Breaking Down the Health Care Impact of the Fiscal Responsibility Act
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Breaking Down the Health Care Impact of the Fiscal Responsibility Act

Brownstein Client Alert, May 31, 2023

The Fiscal Responsibility Act, the product of intense negotiations between the White House and House Republican leadership, suspends the debt limit and outlines government spending cuts.

The legislation cleared its first hurdle on Tuesday, passing through the House Rules Committee with a narrow margin. Following the Rules Committee, the legislation is expected to go to the House floor for a vote on Wednesday evening. The Senate would immediately begin processing the legislation, but it could be slowed by a single senator using various procedural tools.

The deal between the parties, which came together over the weekend, includes:

  • Suspension of the debt limit until January 2025
  • Discretionary spending caps in fiscal years 2024 and 2025
  • Expands work requirements for certain adults receiving benefits under the Supplemental Nutrition Assistance Program (SNAP)
  • Rescinds roughly $28 billion in unobligated COVID-19 money
  • Repurposes $20 billion in Internal Revenue Service funding for non-defense discretionary spending
  • Restarts student loan repayments in September 2023
  • Changes to environmental permitting for energy projects

While some health care policies were floated for inclusion in the bill, including Medicaid work requirements and cuts to Medicare Advantage, negotiators declined to include major health care policy changes in the bill. The largest impact to the health care industry comes in the form of rescission of COVID-19 relief funds that went to government agencies but have not yet been spent.

Multiple programs through the Department of Health and Human Services (HHS) are estimated to have their unobligated balances permanently rescinded. As these numbers are estimations, there is no certainty on the impact these clawbacks of the COVID-19 relief funds will have on future programs.

The following is a breakdown of these programs and activities.

  • The Public Health and Social Services Emergency Fund that provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. The estimated rescission amount of unobligated funds total $10.419 billion. However, the Biden administration has protected priority investments retaining $5 billion in funding for next-generation vaccines and therapeutics. Also, retaining funding for test procurement capacity, long COVID research and other critical needs. Roughly the total estimate of all of these activities is $10 billion remaining in the fund after the rescission.
  • The Defense Production Act allowed for HHS to help address the medical supply shortages during COVID-19 with an estimated rescission of $864 million. Roughly $800 million in funds will remain after the rescission as there are protected priority investments like strengthening pharmaceutical supply chains.
  • Centers for Disease Control and Prevention (CDC) – Wide Activities and Program Support estimated rescission of $1.739 billion, which provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. This included grants to states, localities, territories, tribes and tribal organizations, and funds for global disease detection and emergency response. The Biden administration has protected priority investments like genomic surveillance and investments in vaccine safety and effectiveness where roughly $1.5 billion will remain after the rescission, in addition to about $500 million in the Infectious Diseases Rapid Response Reserve Fund.
  • The Food and Drug Administration (FDA) estimated rescission of $123 million for vaccine efficacy and supply chain monitoring; however, some funding is protected for staff at the FDA to continue some supply chain monitoring activities.
  • Centers for Medicare & Medicaid Services – Program Management, which provided funding to prevent, prepare for and respond to the coronavirus, domestically or internationally. These expenses were made available for the survey and certification program, prioritizing nursing home facilities in localities with community transmission of the coronavirus.
  • Funding for testing activities, which included carrying out COVID-19 testing, contact tracing and mitigation activities; and conducting global health activities to combat current and emerging infectious disease threats globally.
  • Funding for expanding and sustaining the public health workforce by making awards to state, local and territorial public health departments and Medical Reserve Corps.
  • Funding for public health investments, which included awarding grants and cooperative agreements for COVID-19 activities for community health centers and community care; funding for the National Health Services Corps and Nurse Corps; funding for teaching health centers that operate graduate medical education; and funding for family planning.
  • Funding for mental health and substance use disorder programs, which included training for health care professionals; carrying out an education and awareness campaign directed at health care professionals to seek out support for mental health and substance use disorder services; funding for grants for health care providers to promote mental health among their personnel; funding for behavioral health workforce education and training; and funding for pediatric mental health care access.
  • Funding for providers for purposes of making payments to eligible health care providers for health care-related expenses and lost revenues that are attributable to COVID-19.
  • Funding for a state option to provide qualifying community-based mobile crisis intervention services.
  • Funding for support to skilled nursing facilities in response to COVID-19, which includes providing for infection control support to skilled nursing facilities through contracts with quality improvement organizations.

The House and Senate are expected to vote on this legislation before June 5, which is the deadline that Treasury Secretary Janet Yellen has said the United States Government will reach the current debt limit and begin to default on its debts.


THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING THE HEALTH CARE IMPLICATIONS OF THE FISCAL RESPONSIBILITY ACT. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.

 

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