President Biden’s Budget Invests in Healthcare

Although President Biden’s budget is almost always dead on arrival on Capitol Hill, it serves as an outline of the administration’s priorities. In the budget process, the House and Senate are to work separately on budget resolutions which also serve as an organizing document of priorities, and then conference to create one budget resolution. The House Budget Chair, Rep. Jodey Arrington (R-TX) has already said that his committee’s proposal would take at least 30 more days to finish.

The Biden Budget contains many significant healthcare proposals:

Medicare Solvency

The president’s budget plan to increase Medicare solvency by 25 years would:

• Raise the Medicare surtax on earned and unearned income above $400,000 from 3.8% to 5%;
• Close loopholes in existing Medicare taxes and dedicate the Medicate net investment income tax to the Hospital Insurance (HI) Trust Fund, addressing the way some business owners have managed to shield some of their income from tax by claiming it as neither earned income nor investment income;
• Credit savings from the prescription drug reforms passed last year to the HI Trust Fund, equaling up to $200 billion over 10 years;
• Lower out-of-pocket costs for drugs subject to negotiation (the budget expands Medicare drug negotiations);
• Limit cost sharing for generic drugs used to treat chronic conditions to $2; and
• Lower behavioral healthcare costs in Medicare by eliminating cost sharing for three mental health or other behavioral health visits per year and requiring parity between physical health and mental health coverage in Medicare. The budget also requires coverage and payment for new types of Medicare providers, such as peer support workers, certified addiction counselors, as well as evidence-based digital applications and platforms that facilitate delivery of mental health services while removing limitations on beneficiary access to psychiatric hospitals.

Medicare Advantage

The budget proposes to put in place an 85% medical loss ratio requirement on supplemental benefits and require that plans report providers’ identification to Centers for Medicare and Medicaid Services (CMS) as part of encounter data.

More than half of Medicare beneficiaries are expected to be in Medicare Advantage (MA) plans in 2023.

At the same time, Congress and the Medicare Payment Advisory Commission are concerned that MA plans are reimbursed at 106% of what would be Part A and B costs in traditional fee for service Medicare. This, the administration says, is negatively affecting Part A Trust Fund solvency and increasing Part B premiums. To address this, the budget contains a proposal to have a targeted risk adjustment pre-payment review for MA plans to confirm beneficiaries’ diagnosis before CMS makes risk adjusted payments. This step will improve accuracy in the program’s reimbursement of plans, according to the administration.

Prescription Drug Measures

The administration says its prescription drug measures would save more than $200 billion over 10 years. Among those proposals, the administration wants to expand the number of drugs the CMS can negotiate. The proposal would permit CMS to negotiate 20 Part D drugs in 2026 and 40 Part B drugs each subsequent year. In addition, drugs and biologics would be excluded from negotiation for five years, a change from current law’s effective nine years for small molecule drugs and 13 years for biologics.

In addition, the administration would cap commercial insurance monthly co-pays for insulin to $35.

ACA Enhanced Tax Credits

The budget provides HHS with $183 billion to permanently extend the Affordable Care Act’s (ACA) tax credits. This would eliminate premium contributions for enrollees earning 100% to 150% of the federal poverty level (FPL) and limit an individual’s contribution to no more than 8.5% of income for those making more than 400% FPL. In addition, the budget proposes a Medicaid-like program for people living in states that have yet to expand the program, combined with incentives to ensure existing expansion states maintain their expanded Medicaid coverage.

Long-term Care

The budget would make investments to strengthen home and community-based services, improve quality of care in nursing homes and would require more transparency in ownership.

Preparing for Pandemics

The proposal includes $20 billion for HHS’ pandemic prevention and preparedness efforts and would make investments in research and the procurement of vaccines, therapeutics, and tests in the nation’s stockpiles.

Behavioral Health

The budget proposes requiring all plans, including group health plans to provide mental health and substance use disorder benefits and to use medical necessity criteria for services that are consistent with those developed by non-profit specialty associations. In addition, it authorizes the Department of Health and Human Services and the Departments of Labor and Treasury to regulate network adequacy for behavioral health and to issue regulations on a standard for parity in reimbursement rates.

National Hepatitis C Initiative

The budget proposes the creation of a five-year national program to expand screening, testing, treatment, prevention, and monitoring of hepatitis C infections around the country. The program would support the federal procurement of medications while seeking to increase the capacity for providers to offer resources to increase the number of Americans treated for hepatitis C. The budget also proposes a national subscription-based payment model for hepatitis C drugs that the administration says would reduce Medicaid spending by hundreds of millions of dollars per year by 2032.

Telehealth

The Health Resources Services Administration (HRSA) would be provided increased funding for telehealth as well as to increase health care quality, access and to improve health outcomes in rural and underserved areas. The budget also includes $30 million to assist rural hospitals at risk of closure and to support hospital service lines expansion to meet the needs of rural patients, including telehealth.

Behavioral Health

The budget proposes an increase in spending for behavioral health. The Substance Abuse and Mental Health Services Administration (SAMHSA) budget would increase by $3.3 billion from last year. The agency’s proposed budget includes provisions for treating the opioid disorder epidemic, including funding for treatment and prevention. In addition, $4.9 billion would go toward mental health activities, including more community programs, pediatric behavioral health services and support for individuals with serious mental health illnesses.

In addition, the budget proposes increased funding for Centers for Disease Control and Prevention initiatives as well.

HRSA also would receive additional funding to train more than 18,000 behavioral health providers and expand community-based experimental opportunities.

Food and Drug Administration

The Administration would provide $372 million in new funding for the Food and Drug Administration. A majority of the new spending is proposed for food safety, tobacco oversight and drug programs.