Biden Budget Proposal Could Cost Providers $800 Million

WASHINGTON, D.C. (April 1, 2022)—On Monday, March 28th, President Biden released a $5.8 trillion proposed budget for fiscal year (FY) 2023, which begins Oct. 1, 2022. While the White House budget is simply a request and Congress has final say on government spending, it does provide a window into the president’s priorities and where his administration wants to direct its efforts going forward. As a reminder, lawmakers just this month finalized spending for the current fiscal year—which runs through Sept. 30—and will soon begin negotiating funding legislation for FY 2023. 

The budget requests more than $127 billion to fund the Department of Health and Human Services (HHS) in FY2 023, a roughly 15% spike from 2022 funding that includes major increases for pandemic preparedness and public health surveillance. Notably, the budget also would extend the Medicare sequester cuts by one year until 2032 (they were previously extended through 2031 by The Infrastructure Investment and Jobs Act of 2021), which would provide savings of around $7.6 billion. 

The National Association for Home Care & Hospice (NAHC) estimates the cuts would cost home health providers $360 million in penalties and hospice providers $440 million in penalties. The American Association for Homecare (AAHomecare) did not provide an estimate on the impact for home medical equipment providers, saying that the full impact won’t be realized until 2032. 

NAHC has opposed the cuts. “What providers need is financial flexibility to offset many COVID related expenses, such as PPE, added staffing, overtime and lost revenues,” said NAHC Director of Communications Tom Threlkeld in an email to HomeCare. 

The 2% Medicare sequestration cuts were paused in 2020 and 2021 to help Medicare providers manage financial fallouts of the COVID-19 pandemic. The cuts resumed April 1, 2022. Under a plan passed by Congress last December, the cuts will be 1% between now and the end of June and increase to 2% in July.

“The administration is likely looking at adding additional one-year extension of these cuts in 2032 as a potential pay-for to fund other near-term spending proposals,” said AAHomecare President and CEO Tom Ryan. “We’re concerned by any extension of the sequestration cuts, particularly for non-health care spending. AAHomecare will work with other major health care groups to ask Congress to resist further extending these cuts as part of new spending packages.”

“The annual stress and threat of continued Medicare cuts is an ongoing challenge to home-based providers’ stability and predictability. NAHC is committed to fighting against harmful payment reductions and advancing sensible long-term sequestration relief,” Threlkeld added.

The proposed budget also calls for standardized data collection to improve quality and promote equitable care. This would update current reporting standards to include social determinants of health such as transportation, housing and food insecurity. This new data would enable real-time information exchange between the health care system and those resources best equipped to address individual needs—activating government, community agencies, and health care providers to work together to support individuals of underserved populations and be responsive to respond to public health needs. 

The budget also requests a total of $2.1 billion for numerous Health Resources and Services Administration (HRSA) workforce programs—including $430 million in mandatory and other sources of funding—an increase of $324 million above FY 2022, including additional investment to support the resiliency, mental health and well-being of health care providers.