CHA News Article

President Announces Fiscal Year 2021 Federal Budget Proposal

President Trump has released his fiscal year (FY) 2021 budget proposal. The annual budget, which is a political blueprint rather than a legislative proposal, serves as a messaging document for the President and his party.

The proposal includes a 9% cut to funding for the Department of Health & Human Services and proposes $478.5 billion in cuts to Medicare over 10 years. Among the Medicare-related changes, the budget proposes to:

  • Pay off-campus hospital outpatient departments at the physician office rate, reducing payments by $47 billion over 10 years.
  • Expand the site-neutral policy and pay on-campus hospital outpatient departments at the physician office rate for certain services, reducing payments by an additional $117 billion over 10 years.

The budget also calls for over $900 billion in cuts to Medicaid over 10 years, proposing an overhaul of Medicaid financing that includes regulatory and legislative changes to increase states’ flexibility. It would restrict eligibility, program funding, and hospital payments by:

  • Extending the current law on Medicaid disproportionate share hospital allotment reductions for an additional five years through FY 2030 ($32 billion in savings over 10 years)
  • Applying work requirements for able-bodied individuals to receive Medicaid ($152 billion in savings over 10 years)
  • Requiring documentation of satisfactory immigration status before receipt of Medicaid benefits ($2.6 billion in savings over 10 years)
  • Increasing co-payments for non-emergency use of the hospital emergency department ($1.8 billion in savings over 10 years)
  • Applying asset tests to determine Medicaid eligibility using the modified adjusted gross income ($2.2 billion in savings over 10 years)
  • Limiting Medicaid reimbursement for public hospitals so that payment could not exceed the cost of providing services to Medicaid beneficiaries (no budget impact available)
  • Making permanent Medicaid managed care waiver programs and increased state flexibility for 1915(b) managed care waivers (no budget impact)

Of note, the budget includes an allowance for the President’s health reform vision that would build on his Executive Order on price transparency and lowering the price of pharmaceuticals, ending surprise medical bills, breaking down barriers to choice and competition, and reducing unnecessary regulatory burdens.

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