Trump calls for $18 billion cut to HHS funding

President Donald Trump on Monday unveiled his $4.4 trillion fiscal 2019 budget proposal that includes sharp cuts for HHS funding.

Trump's proposed budget allocates $68.4 billion to HHS, a 21% decrease or $17.9 billion less than what the agency received in fiscal 2017.

It's unclear if the proposed cuts, or any of the proposals outlined in the budget documents released Monday, will be enacted given that Congress just passed a two-year budget bill.

The plan received immediate praise from HHS Secretary Alex Azar on Monday.

"The president's budget makes investments and reforms that are vital to making our health and human services programs work for Americans and to sustaining them for future generations," Azar said in a statement.

But the plan struck a dissonant chord with providers, in part due to its consolidation of graduate medical education spending in Medicare, Medicaid and the Children's Hospital GME Payment Program to a new mandatory capped grant program.

Funding in the new capped program would be targeted to address medically underserved communities and health professional shortages.

The change would lead to a $48 billion drop in GME funding over 10 years, according to Kenneth Raske, president of the New York Hospital Association.

"The staggering cut to graduate medical education would shatter the ability of New York's teaching hospitals to produce the next generation of world-class doctors," Raske said in a statement.

In addition to the cuts, the budget also outlined several initiatives the HHS should implement to battle the opioid crisis.

The Trump administration proposed to test and expand a bundled-payment model for community-based medication assisted treatment nationwide. The model will include comprehensive Medicare reimbursement for methadone treatment for the first time.

The White House also wants the HHS secretary to work with the Drug Enforcement Administration to bar providers with abusive prescribing patterns from billing Medicare.

For Medicaid, the administration suggested that states set minimum standards for state drug utilization reviews to reduce clinical abuse, and require them to track and act on high prescribers and utilizers of prescription drugs.

It also called for the creation of a new Medicaid demonstration authority where the CMS could allow up to five states determine their own drug formularies and negotiate drug prices directly with manufacturers.

Depending on the experiment's results, more states could gain permission to tailor their drug coverage decisions.

Health policy insiders immediately criticized the state-based drug coverage proposal.

"It would be very unfortunate for the budget to include this type of reform," Republican healthcare analyst Lindsay Bealor Greenleaf, director at consultancy ADVI, said in a statement. "This type of policy change would break the bargain that Congress struck in the 1990s that requires states to provide coverage for every FDA-approved drug in exchange for Medicaid drug rebates."

Greenleaf noted that Massachusetts already has a pending waiver to make its own drug coverage decisions and has received pushback from advocates.

The fact the the Trump administration posed the idea in a budget proposal to Congress could indicate the CMS doesn't have the legal authority to approve such waivers.

Jeff Myers, CEO of Medicaid Health Plans of America, noted that states cannot use 1115 waivers to circumvent the drug rebate provision. However, the fact that the proposal was included in the budget indicates that the president is serious about finding ways to address drug costs.

Trump also hasn't given up on repealing and replacing the Affordable Care Act, and his budget used the failed Graham-Cassidy bill as a blueprint for the path forward.

That legislation would have largely turned the ACA into a block-grant program for states, giving governors and state lawmakers more power in determining health policy.

Under that bill, nearly $1.2 trillion in ACA subsidies would be doled out to the states through 2026. States would be free to do away with many of the consumer protections embedded in the ACA. That bill also called for the end of Medicaid expansion by 2020.

"The president is committed to rescuing states, consumers, and taxpayers from the failures of Obamacare, and supporting states as they transition to more sustainable healthcare programs that provide appropriate choices for their citizens," according to the proposed budget.

The budget would give states additional flexibility around benefits and cost sharing by allowing states to consider savings and other assets when determining Medicaid eligibility including lottery winnings.