Trump budget slashes Medicaid, targets 340B
- 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.
- A political document more than anything else with Congress holding the purse strings, it 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.
A major target of the budget is Medicaid, which sees more than $1 trillion in cuts and is turned into a block grant program with greater power to states to implement means-testing. The document assumes repeal of most of the ACA, but interestingly includes funding for risk corridor and cost-sharing payments for insurers.
The plan also calls for a major cut to the CDC and 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 American Hospital Association was mostly critical of the budget, though it did praise infrastructure funding, efforts to improve rural broadband and the “willingness to tackle skyrocketing drug costs.”
AHA President Rick Pollack said “the federal budget should not weaken our commitment to provide access to quality hospital and health system services that provide a lifeline for our patients and communities.”
The budget makes a few notes on value-base payment reform. It would 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 AHA specifically condemned a proposal to create one payment system for all post-acute care systems and provide payments based on episode of care instead of site of care. It also objected to a provision that eliminates exemptions for site-neutral payment policies for off-campus hospital outpatient facilities.
The association also targeted 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 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. Elsewhere, however, the document calls for slashing the Supplemental Nutrition Assistance Program by more than 20%.
The budget contends 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:
- Reduces Medicare reimbursement of bad debt from 65% to 25% over three years.
- 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 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.
While the White House budget and the spending deal Congress just agreed to devote some funding to the crisis, public health experts estimate far more resources will be needed to make progress.
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, including letting states use savings and assets to determine Medicaid eligibility and counting lottery winnings as income.
Kentucky recently became the first state to implement a work requirement for beneficiaries, but several other states have expressed interest. Opponents of those proposals say most people on Medicaid already work and the requirement only adds to administrative hurdles they face in obtaining care.
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."
It also calls for savings from hospitals providing a certain percentage threshold of uncompensated care to be redistributed based on that percentage. Hospitals that do not meet the requirement do not receive any funds and their payment reductions are returned to the trust.
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.
Other items of note include consolidation of federal graduate medical education spending from Medicare, Medicare and the children’s hospitals GME program to a single grant program for teaching hospitals. It also prohibits certain abortion providers from receiving HHS funds under the Title X Family Planning program and Medicaid.
The massive budget proposal is likely to largely be dead on arrival in Congress.
But that doesn't mean that it will 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."