The White House unveiled its proposed budget for the fiscal year 2021, which calls for major cuts to Medicaid that have infuriated provider groups but includes key changes for Medicare Advantage (MA) and other programs.
While the proposed budget is likely to be dead on arrival on Capitol Hill, it does give key insights into regulations and legislation that the Trump administration wants to pursue. For example, it keeps intact key policies on instituting site-neutral payment cuts and on Medicaid work requirements.
Beyond the top-line numbers and controversial policies lay several critical changes the administration is proposing, including:
Letting MA plans enter into any reinsurance arrangements
Currently, there are several types of reinsurance arrangements that MA plans cannot agree to. For example, MA plans cannot use quota share reinsurance where an insurer agrees to take on some amount of another insurer’s losses in exchange for a portion of the policy's premiums.
The inability of MA plans to enter into common reinsurance arrangements “may inhibit their ability to grow, particularly in areas with smaller risk pools, such as rural areas,” the budget said. The White House proposes allowing an MA plan to enter into any reinsurance arrangement viewed as acceptable by the National Association of Insurance Commissioners.
Eliminate a requirement under MIPS
In order for the Department of Health and Human Services to create a new measure for the Merit-based Incentive Payment System, a quality payment program created by Congress, the measure must first be published in a peer-reviewed medical journal. But journals have not been interested in publishing articles on the new measures.
“To support the goal of reducing administrative burden,” the proposal eliminates that requirement, the budget said.
Removing the cap on MA benchmarks
The Trump administration wants to remove a cap on the benchmark capitation rate that Medicare pays out to MA plans. The Affordable Care Act altered the methodology for calculating the benchmark and then capped it at a level before the law went into effect.
“As of 2019, nearly half of all counties (48%) have the top-rated, quality-adjusted bonus capped while over one quarter of all counties (29%) have the nominal benchmark itself capped,” the budget summary said.
The White House is concerned the cap could make plans “less competitive and discourage quality improvements.” So the budget gets rid of the cap altogether.
The proposal also removes the double bonus for plans in eligible counties. The budget said that in 2016 there were 236 counties that qualified for the double bonus. The White House believes the double bonus makes MA markets fairer and “more competitive.” The proposal would generate $1.2 billion in savings over a decade.
Providing $34 million to boost 340B program oversight
The amount would be an increase from the $29 million that the administration proposed in the fiscal year 2020 budget. Part of the funding would come from a new user fee based on 340B sales.
The White House also wants to clear up regulatory authority over the controversial program, which gave safety-net hospitals $24 billion in discounts on drugs in 2018.
The program has been a source of friction between the administration and hospitals. The Centers for Medicare & Medicaid Services instituted payment cuts to 340B that have been challenged successfully by hospital groups in court.