Proposed Budget Repeals ACA, Boosts Opioid Resources, Slashes HHS Funding
Less than a week after Congress passed and President Donald Trump signed a two-year budget deal into law, the administration proposed to slash the budget for HHS to $68.4 billion, a $17.9 billion or 21% decrease from the 2017 enacted level.
The document calls for repeal of most of the Affordable Care Act, modifications to the 340B program and new funding to fight the opioid crisis.
In total, the budget proposal for HHS lays out $95.4 billion in discretionary budget authority and $1,120 billion in mandatory funding for programs like Medicare and Medicaid. It also eliminates the Agency for Healthcare Research and Quality.
Newly-minted HHS Secretary Alex Azar said the document backs the administration’s four priorities of “addressing the opioid crisis, bringing down the high price of prescription drugs, increasing the affordability and accessibility of health insurance, and improving Medicare in ways that push our health system toward paying for value rather than volume.”
The budget calls for $5 billion over five years in new resources to fight the opioid epidemic, which claimed the lives of about 64,000 Americans in 2016. Specifically, the budget request asks for $1 billion in funding for 2019, including: $50 million for a national media campaign, $625 million in funding for states, $50 million to provide first responders with overdose-reversal drugs and $100 million for surveillance and opioid abuse prevention like investments in state Prescription Drug Monitoring Programs.
Affordable Care Act and Medicaid
The ACA is back in the administration’s crosshairs: the budget calls for the passage of legislation based on the Graham-Cassidy-Heller-Johnson bill as soon as possible. The crux of the proposal seeks to repeal and replace the ACA by taking federal dollars and block granting the money to states. In addition, it calls for the repeal of the ACA’s Medicaid expansion.
“National healthcare spending trends are unsustainable in the long term and the Budget includes additional proposals to build upon the GCHJ bill to make the system more efficient, including proposals to align the Market Based Health Care Grant Program, Medicaid per capita cap, and block grant growth rates with the Consumer Price Index (CPI-U) and to allow States to share in program savings,” the budget proposal states.
Recent CMS efforts to allow states to implement Medicaid work requirements will continue. “The Budget would give States additional flexibility around benefits and cost-sharing, allow States to consider savings and other assets when determining Medicaid eligibility, and reduce waste by counting lottery winnings as income for Medicaid eligibility,” the proposed budget states.
Notably, in a footnote, the budget proposal calls for mandatory funding for certain ACA stabilization efforts. “In addition to the proposals listed, the Budget requests mandatory appropriations for the Risk Corridors program and for Cost Sharing Reduction payments. These proposals have no deficit effect,” the footnote states.
According to the HHS budget-in-brief, the proposal would fully fund the ACA Risk Corridors Program and exempt the program from sequestration.
340B drug pricing program
The proposed budget also targets 340B hospitals by “rewarding hospitals that provide charity care and reducing payments to hospitals that provide little to no charity care,” and states that “beginning in CY 2019, this proposal allows CMS to apply savings from a reduction in payment to hospitals for drugs purchased under the 340B program in a non-budget neutral manner.”
“Under this proposal, the savings from hospitals that provide uncompensated care equaling at least one percent of their patient care costs are redistributed based on their share of aggregate uncompensated care. Hospitals not meeting that threshold are not eligible for the redistribution, and the savings from their payment reduction will be returned to the Medicare Trust Funds,” the HHS budget-in-brief states.
In addition, the budget proposal pushes for a requirement that hospitals report how they use savings from the 340B program. The recommendations come days after the White House Council of Economic Advisers suggested that more oversight of the 340B program is needed.
“The administration’s interest in examining the integrity of the 340B drug pricing program mirrors our years-long investigation, which will help inform upcoming legislative efforts. Many of the administration’s other proposals to lower health care costs complement our continued commitment to addressing the cost drivers across every facet of our nation’s health care system,” House Energy & Commerce Committee Chair Greg Walden, R-Ore., said in a statement.
The budget makes a few notes regarding value-base payment reform. It says it will eliminate “low-value metrics” in performance-based payment models and change incentives to participate in alternative payment models by altering how the 5% bonus is paid out. Providers would be glad to see more upside to engaging in APMs, as many worry about taking on too much risk as they experiment with different models. As for metrics, it’s hard to argue against eliminating those that don’t accurately convey quality care that is efficient, but there are numerous disagreements about which metrics that might include.
The budget document also suggests HHS could work with the Drug Enforcement Agency to revoke the ability to prescribe certain controlled substances from providers with a pattern of abusive prescribing. It also proposes allowing Medicare to cover methadone treatment.
The budget lays out a plan to “prioritize funding” for programs that focus on meeting the needs of older Americans. It mentions providing assistance with transportation, nutrition and respite care for caregivers.
It also includes a proposal to remove uncompensated care payments from the Inpatient Prospective Payment System and create a new process that makes those payments based on hospitals’ share of charity care and non-Medicare bad debt reported on S-10 worksheets.
The budget claims its Medicare changes would produce more than $490 billion in savings over 10 years and extend solvency of the program by eight years.
The budget proposal also:
- Creates one payment system for all post-acute care systems and provide payments based on episode of care instead of site of care.
- Reduces Medicare reimbursement of bad debt from 65% to 25% over three years.
- Eliminates exemptions for site-neutral payment policy for off-campus hospital outpatient facilities.
- Establishes a prior authorization program for practitioners with high use of radiation therapy, therapy services advanced imaging and anatomic pathology service.
- Changes MIPS to assess clinician performance on the group level only.
The bottom line
The massive budget proposal is likely to largely be dead on arrival in Congress. But that doesn’t mean that it have no impact, one expert says.
“This year’s budget comes on the heels of a major Congressional agreement that explicitly funded many specific healthcare priorities, including $6 billion to fund responses to the opioid crisis and mental healthcare, $4 billion for Veterans Health, and $2 billion for the National Institutes of Health,” said Dan Mendelson, president at Avalere. “This budget discussion is meaningful in implementing these changes, as well as in proposing new policies that could potentially be pursued without Congressional approval.”
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