Joan Alker: Hi, everybody! This is Joan Elker, with the Georgetown University Center for Children and families. We're just going to give folks a minute to to jump online. Here, as we assemble, we have a large crowd, so I'll give it another 30 seconds or so, and then we'll get started.
Joan Alker: Okay, we've still got folks joining. But I think we're going to go ahead and get started because we've got a lot of ground to cover today and welcome everybody again. My name is Joan Elker. I am the Executive Director of the Center for Children and Families at the Georgetown University Mccourt School public policy. I'm also a research professor at the Mccourt school.
Joan Alker: and I want to welcome everybody to today's webinar, which is called Medicaid Provider taxes. How States use them, and budgetary effects of proposed Federal changes. So we've got a fairly wonky topic. It's a hot topic in a niche world here. But that's the topic. So just so, you know, in case you're in the wrong place.
Joan Alker: This webinar is part of a series that Georgetown Center for children and families has been doing for the last 6 months or so, which is open to everybody anywhere. And it's really about understanding key Medicaid policy issues that are under contemplation in Congress.
Joan Alker: As Congress considers major policy changes and cuts to the Medicaid program, and we do expect Congress. The House, in particular, has indicated they're going to be moving forward very, very quickly in the next few weeks on this, potentially some of the issues we're going to talk about today.
Joan Alker: So thank you all for joining a few housekeeping notes everybody is going to be in. Listen, only mode. We do have a large crowd. We will take questions in the chat. Sorry in the Q. And a feature, and I will go to those at the end after we've heard from our presenters.
Joan Alker: and and I'll read the questions out since everybody's in. Listen only. And also this webinar will be recorded, and it will be available on our website. And we'll send that link out with the resources accompanying this call. We have had a number of webinars in this series, and my colleague Melody, will pop that link into the chat for everybody. If you want to look at some of the past webinars.
Joan Alker: So we have a terrific lineup of speakers today with with decades of experience. Before I get to their intro. Let me just do a very, very quick table setting. Here. As you know, Medicaid is a Federal State matching program.
Joan Alker: States operate the program within the the Federal rules and the many options that States have and many choices. The Federal Government does provide. The majority of the funding and States pull that down by putting up their share.
Joan Alker: And, of course, one of the ways in which Congress could restrict Medicaid funding is by cutting Federal matching funds directly, and that's certainly on the table. There are a variety of proposals to do just that for either the Expansion group, the administrative match.
Joan Alker: Other proposals are under consideration. But that's not what we're here to talk about today. Another way in which Congress could restrict medicaid funding and and
Joan Alker: enact savings. The scorable savings by the Congressional Budget office is by restricting States ability to raise their share of the funding to pull down the Federal funding. And that piece of the equation is what leads us to today's discussion about Medicaid provider taxes.
Joan Alker: So to help us through this topic, we've got 3 wonderful speakers. I'll introduce them all very quickly, and then we'll just get rolling with the presentations.
Joan Alker: Our 1st speaker is going to be Andy Schneider. He is a research professor of the practice here at the Mccourt school of public policy, and one of my colleagues at the Center for Children and Families, and he has decades of experience working on Medicaid, as many of you know, as a Congressional staffer working the Executive branch, and I'll just highlight for the purposes of this discussion.
Joan Alker: that before joining us at Georgetown in 2017. Andy was a senior advisor at the Center for Medicare and Medicaid services, where he did focus on program integrity issues.
Joan Alker: So Andy is going to cover what are provider taxes? Where did they come from and help shed some light on this question
Joan Alker: our second speaker, we're so thrilled to have Robin Rudowitz. She is a vice president at Kff. She is the director for the program on Medicaid and the Uninsured, and a leading expert. And Robin is going to talk to us about what we know about which States are using them, which provider taxes. What do we know about how States are actually use using provider taxes today
Joan Alker: to finance their programs. And then, last of our speakers will be Edwin Park, who is a research professor at the Mccourt School of public policy. Another one of my colleagues here at the Center for children and families, and, as many of you know, a leading expert on Medicaid, particularly Medicaid financing, and Edwin is going to walk us through what proposals Congress is considering right now, with respect to restricting provider taxes.
Joan Alker: So with that, I'm going to hand the virtual mic over to Andy, and we'll get rolling.
Andy Schneider: Thank you, Joan. Afternoon everyone.
Andy Schneider: So if I could have the 1st slide.
Andy Schneider: So I'm going to talk about the origins of the Medicaid Provider tax rules.
Andy Schneider: I'm going to try to do this in 10 min.
Andy Schneider: It's actually not possible to do this in 10 min. Because it's too complicated. But that's the time we've got. So that's what we're gonna walk through. If you if you are having a little trouble following it.
Andy Schneider: there are some resources that would help you catch up.
Andy Schneider: So 1st slide.
Andy Schneider: okay? So while Melody is looking for there we go. So what is a Medicaid provider tax. So, as Joan mentioned, Medicaid is a public health insurance program, and the Federal Government and State Government share in the cost of the program.
Andy Schneider: And the way that happens is the Federal Government matches what States spend for covered services furnished eligible individuals at specified rates, and that specified road is known as the fmap, and on a regular basis. It varies between 50 and 77%, depending on the per capita income of the State.
Andy Schneider: In some cases, like the medicaid expansion population. The fmap is 90%. But there's a specified rate.
Andy Schneider: and that is a policy statement about how the Federal Government and the State government should share in the cost of the program.
Andy Schneider: So historically. And we're talking back to 1965 States have had considerable flexibility in how they raise their share of Medicaid's costs. Again, if the State doesn't spend the money, Federal government should not be matching.
Andy Schneider: state does spend the money, and the and the population is covered and the services is covered, then the Federal Government should match.
Andy Schneider: So there have been in place since 1991 and 1992, a set of statutory and regulatory provisions.
Andy Schneider: And they allow States to use taxes on providers as one source of the revenues that they use to pay their share of Medicaid, and I'm going to try to summarize how those came about.
Andy Schneider: But the point is just to lay it out right now.
Andy Schneider: The 1991 and 1992
Andy Schneider: statute and Regs were really a program integrity initiative.
Andy Schneider: They have largely remained in place unchanged since that point in time.
Andy Schneider: That doesn't make them perfect. But they they were developed
Andy Schneider: in a thoughtful manner, trying to balance the interests of the States and the Federal Government.
Andy Schneider: So that we have a stable medicaid financing situation.
Andy Schneider: Okay, next slide, please.
Andy Schneider: So let's start. In the 19 eighties. In 1985, the Reagan Administration issued a Reg.
Andy Schneider: And the Reg said, Here's how States can fund their share of the Medicaid program.
Andy Schneider: So
Andy Schneider: as long as you're not using Federal funds, said, these regulations state funds would count if they were either appropriated directly to the State Medicaid Agency by the
Andy Schneider: by the State legislature, if they were transferred from other public agencies to the State Medicaid Agency, and remained under that agency's administrative control that's come to be known as the Intergovernmental Transfer, or if they were certified
Andy Schneider: by a contributing public agency, a county agency, or a local education agency, as representing expenditures that are federally matchable. Those are called certified public expenditures.
Andy Schneider: And if you want later, we can go back into what those look like. But I pointed out only because, as you'll see, after the program, integrity changes came into place. Those 2 financing mechanisms were codified in addition to all the rules you're about to learn about provider taxes.
Andy Schneider: So the second piece of the Reagan Administration Reg was that from her
Andy Schneider: funds donated from public private sources. Excuse me, they were transferred to the State Medicaid Agency
Andy Schneider: under the State Medicaid agencies, administrative control and the private funds didn't revert to the donor's facility
Andy Schneider: unless the donor was a nonprofit. So those were called provider donations.
Andy Schneider: There were no rules in the 1985 reg. Around. How States could tax providers in order to raise revenues to fund their State share of Medicaid
Andy Schneider: and long story short, there were some abuses under these regs, particularly in relation to donations, and the result of the abuses was that the Federal Government was paying the entire cost of
Andy Schneider: portions of the Medicaid program in those States where
Andy Schneider: hospitals and other providers would make donations and and then receive everything back
Andy Schneider: as a result of the transactions that
Andy Schneider: that transpired. So next slide. So 1991, the bush Administration,
Andy Schneider: and the Congress work out along with the States, a set of rules to address these problems and to correct some of the shortcomings of the
Andy Schneider: Reagan regulations in 85. And the 1st thing they do is effectively prohibit the use of provider related donations. And there's a lot of complication around this. But trust me, Provider related donations disappeared as a public program integrity problem. After after these rules came into place. It also, as I mentioned, codifies intergovernmental transfers and Cpes as legitimate sources of State share.
Andy Schneider: Now,
Andy Schneider: we've come to the to the overview here of the of the provider tax rules. So States are are allowed to use revenues from taxes on providers
Andy Schneider: as a stores of state chair. If the tax is broad based.
Andy Schneider: and if there's no hold, harmless provision in effect, that's the statutory language.
Andy Schneider: We're going to go into that in a little more detail.
Andy Schneider: In the next 2 slides. But but that is sort of the broad concept, broad-based, was an effort to say, well, you can't just tax hospitals that serve only medicaid patients. If you're going to tax hospitals, you've got to tax all the hospitals in the class
Andy Schneider: and if you tax all the hospitals in the class. You can't just tax the Medicaid hospitals at a high rate, and the other hospitals at a very low rate.
Andy Schneider: So that was the basic concept of broad-based hold. Harmless is you can't hold the hospitals or other providers that you're taxing harmless against the effects of the tax. Somebody actually has to pay tax
Andy Schneider: so to enforce this, the the statute provides. This is the 1991
Andy Schneider: provisions, that if you're if you're a state, and you're collecting revenues from a tax, and the tax doesn't meet these requirements. We're going to go into a little more detail on.
Andy Schneider: Then those revenues get deducted from the State's expenditures before
Andy Schneider: you apply the fmap to the State's expenditure. So, for example, say the State has expenditures of 100 100 million dollars, all right. And it's a 50% fmap state. So normally, the Federal Government would pay 50 50 million of that.
Andy Schneider: All right. So assume that there's a there's a non-complying provider tax, and it raises 30 million dollars in revenue.
Andy Schneider: I'm making these numbers up, of course, so that would reduce. If the tax is not complying.
Andy Schneider: while the State says it has expenditures of 100 million. This provision says we're reducing that 100 million by 30 million. And now we're going to apply the F map to that. The 50% F map applied to the 70 million dollars. And now the State's going to get 35 million
Andy Schneider: and matching payments. That's the way this is all enforced. That's why.
Andy Schneider: you know, as far as we can tell from the outside.
Andy Schneider: All of the provider taxes in place now are approvable and are approved by Cms. As meeting these requirements that we're about to discuss, because the financial consequences of not meeting them are are just too severe.
Andy Schneider: Okay, next slide.
Andy Schneider: So
Andy Schneider: all of this is laid out in withering detail in Section 19 0, 3 W. Of the Social Security Act. I don't recommend you read it. It's dense. But here's basically what it says. It's identified. Certain classes of providers to which tax rules apply that would allow States to raise revenues from them, and the provider classes.
Andy Schneider: hospitals, and nursing facilities, intermediate care, facilities for individuals with intellectual disabilities, physicians and managed care organizations. Among others.
Andy Schneider: the the concept of a tax is a broad one. It includes licensing fees includes an assessment. Other mandatory payments.
Andy Schneider: and so here's the important rob to qualify as broad-based, and the statute required. They got to be broad based. There can't be a whole harmless in effect.
Andy Schneider: the tax has to be imposed uniformly, and it has to be imposed with respect to all non-federal nonpublic providers in the class.
Andy Schneider: the the statute allowed the Secretary to waive that requirement. If the State could show that its tax, while it didn't necessarily meet those particular requirements, was quote generally redistributive.
Andy Schneider: We'll get to the Regs in a second.
Andy Schneider: Okay, now, there's a whole harmless requirement.
Andy Schneider: There's a whole harmless provision. In fact, the tax is no good
Andy Schneider: right? And the whole harmless provisions. In effect, if the state or local government that imposes the tax
Andy Schneider: provides for any payment or offset or waiver that directly or indirectly guarantees
Andy Schneider: to hold a provider harmless for any portion of the cost of the tax. And the key phrase here is indirectly guarantees.
Andy Schneider: Okay, so let's go to the next slide.
Andy Schneider: Some of this was fleshed out in an implementing regulation. Isn't that quaint Congress enacts a statute and the administrative agency with the expertise and the responsibility for actually administering the program. That's complicated issues, a regulation to implement the statute.
Andy Schneider: So here we are. And these regulations again.
Andy Schneider: you see the citation. They're even more complicated than the statutory language, and they've been in place since 1992. They were issued in November of 1992,
Andy Schneider: remember, I said there were secretarial waivers available for the broad, based and uniformly imposed requirements, and there were statistical tests in the waivers.
Andy Schneider: If you're a quant you'll love them that explain how a State can can waive those requirements and still qualify its tax.
Andy Schneider: And then there is something called a safe harbor threshold.
Andy Schneider: or where you can. You can show that you've met the hold harmless provisions.
Andy Schneider: If the tax produces revenues that are less than or equal to 6% of a provider's net patient revenues.
Andy Schneider: and you'll be hearing a lot more about that. The provider tax class has got to increase by the 92 regulations, and subsequently. And now there are currently 19 different categories of providers that states, if they want to, can impose taxes on
Andy Schneider: and use the revenues from those taxes to fund their State shares. If they meet these requirements again. Not many changes. You'll see in the Regs that between 2,008 and 2011 the safe harbor threshold was lowered from 6.0% to 5.5%.
Andy Schneider: And I am going to turn it to Robin. I just want to emphasize these. These provisions have been in place for a long time. That doesn't make them perfect. Of course there are policy issues that have developed in 30 years of operation, and it would be useful to look at them and correct them if they need to be corrected. That is different from using provider taxes as a way to shift
Andy Schneider: costs from the Federal Government to the States.
Andy Schneider: You're on.
Robin Rudowitz: Great! I guess I could jump in. Thanks. Andy, pleased to be here. Thanks everyone for joining us on what Andy and Joan set up as a really complicated issue. That is definitely a hot topic. So I'm just going to pick up a little bit where Andy left off. I think we are hearing, I think, in the ether, some people calling
Robin Rudowitz: provider taxes, fraud, and abuse, or money laundering. So you may have heard those terms as Andy went through all the long history and all the rules, and these are, of course, permissible sources of financing for the Medicaid program. So if we could just go to the next slide.
Robin Rudowitz: I'm going to cover a little bit a lot of data that we collect as part of our annual budget survey that we've been collecting for a long time on States use of provider taxes across provider types and in the amounts.
Robin Rudowitz: And at the outset I'm just going to say that while I'm going to share all the information that we have and that we collect, there is just a lot that is not known on this topic. We really don't know the total amount of the revenues that are collected through these taxes. We don't know the effect of the taxes on net payments to providers, because we know a lot of the uses are to
Robin Rudowitz: enhanced provider rates, and we don't know really broadly. States have a number of different uses of provider taxes. So we don't know the answers to all those things. I think there's general agreement that there's not enough transparency around a lot of these issues. But I will jump in and tell you what we have from data collected. So next slide.
Robin Rudowitz: So as Joan set up and Andy amplified financing for the Medicaid program is shared by States and the Federal Government, and of course, States do have this flexibility to determine how to finance the non-federal share of Medicaid payments. So we do know from looking at data from National Association of State Budget Directors, that when we look at State spending on the program
Robin Rudowitz: they report that 68% comes from state general funds. So those are funds that are collected from pretty broad taxes, like income taxes, corporate taxes. Those kind of things.
Robin Rudowitz: And about 32% is from other sources or other funds. And those could include provider taxes. Provider taxes are those where over 85% of the burden falls on services or entities that provide or pay for health care. We know that over time States have increased their use of provider taxes, and that has happened particularly during economic downturns. When state general fund
Robin Rudowitz: dollars are more constrained. We have seen an increase in reliance on state provider taxes, and we know that from other data sources, from Macpac and Gao that States use provider taxes for a number of things
Robin Rudowitz: to support base payments for providers, managed care payments, supplemental payments to providers, and some States also dedicate some of these taxes to covering specific things like financing the state costs of the expansion aca Medicaid Expansion group next slide.
Robin Rudowitz: So from the data we collect in our annual budget survey, we know that all States but Alaska use provider taxes and the large majority of States. So 39 States have multiple taxes in place. So 3 or more taxes. And you know there are some estimates from Gao that look at the range of how much provider taxes
Robin Rudowitz: our share of State budgets, and that, or share of State Medicaid spending in that ranges.
Robin Rudowitz: From, you know, very much across across States next slide.
Robin Rudowitz: Andy covered a lot of the Federal rules on provider taxes. So I'm not going to cover all of these, except to reiterate that taxes need to be uniform, broad, base, and not have this hold harmless. So we'll get back to the hold harmless piece with some of the other data that I will present next slide.
Robin Rudowitz: So, picking up on the holds harmless, we ask States, when we have done our annual survey where States are with regard to net patient revenues, so where they are with regard to the safe harbor, so how close they are to the limit of the holds harmless.
Robin Rudowitz: and again, similar to the use of provider taxes across States. We know that the large majority of States, 38 States have at least one tax that is close. So we ask them if they're above 5 and a half percent of net patient revenues. And again, the safe harbor limit is 6%. So the large majority of states have
Robin Rudowitz: at least one tax that is close to the current safe harbor limit. And again, if there are policy changes that I know Edwin will talk about could be more at risk next slide.
Robin Rudowitz: We also asked States about their provider taxes across provider types. So we know that the largest number of States have provider taxes for nursing facilities followed by hospitals, intermediate care, facilities for people with developmental disabilities. Their other providers also encompass a wide range of provider types, including ambulatory care and home care providers.
Robin Rudowitz: So the more frequent provider taxes on institutional providers may reflect the fact that provider taxes are often used to finance supplemental payments and supplemental payments are most common for those institutional providers. So hospitals, nursing facilities, and Icf Providers
Robin Rudowitz: next slide.
Robin Rudowitz: When we look at where States are by provider type in terms of relative to the safe harbor, we know that almost half of all States have provider taxes near the current safe harbor limit for nursing facilities.
Robin Rudowitz: So provider taxes are most likely to be near relative to all other provider types. Nursing facilities are most likely to have those taxes that are close to the 6%.
Robin Rudowitz: So, therefore, again, when Edwin talks about, you know some of the proposals that Congress might consider to limit provider taxes. These providers in these States that have these provider taxes close to the limit could be most at risk
Robin Rudowitz: next slide.
Robin Rudowitz: And when we look at hospitals, we know that you know large majority of States have hospital provider taxes, but 13 States have provider taxes that are near the safe harbor limit for for hospitals.
Robin Rudowitz: Next slide.
Robin Rudowitz: I think there's also been a big focus on hospitals in general. Hospital financing is really complex. Hospital rates are really a combination of base rates and supplemental payments. We also know that base rates are often below cost, so providers may help fund reimbursement rates, particularly for these supplemental payments through provider taxes.
Robin Rudowitz: It really depends whether States use fee for service or managed care to provide their Medicaid benefits, but in 2022, 61% of Medicaid payments were through managed care, and about a 3rd of those payments were through these State directed payments or supplemental type of payment.
Robin Rudowitz: and on the fee for service side about half of payments were through these kind of supplemental payments
Robin Rudowitz: next slide.
Robin Rudowitz: I'm not going to spend a lot of time on policy options again, because I know Edwin is going to touch on a lot of these. But I just want to point out that there are a number of proposals that would make changes to States ability to use provider taxes, and those could generate a significant amount of Federal savings. But what happens when there are Federal savings is that usually means that there are cost shifts to the States. So next slide.
Robin Rudowitz: So reductions in Federal Medicaid spending generally would leave States with pretty difficult decisions about how to offset those reductions. So again, if States are no longer able to use provider taxes to raise part of their State share. They would need to make decisions either to increase their taxes or cut other programs or make reductions in the Medicaid program.
Robin Rudowitz: To think about the implications of Federal spending cuts we looked at. You know, if the number or the target is 880 billion, we looked at a 1 year analysis of what it would mean for States to make up 88 billion dollars.
Robin Rudowitz: and it would require states nationally to increase the state share of Medicaid spending by 29%.
Robin Rudowitz: If States wanted to make cuts in their Medicaid program or States, you know, if they wanted to offset those federal reductions would need to increase state revenue or taxes per person by about 6%
Robin Rudowitz: or decrease education spending per pupil by nearly 1 5.th So these are again hard decisions that States would be faced with with limited ability to or limited use of federal dollars
Robin Rudowitz: next slide.
Robin Rudowitz: And just to end. We also tried to put some of those spending reductions in context of what it would look like or mean relative to spending on the Medicaid program, and cuts of that magnitude would be equivalent to about 18% of all spending on older adults and people with disabilities.
Robin Rudowitz: 38% of spending on all other adults or 76% of spending on children. So we know states would not implement, you know, reductions in all of these areas increase taxes or cut education by these amounts, but these were just illustrative to show sort of the magnitude of some of the cuts in terms of what it would mean in larger state budgets.
Robin Rudowitz: so I will stop there and look forward to Edwin and questions.
Edwin Park: Thanks, Robin. So now I'll talk about some of the proposals that are now under consideration by Congressional Republican leaders with regard to budget reconciliation next slide.
Edwin Park: So provider taxes is one significant area of focus for
Edwin Park: proposals to meet this 880 billion dollar target in Medicaid cuts that's in the Budget resolutions, instruction to the House energy and Commerce Committee.
Edwin Park: And what are some of the proposals that
Edwin Park: are being considered related to provider taxes.
Edwin Park: It's important to note up front that these aren't proposals that are targeted or designed to deal with specific issues that have risen in terms of State compliance with the longstanding provider tax rules that raise concern, but rather they are about generating significant Federal savings to meet that 880 billion dollars target in sort of the simplest, most direct way with regard to provider taxes.
Edwin Park: So the many of the proposals that are under consideration in this area involve taking that safe harbor threshold that both Robin and Andy discussed
Edwin Park: related the whole harmless requirement which is currently set at 6% of net patient revenue and just lowering it to some lower level. For example, the House Budget Committee in January had put out sort of leaked to the press, but never released publicly
Edwin Park: a 50 odd page menu of budget reconciliation options. And one of the options was to lower that safe harbor to 4% from 6%. Starting in 2026, and then again down to 3% in 2028 on a permanent basis, moving forward so basically reducing by half the safe harbor threshold.
Edwin Park: Now, as Robin mentioned, that would affect the majority of States that have at least one tax of 5 and a half percent or higher, you know and then affect eventually by 2028, nearly all the States that have a provider tax
Edwin Park: with a proposal that would go down to 3%.
Edwin Park: There are other possible proposals that have come up, including eliminating that safe harbor, entirely
Edwin Park: restricting the current use of waivers of broad-based and uniform requirements that are done by undergoing a statistical test. This is something that, for example, was proposed in the Medicaid fiscal accountability rule, which was a proposed rule in the 1st trump administration.
Edwin Park: That's a time, limits and restrictions on renewal of statistical test waivers related to those 2 requirements that could be something that also is on on the table.
Edwin Park: and one other area is, with regard to the use of provider taxes. As Robin pointed out.
Edwin Park: provider taxes are often used to increase payments to health care providers, including state directed payments which are
Edwin Park: payment increases that are provided through managed care plans. They pass through these payments, and they're often financed by provider taxes or provider tax increases.
Edwin Park: There are proposals, for example, included in the House Budget Committee menu that would lower the size of the State. Directed payments that States can make to providers through managed care plans from the current average commercial rate as set by a by administration regulation to some lower level
Edwin Park: next slide.
Edwin Park: So there are some estimates of illustrative provider tax restrictions that Congressional Budget Office has conducted as part of their budget options that they put out every December. So a cbo has some updated
Edwin Park: estimates of provider tax restrictions from December of last year that include lowering the safe harbor from 6% to 5%, which will be a cut of 48 billion dollars in 10 years in Federal Medicaid, spending.
Edwin Park: lowering the safe harbor to 2 and a half percent from 6% would be a much larger cut of 241 billion dollars in reduced Federal Medicaid spending over 10 years. And there are proposals to eliminate the safe harbor entirely, that Cbo model where that would actually cut Federal spending by more than 600 billion dollars over 10 years, 612 billion
Edwin Park: and gives you a sense of how large
Edwin Park: an impact these proposals could have, as well as how they can be dialed up or down to meet various budgetary targets as Congressional leaders see fit next slide.
Edwin Park: So why do these restrictions or elimination of provider taxes reduce Federal spending?
Edwin Park: They are about restricting what States are doing, not directly, for example, affecting the Federal, you know, matching rate for Medicaid, or for the expansion or so forth. It's really about changing what States can do to raise their share of the cost of Medicaid.
Edwin Park: Cbo finds that these safe harbor proposals, these lustre proposals, reduce Federal spending because they assume States won't be able to replace on these revenues that they would be able to replace no more than half of the provider tax revenues lost, which is actually a pretty generous assumption, and includes the resulting effect on state behavior
Edwin Park: with that reduction in revenues, that restriction of revenue sources, that a provider tax restriction would require, such as, for example, dropping the Medicaid expansion, which is optional under the Supreme Court decision that upheld the
Edwin Park: affordable Care act cutting provider payments. As we discussed.
Edwin Park: provider payment increases are often financed by provider taxes, cutting optional benefits, and of course not expansion. States not being able to adopt the expansion in the future. The reason the expansion is so closely tied to provider taxes is that new provider taxes or increases in existing provider taxes were often used to finance the 10% share of the cost of the Medicaid expansion when they were adopted. And that was
Edwin Park: the case in North Carolina, for example, which is the most recent state to take up the expansion
Edwin Park: next slide.
Edwin Park: So with these provider tax restrictions, it's important to recognize the context and how it fits and interacts with other Medicaid cut proposals that are under consideration.
Edwin Park: Now, many of those proposals and we discussed this in previous webinars involve reducing Federal Medicaid funding and shifting. Significant cost to States. Examples include a per capita cap where Federal funding for Medicaid would be capped at a level that would fail to keep pace annually with rising healthcare costs to produce
Edwin Park: Federal savings by reducing the amount of Federal funding that States can receive for Medicaid over time eliminating the current 90% expansion matching rate and have the regular matching rate apply, which in some states would be as low as 50%. That's a cut to Medicaid, shifting costs to States. The States have to bear a greater percentage of those costs
Edwin Park: now
Edwin Park: within that, within the sort of the budgetary context of the State level. It's always critical to recognize how important Federal Medicaid Funding is. Federal Medicaid Funding
Edwin Park: nationally accounts for the large majority of Federal funding that comes into state budgets 56%. Nationally. In some states, it's significantly higher than that
Edwin Park: next slide.
Edwin Park: And when you think about that, if you have cost shifts happening with other Medicaid cut proposals.
Edwin Park: then restricting or eliminating the ability of States to use provider taxes would make it much harder to maintain current state spending on Medicaid, let alone increasing State revenues to compensate for these significant losses in Federal Medicaid funding. So in response to that, both restrictions on provider tax, as well as some of these other cost shift proposals, States would either have to dramatically raise taxes or severely cut other parts of their budget.
Edwin Park: and that especially would be K. Through 12 education, higher education, which constitutes 43% of general fund budgets. The number one expenditure in state budgets is education and Robin illustrated that with some of her estimates on how much more States would have to raise taxes per resident or cut, spending per pupil in K through 12 education.
Edwin Park: you know, in response to these kind of cuts, it's far more likely that States will have to make deep damaging cuts to their medicaid programs. Not just provider payment rates, but eligibility and benefits.
Edwin Park: I'll just end by pointing out that. Why cuts affecting Federal and State Medicaid financing are at the fore. They're the top of the list in terms of Congressional Republican leaders, particularly in the House, including provider tax restrictions. Why, they're attractive is because it allows Federal policymakers to misleadingly claim.
Edwin Park: They're not making explicit cuts to eligibility, benefits and provider payments. Work requirements, of course, is a notable exception to that. But these types of proposals do leave States holding the bag. Governors and State legislatures are given no choice but to make really painful cuts.
Edwin Park: Really large cuts to their Medicaid programs because they're both getting less Federal funding than they would under current law.
Edwin Park: and they would be restricted on their ability to raise revenues. Their current revenue sources would be curtailed, limited, restricted, with changes to provider taxes at the same time, so that together, because States have to balance their budgets, unlike the Federal Government, they would have to institute really, really Draconian cuts to their Medicaid programs over the long run.
Edwin Park: So with that I will stop, and I will turn it back over to Joan.
Joan Alker: Thank you. Thanks so much to all of our speakers. This is a tremendously complicated area.
Joan Alker: and we've got a lot of great questions in the chat. I think if we can maybe put all of the speakers put their cameras on, let's get them back up here, and there are no dumb questions here. There are never any dumb questions, but especially in this topic, which is very hard to follow. So I'm going to try to pull a couple of these questions to kind of
Joan Alker: start to make sure that we're we're being clear here on the kind of structural basics, and then get to some of the specific questions.
Joan Alker: So one question is, if if folks could just
Joan Alker: and and, Edwin, I think I'll direct this to you, since this is what you were just addressing. But
Joan Alker: could you just clearly state how
Joan Alker: cutting and and restricting States ability to lower provider taxes, help save the Federal Government money? If you could just answer that question.
Joan Alker: and then I'm going to ask you a follow up.
Edwin Park: Sure. So, as Andy mentioned, you know, States have to pay their share of the cost of Medicaid, and then in turn they draw down Federal matching funds related to that State spending. So if States are using provider taxes, which is all States but Alaska, do
Edwin Park: to generate the revenue which they use to provide their share of the cost of Medicaid, their state spending related to Medicaid. Then they have to reduce that state spending, unless they can find other revenue sources, and if they can't, which is very likely, and a cbo assumes as well, then they draw down less Federal funding, so they spend less
Edwin Park: they draw down less Federal funding, and so States have to reduce their Medicaid budgets equal to that total amount of both Federal and State dollars. So it generates Federal savings. It generates State savings. And the reason is because States are cutting their medicaid programs, whether it's dropping optional populations, optional benefits, reducing provider payments.
Edwin Park: There's a whole host of cuts that they would make, but they have no choice but to make these cuts, which ultimately results in Federal spending reductions, because the State spending less is little less Federal matching funds. Going to that State.
Joan Alker: Yeah, thank you. And and the follow up point I wanted to make. And and any of the panelists should jump in is that the estimates that I think both Robin and Edwin provided specifically, are related to what the Congressional Budget Office is scoring is Federal savings.
Joan Alker: But to pick up on the point Edwin was making. This means states are cutting their own spending as well. And so on. Top of that. Actually, you know, a State's Medicaid program is seeing even larger cuts than those numbers that are depicted in those estimates.
Joan Alker: Any anyone want to comment on that? Or we can go to the next question.
Joan Alker: Okay.
Joan Alker: so here, we're gonna get into clarifying a little bit of the the nitty gritty here on some of the issues.
Joan Alker: so another question is, if if one of you could explain why reducing the safe harbor means reducing revenues.
Joan Alker: the the questioner is saying, I thought the safe harbor is only needed. If states are violating the hold, harmless requirement.
Robin Rudowitz: Do you want me to try? And then Andy could then Andy could correct me. But basically, as Andy stated, there are a few rules around the provider taxes, so they need to be broad based, uniform, and not have a hold harmless.
Robin Rudowitz: But the safe harbor is really a exception to the hold harmless, or it creates, you know, this safe harbor, this limit of where States don't it
Robin Rudowitz: are protected in their hold harmless provision. So if net patient revenues from a provider tax are within that 6%, they are not in violation of the hold, harmless provision, and that is the federal limit. So States have provider taxes, and they may fall within
Robin Rudowitz: range of that 6%. And if they are over the 6%, they're in violation of Federal rules. So that was my stab at trying to explain the safe harbor and the hold. Harmless limit.
Joan Alker: Andy anything you wanna add.
Andy Schneider: So. So that's right.
Andy Schneider: Remember the indirect guarantee phrase in the statute. Right? So the the safe harbor threshold is a way of saying, if your tax is less than or equal to 6% of net patient revenue in the provider class.
Andy Schneider: you don't have any guarantee, and therefore your your provider tax is okay, right? If you if you reduce that to 5% or 5.5 or whatever right then, by definition, the State is raising less revenue
Andy Schneider: from a 5.5% tax than it is from a 6% tax.
Andy Schneider: Right?
Andy Schneider: That's the revenue effect.
Andy Schneider: I hope that.
Joan Alker: Yeah.
Joan Alker: So I mean, I think that's super helpful. I know these these concepts are all really confusing. But basically, it's like, if you're in the safe harbor. It's end of story. You don't need to worry about these other rules. So we've got a few questions that relate to what do we know about what States are doing, and I know the answer for everybody on this call is that we want to know more than we know, so that some of these we're probably not going to be able to answer these questions.
Joan Alker: But I'll throw a couple of them out there.
Joan Alker: So
Joan Alker: One questioner is asking, what do we know about which States rely on provider taxes above the safe harbor threshold? In other words, they're over 6%. Do we know
Joan Alker: how many of those are? I think the answer is, no, but I'll open it to the panel.
Robin Rudowitz: Well again. They yeah. If they were above then they would be in violation of.
Joan Alker: They wouldn't get Federal match. But I think the question is because mentioned, they could theoretically be doing it for their own purposes.
Joan Alker: So okay?
Joan Alker: A related question is, Andy, you mentioned the waivers of of broad based and uniform requirements? Do we know? Do we have any data? And I think again, the answer, unfortunately, is no to better understand what provider tap type they're commonly used for, and why States use them.
Joan Alker: Robin. That might be. You.
Andy Schneider: Like this, I always turn to Kff as the source of current information, so I don't know if they've asked the question about how many States have have gotten waivers from the Secretary.
Andy Schneider: using one or the other statistical tests, there actually is an answer to that question. I don't know it, but.
Robin Rudowitz: Yeah. And I'll say, if anyone on the call knows the answer, we've been trying to find this question out. There are the waivers have to be granted by Cms. But there is no one central place that we've been able to find that has a list or a compilation of states that have waivers. So we don't have a list of
Robin Rudowitz: total number of states that have those.
Edwin Park: Yeah. The only thing I can think of is that when
Edwin Park: the Mfar rule was proposed in the 1st Trump Administration.
Edwin Park: numerous states. you know, submitted comments, explaining that the provisions relate to
Edwin Park: statistical test waivers of the uniform, broad-based requirements would adversely affect them. So it certainly was a significant number of states, but I don't think there is a clear number that's readily available for how many States and then within the State. You know how many of their taxes may have been approved. Using some of these waivers.
Joan Alker: Yeah. And I think related to that our very 1st question, which again, I fear the answer is, no. Is is there a resource that breaks down the fiscal impact of these provider rate cuts by state.
Joan Alker: And so I think Robin and Edwin and Andy will confirm the answer is no
Joan Alker: specifically, but I do think for folks on the call. It would be good to try to figure this out. If you're in a state and and try to track down this data. But, Robin, do you wanna add anything to that?
Robin Rudowitz: I'm sorry. I'm not sure I fully understand the I mean we do have well, the maps and all of the information that are in the maps. In the brief, that is, we have the levels of the States that have all of those taxes by by State, but not the total amounts of
Robin Rudowitz: the dollars that are paid.
Joan Alker: Right. That's that's what I was
Joan Alker: interpreting the question as, okay. So here's a a good question. I'm hoping that. That there are 2 questions I want to get to before we close. So, Edwin, I'm going to send this one to you.
Joan Alker: Are there other revenue sources available to states that can keep pace with the rate of inflation of medical care that Medicaid is purchasing.
Edwin Park: Well, I think this is a question of State's tax bases. Their current set of
Edwin Park: income taxes, corporate taxes. They may have capital gains, taxes, sales, taxes, so-called sin taxes, tobacco, alcohol.
Edwin Park: There may be funding sources from the local level, whether it is
Edwin Park: counties and or even the case of New York, New York City, contributing to the cost of the State match as well as as Andy mentioned intergovernmental transfers, including certified public expenditures, spending on health care that that can be matched by local governments, usually through
Edwin Park: they're public hospitals. So, you know.
Edwin Park: without provider taxes or restriction of existing use of provider taxes, States would have to look at from the revenue side of things.
Edwin Park: that array of taxes, and would have to increase them to compensate for the loss of provider tax revenues, and certainly in many states they're moving in the opposite direction, which is enacting very large tax cuts, including some States moving forward on abolishing their income tax entirely as well as other spending initiatives that have affected their budgets, including
Edwin Park: education voucher type spending programs which have opened up big deficits at the state level. So you know, it's certainly a question of individual states and what their revenue tax revenue base looks like, what their current tax policies are. But in general I think it's safe to say that States would not be able to replace the revenues associated with provider taxes compared to what they're currently raising right now.
Joan Alker: Thanks, Robin Andy, do you want to add anything there?
Joan Alker: Okay.
Joan Alker: this question I want to dig into a little bit, because this whole topic is very, very confusing, and I think this is a really good question. And, Robin, you you touched on this. I think a couple of you did. But let's slow down a little and really explain the intersection
Joan Alker: between Mco. Provider taxes and state directed payments.
Joan Alker: So, Robin, you want to start and then others can jump in.
Robin Rudowitz: Sure. So again States.
Robin Rudowitz: there are provider taxes. So how States raise the money for how they're going to pay for Medicaid services. Those services can either be delivered through fee for service or managed care. So if States are delivering services through fee for service, they can use supplemental payments to help
Robin Rudowitz: supplement or provide payments above base rates to certain providers. You're not allowed to use a lot of those supplemental payments when you have managed care. So there are rules around how States can use State directed payments through managed care. So often provider taxes fund are often used disproportionately to fund
Robin Rudowitz: supplemental payments, and often Mco. Taxes might be linked and provide a payment source for State directed payments.
Edwin Park: And to the extent that those provider taxes are being used to finance supplemental payments. Then restricting state use of those taxes will likely mean, you know, less funding for those type of payments which would reduce the net reimbursement to those hospitals, and oftentimes the reimbursement rates have been raised to increase participation among providers to ensure adequate provider networks, including in managed care, and then also
Edwin Park: the other purposes that States use provider taxes for would also be affected, and that includes financing. The Medicaid expansion, and the States have taken it up, but as well as improvements for home and Qa. Services, services for people with developmental disabilities that a number of States have dedicated a portion of the revenue they raised from provider taxes for those purposes, to improve aspects of their Medicaid program.
Joan Alker: Yeah. And I think you touched on. There's a lot of misinformation around this issue that we hear. For example.
Joan Alker: these provider taxes are have been used for a long time, and they're used to fund other aspects of the program nursing home services, etc.
Joan Alker: I think you both touched on what? When we hear, you know, proponents of cutting
Joan Alker: the safe harbor, for example, there's a lot of allegations that this is money laundering. So going back to this question of the relationship between a managed care tax and state directed payments
Joan Alker: I'd open to the panel. I mean, okay, well, that's the thing people say, sounds fishy right? They're paying the money, and then they're getting the money back
Joan Alker: so cause it's going back to them. So so I would just wanted to get folks, you know, to to give you a last word here
Joan Alker: to explain why. That's okay.
Joan Alker: Edwin. I'll start.
Andy Schneider: Oh, let me just start!
Joan Alker: Go ahead!
Andy Schneider: Okay.
Edwin Park: No go ahead!
Andy Schneider: Just very quickly, because the same question came up in 1991 right
Andy Schneider: like, Can the Federal Government, either as a matter of constitutional law or principle, or just as a matter of comedy between the Federal and State agencies and the States. Tell tell the States no, you can't tax period. No.
Andy Schneider: the answer was, there are going to be some, some some rules, some guide rails about
Andy Schneider: tax the healthcare sector of their economy in order Medicaid very complicated very quickly, as you've just heard right. But there is. There is always has always been, and will always continue to be, this tension between
Andy Schneider: the the Federal Government's interest in
Andy Schneider: ensuring a balance, in financing responsibility between the Federal Government and the States and the State's interest in its sovereign ability to tax who it wants and under what circumstances and what to do with the revenues
Andy Schneider: right? And from there on it gets very complicated.
Robin Rudowitz: I would just add quickly that you know all of these things are complicated, including state budgeting and financing. And it's I saw a few other questions about why this is so complicated. It's complicated because you don't. There's not a dollar that is tagged in the State. You know, Budget, it doesn't come in as a provider tax, and you follow that, you know dollar around to know exactly where it goes back to. So.
Robin Rudowitz: And that's part of the, you know. I describe it like a balloon pushing. So if you're cutting something here, you're going to push part of the balloon and need to finance it, you know, some other way, or the services or access is going to go away. So if this vehicle goes away and that puts
Robin Rudowitz: limit on States ability to use provider taxes and fund reimbursement rates for hospitals that pushes the balloon and might, you know, something else has to go, either increase in taxes or cuts somewhere else in the budget. So everything is sort of interrelated at the, you know, at the State budget funding level.
Edwin Park: Yeah, I'll just add that some of the proponents of provider restrictions today are making it sound like they've just discovered the existence of provider taxes when they've been used since the beginning of the program, and, as Andy mentioned, operating under a regulatory regime that's been in place since 1991 and 1992. This is a widely accepted, widely used aspect of Medicaid financing, governed under Federal rules.
Edwin Park: And just note that provider taxes, like many of the other cuts that are being considered in Medicaid as part of budget reconciliation.
Edwin Park: They're from this exact same playbook from 2017 for Aca repeal and replace medicaid per capita caps. Work, requirements, changes to the Medicaid expansion, matching rate and restrictions on provider taxes were all in the leading Senate.
Edwin Park: a Republican.
Edwin Park: a repeal bill that ultimately didn't make it through the Senate. So it's being sort of reframed as something that's sort of new and pernicious when, instead, is a form of financing that's been used operating under longstanding rules. And if there are
Edwin Park: targeted reforms that are needed to address certain State behavior that may not be in full compliance with existing Federal requirements. That's 1 thing, but it should not be used in this manner just to produce Federal savings for purposes of budget reconciliation to offset the cost of tax cuts that are the top priority for Congressional Republican leaders in the trump administration.
Joan Alker: Thank you. So we're going to keep going for a few minutes. We thought we might end up going over, and we've got tons of great questions. I'm just gonna see if we can answer a couple of them pretty quickly before we close up.
Joan Alker: Does this only affect for-profit providers?
Joan Alker: Nonprofit providers presumably don't pay taxes. That's a question.
Andy Schneider: Depends on the State's tax.
Andy Schneider: There are nonprofit providers that are subject to these taxes.
Andy Schneider: There are for-profit providers that are subject federal facilities are not.
Edwin Park: Yeah, generally depends on the class, right?
Edwin Park: Yeah. And usually, usually it's across all you know, major classes, which is usually split between the publicly operated facilities and all other private facilities like hospitals, and that would include both nonprofit and for profit.
Joan Alker: Thanks.
Joan Alker: Now, if Congress were to lower this safe harbor, let's say another good question is, could States use waivers to request an exception
Joan Alker: from a reduction in the safe harbor threshold.
Edwin Park: I think it would depend on how it's drafted, but I defer to Andy on this.
Andy Schneider: So the statutory waiver authorities go to the uniform
Andy Schneider: imposition of the uniform tax and
Andy Schneider: the broad base requirement. There's no waiver specific to
Andy Schneider: that I'm aware of. That's specific to the whole harmless provision.
Andy Schneider: There's.
Edwin Park: Unaware of any waiver that's ever been granted.
Edwin Park: Yeah.
Robin Rudowitz: I would also say that it's unclear, you know. Any waivers that are granted are administrative or done administratively, and it would be unclear if the current administration would be willing to grant those
Robin Rudowitz: waivers that would allow for higher use of provider taxes.
Joan Alker: Yeah. And there's a whole slew of questions. I I think the answer to that question really was depends on how it's drafted. If we see a change in Congress. There's a number of questions that relate to essentially, who has jurisdiction over this right. Is it Congress? When in 22,008 to 11. Was that a consequence of Cms action? So.
Joan Alker: Edwin, do you want to comment on that?
Edwin Park: Yeah, yeah, that was a temporary statutory provision enacted back. Then.
Joan Alker: So clearly. Congress has jurisdiction, and indeed Congress is looking at this, which is clear, but also
Joan Alker: there could be regulatory changes that the trump administration proposes in the event that Congress doesn't do anything.
Joan Alker: And and so that's that's a possibility.
Joan Alker: Let me. I'm just gonna take one or 2 more questions. And then I think we're gonna wrap up. There's some good
Joan Alker: resources in the chat here, Shadac, and others that are trying to track some of this. Another question I wanted to raise before we sign off is the Medicaid Provider tax a better deal for states that expanded Medicaid because of the higher fmap rate.
Edwin Park: I think I mean, it would depend on what the State is. Using the provider tax for. So
Edwin Park: you know, that State spending is is attached to the Federal spending has to come up with some sort of resource financing source for that, and for you know, if if some of the tax is going to
Edwin Park: funding the expansion they would get, you know, 90% for the expansion, just like any other financing source. Similarly, if it's something that the regular fmap, then they would receive on average, the 57% match. So it just depend on what the revenue is being used for, and what type of spending it's helping finance and it. And often, as Robin said, it's not dedicated. It's just going into this to the Medicaid budget, and then depending on
Edwin Park: the various types of spending type of expenditures, the relevant fmap would apply.
Joan Alker: Anybody else. Wanna comment on that or I'm gonna raise another question. I'm gonna keep going because I think this keeps coming up because this is this is
Joan Alker: part of the conversation. Earlier in the year there seemed to be conversations around provider taxes, allowing providers to get higher rates. They insinuate that the tax allows them to get more income?
Joan Alker: Is there any truth to providers benefiting from higher rates due to Federal matching of their provider taxes.
Joan Alker: Robin, do you wanna start tackling that one.
Robin Rudowitz: I. We know from Mac Pack that you know there's some
Robin Rudowitz: estimates of how States use provider taxes. So again, they use them for funding payment rates, base rates, managed care rates, you know, expansion, lots of different things. According to Macpac and Gao, there is disproportionate
Robin Rudowitz: amount of financing for supplemental payments coming from provider taxes, and that is probably, you know, related to these institutional providers. It's easier to do taxes and easier to do supplemental payments for those types of providers.
Edwin Park: Just.
Andy Schneider: There's the in.
Edwin Park: Oh, go ahead, Andy!
Andy Schneider: I'm sorry. So in the Mac Pack
Andy Schneider: issue brief, that's in the slides. At the end there is
Andy Schneider: a visual and a table that sort of explains
Andy Schneider: in a simplified way what Robin was just was just saying.
Edwin Park: I just mentioned that, you know, if you look at
Edwin Park: Budget debates, the State Level or Provider tax may be on the under discussion.
Edwin Park: Because of. You know how the taxes are raised.
Edwin Park: Whatever you know, provider payment increases are financed with that, including supplemental payments or state directed payments.
Edwin Park: There are a number of hospitals that do object to these taxes because they tend to be hospitals that are now incurring liability having to pay these taxes, but they don't have a significant patient mix that relies on Medicaid. Rather, it's more commercial insurance or Medicare, and as a result.
Edwin Park: you know, they are not being. They are contributing, but not receiving you know much in the way of benefits, and so they often politically object to that. I think it's important to recognize that because for simplification, and often these graphics and and diagrams make it very straightforward that the taxpaying providers are somehow receiving, you know.
Edwin Park: you know, benefits from the payments, but depending on how the State designs the tax, it's going to affect different providers and certain providers, even if it's used to finance supplemental payments or state direct payments, certain providers will benefit more than others.
Joan Alker: Okay, this is is really going to be our final question. And I'm going to go to all 3 of you to give you a closing word, because I think, as we contemplate Congress moving forward in the next few weeks.
Joan Alker: This is a little broader, but there's a attendee, asks are the panelists saying there's no way to reduce Federal Medicaid spending without cutting Medicaid services.
Joan Alker: if not, what would they suggest as a solution? So I'm going to go on the order of the panel. This is going to be your closing comment.
Joan Alker: You can broaden out here from the issue of provider taxes, and we'll go in the order of the panel. So Andy.
Joan Alker: closing thoughts.
Andy Schneider: Okay, before we get to that, can I? Just for the on the waiver issue for the.
Joan Alker: Yes.
Andy Schneider: For the person who asked that.
Andy Schneider: 42 Cfr. 4 33.7 2
Andy Schneider: waiver provisions applicable to healthcare healthcare, related taxes.
Andy Schneider: Okay, just
Andy Schneider: that'll set you straight. 44, 33.7 2. Okay, so how could how could Congress responsibly cut the Medicaid program?
Andy Schneider: Cut medicaid expenditures in in 10 seconds or less.
Andy Schneider: I mean, we all have our little, our favorite little fixes.
Andy Schneider: Right? I'll give you mine. This doesn't represent anybody else's views on this except me. So I think that Medicaid ought to join Medicare and the marketplace
Andy Schneider: in setting a minimum medical loss ratio for Medicaid managed care plans
Andy Schneider: that. That is the same as medical loss ratio in medicare and
Andy Schneider: and if a plan doesn't hit it, collect
Andy Schneider: the remittance and require that of States. A lot of States do that now, not all of them. As a result, Cbo has given small amounts of savings
Andy Schneider: for a policy change like that, and I mentioned that only because there are ways to tweak current policy structures without completely disrupting everything, particularly if you allow phase-ins. But if you're driven by an arbitrary number. You're going to get very, very bad results and massive cost shifts.
Joan Alker: Thanks, Robin.
Robin Rudowitz: So you know, my roots are in State government. So when States typically have to balance their budget annually or biannually, so, I think States are constantly looking for efficiencies, and if there were easy ways to, you know, reduce Medicaid spending that would reduce state spending as well as Federal spending on the program. States have.
Robin Rudowitz: you know, done a lot of things to try to be efficient with their programs? I think in the current debate where the Federal Government is looking to make large reductions in Federal medicaid spending
Robin Rudowitz: that is largely a cost shift to States. So the Federal Government is not the entity making the cuts. It goes and gets shifted to the States to make tough decisions, and there are a few levers
Robin Rudowitz: to make reductions in spending. You can cut provider rates. But Medicaid rates are already typically lower than other provider rates. You can cut coverage, which is hard to do, because the large majority of spending on the program is for people with high healthcare needs who are elderly or qualify on the basis of disability.
Robin Rudowitz: Or you can cut benefits and access to the program. So it's hard to generate large amounts of savings without without doing those things.
Joan Alker: Admin. Who's.
Edwin Park: Yeah, I'll just say that. You know. There have been, you know, often bipartisan proposals to reduce Medicaid spending to offset the cost of Medicaid improvements, you know, in various appropriations, bills, budget bills, and so forth, including their sort of hanging out there, longstanding proposals related to
Edwin Park: pharmacy, benefit managers, and Medicaid that has enjoyed support in both the House and Senate come out of committees, been in bills that ultimately didn't make it through, but the magnitude of the savings associated with these bipartisan proposals is so small compared to a target of at least 880 billion dollars over 10 years, you can't achieve
Edwin Park: a cut of that size without making, without instituting deep damaging cuts related to eligibility, benefits, and provider payments. It's just such a big number, and that's the target for budget reconciliation this year, and you can't come up with proposals that have bipartisan support that don't do that don't affect beneficiaries directly and get anywhere close to that kind of number.
Joan Alker: Thanks, Edwin. And just to sum up, just so, everybody's clear, these are not a done deal. Congress is going to be considering these issues in the next few weeks and months. So stay tuned. See what happens. See how your state might be affected, and I want to thank everybody for the great conversation so many rich questions. I'm sorry we couldn't get to all of them.
Joan Alker: There will be a recording, as I mentioned, Up Top, and all the slides will be available on our webinar. So if you're signed up for the, you'll get that in an email.
Joan Alker: But thanks, and we will certainly, once we do see actual proposals. Undoubtedly we'll be having more webinars to explain precisely what Congress is thinking about doing. So. Thanks so much. Everybody for joining us today. Have a good rest of your day.