CBO releases updated score on federal healthcare spending over next decade

CBO releases updated score on federal healthcare spending over next decade

At the agencies

The Congressional Budget Office (CBO) released an updated score of federal healthcare spending over the next decade which predicted that spending for people under 65 will total about $705 billion in 2017, and grow to $1.7 trillion by 2027. Net spending on healthcare for the same period will be about $9.2 trillion, which includes $4 trillion for Medicaid and the Children’s Health Insurance Program (CHIP), and another $3.9 trillion for the tax treatment of employer-sponsored coverage. CBO’s predictions assume that subsidies for individual market coverage will be $137 billion lower than earlier estimates, with four million fewer Americans expected to enroll in coverage through the exchanges.

The Centers for Medicare and Medicaid Services (CMS) has received a number of comments from concerned hospitals and providers over the agency’s proposal to further reduce funding for off-campus provider-based departments. CMS issued a proposal that would cut pay rates for physician practices that hospitals buy down to 25 percent of hospital rates in 2018. Multiple stakeholders pointed to the lack of data CMS has to justify the additional reduction in pay rates for these off-campus facilities, and asked that CMS delay further changes to the rates until they have sufficient data to inform their policymaking. 

CMS announced it is seeking stakeholder input on several methodology re-evaluation items designed to enhance the overall star rating methodology. The agency recently issued a notice seeking public input on possible enhancements to the overall hospital quality star ratings and requested specific feedback on how measures should be weighted, whether certain measures should be incorporated into the star ratings and possible changes to the public reporting thresholds as well as the minimum measures. Despite the request for input, hospitals remain concerned about the overall star rating methodology.

On the Hill

The House Energy & Commerce health subcommittee unanimously passed seven bipartisan Medicare-related bills that mirror the Senate’s Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017. The various pieces of legislation include language that will increase access to remote telemedicine services for certain stroke patients, permit telemedicine to be included as a basic benefit for Medicare Advantage enrollees, extend a Medicare demonstration program that provides a home-based primary care benefit to high-need Medicare beneficiaries with multiple chronic conditions, update civil and criminal penalties for Medicare violations and enhance reporting regarding Medicare beneficiaries’ access to diabetic testing supplies, among other items.

Leaders of the Senate Finance Committee announced a five-year deal to extend CHIP funding at an estimated cost of $8 billion. The proposal includes a phase-out of the 23 percent funding bump that was included in the Affordable Care Act, maintaining the 23 percent through 2019, then dropping the payment to 11.5 percent in 2020, and eliminating it entirely in 2021. The negotiated deal would also allow states to drop the eligibility level down to 300 percent of poverty after 2019, instead of 405 percent. Although this deal was announced by Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR), legislative text has not yet been introduced, and the bill will need to go through the entire legislative process in both the House and Senate. CHIP is currently authorized through 2019, but funding for the program runs out at the end of September.

The Senate Health, Education, Labor and Pensions (HELP) Committee held a series of four hearings earlier this month, emphasizing the need for individual market stabilization. As expected, hearing topics includes funding for cost-sharing subsidies and granting states increased flexibility in designing their individual health insurance markets. All experts urged Congress to provide funding for cost-sharing subsidies, noting that the uncertainty related to these payments is disrupting the market and has the potential to lead to additional increases in premiums for individuals.

Senator Bernie Sanders (I-VT) released Medicare for All legislation this week that would overhaul the existing healthcare system and guarantee coverage for hospital care and ambulatory care services, but does not include an overall financing mechanism. The proposed legislation would cut out all insurers and put all federal money for health programs besides Veterans Affairs and Indian Health Services into a Universal Medicare Trust Fund. Within four years of the effective date of this bill, everyone would be eligible for coverage and would be guaranteed nine services, including: hospital care; ambulatory patient services; primary and preventive care, including chronic care; prescription drugs, medical devices and biological products; mental health and substance use disorder care; laboratory and diagnostic services; comprehensive reproductive, maternal and infant care; pediatrics; and dental, hearing and vision care.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.

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