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President Obama Releases 2017 Proposed Budget

This week, President Obama released his 2017 proposed budget. While the provisions are not expected to pass as part of the budget, various provisions could become part of other Congressional actions, and HCA will remain vigilant in monitoring such legislation.

A summary of the health provisions is at Additional information is at

 Some of the Medicare proposals for home care and hospice include:

  • Reduce market basket updates for home health agencies (HHAs) and other post-acute providers by 1.1 percentage points in fiscal year (FY) 2017 and then from FY 2019 through FY 2026. For 2018, the statute requires an update of 1 percent for home health and other post-acute providers; payment updates for these providers would not drop below zero as a result of this proposal.
  • Institute a co-payment for new beneficiaries of $100 per home health episode, starting in 2020. The co-payment will apply only for episodes with five or more visits not preceded by a hospital or inpatient post-acute stay.
  • Implement, beginning in 2021, bundled payments for post‐acute care providers, including home health providers, long‐term care hospitals, inpatient rehabilitation facilities, and skilled nursing facilities. Payments will be bundled for at least half of the total payments for post‐acute care providers.
  • Implement a budget neutral value‐based purchasing program for several additional provider types, including HHAs, skilled nursing facilities, ambulatory surgical centers, hospital outpatient departments, and community mental health centers beginning in 2018. At least two percent of payments must be tied to the quality and efficiency of care in the first two years of implementation and at least five percent beginning in 2020.
  • Reduce market basket update for hospice providers by 1.7 percent in 2018, 2019, and 2020. Payment updates would not drop below zero as a result of this proposal.
  • Allow the Department of Health and Human Services (HHS) to implement a hospice-specific market basket by 2012.
  • Allow HHS to make further budget neutral reforms to the hospice payment system.

Medicare Appeals

  • Institute a refundable filing fee for Medicare Parts A and B appeals for providers, suppliers, and state Medicaid agencies. Fees will be returned to appellants who receive a fully favorable appeal determination.
  • Allow the Office of Medicare Hearings and Appeals to use Medicare magistrates for appealed claims below the federal district court amount in controversy threshold ($1,500 in calendar year 2016 and updated annually), reserving Administrative Law Judges for more complex and higher amount in controversy appeals.
  • Allow the Office of Medicare Hearings and Appeals to issue decisions without holding a hearing if there is no material fact in dispute.
  • Increase the minimum amount in controversy required for adjudication by an Administrative Law Judge to the Federal Court amount in controversy requirement ($1,500 in calendar year 2016).
  • Remand an appeal to the first level of appeal when new documentary evidence is submitted into the administrative record at the second level of appeal or above.

Other Medicare Provisions

  • Allow HHS to base beneficiary assignment in the Medicare Shared Savings Program (accountable care organizations) on the basis of primary care services delivered by a broader set of primary care providers, including nurse practitioners, physician assistants and clinical nurse specialists.
  • Allow HHS to expand the ability of Medicare Advantage organizations to deliver medical services via telehealth by eliminating otherwise applicable Part B requirements that certain covered services be provided exclusively through face‐ to‐face encounters.
  • Expand the competitive bidding program to additional durable medical equipment, including inhalation drugs; all prosthetics and orthotics; and ostomy, tracheostomy and urological supplies.
  • Establish competitive bidding in Medicare Advantage by calculating an adjusted benchmark, against which plans are paid, as the lesser of the current law fee‐for‐service benchmark or the average Medicare Advantage plan bid plus a five percent “buffer” to protect beneficiary rebates.

Medicare Beneficiaries

  • Increase income-related premiums paid by Medicare beneficiaries under Medicare Part B and Part D.
  • Increase Medicare Part B deductible by $25 in 2020, 2022, and 2024 for new beneficiaries beginning in 2020.


The 2017 budget proposes to increase Medicaid funding by $22.2 billion over ten years. Some of the provisions would:

  • Create a comprehensive long‐term care state plan option for up to five states. Participating states would be authorized to provide home and community‐based care at the nursing facility level of care.
  • Expand eligibility under the Community First Choice Option.
  • Allow states to develop age-specific health home programs.

Dual Eligibles

  • Allow for federal/state coordinated review of dual eligible special need plan marketing materials.
  • Integrate the appeals process for Medicare-Medicaid enrollees.

Program Integrity

  • Implements a number of program integrity measures that are intended to save $23.8 billion in Medicare and Medicaid over ten years.
  • Includes allowing prior authorization for all Medicare fee-for-service items and services; imposing penalties if providers and suppliers fail to update their records; expanding funding for the Medicaid Integrity Program; providing the U.S. Centers for Medicare and Medicaid Services with maximum flexibility to disallow and defer individual payments or partial managed care payments; and requiring state Medicaid agencies to suspend payments to providers when HHS determines that a provider poses a significant risk of Medicaid fraud.