This week, our In Focus section reviews President Biden’s budget proposal for federal fiscal year 2023, released on March 28, 2022. The President’s proposal kicks off the Congressional budget process and negotiations on the annual spending bills for the federal fiscal year that starts October 1, 2022. The budget proposal highlights the Administration’s program initiatives and recommended legislative and regulatory changes. The President’s budget is merely a request of Congress, who drafts the actual budget resolution that will go into effect if passed.
President Biden previewed several major initiatives in his State of the Union address earlier this month, and the budget request includes details his recommended funding and policy changes to advance these priorities. Cutting across all aspects of the Administration’s budget plan are efforts focused on racial equity, including health equity. HMA and Leavitt Partners, an HMA company, are closely monitoring the policies that fall into what the President has called his “Unity Agenda”, including:
- Reforms to address the mental health crisis, including parity in coverage across federally funding programs and development of the mental health workforce;
- Bolstering services to help individuals with and at risk of substance use disorders
- Investments to reduce cancer death; and
- Funding for the Advanced Research Projects Agency for Health (ARPA-H).
In the remainder of our post we provide a snapshot of the Department of Health and Human Services’ budget proposals
The President’s budget includes several behavioral health proposals in the Medicare program. For example, the Administration calls on Congress to:
- Extend mental health and addiction parity to Medicare
- Allow Medicare to cover three behavioral health visits without cost-sharing;
- Reimburse for services provided by community health workers, including behavioral health coordination; and
- Expand the types of providers and remove limits on scope of services that are eligible for Medicare reimbursement.
Additionally, the budget addresses looming reimbursement issues for Medicare physicians. The budget recommends Congress update the physician fee schedule by 0.25 percent for clinicians who do not participate in Medicare’s approved alternative payment models (APMs), and 0.75 percent annually for those who do, beginning in performance year 2023 for payment in 2025 instead of 2026. This change would increase Medicare’s costs by $3.5 billion through 2032.
The budget proposal also states that the Administration is committed to supporting a temporary extension of broader telehealth coverage under Medicare beyond the COVID-19 Public Health Emergency declared by the Secretary in order to study its ability to promote proper use and access to care. The recently enacted spending bill for the current fiscal year extends many of the temporary telehealth policies already in place for an additional 151 days following the end of the PHE declaration. It also required the Medicare Payment and Advisory Commission to report on several aspects of telehealth by June 15, 2023, and directs CMS to begin publishing telehealth data by July 1, 2022. The Administration’s ongoing support for temporary extension of the policies could be critical while policymakers wait on MedPAC and other expected analyses.
The budget plan for Medicaid also includes a significant focus on mental health services, including calling on Congress to:
- Make permanent the current demonstration for Certified Community Behavioral Health Clinics. [$24 billion over 10 years]
- Provide $7.5 billion for planning grants and a Medicaid provider capacity demo for mental health treatment.
- Require state Medicaid programs to allow reimbursement for mental health and physical health visits provided to a Medicaid enrollee which happen on the same day.
Notably, HHS recommends Congress give CMS new managed care program oversight and enforcement tools. In particular, CMS is seeking the ability to withhold the federal match in Medicaid managed care plan contract capitation payment amounts on a service-by-service basis. Currently, CMS’s only recourse when it identifies compliance failures is to withhold all federal match under the contract, which has proven untenable in many situations. The Administration projects it will result in $2.1 billion in savings over ten years. This could be attractive to Congress if it needs to identify proposals that generate federal savings (or “offsets”) to increase federal expenditures for other policies or reduce the deficit.
In addition to parity in Medicare, the Administration recommends Congress extend enforcement of mental health and addiction parity requirements in commercial insurance, TRICARE, and the Veteran’s Affairs healthcare system. The budget seeks to enhance mental health parity in the individual and group insurance markets by:
- Requiring coverage of three behavioral health visits and three primary care visits without cost-sharing [$310 million in costs over 10 years];
- Increasing mental health parity enforcement through new regulations on behavioral health network adequacy, and standards for parity in reimbursement rates based on the results of comparative analyses submitted by plans and issuers. [$720 million over 10 years]; and
- Providing new grants to states to enforce behavioral health parity [$125 million over 5 years].
Generally, the budget recommends increasing investments in numerous behavioral health programs administered by HHS agencies and other federal programs. For example, the budget prioritizes several behavioral health workforce initiatives, 9-8-8 implementation efforts, Project Aware, the Children’s Mental Health Services program, and community-based mental health services. There is a strong interest in supporting comprehensive, coordinated, and integrated state efforts to make schools safer and increase access to mental health services. The budget proposes to increase funding for the State Opioid Response (SOR) grant program by $475 million.
Congress is also working on a bipartisan basis to address mental health and substance use disorder prevention, evidence-based treatment, and support services. The President’s priorities in this area could help shape final spending levels and a consensus mental health package that could take shape as the year goes on.
Public Health and Pandemic Preparedness
The President’s budget request includes $88.2 billion in new mandatory spending over a 5-year period for biodefense & preparedness, vaccine development, and technology infrastructure. $40 billion of this amount would be allocated to the HHS Assistant Secretary for Preparedness and Response (ASPR) to:
- Expand the nation’s manufacturing capacity through capital investments focused on manufacturing infrastructure and technology, especially for warm surge capacity for vaccines, therapeutics, tests, personal protective equipment, and medical equipment;
- Support “end-to-end” advanced development and manufacturing scale-up of prototype vaccines and therapeutics against the highest priority viral families;
- Support the advanced development and procurement of diagnostics, advanced disease surveillance technologies, next-generation personal protective equipment, and other medical countermeasure technologies;
- Refill and modernize depleted pandemic stockpiles;
- Expand the public health workforce; and
- Manage the mission within ASPR, which will include recruiting staff and centralizing coordination efforts to ensure alignment of activities across HHS.
The budget also includes a $28 billion investment for CDC to enhance public health system infrastructure, domestic and global threat surveillance, public health workforce development, public health laboratory capacity, and global health security.
The President’s budget request underscores the likelihood of bipartisan action this year on mental and behavioral health, the opioid crisis, the Cancer Moonshot, and biomedical innovation. It is less clear if Congress will be able to pass more partisan health policies included in the
Build Back Better Act, such as expanding the Affordable Care Act’s subsidies and giving Medicare the power to negotiate drug prices. Beginning this week, agency officials will testify before these committees to justify and explain their budget requests to Congress and respond to questions from committee members.
This post covers a portion of the important programs within the Department of Health and Human Services. For inquiries about the potential implications of the budget proposal for your agency/health plan/provider/stakeholder and how you can engage in or keep tabs on the federal process going forward, please contact Andrea Maresca at Health Management Associates and Liz Wroe at Leavitt Partners.