House and Senate lawmakers came to a bipartisan agreement on an end-of-year spending deal that will fund the government for FY 2020. The $1.37 trillion package includes a total of $738 billion in funding for the military and $632 billion for non-defense departments, including Health and Human Services (HHS). President Trump is expected to sign this appropriations legislation into law this week, ahead of the Dec. 20, 2020, funding deadline.

In addition to this spending agreement, Congress agreed to a health care package to authorize and fund expiring health care programs through May 22, 2020. Congress will fund the extension of these programs by passing the CREATES legislation, which saves $3.3 billion and aims to increase the utilization of generic drugs. This health care package also includes new policies raising the federal age to purchase tobacco, delaying hospitals cuts, and repealing three major health taxes. When the health care programs expire on May 22, 2020, Congress will again need to identify policies that will pay for a longer-term extension of these health programs. This will set up a “must-pass” legislative vehicle for larger health care policy changes that may include legislation on drug pricing and surprise billing.

Appropriations Health Care Spending

The FY 2020 funding agreement appropriates funds for health care priorities including:

  • National Institutes of Health (NIH): The bill provides $41.68 billion, a $2.6 billion increase. There is a $350 million increase for targeted Alzheimer’s research, $50 million for the president’s Childhood Cancer Data Initiative, and $212.5 million to increase funding for cancer research.
  • Ending the HIV Epidemic: The bill provides $291 million, an increase of $241 million, to support high-priority HIV efforts with the goal of reducing the number of new HIV infections by 90% in 10 years.
  • Mental Health: The bill provides $3.9 billion for mental health programs, an increase of $328 million, recognizing mental health as a critical part of both combating opioid abuse and ensuring safety in our schools and communities.
  • Fighting Opioid Abuse: The bill provides $3.8 billion, and gives new flexibility to states to combat the increasing level of stimulant use. Funds are targeted toward improving treatment and prevention efforts; finding alternative pain medications; workforce needs, especially in our rural communities; and behavioral health.
  • Community Health Centers (CHCs): The bill provides $1.63 billion for CHCs that serve more than 28 million patients per year through more than 11,000 health centers nationwide.
  • Children’s Hospitals Graduate Medical Education (CHGME): The bill provides $340 million, an increase of $15 million. This program protects children’s access to high-quality medical care by providing freestanding children’s hospitals with funding to support the training of pediatric providers.
  • Rural Health Care: The bill provides $318.3 million for rural health programs. The bill focuses resources toward efforts and programs to help rural communities, including $29 million, an increase of $4.5 million, for Telehealth to expand the use of telecommunications technologies within rural areas that can link rural health providers and patients with specialists.

Health Care Extenders Deal

Congress extended funding for a dozen expiring health care programs through May 22, 2020. To pay for the extension of these programs, Congress included the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 (CREATES), which is projected to save the federal government $3.3 billion over 10 years. The legislation would result in generic drugs entering the market earlier, on average, than they would under current law.

The following is a list of the dozen health care programs that were extended through May 22, 2020:

  • Extension of the work geographic index floor under the Medicare program.
  • Extension of funding to support activities related to quality measurement and performance improvement in Medicare and Medicaid.
  • Extension of funding outreach and assistance for programs supporting low-income Medicare beneficiaries seeking insurance coverage.
  • Extension of the Community Mental Health Services demonstration program, which allows eight states to deliver mental and substance abuse disorder treatment to Medicaid beneficiaries at an enhanced rate.
  • Extends protections for spouses of Medicaid patients, allowing the spouse to maintain a certain level of assets and income after a Medicaid patient begins receiving home and community-based services.
  • Extends the Money Follows the Person demonstration program, which provides states with enhanced FMAP for services and supports to help seniors and people with disabilities moving from institutions to a community-based setting.
  • Extends funding for the Health Profession Opportunity Grants (HPOG) demonstration, which helps disadvantaged workers enter health professions in need of workers.
  • Extends funding for the Temporary Assistance for Needy Families (TANF) program, the Child Care Entitlement to States (CCES) and related programs, including the TANF Contingency Fund.
  • Extends current funding for the Sexual Risk Avoidance Education (SRAE) program, which provides resources to implement educational programs that educate adolescents on relationships, abstaining from sexual activity and resisting sexual coercion.
  • Extends current funding for the Personal Responsibility Education Program (PREP), which provides grants to fund evidence-based education programs that inform adolescents about the prevention of teen pregnancy and sexually transmitted infections.
  • Extends the Community Health Centers Fund and National Health Service Corps Fund and continues current funding for the Teaching Health Center Graduate Medical Education program. These programs support the training of health providers in underserved areas.
  • Extends funding for the Special Diabetes Program, which supports research on the prevention and cure for Type 1 diabetes, and the Special Diabetes Program for Native Americans, which supports diabetes treatment and prevention to the Indian Health Service, Tribal, and Urban Indian Health Programs.

Congress also included a number of health policy changes in this health care package. The policies include:

  • ACA Tax Repeal: The agreement permanently repeals three Affordable Care Act taxes: the Cadillac Tax, the Health Insurance Tax and the Medical Device Tax.
  • Delay of Hospital Cuts: The agreement delays the reduction in allotments for disproportionate share hospitals (DSH) until May 22, 2020.
  • Medicaid Funding in Territories: The agreement allocates and increases funding to the U.S. territories for two years. The federal match rate is set at 76% for Puerto Rico, and 83% for the other territories. This also includes enhanced Medicaid program integrity requirements for Puerto Rico.
  • Blocks Administration from ACA Changes: The agreement will prevent the Trump administration from ending auto-enrollment in the exchanges, and require them to allow “silver loading” through 2021.
  • Tobacco: The federal age to purchase tobacco will be raised from 18 to 21, and enforcement of this provision is tied to federal public health funding for states.
  • Patient Centers Outcomes Research Institute (PCORI): The agreement provides a 10-year funding extension for PCORI, a research institute created in the ACA.

Next Steps

Congress was ultimately unable to agree on the policies that would pay for a long-term authorization of expiring health care programs, including legislation surrounding surprise billing and lifting or changing the cap for Medicaid drug rebates. As a result, House and Senate lawmakers punted a long-term deal to next year. Offsets from the CREATES legislation will only fund health care extenders through May 2020, setting up a larger legislative vehicle for next year.

Many of the health programs important to key stakeholders will expire or run out of money in May 2020. Lawmakers will spend the first half of 2020 working to find bipartisan agreement on health care bills, particularly those that save money to offset the cost of a long-term health care bill. Staff have expressed a desire to extend these health care programs from two to five years, which would cost anywhere from $20 billion‒$50 billion.

Surprise billing legislation is a potential offset, which could save around $20 billion, but House and Senate lawmakers have been unable to come to an agreement on the policy. Another potential offset is lifting the Medicaid rebate cap at 100% of average manufacturer price, which could save upwards of $10 billion. Lawmakers will also eye the May 2020 deadline as an opportunity to advance policies from the bipartisan drug pricing packages that have passed out of the Senate Finance Committee and Senate HELP Committee.