United States: The Bipartisan Budget Act Boosts Medicare: Flexibility And Financing For Healthcare Plans And Providers

On Friday, February 9, 2018, President Trump signed the Bipartisan Budget Act of 2018 (the "Budget"), a two-year budget which, in significant part, made substantial revisions to Medicare, including the Medicare Advantage (MA) program. Such revisions include:

  1. the addition of non-medical services (e.g., home-delivered meals, transportation to and from a physician's office, etc.) and telehealth services to the range of MA-covered services that an MA plan (Plan) can offer to its members;
  2. a significant increase in federal funding for services provided by federally qualified health centers (FQHCs);
  3. disbanding the Independent Payment Advisory Board (IPAB), a board comprised of presidential appointees whose sole authority and responsibility was to cut Medicare costs and expenses; and
  4. an increase in the discounts that pharmaceutical companies must give seniors enrolled in Medicare Part D drug plans by making the so-called "doughnut hole" disappear in 2019.

The above Medicare-related changes were part of the "Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017" (the "Act") – a bipartisan bill that passed the Senate last October and was incorporated into the Budget during the final throes of Budget negotiations.

The following includes a more in-depth discussion of each of the Budget items described above.

Extended Coverage for Services Under Medicare Advantage Plans – New Supplemental Benefits and Telehealth Benefits for MA Plans and ACOs

The Act contains various warmly-received modifications to the Medicare program including the addition of language that allows providers to have greater flexibility to care for their chronically ill patients. As a result of the Act's provisions as incorporated into the Budget, the Act allows reimbursement of supplemental services provided by MA plans to chronically ill enrollees. Supplemental benefits are any benefits that have a reasonable expectation of improving or maintaining the health or overall function of a chronically ill patient. Supplemental benefits are not limited to being primarily health-related benefits, which allows MA plans to provide services such as transportation to and from a physician's office or meal delivery services. Additionally, the Act will provide for reimbursement of telehealth services provided by MA plans and Accountable Care Organizations (ACOs) to attempt to extend the reach of health services to chronically ill patients.

Federally Qualified Health Centers

FQHCs are community-based health care providers that receive funds to provide primary care services in underserved areas. FQHCs include Community Health Centers, Migrant Health Centers, Healthcare for the Homeless, and Health Centers for Residents of Public Housing.

Under the new Budget, Community Health Centers will receive more than $7 billion in funding. These clinics, which serve 26 million people nationwide, lost funding last October and were relying on temporary funding through March 31, 2018. Many of these clinics could see an increase in patients resulting from recent CMS guidance allowing changes to Medicaid eligibility levels and work requirements. The additional funding in the recent Budget is critical to ensure that FQHCs can provide care to underserved populations.

The Budget also stalls mandatory cuts to Disproportionate Share Hospitals (DSHs), which were originally mandated by the Patient Protection and Affordable Care Act (ACA). Disproportionate Share Hospitals provide medical services for large numbers of Medicaid enrollees and uninsured patients. The ACA calls for a reduction in federal funding for DSHs each year, but the reductions have been delayed every year since the ACA's passage. The Budget further delays the reductions to DSHs, giving providers access to critical resources to serve low-income individuals.

The Independent Payment Advisory Board

IPAB, created as part of the ACA, was intended to be a panel of experts tasked with controlling Medicare spending, although neither former President Obama nor President Trump nominated any members for IPAB. In theory, IPAB would recommend Medicare spending reductions to Congress if the five-year average growth rate in Medicare was projected to exceed the per capita target growth rate. In fact, Medicare costs never rose to the level required to trigger IPAB. The Budget eliminates IPAB entirely, though it is unclear exactly what effect this will have on controlling future Medicare costs.

Medicare Part D

Many Medicare Part D Prescription Drug Plans (Part D Plans) have a coverage gap, commonly referred to as a "donut hole." For 2018, enrollees enter the coverage gap once the enrollee spends $3,750 on out-of-pocket expenses, like deductibles, coinsurance, and copayments for covered drugs. Enrollees that enter the coverage gap must foot the bill for a large percentage of prescription drug costs,1 until the enrollee hits $5,000 in out-of-pocket expenses and qualifies for catastrophic coverage.

Under the ACA, the coverage gap would be gradually reduced until 2020, when enrollees in the coverage gap would be expected to pay 25% of the cost of prescription drugs while in the gap. The Budget accelerates closing the coverage gap to 2019, giving seniors who juggle many prescriptions relief one year earlier than expected.

Medicare Sequester

Originally enacted as part of the Budget Control Act in 2011, the Medicare sequester was designed to control Medicare costs by imposing a 2% cut in provider reimbursements under Medicare beginning on April 1, 2013. The sequester was scheduled to expire at the end of 2025, but the Budget extended sequestration through 2027. The continuation of the Medicare sequestration was not unexpected, but, for many providers, a 2% reduction in Medicare spending is cause for concern.

Key Takeaways

The Budget takes strides to increase federal funding for healthcare services for low-income individuals, and provide greater access to healthcare services for chronically ill patients. Additionally, the Budget attempts to control some healthcare costs by closing the coverage gap under Medicare Part D, and extending the 2% Medicare sequestration through 2027; however, eliminating IPAB may have unforeseen negative consequences should Medicare spending outpace projections in the coming years.

As with any Federal budget, there is a lot to unpack, and we will keep you updated on these, and other, changes to Medicare over the coming months.

Footnote

1 In 2018, enrollees must pay up to 35% of the cost of brand-name prescription drugs, and 44% of the cost of generic drugs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
13 Sep 2018, Other, Los Angeles, United States

Liisa will be giving opening remarks and presenting, "Big Data and Online Behavioral Advertising (OBA): An Advertiser’s Perspective Origins of big data and how to legally acquire data."

20 Sep 2018, Seminar, Los Angeles, United States

The annual seminar addressing changes and developments in state and federal wage and hour laws is a unique one-day program and hundreds of California employers, personnel managers, controllers, attorneys, payroll managers, and supervisors attend each year.

26 Sep 2018, Seminar, San Francisco, United States

Please join us for Sheppard Mullin's Labor & Employment Law Update & Happy Hour Seminar Series.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions