The President’s budget request for federal fiscal year (FFY) 2021 proposes a 10 percent reduction in the Department of Health and Human Services’ (HHS) budget. A signature piece of the budget features the President’s Health Reform Vision, which includes $844 billion in cuts over 10 years to implement the Administration’s efforts to provide “better care at lower costs.”
While the proposed budget is subject to Congressional review and expected to change, it is important for states to consider how the Administration’s priorities could affect public health programs. The following highlights some of the key budget proposals that impact state health programs.
- Increases oversight of the 340B Program. The proposal gives explicit oversight authority to the Health Resources and Services Administration (HRSA) with the goal of creating enforceable standards for participation and ensuring 340B benefits low-income and uninsured patients. Part of the increased funding for oversight ($34 million) will come from a new user fee on covered entities based on 340B sales.
- Bipartisan drug pricing proposals. The budget includes an allowance of $135 billion in savings for bipartisan Congressional drug pricing proposals. The Administration specifically supports efforts to improve the Medicare Part D benefit by establishing an out-of-pocket maximum and lowering out-of-pocket costs for seniors, as well as reforms to US Food and Drug Administration (FDA) approval and regulatory measures to bring lower-cost generics and biosimilars to market.
Health Insurance Markets
- Encourages expansion of coverage in the small-group market through Multiple Employer Welfare Arrangements (MEWAs). Provides additional funding to the Employee Benefits Security Administration to encourage adoption of policies to boost insurance coverage for small businesses. Specifically, the budget suggests promotion of MEWAs – an arrangement made when multiple employers coordinate to offer benefits to their employees – for example, association health plans are a type of MEWA. State regulation of MEWAs varies, though largely they are exempt from many requirements imposed on other health plans, including consumer protections codified under the Affordable Care Act (ACA). This investment follows prior action taken by this Administration to promote association health plans.
- Reductions in overall program funding. Proposes to cut $920 billion over 10 years from Medicaid.
Eligibility and Enrollment
- Requires work and community engagement initiatives. To receive Medicaid benefits, the budget proposes requiring all able-bodied, working-age, Medicaid-eligible individuals to find employment, participate in job training, or volunteer. It estimates this will generate $152.4 billion in savings over 10 years.
- Gives states the ability to change certain program elements and eligibility determination processes. Proposes to allow states to implement certain changes to Medicaid benefits and cost sharing, including making non-emergency medical transportation optional and allowing states to use state plan authority rather than a waiver to increase copayments for nonemergency use of emergency departments. Proposes to permit states to apply asset tests for individuals who are financially eligible for the program through the Modified Adjusted Gross Income (MAGI) standard. States would also be permitted to conduct eligibility redeterminations for MAGI-eligible individuals more frequently, to align with the soon-to-be released proposed rule on Medicaid eligibility determination processes.
- Requires documentation of immigration status prior to receipt of Medicaid. Proposes that before they receive Medicaid coverage, individuals must provide evidence of citizenship or satisfactory immigration status. While states will still be allowed to provide coverage during a reasonable opportunity period, they will not be able to receive federal match for these individuals during this time. This is estimated to save $2.6 billion over 10 years.
- Reduces maximum allowable home equity for Medicaid eligibility. Eliminates states’ ability to set a higher home equity limit for individuals seeking long-term care coverage through Medicaid, which is estimated to save $34.3 billion over 10 years.
Payments and Financing
- Changes the ACA’s financing for the expansion population. Indicates that it will end the “…financial bias that currently favors able-bodied working adults over the truly vulnerable.” While no specific details were provided about how precisely this would be accomplished, language in the budget brief references allowing states with expansion populations to elect a block grant or per capita cap to finance their coverage. No details were provided as to whether the existing federal match rate for expansion adults would be reduced, to what base rate that reduction would be, or when this change would be enacted by Congress.
- Reduces the federal match rate for Medicaid-eligible workers. Reduces the federal match rate for Medicaid-eligible workers from 75 percent to 50 percent by FFY 2024.
- Prohibits Medicaid payments to public providers in excess of costs. Proposes to limit Medicaid reimbursement for health care providers operated by a governmental entity to no more than the actual cost of providing services to Medicaid beneficiaries.
- Increases transparency of Medicaid financing and supplemental payments. Supports the finalization of a recently proposed rule that would require more data on states’ financing of Medicaid supplemental payments.
- Gives the Centers for Medicare & Medicaid Services (CMS) increased ability to recoup Medicaid improper payments and recover Medicaid and Children’s Health Insurance Program (CHIP) overpayments. Permits CMS to issue disallowances for payments made due to noncompliance with provider screening and enrollment requirements and collect overpayments made to states for ineligible or misclassified Medicaid beneficiaries.
- Continues Medicaid Disproportionate Share Hospital (DSH) reductions. Current law reduces Medicaid DSH allotments between FFY 2020 and FFY 2025. The budget proposes to continue DSH allotment reductions through FFY 2030 and estimates this will save $32.4 billion over 10 years.
- Modifies Institutions for Mental Diseases (IMD) payment exclusions. Allows states that meet certain criteria and requirements to receive federal Medicaid reimbursement for covered services provided to adults with serious mental illness living in IMDs, which is estimated to cost $5.4 billion over 10 years. Also, if a group foster home is considered a qualified residential treatment program (QRTP) and qualifies as an IMD, these QRTPs would be exempted from the IMD payment exclusion.
Other Proposed Medicaid Changes
- Eliminates Money Follows the Person (MFP) evaluation and reduces financing for the program, which provides funding to states to help transition people to home and community-based settings from institutions.
- Creates new MFP state plan option. Provides states the ability to establish an MFP program with an enhanced federal match for the first five years of services if they spend less than 50 percent of their long-term service and supports funding on home- and community-based services in the previous year.
- Extends Medicaid managed care waivers. Permits states to grandfather managed care authorities in waivers and demonstration programs if a waiver has been renewed once before and there are no substantive changes.
Proposals Affecting Individuals Dually Eligible for Medicare and Medicaid
- Coordinates review of Dual Eligible Special Needs Plans marketing materials. Allows for joint state and CMS review of marketing materials for Dual Eligible Special Needs Plans.
- Revisits Part D special enrollment period for dually eligible individuals. Clarifies the special enrollment period (SEP) for Medicare Part D to allow CMS to apply the same annual election process for all eligible individuals, but maintains the ability for dually eligible beneficiaries to opt into integrated care programs or to change plans following auto-assignment.
Children’s Health Insurance Program
- Creates a shortfall fund to replace Child Enrollment Contingency Fund. Calls for creation of a shortfall fund containing unused annual appropriations that could be distributed to states that need additional CHIP funding. This fund serves to replace the Child Enrollment Contingency Fund as of FFY 2022; the Performance Bonus fund would also be eliminated that year.
- Aligns Medicaid and CHIP policies on suspending and reinstating coverage for enrollees under age 21 who are incarcerated and released from custody. The Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act contains a policy requiring states to suspend coverage for youth under age 21 enrolled in Medicaid who are incarcerated instead of terminating coverage. The budget proposes extending this requirement to CHIP programs with the goal of providing access to health coverage upon release.
- Increase in Maternal and Child Health Services (MCH) Block Grant funding to offset reduction in other HRSA-funded programs to support children. Proposes a $60 million increase over FFY 2020 levels for the Title V MCH Block Grant, however this increase is combined with $97 million in reductions in other HRSA-funded programs for children, including: Sickle Cell Disease Treatment Demonstration, Autism and Other Developmental Disabilities, Heritable Disorders in Newborns and Children, and Emergency Medical Services for Children. This assumes states will fund the types of activities these programs previously funded through their MCH Block Grant programs.
- Continue funding and disseminating research into neonatal abstinence syndrome. Proposes $2.25 million to continue the Centers for Disease Control and Prevention’s (CDC) work to investigate neonatal abstinence syndrome and share findings to improve care and outcomes for children and families.
- Maintains Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program. Maintains MIECHV program at current levels.
- Level funding proposed for Children’s Mental Health Services grants. The budget proposes $150 million to the Substance Abuse and Mental Health Services Administration (SAMHSA) – consistent with FFY2019 funding – for Children’s Mental Health Services for state, tribes, and communities through competitive grant awards that promote collaboration between juvenile justice, child welfare, and education systems. Up to 10 percent of these funds are proposed for a new demonstration initiative that will target those at risk for developing serious mental illnesses.
The overall budget proposes $116 million for the President’s Improving Maternal Health in America Initiative. The initiative focuses on health outcomes for all women of reproductive age by improving prevention and treatment, healthy pregnancies and births by prioritizing quality improvement, health futures by optimizing post-partum health, and improved data and bolster research to inform interventions.
- Promotes state innovations to improve maternal health outcomes. Expands the State Maternal Health Innovation Grant Programby $30 million, the Alliance for Innovation on Maternal Health (AIM) by $10 million, and the Rural Maternity and Obstetrics Management Strategies (RMOMS) program by $10 million. There is a $50 million increase ($80 million total for FY 2021) to HRSA to improve the overall quality of maternal health services.
- Advances state efforts to combat maternal mortality and morbidity. The proposed budget invests $24 million in the CDC to expand maternal mortality review committees to all 50 states and DC.
- Allows states to provide postpartum coverage for pregnant women with substance use disorders (SUDs). Proposes to make it easier for states to offer pregnant women diagnosed with SUD full Medicaid benefits for one year postpartum, which would cost $205 million over 10 years.
- Maintains funding for family planning and health related services. Provides $286 million for the Title X family planning program but prohibits certain entities that provide abortion services from using the funding.
Prevention and Public Health
Substance use disorder and the opioid epidemic
- Increases grant funds to states for SUD prevention, treatment, and recovery:Adds $85 million over the FY20 budget for State Opioid Response (SOR) grants, bringing the total to $1.6 billion, and includes language to emphasize opportunities to expand activities to address methamphetamine and other stimulants. This increase, however, is coupled with decreases or total elimination of other SUD-related grants, which may lead to states re-aligning their existing activities into this grant.
- Reduces substance use prevention funding to states:Strategic Prevention Framework (SPF) grants to states have been reduced by over $109 million, eliminating all by SPF prescription drug funds, which were maintained at $10 million. This appears to assume that state prevention activities can be picked up in the increased SOR grant funds.
- Eliminates Medication-Assisted Treatment for Prescription Drug and Opioid Addiction (MAT-PDOA) grantsas part of the Targeted Capacity for Expansion (TEC) program that is designed to fill gaps in treatment capacity for communities. This $89 million reduction appears to assume that these treatment activities can be picked up in the increased SOR funding. Other funding within the program for peer-to-peer grants and special projects will be maintained at $11.2 million.
- Eliminates $30 million in federal funding for Screening, Brief Intervention, and Referral to Treatment (SBIRT)program grants, shifting payment for these services to states and third-party payers.
- Maintains funding for the Recovery Community Services Programs (RCSP)that will continue and enhance efforts to develop recovery networks and collaboration with peer organizations.
- Maintains level funding to states through the Substance Abuse Prevention and Treatment Block Grantat a total of $1.9 billion.
- Maintains level funding of $8.7 million for Opioid Treatment Programs (OTP) that provide methadone– funding also supports training and technical assistance for providers.
- Continues grants to nonprofitComprehensive Opioid Recovery Centers: Maintains $2 million in grants to nonprofit SUD treatment organizations as part of a four-year project that provides a continuum of treatment services.
- Supports State and Tribal Youth Implementation grants: Maintains nearly $30 million to fund 11 new grants and continue 35 existing grants that support states and tribes to address gaps in SUD treatment for youth and caregivers.
- Maintains level funding for justice-involved populations with SUD: Provides $89 million for 54 new and 92 existing drug courts and also supports 11 new and five existing Offender Reentry Program grants.
- Maintains Building Communities of Recovery programswith $8 million for 20 new and eight continuing grants that support recovery services.
- Maintains level funding to prevent and reverse overdoses:
- Provides a continued $41 million in funding to the First Responder Training program through $41.0 million in grants to states, localities, and tribes for purchasing and training of overdose-reversal drugs.
- Provides a continued $12 million through grants to states to purchase and distribute naloxone kits and provide overdose reversal training.
- Funding for Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) Act activities
- $5 million to fund hospitals and emergency departments for alternative pain management treatments intended to decrease opioid prescribing;
- $4 million to train emerging prescribers via 117 grants to medical schools and teaching hospitals to develop curricula to educate students on MAT and providing SUD treatment;
- $4 million to implement post-overdose bridges to SUD treatment; and
- $4.5 million project to 15 select states, to provide an enhanced FMAP (80 percent) for five of those states for some SUD services.
- Supports a tool that warns about emerging issues:Adds $10 million for the Drug Abuse Warning Network (DAWN), a surveillance system that can warn about emerging SUD and behavioral health crises.
- Increase of $18 million, for a total of $25 million, for the Assertive Community Treatment for Individuals with Serious Mental Illness program to help 33 communities establish, maintain, or expand efforts to engage patients with serious mental illness through emergency and inpatient settings.
- $25 million for Assisted Outpatient Treatment to expand SAMHSA’s existing grant program. The program has achieved favorable outcomes in reductions in hospitalization, emergency department visits, and substance use, and increases in mental health functioning.
- $35 million increase, including a new 5 percent set-aside, in all states and territories to build crisis systems for individuals in mental health crisis. States will continue to spend at least 10 percent of the funds on early interventions for those experiencing a first episode of psychosis.
- $225 million ($25 million increase) for certified community behavioral healthcenters –clinics certified by SAMHSA and funded through a prospective payment model, similar to federally qualified health centers (FQHC).
- Provides direct support for rural communities to address SUD needs:Maintains level funding for the Rural Communities Opioid Response Program (RCORP), providing a total of $110 million in grant funds to communities to address prevention, treatment, and recovery while building infrastructure and capacity. Adds new pilot programs to address the unique and emerging needs of rural communities responding to the opioid and SUD crises.
- Supports infectious disease prevention and surveillance in high-risk regions:Increases existing funding by $48 million for activities that reduce the transmission of infectious disease and the incidence of potentially fatal cardiac and skin infections as a consequence of the opioid epidemic.
- Maintains $475 million and builds on existing support for data capacity in states and other jurisdictions: Through Opioid Abuse and Overdose Prevention funding, CDC will continue to support states in tracking both fatal and non-fatal drug overdoses and prescribing patterns.
- Shifts Drug-Free Communities funding to CDC: Moves $100 million from the Office of National Drug Control Policy (ONDCP) that was previously administered by SAMHSA as prevention grants, into the CDC budget.
- Proposes a $350 million block grant program for states to address chronic disease priorities, including tobacco control and prevention, nutrition and physical activity, heart disease and stroke, diabetes, and arthritis.
Chronic disease prevention and management
- Supports training for behavioral health workforce:Maintains $139 million within Behavioral Health Workforce Development (BHWD) Programs that train professionals in under-served communities (including at health centers) and supports an addiction medicine fellowship.
- Expanded support for the Ending the HIV Epidemic initiative:
- $137 million (an increase of $87 million) for HIV prevention services in FQHCs, including pre-exposure prophylaxis (PrEP), outreach efforts, and care coordination in approximately 500 community health centers.
- Additional $95 million allocated for the Ryan White HIV/AIDS program.
- Cuts CDC’s total discretionary budget authority by $1.289 billion, compared to 2020 funding levels.Program-level cuts would be $175 million. Other changes include:
- A cut of $427 million for chronic disease prevention and health;
- An increase of $40 million for influenza monitoring and prevention; and
- The creation of the America’s Health Block Grant as a means of reforming state-based chronic disease programs.
- Proposes a new user fee on e-cigarettes. The budgetcontains $812 million in user fees to support FDA’s anti-tobacco programs, which includes a new $100 million fee to be collected from e-cigarette manufacturers. It also proposes to move the FDA’s Center for Tobacco Products to a newly created agency within HHS.
Programs Addressing Social Determinants of Health
Some components of the HHS and Department of Housing and Urban Development (HUD) budgets could affect states’ abilities to address health through housing and other social determinants of health initiatives.
- Cuts HUD funding by $8.6 billion — a 15.2 percent decrease from the 2020 enacted budget.
- Proposes changes to federal investment in rental assistance.The budget request would increase rental assistance to $41.3 billion, which would maintain services for all currently enrolled HUD-assisted households. Uniform work requirements would be placed on “work-able” households.
- Adds funds to the Rental Assistance Demonstration program, which supports transitioning public housing to housing voucher and project-based rental assistance units.
- Increases funding for lead-safe healthy homesby $69 million to $240 million.
- Supports reductions to existing programs:
- Cuts $80 million from Housing Opportunities for People with AIDS, and
- Would eliminate the Community Development Block Grant.
- Proposes policy and financial changes for safety net programs.The budget cuts $15.3 billion from the Supplemental Nutrition Assistance Program (SNAP) and cuts approximately $1.1 billion from the Temporary Assistance for Needy Families (TANF) block grant. Would apply consistent work requirements for federally funded public assistance programs, including SNAP, Medicaid, and TANF.
Long-term services and support
- Cuts family caregiver services by $35 million, which provides grants to states and territories to fund various supports that help family caregivers care for older adults in their homes.
- Cuts state councils on developmental disabilities by $22 million, which are charged with identifying the most pressing needs of people with developmental disabilities.
- Reduces National Institute on Disability, Independent Living, and Rehabilitation Research by $21.6 million.
- Cuts state health insurance assistance programs by $16 million, which are state programs that receive federal funding to provide free, local health coverage counseling to people with Medicare.
Health Care Infrastructure and IT
- Supports rural health care infrastructure. Authorizes up to $2.5 billion for loans to assist communities with developing or improving public services in rural areas, including rural health clinics. Allows critical access hospitals to voluntarily convert to rural stand-alone emergency hospitals, which would enable those facilities to draw in Medicare payments at emergency department rates without the additional burden of maintaining in-patient beds.
- Promotes price transparency and health IT interoperability. Finances several agencies to enable implementation of policies related to the President’s Executive Order to encourage price transparency. This includes $51 million to the Office of the National Coordinator for Health Information Technology for efforts to advance interoperability, electronic information sharing, and to align patient health and cost information.
- Enforces conscience protection laws. Makes permanent the Weldon Amendment, which prohibits government agencies — including state agencies that receive federal money — from discriminating against entities or individuals who refuse to provide or refer for abortions. Expands the authority of the Office of Civil Rights enforce the Weldon Amendment.
Other proposals addressed in the Administration’s budget include:
- Access to better care at lower costs;
- Personalized care;
- Protection for pre-existing conditions;
- Policies to encourage choice and affordability of coverage; and
- Policies to address surprise medical bills.