Mar, 15, 2024

Insights on Federal Healthcare Priorities

Manatt Health 

Introduction

Over the past week, two high-profile events provided insight into federal priorities in Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the Affordable Care Act (ACA) Marketplaces. On March 9, Congress passed and the President signed a “minibus” funding bill (H.R. 4366), funding about half of the government agencies[1] for fiscal year (FY) 2024 and deferring action until March 22 for remaining agencies, including the U.S. Department of Health and Human Services (HHS). And on March 11, the White House released the President’s Budget for FY 2025, articulating the Biden administration’s healthcare policy priorities for the upcoming year.

This expert perspective reviews the healthcare policies and programs recently funded by Congress for FY 2024 as well as the Biden administration’s stated healthcare priorities for FY 2025.

Healthcare Policies Funded by Congress for FY 2024

The minibus includes a number of health policies. The funding legislation:

  • Delays the Medicaid disproportionate share hospital payment cuts through December 31.
  • Extends funding for several public health programs, including Community Health Centers, National Health Service Corps, and the Special Diabetes Programs.
  • Provides a temporary increase of 1.68% for services reimbursed under the Medicare Physician Fee Schedule provided between March 9 and December 31, 2024. (This reimbursement increase roughly cuts in half the 3.4% payment cut that went into effect on January 1 by regulation.)
  • Addresses operational barriers and access issues for Medicaid and CHIP enrollees during and following incarceration by:
    • Prohibiting states from terminating Medicaid eligibility for an individual while they are incarcerated. (Beginning January 1, 2026, states must not terminate but suspend coverage for adults who enter a correctional facility already enrolled in Medicaid coverage.)[2]
    • Authorizing $115.5 million in planning grants to support Medicaid/CHIP eligibility, enrollment, and suspension processes in carceral settings. Funds—which can be used for a variety of purposes[3]—will be awarded by March 2025; and planning grant amounts will be determined based on factors including: the number of individuals incarcerated in a state who are eligible for Medicaid/CHIP; the number of correctional facilities in the state; and the state’s progress on promoting continuity of care for this population (with favorable consideration given to states with less progress to date).
    • Directing HHS to issue guidance to states by September 2025 on common challenges to meet enrollment and eligibility requirements; and best practices and strategies related to completing Medicaid/CHIP applications and renewals, opportunities for Medicaid administrative matching funds, and establishing community-based provider networks to provide services before, during, and after incarceration.
  • Extends access to behavioral health by making permanent the requirement that state Medicaid programs cover all forms of medication for opioid use disorder, requires agency guidance on “improving the behavioral health workforce and integration of care under Medicaid and CHIP,” and establishes Certified Community Behavioral Health Clinic services as an optional state Medicaid benefit.

Looking Ahead: Congress will continue to debate FY 2024 funding for HHS and any health policies that may accompany funding bills and has until March 22 to enact the remaining appropriations bills. In accordance with the Fiscal Responsibility Act (i.e., the debt limit deal), if Congress fails to enact any of the twelve appropriations bills by April 30, spending for all discretionary funding accounts will be cut across the board by 1% below FY 2023 levels.[4]

Biden Administration Healthcare Priorities

The President’s Budget, released on March 11, includes calls to expand the Inflation Reduction Act policies to cap out-of-pocket drug spending and limit the prices Medicare pays for drugs. It also tracks closely with policy priorities in President Biden’s prior budgets. The FY 2025 budget proposes $130.7 billion in discretionary funding for HHS and includes a $4.3 billion request for program management at the Centers for Medicare & Medicaid Services (CMS).

With respect to the Medicaid and CHIP programs, the HHS budget proposes to:

  • Expand CE policies by allowing states to provide CE from birth until age six, as well as 36 months of CE for all children under age 19.[5]
  • Require all states to provide continuous coverage for 12 months postpartum in Medicaid and CHIP.[6]
  • Create a new, optional maternal health benefit in Medicaid that would cover services provided by doulas, community health workers, nurse home visiting, and peer support workers. The benefit would be paired with an enhanced federal match for the first five years to incentivize state take-up.
  • Invest in Medicaid home and community-based services.
  • Make permanent the Medicaid Certified Community Behavioral Health Clinic demonstration program.
  • Give CMS statutory authority to withhold federal financial participation (FFP) for Medicaid managed care capitation on a service-by-service basis to increase federal oversight and compliance.[7]
  • Require states to collect remittances when managed care plans fail to meet a minimum 85% medical loss ratio to encourage investments in quality improvement activities and restrict profit retention.
  • Establish a 12-month renewal period for Qualified Medicare Beneficiaries with income below the federal poverty level to align with other Medicaid eligibility groups.

With respect to Marketplace coverage, the HHS budget proposes to:

  • Permanently extend the Marketplace enhanced premium tax credits for ACA Marketplace coverage.
  • Address the Medicaid coverage gap by creating a Medicaid-like private insurance product for low-income people living in states that have not expanded Medicaid.[8]
  • Fund federal Marketplace (HealthCare.gov) operations.

For an overview of all HHS proposals, see the HHS Fiscal Year 2025 Budget in Brief.

Looking Ahead: The President’s FY 2025 budget signals the administration’s healthcare policy priorities for the upcoming year. In addition to Medicare drug pricing, other healthcare-related areas of focus are likely to include maternal and child health, behavioral health, and coverage affordability and access.

[1] Agencies include Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; Commerce, Justice, Science, and Related Agencies; Energy and Water Development and Related Agencies; Interior, Environment, and Related Agencies; Military Construction, Veterans Affairs, and Related Agencies; and Transportation, Housing and Urban Development, and Related Agencies.

[2] This provision aligns with existing requirements set forth in the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) Act, which prohibits states from terminating Medicaid coverage for youth.

[3] For example, to identify and address operational issues in Medicaid/CHIP enrollment processes during incarceration; establish standardized processes to identify eligible individuals; automate systems to submit, renew, and suspend/unsuspend coverage; update or build IT systems to support bi-directional data sharing between correctional settings and stead Medicaid agencies; and establish claims processing systems for individuals who are eligible for Medicaid or CHIP covered services while incarcerated.

[4] The Office of Management and Budget (OMB) is the ultimate authority as to whether a spending measure will trigger the 1% cut, and many fiscal experts believe that OMB will deem a year-long, across-the-board continuing resolution (CR, extending through the end of September) to not trigger those cuts. However, OMB is unlikely to say that publicly in order to put maximum pressure on both parties to pass an appropriations omnibus, since a year-long CR would result in significant cuts below current levels.

[5] States are currently required to provide 12-month CE to children covered by Medicaid or CHIP.

[6] States currently have the option to extend Medicaid and CHIP coverage for one year following a baby’s birth.

[7] Currently, CMS’ primary enforcement mechanism for compliance issues is to withhold all FFP for the whole contract, which is not typically used.

[8] This proposal would be paired with financial incentives for Medicaid expansion states to maintain their existing expansions.