH) will continue to provide patient care for current NIH Clinical Center⁴ patients;
• The U.S. Food and Drug Administration (FDA) will be able to operate only for "vital activities" such as high-risk recalls and other "critical public health issues";
• The Substance Abuse and Mental Health Services Administration will continue programs such as the Suicide Prevention Lifeline using the balance of available grants; and
• Other programs supported through mandatory funding such as the Centers for Disease Control and Prevention (CDC) Global HIV/AIDS Program will continue.

However, several programs important to public health will be disrupted if a congressional compromise cannot soon be reached. For example:

• Outside of matters related to "imminent threats to the safety of human life or protection of property," CMS, FDA, NIH, and other federal agencies will not publish regulations or other guidance during the shutdown;
• CMS will not fund task forces that work to prevent health care fraud and abuse, and will scale back on Medicare provider audits;
• The CDC seasonal influenza program, which tracks flu outbreaks and certain infectious diseases, will come to a halt;
• No action will be taken on any grants related to medical research, improvement of the health care system, and monitoring of substance abuse programs;
• No new patients will be admitted to the NIH Clinical Center. NIH-funded researchers may continue to work for as long as their money holds out but additional funds will not be released during the shutdown; and
• FDA will not be able to support much of its food-safety activities, such as routine inspections and public notification programs. FDA's laboratory research and some compliance and enforcement activities will be suspended.

Although providers can take comfort in the fact that Medicare and Medicaid program reimbursement will proceed, a government shutdown for any period of time beyond three or four weeks could impede certain critical administrative functions, such as Medicare claims processing, and therefore impact their pocketbooks. Likewise, while substantial ACA implementation will continue, long-term furloughs could affect certain components of the law (such as the exchanges) because they depend on government employees to help run the IT component, among other aspects of the program. Thus, the magnitude of the shutdown's impact will depend on how long it endures.

Too Many Rules for Med Devices?

New rules for medical device makers, both in the U.S. and abroad, may make it more difficult for medical device companies to succeed, some say.

Both Sides of the Aisle Oppose Medical Device Tax

On Capitol Hill, GOP senators are trying to attach a repeal of a medical device tax to a government spending measure.  The repeal is part of an ongoing effort to defund the ACA.  The healthcare law imposes a 2.3% excise tax to help pay for the healthcare overhaul.

Lawmakers on both sides of the aisle express dislike for the tax.  However, it is most unpopular among Republicans in both houses, marked by Sen. Orrin Hatch's (Utah) lively description of the tax a "stupid dumb-ass thing."  Sen. Hatch and other opponents of the tax say it would put tens of thousands of jobs at risk, and hinder the health IT industry that creates pacemakers and artificial hearts. Among the democrats who oppose the tax are Sens. Amy Klobuchar (Minn.), Al Franken (Minn.), Kay Hagan (N.C.) and possibly Whip Dick Durbin - though Durbin would only support a repeal of the tax if it didn't negatively affect the overall funding for the healthcare law.

Supporters of the 2.3% medical device tax argue the healthcare law could eventually offset at least some of the cost of the tax.  As the number of insured grows, supporters say, so would the demand for medical devices and health tech innovation.

EU Rules May Slow U.S. Approvals

The European Parliament will soon vote on new regulations to close loopholes in their medical device laws. Currently, the EU has a much easier process for medical device companies to test their products and accumulate patient data.  It is precisely this simpler process that facilitates faster device approval in the U.S. - health tech companies can more easily gather the data they require in Europe to then get approval in the U.S., the world's most profitable health care market with the most stringent approval process.

The different between the system in the EU and U.S. stems from the government agency that oversees device approvals. In the U.S., the approval process is handled by the Food and Drug Administration.  In the EU, private reviewers known as "notified bodies" are hired by manufacturers to vet products and grant so-called CE marks that allow devices to be sold in the EU.

"If the rest of the world begins to raise the bar of approval to the U.S. level , it will surely damage investment in innovation and patient progress will plateau," said Kevin Sidow, CEO of Moximed of Hayward, CA, whose knee-implant system was approved in Europe.

ACA Could Survive a Government Shutdown

States that run their own insurance exchanges say they expect to be able to function in the face of a federal government shutdown.  
However states whose exchanges are being run by the Feds may not. The possibility of a federal government shutdown became more late last week, when congressional Republicans voted to fund the government but not the implementation of the Affordable Care Act.  Although the Democrat-controlled Senate is unlikely to follow suit, if the two legislative bodies cannot agree on a spending bill by next Monday, the government will shut down on Oct. 1.

While state-run exchanges could continue to operate with state funds and federal grants already paid to them, states are uncertain about whether they will have access to draw-down grants and other grants awarded but not yet deposited in the state's bank account.

The White House Office of Management and Budget (OBM) stated that entitlement programs could continue to run because funding for those programs comes from an "indefinite appropriation."  In other words, there are some permanent programs that do not require annual appropriations from Congress to operate. This was seen during the longest government shutdown, from Dec. 16, 1995 - Jan. 6, 1996, when Social Security continued to operate as a "permanent program."

IMPACT ON ACA'S INFORMATION TECHNOLOGY

One of the major concerns is how a shutdown would affect the IT component of the ACA, called the federal data services hub.  The hub is responsible for shepherding personal information from IRS databases, other federal agencies and private data companies back to the state exchanges to determine eligibility for premium subsidies.

"The OBM says that a contractor responsible for running the IT part of the state exchanges 'may continue to proceed with its work' during a shutdown if the agency they are working for 'already obligated funds representing the entire price under a contract' before the shutdown." (Reuters.)

CMS declined to say whether the IT contracts for Obamacare meet that criterion.