Today, the White House Office of Management and Budget released An American Budget, the fiscal year 2019 budget for the US Government. Concurrently, the Department of Health and Human Services released its FY 2019 Budget in Brief. Together, these documents propose significant savings while making a number of changes to federal healthcare programs. A brief summary of proposals relevant to healthcare providers is below, however, nearly all of these proposed changes must be passed into law by the Congress before any effects may be realized

Medicare Savings (saves $266.191 billion, extends Medicare solvency by 8 years)

• Reform uncompensated care
  • Decouples payments from Medicare
  • Slows spending growth
  • New process to allocate uncompensated care amounts to hospitals based on charity care and non-Medicare bad debt.
• Consolidate graduate medical education payments
  • Transfers Medicare, Medicaid, and Children’s Hospital GME programs into a single capped program
  • Targeted to address medically underserved communities and health professional shortages
• Transition to site-neutral payments for post acute care over 5 years
  • Payment based on the anticipated clinical needs and risk factors of the patient, rather than the site of service.
  • All types of facilities would remain available
• Eliminate current grandfathered-in rate for hospital-owned physician offices located off-campus
  • Equalize Medicare reimbursement for all physician practices and off-campus facilities
• Reduce hospital payment when a patient is quickly discharged to hospice
• Reform and expand durable medical equipment competitive bidding
  • Eliminate single payment amount; Reimburse winning durable medical suppliers at their bid amounts
    • Intended to encourage more realistic bids
  • Expand competitive bidding nationwide
    • If not enough suppliers bid in an area, would use a similar area to set payment rates
• Let Medicare beneficiaries with high deductible health plans make tax deductible contributions to Health Savings Accounts and Medical Savings Accounts
• Eliminate required face-to-face provider visit for dura­ble medical equipment

Medicare Part D & Other Drugs (saves $5.7 billion)

• Exclude manufacturer discounts from out-of-pocket costs
• Part D plans to share savings from rebates with patients
• Establish out-of-pocket maximum in catastrophic phase of Part D
• Reduce wholesale acquisition cost payments in Part B
• Let Part D plans negotiate drug costs for certain drugs in Medicare Part B
• Increase Part D formulary flexibility
• Clarify the definition of an innovator and non-innovator drug in Medicaid.
• Eliminate cost-sharing on generic drugs for low-income patients
• Modify 340B payments
  • Requires a minimum level of charity care to receive payment
• Change FDA’s first generic 180-day exclusivity
• Let some states negotiate drug prices and establish a formulary in Medicaid

Electronic Health Records & the Quality Payment Program

• Eliminate the reporting requirements for use of electronic health records
• Eliminate participation thresholds for advanced Alternative Payment Models
• Simplify participation in the Mer­it-based Incentive Payment System (MIPS)

As HHS elaborates on these proposals over the coming weeks and months, we will continue to provide updates. If your organization has questions about how the budget proposals might impact your business and the patients you serve, don’t hesitate to contact us at gpugh@appliedpolicy.com or 202-558-5272.