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Obama's 2017 budget proposal: What it means for payers

$4 trillion plan includes Medicare Advantage changes, Cadillac tax tweaks, policies aimed at curbing drug costs

President Barack Obama unveiled his 2017 fiscal year budget Tuesday, including a host of provisions set to impact both public and private payers.

In the health insurance realm, the $4 trillion budget proposal would:

  • Give any state that expands its Medicaid program three years of full federal support, regardless of when the state chooses to expand. "This commonsense proposal makes expansion as good of a deal for states that choose to expand now, as states that have already done so," according to a fact sheet about health-related budget proposals.
  • Implement policies to improve care for Medicare-Medicaid dual-eligibles, including: creating an integrated appeals process for dual-eligible beneficiaries; simplifying the process for receiving Medicare Savings Program benefits; and making sure low-income individuals who are newly-eligible for Medicare have Part D coverage during their transition between payers and plans.
  • Expand Medicare Advantage plans' ability to deliver services via telehealth and enable rural health clinics and federally qualified health centers to qualify as originating telehealth sites under Medicare.
  • Create a competitive bidding system for Medicare Advantage that reforms payments based on estimates for the cost of beneficiaries' care; preserve most beneficiaries' access to a Medicare Advantage plan that provides supplemental benefits without requiring them to pay an additional premium; and provide higher payments to high-quality Medicare Advantage plans to encourage quality improvement.
  • Limit the portion of Medicaid and Children's Health Insurance Program managed care dollars spent on administration and incentivize more investments in quality healthcare services by establishing a medical loss ratio of 85 percent.
  • Adjust how the Cadillac tax works, including: making the threshold above which it applies equal to the greater of the current law threshold or the average premium for a marketplace gold plan in each state; making it easier for employers offering flexible spending arrangements to calculate the tax; and requiring the Government Accountability Office to conduct a study of the potential effects of the tax on firms with unusually sick employees.
  • Create policies aimed at curtailing drug costs, including: providing the secretary of the Department of Health and Human Services with the authority to require drug manufacturers to publicly disclose information including research and development costs, discounts and other data; and providing states with a new, voluntary tool to negotiate lower drug prices through the creation of a federal-state Medicaid negotiating pool for high-cost drugs.

Obama's 2016 budget proposal also included policies aimed at curtailing drug costs, and aimed to require high-income Medicare beneficiaries to pay more for coverage, FierceHealthPayer previously reported. The 2017 budget proposal also sets aside funding to help tackle the crises of opioid addiction and antibiotic-resistant superbugs.

To learn more:
- read the budget proposal (.pdf)
- here's the HHS fact sheet

Related Articles:
Final Obama budget takes aim at opioid addiction, superbugs
Obama to include Cadillac tax adjustment in budget proposal
Obama offers incentive to spur more states to expand Medicaid
Obama's 2016 budget seeks lower drug prices, higher costs for wealthy Medicare patients
What Obama's 2016 budget will mean for healthcare providers