15 things for healthcare leaders to know about Obama's 2016 budget

President Obama shared his $3.99 trillion budget proposal Monday for the 2016 fiscal year, which begins Oct. 1. Here are 15 of the budget's key proposals related to healthcare.

1. The proposed budget allotment for HHS is up 4.3 percent for 2016, and the budget includes full funding for ongoing implementation of the Patient Protection and Affordable Care Act with no serious changes to its implementation. In fiscal 2016, HHS would receive authority over approximately $1.09 trillion, up from $1.04 trillion in fiscal 2015, according to the Wall Street Journal. Of that pool, $83.8 billion would be discretionary funding.

2. Despite the increase to the agency, the budget includes approximately $400 billion in reductions and reforms to Medicare, Medicaid and other HHS programs over the next decade.

3. The proposed long-term $400 billion haircut to Medicare spending breaks down in several ways, including smaller Medicare payments to teaching hospitals to better align with patient costs — a $1 billion reduction to graduate medical education payments in fiscal 2016, amounting to a $16.26 billion reduction over 10 years. The budget would also reduce inflation updates for post-acute providers that care for Medicare beneficiaries, reductions that would amount to $1.6 billion in fiscal 2016 and $102 billion over the next decade. Critical access hospitals face a payment reduction as well, from 101 percent of reasonable costs to ensure they remain viable to 100 percent. This would cost CAHs $110 million in 2016 and $1.73 billion over the next decade.

4. Beginning in 2019, the budget calls for increases to Medicare premiums for high-income beneficiaries and added charges for new enrollees. These new enrollee charges include a new copayment system for home healthcare services (saving Medicare $830 million over 10 years) and changes to the Part B deductible (saving $3.74 billion over 10 years). The budget would also collect $3.97 billion over 10 years through a surcharge on premiums for new beneficiaries who buy private insurance to supplement Medicare.

5. Despite the long-term reductions to Medicare and HHS programs, there are some proposed wins for healthcare providers. The budget would abolish the sequester's automatic 2 percent cut in Medicare payments to providers, which were enacted by the Budget Control Act of 2011 to be carried out through 2021. The budget also proposes a repeal of Medicare's sustainable growth rate reimbursement formula, a decisive move that has been avoided through short-term legislation since 2002. (The Brookings Institution estimates a permanent SGR repeal could cost $150 billion over 10 years.)

6. The budget reinforces the Obama administration's goal of ensuring 30 percent of Medicare payments are made through alternative payment models by 2016 and 50 percent by 2018.

7. One of the biggest changes proposed in the budget is for the HHS secretary to have authority to negotiate prices for biologics and high-cost drugs in the Medicare Part D program and the authority to suspend coverage and payment for questionable Part D prescriptions. Currently, private insurers bargain on behalf of Medicare beneficiaries. The introduction of Sovaldi, a $1,000-a-pill hepatitis-C drug, and other high-price specialty drugs may have expedited this proposed change within the past year.  

The budget also proposes to close the coverage gap for brand drugs in the Part D benefit by 2017, three years earlier than under current law, by increasing the discounts offered by the pharmaceutical industry. President Obama also proposed a program to reduce prescription drug abuse in Medicare and increased alignment of Medicare payments for drugs with Medicaid's policies for low-income beneficiaries.

The aforementioned pharma-related proposals would save Medicare approximately $126 billion over 10 years.

8. The budget calls for a one-year extension of the PPACA policy that equalizes Medicaid reimbursement rates with Medicare reimbursement rates for primary care services.

9. The budget requests a four-year extension of the Children's Health Insurance Program through 2019, as well as the program's contingency fund. A state may qualify for contingency funds if it projects a funding shortfall and if its average monthly child enrollment exceeds a target number. This extension would be funded through an increase in tobacco taxes.

10. The budget would invest $810 million in 2016 and $2.1 billion from 2017 through 2020 in the National Health Services Corps to place and maintain 15,000 healthcare providers in the areas where they are most in demand.

11. The budget includes an increase of more than $550 million across the federal government in fiscal 2016 to prevent, detect and control illness and death related to infections caused by antibiotic-resistant bacteria.

12. President Obama proposed $100 million more in additional funding for domestic preparedness to "more effectively and efficiently respond to potential, future outbreaks here at home." The funding would support emergency staffing, hospital and containment facilities, laboratory equipment and other means of fighting unexpected public health emergencies.

13. The budget would increase research and development funding by nearly 6 percent, providing the National Institutes of Health is seeking $31.1 billion, up from $30.31 billion in fiscal 2015, according to the Wall Street Journal. This would go toward the Brain Initiative, an effort to map the brain, and genomic research conducted by the NIH's National Cancer Institute.

14. The budget also includes a proposal for an additional $80 million to the HHS Office of Inspector General to regulate fraud and abuse. Part of the money would be used to oversee the insurance markets created under the PPACA.

15. Finally, the Budget invests $73 million to manage and provide oversight to the HHS Cybersecurity Program, which is designed to reinforce and protect IT systems against the growing threats within the cyber community.

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