Health Center Federal Policy

The Fiscal Cliff Deal – What it Means for Entitlement Programs

by Heather Foster, MPH

While we blogged last week about what the fiscal cliff deal means for Health Center grant funding and the sequester, it’s also worth noting what changed in regards to entitlement programs such as Medicaid and Medicare…and what that means for the next round of deal-making.

“Savings” were found by making a number of cuts – largely to the Medicare program, none of which will have a major direct impact on health centers.  The major items of note in this portion of the package were the full repeal of the “CLASS Act,” a voluntary long-term care fund established as part of health reform, and rebasing of the Medicaid Disproportionate Share Hospital (DSH) payments.  The DSH changes will mainly impact the public hospitals, also part of the safety net, so there could be some trickle down impact onto the rest of the safety net.

Of note, the much-talked about provider tax cuts were NOT in the mix, nor was the blended FMAP proposal put forward by the Administration last year.  In fact, the Administration recently withdrew its support for the blended-FMAP, as it would act as a disincentive to states to take up the new Medicaid expansions.  This means, however, that eliminating or reducing provider taxes will almost definitely be on the table as part of the next round of discussions.  President Obama recently stated that the next proposal to offset the sequester (which was postponed, and as of now will take effect in less than two months), will be much more focused on health care cuts than the current one.  While the lion’s share of the cuts will likely come from Medicare there will also be continuing pressure to find savings in the Medicaid program.  We will continue to monitor all of these discussions and work to prevent both arbitrary cuts to the Medicaid program writ-large as well as any specific impact on health centers’ Medicaid PPS.

The package also included a slew of miscellaneous items that are typically renewed around Christmastime every year—known as “extenders.”  These included the so-called “doc fix” or payments for non-health center physicians billing Medicare, along with an extension of Medicare therapy caps, extension of Transitional Medical Assistance for low-income families transitioning from welfare to work, and expansion of Medicaid and CHIP Express Lane eligibility (which relies on data from other state offices, such as school lunch programs) to make Medicaid eligibility determinations for children.

Stay tuned for continued updates on the status of deficit reduction discussions and further deals to forestall the sequester!


  1. Why don’t you reduce govt employee benefits such as double pensions, sick pay which rolls over, year after year and is payable at termination. Holidays that govt employees get that regular working people don’t get – all the extra that actually cripples the budget….

    Put govt workers on Social Security – so when there is cut – all feels it,


    THose of us who have worked for 40+ years who have contributed to SS/medicaid
    are getting screwed.

  2. Get rid of the abuse that goes on all over in government spending, a lot of the programs are good and essential but way to much fraud and abuse of the system goes on. Do not punish the hard working that earned benefits, screen out the abusers.

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