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February 13, 2018

Trump budget calls for $554B in Medicare cuts over 10 years, 'transition' away from ACA

Daily Briefing

    The White House on Monday released President Trump's fiscal year (FY) 2019 budget proposal, which calls for significant cuts to Medicaid and other programs for low-income U.S. residents, while increasing funding for efforts to combat opioid misuse.

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    The proposal, called "Efficient, Effective, Accountable: An American Budget," is viewed as an outline of the administration's federal funding requests. Congress ultimately drafts and approves federal spending measures, which the president must sign into law.

    FY 2019 budget proposal details

    Trump's budget proposal requests $95.4 billion in discretionary HHS funding for FY 2019—up from the $86.7 billion in discretionary funding HHS received in FY 2017, with some federal health care agencies seeing budget increases and others seeing budget cuts.

    For instance, the budget proposes increasing funding for:

    • The Indian Health Service, which would receive a total of $550 million in additional funding for FY 2019, bringing the agency's total budget to almost $5.6 billion;
    • NIH, which would get $35.5 billion in FY 2019—up by $1.4 billion from FY 2018; and
    • FDA, which would get $5.8 billion in FY 2019—up by $473 million from current funding levels.

    The budget also proposes $85.5 billion in funding for VA health care and other programs.

    Compared with FY 2017 levels, the proposal would reduce budgets for:

    • CDC by $703 million, including a $600 million cut to the agency's public health preparedness programs and a $175 million boost for opioid programs;
    • HHS' Office for Civil Rights from $39 million to $31 million;
    • Office of the National Coordinator for Health IT from $60 million to $38 million;
    • The Substance Abuse and Mental Health Services Administration's substance misuse and mental health block grant programs by nearly $700 million; and
    • Health care workforce training programs available under the Health Resources and Services Administration by $744 million cut, though the agency would receive an additional $550 million for opioid-specific programs.

    In addition, the budget proposal would eliminate HHS' Social Services Block Grant, which the White House projects would save $16.7 billion over a decade, and would move, rename, and reduce funding for the Agency for Healthcare Research and Quality from $324 million to $258 million.

    The budget proposal also would:

    • Cut the Temporary Assistance for Needy Families block grant by $1.7 billion in FY 2019, which the White House estimates would save $21.3 billion over 10 years;
    • Decrease funding for health professional training programs from $539 million to $88 million; and
    • Reduce funding for the Agency for Healthcare Research and Quality from $324 million to $258 million, move the agency to be housed under NIH, and rename the agency as the National Institute for Research on Safety and Quality.

    In addition, Trump's budget proposal would transfer two of the Office of National Drug Control Policy's (ONDCP) grant programs, which account for about 95% of ONDCP's budget, to the Department of Justice and HHS. Overall, the budget proposal calls for $17 million in funding for ONDCP.

    Medicaid, ACA reforms

    The proposed budget would significantly reduce federal Medicaid spending over 10 years, in part by repealing the Affordable Care Act and replacing it with a proposal similar to one offered last year by GOP Sens. Lindsey Graham (S.C.) and Bill Cassidy (La.). That plan would redirect part of the funding from ending the ACA's Medicaid expansion and federal subsidies to provide state block grants.

    The proposal also calls for changing Medicaid into a block grant program or implementing per capita caps on federal Medicaid spending. The proposal would tie growth rates for the new system to the consumer price index (CPI), which is lower than the medical CPI. All told, the changes would reduce federal Medicaid funding by $675 billion by 2028.

    In addition, the budget proposal calls for $812 million to allow the federal government to pay insurers money they are owed under the ACA's risk corridors program, as well as money to fund the ACA's cost-sharing payments to insurers for FY 2018 and FY 2019.

    According to CQ News, the budget proposal also would allow up to five states to expand their control over what prescription drugs their Medicaid programs cover and to negotiate prices with drug companies. In addition, the budget proposal would limit Medicaid coverage to individuals with verified immigration statuses, which the White House estimates would save nearly $2.2 billion over a decade. The budget proposal also would make it easier for states to implement copay requirements for Medicaid beneficiaries who seek emergency care in non-emergency situations, which the White House estimated would save $1.3 billion over 10 years.

    Medicare reforms

    Further, the budget proposal calls for about $554 billion in cuts to Medicare spending over 10 years through various reforms. For instance, the budget proposal calls for implementing a single payment system for post-acute care providers, which include home health care agencies, nursing homes, and rehabilitation facilities. The White House estimates that such a system will save about $80 billion over 10 years.

    In addition, the budget proposal suggests that Medicare reimburse hospital-owned physician offices at the physician payment rate instead of the hospital payment rate, which the White House estimates would save $34 billion over 10 years, according to the Post.

    The budget proposal also calls for measures intended to reduce Medicare beneficiaries' prescription drug costs by requiring Medicare Part D insurers to pass on a portion of the rebates they receive for prescription drugs to beneficiaries. The budget also would exclude the rebates beneficiaries receive from calculations of their out-of-pocket drug costs, which could help them to avoid hitting Medicare Part D's so-called "doughnut hole." The White House estimated that change would save $47 billion over a decade. In addition, the budget proposal would:

    • Eliminate copayment requirements for generic drugs for low-income beneficiaries; and
    • Permit CMS to begin billing some drugs current covered under Medicare Part B to Part D plans, which would allow insurers to negotiate prices for those drugs.

    The budget proposal also calls for consolidating federal medical residency programs across children's hospitals, Medicaid, and Medicare to focus on underserved areas and specialties, CQ News reports. The White House estimates the consolidation would save $48 billion. The budget proposal also calls for $70 billion in new cuts to Disproportionate Share Hospital payments and $1.2 billion in cuts to hospital payments "when a patient is quickly discharged to hospice."

    White House's plan to combat opioid misuse epidemic

    The budget proposal calls for nearly $10 billion in discretionary funding to address the U.S. opioid misuse epidemic. The White House said much of the funding would go to HHS "to combat the opioid [misuse] epidemic by expanding access to prevention, treatment, and recovery support services, as well as support for mental health." In addition, the budget proposal states that:

    • $100 million in funding would be used for activities intended to prevent opioid misuse;
    • $100 million would be used for a public-private partnership between NIH and the pharmaceutical industry to develop substance use disorder treatments, misuse-deterrent painkillers, and overdose reversal drugs;
    • $50 million would be used for a media campaign regarding opioid misuse; and
    • $50 million would be used to distribute drugs that can reverse opioid drug-related overdoses to emergency workers.

    In addition, the budget proposal calls for comprehensive Medicare coverage for substance use disorder treatment, such as providing bundled payments to providers on a per-week-per-patient basis for medication-assisted treatments. The budget proposal also calls for Medicaid to cover all FDA-approved medication-assisted treatments. Further, the budget proposes measures intended to address high opioid prescribing and use in Medicaid and to require insurers to participate in a program aimed at preventing prescription drug misuse among Medicare Part D beneficiaries.

    Experts, industry react

    According to Politico's "Pulse," various public health groups have criticized the budget proposal, saying increased funding to fight the opioid misuse epidemic should not come at the cost of other public health funds.

    Mike Fraser, executive director for the Association of State and Territorial Health Officials, in a statement said, "It is critical that these funds supplement and not supplant core public health funding."

    Chuck Ingoglia, SVP of public policy at the National Council for Behavioral Health, said, "We are deeply concerned to see [Trump's] proposed cuts to Medicaid, which would devastate this critical source of coverage for mental health and addiction care."

    Further, the Campaign for Sustainable Rx Pricing said Trump's proposals do "nothing to attack the root cause" of rising prescription drug prices.

    According to the Associated Press, others said Trump's Medicare Part D proposals would only help beneficiaries with the highest drug costs, and could raise out-of-pocket costs for remaining beneficiaries. Tricia Neuman, director of the Kaiser Family Foundation's Program on Medicare Policy, said, "The package reduces costs for some but increases costs for others, and the effect on premiums is not clear."

    Meanwhile, hospitals lambasted the Medicare reforms included in Trump's budget proposal.

    Federation of American Hospitals President Chip Kahn said, "These unsustainable cuts would directly impact hospitals' ability to serve patients."

    Likewise, American Hospital Association President Rick Pollack said the Medicare reforms "would weaken the important safety net" (Horsley, NPR, 2/12; Mui/Pramuk, CNBC, 2/12; Vitali, NBC News, 2/12; Paletta/Werner, Washington Post, 2/12; Jagoda, The Hill, 2/12; Sink, Bloomberg, 2/12; FY 2019 budget proposal, 2/12; Ehley, "Pulse," Politico, 12/13; Siddons/McIntire, CQ News, 2/12 [subscription required]; Ricardo Alonso-Zaldivar, AP/Sacramento Bee, 2/13; Davis, Healthcare IT News, 2/12; Weixel, The Hill, 2/12; Gibson/Oliphant, Reuters, 2/12; Dickson, Modern Healthcare, 2/12).

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