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President Issues Fiscal Year 2019 Budget Request

February 12, 2018

President Trump released a $4 trillion federal fiscal year (FY) 2019 budget request which defines funding priorities for discretionary spending and outlines legislative proposals. The budget proposal places a focus on tackling the opioid epidemic and addressing drug prices, and envisions significant policy changes to Medicare, Medicaid, and the 340B Drug Pricing Program.

While the President’s proposal reflects the Administration’s budget blueprint, Congress will engage in its own budget and appropriations process to determine the final funding levels provided.

The FY 2019 Health and Human Services budget includes $295 billion in cuts to mandatory programs, and $675 billion in savings from repealing the Affordable Care Act (ACA).

Key proposals of concern to the hospital community include:

  • Replaces the ACA with a state block grant system similar to the Graham/Cassidy proposal beginning in FY 2020
  • Recommends new requirements within the 340B Drug Pricing Program including the imposition of a user fee, and the redistribution of 340B savings
  • Establishes an uncompensated care pool to distribute payments based on the share of charity care and non-Medicare bad debt, and significantly reduces Medicare bad debt payments
  • Expands “site-neutral” payment policies by eliminating protections that ensure off-campus hospital outpatient departments are paid at a rate that reflects the crucial role of hospitals in the health care system
  • Consolidates all graduate medical education funding into a single pool
  • Builds on the Administration’s Medicaid redesign efforts—including work requirements, eligibility requirements, and greater flexibility through waivers
  • Consolidates the Agency for Healthcare Research and Quality into the National Institutes of Health

Other key funding and program requests include:

  • Dedicating $10 billion in additional resources to support opioid abuse treatment and mental health services, including funding for certified community behavioral health clinics, state resources for overdose prevention activities and safe prescribing, and enhanced coverage under Medicare and Medicaid for substance abuse treatment
  • Modifying policies with the Medicare Part D prescription drug benefit and coverage of drugs under the Medicaid program in order to tackle drug costs, such as enhancing Part D plans’ negotiating power, encouraging utilization of higher value drugs, and discouraging drug pricing and rebate strategies that increase spending
  • Promoting liability relief intended to make health care more affordable and efficient, and ensure resources are maximized to benefit patients

Having passed a bipartisan budget deal last week that reallocates the current budget caps for defense and domestic discretionary programs and temporarily funds the government through March 23, Congress is now working to finalize funding decisions for the remainder of the current year. During the coming weeks, Congress will turn to the FY 2019 appropriations process. The priorities laid out by the President will help to inform that process but are not binding.

Questions regarding the federal budget process may be directed to Laura Stevens Kent, HAP’s vice president, federal advocacy.

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