December 1, 2021

Last month, the U.S. House of Representatives narrowly approved the Build Back Better (BBB) legislative package submitted by the Biden Administration.  The term, “build back better,” has been used multiple times by Mr. Biden since the 2020 campaign.  He, in turn, got the phrase from World Economic Forum founder and Covid 19: The Great Reset author, Klaus Schwab.  (You may want to research further the connection between “build back better” and “the great reset.”)  It remains to be seen if the Senate will pass the measure; if it does, hospital leaders should be aware of the many health-related provisions present in the current version of the bill.  To help us wade through these provisions, the American Hospital Association (AHA) published a lengthy summary.  The below reflects some of the key takes from that summary. 

Health Coverage

Closing the Gap.  The legislation would temporarily close the Medicaid coverage gap by providing subsidized coverage through the federal health insurance marketplace for individuals with income under 138 percent of the federal poverty level. Beginning in 2023 and continuing through 2025, premium tax credits would be extended to such individuals to purchase marketplace coverage with zero-dollar premiums and cost-sharing assistance that reduces enrollee cost-sharing to 1 percent.

Reductions in Medicaid DSH Allotment.  States that have not expanded their Medicaid program would face a reduction in their Medicaid DSH allotment.  Beginning in fiscal year (FY) 2023, non-expansion states would be subject to a 12.5 percent reduction of their DSH allotment.  This “DSH penalty” would be applied against their DSH allotment each fiscal year the state has not expanded their program and would cease only if the state expands coverage.  Funding restrictions also would apply to any state with a Medicaid uncompensated care pool that has not expanded their program. Such restrictions would prevent these states from claiming federal matching dollars for health care services provided to an “expansion individual” through the pool funds.

Affordability Fund.  The BBB Act would establish a new health insurance affordability fund to provide assistance in reducing health care premiums and out-of-pocket costs through reinsurance programs.  The Centers for Medicare & Medicaid Services (CMS) also is directed to implement a temporary reinsurance program in non-Medicaid expansion states. In addition, cost-sharing reductions would be extended through 2025 for individuals with income up to 150 percent of the federal poverty level receiving unemployment.

CHIP.  Federal CHIP funding would be made permanent.  The pediatric quality measures program and the contingency fund would also be made permanent by the bill. States would be provided an option to increase CHIP income eligibility levels above the existing statutory ceiling, which is currently tied to Medicaid income levels. The bill also creates a drug rebate program similar to the Medicaid rebate program in order to lower the cost of prescription drugs for CHIP.

Graduate Medical Education

The BBB would increase the existing cap on the number of Medicare-funded residency slots by 4,000, with no more than 2,000 slots distributed each year starting in FY 2025. At least 25 percent of these slots would be awarded for primary care residencies, including obstetrics and gynecology.  At least 15 percent would be awarded for psychiatry residencies, including addiction medicine.  To be eligible for these slots, hospitals must be training above their Medicare caps, located in a rural area, in states with new medical schools, located in or serving health professional shortage areas, or in states with the lowest quartile of medical resident to population ratio.

The bill also would establish the Rural and Underserved Pathway to Practice Program, which would provide 1,000 scholarships annually to students from underrepresented groups to attend post-baccalaureate programs and medical school, starting in FY 2023.  Teaching hospitals would be eligible to train graduates of the Pathway to Practice Program, and these positions would be excluded from hospitals’ GME caps. Eligible teaching hospitals must be recognized by the Accreditation Council for Graduate Medical Education as providing mentorship, training in cultural and structural competency, and training in underserved areas.  The package also would provide $200 million for the Children’s Hospitals Graduate Medical Education program for FY 2022.

Drug Costs

The package would direct the Department of Health and Human Services (HHS) to establish a Drug Negotiation Program, which would require the HHS Secretary to identify 100 brand-named, single-source drugs annually.  Beginning in 2025, the HHS Secretary must negotiate the price of 10 drugs from that list, followed by 15 drugs in 2026 and 2027, and 20 drugs annually thereafter. In addition, insulin products must be included in negotiations.  Failure for a drug manufacturer to negotiate the price of a selected drug would result in an excise tax. The legislation also would penalize drug manufacturers that increase their prices faster than inflation for drugs used by individuals covered by Medicare.

Other provisions would redesign the Medicare Part D program by capping beneficiary out-of-pocket costs and shifting certain financial responsibilities to insurers and drug manufacturers. The legislation also would repeal a final rule aimed at creating a new safe harbor protection for pharmacy benefit managers.

Workforce Capacity

The legislation includes several provisions intended to bolster hospital workforce capacity, including the following:

• Reauthorizing the Health Profession Opportunity Grant (HPOG) Program, which provides grants for the purpose of preparing certain low-income individuals to enter into the healthcare profession.
• $2 billion for the National Health Service Corps, which provides scholarships and loan repayment to qualified healthcare providers in exchange for service in underserved parts of the country.
• $500 million for the Nurse Corps, which provides loan repayment assistance to registered nurses (RNs) and advanced practice registered nurses (APRNs) in exchange for service in critical shortage areas or serving as faculty at eligible nursing schools.
• $500 million for schools of nursing in underserved areas.
• $500 million for schools of medicine in underserved areas, with priority given to minority-serving institutions.
• $85 million across several programs aimed at bolstering training and education for palliative care medicine and nursing.

The AHA’s Take

AHA President and CEO Rick Pollack supported many parts of the BBB bill, including the expansion of access to coverage though subsidized health insurance marketplace plans and the investments in workforce training.  He expressed special appreciation over the expansion of Medicare-funded physician residency slots and Pathway to Practice. As to those areas of the bill that the AHA found wanting, Pollack noted the following:

However, while we appreciate the goal of increasing coverage to residents in states that did not expand their Medicaid programs, it should not come at the expense of vital funding to hospitals and health systems located in those parts of the country that serve a large number of children, the poor, the disabled and the elderly.  These cuts are unacceptable, especially while hospitals remain on the front lines of fighting COVID-19 and the deadly Delta variant.  In addition, we are disappointed the House did not include critical funding for hospital infrastructure improvements through the Hill-Burton Act, as they did in an earlier version of the legislation.  We look forward to working with the Senate to improve this bill.

We will keep you apprised of the progress of this legislation in the weeks ahead.  If you have questions about our hospital business services, please reach out to us at info@miramedgs.com.