On February 10, 2020, the Trump Administration released its budget proposal for fiscal year 2021. While the total budget would amount to $4.8 trillion, the administration proposes to cut $9.4 billion in funding from the U.S. Department of Health and Human Services and provide for $96.4 billion in discretionary spending. The budget contains several notable provisions related to the Medicaid program including cuts of $920 billion over ten years. The proposal asks Congress to partially eliminate the restriction on the use of Medicaid funds for Institutions for Mental Diseases. Notably, it calls for reductions in spending as a result of state implementation of work and community engagement requirements for a minimum of 20 hours per week and proposes savings from program integrity measures that would reduce improper payments. To date, community engagement requirements as a condition of eligibility have been halted by the United States District Court for the District of Columbia after finding the approvals to be arbitrary and capricious for failing to consider the effect on coverage. (HL Pulse summary here). The budget would also implement $32 billion in cuts to Medicaid Disproportionate Share Hospital allotment reductions beginning in 2026. The proposal also includes reductions in Medicare spending based on site neutral payments to excepted off-campus outpatient departments. Earlier attempts at site neutral payments for these departments have also been halted by the United States District Court for the District of Columbia. (HL Pulse summary here). The budget would close the deficit by 2035. While it is extremely unlikely that the proposed budget will be enacted into law, the White House budget proposal is an important barometer of administration priorities. Even when Congress does not implement a President’s proposals, many policies may be implemented through executive agency actions.
Norton Rose Fulbright attorneys will continue to monitor action on fiscal year 2021 funding and corresponding implications for healthcare entities.