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Bipartisan Budget Act of 2018 Includes Significant Changes in Medicare, Other Federal Health Programs

February 09, 2018

McDermott+Consulting

On February 9, 2018, following several continuing resolutions that have kept federal doors open since the previous funding agreement expired on September 30, 2017, the US Congress passed the Bipartisan Budget Act of 2018 (Act) to enact a two-year federal spending agreement and provide for the operation of the federal government until March 23, 2018. In addition to addressing a number of critical budget questions, the legislation includes significant health care policy changes impacting Medicare, Medicaid and other federal health agencies. The agreement’s inclusion of budget provisions for a two-year time period marks a positive departure from the shorter-term spending bills typical of the recent past, and it includes other necessary actions such as the periodic raising of the nation’s debt ceiling to ensure continued payment of financial obligations.

The Bipartisan Budget Act addresses a number of key health funding issues. First, it raises the federal spending caps previously enacted in the Budget Control Act of 2011 and increases annual spending authority above sequestration levels for both defense and non-defense spending levels. Non-defense spending cap will be higher by $63 billion and $68 billion in 2018 and 2019, respectively. It does not alter the separate sequestration reduction of two percent for payments under Medicare and, in fact, extends those reductions through 2027. It also includes significant funding for key health care initiatives, including $2 billion for the National Institutes for Health (NIH) and $6 billion in funding to address the opioid epidemic over the next two years. These provisions, in addition to the specific Medicare and Medicaid program policies highlighted below, represent the largest legislative package addressing health issues since passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015.

The federal health care program changes included in the Act cover a wide range of issue areas in addition to the time-sensitive extension of several Medicare programs that expired in 2017. Notably, it also includes an additional four-year extension of the Children’s Health Insurance Program (CHIP) to follow the six years already authorized in the HEALTHY KIDS Act of 2018 enacted last month, meaning that the program will not expire again until 2027. It also includes the long-awaited repeal of the Independent Payment Advisory Board (IPAB) established in the Affordable Care Act of 2010 (ACA) to control growth in health care spending. This article offers an overview of the Act’s major federal health care program provisions. It is not, however, an exhaustive summary of all the health provisions in the new law and we encourage readers to review the legislation here to identify additional provisions that may be of interest to your organization.

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