Health Headlines – March 13, 2023

President’s Proposed Budget Emphasizes Existing Healthcare Priorities Ahead of 2024 Election

Released on March 9, 2023, President Biden’s proposed fiscal year (FY) 2024 budget focuses on existing healthcare initiatives while attempting to lower healthcare costs with an emphasis on prescription drug prices, seeking to shore up Medicare’s finances, and making enhanced subsidies permanent for insurance plans offered on health insurance exchanges. 

Pharmaceutical Savings

President Biden’s proposed budget calls for expanding Medicare’s prescription drug negotiating power enacted by last year’s Inflation Reduction Act (IRA), which allows Medicare to negotiate the prices of up to twenty drugs each year that have been on the market for at least nine years. The expansion would, among other proposals, (1) allow for more drugs to be negotiated and shorten the nine-year negotiation-eligibility window; (2) extend to the commercial market the 2021 law requiring drug companies to pay rebates to Medicare when they increase prices faster than inflation; and (3) expand the $35 insulin price cap, enacted under the IRA to limit out-of-pocket costs for Medicare beneficiaries, to the private sector.

Medicare Reforms

The proposed FY 2024 budget calls for lifting the income cap on Medicare taxes and increasing the tax rate from 3-5% on income over $400,000. The budget also proposes additional taxes on investments by high income earners and directing certain tax revenues into the Medicare Hospital Insurance Trust Fund. The Administration projects that these additional revenue streams, along with savings from the Medicare’s expanded drug negotiation authority, would extend the Trust Fund’s solvency by 25 years.

The FY 2024 budget proposal also calls for several other Medicare reforms, including:

• Requiring Medicare Part B to cover up to three behavioral visits a year without any cost-sharing starting in 2025. CMS Administrator Chiquita Brooks-LaSure has indicated the proposal also would apply to Medicare Advantage plans as well, if enacted.
• Extending payor parity between physical and behavioral health coverage to Medicare.
• Requiring Part C and D prescription drug plans to offer a standard list of generics for $2 per 30-day supply.
• Introducing a medical loss ratio of 85% to all Medicare supplemental benefits plans, which means 85% of every premium dollar would have to be spent on medical claims.

Premium Subsidies Under the Affordable Care Act

President Biden’s FY 2024 budget proposal would enhance premium subsidies for health plans offered on health insurance exchanges. Premium subsidies were enhanced through 2025 in response to the pandemic through the American Rescue Plan Act of 2021. This year, these enhanced subsidies allowed qualifying households who were between 100% and 150% of the federal poverty level to pay nothing towards their health insurance premiums on silver tier plans offered through the health insurance exchanges. However, in light of the impending expiration of the enhancement, the Budget proposes to make the subsidy expansion permanent.

In addition to the premium subsidies, the budget proposal seeks to offer “Medicaid-like” coverage for eligible individuals in states that have yet to expand Medicaid coverage and financial incentives for Medicaid-expansion states.

Conclusion

President Biden’s FY 2024 budget proposal, like its predecessors proposed by both political parties, is a political document, and will not be enacted as proposed. The President’s proposal marks the official kick-off of the annual budget process. The focus now shifts to Congress to pass a budget resolution. 

The proposed FY 2024 budget can be found here.

Reporter, Peyton Pair, Washington, D.C., +1 202 626 9229, ppair@kslaw.com.

OIG Reminds Industry that COVID-19 Public Health Emergency Flexibilities Expire on May 11, 2023

OIG has issued a notice reminding the health care community that OIG flexibilities, further described here, end upon the expiration of the COVID-19 public health emergency declaration on May 11, 2023. These flexibilities include exemptions from administrative sanctions for reducing or waiving cost-sharing obligations for certain telehealth services; increased OIG discretion to not impose administrative sanctions for certain types of remuneration; and informal guidance concerning the enforcement of certain arrangements relating to the federal Anti-Kickback Statute and the beneficiary inducements civil monetary penalties law. 

King & Spalding’s 32nd Annual Health Law & Policy Forum

Join us on Monday, March 20, 2023, for our annual forum focusing on the foremost legal and political developments impacting the healthcare industry. The event will be hosted at the St. Regis Atlanta Hotel.

Health, Law, and Policy Forum Highlights:

• Secretary Kathleen Sebelius speaking on the future of health policy
• Leading practitioners providing policy and regulatory enforcement updates, and other industry developments
• How changes in antitrust policy and enforcement are impacting the healthcare industry
• Democrats in the Senate and Republicans in the House: Healthcare in a divided Congress 

To register for this year's event, please click here.