Medicare, Medicaid Drug Payments Will Be Unaffected By Government Shutdown
This article was originally published in The Pink Sheet Daily
Executive Summary
As an entitlement benefit, Medicare will not be affected on Oct. 1, and Medicaid funding to states will continue due to advanced appropriation. Many CMS activities authorized under the Affordable Care Act will also continue.
An HHS contingency plan for a government shutdown says Medicare will be unaffected and Medicaid funding to states will continue if the closure takes place.
The plan, released Sept. 27, says many CMS employees will be furloughed with the Oct. 1 start of fiscal year 2014 due to the expected shutdown, but those whose administrative function was funded in authorizing legislation or whose presence is needed to ensure that fully funded programs continue operation and that funded entitlement benefits are paid will remain on duty. Of the current 5,994 employees at CMS, 2,113 will continue working throughout the shutdown, according to the HHS plan.
“In the short term, the Medicare Program will continue largely without disruption during a lapse in appropriations,” the document says. In addition, “states will have funding for Medicaid on October 1, due to the advanced appropriation enacted in the FY 2013 appropriations legislation, as well as for the Children’s Health Insurance Program (CHIP).”
Such assurances mean there will be no change in the amount or timing in payments for drugs, which should come as a relief to health care providers who already have suffered a reduction in Medicare Part B drug reimbursement through the ongoing budget sequester. Providers have argued that the cut in payment has affected patient access to drugs, but the reduction remains in effect (Also see "CMS Lacks Authority To Exempt Part B Drugs From Sequester Cuts – Tavenner" - Pink Sheet, 11 Jun, 2013.).
In addition, although the Affordable Care Act is the issue at the center of the shutdown – since the House has passed legislation to continue funding the government as long as ACA was either defunded or delayed, conditions the Senate would not agree to – many CMS activities authorized under that law will continue during the shutdown. These would continue because funding was included in the authorizing legislation.
“CMS would continue large portions of ACA activities, including coordination between Medicaid and the Marketplace, as well as insurance rate reviews, and assessment of a portion of insurance premiums that are used on medical services,” HHS says. “Additionally, other non-discretionary activities including Health Care Fraud and Abuse Control, Center for Medicare & Medicaid Innovation, and Pre-existing Condition Insurance Plan activities would continue.”
Since CMS will lose over half of its staff, however, clearly some activities will have to be put on hold. The HHS document describes some activities that would be discontinued: “CMS would be unable to continue discretionary funding for health care fraud and abuse strike force teams resulting in the cessation of their operations. Fewer recertification and initial surveys for Medicare and Medicaid providers would be completed, putting beneficiaries at risk of quality of care deficiencies.”
Overall, HHS would furlough 52% of its staff, with 40,512 staff furloughed and 37,686 retained. FDA would retain 8,180 staff members, about 55% of its total (Also see "FDA’s Shutdown Plan: Some User Fee Services Would Continue; Routine Inspections Would Not" - Pink Sheet, 27 Sep, 2013.).