President Biden’s FY 2023 Budget Includes Health Care Investments, No Hospital Cuts

March 29, 2022

GNYHA is extremely pleased that President Joe Biden’s fiscal year (FY) 2023 budget proposal makes new investments in the health care workforce, behavioral health services, and pandemic preparedness programs, and has no significant cuts to hospitals and other health care providers. The FY 2023 budget is a non-binding blueprint that lays out the President’s priorities for the coming fiscal year and serves as a tool in budget negotiations and other future legislative discussions.

Past White House budget proposals have included significant Medicare reimbursement cuts to providers, including cuts to graduate medical education (GME), Medicare “site-neutral” payments, bad debt, and post-acute care services. President Biden’s proposed budget contains none of these dangerous cuts. Given the sacrifices made by hospitals, nursing homes, and health care workers throughout the COVID-19 pandemic, we are grateful to the Biden Administration for recognizing that now is not the time for health care provider cuts.

The full FY 2023 budget can be found here. The Department of Health & Human Services (HHS) “Budget-in-Brief” and press statements are also included. Key budget provisions relevant to hospitals and other health care providers are summarized below.

GME and Health Workforce

President Biden’s FY 2023 budget does not cut Medicare GME payments and proposes investing in several health workforce programs. President Donald Trump’s budget had proposed to consolidate GME payments associated with Medicare, Medicaid, and the children’s hospital GME program into a single grant program and cut the funding by $52 billion over 10 years. President Barack Obama’s last budget also proposed cuts to teaching hospitals by reducing Medicare indirect medical education payments by 10%. The absence of these cuts in President Biden’s FYs 2022 and 2023 budgets is a testament to the GME community’s advocacy and a renewed recognition of the importance of the nation’s academic medical centers and other teaching hospitals in addressing public health crises.

The FY 2023 budget provides a total of $2.1 billion for Health Resources and Services Administration (HRSA) workforce programs to support public health workforce training, including significant new and expanded investments in behavioral health and workforce diversity. It includes $502 million for the National Health Service Corps, which provides scholarships and loan repayment to health professionals who practice in Federal health professional shortage areas. The budget requests $165 million for the Rural Communities Opioid Response Program to address, among other issues, rural workforce and service delivery issues, and requests $13 million for the Rural Residency Program.

The budget invests $397 million in behavioral health workforce development programs, including $50 million to support the resiliency, mental health, and well-being of health care providers. It invests $119 million in Teaching Health Center Graduate Medical Education programs, which support training primary care physicians and dental residents in community-based settings, and $350 million in Children’s Hospital GME. It also provides $133 million to expand the diversity of the health workforce, including Nursing Workforce Diversity, Centers of Excellence, Health Careers Opportunity Program, Faculty Loan Repayment, and Scholarships for Disadvantaged Students.

Medicare and Medicaid

The budget includes Medicare proposals that support the Administration’s priorities to invest in and remove barriers to accessing mental health services, strengthen health equity, and improve beneficiary protections. It would eliminate the Medicare 190-day lifetime limit on inpatient psychiatric hospital services; require Medicare to cover three outpatient behavioral health visits without cost-sharing; remove statutory limits on the list of practitioners and the scope of mental health services that are eligible for Medicare payment; and apply the 2008 Mental Health Parity and Addiction Equity Act to Medicare, which would ensure that Medicare mental health and substance use disorder benefits do not face greater limitations on reimbursement or access to care relative to medical and surgical benefits.

The budget also proposes several Medicare policies to improve Federal pandemic preparedness response efforts. It shifts all Medicare coverage for vaccines, including administration costs, to Part B and requires that Medicare Advantage Plans charge no greater cost-sharing for any vaccines and their administration than is charged under Original Medicare. It permits the Centers for Medicare & Medicaid Services (CMS) to require all Medicare providers, suppliers, and contractors to collect and report relevant data under a declared public health emergency (PHE), and to enforce these requirements with intermediate penalties, including civil monetary penalties.

The budget also seeks to bolster mental health services through Medicaid by providing $7.5 billion to support Medicaid planning grants and a demonstration opportunity for states to improve Medicaid mental health provider capacity.

340B Program and Telehealth

The budget provides $17 million to HRSA for administrative function associated with the 340B Drug Pricing program, including improving operations, program integrity, and oversight. The budget also supports extending Medicare telehealth coverage expansions beyond the COVID-19 PHE to study its ability to promote proper use and access to care.

Pandemic Preparedness and Public Health

The budget includes $81.7 billion in mandatory funding across HHS public health agencies to enable a coordinated response to counter future public health threats. The budget establishes a new, mandatory Vaccines for Adults program that will provide uninsured adults with free access to all vaccines recommended by the Advisory Committee on Immunization Practices. The budget includes $710 million for the World Trade Center Health Program, which provides monitoring and treatment benefits to eligible responders and survivors affected by the 9/11 terrorist attacks. It also provides $292 million to the Hospital Preparedness Program, which helps hospitals and health facilities prepare for and respond to large-scale emergencies and disasters, and $975 million to the Strategic National Stockpile to expand its medical supplies capacity and infrastructure.

The budget also invests $470 million across HHS agencies to reduce maternal mortality and morbidity, including $128 million to reduce health care disparities and advance maternal health equity.

Prescription Drug Pricing

The budget supports the Administration’s priority of lowering prescription drug costs and addressing high and rising drug prices. It mentions the President’s Prescription Drug Pricing Plan, which calls on Congress to pass legislation that would allow Medicare to negotiate prices for high-cost prescription drugs, impose a tax penalty if drug companies increase their prices faster than inflation, ensure lower prices under Medicare Part D for seniors, and cap out-of-pocket insulin costs at $35 per month.

Home- and Community-Based Services and Long-Term Care

The budget highlights the American Rescue Plan Act’s investment in long-term care and includes $500 million for home- and community-based supportive services (HCBS). It provides $139 million to protect vulnerable older adults, including funding to the Long-Term Care Ombudsman Program and various elder rights and elder justice programs. The budget also requests $494 million for CMS Survey and Certification to support oversight and infection control safety at nursing homes and other facilities. In addition, it provides $424 million for Money Follows the Person Demonstration projects to continue providing HCBS long-term services and support to individuals transitioning from institutions to community-based settings.

Next Steps

Top Administration officials will testify before Congress in the coming weeks to respond to questions about the proposed budget. HHS Secretary Xavier Becerra is scheduled to appear before the House Appropriations Subcommittee on Departments of Labor, Health and Human Services, Education, and Related Agencies in a hearing on Thursday.

GNYHA will weigh in with the Biden Administration, Congressional leadership, and the New York Congressional delegation to convey how the President’s budget would impact hospitals and other health care providers. We remain in close contact with Senate Majority Leader Chuck Schumer (D-NY) and the New York Congressional Delegation as we continue to advocate for additional COVID-19 provider relief. We also continue to advocate for rapid distribution of Federal Emergency Management Agency Public Assistance funds to reimburse New York health care providers for their COVID-19-related expenses.

The next steps in the Federal budget process will be determined by Congressional leaders. GNYHA will keep you apprised of all budget developments and other Federal activities.