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October 4, 2017

How the House's CHIP reauthorization bill would modify DSH payment cuts

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Republicans on the House Energy and Commerce Committee late Monday unveiled legislative text for a bill that would reauthorize CHIP for five years.

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Federal funding for CHIP expired Sept. 30, but most states will not run out of CHIP funding for at least a few months. According to the Kaiser Family Foundation, out of 42 states that provided estimates, 10 anticipated they would run out of funds by the end of December, and 32 anticipated they'd run out of funds by March 2018. However, in the bill summary, House Republicans noted that some states could run out of funding as early as November.

Bill details

Similar to a proposal in the Senate Finance Committee, the House bill would provide nearly $120 billion for states over five years, but after two years it would gradually phase out the 23 percentage point funding increase states received under the Affordable Care Act (ACA).

According to Politico's "Pulse," the bill also would change the ACA's "maintenance of effort" requirements that prevented states from reducing CHIP eligibility and would delay reductions in Medicaid disproportionate share payments to hospitals. Congress over the past three years has passed legislation to keep the cuts from taking effect. Currently, $43 billion in DSH payment cuts from fiscal year 2018 through fiscal year 2025 are scheduled to take effect on Oct. 1. The cuts grow gradually from $2 billion in FY 2018 to $8 billion in FY 2025. However, the House bill would eliminate the FY 2018 payment cut, and offset the cost of the delays by extending DSH reductions through FY 2017.

The bill also would extend by two years federal funding for community health centers, which provide primary health care to low-income individuals in rural and urban areas, Vox reports. According to the Washington Post's "PowerPost," the bill would redirect funding from the ACA's prevention and public health fund to community health centers.

In addition, the bill would provide $1 billion in Medicaid funds over two years to Puerto Rico. The U.S. territory is still recovering from Hurricane Maria, a powerful Category 4 storm that struck the island on Sept. 20 with 140 mph winds. According to STAT News' "Morning Round," half of the island's residents still do not have access to clean drinking water.

House lawmakers proposed several funding mechanisms in the bill. For instance, the bill would:

  • Allow states to remove lottery winners from Medicaid;
  • Bolster Medicaid's third-party liability policy to make it easier for state Medicaid programs to not cover certain medical costs if they could be covered by another private plan or government program;
  • Increase Medicare premiums for beneficiaries with incomes over $500,000;
  • Shorten the grace period for exchange enrollees who do not pay their health plan premiums from 90 days to 30 days.

Next steps

The House Energy and Commerce Committee is scheduled to mark up its bill Wednesday—the same day the Senate Finance Committee is planning to mark up its own bill (S 1827). However, Vox reports Democrats are likely to oppose several of the proposed funding mechanisms in the House bill. The Senate bill currently includes no funding details

If both committees approve their bills, NPR's "Shots" reports House and Senate leaders would likely move quickly to hold floor votes. If they both pass in their respective chambers, lawmakers would need to consolidate the bills and resolve any differences (Winfield Cunningham, "PowerPost," Washington Post, 10/2; Diamond, "Pulse," Politico, 10/3; Thielking, "Morning Rounds," STAT News, 10/3; Galewitz, "Shots," NPR, 10/3; AP/New York Times, 10/3; Scott, Vox, 10/3; Dickson, Modern Healthcare, 10/3).

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