On May 11th, the House Energy and Commerce Committee released legislative text for their proposed changes to health care and other policies as part of the anticipated Republican reconciliation bill. The Committee will hold a markup hearing on this bill tomorrow (May 13th) at 2pm ET. A live stream of the hearing and links to the legislative text can be found here.
Although this is the first look into the bill’s specific text, it is by no means final. The legislation may change through amendments over the next month in the House and will need to be matched with an eventual version from the Senate. Therefore, please treat the below summary of important components of the bill as a preliminary perspective.
Projected Savings
The Congressional Budget Office (CBO) scored the health care provisions of this portion of the bill (Subtitle D) as reducing the deficit by $715 billion over the 2025-2034 period. CBO also estimated that the overall policy package will result in increasing the number of people without health insurance “by at least 13.7 million in 2034”, of which 5 million is already reflected in CBO’s baseline projections (mostly reflecting the expiration of enhanced premium tax credits at the end of 2025).
Proposed Medicaid/CHIP Provisions
The bill includes a mix of smaller proposals, rather than any of the “major” cuts discussed such as reducing the ACA expansion Federal Medical Assistance Percentage (FMAP) from 90% to 50%.
These include a variety of proposals that end projected future spending, rather than current spending:
- Place a moratorium on Biden Administration final rules that, if implemented, would result in projected spending increases because they would create easier access and eligibility processes for Medicaid (the Medicare Savings Programs (MSP) rule and the Medicaid eligibility and enrollment processes rule). CBO projected savings of $162 billion related to these moratoria.
- Place a moratorium on the Biden Administration nursing home staffing rule. CBO estimated savings of $22 billion associated with this.
- End the American Rescue Plan’s 5% bump in FMAP over two years for states that newly adopt the Medicaid expansion (grandfathering in existing states).
There are also a number of new eligibility requirements and rules that would tend to decrease enrollment in government health coverage:
- Impose a work requirement for Medicaid eligibility for Expansion enrollees, starting in 2029. Expansion enrollees would be required to submit proof of 80 hours of eligible activities per month.
- Require redeterminations every six months for the ACA expansion population, starting October 2027.
- Require cost-sharing for Expansion enrollees of up to $35 per service, with a total cap of 5% of income, and exempting primary care, prenatal and pediatric care, and emergency care.
- Permit retroactive Medicaid and CHIP coverage to only extend back one month, rather than three months as currently, starting October 2026. (See NY’s policy about this from 2011 here.)
- Impose new eligibility verification requirements:
- Starting in 2027, states must collect enrollee address information to ensure that they are not simultaneously enrolled in two Medicaid programs at once.
- Starting in October 2029, HHS would establish a system to prevent such simultaneous enrollments.
- Starting in 2028, states must quarterly review the Social Security Death Master File to ensure that deceased enrollees are disenrolled timely.
- Impose a $1 million cap on home value when determining allowable assets for long term care-eligible individuals, and prohibit asset disregards from applying to waive such limits, starting in 2028.
- No federal matching funds for individuals whose immigration status has not yet been verified, starting in October 2026. States may still provide provisional coverage, but federal match would not be available under immigration status is verified.
Many proposals relate to new restrictions on State financing of their Medicaid programs:
- Reduction in federal matching funds if states are found by OIG or other entities to have received “excess Medicaid payments,” starting in 2030.
- Reduction in FMAP for the Expansion population from 90% to 80% for states that provide any form of coverage to undocumented immigrants, starting in October 2027.
- SPG estimates that this would result in about $1.7 billion of additional costs to New York State, if it maintained its current coverage programs for undocumented immigrants (which cover roughly 40,000 such people today).
- Many states provide coverage for children or pregnant individuals who are undocumented, and it is unclear whether they would be included.
- Prohibit states from implementing new provider taxes, freeze current provider taxes at current levels, and require provider taxes to be compliant with new uniformity requirements within three fiscal years at most.
- Although it is not yet clear exactly what would be permitted under the uniformity requirements, it does seem clear that MCO taxes like those that exist in New York and California will not be permissible in their current form.
- Prohibit states from implementing state-directed payments that would increase Medicaid payments above 100% of the Medicare fee-for-service level. Existing state-directed payments could continue as is.
- Institute a formal requirement for budget neutrality in 1115 waivers. HHS must certify that 1115 waivers are budget neutral, and would “specify the methodology to be used with respect to any subsequent approval period.”
The bill would also ban “spread pricing” in Medicaid pharmacy reimbursements, such that pharmacy benefit managers (PBMs) would be limited to the sum of ingredient cost and a professional dispensing fee.
Proposed Medicare Provisions
In Medicare, the bill proposes to institute replace current Physician Fee Schedule (PFS) updates with a formula tied to the Medicare Economic Index (MEI). MEI was the original annual physician fee update in 1975. MEI is a weighted index of input price changes for physician work and practice expense components.
MedPAC has recommended various MEI-based formulas (50% of MEI in 2023; MEI minus 1% in 2025). The bill would be much less generous than this:
- 75% of MEI in 2026 (MEI is projected to be 2.3%, so 75% would be about 1.7%).
- 10% of MEI thereafter.
Therefore, this would be very unlikely to ever result in a PFS change of more than 1% after 2026.
The bill also proposes to create regulations on Medicare Part D contracts with PBMs. Medicare Part D contracts with PBMs must specify “no income other than bona fide service fees.” Rebates and discounts must be “fully passed through” to plan, and HHS would be able to review compensation agreements between Part D plans and PBMs. PBMs would be subject to transparency requirements to disclose drug pricing/payment information and submit annual reports.