Health Law Scan

Legal Insights and Perspectives for the Healthcare Industry

The recently passed FY 2020 Appropriations Act increases funding for US healthcare agencies and programs over FY 2019 levels. The new law limits reauthorization of expiring healthcare extenders to five months, delays a scheduled reduction in Medicaid Disproportionate Share Hospital payments, enhances federal funding for healthcare research, and permanently repeals certain Affordable Care Act (ACA) taxes.

US President Donald J. Trump signed the Further Consolidated Appropriations Act, 2020 (FY 2020 Appropriations Act) into law on December 20, 2019. The $1.4 trillion bipartisan package, which funds the federal government through September 30, 2020, combined all 12 appropriations bills into two legislative “minibus” packages for defense and nondefense (HR 1865) spending. In addition to providing agency funding, the year-end spending package included a number of important healthcare policy changes discussed below.

Short-Term Reauthorization of Healthcare Extenders

Because Congress was unable to reach consensus on necessary offsets for the long-term authorization of the expiring healthcare “extenders,” these programs are only funded for six months (i.e., through May 22, 2020). The extenders include the Medicare work geographic index floor, activities related to quality measurement and performance improvement in the Medicare and Medicaid programs, outreach and assistance for low-income programs, community health centers, the Medicaid Community Mental Health Services demonstration program, and teaching health centers that operate graduate medical education (GME) programs.

The FY 2020 Appropriations Act also delays a scheduled reduction in Medicaid Disproportionate Share Hospital (DSH) payments only until May 22, 2020.

The short-term extension was funded in part by the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act that enhances access by generic manufacturers to brand name drug samples for the development of generic versions.

The May 2020 expiration may provide an opportunity to develop a consensus on legislative proposals that were not included in the FY 2020 Appropriations Act. These include pending high-profile proposals to prevent or limit “surprise” medical bills and rising prescription drug costs. The fact that CBO scored these proposals as producing substantial savings to the federal government may enhance the prospects for later passage.

Policy Changes to the Medicare Program

Notable Medicare policy changes made by the FY 2020 Appropriations Act include:

  • Clinical Lab Data Collection and Reporting. Suspends clinical laboratory commercial payer data reporting for one year until 2021 under the Laboratory Access for Beneficiaries (LAB) Act, which was passed as part of the FY 2020 Appropriations Act. Directs the Medicare Payment Advisory Commission (MedPAC) to study and report to Congress with recommendations on “[h]ow best to implement the least burdensome data collection process.”
  • Hospital Pass-Through Status. Extends outpatient hospital pass-through status for certain diagnostic radiopharmaceuticals under Part B of the Medicare program for the nine-month period beginning January 1, 2020.
  • Hospital Hematopoietic Stem Cell Acquisition Payments. Reimburses hospitals that furnish allogeneic hematopoietic stem cell transplants for hematopoietic stem cell acquisition on a reasonable cost basis. The secretary of the US Department of Health and Human Services (HHS) will specify items to be included in such acquisition through rulemaking.

Policy Changes to the Affordable Care Act

Marking the 10th anniversary of the ACA, the FY 2020 Appropriations Act does not provide any new funding for the ACA. However, it does make several ACA-related policy changes, including a permanent repeal of the following taxes:

  • 2.3% Excise Tax on Medical Devices. The repeal of the medical device tax applies to taxable years beginning after December 31, 2019.
  • Annual Fee Assessed on Health Insurers Based on Market Share. The repeal of the health insurer tax applies to calendar years beginning after December 31, 2020.
  • 40% Excise Tax on High-Cost “Cadillac” Employer-Sponsored Health Plans. The repeal of this tax, which has not been implemented, applies to taxable years beginning after December 31, 2019.

With respect to health exchange insurance plans for plan year 2021, the FY 2020 Appropriations Act bars the Trump administration from restricting the practice of “silver loading,” as described by the Centers for Medicare and Medicaid Services in a final rule titled ‘‘Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020,’’ and from ending auto-enrollment in qualified health plans with regulatory action. It also funds the Patient-Centered Outcomes Research Institute (PCORI) trust fund through FY 2029.

Healthcare Funding Highlights

Funding for federal healthcare agencies include $94.9 billion in discretionary spending for programs and activities of the HHS, which is $4.4 billion more than FY 2019 and $16.8 billion above the president’s budget request. As a result, the FY 2020 Appropriations Act increases funding for many US healthcare agencies and programs.

Key funding highlights from the FY 2020 Appropriations Act include the following:

  • Research. The FY 2020 Appropriations Act provides a total of $41.7 billion to the National Institutes of Health (NIH), an increase of $2.6 billion above the FY 2019 funding level (roughly 3%). To that end, the FY 2020 Appropriations Act allocates $3.1 billion for HIV/AIDS research; $2.8 billion for Alzheimer's disease research; $818 million for research on opioid addiction, development of opioids alternatives, pain management, and addiction treatment; $500 million for the All of Us precision medicine research initiative; $500 million for mapping the human brain (BRAIN Initiative); and $200 million for a universal flu vaccine. Appropriations for cancer research include $212.5 million in new funding for the National Cancer Institute to prioritize competing grants in cancer research; $195 million for the Cancer Moonshot research initiative; $50 million in new funding for the Childhood Cancer Data Initiative; and $30 million to implement the Childhood Cancer STAR Act.
  • Children’s/Maternal Healthcare. Provides $340 million in annual funding for Children’s Hospitals Graduate Medical Education (CHGME), an increase of $15 million; and $944 million for maternal and child health programs. The FY 2020 Appropriations Act provides a total of $7.3 billion for the Health Resources and Services Administration (HRSA), an increase of $172 million over FY 2019 funding levels. Authorizes $39.5 billion for early childhood programs funded under the Administration for Children and Families, an increase of $1.1 billion more than FY 2019.
  • HIV/AIDS. Appropriates $291 million (an increase of $241 million) to support the president’s HIV initiative and other high priority HIV efforts, including $140 million to support efforts by the Centers for Disease Control and Prevention (CDC) to reduce new HIV infections over 10 years.
  • Global Health. Authorizes $5.9 billion for the president’s Emergency Plan for AIDS Relief (PEPFAR), an increase of $210 million over FY 2019; and $3.2 billion for programs to improve maternal and child health, an increase of $45 million over the 2019 level.
  • Opioid Prevention and Treatment/Mental Health Services. Appropriates $3.8 billion, an increase of $1.9 million, for opioid prevention and treatment; allocates $206 million to support mental health resources for children and youth, and suicide prevention. The FY 2020 Appropriations Act provides a total of $5.9 billion to the Substance Abuse and Mental Health Services Administration (SAMHSA), an increase of $140 million over FY 2019.
  • Tobacco Products. Raises the legal age to purchase tobacco products to 21 years and ties enforcement to federal public health funding for states; provides $230 million to the CDC to address tobacco and ecigarettes ($20 million more than FY 2019).
  • Gun Violence Prevention. Authorizes $25 million in funding ($12.5 million each to NIH and CDC) for research on gun violence prevention.