After demonstrating hope, resolve, and bipartisanship with the passage of a 12 bill omnibus for Fiscal Year (FY) 2014, Senate Appropriations Chairwoman Barbara Mikulski and House Appropriations Chairman Hal Rogers have set a positive tone for the FY 2015 process. As the budget deal decided upon in December set an allocation level for FY 2015 ($1.014 trillion), there is momentum for action.
Deadlines for programmatic and report language requests have come and gone for the most part and the parade of interest groups making the rounds for staff meetings are filling security lines. While it remains too soon to tell how it will all play out, bipartisan hope that bills will move forward is appreciated by most of those who frequent the halls of Congress to lobby.
The House Full Appropriations Committee took a significant step forward in the Fiscal Year 2015 process by passing both the Military Construction and Veterans Affairs and the Legislative Branch bills on Wednesday, April 9th.
What We Are Hearing:
The House is expected to keep moving through Subcommittee and full Committee markups and Senate should get started soon. The House and Senate both head out for two weeks of recess over Easter/Passover and then will be back for a month before the Memorial Day break.
It is rumored that there is a lot of support for Subcommittee Chairman Tom Harkin (retiring) to be able to take the Labor, Health, and Human Services (LHHS) bill to the floor for a vote. Given that this bill is notoriously controversial, it remains to be seen if that will actually happen.
For the 17th time since the Sustainable Growth Rate (SGR) became law as part of the Balanced Budget Act of 1997, last week the Congress passed a short-term “patch” to prevent scheduled cuts from going into effect for physicians who provide care to Medicare beneficiaries. Staving off the more than 20% in payment cuts, on April 1st, President Obama, signed into law the Protecting Access to Medicare Act of 2014. In addition to preventing the scheduled payment reductions from going into effect, the new law continues a 0.5 percent update for physicians through December 31, 2014, and then maintains reimbursement levels for the first quarter of 2015. The SGR, long-recognized by health care providers and policymakers as in serious need of reform, is the formula used by the Centers for Medicare and Medicaid Services (CMS) to control spending and growth related to physician services provided to Medicare beneficiaries. Over the past six months, leaders and members of the House Ways and Means, House Energy and Commerce, and Senate Finance Committee achieved a rare bipartisan, bicameral consensus with respect to how to repeal the SGR and replace it with a more appropriate payment policy. The result of their efforts culminated in the introduction of the SGR Repeal and Medicare Provider Payment Modernization Act of 2014. Despite agreement on the policy, Members of Congress unfortunately were unable to craft a deal with respect to how to pay for the estimated $140-180 billion price-tag. Therefore, with the April 1st deadline looming, Congressional leaders negotiated a smaller package of health care policies, which included a short-term “patch” for the SGR. The policies include (but are not limited to): an extension of the partial enforcement delay for the Medicare so-called “two-midnight rule,” which effects payment for inpatient stays at acute care hospitals; a one-year delay in implementation of the new ICD-10 coding system; additional authorization for the Special Diabetes Program and the maternal, infant, and early childhood home visiting program; a Government Accountability Office study on Children’s Hospital Graduate Medical Education Program; a new program relating to value-based purchasing for skilled nursing facilities; and a new initiative related to quality, safety, and evidence-based care associated with diagnostic imaging. The costs of the bill are paid for through a variety of policy changes, including: extending the two percent Medicare sequestration; revaluing services under the physician fee schedule; reform of Medicare payment for clinical laboratory services; and rebasing of Medicaid Disproportionate Share Hospital payments. Providers continue to urge Congress to take action to enact a permanent fix. Given that the latest “patch” expires March 31, 2015, prior to that date, Congress will need to take action on a permanent fix or enact the 18th patch.
Definition: Outlays refers to the actual disbursement of funds by the U.S. Treasury to meet obligations incurred by the federal government. They are typically referred to as spending or expenditures.
Used in a sentence: “The U.S. government posted the widest monthly budget surplus in more than five years in June, as spending plunged 47 percent and a stronger economy lifted tax receipts, the Treasury Department said.
Receipts exceeded outlays by $116.5 billion last month, the biggest surplus since April 2008, compared with a $59.7 billion deficit in June 2012, the Treasury said today in Washington. The result exceeded the $115 billion median estimate in a Bloomberg survey of 21 economists.” -Bloomberg
History: Article I, Section 9, Clause 7 of the United States Constitution states:
“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time.”
In a textbook budget process, the President proposes a budget to Congress on a yearly basis in the beginning February. Subsequently, both the House and Senate propose and pass their own budgets and reconcile them to set “top-line” numbers for the relevant accounts within the federal government. These “budgets resolutions,” are not signed by the President, and do not carry the force of law. From these numbers, the House and Senate appropriations committees divide the allocations among the 12 subcommittees, thus determining the actual funding levels for each agency and program. These bills are signed by the President and carry the force of law. From this process the federal government is authorized to produce expenditures or outlaysto pay for the programs necessary to continue government operations.
Definition:OCO funding ismoney set aside in the federal budget for expenses connected to overseas operations such as: crisis response, infrastructure and coalition support for operations in Iraq/Afghanistan, humanitarian assistance in the Middle East and North Africa, and embassy security among other needs abroad.
Used in Sentence: “‘I have received some questions about the willingness to do OCO as a pay-for,” Fisher wrote. “Chairman Wyden is VERY OPEN to considering OCO as a pay-for. If that is the position of your organization, please include that in your support letters … [and] convey this sentiment in your meetings with senators.’ The email sheds light on the status of negotiations over a permanent “doc fix.” Lawmakers are closer than ever to repealing the SGR, but deciding how to offset the reform is proving a major challenge.
Wyden, the Finance Committee’s newly installed chief, is hardly the first lawmaker to suggest war spending as a way to fund an SGR fix. The idea has been proposed by House Democrats and has support from major players in the medical community. -The Hill
History: Following the terror attacks of 2011, President George W. Bush’s administration requested Congress provide specific funds to pursue the “Global War on Terror.” Beginning in 2009 the administration of President Barack Obama changed from using the “Global War on Terror” terminology to instead employing the nomenclature of “Overseas Contingency Operations” and the funds to support the effort became known as OCO. Due to the reduced U.S. military presence in Iraq and Afghanistan, the need for OCO funding is declining. In Fiscal Year (FY) 2013 OCO outlays/expenditures were $93 billion and the President’s request for OCO in FY 2015 has decreased to $85 billion. Currently, there is a debate in Congress about the possibility of using the OCO funds as “savings” to pay-for other expenses (i.e. SGR)—Democrats contend that reallocating OCO funds would account for actual savings, while Republicans claim that since the monies have not actually been spent it is not real savings, just money the nation no longer needs to spend.
In both Democratic and Republican administrations, the President’s use of executive power and actions – or inaction – by federal agencies have been criticized and scrutinized by members of Congress and the courts. Throughout his presidency, like his predecessors, President Obama has used his executive authority on recess appointments, executive orders, and to implement policy priorities. Federal agencies also have used their power to take actions in response to a deadlocked Congress. In his recent state of the union, President Obama made clear his intention to exercise his executive power to the maximum.
Are you curious about how the Executive Branch – the White House and federal agencies – is exerting power and influence over programs and policies, especially in the context of the current Congress and President Obama’s indication he plans to issue numerous executive orders? My colleagues, Scott Coffina and Charlie Rose, will provide a peek behind the curtain of the Executive Branch and share their respective experiences working in the administrations of George W. Bush and Barack Obama.
Please join us this Tuesday, March 25th – either in person or online – to learn about how interest groups can respond to both threats and opportunities stemming from the power being exerted by the Executive Branch. To RSVP, please click here.
What it means: Each year the President prepares and submits to Congress a budget, outlining his spending and policy priorities for the coming federal fiscal year. Accompanying his budget are narrative explanations from each federal agency which present to Congress, specifically the House and Senate Appropriations Committees, the rationale behind the proposed increases or decreases in spending and/or any suggested changes in policy. These “budget justifications” or “Congressional Justifications” – CJs – also include information about spending for the current federal fiscal year, the prior federal fiscal year, and the upcoming “request” year. The CJs typically provide updates regarding agency programs, initiatives, projects, and activities and report on the status of requests that Congress has made of the agencies in the previous year’s appropriations measure.
“The NIH Congressional Justification (“CJ”) provides the Senate and House Appropriations Committees detailed estimates and justifications for research and research support activities (infrastructure, administrative, etc.) that NIH would anticipate funding at the President’s Budget Request level.”
“Head Start (+$1.65 billion) – The FY 2014 request for the Head Start program is $9.6 billion, an increase of $1.65 billion from the FY 2012 enacted level. These funds will allow Head Start programs to serve approximately 1,053,000 children by providing new opportunities for working parents to enroll their infants and toddlers in high quality early learning and development programs through the Early Head Start – Child Care Partnership proposal. The Budget supports implementation of new regulations that require low-performing grantees to compete for continued funding. Funding is requested to minimize the disruption of services to Head Start children and families during the transition period to new Head Start provider. The FY 2014 request focuses on improving program quality and ensuring that funds are directed towards the organizations most capable of providing high quality early education that can put children on a path to school success and opportunity.”
The Patient Protection and Affordable Care Act –commonly referred to as “the ACA”—is a law that reformed nearly twenty-percent of the economy through modifications to regulations and changes to existing law. Its primary goals were to expand health care coverage and control rising costs. Among a number of reforms, the ACA mandated that all citizens have health insurance for a minimum of nine months of the year (or face a penalty); allowed children to remain on their parents plan until the age of 26; created health insurance market places where anyone can shop for health insurance; and banned insurance companies from denying coverage on the basis of pre-existing conditions.
Word: Risk Corridors
Used in a sentence: “Risk corridors, a provision of the ACA, limits both the amount of money that a health-insurance plan can make and lose during the first three years it is sold on the new health-care exchanges. Related programs that mitigate risk for insurance companies are also being targeted by conservative Republicans.” –Rep. Tom Cole quoted in The Washington Post.
Definition: Risk corridors are a component of the ACA that limit the risk borne by qualified health plans on the insurance marketplaces. Risk Corridors are a mechanism to minimize the year-end losses of insurers who covered a disproportionate share of sicker, often older, insured customers. The federal government, through the Department of Health and Human Services, agrees to cover 50% of the excess costs borne by insurers if those costs exceeded premiums by 3-8%. In the event those losses amount to greater than 8%, the government will defray 80% of those losses. However, if insurance companies see similar gains then the situation is reversed and the federal government is the beneficiary of those excess funds. This is the risk adjustment portion of the ACA where “healthier” insurance companies help ones shouldering more expensive populations.
History: Ideally, insurance is a system whereby a company manages risk by distributing moneys from a sizeable portion of healthy participants—needing minimal to moderate medical services—to a much smaller portion of sicker participants that need a lot more medical services. This results in a margin or profit where premiums exceed the medical costs of the consumers participating in a given plan. This is a simplified way of explaining what actuaries do every year. They take consumers in a given plan and compare their likelihood to use medical services with the expected revenues from monthly insurance premiums and other out-of-pocket costs like yearly deductibles. However, the advent of the ACA brought on this new frontier of health insurance marketplaces where no one could be denied care due to pre-existing conditions: previous surgery, diabetes, HIV, cancers, benign tumors, hypertension, etc.
Although, risk was managed by mandating that everyone be covered, this did not completely allay the fears of private insurers. Actuaries remained nervous. Anyone from the individual market—usually those not eligible for Medicaid/Medicare or employer sponsored coverage—could enter the exchanges and purchase insurance coverage. This uncertainty could have resulted in excessive premiums to consumers. To mitigate that risk and help with the possibility that consumers would be sicker and older—and thus more likely to use many costly medical procedures—the authors of the law created risk corridors. This would be a temporary program to help insurers on the insurance market places for three years.
Several subcommittees of the House of Representatives have posted their deadlines for receiving Members’ programmatic and language submissions for consideration in the FY 2015 Appropriations bill. Submissions are to be delivered electronically at http://appropriationssubmissions.house.gov beginning on February 26, 2014. Most subcommittees have posted deadlines in late March – early April. If a subcommittee has not yet indicated a deadline, Dear Colleague letters with Member Submission instructions will be posted as soon as they have been circulated. To view the entire list, please click here.