AHA President says expanded coverage of Build Back Better Act comes at the expense of vital funding; Key provisions were cut

Nov. 22, 2021

The House of Representatives has voted 220-213 to pass a modified version of the Build Back Better Act (H.R. 5376), a roughly $1.75 trillion social spending package that includes many healthcare provisions. The bill, which is being considered under reconciliation procedures, is likely to undergo significant changes as it moves through the Senate in the coming weeks.

In a statement shared with the media, AHA President and CEO Rick Pollack said:

“While we appreciate the goal of increasing coverage to residents in states that did not expand their Medicaid programs, it should not come at the expense of vital funding to hospitals and health systems located in those parts of the country that serve a large number of children, the poor, the disabled and the elderly. These cuts are unacceptable, especially while hospitals remain on the front lines of fighting COVID-19 and the deadly Delta variant.

“In addition, we are disappointed the House did not include critical funding for hospital infrastructure improvements through the Hill-Burton Act, as they did in an earlier version of the legislation.

“We look forward to working with the Senate to improve this bill.”

The following is a summary of key provisions included in the bill that will affect hospitals and health systems.

Healthcare Coverage

Temporary Expansion of Marketplace Subsidies and Cost-Sharing Assistance to Address Coverage Gap in Non-Medicaid Expansion States

The legislation would temporarily close the Medicaid coverage gap by providing subsidized coverage through the federal health insurance marketplace for individuals with income under 138% of the federal poverty level. Beginning in 2023 and continuing through 2025, premium tax credits would be extended to such individuals to purchase marketplace coverage with zero dollar premiums (see section below) and cost-sharing assistance that reduces enrollee cost-sharing to 1%. Plans would be required to include non-emergency transportation and family planning benefits for this population and would be fully reimbursed by the Secretary of Health and Human Services (HHS).

Similar to the Medicaid program, enrollment in this Affordable Care Act (ACA) coverage expansion program would be available year round. Outreach and enrollment efforts would be funded during this period at $105 million. In addition, navigators to assist in enrollment would be funded through a combination of health plan user fees and appropriations.

Reductions in Medicaid Disproportionate Share Hospital (DSH) Allotment and Uncompensated Care Pools for Non-Medicaid-Expansion States

States that have not expanded their Medicaid program, including any state that chooses to reverse their Medicaid expansion, would face a reduction in their Medicaid DSH allotment. Beginning in fiscal year (FY) 2023, non-expansion states would be subject to a 12.5% reduction of their DSH allotment. This fixed 12.5% “DSH penalty” would be applied against their DSH allotment (allowing for inflation) each fiscal year the state has not expanded their program and would cease only if the state expands coverage.

 Note that the penalty also would apply to the state of Tennessee, which has its DSH allotment set in statute through FY 2025. The AHA estimates, based on available data, that the reduction in federal DSH spending for the non-expansion states would be $2.2 billion over five years and $4.7 billion over 10 years. Beginning in FY 2024, when the ACA DSH reduction delay is scheduled to end, the “DSH penalty” would be applied in addition to the ACA reduced DSH allotments for non-expansion states. Expansion states that decide to withdraw their coverage of the expansion population would be subject to DSH allotment reductions, and these reductions would be applied on a pro-rata basis.

Funding restrictions also would apply to any state with a Medicaid uncompensated care pool that has not expanded their program. Such restrictions would prevent these states from claiming federal matching dollars for healthcare services provided to an “expansion individual” through the pool funds. Non-expansion states with uncompensated care pools include Florida, Tennessee, Texas and Kansas.

Expanding Eligibility for and Value of Health Insurance Marketplace Subsidies

The legislation would extend the expanded eligibility for, and value of, health insurance marketplace subsidies authorized through the American Rescue Plan Act (ARPA) through 2025. The subsidy expansion is currently authorized through 2022. Specifically, the ARPA expanded eligibility for subsidies to individuals above 400% of the federal poverty level (the limit in the ACA) by making eligible anyone for whom the cost of benchmark coverage would exceed 8.5% of income. The ARPA also lowered the premium percentage at every income level, with the effect of increasing the value of the marketplace subsidies and further reducing the cost of coverage. For individuals with income up to 150% of the federal poverty level, the new subsidy amounts result in the availability of plans with zero dollar premiums. This legislation also would expand marketplace cost-sharing assistance for certain low-income individuals and authorize funding for a state-based health insurance affordability fund (discussed below). It would not, however, address several other marketplace coverage issues, including fixing the “family glitch.”

Other, Related Health Insurance Marketplace Provisions

The legislation would establish a new health insurance affordability fund available to all states to provide assistance in reducing healthcare premiums and out-of-pocket costs through reinsurance programs, which would be funded at $10 billion annually from 2023 through 2025. The Centers for Medicare & Medicaid Services (CMS) also is directed to implement a temporary reinsurance program in non-Medicaid expansion states. In addition, cost-sharing reductions would be extended through 2025 for individuals with income up to 150% of the federal poverty level receiving unemployment.

Children’s Health Insurance Program (CHIP) and Medicaid Coverage Improvements

Federal CHIP funding would be made permanent. In addition, other CHIP-related provisions would be made permanent, such as the pediatric quality measures program and the contingency fund to provide states with assistance in the event their CHIP state allotment is insufficient. States would be provided an option to increase CHIP income eligibility levels above the existing statutory ceiling, which is currently tied to Medicaid income levels. The bill also creates a drug rebate program similar to the Medicaid rebate program in order to lower the cost of prescription drugs for CHIP. The new rebate program strictly prohibits duplicate discounts for any drug purchased through the 340B program. In addition, children under the age of 19 will be provided one-year continuous eligibility for Medicaid and CHIP coverage. There also is Medicaid coverage available to justice-involved individuals 30 days prior to their release.

Ensuring Coverage for Pregnant and Postpartum Individuals

The legislation would require that Medicaid and CHIP provide 12 months of continuous postpartum coverage and provide the full range of Medicaid benefits during this period. Current rules generally permit enrollees to stay on Medicaid or CHIP for up to 60 days, though the ARPA provided states with an option, for five years, to extend Medicaid and CHIP eligibility to pregnant individuals for 12 months postpartum. The legislation also allows for a state option to provide coordinated care through a maternal health home for pregnant and postpartum individuals and provides $5 million in funding.

Expanding Medicare Benefits

The package includes a provision to expand Medicare coverage to include hearing benefits in 2023. The hearing benefits would cover hearing aids and aural rehabilitation, among other services. The traditional Medicare program does not cover such benefits; however, some Medicare Advantage plans do cover hearing services as supplemental benefits.

The bill would increase the existing cap on the number of Medicare-funded residency slots by 4,000, with no more than 2,000 slots distributed each year starting in FY 2025. At least 25% of these slots would be awarded for primary care residencies, including obstetrics and gynecology, and at least 15% would be awarded for psychiatry residencies, including addiction medicine. To be eligible for these slots, hospitals must be training above their Medicare caps, located in a rural area, in states with new medical schools, located in or serving health professional shortage areas, or in states with the lowest quartile of medical resident to population ratio.

The bill also would establish the Rural and Underserved Pathway to Practice Program, which would provide 1,000 scholarships annually to students from underrepresented groups to attend post-baccalaureate programs and medical school, starting in FY 2023. Teaching hospitals would be eligible to train graduates of the Pathway to Practice Program, and these positions would be excluded from hospitals’ GME caps. Eligible teaching hospitals must be recognized by the Accreditation Council for Graduate Medical Education as providing mentorship, training in cultural and structural competency, and training in underserved areas.

The package also would provide $200 million for the Children’s Hospitals Graduate Medical Education program for FY 2022.

(The Build Back Better Act and assessment by the AHA President linked at the bottom of this article include many other Medicare and healthcare-related provisions, including maternal and child health, behavioral health, proposals to lower drug costs, addressing healthcare disparity, investments in clean energy and sustainability efforts, home and community-based services, childcare investments, community violence care, trauma intervention, and civil monetary penalties).

Public Health Provisions:

Pandemic Preparedness

The package contains a number of provisions to bolster the nation’s pandemic preparedness, including $1.4 billion for Centers for Diseases Control and Prevention (CDC) laboratory activities to support renovation, improvement expansion and modernization of state and local public health laboratories and CDC laboratory infrastructure and enhancement of the CDC’s ability to oversee the biosafety and biosecurity of state and local public health laboratories. It also provides $1.3 billion for the Assistant Secretary for Preparedness and Response (ASPR) public health and preparedness research, development and countermeasure capacity, including improved support for surge capacity for facilities needed to respond to a public health emergency and for drugs, devices, shoring up the Strategic National Stockpile, strengthening the supply chains, supporting domestic and global manufacturing of vaccines, bolstering biosecurity, and investing in therapeutics. Finally it provides $300 million for modernizing the Food and Drug Administration’s (FDA) technological and laboratory infrastructure and innovation and enhancing food and medical product safety.

Public Health Infrastructure

The legislation includes provisions to improve the nation’s public health infrastructure, including $7 billion in funding for state, local and territorial public health infrastructure and programs; $2 billion for capital investments in health centers; and a number of provisions to improve the clinical workforce capacity (many of which are outlined in the following section).

Workforce Capacity

The legislation includes several provisions intended to bolster healthcare workforce capacity and training in addition to several already noted above. These include:

  • Reauthorizing the Health Profession Opportunity Grant (HPOG) Program, which provides grants for the purpose of preparing certain low-income individuals to enter into the healthcare profession.
  • $2 billion for the National Health Service Corps, which provides scholarships and loan repayment to qualified healthcare providers in exchange for service in underserved parts of the country.
  • $500 million for the Nurse Corps, which provides loan repayment assistance to registered nurses (RNs) and advanced practice registered nurses (APRNs) in exchange for service in critical shortage areas or serving as faculty at eligible nursing schools.
  • $500 million for schools of nursing in underserved areas.
  • $500 million for schools of medicine in underserved areas, with priority given to minority-serving institutions.
  • $85 million across several programs aimed at bolstering training and education for palliative care medicine and nursing.

Nurse Staffing Ratios for Skilled Nursing Facilities (SNFs)

The legislation would establish staffing-related requirements on SNFs. Specifically, it would establish a requirement for SNFs to use the services of a RN 24 hours a day, seven days a week beginning Oct. 1, 2024, subject to existing statutory waivers. In addition, the legislation directs CMS to establish and enforce minimum ratios of staff-to residents in SNFs. These ratios would be informed by mandatory reports to Congress on the appropriateness of establishing minimum staffing ratios, the first of which must be completed within three years of enactment, and thereafter updated at least every five years. The HHS Secretary would be expected to promulgate regulations establishing minimum staffing ratios within a year of the first report to Congress. The HHS Secretary would have the authority to waive compliance with the minimum staffing ratio for SNFs in rural areas with an insufficient workforce supply.

Paid Family and Medical Leave

The legislation would establish the first permanent, mandatory paid family and medical leave provision in federal law. The provision would require employers to provide up to four weeks of paid family and medical leave to cover a number of situations, including maternity and paternity leave and caring for ill or injured loved ones. The policy would begin in 2024, and would provide most workers, including contract, part-time and self-employed workers, with a minimum wage guarantee based on a portion of their income capped at $2,000 in 2024, and subsequently indexed to the annual Social Security Average Wage Index. This minimum standard benefit would provide funding by the federal government. States with existing programs would be eligible for funding from the federal government to maintain their programs. A similar provision is included to compensate employers that already provide such benefits.

AHA press release