The $1.1 trillion spending package that congressional negotiators announced on Tuesday takes aim at a provision of the healthcare reform law intended to protect insurers from higher-than-expected costs. It also includes roughly $5.4 billion to deal with the Ebola crisis and prepare for future infectious disease outbreaks.
The Ebola funding is 13% less than the $6.2 billion requested by the Obama administration. About half that money will go to HHS, including $500 million for domestic initiatives, such as worker training, and $1.2 billion for international efforts.
“In this very challenging funding environment I think we were really glad to see the majority of the Ebola funding request was supported,” said Amanda Jezek, vice president for public policy and government relations at the Infectious Disease Society of America.
Jezek said it appears that Congress reduced spending in each of the pots of money targeting Ebola preparedness, rather than striking any specific provision. “We haven't found any complete chunks that are just missing,” she said.
Insurers are disturbed by a provision that seeks to limit funding for the risk corridor program. That funding is designed to protect insurers participating in the fledgling state and federal exchanges from financial risk during the first three years of operations. Participating health plans that end up with a disproportionally expensive population will receive payments from the federal government, while those that end up with a less costly clientele will have to pay into the fund. The program is supposed to be revenue neutral, but most close observers of the insurance industry expect the program to cost the federal government money.
America's Health Insurance Plans, the main industry organization, sent out an alert on Tuesday urging its allies to contact congress to oppose the risk corridor provision. “Over the next two days, we are asking you to contact members of Congress and urge them to voice strong opposition to the risk corridors provision in the current appropriations bill,” reads the note from Jeremy Allen and Erik Komendant, AHIP's top federal affairs officials. “It is critically important that we generate as many phone calls as possible to congressional offices over the next 48 hours.”
But the exact financial ramifications of the risk corridor provision are unclear. While it bars spending money from the Medicare and Social Security trust funds, there may be other pots of money that HHS can utilize to fund the program.
“No human being can actually figure this out,” said Robert Laszewski, a consultant who works with insurers. “That's the first takeaway.”
A note from analysts at J.P. Morgan indicated that Humana and Health Net would face the biggest financial pain if the risk corridor funding isn't available. “Health plans have generally been conservative in how they book risk corridors for 2014 given the political uncertainties about whether the funding would be there in the end,” they wrote. “The impact should be limited if risk corridors are indeed forced to be neutral and collections are not enough to cover payments under the corridors formula.”
But if nothing else, it's a shot across the bow that Republicans plan to continue targeting the risk corridor program when they take full control of Congress next year. Sen. Marco Rubio (R-Fla.) and other Republicans have pilloried the program as a bailout for the insurance industry.
“They're after this,” Laszewski said. “They're after this with a vengeance.”
Lawmakers have also allocated an additional $209 million for medical services in FY 2015 to help the Department of Veterans Affairs implement the Veterans Access, Choice, and Accountability Act (VACAA) of 2014 that President Barack Obama signed in August.
The aim of VACAA was to pay for private care for veterans that lived at least 40 miles from a VA facility or who would have to wait more than 30 days to get into a VA facility. It allocated $10 billion for care.
The need for the additional discretionary funding is that “there are many uncertainties about which activities can be funded with which authority, and whether there are significant unfunded liabilities created by the new legislation,” lawmakers say in legislative summary. “To address this uncertainty, the agreement includes bill language permitting the transfer of funding from various VA appropriations accounts to medical services to address any unfunded needs.”
The budget agreement includes roughly $30 billion for the National Institutes of Health, a $150 million increase over the current fiscal year. The Centers for Disease Control and Prevention received nearly $7 billion in appropriations, a nominal $21 million increase over 2014. However, those totals don't include additional Ebola funding for the agencies that's part of the funding package.
Jezek expressed disappointment that these agencies didn't receive additional funding given the needs for disease research and prevention efforts. “That's very much been largely the trend in the last couple years,” she said. “We were hoping for a little bit more of a long-sighted approach.”
Many significant healthcare provisions were also left on the cutting room floor. The Texas Medical Association had been leading the lobbying charge to get a two-year delay in implementation of the ICD-10 diagnostic and procedural coding system and found a champion in Rep. Peter Sessions (R-Texas). But that failed to make it into the budget agreement and could signal that the oft-delayed ICD-10 implementation will actually take effect next October as currently planned.
“I think there was a big enough push for delay that it's important that it didn't get done,” said one healthcare consultant who tracks the issue closely, speaking on background. “Perhaps the Congress now realizes that this thing is ready to go.”
In addition, there was no deal to permanently repeal Medicare's loathed sustainable-growth rate formula for paying doctors, which the American Medical Association and allies had been lobbying for during the lame-duck session. That sets up another potential funding patch—the 18th straight such short-term fix—when the current deal expires at the end of March.
Also left out of the budget deal were extensions of funding for the Children's Health Insurance Program and community health centers. Advocates had been seeking additional allocations for the programs for low-income households, both of which expire at the end of the next fiscal year.
—Virgil Dickson contributed to the reporting of this story.
Follow Paul Demko on Twitter: @MHpdemko
