The $4.8 trillion proposed budget is not expected to get much traction in Congress. However, critics say it demonstrates the administrations efforts to shred the safety net.
President Donald Trump's proposal to cut nearly $1 trillion from Medicaid, the Affordable Care Act and other safety net programs over the next decade was greeted with a chorus of boos from the nation's hospital lobby.
The proposal, put forward Monday in Trump's $4.8 trillion 2021 budget, is not expected to get much traction in Congress. However, critics say it demonstrates the administrations ongoing efforts to shred the safety net.
"Every year, the Administration aims to gut our nation's healthcare infrastructure," American Hospital Association President and CEO Rick Pollack said in prepared remarks.
"The proposals in this budget would result in hundreds of billions of dollars in cuts that sacrifice the health of seniors, the uninsured and low-income individuals. This includes the one in five Americans who depend on Medicaid, of which 43% of enrollees are children," he said.
Russ Vought, acting director of the White House Office of Management and Budget, defended the budget Monday at a press briefing, and said spending for Medicare and Medicaid will go up 6% and 3% annually, respectively.
"We have reforms, as it pertains to on the payment side, where you’re buying and reimbursing for healthcare costs. That has to be allocated and it shows a savings in a budget," he said.
Vought said the proposal to impose site-neutral payments for hospital outpatient services could save about $266 billion.
"I’ve talked about site neutrality to make sure that a CAT scan that costs $118 in a physician's location and costs $230 at an outpatient hospital costs the same thing to taxpayers and, in the Medicare program, doesn’t lead to people choosing where they refer a patient for the purposes of reimbursement," Vought said.
Pollack says the site-neutral payments "fail to recognize the crucial role hospitals serve for their communities, such as providing 24/7 emergency services."
"Post-acute cuts threaten care for patients with the most medically complex conditions," he said. "The cuts also undermine medical advances and the availability of around-the-clock services exclusive to teaching hospitals, and the training they provide to those who will become our nation’s future physicians."
The proposal cuts $3 billion in funding for National Institutes of Health, the Health Resources and Services Administration), and other health agencies, along with cuts to Medicare funding for graduate medical education public service loan forgiveness, and the 340B Drug Pricing Program.
"The arbitrary cuts to healthcare programs envisioned in the budget will make the job of America’s caregivers much more difficult," Kahn said. "This proposal combined with already issued regulations will result in a reduction in coverage, putting the healthcare of millions of patients at risk."
The Catholic Hospital Association said it was "deeply disappointed" with the budget.
"CHA believes that our nation's spending priorities should reflect our moral commitment to assisting the least among us," CHA said in a statement.
"For the millions of Americans who rely on Medicaid and other healthcare programs, as well as housing and nutrition programs that promote healthier lives, cuts to these programs will have devastating consequences."
CHA noted that adding "burdensome" work requirements to Medicaid "will further restrict access to affordable healthcare."
"While we do commend the Administration's proposal to expand the mental health services available under Medicaid, that effort would only be negated by the budget’s cuts and other harmful program requirements," CHA said.
Association of American Medical Colleges President and CEO David J. Skorton, MD, said the cuts to Medicaid would disproportionately hurt AAMC-member hospitals, which represent only 5% of all hospitals, but account for 26% of all Medicaid hospitalizations.
Skorton noted that much of the research performed by NIH takes place at medical schools and teaching hospitals, and that the $3 billion in cuts proposed to NIH-funded research "would thwart scientific progress on strategies to prevent, diagnose, treat, and cure medical conditions that affect countless patients nationwide."
"Likewise, the president's proposal to reduce and consolidate Medicare, Medicaid, and Children’s Hospital GME into a single grant program would exacerbate the projected physician shortage by forcing teaching hospitals to absorb $52 billion in untenable cuts," he said.
An new analysis estimates what savings states will need to generate in aggregate and per capita Medicaid models.
States participating in the optional block grant proposal for their expanded Medicaid populations would have to generate up to 8% of the total savings to keep below the aggregate cap over the five-year span of the model, a new study from Avalere suggests.
"Under this option, if states are successful in achieving spending below the cap they will be eligible to share those savings with the federal government," Avalere said.
Reductions in total federal Medicaid funding over the life of the model vary from 0.1% in Nebraska to 8.1% in California, with 13 states seeing reductions of less than 2% over five years, and 10 states seeing reductions of more than 5%.
The Healthy Adult Opportunity, unveiled January 30 by the Centers for Medicare & Medicaid Services and created under a Section 1115 demonstration waiver, allows states to opt for capped aggregate model, also known as a block grant, or a per capita model for their expanded, non-mandatory Medicaid populations, under age 65.
The HAO models would give states the flexibility to reduce costs below the caps for the expanded populations through changes in eligibility and benefits, prescription drug formularies, provider reimbursements and managed care oversight. Any savings generated by the models would be shared with the federal government.
By comparison, states using a per capita cap model under the HAO proposal may need to generate up to 6% in savings over 5 years, a lower level of savings than under an aggregate cap, Avalere said.
"The analysis demonstrates that participation in an aggregate cap demonstration will generally create a lower federal funding cap for states than per capita caps; however, the variation between the funding approaches differs by state," Avalere said.
Per capital caps would also better protect federal Medicaid reimbursements during a recession, the analysis noted.
That's because the total reimbursement to states would rise with increased in enrollment, while aggregate caps, by comparison, do not rise during a recession, nor increase Medicaid enrollment.
The analysis also found that states that expanded Medicaid under the Affordable Care Act would need to generate the greatest savings under the proposal, because of the larger number of non-mandatory adults enrolled in each state.
However, the analysis noted that the expansion states, such as California, are also the least likely to pursue the HAO demonstration.
Conversely, Avalere found that several states that didn't expand their Medicaid populations – and are most likely to pursue the HAO model – don't cover enough non-mandatory adult beneficiaries to model the effects on federal funding.
"For these states, the HAO may provide an opportunity to expand coverage with additional flexibilities," Avalere said.
As part of the three-year management agreement, Adventist will bring in a senior management team led by CEO Anita L. A. Jenkins.
Adventist Healthcare will take over operations at the financially troubled Howard University Hospital in Washington, D.C., on February 17 under a management agreement signed by the two providers.
As part of the three-year "partnership," Adventist HealthCare will bring in a senior management team to the private, not-for-profit Howard University Hospital, led by new CEO Anita L. A. Jenkins, the former president of Sycamore Medical Center near Dayton, Ohio.
In addition, Adventist will work with Howard University to build a replacement hospital as part of the overall strategy to continue serving the community, the two providers said in a joint media release.
"We want Howard to continue to be a vital healthcare provider to meet the growing needs of the community, the region and the country now and in the future," said Adventist HealthCare President and CEO Terry Forde.
The affiliation will bring Howard University medical residents, medical students, pre-med students and graduates into the Adventist network for training. Howard University is the No. 1 producer of black applicants to U.S. medical schools.
"This is a historic day for Howard University because this union with Adventist HealthCare signifies a stronger foundation for building our academic programs and it enhances our ability to train the next generation of healthcare professionals," said Howard University President Wayne A. I. Frederick, MD, MBA.
Washington, D.C., Mayor Muriel E. Bowser applauded the agreement, saying it "solidifies the rich tradition of providing high-quality health care services on Georgia Avenue and to the surrounding community."
"In addition, we can all be proud that the District of Columbia will remain home to the largest producer of African American doctors in the country — the Howard University College of Medicine," she said.
Last month, Moody's Investors Service gave Howard University's bond rating a negative outlook, after noting that "weak operating performance when combined with debt service coverage covenants continues to translate into limited bandwidth for revenueunder performance. About 90% of Howard University Hospital's patients are covered by either Medicare or Medicaid.
"Despite its important role in the district, the hospital is financially challenged by a myriad of issues including a high Medicaid population, tightening reimbursement, aging facilities, increasing market consolidation and intensifying competition, and past disruptions resulting from changes in hospital leadership,” Moody’s said.
Not-for-profit, Gaithersburg, Maryland-based Adventist HealthCare's footprint in Maryland and the Metropolitan D.C. region includes three acute-care hospitals, two rehab hospitals, a number of outpatient and mental health clinics, and physician practices, and employs 1,700 physicians.
The rate hike is part of a broader package of proposed "refinements" for Medicare Advantage and the Part D Quality Star Rating system.
Baseline payment rates for Medicare Advantage plans will increase by 0.93% – about one-third the 2.53% increase the plans got this year – under a proposal unveiled this week by the Centers for Medicare & Medicaid Services.
The rate hike is part of a broader package of proposed "refinements" for Medicare Advantage and the Part D Quality Star Rating system under the Patients Over Paperwork initiative that CMS says will provide greater flexibility for payers and Part D plan sponsors to design plans, improve transparency in drug pricing, and which could save the federal government $4.4 billion over the next decade.
"Whether you're a senior dealing with kidney disease, living in a rural area, facing high costs because you need a specialty drug, or just want a better sense of what you'll owe for prescription drugs, these new CMS proposals will improve your Medicare experience," Health and Human Services Secretary Alex Azar said in a media release.
Stakeholders will have until March 6 to comment on the proposal.
Among other things, the proposed rule offers guidelines on enrollment in Medicare Advantage plans for beneficiaries with end-stage renal disease, who will be eligible beginning in 2021.
"By removing the barrier that beneficiaries with ESRD now face in terms of enrolling in MA plans, we are empowering them to choose the type of Medicare coverage that best meets their needs," CMS said.
CMS said its tweaking the Star Ratings to reduce the influence of outliers on cut points.
"We also propose to further increase measure weights for patient experience/complaints and access measures from 2 to 4, reflecting CMS's commitment to put patients first and to empower patients to work with their doctors to make healthcare decisions that are best for them," CMS said.
At the request of pharmacy benefits managers, CMS is also proposing the creation of a "preferred specialty tier" option that would encourage the use of cheaper drugs, reduce the out-of-pocket costs for beneficiaries, and save money for the federal government.
"In addition to giving those with kidney disease more choices, today's proposals shed desperately needed light on previously obscured out-of-pocket costs for prescription drugs," said CMS Administrator Seema Verma. "At the same time, it strengthens plans' negotiating power with prescription drug manufacturers so American patients can get a better deal."
Matt Eyles, president and CEO of America's Health Insurance Plans, said he was "encouraged" by the flexibility that would allow payers to "tailor benefits, design high-quality provider networks, and continue to innovate."
"However, we are concerned that some proposals could undermine the critical funding that protects millions of Americans' access to the benefits and care they need, including individuals with kidney disease who are newly eligible to enroll in Medicare Advantage," he said.
"We will continue to review the advance rate notice and proposed rule, and we look forward to sharing important feedback with CMS during the comment period," he said.
"This is an exciting time for Stony Brook Medicine as our upward trajectory continues into the future in terms of health system growth, reputation, quality outcomes and embracing a talented team of professionals delivering extraordinary and cutting-edge care," Gomes said.
Gomes, MS, FACHE, CPHQ, has been COO at the 624-bed academic medical center for six years and recently was named Interim CEO. She's held a number of executive positions over her 35-year career, most of it spent at SBUH.
"In every position Carol has held at Stony Brook University Hospital, she has led with passion for transformative healthcare and championed delivering the highest quality of care to our patients," said Stony Brook University Interim President Michael Bernstein.
The hospital in 2019 completed a major expansion that includes a Medical and Research Translation building, Stony Brook University Cancer Center, and a 225,000-square-foot, 150-bed Hospital Pavilion, which includes the new Stony Brook Children's Hospital.
The Long Island hospital contains Suffolk County's only Level 1 Trauma Center and Regional Perinatal Center.
CHRISTUS expands its footprint in South Central Texas with the acquisition of Central Texas Medical Center.
AdventHealth will transfer ownership of the 170-bed Central Texas Medical Center in San Marcos, Texas to CHRISTUS Health, the health systems announced Monday.
Financial terms were not disclosed for the deal, which is expected to be finalized this spring after clearing regulatory hurdles.
"The addition of CTMC to our family of hospitals further demonstrates our commitment to keeping exceptional health care close to home," CHRISTUS President and CEO Ernie Sadau said in a media release. "With hospitals in San Antonio, New Braunfels and now San Marcos we are better positioned to serve all in the rapidly growing communities in South and Central Texas."
AdventHealth President and CEO Terry Shaw said the transfer was in the best interests of the hospital and the community it serves.
"Over time we’ve realized that the interests of CTMC and the community it serves would benefit from the hospital joining a strong health system with a robust regional network," Shaw said.
Irving, Texas-based CHRISTUS Health, a Catholic, not-for-profit, includes more than 60 hospitals and long-term care facilities, and more than 175 outpatient clinics and other care sites in Texas, Arkansas, Louisiana and New Mexico and internationally in Chile, Colombia and Mexico.
Not-for-profit, Altamonte Springs, Florida-based AdventHealth, which is sponsored by the Seventh-day Adventist Church, employs more than 80,000 people and operates 45 hospitals, 15 skilled nursing facilities, and 36 urgent care centers in nine states.
Stakeholders raise concerns that guidance unveiled by CMS on Medicaid block grants could lead to drastic cuts in the safety net program.
After months of anticipation, the Centers for Medicare & Medicaid Services on Thursday rolled out its block grant guidance for Medicaid. Stakeholders are already raising concerns that the proposal, which is optional for states, has the potential to cut billions of federal dollars from the program and shred the safety net.
Allison Orris, counsel for Manatt Health in Washington, D.C., and a former senior policy advisor at CMS and associate administrator for the Office of Management and Budget's Office of Information and Regulatory Affairs, offers her assessment of the proposal, and attempts to answer some of the concerns raised by stakeholders.
HealthLeaders: What's your overall impression of this proposal?
Orris: This was touted as something that would really give states a lot of the flexibility that they've been asking for. And yet, when you look at it, it appears at first read to be very much changing the fundamental bargain that states make with the federal government to share in the financing of Medicaid. And yet it doesn't give states a lot of new flexibility.
For example, some states that have not yet expanded Medicaid have wanted the authority to do a partial expansion or have an enrollment cap and still get that enhanced federal funding. That's not permitted here and there's very understandable legal reasons why CMS couldn't go that far.
What that leaves us with is guidance that appears to shift a lot of financial risk to states, giving them less money than they would get under a traditional Medicaid expansion in exchange for some new forms of flexibility, but not sweeping forms of flexibility. Still, the consequences in a state that picks up the option could be very harmful to beneficiaries
The thing that states will want to look at is the money and how the money could put them at risk, because I'm not sure they're getting a whole lot more in exchange.
HL: Provider stakeholders say this could lead to an increased number of uninsured and imperil the Medicaid safety net. Is this accurate?
Orris: There is a risk of it. This is giving states the opportunity to impose either per capita caps or aggregate caps block grants on the Medicaid expansion population and certain other non-elderly, non-disabled populations.
For those populations that would be subject to capped funding, it really would be a fundamental change in the Medicaid program. It would limit funding that's available and it would give states more flexibility to impose higher cost sharing, or changes to enrollment practices that might make it harder for people to get enrolled and stay enrolled.
Also, CMS is promising some forms of relaxed programmatic oversight, such as less oversight on managed care contracting that could lead to lower payment rates for providers and plans, which would have a serious impact on access.
HL: There are also concerns that communities could lose access to care under this proposal, especially in rural areas that depend on Medicaid funding. Is this possible?
Orris: The devil is always in the details. This is optional for states. This is different than what Congress tried to do with repeal and replace. We're not going assume that it's going to be picked up nationwide because it is not a deal for states.
But in states that do adopt it, there will be less money. States will have to make choices about how they're spending their money. They could reduce provider payments and adopt programmatic flexibilities that could reduce access to care for beneficiaries. There's also a provision for states that adopt the block grant model to divert money outside of Medicaid for other uses. So, the concerns that the stakeholders are citing are valid.
HL: How do you see this block grant option evolving over time?
Orris: The Medicaid program has been protective of patients and providers. Medicaid funding is an entitlement to states for matching funds and if you take away that promise of matching states dollar-for-dollar in their contributions, if they are increases in enrollment that aren't projected, [or] if there is an increase in an expensive cancer therapy, funding under the caps may not be adequate to pay for care that's needed for beneficiaries. So, where do the cuts come from? It could certainly come to provider rates and CMS has indicated that there'll be a little bit less oversight. So, putting all the pieces together, there is a risk that access under this program could really suffer.
HL: What incentives would a state have to take up this block grant proposal?
Orris: That it is going to be something that states are going to want to look at. CMS is saying that they are offering flexibilities, but a lot of those flexibilities are already available under regular Section 1115demonstrations. You don't need to have a block grant in order to implement work requirements. You don't need to have a block grant to have higher premiums for the Medicaid population. So, CMS has kind of packaged this together and says that there's an application template that will streamline approvals.
But it will be somewhat difficult for CMS and states to negotiate the details of cap funding. States are going to want to dig in and make sure that the funding calculations that CMS is approving as part of the deal makes sense for the state. That is not going to necessarily be a speedy endeavor.
While there are some new flexibilities that a state might want to take advantage of as a part of this, there are also new forms of oversight. There are continuous performance indicator reporting requirements. This isn't a free lunch for states. They're going to have to monitor quality, monitor spending, and report to CMS.
What is it the states are getting and what will the states have to do, and what risks will the state take on in order to get "flexibility," much of which they could get under a regular demonstration?
HL: Is this block grant option similar to what Tennessee proposed a couple of months ago?
Orris: No. One thing that is notably different is that Tennessee proposed its block grant for its mandatory population. It kept on the table that maybe some savings in the program could be used later to expand Medicaid. But it was really about block granting spending for the current Medicaid population, which is limited to mandatory Medicaid populations.
The other difference is that Tennessee has constructed its block grant using spending data and a trend rate that is different than what this guidance proposes. This guidance is more aggressively designed to constrain Medicaid spending over time.
HL: What sort of resistance should be anticipated if states adopt block grants?
Orris: States that opt into this and apply to CMS for a block grant are likely walking into a prolonged legal fight. This is a new use of the Section 1115 demonstration authority and, just as we've seen with work requirements, I would anticipate that litigation will follow. That is a consideration that states will want to have top of mind as they think about the cost and the uncertainty that litigation would present.
HL: What would be the grounds for a lawsuit?
Orris: There is an argument that limiting otherwise available funding and forcing states to make trade-offs in terms of provider payments or levels of benefits may not further the objectives of the Medicaid program and, therefore, might not be an appropriate use of the Secretary's demonstration authority.
It is also possible that there could be a challenge that issuing this guidance through a state Medicaid director letter is not the appropriate avenue and that it should be done through rulemaking.
The Dublin, Ohio-based medical equipment supplier estimates the cost of the recall at about $96 million.
Cardinal Health this week said it has launched "two voluntary field actions" for Cardinal Health Presource® Procedure Packs containing gowns that were part of last week's recall of AAMI Level 3 surgical gowns.
Cardinal Health customers will receive detailed instructions for handling the affected procedure packs on February 3.
"I apologize to patients and our customers. We understand the gravity of this situation and the disruptions to the healthcare system that will impact patient care," Cardinal Health CEO Mike Kaufmann said in a media release. "We are fully committed to making this right, and we are doing everything we can to ensure it never happens again."
Cardinal Health said it expect to record a $96 million charge for the recall in the second quarter of Fiscal 2020, which the Dublin, Ohio-based medical supply company said is its "best estimate of costs for the recall, including inventory write-offs and other remediation costs, such as costs to replace recalled products."
The recall involves 2.9 million procedure packs manufactured between September 2018 and January 2020 that contain affected gowns, including:
A voluntary correction of 374,794 procedure packs with components separated from the affected gown by inner, sealed packaging or other packs within the sterilization pouch.
Cardinal said these packs can be "over-labeled," allowing the components within inner, sealed packages to be used after the gown is discarded. All other components including the gowns are to be removed and discarded. Approximately 62,976 of these packs remain in Cardinal's inventory.
A voluntary recall of 2,518,653 procedure packs containing gowns with components that are not separated from the affected gown by inner, sealed packaging. Those procedure packs should not be used and must be returned. Approximately 357,127 of these packs remain with Cardinal.
Earlier this month, Cardinal asked healthcare providers to stop using some types of surgical gowns and packs after learning of potential "cross contamination" at the Siyang Holymed manufacturing plant in China. Cardinal said the gown maker had shifted production to sites with "uncontrolled enviromments" that were not approved by the U.S. Food and Drug Administration. Cardinal has since terminated its contract with Siyang Holymed.
To address shortages prompted by the recall, Cardinal Health is:
Increasing its manufacturing production of similar and replacement products;
Offering more protective AAMI Level 4 gowns to help bridge the supply gap;
Working to identify alternatives – including in many cases working with industry partners who offer comparable products; and
Mobilizing employees from all parts of the company to work directly with health care providers to replace gowns and procedure packs.
The CMS administrator suggested that some healthcare electronic records vendors are acting to protect "short-term profits."
Centers for Medicare & Medicaid Services Administrator Seema Verma on Wednesday scolded "bad actors" opposing an interoperability proposed rule, accusing them of protecting the status quo for profits' sake, frustrating the public, and providing "fuel" for advocates of a government takeover of healthcare.
"Access to one's data can be a matter of life and death, and this administration will not waver in ensuring that patients enjoy full ownership of their data," Verma told the 2020 CMS Healthcare Innovation Industry Day audience, in Washington, D.C.
However, she warned that "the sort of consumer-oriented revolution that will make the healthcare system more affordable and accessible is undermined by those bad actors throughout the system that continue to guard the status quo because it's in the interest of their short-term profits."
At the top of Epic's webpage, the company warns that "by requiring health systems to send patient data to any app requested by the patient, the ONC rule inadvertently creates new privacy risks."
"According to a recent study, 79% of healthcare apps resell or share data[i], and there is no regulation requiring patient approval of this downstream use. There are two highly likely patient privacy risks," Epic said.
Verma scoffed at the HIT lobby's concerns that the proposed rule could put at risk patient confidentiality.
"The disingenuous efforts by certain private actors to use privacy, as vile as it is, as a pretext for holding patient data hostage is an embarrassment to the industry," she said.
"The short-sightedness of such efforts is deeply troubling considering the broad frustration of the American people with the status quo, and it's the fuel that is driving the calls for the destruction of the entire private healthcare system," Verma said.
On Monday, Health and Human Services Secretary Alex Azar used an address at the annual meeting of the Office of the National Coordinator to take shots at "scare tactics" used by EHR vendors, "some (who) are defending the balkanized, outdated status quo and fighting our proposals fiercely."
The Detroit native is currently a top executive at Trinity Health Michigan.
Bronson Healthcare has named Bill Manns, MHSA, as its new president and CEO.
He succeeds Frank Sardone who retired in December. Manns' first day at the four-hospital, not-for-profit Kalamazoo, Michigan-based health system will be March 30.
A Detroit native and veteran healthcare executive, Manns, 52, is currently president of Trinity Health Michigan's St. Joseph Mercy Ann Arbor, a 537-bed tertiary care and academic medical center, and St. Joseph Mercy Livingston, a 136-bed community hospital in Howell.
"I am honored to be chosen to lead this prestigious regional healthcare system," Manns said in a media release.
"Bronson's reputation for quality, collaboration, its culture of positivity and putting patients first, its growth and investment in programs and services to meet community needs and its local governance are all qualities that attracted me," he said. "I can't wait to get started and meet all of the wonderful people who are moving health forward in southwest Michigan."
Bronson Healthcare board chair Nelson Karre said Manns was selected from a field of 70 candidates in a national search.
"Bill is one of the most dynamic and personable individuals you'll ever meet," Karre said. "He brings an analytical mind and a passion for excellence that aligns with Bronson's vision and culture along with a track record for building strong relationships with his colleagues and community."
Community-governed Bronson Healthcare serves nine counties in southwest and south central Michigan, with 8,500 employees, more than 1,400 medical staff members, and 836 licensed beds.
