Bipartisan Budget Act Funds CHIP for Four More Years and Includes Other Important Health Care Provisions

happy family funny kids are preparing the dough bake cookies in the kitchen

Congress passed another short-term continuing resolution (CR) early this morning after a brief government shutdown. The Bipartisan Budget Act funds the government through March 23, but this one is very different from the previous CRs. One metric of how it’s different is the length – this one comes in at over 650 pages whereas the last CRs barely broke double digits. Perhaps a more meaningful metric is that this bill includes a bipartisan agreement on the budget – making adjustments to the discretionary budget caps for this year and next – which will finally allow Congress to complete its annual appropriations bills in what we expect to be an omnibus spending bill next month.

Reaching agreement on the discretionary budget caps is significant – the overall spending limits and how much to spend on defense versus non-defense have been the sticking points in all of the budget negotiations this fiscal year, resulting in multiple CRs rather than a long-term budget. But this massive bill doesn’t stop with the discretionary budget. It also adds funding for disaster recovery, infrastructure, and the opioid epidemic, extends numerous health and tax provisions, and raises the debt limit. We may have to continue to unpack this package in the days/weeks to come, but here are the highlights for SayAhhh! readers from Division E, the Advancing Chronic Care, Extenders, and Social Services (ACCESS) Act.

CHIP

Just two weeks ago, we wrote about how Congress passed a 6-year CHIP funding extension, which was good news but long overdue and shortsighted given the 10-year CBO score. We won’t take credit for Congress coming to its senses, but in the ACCESS Act, CHIP is extended for four more years. The HEALTHY KIDS Act provisions remain in place, with the following additions:

  • Funding for FFY 2024, 2025, 2026, and 2027;
  • Extension of the maintenance of effort (MOE) through 2027;
  • A new requirement for states to report quality measures in the child core set beginning in FFY 2024; and
  • Extension of the contingency fund, the qualifying state option, express lane eligibility, the pediatric quality measures program, and the outreach and enrollment program through FFY 2027.

Funding. Close readers of the text will notice that the funding for CHIP is different beginning in FFY 2024. Rather than writing out a specific overall allotment amount each year, FFYs 2024-2027 are funded through what is known as “such sums” language. This gets weedy fast, so we’ll come back to it.

The new language is intended to cover all CHIP expenditures, and we’ll be paying close attention to make sure it does. Importantly, the final year of CHIP funding in this bill, FFY 2027, is written such that CBO will begin carrying $15.3B forward in the baseline rather than $5.7B, which more accurately reflects CHIP spending and should help make future CHIP funding extensions easier to offset.

Maintenance of Effort. As noted, the ACCESS Act extends the MOE through FFY 2027, picking up where the HEALTHY KIDS Act left off. The MOE remains as is – maintaining eligibility levels and enrollment procedures for children in Medicaid and CHIP – through FFY 2019 but beginning in FFY 2020 and beyond, states may scale back eligibility levels to 300 percent FPL ($5,195 per month for a family of three in FFY 2018).

Mandatory Quality Reporting. The new requirement for states to report pediatric quality measures for Medicaid and CHIP comes as a welcome surprise. As my colleague Tricia Brooks has written about many times, voluntary reporting left much to be desired. In 2016, 50 states reported at least one measure, 45 states reported at least half of the measures, but the median number of measures reported was only 18 (of 26). Further, CMS only releases data on measures reported by at least 25 states. Moving to mandatory reporting will make the quality data set more robust and much more useful for child health stakeholders. I’m sure we’ll hear more from Tricia about it soon, so check back.

These CHIP policies are estimated to save the federal government $4.85B. (If that is making you scratch your head, check out this earlier post that walked through how CBO estimates the budgetary impact of CHIP changes.)

Health Extenders

The ACCESS Act includes a series of what are known as “health extenders” – expiring health provisions that are regularly renewed. There are many Medicare-related health extenders, but here are the extenders with the greatest impact on children and low-income families:

  • Maternal, Infant and Early Childhood Home Visiting Program ($400M per year through FFY 2022),
  • Community Health Centers ($3.8B for FFY 2018 and $4B for FFY 2019),
  • Family-to-Family Health Information Centers ($6M each year for FFYs 2018 and 2019 including $1M per year to establish centers in the territories and at least one center for Indian tribes), and
  • Special Diabetes Program for Type I Diabetes and for American Indians ($300M each year for FFYs 2018 and 2019).

Offsets

As with most spending bills, the ACCESS Act includes several offsetting provisions or “payfors” that reduce government spending or raise revenue. One provision I’ve already mentioned saves money – the CHIP extension. Here are the other offset provisions of most interest to SayAhhh! readers:

  • Third Party Liability in Medicaid and CHIP: Generally, Medicaid is the payer of last resort, meaning that Medicaid only pays for services once other payers (like other health insurance, workers compensation, and auto insurance) have already paid their portion. However, there are some exceptions to this rule. Medicaid is required to pay first for prenatal services and preventive pediatric services, seeking reimbursement from the other payers after the fact. Under this bill, Medicaid must pay last for prenatal services. Medicaid must continue to pay first for pediatric preventive services and the option to wait to pay for 90 days is delayed until October 1, 2019. The bill also permanently repeals a provision from 2013 that would have allowed states to recover medical expense claims from any portion of a Medicaid beneficiary’s legal settlement. Note that unlike earlier versions of this policy, the bill applies third party liability requirements to CHIP. Children must be uninsured to qualify for CHIP, but other types of third parties may be liable for some health expenses, like auto insurance following an accident. (Saves $4B)
  • Lottery and Gambling Winnings: This provision requires states to count certain types of income like lottery and gambling winnings when making a Medicaid eligibility determination based on modified adjusted gross income (MAGI). Expect an update from Tricia Brooks on getting MAGI right. (Saves $475M)
  • Prevention and Public Health Fund: The ACCESS Act reduces mandatory funding for the Prevention and Public Health Fund by $1.35B over the next 10 years. (Saves $998M)
  • Medicaid Disproportionate Share Hospital (DSH) Payments: DSH payments are scheduled to decrease starting in FFY 2018, but the ACCESS Act eliminates these payment reductions for FFY 2018 and 2019, maintains the $4B payment reduction for FFY 2020, and increases the payment reductions for FFYs 2021-2025 to $8B. (Saves $180M)
  • Medicaid Rebate for Line Extension Drugs: Pharmaceutical manufactures pay a rebate for prescription drugs in Medicaid, helping to bring down costs for states and the federal government. The bill clarifies the proper rebate amount for so-called “line extension” drugs, like time-released formulations. (Saves $5.6B)
Kelly Whitener
Kelly Whitener is an Associate Professor of the Practice at the Center for Children and Families

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