The following update was provided by Hall Render, NOSORH Legislative Liaison:

White House Budget Guidance Calls for Significant Discretionary Spending Cuts

At noon on February 27, the White House sent its initial budget guidance to the various federal agencies. President Trump’s proposal calls for an increase of $54 billion in defense spending and corresponding reductions to most non-security agencies. The White House has not detailed how deep the cuts to particular programs will be, but the President has said defense spending will be offset and paid by “greater savings and efficiencies across the federal government.”

Additional details will be discussed in President Trump’s State of the Union address on February 28. A full budget submission to Congress may be released in the coming months, but a specific timeline is unclear. Congress is expecting to receive a “budget blueprint” by mid-March. Congressional leaders have indicated their intent to pass an FY 2018 spending bill, but the timeline has been pushed back by at least a month.

While every President’s budget request is dead on arrival, House and Senate Republicans will most likely use the administration’s numbers as a broad outline in crafting their spending bills. If Congress were to adopt Trump’s plan, it would mean that all discretionary spending outside of national security would face roughly 10 percent cuts.

Draft House Republican ACA Replacement Plan Circulated

With the House and Senate set to return to Washington on Monday, a draft of the House legislation to repeal parts of the Affordable Care Act (ACA) was posted on February 24. The 106-page draft bill eliminates key aspects of the ACA while shifting more responsibility back to the states.  The draft bill is important because it is the first legislative text seen from House leadership, however the eventual bill that gets formally introduced could look much different.

The draft bill would repeal the ACA’s individual mandate and medical device tax. The draft bill would phase out Medicaid expansion over four years to 2020.  States could still cover Medicaid expansion costs if they choose, but they would receive less federal funding starting in 2020.

As indicated in last week’s ACA blueprint released by Speaker Ryan, the draft bill would end the current open-ended Medicaid entitlement and shift to capping payments to states based on the number of Medicaid enrollees, known as a per capita cap system. In place of ACA subsidies, the House bill starting in 2020 would provide tax credits based on age instead of income. For a person under the age of 30, the credit would be $2,000. That amount would double for beneficiaries over the age of 60.

House and Senate Republicans are still trying to reach consensus on the repeal of Medicaid expansion. Several members from states that expanded Medicaid want to provide states the option to keep Medicaid expansion and the enhanced federal match. This is the approach set out in the Cassidy-Collins Patient Freedom Act of 2017 (S. 191) which was introduced in late January and to date is the leading Senate ACA replacement proposal.

Another replacement provision of the draft house bill is $100 billion in State Innovation Grants to help subsidize the more expensive enrollees. The innovation grants address a portion of the pre-existing condition population, but with narrower protections than the ACA. To pay for the replacement, the draft bill proposes capping the tax exemptions for employer sponsored insurance at the 90th percentile of current premiums. Benefits beyond 90 percent would be taxed.

Speaker Ryan’s office indicated they would like to introduce ACA replacement legislation by early March. From that point, the House will attempt to pass the legislation through the budget reconciliation process by their informal deadline of April 6. The White House intends to unveil their ACA replacement plan by early to mid-March.  The Senate is operating on a slower timeline with the end of 2017 viewed as an informal deadline.

Rural Health Related Bills Introduced in February

Rep. Diane Black (R-TN) introduced a bill that seeks to ensure fairness in Medicare hospital payments by establishing a floor for the area wage index applied with respect to certain hospitals.  While the text is not yet available, Rep. Black introduced a similar bill last Congress to create a national minimum Area Wage Index of 0.874 for Medicare reimbursement of inpatient and outpatient health care services.  The intent of the bill is to ensure that hospitals in rural and underserved areas with lower average wages to not receive lower reimbursement rates.  Senator Johnny Isakson (R-GA) introduced a companion measure in the Senate (S. 397).

Senator John Thune (R-SD) introduced a bill to permanently prohibit CMS from enforcing the “direct supervision” requirement of outpatient therapeutic services for critical access hospitals and small, rural hospitals with 100 beds or fewer. CMS’ policy would require practicing physicians to directly supervise other certified medical professionals who deliver outpatient therapy services. The bill, S. 243, was also re-introduced in the House by Rep. Lynn Jenkins (R-KS).

Rep. Morgan Griffith (R-VA) introduced a bill (H.R. 1148) that would amend title XVIII of the Social Security Act to expand access to telehealth-eligible stroke services under the Medicare program. Senator Thune (R-SD) introduced a similar bill in the Senate (S. 431).

Rep. John Duncan (R-TN) introduced a bill (H.R. 860) that directs HHS to establish a grant program for States that provide flexibility in licensing for health care providers who offer services on a volunteer basis.


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