On March 9, 2023, the White House released President Biden’s Fiscal Year 2024 Budget (link) and accompanying HHS Budget in Brief (link), which elaborates on health care proposals. The $6.9 trillion budget request includes $1.9 trillion in discretionary budget authority, which is an 8.6% increase from the 2022 enacted level. HHS proposes $144.3 billion in discretionary and $1.7 trillion in mandatory proposed budget authority for FY 2024.

Notable healthcare policies include building on the Inflation Reduction Act’s prescription drug pricing reforms. Budget highlights:

• Drug Pricing proposals
  • Inflation Reduction Act (IRA) Expansion
    • Negotiation: “increase the number of drugs subject to negotiation and make drugs eligible for negotiation sooner after their launch.”
      • Projected to save $160B over 10 years.
      • Details of the proposal are not included in the Budget nor HHS Budget in Brief. However, CMS told reporters the proposal entails CMS doubling the number of drugs negotiated each year (reaching 300 drugs by 2033, instead of 140 under current law) and shortening the timeline before a drug could be subject to a negotiated price to only 5 years (as opposed to 9 year for small molecules and 13 years for biologics under current law).
    • Inflationary penalties: expand the policy so that penalties are applied on commercial units.
    • Insulin copays: extend the $35 cap on out-of-pocket costs per monthly insulin product in Medicare to group and individual market plans. Projected to increase spending by $20M over 10 years.
  • Medicare Part D: $2 Copay for “High Value” Generics
    • Add a new permanent benefit to Part D coverage that requires all Part D plans to offer a standard list of generic drugs at a maximum copayment of $2 for a 30-day supply. This proposal aligns with the “Medicare High-Value Drug List” demonstration that was included in the recently released CMMI report and is projected to increase spending by $1.3B over 10 years.
  • Miscellaneous Topics
    • Proposes to allow CMS to negotiate Medicaid supplemental rebates on behalf of states. The proposal anticipates that CMS and participating Medicaid programs would partner with a contractor to negotiate supplemental rebates for estimated savings of $5.3B over 10 years.
    • Proposes to allow states to extend Medicaid drug rebates to separate CHIP programs starting in 2024. States with separate CHIP programs do not currently have authority to collect Medicaid drug rebates on drugs dispensed to CHIP beneficiaries. Expected savings of $2.3B over 10 years.
• 340B
  • $17M for FY 2024 to “to continue to provide oversight of drug manufacturers and covered providers,” an increase of $5M over FY 2023 enacted.
  • The HHS Budget in Brief notes that this funding is to provide “additional manufacturer and covered entity audits, support operational improvements including system improvements to support the statutorily mandated Administrative Dispute Resolution process, and increase efficiencies. The funding increase provides resources to improve education of participating covered entities and prospective sites on compliance with statutory requirements to increase compliance.”
  • The FY 2024 budget also proposes “requiring covered entities to annually report to HRSA how the savings achieved through the Program benefits the communities they serve and provide HRSA regulatory authority to implement this requirement.”
• Coverage Expansion
  • Medicare
    • Proposal for Medicare coverage of select, evidence-based supportive services delivered by a community health worker for prevention, care navigation for chronic or behavioral health conditions, screening for social determinants of health, and linkage to social supports.
    • Proposal to establish a permanent Medicare diabetes prevention benefit.
    • Proposal to expand Medicare access to cover nutrition and obesity counseling services and to pilot coverage of medically tailored meals in Medicare. Projected to increase spending by $1.7B over 10 years.
    • Proposal to require Medicare to cover three behavioral health visits without cost-sharing. Projected to increase spending by $1.5B over 10 years.
    • Proposal to revise several Medicare behavioral health coverage provisions, including eliminate Medicare’s 190-day lifetime limit on psychiatric hospital services, revise the coverage criteria for psychiatric hospital terminations, and expand the types of professionals eligible to be paid for behavioral health services.
  • Medicaid
    • Proposal to provide “Medicaid-like” coverage to individuals in states that have not expanded Medicaid paired with financial incentives to ensure states maintain existing expansions. Projected to increase spending by $200B over 10 years.
    • Proposal to require all States to provide continuous Medicaid coverage for 12 months postpartum. Projected to increase spending by $2.4B over 10 years.
    • Proposal to expand Medicaid home and community-based services. Projected to increase spending by $150B over 10 years.
    • Proposal to expand the Vaccine for Children program to include all children under age 19 enrolled in CHIP. Expected savings of $2.9B over 10 years.
  • Private Insurance
    • Proposal to make permanent the expanded premium tax credits extended through 2025 under the Inflation Reduction Act. Projected to increase spending by $18.4B over 10 years.
    • Proposal to require private insurers to cover three behavioral health visits without cost-sharing. Projected to increase spending by $310M over 10 years.
    • Proposal to require all plans and issuers, including group health plans, to provide mental health and substance use disorder benefits. Projected to increase spending by $760M over 10 years.
  • Uninsured
    • Proposal to create a Vaccines for Adults program to provide ACIP recommended vaccines to uninsured adults.
• ARPA-H and the Cancer Moonshot
  • $7.8B budget for the National Cancer Institute (NCI) including $716M for discretionary resources to support the Cancer Moonshot initiative, a $500M increase above FY 2023 enacted. The budget proposes a reauthorization of the Cancer Moonshot through 2026.
  • The Advanced Research Projects Agency for Health (ARPA-H) will lead the Cancer Moonshot and designate a Cancer Moonshot champion to coordinate internal and external goals. $2.5B for ARPA-H funding, a $1B increase above FY 2023 enacted.
  • $839M for Centers for Disease Control and Prevention (CDC) to support cancer prevention and control programs.
  • $108M for the Indian Health Service (IHS) to address specialized cancer needs in tribal communities.
  • FDA allocates $50M, $48M increase over FY2023, of its funding to support the Cancer Moonshot through research, education and development of rare cancer diagnostics and therapeutic products.
  • $20M for Health Resource and Services Administration (HRSA) funded health centers aimed at cancer screening and early detection in underserved communities.
  • Creation of a cancer care quality data reporting program for all Medicare providers to provide more information about the quality of cancer care.
  • Mentions the Enhancing Oncology Model (EOM) which is set to begin on July 1, 2023.
• Alzheimer’s Disease
  • $32M for the Administration for Community Living to continue their Alzheimer’s Disease Program Initiative that seeks to develop systems to support families and patients affected by the disease.
• Rare Diseases
  • $8M for FY 2024 to support the implementation of the Accelerating Access to Critical Therapies for ALS Action Plan to advance innovation for the treatment of rare neurodegenerative diseases, including ALS.
• Mental Health
  • The FY 2024 budget includes multiple provisions to strengthen nursing home oversight, transparency, and enforcement. The provisions protect seniors by identifying and penalizing nursing homes that commit fraud, endanger patient safety, or prescribe unnecessary drugs.
  • $387M for FY 2024 for HRSA to train 18,000 behavioral health providers, $190M above FY 2023 enacted.
  • $165M for FY 2024 for the Rural Communities Opioid Response Program, an increase of $20M above FY 2023 enacted.
  • $10M for a new Rural Health Clinical Behavioral Health Initiative.
  • Increase of $200M to the National Institute of Mental Health for mental health research and treatment, including a new precision psychiatric initiative.
  • $1.7B for the Community Mental Health Block grant, an increase of $645M above FY 2023 enacted.
  • $2.7B for the Substance Use Prevention, Treatment, and Recovery Services Block Grant, an increase of $700M over FY 2023 enacted.
  • $5M for AHRQ to research expanding Local Integrated Care Network models.
  • Proposal to provide additional funding for enforcement of mental health parity requirements. Projected to increase spending by $125M over 10 years.
  • Proposal to apply the Mental Health Parity and Addiction Equity Act to Medicare.
• Devices
  • $26M to continue efforts that strengthen public health supply chains for medical products and promote the availability of medical devices by proactively monitoring, assessing, and communicating risks and vulnerability. (Note: A different reference to this provision in the budget allocates $22M).
  • $37M to strengthen FDA post-market safety, to support a range of medical product safety activities to modernize FDA’s safety surveillance and oversight program, advance the development of an active surveillance system for medical devices that leverages high-quality, real-world evidence, and monitor approved, unapproved, and compound animal drug products.
  • $47M to support ongoing technology and data modernization efforts within medical product safety.
• Diagnostics
  • $50M for FDA in FY 2024 to “expand research efforts and develop diagnostic and therapeutic products to treat rare cancers” via the Cancer Moonshot initiative. (Note: This is also included in the Cancer Moonshot section above)
  • $28M for CDC’s Advancing Laboratory Science program to “shorten the development time for diagnostic tests, implement a new Infectious Disease Test Review Board, and improve the speed and quality of CDC laboratory test results.”
  • $10M to conduct reviews of state implementation of the mandatory Medicaid Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit.
• Health Equity
  • $425M for CMS program management, to advance agency priorities including advancing health equity.
  • $25M for CMS to address health equity advancement in nursing homes.
  • $25M for CMS to provide grants to States and tribes to “address disparities, develop innovative approaches for integrating equity into CMS’s programs and policies, build analytic systems to integrate data on underserved populations, and develop dashboards and other products to support interventions to address health disparities.”
  • $70M for Native American Nutrition and Supportive Services, to advance health equity by providing funding for increased program growth and enrollment within a traditionally underserved population.
  • $86M for the Office of Minority Health (OMH) at CMS, which leads the coordination of policies, programs, and resources to reduce healthcare disparities and advance health equity in the U.S.
  • $5M for Public Health Service Evaluation funding for OASH’s Office of Climate Change and Health Equity
• CMMI Priorities
  • $636M for FY 2024, a decrease $44M from FY 2023 enacted.
  • CMMI priority initiatives from 2024 to 2029 include the ACO Realizing Equity, Access, and Community Health Model, the Enhancing Oncology Model, and the Medicare Advantage Value-Based Insurance Design Model.
• Pandemic Preparedness
  • Proposal to provide HHS limited and temporary coverage for medical products and services directly related to diagnosis, treatment, and/or prevention (such as immunization) of a specific disease(s) that are pandemic related as determined by WHO.
    • More specifically unapproved drugs, vaccines, and devices that FDA authorizes for emergency use under an Emergency Use Authorization (EUA) during a public health emergency that results from a pandemic.
    • Proposal modifies Section 1135 emergency waiver authorities under the Social Security Act to ensure Medicare, Medicaid, CHIP beneficiaries, and the uninsured have access to these items and services.
    • The Secretary could authorize or require coverage of unapproved drugs, vaccines, or devices that are authorized by the FDA for emergency use.
    • Patient cost-sharing would be waived for vaccines authorized under an EUA. Reconciliation could be used to make Part D and C plan sponsors whole for drug, vaccine, device, and administrations costs, that were not incorporated in their bids, if the cost is estimated to exceed 0.1% of the national average per capita costs.
    • The Secretary would provide Congress certification and advance written notice before exercising this authority.
  • $20B in mandatory funding across the Administration for Strategic Preparedness and Response (ASPR), Centers for Disease Control and Prevention (CDC), NIH, and FDA to increase preparedness for pandemics and other biological threats.
  • $9B in mandatory funding to encourage the development of innovative antimicrobial drugs.
  • $2.7B for NIH research and development of vaccines, diagnostics, and therapeutics against high priority viral families, biosafety and biosecurity, and expanding laboratory capacity and clinical trial infrastructure.
  • $1B to the Biochemical Advanced Research and Development Authority (BARDA) to develop medical countermeasures.
  • $995M to the Strategic National Stockpile.
  • $375M for the Pandemic Influenza program at ASPR, which BARDA will use to implement an end-to-end strategy to prepare for the next influenza pandemic by supporting the development, licensure, and manufacturing of better diagnostics and treatments to prevent and respond to seasonal and pandemic influenza.

ADVI Angle

• The annual release of the president’s Budget is significant as it outlines the administration’s policy priorities. With the Budget, the president is “requesting” Congress to enact proposals related to fiscal policy and federal programs, and signals how the Biden Administration may act on reforms that are within its administrative authority. Medicare proposals are particularly notable, as the administration has vast authority to enact significant reforms through CMMI and may waive the entire Medicare statute when implementing a demonstration.
• The president’s proposal to dramatically expand the IRA’s government “negotiation” of prescription drugs demonstrates the “slippery slope” concerns with the policy.
  • As then-Representative and now-Sen. Peter Welch (D-VT) said on Dec. 29, 2022, “The slippery slope is very powerful. If [negotiation] works in Medicare, it can work in the private market. Once you have the tool, and it gets implemented, and people get to experience lower rates, and it doesn’t harm health outcomes, it’s going to be really hard to reverse that.”
• While today’s Republican-led House would prevent passage of government negotiation expansion, a potential Democrat-controlled Congress and White House in the future would likely be eager to pursue a “slippery slope” expansion of the policy.

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