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President Trump’s FY18 Budget: What Does It Mean for Health Centers?

By NACHC Federal Affairs Staff

On Tuesday, President Trump released his FY18 budget proposal, which reflects the administration’s priorities for federal spending in the upcoming fiscal year. The President’s budget is a blueprint for national priorities, which is then submitted to Congress. Ultimately, it will be Congress that makes the final budget decisions during the appropriations process.

Based on NACHC’s preliminary review, below is a brief summary of the major provisions of the President’s FY18 budget that could directly impact health centers. We will continue to update the blog as the budget process progresses.

Primary Care Funding Cliff

The FY18 budget calls for a two-year fix to the “health center funding cliff” and extensions of key primary workforce programs. Specifically, the budget includes:

  • $5.1 billion in total funding for the Health Centers Program in FY2018 – the same top-line funding level as FY17, made up of $1.5 billion in discretionary funding and $3.6 billion in mandatory funding
  • An additional year of mandatory funding, also at $3.6 billion, for Fiscal Year 2019
  • $60 million annually for two years for the Teaching Health Centers Graduate Medical Education Program (THCGME). This represents level funding compared to FY2017, but less than is needed to fully fund existing residency slots and programs
  • $310 million annually for two years the National Health Service Corps (NHSC), which is level funding from FY17

While the President’s support for health centers in the FY18 budget is an important boost to efforts to avert the health center funding cliff in Congress, NACHC continues to advocate that all three primary care programs be extended on a longer-term basis to ensure stability and predictability of funding.

Medicaid

The President’s budget would make dramatic changes to the Medicaid program that would transform the underlying structure of the program and cut at least $610 billion in federal funding – largely by capping federal Medicaid contributions to states. The proposed budget cuts are meant to be layered on top of the cuts to the program that have already been passed by the House of Representatives as a part of the American Health Care Act.

Cuts of this magnitude would inevitably lead to reductions in provider payments, narrower eligibility requirements, and restricted benefits for enrollees — all of which would limit health centers’ ability to maintain current service levels and severely inhibit efforts to expand treatment and access for patients or respond to urgent public health crises.

Taken together, these actions would make it more difficult for health center patients to access health care across the safety net, and also put extreme stress on health centers’ budgets as state Medicaid programs face growing shortfalls.

Children’s Health Insurance Program (CHIP)

Funding for the Children’s Health Insurance Program is set to expire at the same time the funding cliff would kick in – September 30, 2017. As with Health Centers, the budget proposes a two-year extension of CHIP through 2019, but also reduces funding for the program by $5.8 billion.

These funding reductions are achieved by eliminating key provisions of the Affordable Care Act that bolstered the program, including a “primary care bump” which provided a 23-point increase in state CHIP matching rates and the maintenance of effort (MOE) requirement that states maintain current eligibility and benefits for children.

The budget would further change CHIP eligibility by capping it at 250% of the Federal Poverty Level (FPL) while also giving states the option to move certain children below 138% FPL from Medicaid back to CHIP.

340B

The FY18 budget includes level funding of $10.2M for the Office of Pharmacy Affairs at HRSA to administer the 340B Program. Of note, the budget includes a new provision this year which directs HHS to work with Congress to develop a legislative proposal “to improve 340B integrity and ensure that the benefits derived from the program are used to benefits patients, especially low-income and uninsured populations.” The legislative proposal is also expected to include new regulatory authority for HRSA to administer the program, a priority of the previous administration.

In addition, the budget calls on HRSA to continue strengthening 340B program compliance by expanding oversight activities, educating covered entities and prospective sites on the statutory requirements of the program and conducting audits of manufacturers. Lastly, some additional priorities that carry forward from the previous year include the development of the 340B pricing system and a facilitated process for refunds and credits to entities who were overcharged.

Conclusion

The President’s proposed budget calls for deep cuts and disinvestment in America’s safety net programs – most of all in Medicaid, which covers more than 70 million Americans and half of health center patients. This is of great concern to all of us who work to address the needs of low-income and vulnerable populations. While the nation struggles to put its fiscal house in order, we will continue our work with Congress on solutions to protect the health, well-being and stability of America’s communities.