President Releases 2021 Budget Proposal

Topics: Budget and Spending, Federal News,

President Trump has proposed a record $4.8 trillion budget for the 2021 fiscal year. The document provides a window into the White House’s policy priorities, although Congress ultimately holds the “power of the purse,” and in fact, the Senate Budget Committee chair, Republican Mike Enzi of Wyoming, has already indicated that he won’t hold a hearing on the Trump budget. 

The president’s plan includes about $2 trillion in cuts to safety-net programs and student loan initiatives. Those reductions encompass new work requirements for Medicaid, federal housing assistance and food stamp recipients, which are estimated to cut nearly $300 billion in spending from the programs. The budget would also cut spending on federal disability insurance benefits by $70 billion and on student loan programs by $170 billion. 

Medicaid

The Budget reduces Medicaid spending by approximately $920 billion over 10 years. Budget documents highlight the Trump Administration’s efforts to increase state flexibility and “reset and restore” the federal-state relationship, citing as an example new strategies for more efficient approval of State Plan Amendments and waivers under Sections 1115 and 1915. The materials also say that “CMS [Centers for Medicare and Medicaid Services] is offering states unprecedented flexibility to design health programs that meet their residents’ specific needs. By fostering state innovation and pairing it with enhanced accountability and program integrity measures, we are now on a path to ensuring program sustainability while improving health outcomes for beneficiaries.”

Money Follows the Person. The Budget gives states the option to establish an MFP program under the state plan with a time-limited enhanced federal match for those activities. States that spent less than 50 percent of their long-term service and supports funding on home and community-based services in the prior year would receive an enhanced match for the first five years they provide MFP services. Although no further specifics are available in the budget documents, the Administration suggests that this program would save $91 million over 10 years.

Program integrity. The Budget proposes to save approximately $31.4 billion over 10 years for Medicare and Medicaid through proposed program integrity reform, including “build[ing] on CMS’s June 2018 Medicaid Program Integrity Strategy by giving CMS and states the tools needed to reduce improper payments and protect taxpayer dollars.” The Budget requests $813 million in discretionary Healthcare Fraud and Abuse Control (HCFAC) funding, $27 million above the FY 2020 level. Of the $813 million, CMS receives $628 million, the Department of Justice (DOJ) receives $83 million, and the HHS Office of Inspector General (HHS OIG) receives $102 million.

The 2021 budget proposal repeats a 2020 legislative proposal that would expand the authority of Medicaid Fraud Control Units (MFCUs) to pursue reports of abuse and neglect in non-institutional Medicaid settings. The Budget proposes to allow MFCUs to receive federal matching funds “for the investigation or prosecution of abuse and neglect of a beneficiary in non-institutional settings, such as home-based care.”

The budget also includes a legislative proposal to strengthen CMS’s ability to recoup Medicaid improper payments. This proposal gives HHS authority issue disallowances outside of the current improper payment rate measurement process and allows HHS and HHS OIG to issue disallowances extrapolated from findings based on a sample of beneficiary eligibility cases. It would also eliminate the current threshold that precludes HHS from issuing disallowances where states’ eligibility-related improper payments are three percent or less of a sample. The Administration projects that this legislative change would result in $5.4 billion in savings over 10 years. To address state noncompliance with provider screening, enrollment, and revalidation requirements in Medicaid and CHIP for both managed care and fee-for-service, the budget also proposes a legislative change that would allow for a one percent reduction of the state’s administrative match in FY 2021, a two percent reduction in FY 2022, a three percent reduction in 2023, and a four percent reduction thereafter until the state comes into compliance.

Another proposal would give states the option to partner with the State Reciprocal Program, which is a component of the Treasury Offset Program, to recover Medicaid and CHIP debts by offsetting those debts against state and federal payments, including federal tax returns. This would include provider and supplier debts, third party liability collections, and debts associated with enforcement of sponsor deeming and repayment requirements for certain immigrants. States would pass on fees to the debtor to cover Treasury’s administrative costs. This, the budget predicts, would lead to $988 million in savings over 10 years. Additional proposals would centralize Medicaid and CHIP provider screenings and streamline the Medicaid terminations process.

The 2021 budget proposal repeats a 2020 legislative proposal that would expand the authority of Medicaid Fraud Control Units (MFCUs) to pursue reports of abuse and neglect in non-institutional Medicaid settings. The Budget proposes to allow MFCUs to receive federal matching funds “for the investigation or prosecution of abuse and neglect of a beneficiary in non-institutional settings, such as home-based care.

Community engagement. The Budget also “supports community engagement activities for working-age, able-bodies adults to promote better mental, physical, and emotional health,” arguing that “well-designed community engagement incentives have great potential to improve health and well-being while empowering beneficiaries to rise out of poverty.” The Budget “improves consistency between requirements in federally-funded public assistance programs, including Medicaid, TANF, and SNAP, by requiring able-bodied, working-age individuals to find employment, train for work, or volunteer (community service) to receive benefits.” This would “enhance service coordination for program participants and improve the financial well-being of those receiving assistance,” and result in $152.4 billion in savings over 10 years.

Other legislative proposals. The budget includes a proposal to limit Medicaid reimbursement for healthcare providers operated by a governmental entity to an amount not exceeding the actual cost of providing those services when that is lower than the Upper Payment Limit tied to Medicare costs. This, budget documents say, “prevents states from using supplemental payments to public providers to circumvent Medicaid matching requirements.” The budget also proposes to allow states to grandfather managed care authorities in waivers and demonstration programs under their state plans if there are no substantive changes and the state renewed the waiver at least once.

Other administrative proposals. The budget proposal commits to using regulatory authority to change the provision of Non-Emergency Medical Transportation (NEMT) from mandatory to optional.

Health and Human Services

Developmental disability-related programs in the Administration for Community Living (ACL), primarily authorized under the Developmental Disabilities Act (DDA), are cut by $44 million, from $173 million to $128 million. This includes State Councils on Developmental Disabilities ($56 million), Developmental Disabilities Protection and Advocacy ($39 million) programs, University Centers for Excellence in Developmental Disabilities ($33 million), and Projects of National Significance ($1 million).

The budget proposes to zero out the $52 million in the 2020 budget given to the Health Resources and Services Administration (HRSA) to carry out their obligations under the recently re-authorized Autism Cares Act. These include administering such programs as the Leadership Education in Neurodevelopmental and Other Related Disabilities (LEND) Training Program, the Developmental Behavioral Pediatrics (DBP) Training Program, and The Autism CARES Act National Interdisciplinary Training Resource Center. In addition, this money funds the State Implementation Grants for Improving Services for Children and Youth with Autism Spectrum Disorder (SIGs), the State Public Health Coordinating Center for Autism, the Autism Intervention Research Program, and the Autism Research Networks.

The budget proposes to cut the Birth Defects, Developmental Disabilities, Disabilities & Health section of the Centers for Disease Control and Prevention (CDC) from $161 million to $112 million. The President also proposes to cut the National Institutes of Health’s (NIH’s) Eunice K. Shriver National Institute of Child Health and Human Development by $141 million, to $1.416 billion.

Education

For Rehabilitation Services, the Administration requests a total of $3.8 billion in mandatory and discretionary funds to “support comprehensive and coordinated vocational rehabilitation services for individuals with disabilities through training, demonstration, and technical assistance, as well as other direct service programs to help individuals with disabilities to live more independently in their communities.” The Request includes $3.7 billion in mandatory funds for the Vocational Rehabilitation (VR) State Grants program, an increase of $57.8 million over the fiscal year 2020 level consistent with the inflation increase specified in the authorizing statute. The Administration continues to propose the elimination of the Supported Employment State Grants program “because it duplicates support available through the VR State Grants program.”

 Labor

The FY 2021 Budget request for the Office of Disability Employment Policy (ODEP) is $27 million, a significant reduction from the 2020 enacted spending amount of $38.5 million. According to budget documents, ODEP will “continue to fund the Employer Assistance and Resource Network in Disability Inclusion and the Job Accommodation Network to assist employers in recruiting, hiring and retaining qualified individuals with disabilities; the Workforce Recruitment Program to connect qualified college graduates with disabilities to federal and private sector employment opportunities; and the State Exchange on Employment and Disability, a partnership with state legislators and administrators designed to encourage the adoption and implementation of ODEP’s policies and practices at the state level.”

While at one time the President’s budget proposal was the traditional beginning of the annual budget process and could at least be relied upon to form the beginning template from which legislators from his own party developed their initial budget legislation, in recent years the executive branch’s opening salvo has become increasingly irrelevant to the budget process. However, the policies described in the budget proposal provide a glimpse into the priorities of the White House for the next year and are likely to resurface in proposed regulations and legislation in the coming months.

FMI: Read more from the White House about the President’s budget at https://www.whitehouse.gov/omb/budget/. The Department of Health and Human Services (HHS) proposed budget is available at https://www.hhs.gov/about/budget/fy2021/index.html. The Department of Education (ED) proposed budget is available at https://www2.ed.gov/about/overview/budget/budget21/index.html. The Department of Labor (DOL) proposed budget is available at https://www.dol.gov/general/budget.