May 12, 2025
More about the House Energy & Commerce Committee’s plan from the National Council:
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Over the weekend, the House Energy and Commerce Committee released draft text of their legislative recommendations for budget reconciliation. This legislation will be the subject of a markup during a committee hearing scheduled for Tuesday, May 13 (tomorrow), at 2 p.m. ET. You can read the draft text here and a section-by-section summary of the text here. While the text does not include certain policies that had been discussed as possible options to reform the program, such as per capita caps/block grants and overall reductions to the FMAP rate (the federal share of Medicaid funding for states), the draft legislation does include numerous policies that, if enacted, would likely cause millions of current enrollees to lose coverage and prevent many in need from enrolling in the future. The full list of health-related provisions can be found in the section-by-section summary linked above, but some of the most substantial provisions from the text include the following related to Medicaid and the Affordable Care Act: Work/community engagement requirements for certain individuals, with several limited exceptions, including exceptions for individuals with a substance use disorder or a “disabling mental disorder.” Specifics on these and other exceptions within the bill will need to be determined by individual states and the Department of Health and Human Services (HHS). A moratorium on new provider tax arrangements and limits on certain specific existing provider tax arrangements. Again, details on these provisions are currently evolving.Requiring states to impose cost-sharing on Medicaid Expansion adults with incomes over 100% of the federal poverty level, up to $35 per service and up to 5% of total income. States would be required to impose cost-sharing on all adults who earn just above the federal poverty level — approximately $15,650 for a single person or $21,150 for a two-person household. While the text does include exceptions to this requirement for certain visits, including primary care visits, no exceptions are included for mental health and substance use treatment services. Limits on certain state-directed Medicaid payments.A 10% reduction in FMAP for states that, per the committee summary document linked above, “use their Medicaid infrastructure to provide health care coverage for illegal immigrants under Medicaid or another state-based program.” It is currently illegal for undocumented immigrants to receive coverage, but several states take on the full amount of coverage without any federal match. Requiring states to conduct eligibility determinations for Medicaid Expansion population adults every six months. Current law requires such determinations to occur every 12 months.Sunsetting the temporary 5% enhanced FMAP afforded to states under the American Rescue Plan Act that opt to expand Medicaid. This provision would apply prospectively, not affecting states currently receiving an enhanced federal match under this authority.Limiting retroactive coverage in Medicaid to one month prior to an individual’s application date. Current law provides retroactive coverage for up to three months before an individual’s application date. Prohibiting federal financial participation (FFP) in Medicaid for individuals whose citizenship, nationality or immigration status has not been verified. Instituting eligibility and income verification processes for Patient Protection and Affordable Care Act (ACA) enrollees. This provision would also roll back income-based special enrollment periods in the federally facilitated and state ACA exchanges. Preliminary Congressional Budget Office (CBO) estimates indicate that more than 8.6 million people would go uninsured if the health portions of the bill became law — resulting in cuts of at least $715 billion. That would be in addition to the 5.1 million people the CBO projects will become uninsured if Congress chooses not to renew the enhanced exchange subsidies due to expire at the end of the year.Reducing federal Medicaid spending by this amount would be devastating. Even in cases where exceptions to the above requirements are provided, the administrative burden imposed by many of these new requirements would lead to many individuals losing coverage. Not only would people lose access to lifesaving mental health and substance use disorder care, but also programs and organizations could face staff layoffs and closure. Rural communities would be especially hard hit, as rural clinics and hospitals already operate with slim or negative margins. Keep in mind that if this bill is voted favorably by the Committee, it will still need to be voted on by the full House and the full Senate before it is sent to the president’s desk to be enacted. Some senators have already begun voicing concerns about the scope of the proposed reforms. |
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More on Work requirements, provider taxes, state directed payments
The bulk of the budget savings would come from Medicaid work requirements, the CBO estimates. Under the bill, most adults aged 19-64 without disabilities or dependents would be required to report at least 80 hours of work, community service or other qualifying activities per month to retain coverage.
The House GOP also seeks to block efforts by California and other states to enroll undocumented immigrants in Medicaid at state expense. Medicaid and the Children’s Health Insurance Program would be barred from covering gender-affirming care. Providers that offer abortion care would be excluded from Medicaid in a provision that appears to target the Planned Parenthood Federation of America.
Republicans also take aim at state provider taxes. The legislation would forbid any new taxes, set caps on state-directed payments to providers subject to these taxes and create a higher bar for whether provider taxes adhere to federal law. (Note: In 2024, CMS capped insurers’ state-directed payments for inpatient and outpatient hospital, nursing facility and professional services at academic medical centers to the average commercial rate.) Previously, there was no maximum for state-directed payments. The agency currently requires states to disclose how much Medicaid insurers spend on patients’ medical costs, quality and administrative expenses and how much is kept as profit. This metric is known as the medical loss ratio.
“The ill-conceived policies target states and tie their hands, leaving them unable to pick up the slack and effectively cutting patients’ Medicaid coverage based on their ZIP codes,” Kahn said.
Energy and Commerce Committee Chair Brett Guthrie (R-Ky.) preemptively defended the legislation in an op-ed the Wall Street Journal published Sunday.
“Undoubtedly, Democrats will use this as an opportunity to engage in fear-mongering and misrepresent our bill as an attack on Medicaid,” Guthrie wrote. “In reality, it preserves and strengthens Medicaid for children, mothers, people with disabilities and the elderly — for whom the program was designed.”
Energy and Commerce Committee ranking member Frank Pallone (D-N.J.) hammered the bill.
“This is not trimming fat from around the edges, it’s cutting to the bone,” Pallone said in a news release Sunday. “The overwhelming majority of the savings in this bill will come from taking healthcare away from millions of Americans. Nowhere in the bill are they cutting ‘waste, fraud, and abuse’ — they’re cutting people’s healthcare and using that money to give tax breaks to billionaires.”
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So, what is a state directed payment?
Key aspects of state-directed payments:
- Purpose:SDPs aim to close the gap between Medicaid reimbursement and other payer rates, potentially leading to improved access to care and provider participation in Medicaid.
- Mechanism:States can direct MCOs to pay providers according to specific rates, methods, or conditions, which may include supplemental payments or uniform rate increases.
- Approval Process:States must obtain CMS approval for SDPs, typically through a preprint review process, and ensure the arrangements are incorporated into their managed care contracts and rate certifications.
- Funding:States can incorporate SDPs into the base capitation rates or reserve a separate payment term for them, ensuring MCOs have sufficient funding to make the required payments.
- Impact:SDPs can improve the financial viability of providers serving Medicaid populations, reduce disparities in access to care, and align provider incentives with state-defined priorities.
- Oversight:CMS and other oversight bodies review state-directed payment arrangements to ensure they meet regulatory requirements and achieve the intended outcomes.
- Growth:The use of SDPs has grown rapidly in recent years, with increasing spending amounts and utilization.
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RESOURCE
Please join the Coalition on Human Needs this Thursday, May 15 at 3:30 pm ET for a Webinar: Reconciliation Markup Impacts on State Budgets – Rapid Response Federal Fightback Call.
Thursday, May 15 (New time and date)
03:30–4:30 PM ET
Register Here, you don’t have to register again if you already did.
Congress is moving rapidly on a reconciliation package that would gut core Human Needs programs and shift costs to states—putting families, communities, and entire state budgets at risk. These harmful proposals include deep cuts to SNAP and Medicaid, massive rollbacks of the Child Tax Credit and Earned Income Tax Credit, and new barriers to accessing education and health care—particularly for immigrant communities. In addition, the package includes billions in increased funding for family separation, detention, and mass deportation efforts, while stripping resources from programs that actually support family stability and economic mobility. Many of these changes are being advanced with little transparency and almost no input from the communities that will be most affected.
We cannot afford to stay silent. This call is your chance to get clear on what’s at stake, understand the latest developments, and prepare to mobilize with powerful messaging and actions in the critical two-week window ahead.
Featured Speakers:
- Ilene Stein, Vice President for Government Affairs, CBPP, State of Play: What’s in the reconciliation markup and where things stand
- Katie Bergh, Senior Policy Analyst, Food Assistance Team, CBPP, Topline analysis of SNAP impacts
- Ben D’Avanzo, Senior Health Policy Analyst, NILC, Attacks on Immigrant communities, ACA/Medicaid access, and funding for enforcement
- Mary-Beth Malcarney, Senior Advisor on Medicaid Policy, Families USA, Medicaid & Health Coverage Impacts
- Kati Mapa, Director of Public Policy, Child Welfare League of America (CWLA) -Impacts on SSBG/TANF and children/families
- Louisa Warren, Senior Director for Advocacy and Campaigns, State Fiscal Policy Team, CBPP – Fightback Strategy and Calls to Action
What to expect:
- Calls to action for state advocates
- Cross-cutting messaging and visuals
- New state-by-state SNAP cost-share data
- Invites to deep-dive SNAP & Medicaid briefings
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| Highlights of Albany’s Bloated and Belated Budget by Bill Hammond, Empire Center for Public Policy |
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The state Legislature approved the last of nine budget bills Thursday evening, 38 days after the start of the fiscal year. Here are some highlights of the fiscal impact of final spending plan:Top linesThe state-funded portion of the new budget, at $146 billion, is increasing by $12.6 billion from last year, which is $2.2 billion more than Governor Hochul initially proposed, according to a financial plan distributed by the Senate leadership.That’s an increase of 9.5 percent, which is four times the current rate of inflation. The “all funds” budget, including federal aid, totals $254.4 billion, an increase of 4.5 percent or roughly double the inflation rate.These totals do not seem to include a last-minute allocation of $7 billion to pay off a debt in the unemployment insurance fund, discussed further below.The enacted spending plan assumes state tax revenues will increase 6.5 percent in the year ahead, compared to the 4.1 percent assumption in Hochul’s proposal from January.Lawmakers agreed to bump up that estimate in spite of significant threats to the state’s fiscal outlook that have emerged in the past few months – including President Trump’s tariff actions, which have jolted the stock market and raised concern about a recession, and plans in Congress to constrain federal Medicaid spending, which could cost the state billion in future funding. |
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